Government to spend Sh3bn yearly on car hire for the police to cut costs and boost security. FILE
New auto dealers and leasing firms are set for a windfall as the government moves to implement a multi-billion-shilling motor vehicle lease plan that was first mooted in 2010.
In his Budget statement to Parliament, National Treasury Cabinet Secretary Henry Rotich said the government would spend Sh3 billion annually on leasing vehicles for the police service.
He said the annual spend would go to “leasing 1,200 motor vehicles to motorise police force and make police patrol visible everywhere to respond to any reported crime much more efficiently”.
Leasing firms said of the policy — which is aimed at cutting the government’s transport costs — would be a key driver of demand in the medium term.
“It is a good development for the industry and we hope the policy will be maintained,” said Vehicle and Equipment Leasing Limited (Vaell) managing director Paul Njeru.
Vaell, which is one of the few local vehicle/equipment leasing firms, is seeking a partnership with a new auto dealer to bid for the leasing contracts.
Leasing allows a client to use a vehicle for a fixed period of time while paying monthly fees as the dealer takes care of maintenance. This helps the client firms to avoid the upfront huge capital expenditure they would otherwise incur if they opted to buy the vehicles.
Mr Njeru said the government had initially planned to lease vehicles of engine capacities ranging from 1.3 to 3.5 litres, signalling that the vehicles would be sourced from multiple dealers.
The policy was set to take off from 2011 but a number of key agencies, including the police, resisted the idea in favour of buying and maintaining their own fleet.
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