Business

Pioneer: We Are Resuming Business In 7 Days

tadalafil http://crappieholic.com/components/com_k2/views/itemlist/tmpl/category.php geneva;”>In a statement issued on Wednesday morning, http://closdescapucins.fr/wp-content/plugins/wp-super-cache/plugins/wptouch.php the company whose 98 buses were impounded by Uganda Revenue Authority (URA) over arrears amounting to Shs 8bn, said it was “engaging with the relevant agencies of government to resolve the impasse that caused our city bus services to be suspended.”

Interestingly, Pioneer does not hint on whether it will pay the import duty tax arrears.

“We intend to get to the root cause of the matter to avoid future disruption of services, thus we will delay resumption of services by at least one week to enable our counter-party conclude and grant us the requisite obligations enshrined in our concession agreement and execute the recommendations as per report of Parliament Committee of Public Service and Local Government,” the statement read.

“The aforegoing envisaged that Pioneer Easy Bus Limited will have a concession from the Government of Uganda a PPP framework, thus be granted the requisite environment to invest and provide passenger services to the public.”

Pioneer’s statement comes on the heels of URA’s threat to sell the buses if the tax arrears are not cleared by February 27.

“Today we have agreed with the bus company to hold buses till February 27,” URA said in a brief statement on Monday, adding, “If there’s no agreeable payment plan, we shall proceed to auction them.”

On February 14, the tax body executed a warrant of distress against the company, impounding all the buses.

The arrears arose out of Pioneer Easy Bus failure to honor the memorandum of understanding they entered into with URA last year to pay Customs taxes on the importation of their 98 busses.

In the memorandum, Pioneer Easy Bus agreed to pay the tax in installments within a period of 12 months.

According to URA Acting Spokesperson Paul Kyeyune, despite several engagements with the bus company management, no tax had been paid “thereby leaving URA with no option but to execute a Warrant of Distress as mandated in the East Africa Community Customs Management Act 2004, Section 130(4).”

The company’s directors attribute its financial woes to government and Kampala City Council Authority which failed to create conducive environment for its business to thrive.

KCCA is also faulted for not putting in place special bus lanes to enable buses avoid traffic jam and congestion in the city.

Below is Pioneer’s statement on the gridlock.

Dear Customers & Stakeholders,

This is to notify you that we are engaging with the relevant agencies of The Government of Uganda to resolve the impasse that caused our city bus services to be suspended.

We intend to get to the root cause of the matter to avoid future disruption of services, thus we will delay resumption of services by at least one week to enable our counter-party conclude and grant us the requisite obligations enshrined in our concession agreement and execute the recommendations as per report of Parliament Committee of Public Service & Local Government.

The aforegoing envisaged that Pioneer Easy Bus Limited will have a concession from the Government of Uganda a PPP framework, thus be granted the requisite environment to invest and provide passenger services to the public.

A) Business Model Of Public Transport In Kampala:

The bid documents from KCC had clear objectives of the project and clear Statement of Requirements complete with Route Demand Analysis, Route Network Design and Passenger trips (number of passengers) on the routes to be concessioned out. Our bid was successful since it was the most responsive.

1. Bus Routes: Western Zones – the Bus Routes; Masaka Road, Wakaligga Road, Hoima Road, Mubende Road.

: Eastern Zones – the Bus Routes; Jinja Road, Port Bell Road, Kira Road and Northern Bypass.

2. Bus Fleet Size : It was derived from the Route Network Design and Route Demand Analysis that for effective public transport service on these routes 522 units of 60 capacity buses was required.

3. Passenger Trips: It was derived from Route Demand Analysis, Statement of Requirement and National Transport Master Plan (‘NTMP’) that Kampala has 2.6 Million passenger trips per day which are serviced by various modes of transport.

Passenger Trips per bus was averaged at 1,000 passenger trips per day per bus. Thus at 90% Fleet Availability 100 buses should move 90,000 passengers per day and for fleet of 522 buses move 470,000 passengers per day.

4. Bus Round Trips

: To achieve the said passenger trips the buses are to perform 12 round trips on the respective routes.

: Peak Time; 8 trips at 100% capacity = 960 pax

: Off-Peak; 4 trips at 10% capacity = 48 pax

: Total Peak & Off-peak = 1,008 pax/bus/day

: Passenger Trips per Bus per Day ~ 1,000 pax

5. Bus Load Factor

: Occupancy of bus capacity will vary with time of day and route demand (number of passengers in a given route). Peak Time; buses are to be 100% occupied and Off-Peak Time 10%.

6. Bus Ticket Revenue

: Passenger Trips per day x Bus Ticket Fare

: 1,000pax/bus/day x Ush800/ticket/pax = Ush800, 000/bus/day

: Discount Revenue Leakage of 10% industry standard benchmark

: Gross Revenue per bus per day = Ush720, 000

NOTE: The above represent the break-even point BEP of the business. The BEP has not been achieved due to factors outlined. However, the BEP can be achieved if the number of passengers is achieved.

Beyond doubt we have subsidized / brought down the cost of transport in Kampala by 50%, we kept this PROMISE based on aforegoing PREMISE; the business model which is simple facts and figures.

The future of public transport is MASS TRANSPORT; city bus service by PEB is one of the steps in right direction.

B) TENETS OF CONCESSION OF PUBLIC TRANSPORT

To achieve the level of performance key concessions had to be granted by Government of Uganda namely;

1. Bus Lanes; It was provided in our concession agreement that the Government was to gazette specific sections of our concessioned routes to have dedicated bus lanes; it is defined on page 52 of the Statutory Instrument No.7 of 2011 as ‘a traffic lane intended for bus use only’. The bus lane was to be achieved by;

a. Dedicated Bus Lanes (‘DBL’); converting current parking spots on Jinja Road, Kampala Road and Bombo Road into bus lanes. For the converted parking spots M/S Multiplex Limited will be compensated the income for the remaining term of their contract.

b. Intermittent Bus Lanes (‘IBL’); where the roads are narrow but can accommodate three lanes example; Banda to Nakawa, bus lanes will be availed intermittently depending on time of the day and direction flow of traffic – peak and off-peak hours.

The city bus service is a precursor of Bus Rapid Transit (‘BRT’) which means mass transport aboard buses on dedicated corridors (‘infrastructure’). The lanes will save loss of 30 to 40 minutes per trip.

Rationale; this will increase number of bus Round Trips per day; avoid losing time on the traffic jam/congestion. We currently are performing 6 to 7 Round Trips per bus, thus lower Passenger Trips 50% capacity.

2. Bus Stops; It was provided in our concession agreement that the Government will gazette the designate bus stops as only points of picking and dropping passengers.

Rationale: quality and quantity of our service has to be determined, regulated and predictable. Currently passengers in buses are picked and dropped at any location; we cannot enforce a nonexistent regulation or by-law. This situation does increase our “Dwelling Time” time spent by bus moving from one stop to next, and time on spent pick ‘n drop.

2. Bus Route Exclusivity; It was provided in our concession agreement that the government will ensure that Pioneer Easy Bus Ltd is only bus operator in the concessioned routes.

Rationale; This is basic tenet of PPP framework, where private entity investing on a public good and/or a public service is guaranteed market, off-take or return on the capital expenditure. In our context we can only achieve the said Passenger Trips when exclusivity is granted, at moment due to presence of other buses and mini-buses operating in our concessioned routes, we carry less passengers.

3. Government Guarantee; it was provided in our concession agreement that the government will grant a Performance Bond to Pioneer Easy Bus Limited. Due to lack of a Government Guarantee, the company had to borrow from a Commercial Bank as opposed to a Development Bank who issue concessionary rates thus lower cost of finance in Capital Expenditure (CAPEX used to acquire the Buses, Bus Shelters, etc) and Working Capital (operating expenses).

Rationale; This is basic tenet of PPP framework where private entity investing on a public good or public service is guaranteed return on his investment and sound business environment.

There has been precedent on other sectors of Uganda especially Power Generation where private investors have been issued with guarantees. PEB’s quantum of investment is over USD70Million; 522Buses, 600Bus Shelters, 4Bus Terminals, etc. The guarantee will lower cost of finance and thus lower risk of service being delivered to the public.

4. Liaison Services; it was provided in our concession agreement that the lead agency of Government of Uganda (aegis of KCC/KCCA) will provide us liaison with respective arms of Government and agencies in spirit to ensure the contract is performed.

Rationale; in a PPP a private entity has to contract with a public entity on behalf of the government. Performance of public transport is multi-sectoral; Local Authorities, Ministry of Transport, Transport Licensing Board, Traffic Police Department, etc. Thus need for an effective liaison service.

All the above are achievable and we hopefully to consummate them within this week. We will keep you all posted.

Our Passenger! Our Customer!

Signed: MANAGEMENT – PIONEER EASY BUS LIMITED


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