Pune: The financially stressed Pune Mahanagar Parivahan Mahamandal Limited (PMPML) has decided to terminate the service of 1,060 buses-on-contract using the Force Majeure clause. Six contractors provided these buses to the PMP on a contractual basis. The PMPML has also suggested options to the contractors if they wish to continue the contracts.
PMPML has a total of 1,800 buses in its fleet and employs nearly 10,000 employees. PMPML has suffered losses of more than Rs 100 crore due to the coronavirus lockdown. In Pune city, PMP bus service is only available for persons engaged in essential services while in Pimpri-Chinchwad city the bus service is available on select routes, but the response is not good.
If the contractual buses are not operational, PMPML has to pay 50 per cent of the stipulated amount per bus to the contractor. As per this clause, PMP will have to pay Rs 15 crore to the contractors. So PMP has informed these contractors that it is not possible to pay this amount and that contract will be terminated or certain changes in terms and conditions need to be made.
WHAT IS FORCE MAJEURE?
Force Majeure provision is applied in a contract to discharge the parties from their contractual obligations in an event or effect that can be neither anticipated nor controlled by the parties involved. In PMP's case, the contract with the contractors states that if for any reason the bus transport is non-operational for consecutive 60 days, then PMPML can terminate the contract. PMPML can also consider continuing the contract on certain conditions.
Nayana Gunde, President and Managing Director of PMPML, said, "The financial condition of PMPML has worsened. We have to take certain decisions to save this company. In accordance with that, we have issued notices to contractors about the termination of the contract."
Shailesh Kalkar of Traveltime said, "Bus contractors are aware of the present situation, but we have also made huge investments. We are paying the salaries of our drivers. We have purchased the buses and provided those to the PMPML on contract. We have to pay EMI's to the bank, and PMPML should consider this aspect too."
Pranjali Deshpande, Independent Practitioner, Sustainable Mobility said, "PMPML service is vital for Pune and Pimpri-Chinchwad cities. If the contract is terminated, the public transport system in these cities will collapse. The state government should intervene and provide financial assistance to PMPML."
BUSES ON CONTRACT
• 12-metre long CNG buses - 920 (Rs 55 to Rs 60 per kilometre)
• 12-metre long Electric buses - 115 (Rs 60 per kilometre)
• 9-metre long Electric buses - 25 (Rs 40 per kilometre)