BEST bidder sought free bus stop ride, tenders cancelled

Mumbai: Quick action by Brihanmumbai Electric Supply and Transport undertaking (BEST) administrator Lokesh Chandra has saved the city from being taken for a very expensive ride by an unscrupulous operator apparently out to cheat taxpayers.

BEST cancelled the tenders for advertising and marketing rights to 2,400 bus stop queue shelters (BSQS) on Thursday afternoon citing administrative reasons.

On the face of it, the highest tender (H1) received by BEST was from Proactive Media Solutions at a whopping Rs2,465 crore--too good to be true considering that the H2 value (second-highest bid) stood at only Rs870 crore and offered BEST an annual revenue of Rs43.5 crore.

The third and fourth bids were for Rs540 crore and Rs440 crore respectively from Prithvi Advertising (H3) and Prakash Arts (H4).

BEST General Manager Lokesh Chandra told First India, “When we analysed the bids, we were struck by the distinctly different revenue-sharing model proposed by the highest bidder, which did not factor in year-onyear revenue growth. When we sought an explanation, the H1 bidder said it was their trade secret. For the first 17 years of the contract, BEST would receive a fixed revenue that would jump over 40 times in the 18th, 19th and 20th years of the contract.”

Another Brihanmumbai Municipal Corporation (BMC) officer explained: “The agreement contains an exit clause, which gives parties the option to rescind the contract if extreme changes occur in the business ecosystem. For example, if new digital and technological innovations become more cost-effective and replace the existing advertising panels, BEST could exit the agreement. The H1 bidder sought to exploit this clause.”

The bidder offered a revenue model that would pay BEST Rs20-Rs22 crore each year for the first 17 years, after which the annual revenue accruing to BEST would scale up to Rs56 crore (17th year), Rs650 crore (18th year), Rs720 crore (19th year) and Rs750 crore (20th year). However, if the contractor chose to exit the contract after 17 years, they would in effect have provided a revenue even lower than the H3 bidder (Rs440 crore) in the current case, this person said.