Home / Metro News / Mismanagement cripples Lagos Bus Franchise Scheme– Investigation

Mismanagement cripples Lagos Bus Franchise Scheme– Investigation

Twenty-five-year-old Funmilayo Adedeji lives in Ikotun area of Lagos and often takes the blue buses of the State Bus Franchise Scheme to Ikeja, where she works, to save some money. Recently though, Adedeji has been spending more time at the bus stand, waiting for bus. Her suspicion is that the harsh economic condition in the country is getting to the scheme.

 She said, “For instance, specifically on Thursday, February 13, 2014, I spent about two hours at the bus stop. Later, I decided to take a yellow commercial bus, which cost me almost double of my budget for the trip.

“The blue buses commenced service on this route less than five years ago and they have started struggling already.”

 Investigation by Saturday PUNCH showed that the poor service experienced by Adedeji might not be unconnected with the growing cases of corruption in the scheme.

On the Thursday that Adedeji made reference to, it was learnt that the bus service only had about one-fifth of its fleet on the road because of a major fuel shortage at its depot because the franchise scheme is heavily indebted to fuel suppliers.

Saturday PUNCH learnt that protesters from one of the bus service’s fuel suppliers, Capital Oil, had blocked the entrance to the bus depot on the morning of Tuesday, February 11. Similar protests were also held by other creditors, including Jamarah Ventures, KTA Oil and Gas Limited, Two Cee Limited, Deekay Oil and Gas Limited and Lobas Washing Services.

A source in the company, who asked not to be named, because he was not authorised to speak on behalf of the company, said the company got its priorities wrong from the outset.

History of the Bus Franchise Scheme

 Saturday PUNCH learnt that the Lagos Bus Franchise Scheme was inaugurated in August 2009 by Governor Babatunde Fashola as a pilot demonstration project in Alimosho Local Government Area, the largest LGA in the state.

Starting with 50 Ashok-Leyland buses, the scheme’s fleet manager, Mint Seal Nigeria Limited, began operation on a 16km Iyana-Ipaja/Ikotun-Igando transport corridor. The scheme later added Maryland/Iyana-Ipaja route to its design structure, but this was soon reviewed and limited to Ikeja from Iyana-Ipaja.

The scheme is a Public/Private Partnership initiative, with the Lagos Metropolitan Area Transport Authority providing infrastructure such as bus terminals and bus shelters, and Skye Bank Plc providing finance to Mint Seal Nigeria Limited for the acquisition of buses.

According to LAMATA website, the agreement stipulates that Mint Seal Nigeria Limited would be responsible for operations and maintenance of the buses. Igbatuntun City Bus Cooperative Society, an offshoot of the Lagos State Chapter of the National Union of Road Transport Workers, was contracted by agreements with stakeholders to liaise with local union formations and prevent union infringements on the corridor, among other functions.

 The scheme’s initial fleet of 50 buses was expected to grow to 150 but sources in the company have put the current number of functional buses at about 20. During visits to the BFS depot, Ikotun, our correspondent counted 31 buses parked at the depot.They were in various states of disrepair. Some of the buses did not have tyres and were supported by wooden or metal materials.

 ‘Genesis of the crisis’

A source said the company started operations by hiring more workers than it required. She added that many of the employees of the company got in by nepotism and not by individual merit, describing this as the “genesis of the problem.”

 She said, “The company employed more than the number of workers required. Some of the people that were employed didn’t even know the venue of the interview, yet they got their appointment letters.

“Some workers are untouchable because of their connection to LAMATA and many of them are like round pegs in square holes. I know many incompetent colleagues like that who got employed, so, some of them were really not doing anything.”

 In addition, sources alleged that the management of the company was wasteful with funds in its first few months of service.

 For instance, a source said, “The franchise service made good money initially because the buses were new and didn’t have faults for close to a year. But the management was squandering the money, instead of saving for the time the buses would start getting old and devel0ping faults.

“For instance, all the major and minor bus shelters had bus supervisors, but there were some minor bus shelters where supervisors were not needed. Such supervisors were usually idle.

“And at that time, they were supplying lunch to all operational staff members daily.”

 The management under the then Managing Director, Mr. Bode Dinyo, seemed to realise the problem after about six months of operation. By  January 2010, the company downsized its labour force by about 40 per cent, according to sources.

About a year later, the company had its second major downsize, which affected Dinyo. It was learnt that the relationship between LAMATA, which was the regulatory body, and Dinyo had degenerated by that time, hence Dinyo’s removal.

A source at LAMATA, who said she was not authorised to speak on the issue, said Mint Seal  Nigeria Limited under Dinyo’s management incurred so much debt.

She said, “The debt profile had risen and the company (Mint Seal Nigeria Limited) was not servicing its debt adequately. So Skye Bank Plc and LAMATA wanted the company taken out of the picture, so Dinyo had to go.”

The General Manager of the company, Mr. Ifeanyi Chima, then took over the management of BFS. With the move, the scheme ceased to be under the direct management of Mint Seal Nigeria Limited, but under LAMATA and ICBC.

This was supposed to be the arrangement pending the takeover of the scheme by another company.

 Allegations of stealing

However, sources said that efforts by stakeholders to get the scheme back on track had failed.

One of such stakeholders is the World Bank, which has been supporting the scheme with funds. But according to a source, LAMATA has illegally been taking cuts from funds from the World Bank that are meant to improve the scheme.

 The source said the fund from the World Bank was to take care of infrastructure and refurbish some buses.

The source said, “But LAMATA has been taking part of these funds even before they get to the BFS. Recently, the World Bank released N100m to refurbish some vehicles, but only about N50m is billed to be spent. LAMATA is taking the rest.”

 Beyond that, sources said that part of the money generated by the buses daily ended up in the pockets of some individuals.

For instance, apart from the scheme’s scheduled operation along the Igando/Iyana-Ipaja/Ikotun/Ikeja corridor, it also undertakes charter rides.

The source added, “Every Sunday, our buses are chartered at N20,000 each by the Living Faith Church in Ota, Ogun State, and sometimes Deeper Life Church, along the Lagos-Ibadan Expressway, but only part of the money is remitted to the company account.”

 The source recalled that on December 15, 2013, the company made N400,000 from its charter service to the Living Faith Church. But that only N200,000 was recorded in the company’s account as being income from the charter service.

 The source continued, “I remember the one of December 15, 2013 very well because I wrote down the date. From the N400,000, the management split the money and said that N200,000 should be put in the account. That was not the only time. There were similar situations that I didn’t write down.

“But the main issue is that the management complains that there is no money to maintain the buses. So sometimes, minor repairs are left undone.”

Meanwhile, residents have complained about the current state of the buses under the scheme.

For example, one of the scheme’s loyal customers, Pa Folabi Ojebowale, 69, who has been taking the bus since 2009, noted that the scheme had failed.

 He said, “The buses used to be very new but they are not well-maintained. I live at Igando and take the bus to Iyana-Ipaja. Sometimes, we will be at the bus-stop for two hours, the buses won’t be available.”

 Ojebowale added that he initially preferred the blue buses of the BFS because they were neater than the yellow commercial buses.

Another resident, Kunle Olaniyan, who also complained about the state of the bus service, said he was afraid of boarding the bus because it might break down on the road.

 Olaniyan said, “I used to board the buses in the services a lot but it got to a point the buses broke down on the road each time I boarded them. This was always embarrassing, so I stopped boarding them (blue buses).

“Apart from breaking down often, the doors of the buses are already off their hinges, the bells that help passengers signify where they want to stop no longer work and many of the seats are no longer good.”

Investigation by Saturday PUNCH shows that averagely five buses of the scheme break down on the road daily.

 Confirming the situation, our sources said many of the workers, especially the drivers, had lost confidence in the scheme.

He said, “The company owes us salaries every time, sometimes up to two months. The drivers are often afraid of driving the vehicles because they all have one fault or the other. If a bus doesn’t have problem with its brake, then it must have with its pedals, the steering wheel or injector.

“All the drivers have bottles in their buses where they put fuel in the morning before leaving the depot. They don’t switch off their engines but if for some reasons they do, they will need to directly put the fuel in the engine before it could start. The popular slang for this practice at the depot is ‘drink fuel.’”

 On Thursday, February 21, 2014, BFS workers, including drivers, protested against their two months unpaid salaries.

Sources said the scheme was owing its workers, a bank, oil suppliers and other service providers about N1bn in salaries, arrears and debts.

Saturday PUNCH also learnt that the scheme had not been audited since 2011.

 Meanwhile, a case involving about 60 former drivers of the scheme, who were laid off in November 2011, is still in court. The affected drivers had sued the company at the National Industrial Court, Ikoyi for N45m. They said they were not compensated after they were dismissed from work by the company for what it called “reorganisation”.

Some workers that were recently dismissed by the company also laid allegations of fraud against the management of the scheme. The workers said they were only dismissed verbally and not given any letter to that effect.

 The workers alleged that the management refused to issue sack letters because some officials of the company were still being paid their salaries.

 One of the affected workers, Emmanuel Namo, said he had been “begging” the management for his sack letter but had not been given the letter.

He said, “The management said I had been sacked and I asked for my (sack) letter but the people there said I shouldn’t worry about the letter.

“Now, I’m even the one begging them for my letter. How can you say you have sacked me verbally and not want to provide a letter? I’ve been begging them to give me my letter since, but they have refused. What is happening is that my salary is going into the pockets of some people. After all, my appointment was not officially terminated.”

Saturday PUNCH learnt that efforts were ongoing to reform the scheme and bring a new fleet manager on board. LAMATA, Skye Bank Plc and ICBS are currently discussing terms with a candidate, who is likely to be chosen.

 In the restructuring, the new fleet manager will add 10 buses to the scheme, while LAMATA and Skye Bank Plc are expected to refurbish 25 buses each out of the 50 buses in the scheme.

 According to a source, the first phase of the programme, which is the refurbishment of 25 buses by LAMATA with funds from the World Bank, has commenced. However, the source said the process is being slowed down because some officials of LAMATA were keeping back part of the money for themselves.

 The source said, “Only three buses have been refurbished since the programme started last year and it is also because of corruption. Some people in LAMATA have decided to keep back part of the funds for themselves and this is slowing down the refurbishment programme.”

 Investigation also shows that some concerned persons have petitioned the Economic and Financial Crimes Commission and the Special Fraud Unit, Ikoyi, Lagos, over the issues in question.

 However, the company’s general manager declined to comment on the issue, saying he lacked the authority to speak and that he would need to get permission from LAMATA to speak to journalists. Later, Chima called our correspondent to say that LAMATA did not grant him the permission to speak on the allegations.

But the Managing Director of LAMATA, Dayo Mobereola, denied the allegations, blaming the poor condition of the buses on bad roads. He said that LAMATA also shared in the blame for failing to provide good roads for the BFS when it kicked off in 2009.

He added that LAMATA was in charge of planning, implementing and regulating transportation in Lagos, but not directly involved in the operation of buses.

He said, “LAMATA is supposed to plan, provide infrastructure and then regulate. Part of the infrastructure that we were supposed to provide included good roads. Unfortunately because of our limited resources, we wanted to fix potholes on the road from Iyana-Ipaja to Ikotun to Maryland. But the state government asked us to put resources together and carry out a total rehabilitation on that road, so that instead of the road lasting for two to three years, it will last for 15 years.

“But unfortunately, that took a longer time and then the buses had started running. So those vehicles that were supposed to last for six to eight years couldn’t last more than two to three years. That was the beginning of the problem on that corridor.”

Mobereola continued, “The system we put in place is such that they get the tickets they will sell from the bank. The bank will be the one that will sell the tickets to the dealers. So the money in itself actually goes to the bank. The scheme is such that the driver, conductor and the management do not have cash on their hands.”

But the arrangement explained by Mobereola does not apply to the scheme’s charter service, where cash is paid.

In his response to allegations of blatant stealing of funds from the charter service, Mobereola said, “The arrangement for charter service is their own prerogative. When we could not provide the good roads and enough money was not coming in for them to run seven round trips a day, they said in order to augment their revenue, they would be doing a certain amount of charter on Sundays. This is understandable since the number of buses required for that axis on Sundays is less. We were not involved in that agreement.”

On allegations of stealing from funds meant for bus maintenance, Mobereola said, “We decided to rehabilitate some of these buses because we were partially responsible because of the poor state of the roads when they started operations. The way LAMATA and the World Bank work is to engage a consultant to identify the problems on each of the buses. We engaged a company to carry due technical diligence on all the buses.

“When the report came out, we realised that the estimate the company gave us to repair the 50 buses was above the money that was earmarked for the maintenance. So we had to streamline. We decided to repair 25 which is what our money can take care of. We went through the procurement process in line with the World Bank international best practices. We advertised and got a contractor who has started repairing the buses.  They have repaired three buses so far now. If you know the World Bank process, you will know that nobody can steal their money. So people making the allegations are talking out of ignorance.”

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