Vehicle acquisition for State institutions rises
View(s):The Treasury has incurred heavy expenditure in acquiring vehicles for state institutions although it has floated a new operational leasing scheme to reduce cost, the recent report of the Public Finance Committee revealed.
Although the vehicle maintenance cost was Rs.3.3.billion during 2016 and 2017, expenditure on the Operational Leasing method of sourcing vehicles has increased by Rs. 3.3. billion, the report said.
Accordingly the total nominal cost has doubled, through a policy that was designed to significantly reduce the total cost. Capital expenditure for the vehicles purchases has also increased dramatically in 2017 and 2018 .
The outlay for vehicle acquisition was around Rs. 1.4 billion a year in 2015 and 2016, and it has increased to over Rs. 16 billion in 2017 – an increase of 12 times, Finance Ministry data showed.
This is despite the increase in expenditure on the operational leasing method as well. Treasury projections for the next five years are also inexplicably high, with an increase of between six to 18 times more than what was spent in 2015, the report said.
It is projected that vehicle acquisition cost will be Rs. 28.8 billion in 2020 and an analysis of the past record in the purchase of vehicles showed that a majority of vehicles purchased has been four-wheeled passenger vehicles (i.e., cars, jeeps and double cabs).
The government has extended the operating leasing scheme for procurement of vehicles to top officials of State-Owned Enterprises (SOEs) and its subsidiaries similar to the system applicable to senior high grade public officials.
Hiring will be permitted for vehicles with a mileage of less than 1,000 km through operational leasing method (use and return option) for a 5-year period on a fixed monthly rental basis ranging from Rs.119, 500 to Rs. 158,000, the Public Enterprise Circular No.PED4/2016 issued by the Treasury has revealed
This circular was issued subsequent to the national budget circular No:1/2016 issued by the Treasury last month, permitting the hire of vehicles for upper grade public officials through operational leasing method (use and return option) for a 5-year period. This decision has been taken by the Finance Ministry as a cost cutting measure. (Bandula)