Posta targets passenger bus service to shore up courier business revenue

Postal Corporation of Kenya CEO Enock Kinara speaks during a media briefing in Nairobi on November 3, 2015. The corporation plans to venture into public transport. PHOTO | SALATON NJAU |   NATION MEDIA GROUP

By OKUTTAH MARK, mokuttah@ke.nationmedia.com

In Summary

• The Postal Corporation of Kenya (PCK) is seeking a licence from the National Transport and Safety Authority (NTSA) to venture into the passenger transport business to subsidise its courier operations.
• The NTSA rules require that a person venturing into the passenger service vehicle (PSV) business must join or form a sacco with a minimum of 30 matatus or buses.
• The PCK is seeking an exemption from this rule since it will not be in a position to comply with the conditions, especially since being a government agency it is unlikely to join a privately owned sacco.

The Postal Corporation of Kenya (PCK) is seeking a licence from the National Transport and Safety Authority (NTSA) to venture into the passenger transport business to subsidise its courier operations.

The PCK currently operates a fleet of vehicles which transport parcels across the country but its CEO, Enock Kinara, Tuesday said passenger buses will soon be introduced.

“We are still waiting for approval from the Ministry of Transport and the NTSA, in fact the wait is what has delayed the commencement of our passenger service,” Dr Kinara said.

The NTSA rules require that a person venturing into the passenger service vehicle (PSV) business must join or form a sacco with a minimum of 30 matatus or buses.

The PCK is seeking an exemption from this rule since it will not be in a position to comply with the conditions, especially since being a government agency it is unlikely to join a privately owned sacco.

Dr Kinara said if the exemption is granted, the PCK will start operations with two 62-seater buses plying the Nairobi-Busia route. This will put it in direct competition with other transport firms such as Easy Coach, Kampala Coach and Marsh which have also emerged as major players in the courier business.

While the number of postal outlets rose by one to 623 in the quarter ended June, the number of private couriers jumped 168.7 per cent to 2,117 as more players ventured into the business that was previously dominated by Posta.

The PCK said it will add more buses, branded Posta Bus, to expand its route network.

“The 62-seater buses will only carry 42 passengers and the remaining space will be left for parcels to maximise on the investment and reduce the cost of doing business,” Dr Kinara said.

The move is part of a wider strategy to grow revenue from Sh3.6 billion in 2013 to Sh14 billion by 2016.

Hitting this target will depend on Posta’s investment in improving infrastructure and business operations with focus on mail, courier and payment services.

Unlike other courier service providers, the PCK is mandated to offer its services under the Universal Service Obligation (USO) to all parts of the country  regardless of whether they are commercially viable or not. Dr Kinara said the cost of doing business in such areas is Sh615 million annually.

He now wants the government through the Communications Authority of Kenya( CA) to provide  infrastructure support under the Universal Service Fund ( USF).

USF is a levy from telecommunication operators and broadcasters to support the introduction of ICT services in areas considered commercially unviable. Operators such as Posta and Safaricom are required to remit 0.5 per cent of their gross revenue to the fund.

The CA raised Sh2.6 billion from the kitty last year. Posta has, in recent years, raised the price of postage stamps to boost revenues at a time when the volume of mail has recorded sluggish growth in what has been linked to increased uptake of electronic communications.tely owned sacco.

The total number of letters sent in the year ended June increased 0.6 per cent to 59.4 million.

40.4 per cent to 5.2 million.