23 February 2013

Uganda: Why Pioneer Bus Won't Return to the Road Soon

Pioneer Easy Bus company has set tough conditions to resume operations, some of which will be difficult for the city authority to meet.

Nearly 100 buses were last week impounded by Uganda Revenue Authority over tax arrears amounting to sh8b.

John Masanda, one of the directors of Pioneer, said their problem was not with URA, but KCCA, which he said had failed to fulfill its part of the deal.

Masanda said to break even, each bus was supposed to carry 1,000 passengers every day, but that had failed because KCCA did not provide separate bus lanes.

Masanda said the city authority was supposed to dedicate special bus lanes on specific routes and to create bus stops, which were not done.

"The buses are usually full, but they spend close to 40 minutes in the jam on every trip. We lose over 100 hours a day," he said.

According to Masanda, as a result of the jam, each bus had been earning only sh400,000, instead of the projected sh800,000.

He added that the buses were facing a lot of wear and tear because they usually brake suddenly since there are no demarcated bus stops.

URA is still waiting for them to pay up. "When we met the bus owners, they asked us for more seven more days. We are hopeful that they will get the money," Paul Kyeyune, URA's manager for corporate and public affairs, said.

The KCCA director of legal affairs, Mike Okua, said the issue of the buses was supposed to be decided by the political arm of KCCA and not the technical one.

"Under a statutory instrument issued by the works ministry recently, designating bus lanes in the city is a decision of the authority's political arm," Okua said. He noted that KCCA executive director, Jeniffer Musisi, had set up an internal team to scrutinise the agreement they signed with the bus company.

The team was constituted after a directive from Parliament to enter a new deal with the company. The parliamentary committee also noted that the duration of the new contract should be long enough, covering between 25-30 years, to enable the company realise its initial investment.

Masanda said they had no problem entering into a new agreement with KCCA.

But a source at KCCA said in the new agreement, the monthly licence would be fixed and that bus fares would also be revised to avoid exploitation of the passengers.

Masanda said the bus shelters on the roads were built by Pioneer and not KCCA, so they were not the stages mentioned in the agreement.

He said Pioneer had sought a five-year tax holiday from Uganda Investment Authority (UIA), but got no response.

"We met URA on Monday and they gave us 10 days to engage KCCA before we can go back to them and reconcile the figures," he said.

On the sh200m Pioneer owes KCCA in tax arrears, Masanda said they would meet KCCA on Wednesday to iron out their differences.

But he insisted they would not back down on their demands.

According to the agreement, Pioneer was supposed to pay KCCA sh300,000 every month per bus, but it had only remitted sh30m in the last one year.

To add insult to injury, a driving school firm has dragged the bus company to court, accusing it of failing to pay it sh70m for training drivers. Masanda said they were in talks with the firm and would pay the debt soon.

Pioneer had promised to import 500 buses, but it fell short of that, bringing in only 100.

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