Time has come to privatise BEST: GM

Published: Dec 15, 2011, 07:11 IST | Shashank Rao |

BEST General Manager OP Gupta said that if there is no hike in power tariffs or bus fares, loss-making civic undertaking will have to shut down

BEST General Manager OP Gupta said that if there is no hike in power tariffs or bus fares, loss-making civic undertaking will have to shut down

The deteriorating financial state of the Brihanmumbai Electric Supply and Transport (BEST) has forced top bosses to speak of privatising it if power tariffs and bus fares are not hiked.

After MiD DAY reported that the loss-making civic unit -- on which 43 lakh commuters depend for daily transport and another 9 lakh for electricity -- wanted another loan of Rs 1,500 crore, the BEST is now mortgaging over 2,000 buses against an additional overdraft of Rs 225 crore as 'working capital' to meet day-to-day expenses. General Manager OP Gupta stated that BEST's financial mess could lead to its privatisation or eventual shutdown.

"The situation has gone out of control. BEST has been facing losses and the time has come to privatise it. We are selling power at Rs 3.50 per unit, while in the suburbs the rate is more than Rs 5 per unit. The condition is so bad that we might have to shut essential services," said Gupta.

He elaborated to say that when a loss-making PSU becomes bankrupt, the quality of services goes down and talk of privatisation becomes inevitable. He further added that to carry on providing the essential services, BEST would either need to hike fare and tariff or depend on a bailout from the BMC or the state government.

Gupta expressed his angst regarding privatisation in front of the BEST standing committee on Wednesday.

Committee member Samir Desai said, "The GM was talking about the eventualities that BEST could face if there is no revision in fare."

Dire straits
The undertaking is reeling under a cumulative loss of around Rs 3,500 crore from both its electric supply and transport departments. On December 3, MiD DAY had reported how the administration approached a nationalised bank for procuring the Rs 1,500 loan at an interest rate of 10.75 per cent. The undertaking said it needed the funds for the maintenance of buses that break down routinely. The number of out-of-order buses that stand idle at depots every day has touched 450 from 250 recently, owing to the lack of funds for repairs, not to mention a staff crunch. Last year, it took a loan of around Rs 1,600 crore, which is still being repaid.

The administration claims that it has been forced to resort to short-term loans as bus fares and electricity tariffs have remained unchanged. In the last several meetings, the GM has been hinting at fare hikes, which the BEST claims to be its only option to survive.

Until two years ago, the electricity supply division of BEST was cross-subsidising the losses faced by its transport division but it ceased to do that. Recently, the electricity regulatory body disallowed a 15 per cent hike proposed in power tariffs. The two factors further led to a downfall in revenue generation for BEST.

Credit crunch
Sources in the BEST said that they would be mortgaging 2,000 old buses from their 4,700-strong bus fleet for one year to run day-to-day operations and stay afloat. After depreciation, the cost of these buses is expected to fetch around Rs 270 crore. "Until now the administration has been giving post-dated cheques to repay its loans," said Ravi Raja, BEST committee member.

Once before, for a World Bank loan four years back, BEST had mortgaged their buses to buy more buses. "But never has the body mortgaged buses for taking a loan to meet daily costs," said Sunil Ganacharya, BEST member.

The number of buses BEST will mortgage for a loan of R225 cr

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