Posted: Tuesday, November 22, 2016. 8:36 am CST.
By Richard Harrison: Consolidation comes at the expense of diversification….and diversification comes at the expense of consolidation.
The PUP government intervened in the bus transport ownership structure during its 1998-2003 term by providing the capital for Novelo’s to purchase 3 of its 4 principal competitors for the major routes that connect the principal towns and cities. That consolidation was to usher in a new era of scaled investments in the sector to improve reliability, sustainability, safety and convenience for commuters that use the public bus transport system.
That consolidation effort went belly up after it was discovered that the government, through the Development Finance Corporation (DFC), had disbursed around $30 million dollars in a couple days to finance the purchase by Novelo’s of Batty Bus, Z-Line Bus and Gilharry Bus. James Bus chose not the participate in the consolidation. After that scandal broke, it was alleged that the government did not deliver on certain aspects of the consolidation agreement with Novelo’s, and it was claimed that this was what lead to default and subsequent court proceedings that ended in foreclosure on Novelo’s. Subsequently, hundreds of dead buses could be seen in bus graveyards near Belize City and in Cayo.
When the UDP got into power in 2008, they moved quickly to get their people into play….accordingly by DFC financing “dead raise political investors” to purchase the highly depreciated assets of Novelo’s at pennies on the dollar….based on contracted routes they gave through their Transport Department to these new players…the epitome of politically-framed insider deals.
What Belize ended up with is the now highly fragmented bus transport sector….using the rehabilitated skeletons of the obsolete Blue Bird scrap buses inherited from the Novelo’s graveyards.
The new owners of the bus transport sector did just enough investment to give these junk yard clonkers enough life to run from point A to point B….most days you could see them crawling along in a cloud of black smoke spewing from their exhaust pipes….broken down on the side of the highways with passengers trying to hitchhike to their final destinations….or even abandoned on the side of the highways after catching fire from electrical faults…..not to mention the many accidents they have been involved with, and deaths they have caused, due to brake and other mechanical failures.
These new dead raise political investors did exactly what should be expected of them….they took the money they could squeeze out of the resuscitated system….and ran.
Everyone, especially the bus owners and managers of the public transport system, knew that these revived skeletons would only last so much longer….they could only be repaired so many times…and lately many of them have been dying off for good. They are in the garage and cannot be made to function without very significant investment. Thus the inventory of available buses to service the growing number of commuters have seen a sharp decline….and the ones that are still running are being pushed to the limit….running almost non-stop from 4am to 9pm daily….with no time for proper servicing….so the sharp decline in functioning bus inventory can be expected to continue.
The price of fuel has remained stable…. and many streets and highways have been improved, which surely have reduced cost of fuel and wear and tear….and it is said that the bus drivers get 7% of sales and conducters get 6% of sales as commission income (incentive for over-crowding the buses and charging more)….so these companies should be making increased profits compared to when streets were full of potholes.
Yet….this past week bus fares were increased by between 25-50% on average….without any notice nor explanation as to why.
This increase will land another $20 million per year into the hands of these dead raise political “investors”.
This will be $20 million less that commuters will have to buy food, clothing, pay school fees, rent and mortgages, etc.
But there is no guarantee that these dead raise political investors will use these new revenues to purchase more and better buses….or to improve their service reliability, sustainability, safety, and convenience.
These price hikes comes on the heels of a recent political shake up of the Prime Ministers Cabinet, which saw the return of Hon. Edmund Castro as Minister of State responsible for transportation.
He was fired in early 2014 from his previous Cabinet position after being accused of stealing public money during his tenure at the head of the Belize Airport Authority.
These dead raise political investors cannot be trusted….they can be expected to do the same as they have been doing all along….they will take this extra money and run.
The bus routes should be publicly auctioned off, through a transparent process, to bonafide investors who can prove capacity and capability to invest in buses and service that meets minimum standards.
“According to the Commissioner of Transport, operators are now legally authorized to charge 12-14 cents per mile for regular runs within 100 miles of Belize City and 15-16 cents per mile for runs above 100 miles.” ~ BBN
These prices are similar to the prices charged per mile by the first-class ADO buses in Mexico.
Instead of allowing prices to be set based on distance of runs…regardless of the quality of service….the bus transport sector should be categorized into first, second and third-class runs….with the price based on the quality of service.
This latest bus fares exorbitant increase should be called out by the public for exactly what it is….a violent rape of the Belizean commuters. These rapists should not be allowed to get away with this violent crime. A class action suit needs to be taken to court…to show that putting another $20 million into the hands of these dead raise political investors has no justification other than to legally steal from commuters. If they want to charge more for their service….then they should invest first…in better and more buses, and customer service. If they cannot invest….then they should get out of the way….and new, more qualified investors invited to transparently participate in this important industry.
It is being rumored that some of these same rapists are putting in place the arrangements for the ADN group of Guatemala to enter through the back door to provide service on domestic routes….for a fat commission….so that they continue to make money without investing a penny….on the backs of ADN “facilitated investments”.
The Prime Minister….with the resuscitation of his Minister of State for Transport of ill-repute….along with their dead raise political investors…are together the grinches that are stealing the Christmas of 2016.
Shame on all of them! Shame on the entire Government of Belize for condoning and colluding in this grave injustice!!
The views expressed in this article are those of the writer and not necessarily those of Breaking Belize News.
This article was written by Richard Harrison, Belizean investor in production and services businesses in Belize. He holds a Masters in Business Administration degree from Lancaster University.
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