A revolutionary change for the private bus industry

Ravi LADDUWAHETTY

A joint programme by the Ministry of Transport and the National Transport Commission (NTC) will ensure that the private buses which run long distances on Inter-Provincial routes will come under company structures to ensure efficiency and scales of operation while having quality thresholds.

This is not privatisation, a much maligned word in the context of passenger transport. But, it will be a system of bringing private bus owners into a collective system under one umbrella for the convenience of operations and management.

Five such inter provincial routes will be shortly earmarked and used as a pilot project before the end of this year. This will be the forerunner for the other inter- provincial routes and based on its success, it will be extended to intra- provincial routes as well.

This may sound like Ripley’s believe it or not. But, the heart of the matter is that Sri Lanka’s annual passenger transport bill, both public and private, is a whopping Rs. 50 billion!!

To put it mildly and comparatively, it is Rs. 8 billion more than the annual turnover of Sri Lanka’s largest diversified corporate conglomerate John Keells Holdings PLC’s Rs. 41.8 billion and whose Post Tax Profit was Rs. 5.5 billion for the year ended March 31, 2008. It is also around Rs. 18 billion more than Sri Lanka’s single largest market capitalized corporate- Dialog Telekom PLC of 32.5 billion who’s Post Tax Profits was Rs. 8.96 billion for the financial year ended December 31, 2007.

However, unlike these two corporate giants and others of their ilk who have highly trained and results oriented Board of Directors and high calibre Managers, who are equipped with local and overseas training and with proven track records, their counterparts in private and state owned buses- be it drivers and crew members can barely talk and/or write.

No Harvard MBAs or Cambridge PhDs for them. Nay indeed not, nigh. It is barely Grade 5!! Therefore, it is in this paradoxical economic backdrop that the Chairman of the National Transport Commission Professor Amal Kumarage speaks to the Daily News of the need for sweeping reforms in the sector, and the infusion of some professionalism in its management due to the magnitude of the operations and the revenue that this industry generates.

Prof. Kumarage is an authority on the Transport Sector. He also wears twin hats of Co- Chairman of Transport Cluster the National Commission for Economic Development and Moratuwa University Professor of Civil Engineering and also the Head of the University’s Transport Engineering and Logistics Department. He has been on the NTC Board four times- twice as Chairman in 2004 and from August 2007 to date.

He started the Moratuwa University Transport and Logistics Department in 2005 and has published over 50 research papers in both local and international journals.

He also stresses with emphasis that these corporate structures will not be a sine-qua non to privatization. The owners will remain the same. What will effectively happen is that they will come under one organization.

Quoting an example, he said that if there are 200 private buses plying on the Colombo- Kandy road, they will come under the purview of a limited liability company which will mean that they will be managed as one company. Each of the owners will have a share in the company profits will also be shared and the break neck competition will also stop.

The highlight of the operation will be that each of the companies will have a fully fledged Board of Directors and more importantly a full time and fully fledged Chief Executive Officer (CEO) along with a Company Secretary. They will each have an independent office and will be run in the same manner of a corporate outfit.

Prof Kumarage also said that five routes which are essentially long distance will be earmarked which will be used as a pilot project. Asked whether they will all lead to Colombo from outstations, he said that some were so while other was between inter provincial routes in the outstations.

However, the morale of the story is that the management will be more effective when they are under one umbrella. They will also have advantages from the ability of raising capital through banks and being entitled to discounts when they affect bulk purchases, be they for buses or even for spares.

Operational logistics also will mean that they will be able to effect improved infrastructures such as common service and repair facilities which will all the under one roof. The National

Transport Commission will also assist these bus companies to recruit these CEOs who will be recruited at market rates by part funding for the wheels of the process to be in motion. They will have to manage their affairs after a prior of time. This will be of mutual benefit for both the NTC and the bus operators themselves. Passengers will also have a better quality of service.

Operationally, what is of essential importance for the National Transport Commission is that they will be dealing with one CEO of each company and not with say, 200 bus owners.

He also quipped that such CEOs would be able to be filled into a room for a meeting in sharp contrast to summoning all the 20,000 bus owners which might even require the Sugathadasa Stadium!!

There is an assurance of the quality thresholds and these will be operated on the basis of Small and Medium s Enterprise scale. There is also an assurance that there will not be external players who will be coming in the form of the bus companies of yore.

However, the system is expecting some level of resistance to this transformation. That will be the unauthorised money collectors who leave the industry in jeopardy. The resistance, Prof Kumarage said, will come naturally from them, however, a vast majority, is for this revolutionary change.

Passengers have suffered due to the lack of a proper service; Politicians have meant well over the years for a thriving bus industry but what ever the measures taken, have been totally impotent with the growth of the needs of a developing economy.

However, what is startling is that private buses are changed every three years. It is also almost chocking that belching buses, rate less than 4% in contrast to Lorries, vans and trishaws!!