Wednesday , 27 March 2019
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Wheels Within Wheels Of GoaMiles

ALTHOUGH the Goa Tourism Development Corporation (GTDC) insists that its agreement with Frotamiles Private Limited for running GoaMiles, an app-based taxi service, is “in the interest of Goa tourism and not for any commercial interests,” it is hard to overlook the fact that the contract is heavily loaded in favour of the company. The GTDC has allowed the company to keep all the income to itself for the first 30 months from the launch of the service. The GTDC maintains that the service provider has to be given sufficient time to work out the new model and spread it before it can start sharing profits with the corporation. However, there is no condition on providing transparency on revenue data sharing with the GTDC. The agreement says the GTDC will get five per cent of the total gross revenue generated by Frotamiles. The gross revenue generated by Frotamiles has been defined in the contract as gross convenience fee, commission fee, margin, money collected from customers for taxi hailing, hotel booking, restaurant booking, recreation activity and any other value added services offered by the GoaMiles mobile app, excluding the taxes collected by it during the tenure of the agreement.

The agreement states that for the first 18 months from the date of the official launch of the taxi app service no payment shall be made by Frotamiles to GTDC. On completion of the period of 18 months, the company will “affect payment” of fixed committed revenue of Rs 20 lakh exclusive of taxes per annum (twelve months). The actual payment would however be made 12 months after the completion of the 18 months embargo, which means for the first 30 months the GTDC would not receive any amount from the company. The tenure granted to the company is 25 years, which means no new company can bid for the space during this period. The contract with Frotamiles is renewable every three years, subject to “satisfactory performance.” However, the agreement does not mention the mechanism or authority that will evaluate the performance of Frotamiles. Nor does it define the criteria for “satisfactory performance.” Vague terms leave a lot of scope for subjective, arbitrary and manipulative decisions.

The GTDC will have no authority or means to check the income of the company real-time. According to the agreement, Frotamiles would submit a statement signed by a chartered accountant before June 30 of the subsequent financial year, showing gross revenue earned through all sources. That the agreement is heavily skewed in favour of the company is also clear from the fact that it is obligatory for the GTDC to ensure that its public relations and marketing agencies promote the mobile app in all their activities. Besides, the GTDC will have to provide the company continuous and uninterrupted access free of charge to the existing infrastructure including facilities like promotion at tourism resorts and other offices to promote the business among tourists and citizens of Goa. The GTDC will also have to support the company during participation in various tourism exhibitions within the state, country or across the globe and sponsor the same on a regular basis.

There is no clear roadmap about how much revenue the GTDC (the government) expects year after year from the GoaMiles operations. As of now, the GTDC has a deposit of Rs 30 lakh as performance security made by the company. The amount will remain parked with the GTDC till the end of the exclusive tenure period. This is the only security that the government has. A public sector undertaking should have been wiser than that, even if we are willing to accept that the GTDC’s objectives are always in the interest of Goa tourism. The GTDC is required under the agreement to provide a number of services to the company, such as advertisements and promotional activities, which would mean cost to the public sector undertaking. The GTDC is duty bound to present before the public a precise picture of annual revenue estimates of GoaMiles, the costs the GTDC has to incur, and the estimates of net   income of Frotamiles and the net income share of the GTDC. The GTDC claims 800 taxis have been registered with GoaMiles and most of them are active on a daily basis. However, according to ground information, only 250-odd taxis are active. Also, consumer feedback on the GoaMiles app includes complaints of unavailability of taxis and high fare charged. The state government and the GTDC need to evaluate the GoaMiles operations and the agreement with Frotamiles afresh.

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