The Zimbabwe United Passenger Company (ZUPCO) is consuming up to ZWL$ 40 million per month from the government coffers at a time reformation of State Enterprises and Parastatals (SEP) is crucial in ensuring fiscal relief to public finances.
Government has since 2015 embarked on reforming the SEPs sector to ensure that all government entities are self-sustainable by making their operations viable but this has come with limited success.
Speaking to press last Friday, Finance and Economic Development Minister, Mthuli Ncube conceded that the operational structure of ZUPCO was not viable and revealed Treasury has been pumping resources into the company as a social protection initiative.
“The issue about ZUPCO is not just a social protection issue it’s also about to ensure that our cities work. For cities to function as drivers of growth they need efficient public transportation system so ZUPCO is not just about the subsidy which is also good for social protection reasons, we are spending about ZWL$ 40 Million a month just on the ZUPCO transportation subsidy its about efficient cities, cities that are able to move people around wherever they want to go it’s part of urbanization,” Ncube said.
ZUPCO buses have come as relief to most urbanites in the country owing to higher transport fares charged by private operators but analysts have warned against the continuous subsidy on ZUPCO buses as carrying a far much higher burden the company’s future.
Currently, Zupco buses plying the Harare CBD to Chitungwiza or Ruwa routes are charging as little as $ 1.50 against $ 8 charged by kombis while CBD to suburbs such as Glenorah, Hatfield, Waterfalls and Glenview are paying $1 on a Zupco bus while kombi in those areas are charging $ 5.
While government is trapped between cushioning the ordinary citizens and ensuring sustainability of ZUPCO, there are growing calls for government to adjust its pricing structure which is way too low to sustain the company in the near future.
This however, contradicts government’s earlier assurances that it will operate the public transporter viably.
In an interview with this publication earlier this year, ZUPCO chief executive Evaristo Madangwa said the company’s pricing structure was profitable.
“It’s viable, look at the economies of scale, and look at the demand that is there. It’s overwhelming so the huge number of passengers against our fares makes it viable, it adds up,” Madangwa said.
Over the past two decades ZUPCO had seen its fleet of buses plummet drastically to a point where the company was literary moribund owing to high levels of corruption and an unsustainable business model which contributed to perennial loses.
However, starting this year, the company has received over 100 buses in various batches from the government in an effort to resuscitate the parastatal.
But over-reliance on government subsidies continues to put ZUPCO’s future at risk of another downfall.
Government has been channeling huge amounts of money in support of its loss making enterprises at the expense of development.