Chennai’s MTC inks deal to deploy 500 private buses across the city

Metropolitan Transport Corporation (MTC) has decided to deploy private buses across the city under the Gross Cost Contract (GCC) scheme. Chennai will have 500 private buses across various routes by the end of this year.

MTC operates 3,436 buses on 625 routes and caters to more than 29.50 lakh passengers daily. It has a manpower of 20,301 employees who handle operations through 31 depots. MTC runs one of the highest effective km at 274 Km per bus per day.

Routes Finalised for Private Buses

Besant Nagar-Ayanavaram(23C )
Vadapalani-Marina (12B)
Thiruvanmiyur-Tambaram (91)

What is GCC Model?

The GCC is a public-private partnership-based model. The responsibility of managing the transport network and revenue collection are undertaken by the State Transport Undertakings (STUs) while the responsibility of procuring, operating, and maintaining the buses is by the operator. The STUs are responsible for the level of service quality to the commuters. A gross-cost contract pays the operator a specified sum to provide a specified service for a specified period. All revenue collected is for the authority.

A route contract is appropriate if the authority wishes to:

• Have mandatory retendering after a certain number of years
• Determine the routes and daily schedules
• Be identified as the bus system provider
• Offer opportunities to smaller operators to participate
• Take full responsibility for service planning
• Wishes to avoid involvement in setting operators’ profit levels

A gross-cost contract is appropriate if the authority wishes to:

• Avoid on-street competition for passengers
• Establish a sustainable procedure to constantly test the market to achieve the lowest cost
• Avoid the need to apportion off bus revenues between operators
• Provide free or discounted interchange between all routes
• Avoid discrimination against concession fare passengers, and
• Collects a high percentage of revenue off-bus

The major disadvantages of a gross-cost route contract are:

• The operator has no direct incentive to ensure revenue collection
• The authority must ensure that all revenues are being collected and handed over, requiring constant vigilance and inspection
• Penalties must be in place both for passengers who do not have tickets and staff who fail to issue tickets
• The operator is not concerned with the efficient operation of the route
• As this option places the greatest demands on the authority it requires the highest staff numbers
• All service improvements are initiated by the authority which may result in a very conservative approach