Response to reports in the media on audit of DIMTS by CAG and references to the allegations made in the previous CAG reports against DIMTS and its projects

Date: 30/01/2014

On Wednesday, 29 January 2014, reports appeared in several newspapers announcing the Delhi Government’s decision to allow an audit of DIMTS by CAG. While mentioning this, some of the allegations made against DIMTS in the previous CAG reports have also been highlighted.

DIMTS has always submitted its response to the Transport Department on all the questions raised by CAG in its previous reports. However, questions continue to be raised on its functioning that creates negative perception in the public mind about the workings of DIMTS and damages its reputation. It is therefore imperative that the media as well as general public are made aware of the facts.

It has been mentioned in the papers that the Government’s decision to allow audit of DIMTS by CAG was prompted by the complaint from some private vendors who accused DIMTS of “sub-letting” its projects without following proper procedures. On this complaint we would like to reiterate that DIMTS’s internal team works on all its projects. Certain functions of some of its projects are outsourced for which technical and other resources are taken from the market like many other organisations or even the government. This is done after due diligence. At all times, all functions of the projects and the quality control are carried out under the supervision of DIMTS. Additionally when DIMTS executes projects where government money is involved we follow all tenets of financial prudence and comply with government standards.

Further on the various points raised against DIMTS in the previous CAG reports, and quoted in the papers our response is given below.

1. On DIMTS being favoured by the Transport Department, Delhi Government which has ignored all financial procedures and given DIMTS many projects on nomination.

• DIMTS was consciously formed by the Government in public interest after several deliberations and discussions with independent consultants. The main purpose of creation of this company was to create an organisation which has full technical and financial powers to tap the best talent in the market to implement some important transport related projects. This is explicitly reflected in Cabinet Decision (Cabinet Decision No. 1032 dated 10th February, 2006) for the constitution of DIMTS as a special purpose vehicle with objectives to create capacity with a modern work culture and procedures to manage the development and operation of urban transport infrastructure and services, including integration of multi-modal systems and services. The creation of such a company in itself entails that work will be given to it on nomination basis.

The Government has never exceeded this mandate and given any non-transport related project to DIMTS on nomination.

• Further the Shareholder’s Agreement between the Government of Delhi and IDFC Foundation provides that DIMTS shall, with regard to IMMPTN (Integrated Multi-Modal Public Transport Network) projects, provide:
• conceptualization, design, facilitation and bid management services,
• project development and management services and management services for government-owned assets.
• The General Financial Rules (GFR) no.176 explicitly permits outsourcing of work on nomination to a particular source for specific reasons to be recorded in writing and GFR 184 permits outsourcing of a job to a particular contractor for reasons to be recorded in writing.
• The Cabinet Decision No. 1032 dated 10th February, 2006 for constituting DIMTS as an SPV, the Cabinet Decision No. 1092 dated 4th July, 2006 to constitute DIMTS into a 50:50 joint venture and authorising Transport Department to negotiate a draft Shareholders Agreement (SHA) between Government of Delhi and IDFC for the Cabinet’s consideration, the Cabinet Decision No. 1232 dated 25th June, 2006 approving the draft SHA annexed with the Cabinet Note, the consequent SHA dated 4th July, 2007 adequately and substantively fulfil the requirements of GFR and subsequent Cabinet Decision No. 1473 dated 30th September, 2008 detailing the the kinds to works to be assigned to DIMTS, Cabinet Decision No. 1752 dated 9th March, 2011 approving the draft Office Memorandum detailing the terms of engagement of DIMTS as well as encapsulating previous decisions of the government on record and the Office Memorandum dated 6th April, 2011 more than abundantly fulfil the requirements of General Financial Rules of Government of India.
• DIMTS as mentioned above is a 50:50 joint venture of Government of Delhi and IDFC Foundation (a not-for-profit company constituted under section 25 of The Companies Act, 1956). There is nothing unique or unprecedented about the corporate structure of DIMTS where government is a 50% or lesser shareholder or award of work on nomination basis by government to such an organization. There are several instances of the existence of private special purpose organizations set-up in partnership between state/central governments and private organizations to provide the government with certain skill sets, knowledge sharing and work culture which are not available within the government itself. It is only after observing the successful working of several such companies on record in India that the Government of Delhi formed DIMTS. Yet there is never any question raised on the award of work on nomination to these companies.

Some of the companies that are formed on similar ownership pattern as DIMTS are:

• Urban Mass Transit Company Ltd (UMTC) (50% IL& FS and its affiliates+ 25% AP Govt+ 25% MOUD,GOI)
• Road Infrastructure Development Company of Rajasthan (RIDCOR) (50% IL& FS and its affiliates + 50% Rajasthan Govt)
• PDCOR Ltd (50% IL& FS and its affiliates + 50% Rajasthan Govt),
• Mahaonline Limited: JV of Maharashtra Govt (26%) & TCS (74%)
• Tamil Nadu Road Development Corporation Ltd (TNRDC) (50% TN Industrial Development Corporation + 50% IL & FS). Incorporated May 1998
• ICICI-West Bengal Infrastructure Development Corporation (I-WIN): West Bengal Govt + ICICI (ICICI 74%). Incorporated in Jan 1995. Now major stakeholder: Concast Infrastructure Pvt. Ltd
• National Institute of Smart Government (NISG) (51% Private & 49% public)- refer NISG site http://www.nisg.org/. NISG works only on nomination.

The set-up of DIMTS is unique only to the extent that no dividend, i.e. share of profits, is given to the shareholders. It was resolved by the Board of Directors of DIMTS in September 2009 that no dividends are to be paid to its shareholders from any profit that may be earned from projects. All surpluses are retained within the company for strengthening its capital base, its professional capacities, research and exploration of new markets.

2. On DIMTS earning revenue of 27.41 crores from the operation of four clusters in 2011-12 and Transport Department paying DIMTS 42.89 crores for the operation of these clusters. Also payment to DIMTS for gap funding was not viable according to financial agreement.

• The cited amount of Rs. 42.89 crore has not been paid to DIMTS. A sum of Rs. 42.70 crore was paid by Government to concessionaires. Given that the ticketed earning from Cluster buses (which is deposited into Designated Account of Transport Department) during the same period was Rs. 27.41 crore, the viability gap met by the Government was Rs. 15.29 crore (Rs. 42.70 crore ticketed earning minus Rs 27.41 = Rs. 15.29 crore). Further viability gap includes monthly amortization charges towards capital cost of buses bought by concessionaire. It needs to be equally emphasised that no viability gap funding is made by Government to DIMTS. The viability gap is the difference between the ticketed earning and the payment to Cluster concessionaires.
• The Cluster buses carry around 1000 passengers/bus/day which now works out to close to a million passenger trips per day. They have achieved nearly 95% operational efficiency (operated trips as a percentage of scheduled trips) and have been appreciated and welcomed by the public.

3. On DIMTS being accused by Autorickshaw Drivers Union of favouring some companies to install the GPS integrated fare meters in the autos.

• The Delhi High Court through its order in 2010 had ordered GPS to be installed in all public service vehicles in Delhi. Further through an order from Supreme Court in August 2012 the auto permit limit was increased from 55,000 to 1 lakh. A public notice was published in the leading newspapers announcing the same and also mentioning the need to install the integrated fare meters. Auto unions had approached the Delhi High Court to challenge this decision on the installation of these meters which was rejected by the Delhi High Court through its judgement dated 17th September, 2012. The main reasons for integrated fare meter as also ratified by the High court Judgement was to provide commuters with
  • A safe and reliable mode of Transport(Panic Button)
  • A transparent and temper proof system of metering giving proof of travel
  • Stop harassment of commuters
• The Transport Department wanted the empanelment scheme to be formulated based on the existing regime, where the auto driver is free to purchase the Electronic Fare Meter from any vendor whose instrument is approved by the Weights and Measures Department. The Weights and Measures department has always checked the quality, reliability and accuracy of the meters and continues to do so with the new integrated fare meters.
• Based on the above Transport Department instructed DIMTS to empanel vendors whose devices met the set technical specifications. These specifications were drafted in consultation with Transport Department. The process is open where in any vendor can be empanelled if his device meets the technical specifications laid down.
• DIMTS has no role in the quality check or sale of these fare meters. The vendors have to first get the approval for their devices from the Weights and Measures department then come to DIMTS for a check on the devices’ specification vis-a-vis backend protocol for the tracking of its location.
• Currently there are 10 empanelled vendors. GPS has been installed in over 21000 autos
• Additionally, the Transport Department in 2010 had allowed the auto drivers to collect 50 paisa per kilometre extra from the commuters to enable the permit holder to purchase, install, maintain GPS/GPRS and enable control room and dispatch. Thus the cost of meter is being borne by the commuters and not by auto drivers as has been perceived.

4. On DTC Management sending notice of termination of contract for failing to monitor the GPS in buses.

• DTC has not sent DIMTS any notice for termination of contract.
• The GPS devices installed in the Cluster buses are the same as those in DTC buses. However, there have been no issues in the monitoring of the Cluster buses. All data on location of Cluster buses are now in the public domain too, through the Delhi Transit Bus info application that DIMTS had launched some time back. All the information available through the app is based entirely on the GPS data. There have been more than 25000 downloads till date. It has been welcomed by the public and there are reviews on Google play to corroborate the same. There is complete transparency in this system.
• Proper monitoring of the buses can take place if operational discipline is maintained. This includes activities such as timely duty entry of the buses before the out-shedding and proper scheduling and routing, absence of which will impact the system.
• The GPS project was based on a deferred payment system. However, payment has been erratic from October 2011. This also seriously affects delivery of services by the vendors.

5. On delayed redevelopment of ISBT Kashmere Gate and increase in project cost as a result of the delay.

• We have not exceeded the budget. The budget for the first phase of the re-development of ISBT Kashmere Gate was Rs 75 crore and the entire work was completed within this budget.
• The renovated and modernised ISBT has been appreciated by all and has been called a world class ISBT.

6. On the Government being accused of giving DIMTS the tender to construct 1000 BQS (bus queue shelters) at Rs 100 crore during CWG. However, till the Games only 125 BQS had been constructed.

• DIMTS has constructed 750 BQS for the Transport Department and not 125.
• DIMTS was directed by GNCTD to undertake this work as a last resort when bidders refused to undertake the same as part of the bid process conducted for selection of construction contractors. The facts are as under:
  • The tender for 500 BQS was divided into 3 packages with 157 (package A), 165 (package B) & 178 (package C) BQS in each. The rates received for package A was Rs 12,08,760 and for packages B and C was Rs 14,54,300.
  • The tenders for Package B (165 BQS) & C (178 BQS) received were about 10.32% higher than the estimated cost, whereas for Package A the rate was 6.98% lower than the estimated cost.
  • The agencies which were lowest in Package B & C were asked to match the rate of lowest in Package A but they did not agree.
  • On refusal by the bidders of B & C to match the L-1 rate of Package A, the L-1 bidder of Package A was asked to execute the work for package B & C at the L-1 rate of Package A, but L-1 bidder of Package A also refused.
• Pursuant to the aforesaid, DIMTS was instructed to undertake the work. DIMTS was awarded the work at the rates matching the L-1 bidder i.e. lowest of all the packages and also lower than the estimated cost
• Given the urgency of the task, it was desired by the government that the BQS around Commonwealth Games venues be completed before the start of the games and approximately 200 BQS were identified in this category to be completed on priority. DIMTS took immediate action and completed 201 BQS before the Commonwealth Games.

On the matter of the audit of DIMTS by CAG, we would like to state that DIMTS is open to scrutiny by any agency for any money given to it in trust by the Government for payment to various stakeholders.

We request you to publish these clarifications in your newspaper promptly at a place as prominent as the original story.