Ashish Chandra, PricewaterhouseCoopers

1. BUS KARO - Talking Transit
Innovative Financing Mechanisms
Ashish Chandra
February 2015

2. PwC
Current Issues
“a burgeoning population, a strained transport
network, polluted streets and inadequate
housing”
“Thick fog hung over the city and roads
were dirty and dangerous”
London
1970
London
2015
World’s Leading Financial and
Cultural Capital with 5th highest
GDP in the world
(Source Brookings,2014)
Institutional Reforms and Capital Investment led development strategy
• “London Plan ” – Long term development plan, re-thinking London’s economies and
economic futures
• "Fares Fair" – Policy to improve financial health of GLA
• Centralized governance – Devolution of Met Police, TfL and other city operations to the
Mayor
• Large scale infrastructure construction to prepare for future – the M25 (outer ring road),
Blackwall Tunnel, Westway, the Woolwich Ferry and the Thames Barrier
London
“The city had begun to sprawl far beyond
the boundaries”
“people were living in deplorable conditions
and suffering all kinds of nuisances and
inconveniences because of the irregular way in
which our towns and cities have grown up” Source:
The rise and fall of the GLC – BBC News, 31st March 2016.
http://www.bbc.com/news/uk-england-london-35716693

3. PwC
Public Transport can become the preferred mode with targeted
improvement in service quality & customer experience
02
Service Frequency
Incentivize operators to align number
of trips and timings with the routes and
travel patterns of Mauritian population
04
Technology adoption
Implementing smart ticketing
systems, journey planner,
information dissemination systems
Focus Areas for
Investment &
Improvement
Fleet renovation
Incentivize private sector for investing
in modern, fuel efficient buses
03
Accessibility and coverage
Expanding the catchment area served
by each bus stop/ bus station, reduce
access & egress time
01

4. PwC
Modernizing City Bus Services with Innovative
Financing
• Existing Bus Operations and Need for Upgrade
• Infrastructure Improvements
• Fleet Renewal
• Investment in Technology
• Accessibility
• Sources of Financing
• Real Estate Asset Monetization
• Non-Fare Revenue
• Fare Restructuring
• Local Taxation
• Private Participation
• Fully/Semi-Regulated Bus Services

5. PwC
Section 1
Benefits of Investing in Transit Services

6. PwC
Most of the bus transport agencies in India are facing financial
cash flow crunch to even meet its operating expenses
0% 25% 50% 75% 100%
BEST
BMTC
Delhi (DTC)
Odisha SRTC
Rajasthan SRTC
Revenue per passenger as a percentage
of operating cost per passenger
2014-15 2013-14 2012-13
0% 10% 20% 30% 40% 50% 60%
BEST
BMTC
Delhi (DTC)
Odisha SRTC
Rajasthan SRTC
Operationally, higher the proportion of
variable costs, financial viability improves
(2014-15)
Fuel and lubricant cost as a % of total cost
Interest cost as a % of total cost
Source: MORTH, PwC Analysis
…limiting their abilities to invest in transport services as well as improving
commuter experience

7. PwC
Funding of State Transportation Companies through different
sources
 Due to heavy operational losses, State
Transport Undertakings are dependent on
funds for State and Central govt. in order to
provide adequate transport and infrastructure
facilities
 The sources of funds are different for different
State Transport Undertaking
 The different sources of fund for Maharashtra
and Karnataka SRTC are given in the table
below:
State Transport Undertakings
Maharashtra SRTC Karnataka SRTC
Amount (in
Cr. Rs.)
Percentage
Amount (in
Cr. Rs.)
Percentage
Internal
Resources
120.02 28% 286.6 56%
From State
Government
302.59 72% 0.0 0%
From Central
Government
0 0% 0.0 0%
Through
JNNURM
0 0% 108.6 21%
Loans and
other
borrowings
0 0% 117.0 23%
Bus Rapid Transport System
 BRT systems in India are funded by Central
Government for about 40-50% of the cost of
the project thought JNNURM
 Majority of BRT Systems have also
implemented parts of the BRT project like
construction of bus stops, bus operations etc.
through PPP model
 The list of BRT systems in India which are
PPP based are:
• Ahmedabad
• Pimpri-Chinchwad
• Vishakhapatnam
• Indore
• Rajkot
• Bhopal
• Pune &
• Surat

8. PwC
(1000.00)
(800.00)
(600.00)
(400.00)
(200.00)
0.00
200.00
0 10 20 30 40 50
OperatingLoss(Rs.'000per
PaxKM)
Passenger KM
Operating Loss per Passenger KM 2013
(10000.00)
(8000.00)
(6000.00)
(4000.00)
(2000.00)
0.00
2000.00
0 5000 10000 15000 20000 25000
OperatingLoss(Rs.'000perBus)
Fleet Size
Operating Loss per Fleet Size 2013
Higher fleet size tend to increase losses which are proportional to
size of operations and passengers carried
Delhi TC
Delhi TC
Mizoram STC
Tripura
RTC
50% of STCs are operating below
80% recovery level due to low fares
and huge discounts given to
students, senior citizens etc.
Average Operating Loss per Bus =
Rs. 589,000 per Year, Rs. 13,500 per Year
per Passenger KM
0%
20%
40%
60%
80%
100%
120%
0
2
4
6
8
10
12
Operating Ratio of STCs
Freq Cummulative Freq
“PwC findings from the MRVC study suggest
that 80% commuters are willing to pay
10%+higher fares for higher quality of service”

9. PwC
Managing the fleet and continuous renewal is important for added
customer convenience
Features of a low floor bus
 Low-floor buses have the bus
floor height of at most 400mm
above the road surface
 The floor surface can further be
lowered by at least 80 mm to
bring the floor at the front
entrance to a height of the kerb
 A retractable ramp can also be
deployed to facilitate access and
egress to the kerb
Why transit agencies go for Low floor buses?
 To provide easier access for all passengers,
including people with disabilities
 To provide transit services for the growing number
of elderly people with fixed route service rather
than special transportation
 To reduce stop dwell times by achieving faster
boarding and alighting times
 Passengers convenience in low floor buses is
overwhelmingly positive and use of these vehicles
have the potential to effectively compete with the
private cars for patronage from non-captive public
transport users
Low Floor Bus High Floor Bus
 The use of low floor buses instead of high floor buses is
fast become the norm in the developed world
 More than 85% of buses in Europe are low-floor buses
 The use of these buses is more prominent for intra-city
purposes, where the number of stops
(boardings/alightings) are more

10. PwC
But High-floor buses are better economically as compared to Low-floor buses
Parameter High-floor Bus Low-floor Bus
Cost • Lower costs
• Higher Costs due to complexity in design
• 20-30% more than High-floor bus
Maintenance • Low maintenance cost • High maintenance cost if run on bad roads
Fuel Efficiency
• Better fuel efficiency
• Average mileage of 2.7 Km/L (Volvo buses)
• Lewer fuel efficiency
• Average mileage of 2.4 Km/L (Volvo buses)
Capacity
• Higher capacity due to less impact of wheel
wells
• A 12m Volvo bus can carry around 86
passengers
• Lower capacity due to less impact of placement
of wheel wells
• A 12m Volvo bus can carry around 70
passengers
Vehicle Towing
• Easy, as can be towed by a conventional tow
truck in case of breakdown
• Complex, as may require special type of
towing vehicle
Life Cycle • Almost similar operational life of 12 years
Emissions
• Emissions depend on the type of engine and fuel used
• Not much difference and can be same for both type of buses

11. PwC
Economic comparison of a operating minibus with respect to a standard high
floor bus
Parameter Standard high-floor Bus Minibus
Cost • Around Rs. 20-30 Lakhs • Around Rs. 10-15 lakhs
Operating Cost • Average operating cost of Rs 18.50 per Km • Average operating cost of Rs. 15.00 per Km
Fuel Efficiency • Average mileage of 3.75 Km/L • Average mileage of 6 Km/L
Passenger
Capacity
• Can carry around 60-80 passengers at a time
• Suitable for carrying 10-20 passengers at a
time
Emissions • Causes lower level of atmospheric pollution • Causes higher level of atmospheric pollution
Maneuverability
• Requires proper wide roads to operate
• Not suitable for operating in high population
density regions and on weak bridges
• Can be easily operated in congested areas and
weak and low brigdes having restrictions on
vehicle dimentions

12. PwC
New Electric buses can be operated profitably with a ROI of 8 years
 Significant improvement in technology of Electric buses
 Reduction in the recharging time of batteries due to regenerative braking technology; from over 8 h to about an
hour
 Range of 250 Km in a single recharge
 Buses can even recharge during 15 mins turnaround period
 Long battery life; 4,000-10,000 recharging cycle
 Multiple manufacturers available (Build Your Dream-BYD, Proterra etc.)
IISC Study: Electric vs Diesel buses for
Bangalore
 Purchase cost of Electric Bus: Rs 3.0 Crore
 Purchase cost of Diesel Bus: Rs 85 Lakhs
 Operating cost of Electric Bus: Rs 12 per Km
 Operating Cost of Diesel Bus: Rs 28 per Km
 Considering same fare price and passenger
number, Diesel buses break even in 4 years
and Electric buses in 8 years
(30,000,000)
(20,000,000)
(10,000,000)
-
10,000,000
1 2 3 4 5 6 7 8 9 10 11 12 13
NetProfit
Years
Electric Bus Diesel Bus
Break Even
*IISC Bangalore Study- Air-pollution and economics: diesel bus versus electric bus

13. PwC
Section 2
Sources of Financing

14. PwC
Transit authorities like BEST & BMTC need to focus on innovative revenue
sources which leverage their Core Values, and Key Strengths
Real Estate
Development
Sustainability
Safe Mobility &
Services
Community
Involvement
Stakeholder
Engagement
Possible Business
Models for Commercial
Exploitation of Land Assets
Asset Value
Maximisation
Development of Real estate in sync with the
micro markets and ToD characteristics –
Commercial, Office space, residential and
hospitality
Concept of the
Business Model
Utilization of spaces available for passenger
centric amenities, retails, parking, ATMs, etc.
rental or pay-&-use system based businesses
Core Values of
Transit Authority
Key Strengths
Depots /
Stations Buses / Rolling
Stock
High Ridership
Smart Card,
Payment
Mechanism
Source: PricewaterhouseCoopers Pvt Ltd (PwC)
Interchange or
transport hubs
Provide seamless connectivity for moving
people from one point to another intra or
inter City through various modes- metro, bus,
railway, etc.
Social
Infrastructure
and facilities
Development of social infrastructure such as
sports, healthcare, education, affordable
housing, recreational facilities, etc.
Renewable
energy
Use of facilities for rooftop solar power and
other means of renewable energy for captive
use or 3rd party commercial sell

15. PwC
While in case of Kochi Metro, we are implementing Alternate Revenue Models linked to Asset Value
Maximisation, Service Delivery, Enhanced Customer Connect or Associated Brand Value
BEST Undertaking •
10
Transit Company or
“Mobility Service Provider”
Partnership with
Mumbai IPL
Team
Source: PwC Analysis

16. PwC
Financing feasibility depends on ability to monetise existing assets
while enhancing the asset value and revenue potential
13
Category 2 Category 1
Category 4 Category 3
HIGH on Ease of
Implementation
LOW on Ease of
Implementation
HIGH Revenue
Potential
LOW Revenue
Potential
• These are low hanging fruits
• How can these land assets be
monetized on priority while
maximizing revenue potential for
the Undertaking?
• High potential, but difficult to
implement due to various reasons
arising from the aspects of
regulatory, stakeholder interests,
etc.
• How can the Undertaking
enhance the implementability of
commercial exploitation of sites?
• These are low hanging fruits,
however, with low commercial
potential
• How can revenue potential from
these sites be enhanced?
• Typically low on priority for
monetizing assets
• How can the ease of
implementation as well as
revenue potential be enhanced
for these sites?
• What alternate strategies can be
adopted to benefit
tangibly/intangibly? Source: PwC Analysis

17. PwC
Case Study – Assisting BEST Undertaking in Mumbai to formulate
strategy for enhancement of asset value and revenue potential
 Assisting BEST Undertaking for revenue maximization by commercial development of 71 sites
admeasuring ~200 acres and spread across city
 Key considerations
How can it best leverage land and transport use
integration?
How can it help city in…
• Improving citizen’s commuting experience,
• Decongestion, especially in suburban railway
station area
• Provide seamless inter-modal transport
connectivity
• Enhance public transport usage
How strategically can it employ its assets and
resources – both hard and soft to maximise its
operating and non-operating revenues

18. PwC
Existing/
emerging
Residential and
Institutional
Area
CBD
Overview of approach for revenue enhancement strategies for
BEST…
Rail/Metroline
Transit hub /
(if not
available),
mixed-use
development
Residential or
commercial
use – cum –
bus transport
facilities
Multi-modal
transport
interchange hubs
1) Identify locational advantage
2) Plot specific approach to assess best use in-line with the core value of the transport agency
3) Create mix of commercial and operational plan
4) Identify implementation challenges and propose mitigation strategies/alternate solutions
Station
Station
Area/City – Entry Points
Kurla Bus Depot –
Kanakia Zillion
(along LBS Road)
Integrated
commercial-
cum-bus depot
/ station
development

19. PwC
…alternate strategies where asset value maximization through real
estate development may be difficult to achieve
(Primarily Category 4 assets and few from Category 3)
 Certain site are leased from other entities with restricted land usage rights
 Certain site fall under restricted areas and difficult to obtain approvals and clearances
 To improve potential from such sites, alternate strategies being adopted
 For instance,
 Utilization of such land resources for BEST’s own admin and housing requirement
 Allied commercial activities wherever permissible such as passenger centric retail,
captive-cum-public fuel stations
 Bundling of two or more plots – redesign traffic operations freeing up some
developable area
 Alternate revenue streams like creation of pan-city e-charging infrastructure,
renewable energy (roof-top solar), etc.

20. PwC
Section 3
Value for Money in Private Sector Participation

21. PwC
Private Sector participation will require ccompetitive policies to incentivize
better perf0rmance, enhancing customer experience, and reducing government
support
Number of
operators
Single
Multiple for region,
Single on Route
Multiple for region
and routes
Multiple
Nature of
competition
Monopoly
Regulated
Monopolies
Service competition
to acquire market
Free market
competition
Fare structure
Government Owned
& Regulated
Regulated Regulated
Unregulated
(with oversight)
Market/ Demand risk
Choice for users
Role in operations planning
Cross subsidies
Innovation in service – price combination
Role in capacity planning
Low High
Low High
Low High
Low High
Low High
High Low
Example: India, London Bus Mauritius Sri Lanka IPTs,

22. PwC 14
Implication on
nature of investors
RealEstate
• High return
expectation, shorter
investment timeframe
•Capital competes with
other high-risk, high
growth sectors
• Low risk appetite, long
investment timeframe
•Capital competes with
similar sectors in other
countries
Riskprofile
Performance
Fare & Non Fare
Revenues
Metros, Terminals
Risk bundling across transport modes would improve
financing ability
Indian infrastructure Outlook: Opportunities for Japanese corporates •
Source: PwC Analysis
Toll Roads, Parking
and Vehicle
Registration
Market
 PPP’s in India typically carry demand
and revenue risk
• Occasionally, also Real Estate
risk bundled in
 Government actions expected
 PPP structures being revisited
 Sector reform & regulation to
make Demand risk financeable
 Partnering strategies, and choice of
business-models, can help align risk
profile with appetite

23. PwC
Summary
 Asset Value Maximisation through enhanced
monetisation potential
 Improving Customer Services and rider quality is
important to drive up demand
 Alternate non-fare revenue sources depend on ability to
monetise customer connect
 Fare rationalisation could be necessary to develop
sustainable financing sources

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