Some of the new buses that the Metro Shuttle division of KBS had invested in before the firm was hit by a cash crunch.

    Most hit are the Msafiri (luxury coaches), Express (upcountry service) and the Metro Shuttle divisions, which had invested in new vehicles. Bustrack, with its fleet of ageing buses, trudges on.

    If not salvaged, the 72-year firm could collapse in a matter of weeks. And when it does, it could be the end of formal public transport system in Kenya. Besides the loss of 3,000 jobs, the traffic congestion in the city could become unmanageable as uncoordinated low capacity vehicles take over. Fares, driven by a demand glut, would skyrocket before investors can provide enough vehicles to carry the passenger load.

School-going children (who pay half-fare) and the disabled (who get free rides) would find themselves thrust in the storm of market forces.

Just what is killing KBS?

An unhealthy investment climate, favouring low-capacity vehicles in the informal sector, and the introduction of rules for passenger service vehicles by former Transport Minister John Michuki.

Mr Edwin Mukabana, the KBS managing director, dismisses claims of mismanagement, pointing out that international investors such as United Touring Company (UTC) and Stagecoach — before KBS — pulled out of Kenya because of the unfavourable investment climate.

Since Stagecoach was discouraged from investing in high-capacity vehicles by the unfavourable investment climate, no new investor has ventured into new big-bus investment in the city.

And, in any case, there was no talk of mismanagement before the introduction of the new PSV safety rules, says Mukabana.

He says the piecemeal implementation of safety rules being practised by the Ministry of Transport is aimed at "attracting speculators and not sustainable investors".

While he does not doubt the improved quality of transport and safety brought about by the enforcement of Legal Notice 161 of 2004, he laments that the rules did not take into account the long-standing formal operators.

"The rules were punitive and unfavourable to a formal operator who, over the years, has endured storms that have affected the city in the past".

Saying the rules have contributed heavily to the dipping of the bus firm, Mukabana noted KBS had previously managed to pay all its creditors, staff, insurance and claims on time, while also meeting all its operational expenses.

"The rules cost KBS Sh1.04 billion by February 2005 (and) although the fitting of speed governors and seat belts in all (424) vehicles needed capitalisation. KBS was forced to draw such funds at quick notice from the fare box," says Mukabana.

He faults the fitting of safety belts on city buses, where passengers could travel between only two stages before alighting, as not practicable.

The bus chassis KBS used to import were of a special specification that came with a drive train with a low-speed differential ration, automatic gearbox, a retarder, a tachograph, an injector pump that could be calibrated and a low-revolution heavy-duty engine.

The bus engines are high-fuel consumers meant to carry heavy loads. Licensed to carry 105, the buses capacity was brought down to 60 under the new safety rules.

The reduced capacity had serious implications on KBS peak passenger loading and resulted in massive loss of revenue. The company claims this has resulted in daily losses of Sh1.37 million.

"What is happening to KBS now is like carrying a wheelbarrow load, using a seven-tonne lorry, which means a lot of wasted fuel for a company that consumes 800,000 litres of fuel per month.

"Forcing KBS to adopt the rules meant to tame those who are operating a bus body on a lorry chassis, is not correct," says KBS.

It did not make sense, Mukabana adds, to govern KBS buses to drive at 80 km per hour in a built-up area where the speed limit should be 50 km per hour.

And due to the extraordinary circumstances the company found itself in during the implementation of the speed governor and safety belt rules, the firm says it lost heavily through the sub-standard items it was forced to buy.

Other "unnecessary costs" the bus firm incurred, include re-configuration of seat arrangement from 2x2 with a wide gangway to 2x3 with a narrow gangway, sealing of the second doors and removing stairs.

Of course, the reduced capacity of KBS buses meant that the number of matatus on Nairobi streets would increase — resulting in more traffic congestion, especially during peak hours.

This, for the bus company, meant further losses through the fuel wasted in long traffic queues, fewer trips made and reduced crew productivity.

KBS, which for years had maintained the corporate colours of green and blue in their crews’ uniforms, were also caught by surprise when the Transport minister insisted on changing it to maroon. Another expensive rule is the one banning a fleet operator from using the company buses on any route, to give allowance for breakdowns and vehicle servicing.

KBS has also suffered due to the prevailing insecurity in the country, forcing it to employ more security personnel and stop operating late into the night. It has also lost some of its buses through arson in times of civil disobedience.

Instead of enjoying tax breaks, the public passenger transport sector is laden with excise duty, advance tax, fuel levy, Transport Licensing Board fees, road fund licence fees, annual police inspection fees, value added tax, withholding tax and training levy. And then there is corporation tax.

The KBS management, however, argues that the informal sector can easily evade some, if not most of these rules, through bribes and other unorthodox means.

When Stagecoach was pulling out of Kenya in 1998, it cited unfavourable investment conditions, poor infrastructure and unhealthy operating climate, mostly the stiff competition from the unregulated matatu industry.

They sold the company, whose accident claims’ liability stood at Sh350 million, to Kenya Bus.

KBS says the operating climate continues to favour lower capacity vehicles in the informal sector to the detriment of big buses in the formal sector.

"The situation can be tamed by undertaking serious reforms in the public passenger transport, through the implementation of the Integrated National Transport Policy and the review of the now archaic Transport Licensing Act and the Traffic Act," says Mukabana

KBS is calling for a policy that would require building capacity load factor in vehicular mobility. To do so, says Mukabana, the Government needs to introduce economic instruments that encourage investment in single buses or double-deck buses.

"Such high capacity vehicles need to be zero-rated for VAT as an incentive to investors.

"And for the industry to attract serious investors who would be assured of good returns on their investment, the Government must introduce regulation. There must be proper rules of entry under the Metropolitan Transport Authority."

Creditors the firm owes cash
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KBS creditors include General Motors, Shell B/P, Kenya Grange Manufacturers, Labh Singh Body Builders, Tread Setters, Auto Auxiliaries and Bruce Trucks.

These and others are demanding from the bus firm Sh720 million, while staff salary arrears have risen to Sh35 million. Another Sh100 million is needed for claims and insurance, accrued debt requires Sh120 million and the buses rehabilitation and body project another Sh100 million.

The company blames the Government for aggravating the situation and "since the Michuki rules remain illegal", it demands that in the short-term, the Government should arrange a meeting with creditors to ward off winding orders and further make good the accumulated debt.

Apart from seeking assistance from the government, the company is also exploring partnerships with financiers, especially those holding its vehicles.

In the medium term, the Government could also facilitate borrowing through friendly banks, while in the longer term, it could partner with KBS by extending a bilateral grant.

Borrowing from external sources is another option that the Government can facilitate.

Traffic gridlock looms over bus crisis
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By Njonjo Kihuria

At the worst of times, the traffic gridlock of Thika Road, Jogoo Road, Uhuru Highway and Limuru Road, which feed into the city centre, is a long immobile vehicular queue.

Although 70 per cent of the 700,000 trips passengers make to the city’s central business district every day are in matatus and the remaining 30 per cent in buses, the biggest share of transport needs is served by private cars.

City engineer Charles Chiuri says that because of the haphazard organisation of public transport, its use is very low and private vehicles serve 73 per cent of the city’s passenger transportation needs.

"The matatu, on the other hand, accounts for only 17 per cent, buses a meagre 2 per cent, while surprisingly, the taxi gets 4 per cent," said Chiuri.

Most of those using personal car transport would also like to make savings by shifting to public transport or sharing the personal cars.

"If we used public transport more and shared personal cars, we would save on fuel consumption, wear and tear, and the roads would be less congested," argues the city engineer.

But as the only coordinated bus service in the city sinks into debt and teeters on the brink of collapse, passenger transport is increasingly being left to the whims of a chaotic profit-driven system run by unruly individuals.

In many developing and developed economies, public transport is an essential service that is run by either the central government or civic authorities, in the same way they provide water and electricity, says Chiuri.

"Service providers in this sector must charge enough to make a profit, but when the citizens cannot afford the service and are unable to move from one point to another, other sectors of the economy are affected.

"It is, therefore, up to the authorities to inject the deficit to enable all to afford public transport and go about their duties," argues the engineer.

He acknowledges the urgent need for government and local authorities, especially the Nairobi City Council, to get involved in and actively encourage the use of public transport, but at the same time pleads lack of resources.

The city and the rest of the country has ignored the use on non-motorised transport, which would greatly benefit the poor and those travelling short distances.

"Non-motorised transport has not been given priority in our set-up; we do not have enough footpaths for the people who walk to and from the CBD; we do not have enough areas for cyclists and by sharing the roads, the cyclists would be in conflict with motorists," says Chiuri.

The tendency of the authorities has been to develop facilities for motorists and "it has not been easy to start working on non-motorised transport facility if you have not tackled the needs of motorists."

Despite the footpaths that come up with the construction of some roads in the city, and can be used by cyclists, there is still a great need for extra corridors for pedestrian use.

Studies into the possibility of promoting non-motorised modes have been done and proposals for the development of corridors in areas of high pedestrian movements are being considered.

But these will only be implemented, "when funds become available," says the city engineer.

Paying commuters have the alternative of using passenger bus service mostly operated by matatus, the Kenya Bus Service and to a smaller extent, ageing buses run by estate co-operative societies.

For many years, however, only KBS operated a bus service in Nairobi, which was under franchise in which the City Council owned 25 per cent stake.

The council shareholding has now dropped to 5 per cent. "At some point, the company owners wanted to inject more capital, but the council was not able to put in more funds, so its shareholding was correspondingly reduced to 5 per cent," explained the city engineer.

Under the franchise, the company had to be protected to provide the service, but unfortunately that franchise was negated by the introduction of the matatus — which were allowed to operate outside official regulations in the 1970s.

Chiuri admits that the competition between the providers of formal transport (KBS) and the matatus has been unfair as there were certain regulations the bus company had to adhere to and the matatu (informal) transport industry did not.

"Due to the unequal treatment, the bus company was not, for many years, able to develop and continued to diminish as the informal sector flourished," he observes.

Chiuri points to the fact that following the introduction of the public service vehicle rules last year, the matatu industry is no longer having it as easy as it used to.

The growth in the matatu industry has, however, remained uncoordinated and the individual units being run at the owners’ whims have not been able to attain the efficiency of a properly scheduled bus company operations, despite the numbers.

"A formal company would know how many buses to release at what time, how many to take on which route. In fact, when KBS had the franchise, it plied unprofitable routes, ensuring residents in such areas had the service, albeit at particular hours when the need was high.

"The issue of fare was also controlled as the council had to approve tariffs and the company could not wake up one day and increase the fares impromptu," recalls Chiuri.

He says only a national transport authority will adequately co-ordinate and regulate passenger transport providers.

How about passenger transport plans?

These, says Chiuri, exist but their implementation has been slowed by lack of resources. "We have great ideas on how to improve public transportation, but we simply do not have the funds."

The engineer emphasises that the future of the public passenger transport in the city and elsewhere in the country lies in better organisation and management

He hopes that funds can be made available for implementation of a medium-term plan, where the existing public transport will drop passengers on the outskirts of the CBD from where they would transfer to high capacity buses.

With the special lanes, the buses would move faster than personal cars, thus become more attractive and as a consequence, ease traffic congestion drastically.