May 13, 2016
How N16billion Mass Transit Sure-P Fund Was Squandered
Over N16 billion of Subsidy Reinvestment and Empowerment Programme (SURE-P) funds released by the Goodluck Jonathan administration in 2012 for the Public Mass Transit Revolving Fund (PMTF) was squandered, the International Centre for Investigative Reporting icirnigeria.org has found.
The fund, administered as a revolving loan by The Infrastructure Bank (TIB) was given out in form of mass transit vehicles to 31 beneficiaries, mostly commercial transport operators. A total of 1,179 vehicles were released to the beneficiaries under the scheme, with a repayment plan covering four years.
But four years after the vehicles were disbursed, only two of the beneficiaries-ABC Transport PLC and Young Shall Grow Transport Limited, have fully repaid their loans. Most of the other beneficiaries are yet to pay back as stipulated in the contractual agreements signed between them and the TIB.
The bank lists as “chronic defaulters” 15 companies and organizations, owing a total of N4,586,088,671.63 as at December 2015. That figure would have gone up as at the time of filing this report.
The loan defaulters include National Union of Road Transport Workers (NURTW), which got N2.3 billion; Nigerian Association of Road Transport Owners (NARTO), N403,487,239; Road Transport Employers Association of Nigeria (RTEAN), N370,738,460; Greenline Bus, N370,500,000; Global Ginikana, N295,290,190 and Classic Link Express, N123,500,000.
Those familiar with the disbursement say the Jonathan administration gave out the loans largely as political patronage, with many of the recipient believing that they were actually helping the government out of the ditch it ran into after the fuel subsidy protests of January 2012.
Investigations by the icirnigeria.org revealed that the scheme was compromised by stakeholders, including the beneficiaries, TIB and the Bureau of Public Procurement (BPP).
Most of the beneficiaries who defaulted in loan repayment cited supply of poor quality vehicles by TIB as major reason for their inability to pay back. While the beneficiaries requested Toyota, Mercedes and Ashley Leyland high capacity buses, they were supplied Hyundai and IVM Innoson vehicles, which they said is unsuitable for commercial use.
Unlike Mercedez, Leyland and Toyota vehicles, the loan defaulters claim spare parts for Hyundai and Innoson vehicles are also not easily available in the country, a situation that forced many of the beneficiaries to park the vehicles less than a year after delivery.
Najim Yasin, National President of NURTW, said the organization rejected the vehicles provided by TIB but was persuaded to take them as a show of support to the Jonathan administration which was then facing a debilitating country-wide workers strike over the cut in fuel subsidy.
Mr. Yasin said of the 234 mass transit buses given to the NURTW, less than 65 were Toyota vehicles, the others were Hyundai and Innoson buses that broke down within the first month of operation.
Communications between the NURTW and TIB, seen by this website, show that the organization complained about the poor quality of the vehicles and the fact that there were no spare parts to fix those that broke down.
Mr. Yasin said the complaints were ignored by TIB.
In a letter dated May 22, 2012, the NURTW wrote to TIB to reject all the Hyundai and Innoson buses given to it by the bank, claiming that they were not good for transportation business.
Also, in a reply to a letter from the TIB for settlement of the N4.7 billion loan given to NURTW dated July1, 2015, the NURTW wrote: “We reiterate the fact that our good intentions to defray the loan have been hampered and challenged by the fact that these vehicles are mostly grounded due to their inferior and sub-standard qualities. Others are accidented, and despite the fact that we have sent several claims for insurance cover/payment on the buses, these claims have not been paid by the consortium of insurance companies solely appointed by you.”
TREAN, another beneficiary, said it requested TIB to supply it 100 Toyota and Ashley Leyland buses but was given only 10 Toyota buses and 32 Hyundai and Innoson buses, all at the cost of N370.7 million.
The National President of the association, Musa Shehu, told the icirnigeria.org that most of the Hyundai and Innoson buses broke down within the first month because of the rigour of travelling on bad roads, while the others could not last a year, thereby making it impossible to repay the loan.
Mr. Shehu gave our reporter copies of the letters his association wrote TIB to supply them the remaining 58 vehicles and make sure they were Toyota or Ashley Leyland buses so that they could off-set the loan on the bad vehicles with money from the good ones. He said although TIB promised to give them the vehicles the bank never kept the promise.
On May 24, 2012, RTEAN wrote to TIB, complaining that some of the buses were “faulty and draining our pocket.” The association said many of the vehicles they got developed faults within days or weeks after they were delivered.
“Most of the vehicles giving us severe problem are Innoson and Hyundai models,” it said in the letter, asking that the buses be replaced.
In another letter dated July 19, 2012, the association complained that it could not continue to meets its repayment obligation under the agreement as some of the buses given to its members were breaking down daily.
“These buses can hardly be used for 3 days without developing some sort of fault or the other. There is no week that passes by without these buses going to a mechanic’s workshop,” the association wrote.
“We hereby appeal that these Innoson buses should be retracted by you and in exchange, release to us Hummer buses in order for us to effectively run our commercial businesses…”
Both NURTW and RTEAN said those who got the Toyota buses, who are few, met their contractual obligations because the buses are still on the road.
“But those who got Hyundai and Innoson cannot pay back because the vehicles have been parked due to lack of spare parts. While the former has paid only N350 million till date, the later has paid back less than N30 million,”Mr. Shehu stated.
But investigations also show that the transporters were also wont to complain about just any vehicle given to then, even Toyota buses. For instance, in a letter written to TIB by RTEAN in September, 2012, the association also complained about a Toyota Coaster bus which it said developed faults three months after
It was supplied. “This particular vehicle (a Toyota Coaster bus), which has not been on the road for more than three months, has been associated with all sorts of problems which include perpetual break down, faulty internal parts of the vehicle and high cost of maintenance.”