The Chinese-owned company that began operating Phnom Penh’s new public bus service Wednesday secured its five-year deal on the basis of a verbal agreement and has not yet signed a formal contract with City Hall, the company’s CEO said.
Lim Andre, the CEO of Global (Cambodia) Trade Development, which also operates Phnom Penh metered taxi service Global Taxi, said that the deal will see his company invest $12 million over five years, with an initial $4 million outlay in the first year.
“We have not yet signed a contract, we have just a verbal agreement, but I don’t need to wait for the deal to be inked before going ahead, as I expect that very soon the contract will be signed,” he said.
Mr. Andre also confirmed City Hall’s admission on Tuesday that there had been no formal bidding process to select a public bus operator and said his company had been chosen because it was judged to have the best proposal. He added that Global Trade Development does not expect to see a profit from the bus contract for at least three years.
Initially, in early 2013, his company withdrew its proposal to run the bus system after learning City Hall had asked it to share the contract with another company, South Korean-owned City Trans Cambodia.
“I don’t understand why two companies were chosen. It is not a business that very many people want to do because it is difficult to make a profit and two companies would have made it problematic, so I congratulated the other company and stepped aside,” Mr. Andre said.
“But when the City Trans company didn’t receive any license from City Hall, we resubmitted our proposal,” Mr. Andre said, adding that he did not know why City Trans Cambodia did not end up operating the bus service.
Global Trade Development is currently deciding between three unnamed Chinese companies to provide buses for the new service, but for the first 10 months it will continue to use the same rental buses that were used by the Japan International Cooperation Agency during its one-month public bus trial that ended Tuesday.
However, a spokesman for City Trans Cambodia said Wednesday that his company had been refused the contract on the basis that it needed to provide new buses, not rentals, at the beginning of the service.
“My boss [managing director Choi Dae Yong] is really disappointed with City Hall because they told us the new city buses must be purchased before the launch, but now it [is] operating with second hand [rental] buses—not new ones,” said spokesman Din Radeth.
Mr. Radeth also said that he understood Global Trade Development intended to use the next 10 months as a trial period, and if the bus service does not appear to be profitable it could pull out of the project.
“So now my boss is just waiting for Global Development to give up and he will maybe consider again,” he said.
City Hall spokesman Long Dimanche said Wednesday that his comments earlier on Tuesday that there was no formal bidding process for the bus contract did not amount to a lack of transparency.
“We did act with transparency,” he said, declining to elaborate and adding that he was too busy to comment on other aspects of the bus deal.
CNRP chief whip Son Chhay said Wednesday there was a very apparent lack of transparency in the procurement process for a public bus operator.
“There is a lot of information [relating to this deal] that was not put out that should have been provided to the public…. There is a hidden agenda here,” he said.
(Additional reporting by Kuch Naren)