Companies

Foton set to win bus deal in city transport plans

kidero

Nairobi governor Evans Kidero with Foton Group executive Jinyu Wang when the auto firm officials visited City Hall last September. Photo/FILE

Foton East Africa is set to win a multi-billion-shilling contract to supply buses to the Nairobi County government, significantly boosting the Chinese firm’s market share in the local vehicle market.

The devolved government has opened talks with Foton to supply at least 200 buses to kick-start a public transport plan later this year, rattling established players General Motors East Africa, CMC Holdings and Toyota Kenya that sell most of the new buses in Kenya.

Beijing-based Beiqi Foton established its local unit in 2011 when it opened an assembly plant and a regional head office targeting sales of its buses, trucks and pick-ups in East Africa.

The company does not report its sales but the deal with the Nairobi County is set to boost its sales significantly, upsetting market shares in the bus segment.

“Foton put in a serious bid for the supply of the buses and we will soon table it for approval by the county assembly,” said county executive for roads and transport Evans Ondieki.

He said that Nairobi would buy up to 2,000 buses over the next three years and that other companies may be asked to supply part of the units.

Mr Ondieki said the move had been prompted by the chaotic transport system in the hands of private investors, adding that the county would offer a safer, cheaper and more reliable alternative.

Foton East Africa CEO Calvin Guo confirmed that the firm had been picked as the supplier of the initial 200 buses this year but a contract was yet to be firmed up.

He said that the specifications of the buses, including seating capacity, are being discussed and would become clear in the coming weeks.

Sources in the new vehicle industry told the Business Daily that the county is looking at importing fully built buses, with Foton expected to supply the units from its parent firm in China.

Nairobi had also considered sourcing the buses from Swedish vehicle manufacturer Volvo but Foton has emerged as the frontrunner in the lucrative contract.

Analysts say Foton may have benefitted from lower pricing, a strategy that has helped Chinese conglomerates win contracts in Kenya and other African market.

The Foton deal is expected to introduce fresh dynamics in the new bus business to the advantage of the Chinese firm. This is because the Nairobi County is expected to dominate the public transport business, edging out current investors who mostly buy from Foton’s rivals GMEA, CMC, and Toyota.

GMEA is the biggest seller of buses in Kenya through the Isuzu brand, followed by Toyota which sells Hino and CMC that deals in Eicher, MAN, and UD brands.

Mr Ondieki said Netherlands-based CDI Global has offered the county government a Sh1 billion grant to fund the public transport system, with more organisations interested in backing it.

The planned transport company will be a joint venture with private sector investors, with the county taking a controlling stake to offer strategic direction.

Management of the fleet, including maintenance of the buses and hiring of staff, will be contracted out to an independent entity.

Mr Ondieki said that the buses would charge fares of Sh35 for all routes riding on subsidies, making the rates significantly lower than current charges by private transporters in the city.

The county fleet will initially ferry passengers from nearby points such as Upper Hill and Muthurwa into the CBD.

Over time, the project is envisaged to grow into a full-fledged operation covering most routes terminating in the CBD, including the corridors along Thika Road, Limuru Road, and Ngong Road.