Notwithstanding the complaints of frequent breakdown and fire incidents reported from the buses supplied by manufacturers like Tata Motors and Ashok leyland under the JNNURM, the Centre has moved ahead to facilitate quick payment to the auto majors.
The Urban Development Ministry has made it mandatory for the State Governments to tie-up with the financial institutions such as HUDCO and ICICI for immediate financing of the cost of buses being purchased under the second phase of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM).
“The State Governments will have to agree to release payments to the bus suppliers in terms of their mutual agreement without linking it to release of funds from the Central Government.
“In order to ensure that the bus manufacturers get their full payment in time after supply and inspection of the buses without waiting for release of funds from the Government, the States are required to tie-up within two months of project sanction by the Ministry with financial intermediaries such as HUDCO, nationalised banks, State finance corporation, ICICI, IlFS, IFDC for financing the cost of buses,” a senior official said about the Ministry’s initiative to solve the vexing issue.
The move to facilitate and fasten the payments to the companies under the JNNURM programmes follows complaints from the bus manufacturers that the States Governments had been withholding their payments citing delay in release of funds from the Centre.
According to rough estimates, the States owe over Rs 200 crore to the bus manufacturers including Ashok leyland, Tata Motors and Volvo.
Under the Phase I launched in 2005, the UD Ministry released the funds on a ‘conditional basis’ to the State Governments depending on their performance and infrastructure implemented. Under the Phase II, 10,000 buses are to be purchased for across the States, particularly hill States.
In a recent meeting headed by Urban Development Secretary Sudhir Krishna, a representative from Tata Motors had pointed out that payments to manufacturers were linked to the UD Ministry funds. Hence, many times the city or Corporation did not make timely payments even after the delivery of the vehicles saying that they have not received
funds from the State Government yet.
The UD Ministry has also suggested the States to look into proposals for public private partnership (PPP) on priority. However, it has made it clear that the ownership of buses will remain with the Special Purpose Vehicles (SPV).
Various States have been complaining about breakdowns and technical snags besides fire related incidents in the buses supplied under the JNNURM.