Delhi: 2020 DTC meeting raised questions on AMC, passed after ‘clarifications’

The Delhi Transport Corporation’s (DTC) decision that a Rs 4,265-crore 12-year annual maintenance contract (AMC) for proposed 1,250 low-floor buses would kick in before the expiry of a three-year warranty period already embedded in the purchase order had faced questions during the meeting of the public transporter’s board, according to official records.

After “clarifications” that the warranty does not cover several consumables required for smooth operations of the buses, the DTC board, in its November 27, 2020 meeting approved the deal, records show. Speaking to The Indian Express on Thursday, one board member insisted that the approval was “unanimous without any dissent note”.

The purchase order was given to JBM auto and Tata Motors on a 70:30 ratio. The maintenance contract also went to the vehicle manufacturers “as they were expected to mandatorily bid for AMC as well”. However, both the purchase and the AMC were put on hold on June 12. On June 16, the Delhi Directorate of Vigilance formed a three-member committee to “examine irregularities, if any, vitiate the tendering process and if yes, whether there is any criminal misconduct attributable to public officials…”

The committee has been directed to submit its report to Lt-Governor Anil Baijal within two weeks.

AAP MLA and Transport Minister Kailash Gahlot has been the DTC board chairman since 2018. Apart from Gahlot, the meeting was attended by DTC MD Vijay Kumar Bidhuri, then transport commissioner Manisha Saxena, secretary (finance) Sandeep Kumar, secretary (land and building) JP Agrawal.

According to the records of the November 27, 2020, DTC board meeting, “It was pointed out by the board that since all buses were covered under the warranty for a period of three years or 2,10,000 km, whichever is earlier… the AMC should start after the warranty period.”

“In this regard, it was clarified that in the AMC rates quoted by the bidders, the items covered in the warranty include only major assemblies/sub-assemblies like CNG engine, automatic transmission, front axle, rear axle, etc. The warranty of bus does not include cost of consumables like spark plugs, H.T. cables, filters, fan belts, lubricants, coolants, batteries, tyres, brake pads, break drums, break liners, etc., required for regular maintenance during operation of buses,” the minutes of the November 27 meeting state.

The DTC MD also told the board members that the manufacturers would also be responsible for installation of plant and machinery required for providing comprehensive AMC and that the “AMC rates have been obtained after competitive bidding and there are no other parties in the market for maintenance of ultra-modern low-floor buses and already a lot of deliberations have taken place with the bidders.”

Incidentally, the warranty conditions stipulated in the tender inviting bids for the buses had stated that for the first three years, the companies delivering the buses “will be responsible for any defect or failure of buses or equipment provided in these buses due to defective design, material, or workmanship, for a period of three years or operation of buses up to 2,10,000 km… The rectification/ replacement of failed components/ equipment will have to be undertaken by the contractor free of charge at purchaser’s (DTC) workshop/ depot.”

However, a senior DTC official said, “The AMC charges of the first three years exclude the cost that would already be covered by the warranty. We are quite certain that the deal is transparent and has been reached at after due diligence.”

The Delhi government had earlier announced that after the induction of the low-floor buses, the total fleet of DTC buses, currently at 3,760, will increase to 4,760. The DTC’s last purchase of new buses was in 2008.