One of the sectors that has faced the brunt of the lockdown is the urban transport sector. The Covid-19 pandemic has affected the long-term sustainability of operators of mass transit systems due to decreased or zero ridership and thus zero revenues. The virus outbreak has delayed ongoing and planned projects in the sector due to a shortage of funds and labour, and affected supply chains. Though metro services still remain shut at present, the government has permitted bus operations with due attention to physical distancing norms and with reduced ridership. However, going forward, the urban transport sector is going to need financial and technical support from the public as well as private sector to get back on its feet. Indian Infrastructure presents views of leading experts on the impact of Covid-19 on the sector’s performance…
What has been the impact of Covid-19 on the urban transport sector?
S.K. Gupta
The Covid-19 pandemic occurred during the peak months for construction activity in the project-ColabaBandra-Santacruz Electronics Export Processing Zone, fully underground metro corridor in Mumbai. Works were earlier being carried out at the rate of 1.5-2.5 per cent of the total project volume per month with about 15,000 workers. When the nationwide lockdown was imposed, all activities came to a standstill. However, the Maharashtra government was pragmatic and allowed certain activities to resume by end April. The large-scale migration of labour brought down the labour force from 15,000 to about 4,000, but this has now revived to around 9,000. The entire time period from March to September has been difficult for projects as well as the industry. Even now, the performance rate is somewhere around 25 per cent of pre-Covid levels.
Abhay Kantak
The direct impact of the lockdown has been on the urban transport sector, with public transport services being stopped. Metro operations have been completely shut for the past few months. These metro projects are usually developed with significant amount of borrowed capital. The lack of ridership have impacted fare-box revenues and thus constrained meeting the debt service obligations by the operators. Metro operations for most cities in the country have not been financially feasible. The fare-box revenues have been unable to cover the operation and maintenance (O&M) cost in most cases, leave alone the capital costs. So, the revenue gap to meet operational costs and debt repayment obligations has further widened in the lock-down period. However, there have been savings on variable costs such as power and fuel though fixed costs are still being incurred in the metro sector.
City bus services have also been impacted during the pandemic. Governments have prioritised spending on metro projects over funding city bus services. City bus services are also essential and critical services, which provide last-mile connectivity, have been largely neglected in post-Covid and pre-Covid times. The labour exodus from cities has impacted metro construction works which are on-going in several cities.
Vishal Khanama
The urban transport sector is one of the most affected sectors due to the outbreak of Covid-19. The Ahmedabad bus rapid transit system (BRTS), the public bus transport service in the city, has also been affected due to the pandemic as public bus services were completely stopped during the lockdown. It resulted in a huge loss of fare revenues from day-to-day operations. However, most of the players in the sector have invoked the force majeure clause for compensation against the revenue losses incurred due to the pandemic.
What has been the industry/organisation’s response to the pandemic?
S.K. Gupta
Along with the prevailing pandemic situation, restrictions on international trade and supply chain blockages affected the industry. Mumbai Metro Rail Corporation Limited (MMRCL) laid special emphasis on boosting the morale of various stakeholders such as its own engineers, contractors and consultants, and engaged in constant dialogue. Besides, it made sure that it put safety protocols in place for on-site workers with regard to accommodation for them. All the contractors were provided with some financial support through the regular release of payments to ensure that they stayed afloat during the pandemic. MMRCL also utilised the lockdown period to clear financial backlogs that had accumulated over a period of time. So, the major focus has been on extending financial and moral support to contractors as well as workers during the pandemic.
Abhay Kantak
For the existing operators, the immediate action is to find ways the debt payment obligations get addressed through re-negotiations or through fiscal sops. All operators are planning their operation strategy for a post-lockdown world. Restarting the stalled construction work is a priority for projects under construction.
Vishal Khanama
Ahmedabad Janmarg Limited, a 100 per cent subsidiary of the Ahmedabad Municipal Corporation, has been actively involved in essential operations and services during the pandemic. While public transportation was halted during the lockdown, bus services were used for the transportation of paramedical and other staff involved in providing essential services. The services of the BRTS were also used by hospitals for other purposes such as collection of samples from different places across the city. Besides, the buses were used for transportation of passengers from international and domestic airports to the designated quarantine centres.
Ahmedabad Janmarg Limited has now resumed services for public transportation as the government has granted permission to start public transport services at 50 per cent of the seating capacity. Currently, the buses are not being operated in the containment areas of the city. There has been a drastic decline in the use of bus services by the general public. However, Ahmedabad Janmarg Limited is sanitising its buses, depots and stations on a regular basis and ensuring that physical distancing is being maintained at all the stations and in the buses. Besides, it has also tested its entire staff for Covid-19.
What is the outlook for the sector based on the current situation?
S.K. Gupta
Due to the pandemic, a lot of time that could have been utilised for construction activities has been lost. However, major issues such as return of migrant labour and supply chain blockages due to restrictions on interstate transport are now fairly resolved and only issues pertaining to international travel restrictions have to be addressed. The status quo in construction activities is expected to be restored by October 2020, as in August 2020 itself 800 metres of tunnelling work was completed. The only issue that could hamper the flow of routine work is Covid-19 cases emerging on and off among the workers as that could lead to delays.
Abhay Kantak
Mobility patterns are likely to change due to the pandemic as people are getting used to working from home and remote connectivity is being accepted more and more. So, the need for travel, like in pre-Covid times, is probably not going to be the same in the current scenario. Ridership levels will not be as high as before at least in the short term. Physical distancing norms will be a hindrance for public transport such as metros. However, other urban transport operators such as Ola and Uber, which do not have very high passenger occupancy, will come back to normal levels sooner than mass transit systems. Besides, there is always growth in ridership as the population increases in cities. Therefore, ridership levels are expected to be restored to normal levels in a couple of years, though not immediately.
Vishal Khanama
Currently, the public transportation sector is drowning due to revenue losses during the lockdown. However, with due attention to precautionary measures, transit services are being resumed. As public transport plays a crucial role in the day-to-day life of citizens, it is crucial to resume bus services while following the stipulated norms. As most of the state transportation units are not operating at their full fleet and seating capacity, there is a need to provide funds to them to make up for the losses incurred.
What will be the key priority areas in the post-Covid world?
S.K. Gupta
In the post-Covid era, the health of workers will be the topmost priority, as they are the backbone of the project, and an effective system will be introduced to detect Covid infections at the earliest. Another area of focus will be assessing the financial condition of contractors and it is anticipated that resumption of construction is bound to improve contractors’ financial situation. The morale of the people too has to be boosted in the post-Covid era in order to ensure that certain levels of productivity are achieved and it will be necessary to cope with the chnaged working conditions as well. As far as targets are concerned, around six months have been lost due to the pandemic-driven disruption. This is expected to have certain consequences that cannot be waived off fully. However, with construction activities slowly picking up pace, the effect can be minimised.
The pandemic has led to a reduction in human contact due to which the digital medium is being exploited to a great extent. However, in construction activities, the scope of utilising this medium is limited as remote monitoring of projects can only be carried out to a certain degree. For a detailed inspection of the project, engineers have to go to the site and this cannot be avoided.
Abhay Kantak
There is a need for a sustainable financing framework for urban transportation projects. Today, a situation like Covid-19 has exposed the fragile financing framework for metro projects and the lack of cash flows to support activities. Therefore, a sustainable financing strategy that can handle such shocks is critical. The needs of a financing mechanism for city bus services cannot be overlooked any longer.
Further, there is also a need for a stable and robust institutional framework that not only takes care of staffing and financing but also integrates the overall urban planning process of the city to allow for public transit including inter-mediate public transport and the informal sector.
The framework should also incorporate the priorities and requirements of citizens and the city. Moreover, cities do not just require a metro policy. Different modes of public transit need to also be made available to citizens.
Public-private partnerships (PPPs) are very unlikely to work in urban transport projects as these are highly capital intensive. The funding from fare-box revenue to finance metro or bus operations is not a very feasible model. In such cases, subsidies would be required. The uncertainties associated with building a metro project in a city are very high. Therefore, for such projects the engineering, procurement and construction model is more feasible than PPPs. Therefore, while construction needs to be publicly funded, the O&M of a project can be handed over to a private operator.
Vishal Khanama
The key priority areas of Ahmedabad Janmarg Limited are maintaining physical distancing, sanitisation of all the used areas of the system, and ensuring compulsory usage of masks for staff and the public availing of the services. It aims to focus on increasing the bus headway so that the passenger load per trip can be reduced.