Transport firms fight to benefit from recovery fund

Wednesday July 1 2020

buses

Businesses involved in public transport have raised concern over delays in acquiring service contracts that are needed to help them access funds under the Economic Recovery Fund. Photo | Cyril Ndegeya  

JOHNSON KANAMUGIRE
By JOHNSON KANAMUGIRE
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Investors in public transport have raised concern over delays in acquiring service contracts that will enable them to access funds under the Economic Recovery Fund.

Despite being at the heart of a sector that has been hard hit by Covid-19 pandemic and social distancing guidelines, there are concerns that lack of transport licences make it impossible for National Bank of Rwanda to consider their applications under the recovery facility.

Town commuter bus companies, whose formal service contracts expired in August 2018 and had been serving a 12-month extension that ended on August 30 last year.

They, however, did not suspend service pending the outcome of the routes’ bidding process initiated in October with winners expected to come on board by May 2020 to operate for five years according to the timelines then communicated by Rwanda Utilities Regulatory Authority (Rura).

Rura had not publicly announced the outcome of bidding by the time the Covid-19 pandemic struck, with its officials indicating that the submitted bids were rejected for failing to meet the revised city transport requirements.

With a cloud of uncertainty now hanging over future investment decisions for current operators, most decried difficulty managing through the turbulent Covid-19 times without urgent bailout.

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“Unlike other businesses, for us, we cannot run to the bank because our contracts have expired. Let alone the bank, no lender will agree to deal with you when they are not sure if money will be recovered, there are always questions about what would happen in case you don’t get your license or contract renewed,” said Nille Muneza, manager of Royal Express, one of the three firms plying Kigali City routes.

Other players include Kigali Bus Services (KBS) and Rwanda Federation of Transport Cooperatives (RFTC).

The firms took a hit due to the coronavirus lockdown first imposed in late March, leading to the parking of their fleet with many temporarily laying off workers.

Managers who spoke to Rwanda Today decried making losses weeks after the economy opened up, allowing their operations to resume under strict health and social distancing guidelines that require the fleet to carry only a half or less their capacity.

They say the regulator’s move to increase tariffs by over 40 percent did not help the situation as it is still below incurred revenue losses estimated at 58 percent.

“We are in discussions with Rura to see a possible way out. They asked us for some data which we submitted, and they are reviewing them against their parameters of setting tariffs,” said Innocent Twahirwa, managing director at Jali Transport Ltd which runs RFTC.

Some operators argue that without a flexible credit line to help meet running costs until the pandemic is over, the current working conditions would require that the tariffs are doubled on most routes to enable them to compensate for revenue losses arising from carrying half the capacity of buses.

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