Radar | Jan 11,2020
Jul 23 , 2022
By RUTH TAYE ( FORTUNE STAFF WRITER )
Officials of the Ministry of Finance have rejected pleas from public transport providers that acquired dozens of buses from the state-owned Commercial Bank of Ethiopia (CBE).
Last year, Adey Abeba Transport Service Association members bought 70 buses foreclosed from Alliance Transport Services at an auction. They had lodged requests with the authorities to exempt them from duties.
Alliance Transport was incorporated in 2009 with 35 million Br in equity raised from 2,500 shareholders. It acquired 100 Chinese-assembled SunLong brand buses seven years later, for nine million dollars, 70pc of which the CBE provided in credit. Federal authorities allowed the company to import the buses duty-free; Alliance Transport began providing public transportation services in the capital the following year.
A first and only private city bus fleet in Addis Abeba, Alliance Transport made progress over the first couple of years. It grew its fleet size by 25 through loans from the Dashen Bank. However, the progress came at a heavy price. The 100 buses under Alliance Transport were taken to the cleaners by the CBE after the company defaulted on its loans. Neither did CBE’s foreclosure department succeed in selling the buses through auctions. They lowered floor prices by half to 680,000 Br a bus last year.
Agreeing to replace Alliance Transport in its role in the capital’s public transport services, Adey Abeba Association members bought the buses with seats between 45 and 65 passengers. The remaining buses have been sold, but buyers have yet to settle the total amount, disclosed Sosina Alemayehu, vice president of CBE’s legal department.
However, Alliance Transport keeps the buses’ certificates of title as officials at the Customs Commission refused to issue clearance to Adey Abeba before its members pay the duties owed on the vehicles.
“We’re planning to buy more buses using the vehicles as collateral,” said Berhane Yehualashet, general manager of the Association. “We couldn’t do that now.”
The Association lodged complaints to the Ministry of Finance. Berhane argued that the duty-free privileges should also apply to them as they provide the same public services as Alliance Transport.
Adey Abeba Association members have provided public transport services in the capital beginning last September after receiving dispatch orders from the city’s transport bureau. According to Etsegenet Abebe, director of communications at the Bureau, 52 of their buses are operational.
The Transport Bureau dispatches close to 8,000 minibuses a day, serving over 600,000 commuters. Anbessa City Bus Enterprise, owned by the city administration, provides daily services to 300,000 commuters with its 650 buses, while Sheger ferries 229,000 passengers with 289 buses. The Public Transport Enterprise also caters to over 60,000 commuters with a fleet of 254 buses.
Yergalem Berhane, deputy head of the Transport Bureau, supported the Association’s plea before the ministries of Transport and Finance. It was in vain.
Buyers who acquired the buses from the CBE through auctions must settle the duties because Alliance Transport failed to meet the terms of the agreement that granted it duty-free privileges, according to Habtamu Menesha, director of legal affairs at the Finance Ministry.
The Association’s leaders have not taken the refusal kindly.
“We’re petitioning for our rights,” said Berhane.
Habtamu retorted there is a difference between a right and a privilege.
“Duty-free privileges are granted for exceptional ventures that help the government fulfil its duties,” he said.
Yehualashet Tamiru, a legal consultant and researcher, agrees with the official.
“Duty-free privileges cannot be claimed as a right that can be extended whenever the property is transferred to another owner,” he said.
Nonetheless, the expert points out the privileges can be extended if the Finance Ministry decides the venture aligns with its policies.
PUBLISHED ON Jul 23,2022 [ VOL 23 , NO 1160]
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