There was a sigh of relief for the management of Pioneer Easy Bus when Uganda Revenue Authority (URA) finally released their buses this afternoon having been impounded for about 10 months. The revenue body in February 2013 had impounded at least 100 Pioneer Easy Buses for failure to clear tax arrears amounting to 8 billion shillings.
The revenue body in February 2013 had impounded at least 100 Pioneer Easy Buses for failure to clear tax arrears amounting to 8 billion shillings. Abdu Sallam Waiswa, Manager Debt Collection at URA today revealed that the two parties had signed a two-year Memorandum Of Understanding on a monthly payment schedule, effective March 2014. This comes after months of negotiations.
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He pointed out that in the agreement, the buses will not be used as collateral or sold off by anyone, at least until the debt has been cleared. Other details of the MOU were not revealed.
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Pioneer Easy Bus started operations in March 2012 after signing a concession agreement with Kampala Capital City Authority (KCCA). Those privy to the details of the agreement say the bus company had exclusive rights on some routes in Kampala and parts of Greater Kampala. Additionally, the agreement also included giving the buses a priority lane within the city. All this was before the bus had its run-in with the tax authorities. With buses now free from the lock-and-key of URA, the management has to now negotiate terms with KCCA and other district authorities of Mukono and Wakiso. Rebecca Athieno, a legal officer for the bus company, says the buses won’t start operations immediately.
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Athieno still blames the financial troubles of the company on KCCA failing to meet its obligations.
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One key contentious issue will be the Awakula Ennume Transport Co-operative Society Limited, which KCCA licensed to ply the Kampala-Gayaza route. Details of the MOU remain confidential. However, for Pioneer Easy Bus to pay-off the tax arrears, it should be able to generate revenues. According to Waiswa, Pioneer Easy Bus will be required to pay at least between 200 and 300 million shillings each month depending on their financial performance. Athieno is optimistic that the buses will be back on the road at least before March 2013.
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It is not clear how indebted Pioneer Easy Bus is, but it has several court run-ins with creditors, including suppliers of its office furniture.
Athieno revealed that each day the buses were grounded, they were losing close to 40 million shillings, meaning that for the last nine months, 10.8 billion shillings has been lost. This is more than the amount owed to URA. The company employed about 500 workers, who, according to Athieno will return to work once the buses become operational. Pioneer Easy Buses had become popular with people in Kampala, as their transport rates were lower than those of commuter taxis. It is now no-longer a matter of if the buses will return to Kampala’s streets, but when.