HomeLocal NewsRevenue targets threaten to deflate Zupco wheels

Revenue targets threaten to deflate Zupco wheels

A NASTY showdown has exploded between the Zimbabwe United Passenger Company (Zupco) and private passenger operators leasing coaches to the firm, threatening an already overstretched public transportation system, the Zimbabwe Independent has learnt.

The state-run Zupco drafted private players to bolster its depleted fleet after government banned commuter omnibus operators from plying urban routes two years ago.

Government’s action followed the Covid-19 outbreak in 2019, which forced authorities to impose tough restrictions to fight the contagion.

Those banned were given the option to work with Zupco, which was given the sole mandate to carry passengers under prescribed World Health Organisation (WHO) approved measures.

Zupco’s partners were paid ZW$5,5 billion (US$37,6 million) last year, according to government reports.

Reports of the impasse emerged as Auditor-General Mildred Chiri warned last week that Zupco’s heavy dependence on state handouts carried high risks for the troubled operation.

The Independent was informed by operators that Zupco had hiked revenue targets for contracted companies, sparking off a standoff. Frustrated operators have struggled to meet the target, forcing them to withdraw close to 500 buses out of their routes, the Independent was told.

It was not clear this week how much Zupco was demanding from the operators.

But according to an agreement signed between the company and private operators, Zupco undertook to pay them per fortnight.

The operators have established a committee to try and resolve  the problem with government. The committee includes Mupfumi Transport, Trip Trans, Inter Africa, CAG, a government representative and an official from Zupco.

Mutare-based passenger transport operator Esau Mupfumi confirmed the impasse this week. However, he said the committee was locked in crunch discussions with government to map out a solution.

“We are working on it,” Mupfumi said. “We are engaging Zupco so that we come up with an amicable solution.”

Mupfumi said he was confident the parties would strike a deal.

Sources said contracted bus operators had not been paid since January.

“We have not been paid since the beginning of this year,” a source said. “We have set up a committee because private operators are complaining to the government which is not meeting its part of our agreement.”

Meanwhile, in a report on Zupco released last week, Chiri red-flagged a string of issues, including financial losses, compromised accountability, oversight and transparency.

She hit at Zupco’s heavy dependence on government subsidies, which she warned presented a huge risk.

Chiri said the company’s current liabilities exceeded current asset by ZW$81 972 013 (US$560 000) as at December 31, 2019.

“The operating loss before government subsidies was ZW$439 985 816 (US$3 million). This loss is mainly due to the fact that the company is currently dependent on government subsidy for its operational viability,” she said.

“This indicates that the company also relies on leased buses from bus operators and on 31 December 2019, the company lease liability was ZW$328 269 566 (US$2,2 million). The company faces a potential liquidity risk with regard to its lease liabilities.”

Sources said in August last year, Zupco came up with stringent measures, including demanding that buses operate a certain number of trips.

“This became difficult for operators because of certain conditions in urban areas, including bad roads, congestion and few passengers,” they said.

“Although some private operators are now demanding their buses back, they would rather use their own conductors, who can mobilise passengers for their trips.

“Zupco is resisting this suggestion, insisting that operators meet their set targets for them to get paid,” the sources said.

They also said of buses bought to compliment the Zupco, at least half of that fleet was parked because of problems, such as breakdowns and shortage of parts.

“Zupco buses are maintained by the CMED and they park at the former Tombs garage, which charges high (parking fees. Servicing fees are also exorbitant. Zupco has reneged on the original agreements they signed with private bus operators risking lawsuits for breach of contracts,” a source noted.

Contacted for comment, Honest Magaya, the director for special planning at the Local Government and Public Works ministry, said government was involved in monitoring service and fuel consumption.

“We are paying attention to operational details that lead to scheduling of trips and fuel,” he said.

Zupco chief executive Everisto Madangwa was not reachable at the time of going to press as his phone was no reachable.

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