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competition

One Bus Away: How unbundling bus provision from operation can support bus modernization programs

Leonardo Canon Rubiano's picture
Photo credit: Leonardo Canon Rubiano/World Bank
The World Bank is supporting the Government of Sri Lanka’s efforts to create a roadmap for the modernization of urban bus services in the capital, Colombo. We have discussed ways in how cities with high-quality public bus networks have approached the issue: the public sector is responsible for infrastructure development, network and service planning, and regulating and monitoring of operations, while efficiency-oriented bus companies operate the services according to well-defined contracts.

How can we enhance competition in bus passenger urban transport?

Shomik Mehndiratta's picture
Photo: EMBARQ Brasil/Flickr

Também disponível em português.

While bus services are often planned and coordinated by public authorities, many cities delegate day-to-day operations to private companies under a concession contract. Local government agencies usually set fares and routes; private operators, on the other hand, are responsible for hiring drivers, running services, maintaining the bus fleet, etc. Within this general framework, the specific terms and scope of the contract vary widely depending on the local context.

Bus concessions are multimillion-dollar contracts that directly affect the lives of countless passengers every day. When done right, they can foster vigorous competition between bidders, improve services, lower costs, and generate a consistent cash flow. However, too often the concessions do not deliver on their promise and there is a perception across much of Latin America that authorities have been unable to manage these processes to maximize public benefits.

As several Latin American cities are getting ready to renew their bus concessions—including major urban centers like Bogotá, Santiago de Chile, and São Paulo—now is a good time to look back on what has worked, what has not, and think about ways to improve these arrangements going forward.