Karachiites deserve comfortable public transport.
It is sure that public sector has failed miserably in Karachi to offer
this basic facility. Now it can only be ensured by greater
participation by private sector. Spending billions of rupees on
Karachi Circular Railway (KCR) does not offer a solution. An alternate
solution, may not be the best, plying air-conditioned vehicles or at
least non-air-conditioned buses on various routes.
The passengers face serious problems particularly
during peak rush hours. In general the buses and mini-buses plying are
over-loaded and the number of road-worthy vehicles is highly
insufficient to meet the demand. Vehicles lacking technical fitness
are much on the roads, resulting in frequent break down and fatal road
accidents. A large percentage of passengers are forced to use their
own cars and two-wheelers causing traffic jams on roads. This causes
unnecessary waste of POL products. The large consumption of these
products also causes massive pollution in the city.
Individuals own most of the buses and mini-buses
running in the city and no organised transport company in the private
sector exist. In the recent past an autonomous corporation, Karachi
Transport Corporation (KTC) was operating buses in the city. However,
due to its own problems, mainly poor cashflow, the Corporation was
forced to close down its operations. At the time of closure, the
Corporation was running over 150 buses on various routes. As a result
of closure of KTC passengers' problems further aggravated.
Karachi is the largest metropolitan city of
Pakistan having an estimated population of about 14 million people.
The city is spread over a large area. The municipal limits of the city
have expanded and various suburbs have become part of the city over
the years. However, the business centres have remained confined to
certain areas. Karachi has two seaports and the largest number of
manufacturing and commercial establishments. The head offices of
central bank, commercial banks and non-banking financial institutions
are also located in the main city areas. Therefore, there is a massive
movement of people, both the blue-collar and white-collar workers,
during a limited number of hours. These people mostly travel in
certain directions in the mornings and take the reverse routes in the
evenings. The peak load is between 7.00 am to 11.00 am in the mornings
and 5.00 p.m. to 7.00 p.m. in the evenings. The public transport and
roads are over-crowded during these hours. The roads are further
congested due to movement of private cars and two wheelers.
The public transport (buses and mini-buses) is
mostly owned by individuals. As the prices of vehicles have been going
up addition of new vehicles in a limited number has failed to meet the
increasing need. This is mainly because the costs of chases and
completely built units (CBUs) have gone up substantially. In the
absence of any financial facility from the financial institutions
owners of vehicles have to mainly depend on informal creditors. These
people provide credit at very high mark-up rates. The reason being
that they do not have any collateral except the vehicle against which
the credit is extended. Since these vehicles are not insured, in case
the vehicle is damaged in an accident or burnt during riots it becomes
the exclusive liability of borrower, in order to make quick money the
borrowers indulge in over-loading and often fail to keep the vehicles
in road-worthy condition.
The last major induction of vehicles by the private
sector, mostly mini-buses, was during the first regime of Nawaz
Sharif. These vehicles were inducted under Transport Revamping Scheme
at that time. The condition of these vehicles has deteriorated over
the years. Many of the vehicles have gone off the roads due to poor
maintenance and accidents because no insurance cover was available to
rebuild/replace the damaged vehicles. The situation further
deteriorated due to closure of KTC. Though some mini-buses are the
situation remains highly torturous for the commuters.
As the cost of long-chases buses has been going up
the number of such buses has been reducing. Though, effort is being
made to meet the demand by mini-buses, introduction of mini-buses has
proved to be a futile effort. These mini-buses have lesser seating
capacity, insufficient leg space and roof is also low, Therefore,
passengers cannot even stand comfortably.
The fare of mini-buses inducted under transport
revamping scheme was fixed higher because standing was not allowed in
these vehicles. However, due to an acute shortage of vehicles the
passengers are not only seen standing but also seen sitting on the
roof. In spite of all this, the owners charge the same fare whether
the person is sitting or standing/sitting at the roof.
Looking at the prevailing scenario there is an
urgent need to establish more than one entity to own-and-operate
efficient and comfortable public transport. It is believed that even
if the fare is slightly higher but the operators are able to provide
efficient and comfortable vehicles passengers are willing to pay
slightly higher fare. Learning from the KTC experience it will not be
desirable to float another such company in the public sector. Since
the intention is to get the equity and debt from multilateral
institutions, the proposed company may be established in the private
To ensure economic viability and efficient
operations an entity should own-and-operate a fleet comprising of at
least 100 long-chases vehicles. Since this requires massive capital
expenditure, the proposed companies may be listed at local stock
exchanges. Sponsors may be allowed to retain 26% shares and the
balance 74% may be offered to: - 1) local financial institutions, 2)
multilateral lending agencies, 3) automotive assemblers 4) general
public and 5) provincial government. Local financial institutions and
multilateral lending agencies may also be asked to provide soft term
loans under infrastructure development programme.
Looking at the requirement of passengers the
proposed corporation may own and operate two types of vehicles i.e.
air-conditioned and non-air-conditioned. The air-conditioned vehicles
may be run only on long routes. Fare of these buses may be slightly
higher to avoid hauling of short distance passengers. No standing
should be allowed in compensation for higher fare. The average
permissible average seating capacity may be fixed around 45 and seats
should be of superior quality.
The non air-conditioned buses may be allowed to ply
on all routes 24-hours a day. The vehicles will leave the terminals at
fixed interval and cover the distance between the two points according
to the time allocated, to avoid over speeding and unnecessary waiting
on the roads. The intervals between departure of two vehicles may be
short during peak hours and slightly longer during off-peak hours. The
fare may be relatively lower as compared to air-conditioned buses. The
seating capacity may not be allowed to exceed 60 and standing should
be strictly prohibited. However, the fare may be slightly higher as
compared to buses and mini-buses in which standing is allowed.
Since equity of the proposed company will not be
sufficient to own-and-operate transport facility of such a magnitude,
debt has to be arranged from local multilateral financial
institutions. In order to reduce the debt it is suggested that only
locally assembled vehicles should be financed under the scheme. The
federal government may be asked to allow duty free import of CKD
units. The vehicles imported under transport revamping scheme were
exempted from payment of import duty etc. in the past. The reduction
in cost per vehicle, as result of exemption from payment of duties,
will lessen the capital expenditure requirement and in turn operating
cost. To further improve the economic viability of such entities,
their income should be declared tax exempt for first three years.
However, during this period it should be mandatory
for the company to transfer 20% of its income to statutory reserve to
undertake BMR and further addition of vehicles.
To reduce the ultimate financial cost, multilateral
institutions may be convinced to extend soft-term loans, preferably 2%
above the rate being offered on Pakistan Investment Bonds. To
compensate for lending at lower rate, a minimum rate of return on
equity may be guaranteed. The federal government follows such policy
in case of independent power plants, oil refineries and gas
The proposed project offers the many advantages
that include better and efficient public transport system, lesser
number of vehicles plying on road and lesser traffic jams, lesser fuel
consumption and lesser pollution. Therefore, tenders may be floated at
the earliest after the consultation with local financial institutions
and multilateral lenders. International Finance Corporation (IFC) and
Commonwealth Development Corporation (CDC) have offices in Pakistan.
They should be more than willing to participate in equity as well as
lending funds under infrastructure development programme.
It is necessary to reiterate that KCR is a 'dead
horse' and any attempt to revive will be a futile effort. Spending the
amount, the government intends to spend on revival of KCR on proposed
public transport which can yield far better results.
Karachiites do not prefer to travel by circular
railway because they feel most important to reach their offices and
homes. The success and popularity of Metro and Green buses establishes
this fact. Why not follow a system that is acceptable for passengers?