Politics & Economics of 3 Wheelers ... Part 2 of 3.

The Telegraph on July 9th came out with the article: GOVT U TURN ON LPG CONVERSION. “The department (meaning: Transport Dept), is not in favour of conversion as we have found lots of demerits in old autos switching to LPG. Instead, we are planning to replace them with new autos and also catch the illegal autos,” stated RANJAN MAITY, the joint secretary of the Transport Department.

It is to be noted that autos have been successfully converted to LPG in cities like Bangalore, Chennai, Mumbai – hence the argument holds no water.

Owners of 2 stroke autos can take loans from banks to buy new 4 stroke vehicles after depositing Rs 30,000 as seed money. Out of it, Rs 10,000 will be provided by the govt as subsidy and Rs 8,000 will come from selling the old vehicle. (Meaning: The auto owner will have to deposit Rs 22,000). A new 4 stroke auto costs Rs 1.30 Lakh.

Subhas Dutta, noted environmentalist, rightly questions this flawed argument by pointing out “How can auto owners who could not convert to LPG by spending a few thousand rupees buy new vehicles by spending over a lakh?”

Obviously, this is hogwash, and should be treated with disdain as this insults the intelligence of even the dumbest person. Have we become so paralysed in our thinking process that whatever rubbish the Transport Dept throws our way, we have to swallow and live a sub-optimal life – because at the end of the day, this is what it is. If the fumes from kata tel is taking years away from our productive life, then the government of the day will have to pay dearly for it.

The UNION, it seems, is today working only for its members. It is mandated to look after the welfare of its members as per charter. So what, if the majority of citizens suffer because of foul air - the UNION is above the law and can do whatever it pleases to do. I am reiterating, the UNION makes mockery of governance – it has made BENGAL into a banana republic. PERIOD !!!

So what is behind this “U Turn”? MONEY – dear friends, what else? And UNION knows welfare of members only means one thing – pocketing money any which way.

THE ECONOMICS: (read Telegraph article dated 28th June,08)

3 wheeler business is run by the goons, for the goons and controlled by the ultimate goon – the UNION. There are 2 major income stream.

STREAM 1: PROTECTION MONEY. There are approximately 55,000 3 wheelers in the city, more than half of which are unregistered. When Delhi banned 2 stroke 3 wheelers, many of the “scrap” found its way to Kolkata – unregistered. Each of these 55,000 autos pays the CITU Union under which they are organized Rs 5 to Rs 10 EVERYDAY, depending on the route they take. The yearly intake is a staggering Rs 19.80 Crs (@Rs10/day) to Rs 9.9 Crs (@Rs 5 per day). The Telegraph pegs it at around Rs 15 Crs per year.

STREAM 2: ILLEGAL SALE OF KATA TEL. The role kata tel plays in killing breathable air has been discussed in Part 1. This will deal with the economics of it. The sale of kata tel is illegal, yet there are more than 250 “outlets” selling kata tel openly in and around the city, some a few meters away from police stations. Of course, the palms have been greased, otherwise this flagrant violation could not be possible. The police and the transport department can never find these “outlets”, yet Telegraph, Times of India, Indian Express and even citizens have seen these “outlets” operate brazenly, not even having to shift premises – so sure are they of their “untouchability” factor.

The Telegraph, in its investigative article on July 14th, estimates that at least (conservative estimate) 150,000 litres of kata tel is sold in Kolkata alone to 3 wheelers. Which means, at least 50% of this, 75,000 litres of petrol, has to be siphoned off daily to run this racket. These volumes are huge, and needs a corporate style logistics to run this efficiently. Kata tel is sold at Rs 35 per litre, making it a business of Rs 190 Crs per year.

I am estimating at least a 30% plus gross margin, the returns are Rs 50 Crs per year.

Adding Stream 1 & 2 : the profits per year are Rs (15 + 50) = Rs 65 Crs (USD 15.5 million) per year for the UNION. Even the best of corporate in Kolkata will not be earning this kind of money, what the UNION earns from 3 wheelers.

Why kill the golden goose?

The govt did try two half hearted attempts to please the green bench / lobby:

1. Quotations were sought for LPG kits. Md Kamran, the PVD Director, stated that the 60,000 (note: he is quoting a figure above 55,000 here) autos plying in the city will have to switch over to LPG. And as was expected, the tender process was scrapped 3 times, got extended twice. No results. None expected.
2. The Environment Ministry came out with a grant of Rs 4000 for each auto opting to convert. Of course, the Transport Dept, saw to it that this was never implemented.

A gazette notification, dated May 25, 2005, strictly prohibits the plying of auto-
rickshaws and three-wheeled passenger vehicles within the Kolkata
Metropolitan Area after September 1, 2005, unless they are LPG BS-2
emission standard compliant vehicles or LPG retrofitted vehicles.
That is, the order has prohibited the plying of auto-rickshaws from the city’s
thoroughfares until they converted to LPG. The deadline of September 9, 2005,
was extended to December 31, 2005, on the request of the state transport
department. But it is yet to be implemented in the city.

Hence when Ranjan Maity, the jt secy of Transport Department states, that the department is not in favour of conversion as it has found lot of demerits in old autos converting to LPG – WE UNDERSTAND MR MAITY. Why kill an income of Rs 65 Crs a year ?

Even if it kills Kolkatans, who cares ?? Global warming – what is that??

DO YOU ??