Originally published in the Folha de S. Paulo.
Translated excerpt by C. Brayton
The predominant force in the city bus service is José Ruas Vaz, also known as “The Baron of the Asphalt” or “The Pope of the Turnstyles.” He is the founder of the Ruas Group, which controls no less than 53% of the rolling stock and receives 56% of the public funding. He also controls bus transport in Guarulhos and other cities in the greater metro area.
Vaz is a man of many enterprises, all of them oddly interrelated. He is, for example, a partner in the consortium that manages advertising at bus stops and the owner of Caio Induscar, which supplies bus chassis to its own sister companies as well as to competitors. If a sector as monopolistic as this can be said to have competitors, that is.
Ruas Group is also known for filing for the bankruptcy of debt-laden companies and then refounding them in order to make it difficult to collect its debts. In 2013 it faced 242 cases of execution for debt. Its pension plan contribution to the INSS reached R$ 750,000.
This is the gang that rules supreme over public transport in the largest city in Brazil.
Another major player in this area is Belarmino Marta, owner of the Belarmino Group, which comprises more than 20 companies that control public transport in various cities, as well as a portion of the capital city.
Along with Ruas Group, Belarmino is owner and partner in a number of Mercedes Benz concession-holders. Mercedes furnishes 65% of city buses.
A Mercedes sales director, testifying to the parliamentary inquiry (CPI) into the transport scriminalityector, produced the following pearl of wisdom: “They sell the bus and microbus chassis to themselves.” Clever, is it not?
The level of cartelization and criminality in the sector has become self-evident. Zero transparency. They have turned a public concession into a means to extort society.
Fares can and should be cut. But where to cut? The profits of the concessionaires, together with a thorough-going reform in the management of urban transportation. The creation of a public transportation company that would manage the system directly is an urgent and necessary measure.
Profitablity does not combine well with quality. A for-profit transport system means that riders must cope with overcrowding and expensive fares. An example of this is the bizzare practice of paying the buses according to the number of passengers carried rather than distance covered. In other words, it is a matter of carrying more people at a lower cost. The result is overcrowding.
Popular demonstrations and the new round of auctions for transport contracts scheduled for March represent an opportunity to question this logic, to begin treating public transport as a right.
What remains to be seen is whether anyone will have the courage.
Filed under: Brazil, Consumer Affairs, Corruption, Financial Services, Life in Sambodia, Organized Crime, Public Safety, Public Works, Taxes, Tourism, Zoning Tagged: | Antitrust, bus service, concession, concessionaire, PPP