Row over bus deal

Roadwin Chirara

A CLASH is looming between Pioneer Motor Corporation (PMC) and Scania South Africa over a payment deal negotiated by the Zimbabwe United Passenger Company (Zupco) to settle its US$4,8 million

debt.


Zupco owed Scania (SA) US$4,8 million for buses supplied to the company through its agents, Pioneer.


Businessdigest understands that failure by Zupco to settle its debt resulted in Scania settling for US$4 million directly from Zupco to reduce its losses.

It was also revealed that the payment would be made directly to Scania (SA), sidelining its agents PMC.


The move, according to company insiders, would result in a shortfall of US$800 000 which Scania has vowed to recover from PMC.


This is likely to further strain relations between the two companies who have been at loggerheads over settlement of the debt.


Scania is also said to have indicated its desire to sever ties with PMC mainly because of what sources termed its “lenient” position on recovering the debt.


Pioneer Motor Corporation director Hamish Rudland confirmed that relations between the two companies, PMC and Scania, were not at their best.


“The relationship is very strained currently, but we do believe that the matter can be resolved going forward,” Rudland said.


He said the strained relations between the two companies had resulted in the involvement of the parent company of Scania in Sweden negotiating a settlement deal.


“We have had our distribution contract revised and our credit line reduced, but as a company we believe Scania will take a long-term view of our agreement and relations will revert back to normal,” said Rudland.


He said if Zupco had not settled its debt with Scania then the ties would have been severed and legal action taken against the company.


Rudland confirmed that PMC was now liable to a shortfall after the Zupco settlement because of the distributorship agreement that the company entered into with Scania when dealing with its products.


“It is a fact that there was a short- fall on the agreed price between Scania and Zupco of which PMC is now liable,” Rudland said.


He said the Zupco board negotiated the deal directly with Scania.


“The deal was negotiated and made directly with Scania SA and not with PMC. We basically agreed to take on the maintenance contracts and service Zupco locally, hence our involvement in the deal,” said Rudland.

He said PMC had sold Zupco a concept based on the Polokwane model in South Africa and had been impressed by the idea.


He said the media had confused the issue involving Pioneer Corporation Africa, which is a different entity altogether from the operations of PMC.

Zupco public relations manager Richard Mlambo confirmed they had entered into a payment deal with Scania SA


“We have agreed on a payment plan with Scania, but I do not have the figures or the details at the moment,” Mlambo said.


Zupco recently bought 55 buses from a local distributor raising fears of another failed payment deal in the offing.