No easy road for Pioneer Bus

By Joel Ogwang

News of the impending auctioning of the 99 buses belonging to the Pioneer Easy Bus (PEBL) by the Uganda Revenue Authority (URA) over sh8b tax arrears took many by surprise. It is almost a year since the buses hit city roads

Woes

PEBL’s woes started even before all the 100 buses were delivered.  Mukono and Kira leaders petitioned Parliament to suspend bus operations until the PEBL working contract with Kampala Capital City Authority (KCCA) was revised to allow the two local governments get a share of the company’s monthly dues paid to the city authority. But in an emergency move, the Government ordered PEBL to start operations on March 12, 2012, when UTODA-owned commuter taxis went on strike, protesting a sh120,000 monthly fee fixed by KCCA.

While a concession agreement with KCCA was structured as a Public Private Partnership (PPP) requiring the city authority to install bus lanes, bus stops, exclusive routes and a government guarantee on financing, this has not been effected. “We are simply victims of circumstances,” says John Masanda, one of the PEBL directors.

“Due to the petition, we weren’t in business from December 2011 until February 2012. We have not done anything as per our business plan because even at the start, we didn’t start at will, we were ordered.” Since then, PEBL has had a start-stop operation, exacerbated by workers strike over pay, resignation of top managers, loss-making revenue collection system, traffic jams,  accounting for 1,000 hours of lost time, and failure to win a tax incentive. This forced PEBL to stop operations to Bweyogerere, Mukono, Kajjansi, Gayaza and Luzira from Kampala.

Professionals needed

“Public transport requires professionalism,” says Merion Tibabiganya, a  transport consultant. “It is not like primitive agriculture where you plant seeds and wait for rain. PEBL are speculators with wrong bus-sizes and ill-trained  staff. This is not good for a national public transport operator.”

Works state minister Eng. John Byabagambi reckons PEBL’s predicament is akin to the collapse of the governmentowned Uganda Transport Company (UTC) in the 1990s. “PEBL is not run on business principles and has intrigue, with some shareholders more powerful than others, yet public transport investment is a risky business that requires professionalism,” he says.

How other countries handle urban public transport

In other countries, public transport is regulated by government and run in partnership with the private sector to ensure accountability and quality service provision. For this, it is more than just a business venture, but trades on a common-good principle, often enjoying subsidised fuel, terminals, tax holidays and protection from competition to keep rates low.

“In the UK, for example, the government regulates public transport but invites investors to stake interests in it and sells shares to the public,” says Tibabiganya. “In Kenya, Tanzania and Mozambique, governments partner with the private sector but run public transport through Acts of Parliament.”

Who can buy the buses?

While URA has vowed to sell the buses by auction to recover sh8b, many neutrals are calling on the government to either buy the buses or partner with PEBL. But Matia Kasaija, the planning state minister, says the Government should not buy the buses. “I would never recommend the Government to go into that business,” he says. “If it did, the business would collapse in two months as officials would steal the money. It would collapse the same way UTC did. KCCA wants to take it up. I wish them the best.”

The Government does not need to invest in buses, but infrastructure, says  Charles Ocici, the Enterprise Uganda (EU) executive director. “It takes three to four years to install lanes, but a dedicated lane on Uganda roads, under the current setting, is inconceivable,” he adds. “Uganda needs a public transport master plan.”

Byabagambi, however, wants more government investment in roads, as well as tax waivers and other incentives to keep PEBL and other transport service operators afloat. “I strongly support a subsidy,” he said.

“We (the Government) subsidised Umeme to the tune of sh2trillion over a period of five years. Why can’t PEBL get a subsidy? If we don’t, we risk letting UTODA hold the country at ransom.” However, because of budgetary constraints, giving tax waivers (to PEBL) is difficult, says Kasaija.

“We do not give waivers to matatus (commuter taxis) but they are doing good business. PEBL needs good management and reorganisation.”

Way forward

“Ever since we impounded the buses, we expected them (PEBL managers) to come and we talk, but we haven’t seen them,” says Sarah Banage, the URA assistant commissioner for public and corporate affairs. “We are keen on recovering the sh8b. The ball is in their court.” Masanda sounded positive about paying-up.

“The sh8b is negligible for a reputable public transport operator. Our revenue comes from ticket sales. When we are back on the road, we will clear all debt.”