The Maharashtra state is facing an expenditure of around Rs 10,000 crore over the next decade for the new and upgraded 108 ambulance fleet. This is a significant increase of more than three times compared to the previous contract cost. The contract for the 108 ambulance service was previously managed by BVG Pvt Ltd for a decade and expired in January.

Now, a consortium comprising BVG, Spanish company SSG, and a financial firm Sumit Enterprises has secured a ten-year contract to operate the service in Maharashtra. This consortium emerged as the sole bidder in the government tender, which was issued four times. Despite initial interest from over 30 companies, most of them failed to meet the set criteria.

Under the new contract, the consortium will acquire and manage a fleet of 1,756 ambulances, a significant increase from the current fleet of 937. However, the cost of the new contract could become a major impediment for the state since it will be responsible for both the capital and operational aspects.

The provider will receive a capital cost of approximately Rs 580 crore for procuring the ambulances and an annual operational cost of Rs 700 crore to manage call centers and pay the salaries of medical personnel responsible for ambulance operations.

The state has established a base capital cost of Rs 580 crore for ambulance procurement. The agreement involves the state reimbursing 49% of the upfront ambulance purchase cost and paying the remaining 51% over the next ten years. However, it is the operational cost that raises concerns. The tender’s base operational cost was set at Rs 700 crore, subject to an 8% annual increase to account for inflation.

A senior state government official said, “Combining the operational cost and capex, the total is likely to exceed Rs 10,000 crore by 2034.” On Friday, the high-powered purchase committee, headed by the additional chief secretary (finance), will open the price quoted by the consortium. “They have quoted much higher than the fixed base prices,” another official said, adding that the government would be negotiating with the consortium.

It appears that the initially conservative pricing of ambulances by the government is expected to rise notably due to additional specifications. The advanced life support ambulance and neonatal ambulance, initially priced at Rs 48.7 lakh each, may see an increase in cost. A boat ambulance is anticipated to surpass Rs 1.8 crore, and a basic ambulance with life support is set to cost Rs 30.3 lakh.

Many questions have been raised regarding the cost-effectiveness of outsourcing ambulance services. Dr Abhay Shukla of Jan Arogya Abhiyan said that with such a substantial sum, the government could have potentially established its fleet. In states like Tamil Nadu, only the call center management and personnel are outsourced, while the state owns the vehicles.

Concerns have also been raised about the state’s inability to carry out a forensic audit of the service’s performance between 2014 and 2024. BVG claims to handle almost 4,000 emergency cases daily and has attended to 94 lakh cases.