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Peshawar BRT Service at Risk as Government Fails to Clear Arrears

The outstanding arrears amount to over Rs 60 crore, covering the expenses for May and June.
by TNN Editor - 14 Jul, 2023 1657

Muhammad Faheem

The Khyber Pakhtunkhwa government is facing a major issue as it has not made payments to the private company responsible for operating the Peshawar Bus Rapid Transit (BRT) for the past two months.

The outstanding arrears amount to over Rs 60 crore, covering the expenses for May and June. The company has expressed its inability to pay salaries to employees and maintain the buses due to the non-payment. If the arrears are not settled within one week, the bus service is at risk of being suspended.

In a letter addressed to the Transport Secretary, the private company highlighted that the arrears of Rs 603 million have not been cleared yet, despite previous correspondence. The lack of a positive response indicates an imminent crisis, similar to what occurred in late May and early June of 2023 when 90 percent of the payments for May and June expenses were not received.

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According to the agreement, payment is supposed to be made upon submission of the previous month's expenditure details. However, the consistent practice of delayed payments each month constitutes a clear breach of contract. The letter emphasizes the company's inability to cover essential resources such as diesel, lubricants, spare parts, and even employee wages. Insufficient funding severely hampers their ability to fulfill obligations and maintain a smooth bus service.

The private company has urgently requested the outstanding amount of Rs 603 million to be paid within a week. Failure to do so will regrettably lead to the suspension of operations, causing inconvenience to the public and disrupting the overall transport system.

This is not the first time such payment issues have arisen with the Peshawar Bus Rapid Transit project. Previously, the company had also warned of suspending the service. The Asian Development Bank and Agency France Development expressed their dissatisfaction with the non-payment, considering it a breach of contract and raising concerns about its impact on other projects with the provincial government. Subsequently, the arrears were paid by the provincial government.

In a letter from the aid agencies on June 5, it was revealed that the Asian Development Bank and Agence France Development had provided $475.7 million for the Peshawar BRT project, benefiting over 300,000 passengers daily. However, it has come to light that the current bus operator has not received payment for several months, compelling them to consider suspending the bus service. This development will create a negative impression among the public and media, as it is incomprehensible that the provincial government is failing to fulfill its payment obligations to the BRT bus operator.

The letter further emphasized that the suspension of the BRT service would be a violation of the agreement with the provincial government, carrying severe consequences and affecting both existing and future projects.

Although the provincial government made partial payments in response to the concerns raised by the aid agencies, the private company now states that they have not received payment for the expenses incurred in May and June. They find themselves in a challenging situation with no alternative. If the payment is not made within one week, they will be compelled to suspend the bus service.