Public transporters are facing financial constraints and organisational hurdles as they undergo a transition from associations to commercial entities, adhering to stringent standards set by the Ministry of Transport & Logistics. Officials believe the directive, ratified a month ago by Minister Alemu Sime (PhD), aims to develop stronger competition, transparency and improved services within the sector.

However, the transition is proving to be arduous, with difficulties exacerbated by the lasting impacts of the northern conflict. Berhane Zeru, president of the Ethiopian Transport Employers Federation for 9,000 members, disclosed that the transition is challenged by the ongoing economic downturn and further complicated by delayed compensation for services during the northern war.

"At least five more months are necessary," Berhane told Fortune.

Under the directive, monthly reporting to the Ministry is mandatory, and entities formed under a share company must undergo asset auditing by a general assembly before the transfer to the new company. Stringent requirements, including GPS equipment, periodic registration of rented vehicles, minimum vehicle quotas, and tariff categories for different travel classes, have been established.

As part of the Ministry's 10-year strategic overhaul of the sector, which includes plans to phase out petrol-powered automobiles for personal use and fuel subsidies, the commercialisation of transport modalities is deemed foundational.

Assefa Hadis, an advisor at the Ministry, defends the timeline, stating that transporters have had sufficient time for the transition. Drawing from experiences in the "Western world", Assefa said their success nearly guarantees its effective implementation in Ethiopia. He believes the policy shift will enhance service delivery and kindle competition.

"They only have a few weeks left," he told Fortune.

However, the policy shift has faced significant criticism from the private sector ever since the Proclamation that led to the change was ratified by Parliament, with minor extensions on the time required to meet the minimum vehicle quota over the two years.  Assefa acknowledges the comments but emphasises the need for the sector's effective commercialisation.

"The government has been overly burdened supporting the transporters," he said.

The Council of Ministers started phasing public transporters out of fuel subsidies last year. The latest bi-annual revision to fuel subsidies for public buses chipped away petroleum bumps by around four Birr to 19.16 Br a litre, while diesel refills were tapered off by around three Birr to 19.89 Br.

Transport lecturer Abiy Alene argues that public transporters have disproportionately benefited from fuel subsidies and their commercialisation should be expedited. He supports the Ministry's shift, emphasising that associations have relied heavily on government support for too long. He raises concerns about affordability as the real challenge for effective implementation. With nearly 90pc of the population relying on subsidised public transportation, Abiy warns of the potential for operators to increase prices, posing a risk to the success of the commercialisation efforts.

"Affordability will be the real testing ground," he told Fortune.

Transporters with special public licenses can operate on cross-border and international roads, while those categorised from levels one to three are expected to operate on domestic roads. Operators with vehicles that have fewer than 45 seats fall under regional transport bureaus' oversight. The commercialisation of transporters, from colour-coded stickers to lower tariffs for children and designated stops, marks an inevitable shift.

Some associations express anxiety over the limited time for the transition. Alem Long Distance Bus Owners Association, struggling to incorporate into a share company, finds sourcing funds for its 15 vehicles a trying task. Genzeb Asema, the general manager, feels the implementation process is rushed and calls for an extension of about a year to manage a seamless transition.

"We need to figure out how to source funds," he said.

PUBLISHED ON Feb 24,2024 [ VOL 24 , NO 1243]

How useful was this post?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.

Put your comments here

N.B: A submit button will appear once you fill out all the required fields.

Editors' Pick