ONATRACOM to be dissolved into RITCO Ltd
Defunct Rwanda national transport company Onatracom is set to be dissolved into a new and independent transport operation company -Rwanda Interlink Transport Corporation Ltd (RITCO), according to the ministry of infrastructure
Dr. Alexis Nzahabwanimana, the state minister for infrastructure, made the revelation while presenting a report on the state of transport to the Rwandan parliament, this January 28, 2016.
“We believe that the Onatracom has come of age and has been in gross losses. By changing its status to a private company we expect an improved efficiency and solution to its troubles in the past” Dr. Nzahabwanimana said.
The new developments indicate that government will have 53percent of the shares in Ritco while private public transporter cooperatives-Rwanda Federation of Transport Company (RFTC) will have the remaining shares.
To boost the new company operations, Rwf11billion has been set aside as initial capital from shareholders, and at least 163 new state of the art buses will be purchased in the process according to the agreement between stakeholders.
Last year, the Rwanda government had announced plans to place loss-making public transporter under private managers and terms of reference for the international tender to hire the company to manage the failing public transporter were underway.
Onatracom, Rwanda’s state-owned public transport company is to be placed under the care of private managers in the last attempt to rescue it from stubborn losses averaging Rwf35 million monthly.
Troubled history
Created in 1970s as state-owned public transport enterprise, Onatracom was given a social mission to operate in rural routes and other routes which the private operators cannot operate because they are not profitable.
The company is also used to transport people during celebrations of national days such as Independence Day and Liberation Day. It was also tasked to provide other services such as production of car number plates, vehicle technical inspection, repair and servicing of government vehicles and management of taxi parks across the country.
Onatracom was entitled to budgetary support from the government and this would supplement the revenues from the transport services and other services for the company to continue operating as a monopoly in transport services and other services.
However, most of these services have been stripped off of Onatracom and it is only left with transport services. Production of car number plates has been shifted to the Rwanda Revenue Authority (RRA), vehicle technical inspection has been moved to the Rwanda National Police (RNP), repair and servicing of government vehicles is now open for competition by the owners of private garages, and management of taxi parks has been decentralised to local administration such as districts.
Since 2008, the government has also cut the budget support to the company. As a result, Onatracom started experiencing cash flow problems in 2009.
By the time the government intervened in mid-2011, the company had accumulated over Rwf2 billion in arrears to staff, suppliers, and the revenue collector.
The weakening of Onatracom, however, can be attributed to reluctance of the government to reform it and lack of strong management.
In 2007-2008, government gave Onatracom new buses to help improve its cash flow. However, the government failed to follow up and change the law if it wanted to see Onatracom operating profitably. The new buses were also poorly managed and after two years, few were still operating. The management also failed to deal with competition from the private sector.