BRTS Project Presentation

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Transcript of BRTS Project Presentation

Exploring opportunities for Public Private Partnerships

BRTS for International Business

1

BRT AfricaSource: Treehugger.com

BRT IndiaSource: Huffingtonpost.in

BRT BrazilSource: Flickr.com

BRT WashingtonSource: Greatergreaterwashington.org

BRT GuangzhouSource: Cityweekend.com.cn

Passengers/day: 14, 718, 290 Cities: 66Length (km): 1,785 Latin America BRT Statistics

Passengers/day: 9, 293, 374Cities: 42Length (km): 1,489Asia BRT Statistics

Usage across 6 continents

Bogota, Columbia

Known as TransmilenioIt is operated primarily through a PPP modelA concessional contract model has been adopted Compensated through user fee generatedRisk allocation is distributed between government and the private firmsBogota, Columbia

Curitiba, Brazil

Began in 19745,61,000 passengers per dayCovers 84 kms length46% of total trips in city made by means of public transport

Curitiba, Brazil

After key changes in the Brazilian Constitution, new policies that encourage private sector participation have been formedThe Curitiba BRT which began in 1974 and covers some 83 kms today, is supported through a concessional contract modelThis is a User feee-based Build-Operate-Transfer ModelThe government offers 2 forms of concession to the private entitySponsored Concession provided for services delivered to the end-usersAdministrative Concession provided for services delivered to the administration itselfCuritiba, Brazil

Santiago, Chile

Started in 20063,40,800 passengers per dayCovers 91 kms of length35% of the total city transit is through public transport

Santiago, Chile

69% funding by private consortiumConcession based modelContract signed for 81 kms

Santiago, Chile

Guangzhou, China

It began in 20108,50,000 passengers a dayLength of 23 kms, which is growing further at a rapid pace32% of total city transport depends on public modes like BRT

Guangzhou, China

30% investment by private firmsFollows the same model as Transmilenio in Bogota, ColumbiaThe buses are operated and maintained by private contractorsThe compensation received is through user fee collectionGuangzhou, China

Ahmedabad, India

Began in 2009Covers 82 kms1,30,000 passengers per day22% of the citys transit is through public transportAhmedabad, India

The Ahmedabad BRTS retains complete ownership of the system100% financing by governmentOnly the buses are provided by private entities like TATA and Chartered Logistics Ltd.There is opportunity for furthering PPP engagements

Ahmedabad, India

User fee based Build-Operate Transfer ModelAnnuity based BOT ModelPerformance based Management/Maintenance ContractsTurnkey Projects

PPP Models

Medium to large scale PPPs have been awarded mainly in the energy and transport sub-sectors (roads, ports and airports)Although there are variations in approaches, over the years the PPP model has been veering towards competitively bid concessions where costs are recovered mainly through user charges (in some cases partly through Viability Gap Funding (VGF) from the governmentUser fee based BOT Model

In sectors/projects not amenable for sizable cost recovery through user charges, owing to socio-political-affordability considerations, such as in rural, urban, health and education sectors, the government harnesses private sector efficiencies through contracts based on availability/performance payments. Implementing annuity model will require necessary framework conditions, such as payment guarantee mechanism by means of making available multi-year budgetary support, a dedicated fund, letter of credit etc. Government may consider setting-up a separate window of assistance for encouraging annuity-based PPP projects. A variant of this approach could be to make a larger upfront payment (say 40% of project cost) during the construction period.

Annuity based BOT Model

In an environment of constrained economic resources, PPP that improves efficiency will be all the more relevant. PPP models such as performance based management/maintenance contracts are encouraged. Sectors amenable for such models include water supply, sanitation, solid waste management, road maintenance etc. Performance based management/maintenance contracts

In traditional Design-Build (DB) contract, private contractor is engaged for a fixed-fee payment on completion. The primary benefits of DB contracts include time and cost savings, efficient risk-sharing and improved quality. Government may consider a Turnkey DB approach with the payments linked to achievement of tangible intermediate construction milestones (instead of lump-sum payment on completion) and short period maintenance / repair responsibilities. Penalties/incentives for delays/early completion and performance guarantee (warranty) from private partner may also be incorporated. Subsequently, as the market sentiment turns around these projects could be offered to private sector through operation-maintenance-tolling concessions.Modified Design Build (Turnkey) Contracts

We started with an idea of understanding BRTS operationsWe wanted to explore the potential gaps in operationsFrom these gaps we wanted to identify business opportunitiesWe then aimed at categorize these opportunities into business areasMeasure the interest levels of BRTS Ahmedabad and MNCs separatelyCompare them to predict the robustness of PPP in BRTSStudy this through a global comparison of 5 major cities, including AhmedabadAnd thus conclude the benefits to International Business

Research Objectives

Qualitative MethodPrimary data collection by means of surveys and interviewsSecondary data collection using various online resourcesMethodology

Risk allocation and financing remain major considerations and potential challenges for new PPP Projects (Yen, Shen & Cheng, 2010)

Literature Review

We prepared a data collection survey to understand the everyday operation of BRTS AhmedabadWe aimed to observe 3 main units:Bus StopsBusesBus RoutesWe planned to measure 3 aspects of the operations:Basic InfrastructureFunctional EfficiencyMarketability of ServicesPhase I Operational Analysis

We divided our potential data collection zone into East Ahmedabad and West AhmedabadWe divided into groups of 2 and pursued on-field data collectionWe scored the data obtained as part of data analysisWe could cover 35 bus stops, 35 buses and 30 bus routes across the citys spanWe prepared a score sheet for the items and categorized them into Basic, Functional and Marketability ParametersPhase I Data Analysis

Phase I Observations

Phase I Observations

Phase I Observations

We pursued an online passenger satisfaction survey to know what people felt about BRTSWe got some 20 responsesWe did not collect personal information, so as to ensure privacy

Phase I Customer Satisfaction Survey

60% of the respondents used BRTS frequentlyHowever, only 10% owned BRTS Cards35% showed interest in getting a BRTS Passenger card in near future15% found the BRTS Service to be excellent, 55% fond it to be very good, while 30% found it average75% people agreed that BRTS was better than other modes of transport85% recommended the service to their friends and family85% found it faster, 65% found it convenient and 70% found it to be efficientPhase I Customer Satisfaction Survey

95% of the respondents found it to be well-maintained55% said that traffic was a problemCustomer friendliness was felt by 90%20% found the design to be excellent75% expect more services from BRTS55% agreed that Public Private Partnership in BRTS was an excellent idea90% of the people want to have better infrastructure for BRTS, while 60% of the respondents expect IT Services/Mobile Applications being introduced for BRTSPhase I Customer Satisfaction Survey

BRTS route should not be used by other vehiclesTraffic congestions need to be reducedUse of solar panels for bus stops, basic amenities like water and sanitationThe use of BRTS needs to be increased, so as to combat pollution levels in the cityRound figure fares, to avoid delays caused due to lack of changePhase I Customer Suggestions

We found that marketability of the services were higher in case of stops that had the basic infrastructure in place and was functionally more efficientIt was lower in cases where both basic infrastructure and functional efficiency was lackingMarketability was more controllable by means of basic and functional parameters only in case of bus stops and busesIt was not related to basic and functional parameters in case of bus routes, where we believe external influences were at playFrom CSS we found that PPP in infrastructure and IT Services offer potential opportunitiesPhase I - Inferences

We visited the BRTS Head Office at Usmanpura and talked to key officials in OperationsWe interviewed 3 officialsWe found that they were hesitant towards PPP, primarily because there was a lack of push from the higher managementHowever, user-fee based model and annuity based BOT model were rated highestThey are using the PPP model used by GSRTC at Geetamandir, as a roadmap for implementing some key PPPs themselvesAdvertising is not as much encouraged, in spite of the benefitsPhase II Interview Based Data Collection at BRTS Office

We recorded the interviews and prepared transcripts of the sameThe transcripts were used to derive a summary of the discussionPhase II Data Analysis

We believe that more of on-field research can help BRT understand the current state of BRT operations in the cityThey have not really considered BRT operations in other countriesIf they study international structures, they would find relevant frameworks for implementation in Jan