Onatracom in trouble over Rwf 4.6Bn debt

Financial problems continue to haunt the government public transport company, Onatracom, with latest information indicating that the institution owes several companies up to Rwf4.6 billion. The pressure is now building up and some companies including Petroenergy Ltd, a private owned petroleum company, have threatened to seek legal redress for failure to pay its debt amounting to over Rwf 412 million.

Financial problems continue to haunt the government public transport company, Onatracom, with latest information indicating that the institution owes several companies up to Rwf4.6 billion.

The pressure is now building up and some companies including Petroenergy Ltd, a private owned petroleum company, have threatened to seek legal redress for failure to pay its debt amounting to over Rwf 412 million.

In February, 2010, Onatracom and Petroenergy signed a contract worth over Rwf 1.64 billion of petrol to be supplied by the latter.  But Onatracom later breached the contract, a fact attributed to poor management of the company.

Documents seen by The New Times include a contract signed between Esdras Nkundumukiza, former managing director of Onatracom, and Abdirahman Mumin, the Manager of Petroenergy.

In the contract, Onatracom was supposed to pay all the invoices submitted by the supplier within 45 days, a commitment never met by the transport agency since July last year.

One letter dated July 19, 2011, by Mumin and addressed to Onatracom, states that despite several meetings held between the two parties on terms of payment, Onatracom has made no effort to clear the debt.

“This letter serves as formal notice to you that you are in default of your obligation to repay the sum of Rwf 412, 421, 857 of the fuel supplied to you,” it reads in part.

“Unless the payment  is received by us within ten days, we will have no alternative but to exercise whatever rights and remedies we have under the law to enforce such payment and recover the above amount, together with accrued interests and legal expenses”.

Mumin revealed that they are now incapacitated and cannot operate.

 “We are forced to close the business. They keep telling us that the government has priorities. But we also need to pay our suppliers,” Mumin complains.

Onatracom has undergone financial crisis for the last two years, thus not being able to meet its commitments with most of its suppliers.

It experienced financial crisis due to poor management, which prompted the government to embark on revamping the administration in the process of recovering its debts.

Dr. Alexis Nzahabwanimana, the Minister of State in charge of Transport, explained in a telephone interview this week that “we are struggling to pay all companies, not Petroenergy alone.  What went wrong within Onatracom is well known and those responsible for the mess will answer for it.”

Among those sacked during the process of restructuring the transport agency, is Esdras Nkundumukiza, who headed the company for many years.

Audit in progress

“Officials from the Auditor General’s office are here carrying out  some auditing. They are doing it separately from the one we carried out.” Nzahabwanimana revealed.

However, Nzahabwanimana was non-committal on when Petroenergy’s debt will be repaid.

“I cannot say when we will pay these people, but the payment roadmap has been drawn. We are trying to find out who is responsible”.

“We contacted the Prime Minister and the government is willing to do everything to pay. What happened was bad. I am not in a position to apportion blame, but writing stories in papers won’t solve any problem”.

Last year, Onatracom registered a loss of about Rwf 342 million and a liability of Rwf  2 billion due to the emergence of new private and seemingly competitive travel companies, becoming difficult for the public institution to remain competitive.

The government company which previously used to cover 57 percent of the total transport network in the country, only covered 25 percent in 2008.

Only 117 buses of 178 are operational while the rest were grounded due to mechanical deficiencies. Onatracom also owes Rwanda Revenue Authority and Rwanda Social Security Board (RSSB) a combined debt of Rwf 1.118 billion.

Ends

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