JNNURM project comes a cropper

With commercial vehicle manufacturers' payments to the tune of over Rs 2,000 crore (Rs 20 billion) stuck with various state transport agencies, the ambitious scheme to fund modern buses under the Jawaharlal Nehru National Urban Renewal Mission (announced in January last year as part of stimulus measures) has come a cropper.

According to industry sources, states are yet to clear their previous dues of Rs 2,000 crore (Rs 20 billion) for the buses that have already been delivered. Consequently, major commercial vehicle manufacturers like Tata Motors, Ashok Leyland, Swaraj Mazda and Volvo Buses have refused to deliver nearly half the total buses ordered under JNNURM before previous dues are settled.

This, in turn, has resulted in an inventory of 2,300 ready-to-be-delivered buses at the premises of these bus manufacturers.

"Different states are not passing on the money to these bus manufacturers and there has been no price amendment after changes in specification. Hence, manufacturers have stopped delivery for new buses after over Rs 2,000 crore was due on the states for more than 7,800 buses already delivered. This has resulted in an inventory of 2,300 buses with these manufacturers," said a senior official at Siam (Society of Indian Automobile Manufacturers).

The central government, on the other hand, says it has made its first instalment for buses under JNNURM and the government's remaining share would be paid during the current financial year, as buses are delivered and reform requirements are met.

"Out of the total estimated project cost of Rs 4,700 crore (Rs 47 billion), we have released Rs 1,030 crore (Rs 10.3 billion) as first instalment to cities out of our total estimated share of Rs 2,350 crore (Rs 23.5 billion) and the rest will be paid as deliveries of remaining buses happen," M Ramachandran, secretary, urban development ministry said.

Even the absence of clarity on the issue of extension of deadline beyond March 31, 2010, has left various state transport undertakings in a dilemma over the already ordered buses.

"While there has been no extension of deadline beyond March 31, 2010, all orders placed by this time, will stand valid for deliveries later in the year and we hope to see all buses being delivered in the next three months," Ramachandran added.

According to the urban development ministry, while orders had been placed for 14,500 buses, only 7,800 buses had been delivered till March 31, under the second stimulus package announced by the Centre in January last year, wherein states would get a one-time measure up to June 30, 2009, under JNNURM for purchase of buses for their urban transport system. The deadline was later extended to December 31, 2009, and subsequently to March 31, 2010.

It is estimated that a normal standard bus costs Rs 20 lakh (Rs 2 million) and the cost of its technologically-upgraded version goes up to over Rs 30 lakh (Rs 3 million), while low-floor buses cost between Rs 45 lakh (Rs 4.5 million) and Rs 60 lakh (Rs 6 million). This gains significance as close to 60 per cent of the buses ordered have been semi low-floor and technologically-advanced buses, irrespective of whether or not infrastructure to run such buses is available.