Public transport regulation on right track, says Rura chief

The Rwanda Utilities Regulatory Authority (Rura) has the mandate to regulate multiple utilities and services in the country. Public transportation is one of the services within Rura’s docket. While the move to regulate public transport has eased the woes of passengers, it has also attracted discontent from some operators. The New Times’ Kenneth Agutamba spoke to Patrick Nyirishema, the Director General of Rura, about protecting the different interests. [READ ALSO: Queries over public transport policy] What is Rura’s mandate in as far as public transport is concerned? Our first role as provided by law is to put in place regulations that guide public transport. Two, we license all operators in public transport, all companies and cooperatives that are offering the service of transport are licensed by Rura. Thirdly, the law mandates us to set the transport fare. So, Rura as a regulator sets the fare, so people cannot decide and put their own tariff because transport has a big impact on the economy. As a regulator, we also make sure that all citizens are served, including in remote areas. In the absence of a regulator, what happens is that operators will choose a few places where they will operate, and leave the rest of the country with no service. We ensure that service is extended to all parts of the country, including seemingly unprofitable areas. This is achieved through combining low traffic routes with the high traffic routes, in a manner that preserves profitability for the operators. In doing so, we have a unique role whereby our regulatory intervention brings certainty, predictability and sustainability in the public transport sector. In the past, the public transport sector wasn’t really regulated but following Rura’s involvement, there have been many changes, and this is important because for the transport sector to be sustainable in the long run, it requires that operators continue to grow and invest. With predictability of what is going to happen on particular routes and the sector as a whole, operators can easily get funding from financial institutions. And for that reason, when we give a license to an operator, it specifies the routes where they will be operating let’s say, you’ll be operating, from Kigali-Musanze or Kigali-Nyagatare, etc. So, we monitor each route to make sure that there is adequate service while also ensuring that we do not license too many operators on the same route because it would have a negative financial impact on all of them. How do you allocate routes? We regulate the number of operators on a particular route but we do not pre-set a limit on the number of operators because it can change overtime. Our primary role is to make sure that all routes are adequately served, and that there are not a few routes that are over populated by operators and vehicles while others are underserved, as it used to be. For the City of Kigali, we carried out route tendering, but for the rest of the country, it is on a first come first serve basis. And before we add another operator to a particular route, we look at the traffic volumes, the total number of vehicles already operating on the route, the average waiting time for a vehicle to fill up at the bus park, the average waiting time for people at various pre-determined stops along the route, overall profitability and then assess the room for growth. So, before we add a new operator to a certain route, we put all this into consideration. When an operator comes to us requesting for a particular route, we might tell him that at the time, it is not a good idea to take up that route; we do not close the door for them to take it up in the future, but we say, ‘according to how we are monitoring that route today, we believe it is a bad idea for you to go to this route, unless you have a business plan that shows us the contrary, and you prove to us that it will be profitable.But otherwise, we recommend another route.’ For an open economy like Rwanda’s, aren’t you interfering with free market enterprise; why don’t you leave market forces of demand and supply to prevail, especially given that the government is trying to break regulatory red-tape? First of all, let me say that I know about the free market enterprise, and I know that there are circumstances where it works well and others where it simply doesn’t work. In many countries, including some of the developed countries that advocate for free market enterprise, public transport is still largely funded and run by government entities or city councils. Rwanda is among few countries where public transport is run almost entirely by private operators. But we have to look at our own past to see what the market forces will do in the absence of regulatory intervention. We had a public transport system where we didn’t have clearly defined routes; travellers didn’t know when buses would be available; there were many routes that had no service at all, and this was the case in Kigali and the rest of the country. For a critical sector such as public transport, you need to have an effective regulatory intervention that makes sure the sector is operating properly and then within that regulatory framework, you allow the market forces to come into play. For example, the Kigali-Musanze-Rubavu route, if we have licensed eight different operators, and have over 400 vehicles on that route, we do not come in to determine how those eight operators and vehicles operate other than making sure that the people are served; the rest is left to competition and passengers will go to an operator that gives them the best service. But we often see long queues of people waiting for buses… This is not the case for intercity routes going out of Kigali. But for the City of Kigali, we do see long queues during peak hours, and are working with operators to improve the situation. The peak hours present a particular challenge because, even when we increase the number of buses, the traffic jam still leads to delayed arrival at the bus stops. It requires a holistic solution, including infrastructural upgrades to reduce traffic jam during peak hours, and, of course, operators have a role to play by providing enough vehicles. What are the minimum requirements for one to have a route? Before talking about the routes, they have to be licensed as a public transport operator. We have requirements for someone to operate in the public transport sector which, for example, sets the number of vehicles that the person needs to have, and then we go into detail of how they should operate, then the next level is to give them a particular route. Well, I know that your regulations actually require six vehicles (buses) minimum for a new route, is that true?Yes, that’s one of the requirements. But there are other requirements. May you comment on allegations that there are operators that actually managed to beat your system and obtained routes without having the minimum number of vehicles required and they’re now ‘route-lords’ using other people’s cars? Some of the cases that have happened in the past are among cooperatives, members meet the minimum requirements and get licensed to operate but later on, a member might leave the cooperative leading to a reduction in the number of vehicles. But we also allow operators that are already licensed not necessarily to always use their own vehicles, they may hire from others and make them part of their fleet. But initially, they must have met the minimum requirements. Passengers board an omnibus at the statistics office bus stop in downtown Kigali recently.(Timothy Kisambira) And you are absolutely not aware of operators with routes but never qualify for them? No, I am not aware of any. I have some documentary evidence from Rwanda Revenue Authority showing companies that do not own a single car but have more than one route, why? First of all, the revenue body keeps records of people who imported cars. But they do not have the record of which cars are on which route, and so, all that they can give you is which cars are attributed to which company. You also have to consider that a licensed company is permitted to hire vehicles and submit them to Rura for licensing. The Rwanda Revenue Authority would not have a record of that. And by the way, I don’t know why you would go to the RRA; all the records are here in Rura’s electronic system for public transport. All licensing information is available and verifiable. Let’s be specific on this; on the route of Kigali-Musanze, Kigali-Rubavu; do we have companies there, or they are cooperatives? We have five companies and three cooperatives, making a total of eight operators. What would be the difference between a company and the cooperative in this case? A company is where somebody has sufficient financial capacity (on their own) to meet regulatory license requirements, while a cooperative brings together many individuals under one umbrella (operator). The re-organisation of the transport sector started in 2012 after the new transport policy was adopted. Although the objective was to develop capable operators that could invest and sustain the transport sector, it was realised that there were many individual vehicle owners already in the sector, who did not have the financial capacity to compete or meet the regulatory requirements. So, to secure their interests and sustain their livelihoods, we decided to let them form cooperatives so they can meet the requirements, which they otherwise can’t individually. A story was published last week featuring a complaint from one bus operator, Jean Baptiste Ngabo, the proprietor of Yahoo Car Express. He alleged that the regulator was treating him unfairly. What is your take on this? The transporter wrote to Rura requesting for a new route. Yahoo Car Express today is licensed to ply the Kigali-Nyagatare route. He came requesting for Kigali-Musanze-Rubavu route. So, on receiving his case, we asked the operator to provide what was needed, and he did. We then analysed his request and found that there were over 400 vehicles on that route, while his existing route of Kigali-Nyagatare had about half that number of vehicles. After considering this and other factors as explained earlier, we responded to his request and told him we would not license a new operator on the Kigali-Musanze-Rubavu route at the present time, and we recommended that he instead adds vehicles to his existing route and if he still remained with some vehicles, he could consider other underserved areas such as Kigali-Gitwe and Kigali-Mushubi. We were open to explore alternative routes together with him. The operator did not agree with our decision, so he took the case to court. When he first appeared in court, he was told that this was not a case they could deal with. So they referred him to the right court. He took the case to another court, we were notified, and court set January 5 as the date for the hearing of his case. Meanwhile, he went ahead and petitioned other public offices as the court case was on. He wrote to the Minister in charge of Transport, and he was told that since the matter was already in court, he should wait for a court decision. He later decided to withdraw the case from court. I should end by saying that Yahoo Car Express finally agreed with our recommendation and we licensed five vehicles on Kigali-Nyagatare route and the remaining five vehicles on Kigali-Huye route. The matter was settled. It’s important for the public to know that the matter was settled. Note: The investor says he withdrew the case temporarily out of frustration and decided to negotiate with bank on a favorable loan repayment plan.Let’s say an operator takes your advice and goes to a route where you think he’ll make profits but somehow fails, can they come to you for compensation? We do not force an operator to work on a given route that they don’t want; we only advise them. You gave Kigali to a few bidders hence closing the market and eliminating competition, isn’t it? Absolutely not! The essence of competition is to promote better services. And in the case of Kigali, we let operators compete for the market through a route tendering process rather than compete on the market. By guaranteeing routes for a five-year period, operators can secure loans to import a large number of buses as has been the case. If a new company wants to operate in Kigali, they can negotiate and put their vehicles in the fleet of the licensed company. Another option is for the new company to consider intercity routes out of Kigali. On a scale of one to ten, how would you rate your regulation of the transport sector, thus far? I would get very close to ten. A lot has been achieved, but again, there is so much more to be done. And for the public transport sector to be credible for investors, there is need for certainty and predictability, which can only be achieved through effective regulation. We are certainly on the right track.

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Public transport regulation on right track, says Rura chief