PMA proposes steps to augment revenues

Shahid AslamSpecial Correspondent - Lahore

31st Aug, 2021. 07:15 pm
orange line metro

LAHORE. After proposing distance-based fare, the Punjab Masstransit Authority (PMA) has also proposed over a dozen “non-fare” measures to increasing revenues of the mass transit projects in Punjab so that their reliance on the government subsidies may be minimised.

PMA managing director Mirza Naseer Inayet has written a letter to the transport department for getting approval to various steps from the Punjab’s provincial government, as well as from the federal government to implement the proposed initiatives.

According to the letter, a copy of which is available with the BOL News, around a dozen steps have been proposed to increase non-fare revenues.

Earlier, the MPA had made certain recommendations for an increase in the fare revenues, including the distance-based fare.

The PMA has proposed conversion of all its current bank accounts to saving accounts. Currently, all PMA current accounts are maintained at the Bank of Punjab (BoP) but negotiations are underway with the bank for opening profit-based savings accounts.

After negotiating the profit rate with the BoP, the PMA will transfer its accounts to savings accounts hopefully at a 5.5% profit rate. The PMA hopes to earn Rs45 million profit each year through this move.

Similarly, it has proposed that through advertisements and leasing out its spaces, it can generate a considerable amount each year. According to the letter, the PMA has proposed to establish a transport police for implementing transport rules.

The transport department had initiated a summary in 2020 for establishing a transport police for the enforcement of transport laws, safety and security of metro lines, metro stations and passengers travelling on metro lines and buses.

After the establishment of the transport police, Rs882 million, currently being spent annually on various security contracts, could be saved. The authority has also proposed that the Punjab government should take up the matter with the federal government for exemption of Customs duty on its diesel buses.

According to the PMA, the Customs duty at 64 per cent of the bus cost are payable at the port of entry as per the government regulations. The Customs duty on electronic buses is 1 per cent of the cost of the bus. It also said after waiver of Customs duty, approximately Rs1 billion could be saved.

The tender of buses for the Rawalpindi-Islamabad Metrobus system is due by June 2023 and if the Customs duty on diesel buses is waived, there is an opportunity to save Rs290 million/annum and Rs2.3 billion over the next eight years.

“Therefore, the finance department may be requested to move a case to the federal government for waiver of the Customs duty on buses imported for mass transit system.”

Similarly, the PMA has also proposed the Punjab government to take up the matter of electricity tariff for the Orange Line with the federal government as a special case for lowest rates to reduce subsidy.

According to the letter, the annual consumption of Orange Line metro train project is 109 million kWh and the Lahore Electric Supply Company (Lesco) has applied electricity tariff under category C3 (b) under which peak hour rate is Rs21.6/unit and off-peak hour rate is Rs14.7/unit.

At an average, it costs Rs18/unit for the Orange Line. The annual expected cost of electricity is approximately Rs2 billion. The Orange Line metro train is an urban public transport system where the bulk of its riders are from poor sections of the society.

Therefore, is it proposed that the federal government may be requested to allow the lowest possible electricity tariff rate for the Orange Line metro train as a special dispensation, which will reduce subsidy paid in respect of tariff. A 30 per cent reduction in the tariff yield savings of Rs590 million/annum, it added.

The PMA has also proposed a tax on gasoline sales in three districts of Punjab, including Lahore, Rawalpindi and Multan where metro buses operate.

It is proposed that a case may be moved to the federal government, allowing the provincial government to levy a mass transit tax of 5 paisas/litre on gasoline in these three Punjab districts.

Further, the PMA has proposed levying a mass transit tax on annual vehicle registration fees. Initially, the mass transit tax of Rs50 was to be levied on motorbikes to discourage bike users and incentivise the use of mass transit projects. It is recommended that the matter may be assigned to the urban unit to study viability and to frame policy in coordination with the excise and taxation department.

Currently, there are 16.5 million vehicles registered in Punjab, of which 13.5 million are motorbikes and the PMA with an average levy of Rs50/motorbike wants to earn a revenue of Rs675 million/annum.

The PMA also wants to impose a levy on the property tax on those properties located adjacent to roads with the mass transit lines/network.

“It is recommended that the matter may be assigned to the urban unit to study the viability of levying mass transit tax on the properties adjacent to [the] mass transit corridor and frame policies in coordination with the excise and taxation department.”

It has also proposed relocation of competing modes on the Orange Line and Multan Metrobus system. According to the PMA, a significant ridership is being captured by competing modes on the Orange Line Lahore and Multan Metrobus system. These competing modes mainly consist of motorcycle rickshaws.

“The PMA had already taken up the matter with the transport department for giving directions to relocate the parallel/competing modes to the designated alternative feeding routes; thereby, transforming their role from competing to supporting modes. This can result in [a] significant increase in ridership and reduction in subsidy.”

Moreover, the PMA wants its share from the parking fees of the district governments collected from those places located along the PMA-owned mass transit corridors and feeder bus routes in Punjab.

It proposes that 30 per cent of the share of parking fee collected by the district governments from parking lots located along the PMA-owned mass transit corridors and feeder bus routes in Punjab may be transferred to the PMA.

Inayet said that the authority is pushing for all these initiatives not only to increase riders for metro systems but also to minimise the amount of subsidy by the government.

“The PMA has prepared these proposals after extensive deliberations and keeping in mind all the possibilities attached with it. The target is to make the metro bus system a profitable entity,” he added.

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