Post facto reduction in hoarding licence fees by NMC causes heartburn among advertisers

 

 

 

In a surprise move, Nagpur Municipal Corporation (NMC) has reduced licence fees for advertising rights to hoarding and kiosks, post awarding sites to advertisers. The move was decided by civic administration on October 11, 2024, wherein the licence fee prescribed for advertising sites is rolled back to one prevailing during pre COVID-19 times. The decision incidentally just days before the Model Code of Conduct came into force for the State Assembly elections. That time the licence fees was quite low than the one prevailing during current times prior to its reduction. The reduction of licence fees on part of NMC when the market is buoyant has not gone down well with a section of advertisers. The roll back of hiked license fees was carried out by NMC through an administrative decision is something that has put a segment of advertisers in a tight spot.

 

This is so as currently the House is not functioning and all the powers are vested with Administrator. After the COVID-19 wave ebbed and normalcy returned to society and markets also bounced back, NMC had restored the licence fees while awarding rights for putting up hoarding and kiosks in public places. As per NMC notification, space upto 1 sq.mtr for putting-up hoarding or wall posts (non illuminated) upto Rs 86/sq.mtr maximum charge was finalised. In the case of illuminated post, the rate would be Rs. 194 sq./mtr and for fixed sky sign, gantry gate advertisement with illumination the advertising department had fixed rate of Rs 344/sq. mtr of space. The same was to be made applicable from April 1, 2023, onwards. Now even before end of financial year, NMC has slashed the licence fees and brought it at par with rates that were prevalent prior to Covid-19, said the people familiar with the development. As per new notification, NMC has brought down the licence fee for putting-up hoarding or wall post to Rs. 22/sq.mtr (non illuminated).

 

In case the advertisers want to increase the advertising space the new rate will be Rs. 22/sq.mtr for every additional sq.mtr. For the advertisement in fixed or in hanging position along the streets or footpaths, Rs 19/sq.mtr will be charged and the same charge for every additional sq.mtr. In case of advertising across the street the rate would be Rs 33/sq.mtr. Similarly for other forms of outdoor advertising the new licence fees has been notified by the NMC. Bidders who regularly lease spaces under NMC jurisdiction for putting-up hoarding were taken by surprise at the steep reduction in licence fees and have called for re-tendering of sites that are leased to winning parties. This reduction is post facto, so those who lost out in bidding when the outdoor advertising rights were awarded are feeling sort of cheated.

 

They further contended that earlier while submitting tender, bidders had to propose offers based on both ground rent and a compulsory license fee. Now due to reduction in licence fees, the field has changed drastically and hence new tenders should be called by NMC so that every player in the field can get a shot at advertising and kiosk advertising rights. When the tender was first announced, the license fee was set at a much higher rate, which resulted in increased bid values and the tenders submitted were in as per the rates that NMC had set that time. Now NMC has gone for drastic reduction in the fee by nearly five times, the change has caused discontent among those who submitted bids earlier, as they had calculated their offers based on the original higher fee structure. One of the bidders stated, the significant reduction in the license fee after the tender was released has altered the cost calculations drastically. The advertisers have already approached NMC officials and sought re-tender for outdoor advertising considering changes in policy.

 

The bidders stated that this step was necessary to ensure that all participants could recalibrate their bids under the newly revised terms. NMC has not yet responded to the request of advertisers but the development has raised questions regarding the impact of post-bid changes on tender processes and their implications for participants. Milind Meshram, Deputy Commissioner, Revenue, NMC, and In-charge Advertising Department, contended that licence fees and ground rent are two separate issues. As to licence fees, same can be reduced or increased at any period of time since it is administrative decision. When asked the reason for drastic reduction, he said same is done by higher authorities. He further clarified that tenders for outdoor advertising are based on ground rent that remains unchanged. The tenders that were called were submitted on basis of ground rent of spot where the bidders were interested in putting-up hoarding, gantry, or kiosk. So changes in licence fees as such does not impact the bid value of advertising spots, Meshram added.