BUSINESS PLAN FOR THE PURCHASE AND

OPERATION OF DART PHASE 2 BUSES

PREPARED BY: GRANT MUDYIWA

1
Table of Contents
Executive Summary.3
Chapter 1 Introduction ............................................................................................4
1-1 Background of the Project ................................................................................4
1-2 Present Situation of Public Transport in WCB ltd ............................................5
1-3 Future Urban Growth in Dar es Salaam............................................................ 6
1-4 Necessity of the Project .....................................................................................6
1-5 The Business: Wazawa City Bus Limited..7
1-6 Vision .................................................................................................................9
1-7 Mission ...............................................................................................................9
Chapter 2 Bus Rapid Transit (BRT) Scenario in Dar es Salaam..............................11
2-1 What is BRT?.....................................................................................................11
2-2 Proposed Phase 2 DART System ..................................................................... 13
2-4 Target Year ........................................................................................................14
Chapter 3 Demand .............................................................. 15
Chapter 4 Capital Costs .......................................................................................... 17
4-1 Construction Cost ............................................................................................. 17
4-2 Procurement Cost ............................................................................................. 17
Chapter 5 Operation and Maintenance Costs ......................................................... 19
5-1 Operation Plan .................................................................................................. 19
5-2 Personnel Plan .................................................................................................. 20
5-3 O&M Costs ....................................................................................................... 21
Chapter 6 Business Model ...................................................................................... 23
6-1 Introduction ...................................................................................................... 23
6-2 Contract Type.................................................................................................... 23
Chapter 7 Financial Analysis .................................................................................. 24
7-1 Funding Sources ............................................................................................... 24
7-2 Financial Calculation ........................................................................................ 25
7-3 Financial Statements ......................................................................................... 26
7-4 SWOT Analysis..27
Chapter 8 Economic Analysis ................................................................................. 28
8-1 Economic Benefits of the Project ..................................................................... 28

2
 EXECUTIVE SUMMARY

Background
This document is an outline of the business of Wazawa City Bus Limited and explains the
companys strategic thrust as well as its operational vision. This document has been prepared
both as part of the companys strategic planning and for submission to financiers so that the
operational vision can be effectively implemented. The company is into the business of
passenger transportation in the city of Dar es salaam.
The business plan runs through the background of the project, the current development,
management structure and composition, manning levels as well as its operations. This cascades
down to a SWOT analysis. The strategic thrust is underpinned by the cash flow projection and
the projected financials which derive more from what the business is expected to achieve in the
short term.
Implementation
This project is expected to roll out its implementation plan after the contract has been awarded
by the DART Agency and disbursement of funds by Financiers. The implementation entails
acquiring workshop equipment, Dart buses and training.
Finance
The project requires capital expenditure as well as working capital to be launched. The Directors
have planned to contribute towards the project up to 20% Equity. The bulk of the finance will be
sourced from foreign financiers because of the attractiveness of the terms.
Proposed Turnover
The project is expected to turnover in excess of US$ 27 million per year from launch and should
grow by at least 0.05%

3
Chapter 1 Introduction

1-1 Background of the Project

The Wazawa City Bus ltd (WCB ltd) plan is based on the official Dar es Salaam mass transit
master plan of 2008 by the Japan International Cooperation Agency (JICA). The Government of
the Republic of Tanzania (GoT) gave notice of the Dar es Salaam Bus Rapid Transport (BRT)
System in 2003 as indicated in the master plan. The Dar es salaam version of the BRT was
branded Dar es salaam Rapid Transit (DART) system. The plan was based on the Mass Transit
Study in which bus corridors were proposed. The transit system consists of 6 phases covering a
total of 130km and 90% of the population.

With the population in the city of Dar es salaam growing so rapidly and the Government of the
Republic having predicted the city to have grown beyond 5 million by 2015, plans were drawn
for a rapid transit system in 2008. At the invitation of the government of the Republic of
Tanzania, JICA, designed the master plan for transport in the city.

Figure 1-1: The DART system MAP as indicated in the Master Plan.

The inaugural Phase 1 of the DART system was operational from the 10th of May 2016 and runs
for 21km from Kimara to the City Centre via Ubungo. It also has another route ending at
Morocco. The construction of the infrastructure began in April of 2012 through to December of

4
2015. The route is designed to carry 300,000 passengers daily along 29 stations. The 21km trunk
roads are complemented by about 57,9km feeder roads and 5 large stations.

The operation of the Phase 1 is run by UDA-RT which is a special purpose company formed by
Shirika la Usafiri Dar es salaam (UDA) and two Daladala Associations, Dar es salaam
Commuter Bus Association (DARCOBOA) and UWADAR. The Tanzania Daily News of 10
May 2015 asserted that, the UDA-RT was designed to provide a training platform for future
operators and build up local capacity.

Phase 2 is to run for 20,3 km servicing the Kilwa road corridor. Busiweek.com says that the
funds for the construction of the infrastructure has since been secured through the African
Development Bank (ADB) in October of 2015, a claim which is also supported by the ADB in
their report of March 2015 about the project. Construction of the Phase 2 project is set to begin
in September 2016 and expected to complete in 36 months.

1-2 Present Situation of Public Transport in Dar es Salaam.

Presently, road transport system along the Kilwa trunk road, like many roads in the city, is very
poor. The number of road transport users along this road and the surrounding areas
approximately go beyond a million per day, accounting for about 25% of all public transport
users in Dar es salaam according to the African Development Bank. The average speed of
Daladalas is as low as 12km/h because of road conditions and congestions. Since buses are
operated by individual operators who want to maximize the fare revenue, overloading, waiting
for passengers at a bus stop for a long time, non-stop at bus stops where the number of
passengers is small, and low frequency in off-peak hours are commonly observed. Bus services
are unpredictable, unstable and uncomfortable. People who can use other transport modes prefer
motorcycle commonly known as bodabodas, three wheel bikes commonly known as bajajis and
taxi rather than using buses.

The vehicle fleet in the city of Dar Es Salaam is estimated at approximately 80,000, with 46,000
private cars, 10,000 daladalas and the rest are taxis and commercial vehicles. A study undertaken
by the City Council on Modal share estimates showed that bus trips account for 47.8%, Taxi and
other passenger cars 12.2%, Bicycles and Motorcycles 4.7%, Walk 32.6%, Trucks and other
means of transport 2.7%

5
Photos: The Study for DART Phase 2, Bodaboda image from Mwanachi.

1-3 Future Urban Growth in Dar es Salaam

According to the census of 2012, Dar es Salaam had a population of 4,3 million which was over
a million more than what was previously projected. The city experienced an average growth rate
of 5,6% per annum. The present population is approximately 5,3 million in accordance with the
population growth rate. The population will increase to 6.6 million by year 2020 and 11.4 million
in 2030. This means that more than 6 million people will be added to Dar es Salaam city in the
next 15 years.

1-4 Necessity of the Project

For the public transport system in the city of Dar es Salaam, DART system is not necessarily the
best solution because of its disadvantages such as lower capacity than railway system and
consumption of existing road space. However, investment cost on a railway system is too
expensive to realize. The growing city cannot wait mass transit system until the economic level
of the city is high enough to introduce an expensive system. To improve the public transport
system in Dar es Salaam, BRT is the best system on the project corridors considering the cost-
efficiency and available resources.

6
The project is expected to bring social economic outcomes such as the easement of city traffic
congestions, improved safety for all road users through separation of non-motorized transport
from vehicles, and removal of the many daladalas from the city streets. The project shall directly
impact on individual incomes through creation of job opportunities. WCB ltd is expected to
create hundreds of jobs for its operations directly and indirectly. These will come in a form of
services in areas of driving, mechanics, traffic controllers, security, cleaning and others. In
addition, there will be jobs created in areas of auxiliary services such as ITC support, finance and
many more.

One key positive impact of the DART system as noted by the African Development Bank, is the
reduction of greenhouse gas emissions once operational. A majority of the current public
transport providers are daladala minibuses carrying less than 20 people at a time. The emissions
by BRT trunk buses carrying 140 passengers are estimated at 2,l 00g/km, since WCB ltd will use
buses compliant to EURO III emission standards, while emissions of the feeder buses carrying
60 passengers are 1,250g/km. The March 2015 report by the ADB further asserts that,
calculating the amount of NOX emitted by the daladala fleet, a total of about 160.23 metric tons
of pollutants are emitted per day compared to 55.987 metric tons of pollutant emitted by BRT
buses per day.

1-5 The Business: Wazawa City Bus limited

Based on the institutional, regulatory and business principles, WCB ltd was established as a
company as indicated in 2013. The company was formed by Daladala owners who came
together to take advantage of the governments initiative to promote local grown companies to
build a quality transport system. They registered Wazawa City Bus Limited as a legal entity
under registration number 98966 on the 2nd of May in 2013. The company has three directors
with over 50 years combined experience in the public transport industry in Dar es salaam. On
the 29th of July 2016, WCB ltd acquired a licence from the authorities to operate City Bus
Commuters paving the way for DART operations.

The management of the new business will be directly under a Chief Executive Officer that has
been identified. The CEO will be supported by three Heads of Departments as indicated in the
personnel plan in Chapter 5 below. The structure of the company is as follows:

7
 Organogram

BOARD of DIRECTORS

CHIEF EXECUTIVE OFFICER

HEAD OF DEPT HEAD OF DEPT HEAD OF DEPT

OPERATIONS FINANCE AND ADMIN MARKRTING & PR

ADMINSTRATION STATION SECURITY

DART DRIVERS TECHNICIANS
STAFF STAFF STAFF

As the organogram indicates, the business has put in place a competent board of directors in
order to ensure that the issue of corporate governance is adequately taken care of. The board is
comprised of professionals from various fields. The following is a brief profile of some of the
key members:

Chief Executive Officer

The position is still vacant. The company realizes the importance of this role and would therefore
want to engage the services of a strategist of repute. WCB ltd is in discussions with individuals
with vast business experience in running multi-million dollar passenger transport operations in
other markets to come and spear-head the operations. The CEO will work on a fixed term
contract with someone understudying him as a succession plan mechanism.
Board Member and Director-Mr. Kizunga. Hassan Suma
Mr. Suma is a passionate businessman with over 23 years of experience in the bus transportation
industry. He currently owns city buses in Dar es salaam with routes from Buguruni to Muhimbili
and Mburahati and from Ubungo to Mnazi mmoja. He also runs an oil lubricants business. His
experience will bring value to the project.

8
Board Member and Director-Mr. Ayubu Lussani Msigala
Mr. Msigala has successfully run a passenger transportation business for over 12years in Dar es
salaam. He owns city buses operating in Da es salaam, plying the Buguruni to Muhimbili and
Mnazi mmoja routes. He also owns auto spare shops in the city. He understands the passenger
transport business and is an asset to the team.

Board Member and Director-Mr. Makata Abdalla Nganilo

Mr. Nganilos over 14 years of experience in the bus transportation industry is valuable to the
board. He owns city buses in Dar es salaam, plying the Buguruni to Muhimbili, Mnazi mmoja to
Kinyerezi and Mbagala to Kilwa Masoko routes.

1-6 Vision
The vision of the WCB ltd BRT Project is: To provide the best in class, stress-free, reliable,
comfortable, safe and sustainable public transport system.

1-7 Mission
The mission of the WCB ltd BRT system is to introduce a Bus Rapid Transit system that is
frequent, fast, reasonable and comfortable while ensuring environmental friendliness and a
financial stability for continuous service.

9
Photos 1-2: Some of WCB ltds rolling units

Graphics 1-1: The Proposed WCB LTD DART unit

10
Chapter 2 Bus Rapid Transit (BRT) Scenario in Dar es Salaam

2-1 What is BRT?

2-1-1 World Trend

Bus Rapid Transit (BRT) is a high quality bus system providing high speed, reliable, and
comfortable services compared to traditional bus services. The concept of BRT is based on the
railway system running along exclusive way, high speed, accurate travel time, and high
capacity.
Curitiba (Brazil) introduced a high quality bus service system in 1974, which is now recognized
as the first successful case of BRT in the world although some advanced bus transit services such
as busway and bus exclusive lanes had been introduced in some cities. In 2000, Bogota
(Columbia) opened innovative BRT system (TransMillenio) which made a significant impact on
transit planners and decision makers in the world, showing that the BRT can achieve high
capacity transport service similar to railway systems.

Curitiba (Brazil) Bogota (Columbia)

Photo: Toshiyuki Okamura Photo: Toshiyuki Okamura

In the 2000s, a number of capital cities in the world introduced BRT. These cities are: Taipei
(2001), Seoul (2004), Jakarta (2004), Beijing (2005), New Delhi (2008), Istanbul (2008), Lagos,
the first BRT in Africa (2008), Johannesburgs Rea Vaya (2009) Cape Town (2010) Lima
(2010), Bangkok (2010) and now recently Dar es salaam (2016). BRT has been recognized as a
cost-efficient mass transit system which can solve urban transport problem in not only
developing countries but also developed countries.

2-1-2 Major Feature of BRT

There are many variations of BRT systems in the world. Articulated buses are popular but
standard type lager buses are also used in many cities. The major characteristics of successful
BRT systems are:
o Dedicated bus lanes in the middle of the road (at-grade)
o Stations with the platform for convenient boarding and alighting
o Frequent and rapid operation
o Pre-boarding fare collection (segregation of paid and unpaid areas in a station)
o Low cost compared to other mass transit systems

11
2-1-3 BRT Capacity
The Bogota BRT (TransMillenio) shows that BRT system can provide transport capacity as high
as railway system, by achieving the capacity of 43,000 passengers per hour per direction. From
this, BRT has been proposed in many cities as an alternative of rail-base mass transit system.
However, TransMillenio is the exceptional case, and no other BRT has achieved such a high
traffic throughput. The success of TransMillenio brought about misunderstanding of BRT
capacity as if BRT can be an alternative of the railway system in terms of capacity. The
maximum capacity of a standard BRT is approximately 13,000 passengers per hour per direction.

The Dar es Salaam BRT project-Phase 2 serves the Kilwa road corridor and high density areas of
Mbagala, Mtoni, Kurasini, Changombe, Keko and Ilala among others and high employment
densities in the CBD (Kariakoo and Posta). The direct beneficiaries of this project includes all
public transport commuters along the corridors and its environs in Temeke and Ilala
Municipality with estimated population of over 1.2 million.

According to the study by the African Development Bank, upon which they are basing their
involvement in the Phase 2 project, the entire Phase 2 trunk system of 20.3 kilometers will be
built along the middle of existing roads. A 9m wide median along Kilwa road is currently
reserved for BRT lanes, terminals and stations. Throughout the entire corridor, there will be tree-
shaded bicycle and pedestrian ways on both sides of the road. The average distance between bus
stops will be 500 metres and system users will be encouraged to either walk or bicycle to the bus
stops (privately operated bicycle parking facilities are planned at each bus stop).
The study shows that there will be a requirement of Ninety seven (97) articulated trunk buses
with a capacity of 140 passengers which will provide both normal (stopping at all stations) and
express services (stopping only at connector stations). Additionally, a system of 105 feeder buses
with a capacity of 70 passengers will transport passengers to the trunk system through feeder
stations. Trunk buses will be accessed at the stations by the passengers at a level which will
enhance system capacity and comfort. The system is expected to operate for 18 hours from 5am
to 11 pm. The WCB ltd will provide the bus fleet which is expected to serve 495,000 passengers
per day and 150 million annually as envisaged by the report.
2-1-4 Speed
The world experiences show that BRT is not necessarily high speed system. The average
commercial speed of a standard BRT is approximately 20km/h, ranging from 15 to 25km/h,
while Transmillenio achieves approximately 30km/h. It is expected that a standard BRT can
achieve a commercial speed of 25-30km/h. The commercial speed depends on the distance
between stations, the density of intersections to be crossed, and necessary time at stations. Due to
the delay at intersections, the maximum speed of a BRT without stopping at stations would be
approximately 30-40km/h depending on the signaling pashing given to BRT lanes. With the
stopping at stations, the speed would reduce to 20-30km/h. Since the average speed of existing
minibuses in Dar es Salaam is approximately as low as 12km/h, the speed of 23km/h, which is
being currently experienced by UDA-RT, will produce a significant benefit as it is a higher
commercial speed than minibuses.

12
2-1-5 Why DART System Phase 2
WCB ltd, through the DART System Phase 2 infrastructure along the Kilwa road corridor, shall
address public transport problems, traffic congestion and provision of safe, reliable and
accessible transport with a view to improve urban mobility and accessibility for Citys public
transport commuters by using customized large articulated buses and standard feeder buses along
the constructed 20.3 km of exclusive DART lanes. Furthermore, WCB ltd will provide
employment to a significant number of people under the project during the operational stage. The
system will improve air quality along the transport corridor and the city at large once operational.
The DART system, has also been proposed because it is a cost effective system compared to
railway systems.

The Provision of the DART system is expected to directly enhance and improve the traffic
circulation and eliminate bottlenecks to traffic flow to various economic activity centers such as
the industrial zones, and the vast populous residential areas of Temeke Municipality. The
proposed project would therefore impact positively on the informal and formal businesses by
providing them with improved accessibility and enhanced roadside air quality. The System will
provide:
o Predictable travel time
o Faster travel times than buses
o Constant interval
o Environmental friendliness
o Lower investment cost
o A conducive, reliable and safe transport system for the elderly, women and children

2-2 Proposed Phase 2 DART System

2-2-1 Routes and Stations

The Phase 2 Dart project will have 3 terminal points and stations at every 500m according to the
mass transit master plan. The WCB ltd will provide the transport operations for the Phase 2
project. The total length of the covered trunk routes is 20.3 km. The project involves the
construction of BRT infrastructure along Kilwa Road from Mbagala to CBD (14.9 km), and
Changombe Road to Kawawa Road (5.4 km) connecting to Phase 1 line at Magomeni area. The
construction includes Terminals, Depots, Feeder Stations, Non-Motorized Transport (NMT)
facilities and flyovers at Nyerere/Kawawa and Mandela/Kilwa roads intersection.

The works on Kilwa road involve constructing two DART lanes in the right of way provided in
the center of existing mixed traffic lanes with service roads, bicycle lanes and pedestrian
walkways. On the Changombe Road, Gereza street and Bandari street sections, the existing two
lane roadways will be expanded to provide two DART lanes in the center with two outside
mixed traffic lanes plus service roads, pedestrian walkways and bicycle lanes, while the existing
4-lane roadway on Kawawa road will be expanded to accommodate two BRT Lanes in the center
with two mixed traffic lanes on either side.

13
Fare Collection
According to the report by the ADB, DART system fare collection services will be outsourced to
a third party organization through the DART Agency. WCB ltd will therefore concentrate on the
provision of transport services as guided by the project implementation agency. Passenger fare
will be collected before boarding. The pre boarding fare collection has been proven to increase
the capacity by reducing the stopping time at stations. The other reason is transparency of fare
collection and the application of a popular business model in many cities, where BRT system is
successfully introduced. In the business model, passenger fare will be collected by a fare
collection company, and operators will be paid based on their performance.
2-2-3 Vehicle
Due to the improvements on the proposed DART lanes for the Phase 2 project, emanating from
bottlenecks observed on the Phase I, WCB ltd will provide BRT articulated units with a 140
capacity as well as feeder unites with a capacity of 70 passengers. The turning radium of modern
articulated buses is as same as the standard buses, though they require larger space than standard
buses, which is being taken care of. The major characteristics of the BRT bus are:

o Right side door (opposite side of normal buses)

o No step (direct access to platform)
o Bridge equipment to connect bus floor and station platform
o Capacity of 140 (articulated buses) and 70 (standard buses) passengers
o Compliance with Euro III emission level standards

Figure 2-1: Ideal BRT Bus

2.3 Target Year

According to the master plan and ADB, the main project sponsor, the construction of the
infrastructure of the Phase 2 will begin in September of 2016 and is expected to be complete in
36 months, giving WCB ltd time to prepare and consolidate the preparedness for rollout. The
traffic demand in the City is high at present and will increase rapidly up to 2019 due to the
projected growth rate of 5,6% per annum. Therefore, the project should finish as expected in
order to curb a further worsening of the public transport situation.

14
Chapter 3 Demand
3-1-1 Present Traffic
The number of passengers along major corridors of Dar es salaam has reached very high levels
without a corresponding improvement of the road network. As noted by the World Bank during
the study of the DART system as they prepared to fund the Phase I project, Tanzania is
experiencing a significant increase of the middle class citizens who are buying motor cars at a
rate higher than the population growth rate and the result is congestion.

The same report says, the citys metropolitan area covers a big part of the Dar es salaam region
with a total area of 1,391 square kilometers and a population density of 3,133 per square
kilometer. Therefore this is a city that needs quality public transport. The vast majority of the
citys residence commute uncomfortably in overcrowded and unreliable vehicles on congested
roads.

Photo 3-1: Congestion in Dar es salaam

Bus passenger volume in the peak hour is approximately between 10,000 and 15,000 passengers
per hour per direction along the major corridors. Total passenger volume (the sum of all traffic
modes) is approximately between 20,000 and 24,000. This means that a BRT system is a
welcome solution at present. Bus passenger demand slightly exceeds the capacity of a standard
BRT. If motorcycle demand is added to public transport, the passenger volume becomes
approximately 18,000, which is nearly the capacity of a saturated BRT. Not all bus passengers
will shift to BRT. Some passengers will remain in mixed traffic using feeder services. From this,
a standard BRT system is enough for public transport under the present traffic demand.

3-1-2 Demand Forecast

(1) Urban Growth

As described in Chapter 1, Dar es Salaams population will have increased by just under a
million in the next 3 years, and the population will be more than 11 million in the next 15 years.
This population increase is expected to stir up demand across all the regions of Dar es Salaam.

15
The study clearly showed that there is high demand of Public Transport in the City. Commuter
Service provided mostly by Daladala and supplemented by UDA is inadequate. The City of Dar
es Salaam is experiencing serious transport problems. As alluded to earlier in Chapter 1,
reports claim that Daladala buses operating in the city number to about 10,000. Most of them
are reconditioned with an average of 15 to 50 passenger capacity, but a modal capacity of only
24 passengers. This capacity for the number of units in operation means that there is still a
large deficit for transportation in the city, especially during the peak hours of 0600hrs 0900hrs
in the morning and 1600hrs 1900hrs in the evening daily. WCB ltd has realised that they
cannot just be an average player in this industry and has embarked on an ambitious plan to get
the extra capacity to partner the public service on the DART project.

3-1-3 Revenue

The DART Agency, has set fares developed to assess the viability of the system. They used a
TSh 450 flat fare for a single trunk, feeder bus trip and a TSh 600 fare for a combined trunk and
feeder bus trip. These fares are comparable with what current daladala (mini buses) users are
paying. That is, they are slightly higher for short trips, but considerably cheaper for long distance
trips.

The Master Plan further highlights that commuter transport fares in urban areas are regulated by
SUMATRA (the Surface and Marine Transport Regulator). DART Agency, with the help of the
fund manager, will make system revenue and expenditure forecasts and based on them propose
fare adjustments, if needed, for consideration by SUMATRA. SUMATRA is an autonomous
regulatory authority and has a broad-based Board of Directors including private sector
representatives. As per its creating law when considering proposed fare adjustments it needs to
take into account both system operating costs and affordability. Judging from the performance of
SUMATRA, there is confidence that DART fare adjustments will be dealt with correctly and
efficiently.

16
Chapter 4 Capital Costs

4-1 Construction Cost

4-1-1 Scope of Cost Estimation

All the necessary costs for constructing a complete infrastructural facility of the DART Phase 2
system, with the exception of procurement costs of the bus fleet with spare parts, are to be met
by the public sector.

As indicated in Chapter 2, the Phase 2 project will include the construction of the DART
infrastructure and related facilities along Kilwa Road from Mbagala to CBD and Changombe
Road to Kawawa Road. Depots and Feeder Stations, NMT facilities and flyovers will also be
constructed under this project. All these costs will be borne by the government of Tanzania and
according to the report from the ADB, these funds have already been secured.

(2) Fare system and ITS costs

The following systems were proposed:
o Magnetic strip vending machines and coin & token system per station, and
o Bus operation control system with GPS technology.
Since the systems proposed above will be implemented by an independent contractor, costs
estimations are not included in this plan.

4-2 Procurement Cost

4-2-1 Unit Price of BRT bus
The cost of a BRT bus is estimated as US$ 177,000 and US$ 118,000 including duties and VAT.
These are the catalog price of an articulated bus and standard 12m bus plus special equipment for
BRT respectively.

4-2-2 Vehicle Maintenance Equipment

In order to perform safe and reliable BRT operation, enforcement of the periodic inspection
which prevents vehicles failure is proposed. When a workshop is established in the depots, each
workshop shall have the maintenance capacity of approximately 200 buses. The major
equipment which is needed to carry out the periodic inspection (e.g. monthly, every 3 month and
every 6 month) and the unscheduled inspection for 200 buses in each workshop is estimated as
shown in the following table. All equipment would be imported.

Procurement Cost Estimation

The necessary number of buses is estimated at 97 articulated and 105 standard buses The
procurement cost of a bus and the maintenance equipment is estimated as follows:

17
 Major Equipment for Bus Maintenance
Item Equipment Remarks Qty per Workshop

Movable frame lift Capacity 10 tons

4
Transmission gear jack Capacity 800kg 1
Wheel dolly 1
Drum pump Manually and rotatory type 1
Mechanical tool set General tool for large-sized
Equipment for inspection 5 sets
vehicle
Pneumatic-hydraulic garage jack Capacity 15 tons, 250~430mm 3
Service creeper 420mm x 840mm 4
Deferential gear jack Capacity 300kg, 200~800mm 1
Brake fluid bleeder 18 littler 1
Engine compression gauge set 1
Wheel/Tire/Brake Automatic tire inflator Floor type, 10 -700 kPa
2
maintenance
Engine/Transmission Air valve lapper 0.58MPa 1
maintenance Engine stand Capacity 550kg 2
Car washing equipment Heated water high pressure washer Capacity 1,500 litter/hour 2
Air impact wrench and sockets 1/2 sq.in, 3/4 sq.in, 1 sq.in. drive 3 sets
Electric tool Torque amplifier Capacity 1,500 Nm 1
Port-power set Capacity 10 tons 1
Socket wrench set 3/8 sq.in, 1/2 sq.in 1 sq.in. 3 sets
Hand tool
Chain block Capacity 1.5 tons 1
Torque wrench set 3/8 sq.in, 1/2 sq.in, 3/4 sq.in, 1
4 sets
sq.in.
Digital multi tester DC/AC, Power current and
Measurement device 1
voltage
Combination socket for impact 1 sq.in. 41 x 21 mm
2
wrench
Battery maintenance Quick battery charger 12-24V/100A 1
Air compressor Capacity 15 kW, 0.93MPa,
Air compressor 1
Receiver tank 340 litre
Semi-automatic CO2 welding 200A
1
machine
Welding Plasma-arc welding machine 35 A (3-phase) 1
Spot welding machine 8,500A 1
Electric component Circuit tester Analog 1
maintenance Clamp tester 1,000A (DC/AC) 1
Sling chain Capacity 2 tons, single hook 2
Hoisting device Sling chain Capacity 2tons, double hook 8
Movable floor crane Capacity 1 ton 2

Table 4-1: Major Workshop Equipment

Estimated Cost of Bus and Maintenance Equipment in US$

Articulated bus per unit Standard bus per unit Workshop Equipment

F/C 120,000.00 80,000.00 150,000.00

L/C 30,000.00 20,000.00 -
(Import duty of 5% is included)
Sub total 150,000.00 100,000.00 150,000.00
VAT 27,000.00 18,000.00 27,000.00
Total 177,000.00 118,000.00 177,000.00
( US$ 29,736,000.00 in total)

18
Chapter 5 Operation and Maintenance Costs

5-1 Operation Plan

5-1-1 BRT Routes

(1) Operation
It is proposed that 85% of the articulated units be used along the Kilwa Road from Mbagala to
the City Centre while 15% will be used along the Changombe Road to Kawawa Road because of
the length of the road and expected demand. Excess demand between Changombe Road and
Kawawa Road can be covered with the standard buses. The first few days of operation will give
a clear picture of the bus allocation and a new plan will be introduced accordingly.
Peak Hour Operation
The target capacity in peak hours is over 20,000 passengers per hour per direction if the target of
495,000 passengers per day will be realized. Since the capacity of DART Phase 2 bus is planned
as 140 passengers, the necessary frequency is calculated as 142 per hour (2.4 per minute). In this
case, buses should arrive at station in 25 seconds interval. From this high frequency, the time
table of bus arriving will not be necessary for passengers. However, DART should be operated
based on a time table for efficient operation.
(1) Time at Station
Short boarding and alighting time at stations will increase the capacity. However, it is proposed
to fix the boarding and alighting time at stations at 20 seconds to enable the scheduled operation
of buses. The time of 20 seconds at a station for boarding and alighting is a popular time of BRT
operations in the world. In addition to the boarding and alighting time, deceleration and
acceleration time will be necessary at stations. For comfortable riding, rapid deceleration and
acceleration should be avoided. The time is approximately 10-20 seconds. In total, 40 seconds
will be necessary for a bus at a station.
(2) Speed
It is necessary to keep the BRT speed even in peak hours otherwise the benefit of BRT will
become small. The target speed is 25km/h.
(3) Convoy system operation
A boarding and alighting slot can deal with only 1.5 buses per minute (60/40). To achieve 2.5
buses per minute, two slots with a passing lane are necessary. However, three slots for boarding
and alighting were proposed to apply a convoy operation. In this case, two or more buses are
operated in a group which arrive and depart at the same time. If two buses arrive at a 48 seconds
interval, the capacity of 20,000 passengers per hour is possible.
(4) Peak Hours
Peak hours along the Kilwa corridor are approximately three hours from 6:00- 9:00, while
evening peak continue approximately four hours from 17:00-21:00. In total, the peak hour
operation should be applied for 7 hours in a day.
(5) Off-peak Hour Operation
The frequency should be reduced according to passenger demand. However, it is necessary to
maintain the minimum frequency.

19
5-2 Personnel Plan
5-2-1 Required Staff
Efficient staffing is one of the important issues of a public transport operation. On the other
hand, the DART project will succeed only when the customer service is satisfactory for
passengers. Good staffing is the fundamental part of the customer service. WCB ltd undertakes
that all its staff members for the DART system should be highly trained and skilled for their
designation, which contributes to high quality customer services. From this viewpoint, the
necessary staff was identified as shown in Table 5-1.

Occupation Roles and Duties

Chief Executive Officer Represents WCB ltd and responsible for the management.
Head of Department Manages section(s) to assist the CEO.
Administrative Staff Works for the administration of the company to assist the management.
Drivers Drive the WCB ltd DART vehicles safely and efficiently.
Mechanics Keep the DART vehicles in good condition for the safe operation.
Station staff Works for safety of passengers and assist for safe operation of the DART.
Security staffs Keep the DART area be secured from any dangers from criminals.

Table 5-1 Roles and Duties of Expected Staff

Numbers of drivers and mechanics were estimated by assuming 2.0 and 0.20 persons per one
vehicle respectively. WCB ltd is expected to be operational every day all through the year, the
number of staffs at the site such as drivers, station staffs and mechanics are increased by
assuming 300 working days and 10% spare staffs. Therefore, in addition to the 2.0 and 0.20
persons per bus for drivers and mechanics respectively, a conversion factor of 1.34 was applied,
which represents working days per year and spare ratio (10 %) of the staffs. The calculations
were based on the following formulas. No. of drivers = 2.0 (per vehicle) * 183 (operating
vehicles) * (365/300) * 1.1 No. of mechanics = 0.20 (per vehicle) * 202 (total vehicles) *
(365/300) * 1.1.
5-2-2 Personnel Cost
Table 5-2 shows assumed personnel cost of WCB ltd. As dictated in the mass transit plan, a
separate fare collecting company is responsible for the fare collection and will be appointed by
the DART Agency. Monthly personnel cost by occupation was estimated based on the current
prevailing rates in the transport sector in the region.

Occupation No of Staff Monthly Personnel Cost in US$

Chief Executive Officer 1 5,000.00
Head of Department 3 9,000.00
Administrative Staff 50 9,000.00
Drivers 490 112,700.00
Mechanics 54 9,720.00
Station staff 205 22,550.00
Security staffs 100 11,000.00
903 178,970.00
Table 5-2 Monthly Personnel Cost of WCB ltd for the DART system

20
5-3 Operation & Maintenance Costs
5-3-1 Vehicle Operation Cost
The vehicle operation cost is a representative variable cost of the DART operation system,
which varies in proportion to operated distances of the DART vehicles. The vehicle operation
cost includes fuel, lubricant, tyre and filter costs in this study. The vehicle operation cost was
estimated based on future total annual DART vehicle-km by assuming specification of the
DART vehicle such as fuel, daily service hours, operating speed and so on. Fuel consumption
rate, useful life, of tyre and others are assumed properly in this calculation. The cost was
estimated at the constant price of August 2016. Table 5-7 shows the vehicle operating cost per
one vehicle-km.

Estimated Vehicle Operation Cost per vehicle-km (US$)

Category Cost
Fuel 0.29
Lubricant 0.07
Filters 0.03
Tyre 0.17
Total 0.56
Table 5-3 Estimated Vehicle Operation Cost per vehicle-km adapted from the Karachi Study

Annual vehicle operating cost was estimated as much as US$ 11,085,760.00 for the entire fleet.
5-3-2 Vehicle Maintenance Cost
Vehicle maintenance cost of the DART system was estimated based on maintenance scheme,
which stipulates timing of change and overhaul by part in terms of operated distance and/or
period of operation. The maintenance cost of a DART vehicle is estimated as US$ 8,900.00 for a
500,000km operation according to Victoria Transport Policy Institute. Therefore, unit maintenance
cost per vehicle-km was estimated to be USD 0,02. Annual total vehicle maintenance cost was
calculated as US$ 395,920.00.

5-3-3 Vehicle Insurance Cost

The insurance cost was assumed as 3 % of vehicle purchasing cost per annum. Annual insurance
payment was calculated to be US$ 751,500.00 for the fleet,.

5-3-4 Other administrative cost

It would be practical and conservative to admit the unpredictable cost for the implementation
of future projects. The Study assumed the unpredictable cost as other administrative cost and
appropriated US$ 496,486.00 per year, which is 4 % of the sum of personnel cost, vehicle
operation cost, vehicle maintenance cost and vehicle insurance cost. The 4% was derived from
experiences mentioned in Wright et al (2007). The other administrative cost is considered to
include office expenditures, telephone charges, utility costs, repair costs and contingency.

21
Table 5-4 Summary of O & M Cost

O&M Cost per year in US$

1. Personnel Cost 178,970.00
2. Vehicle Operation Cost 11,085,760.00
3. Vehicle Maintenance Cost 395,920.00
4. Vehicle Insurance Cost 751,500.00
5. Other Administrative Cost 496,486.00

Total 12,908,636.00

22
Chapter 6 Business Model

6-1 Introduction
The popular business model applied by successful BRT systems in the world is competition for
the market but monopoly in the market. The major feature of the popular business model is:
o A public entity is responsible for the implementation of the project.
o Infrastructure, including busway, stations, depot, and pedestrian bridges, is developed by
public sector.
o The system is operated by private sector under the contract between the operator and the
public entity.
o The private operators are selected by competitive bidding.
o Passenger fare is collected by another private company than the operator. The public
entity receives the passenger revenue.
o The operators receive a contract amount from the revenue based on the vehicle
kilometers (not the number of passengers).
o The private operators are responsible for purchase and maintenance of vehicles as well as
operating costs such as fuel and drives.
The basic structure of the WCB ltd DART Phase 2 project is the same as the business model
mentioned above DART Agency gives an exclusive concession to WCB ltd and pays the
contract amount based on performance.

6-2 Contract Type

6-2-1 Net cost model and gross cost model
There are two types of contract in terms of revenue risk: net-cost contracts and gross-cost
contracts. In a net-cost contract, WCB ltd receives the passenger revenue, while the payment
from public sector based on the performance such as vehicle-kilometers travelled is the revenue
in a gross-cost contract. In other words, WCB ltd takes revenue risk in a net-cost contract while
public sector takes the risk in a gross-cost contract. WCB ltd proposes to employ the gross-cost
contract because it can ensure the quality of the bus services. In case of net-cost contract, the
major incentive of bus operators is to collect as many passengers as possible. This will cause
overstay at a station, overloading, low frequency in off-peak hours, and non-stop at stations of
few passengers, which are the same situation as the present minibus services.

6-2-3 Contract Structure

The contract structure is, DART Agency will take the revenue risk while SUMATRA is charged
with fare regulation. WCB ltd is responsible for rolling stock and maintenance and also takes
operation cost risk such as fuel price increase. TANROADS is responsible for infrastructure
development and maintenance, while DART Agency is also responsible for the system.

23
Chapter 7 Financial Analysis

7-1 Funding Sources

7-1-1 Private Sector Involvement

UDA-RT which is the company operating the DART Phase I project, secured funding for its 140
DART units. There seem to be very few other investment of this magnitude by a private
company in Tanzania. The DART Phase 2 system needs US$ 29,559,000.00 including VAT only
for vehicle acquisition. Even though the DART system is a completely new system to WCB ltd
and no one knows whether it would be successful or not, the existence of the Phase I provides
the necessary insight into the project and its viability. Therefore, it seems unrealistic that WCB
ltd would be confident to invest huge amount of capital for the project. It would have been
realistic and ideal to develop the whole BRT system by the public sector in terms of investment
and that the private sector operates and maintain the BRT system through concession contract.

In view of the above, it should be noted that WCB ltds involvement is proposed to be open to
foreign private companies too, who are experienced in the system. If an experienced foreign
private operator or a joint venture with WCB ltd is secured, some amount of the investment cost
would be saved in some extent.

7-1-2 Equity
In the case of WCB ltd equity investment was planned as only 10% of the total investment cost.
Similar projects like this one proposed an equity of as low as 3.7% and then were supported by
foreign funding according to JICAs 2009 report on the ongoing Karachi Transportation in
Pakistan. The total cost of the project is estimated as US$ 42,6 million. The equity investment is
planned as US$ 4,46 million only..

7-1-3 Loans
Two types of loans were considered. One is Foreign Financing through foreign financing Firms,
which usually provide very soft loans for such projects, for the long term loan. The other type is
a short term loan available in the domestic market to cope with potential cash shortage and any
local charges not met by foreign finance. The conditions of the loans are summarized below:

Foreign Loan
Interest Rate: 4% per annum (0.01% per annum for consulting service) Repayment period: 10
years (including grace period of up to 3 years)

Short Term Loan

Interest Rate: 9% per annum
Repayment period: 3 years
The condition of the short term loan was derived from the prevailing interest rate in Republic of
Tanzania on United States Dollar finance. It should be mentioned that the foreign loan amounts
to 80% of the total investment cost. Therefore, 20% of equity investment to the total project cost
is considered reasonable.

24
7-2 Financial Calculation
7-2-1 Assumptions
(1) Pricing date
The pricing date of the financial planning was assumed as of August 2016.
(2) Foreign exchange rate
Foreign exchange rates in September 2016(average monthly rate) were adopted as below
Tanzania.
US$1.00 = TSH2200.00

(4) Construction period and the opening year

As mentioned in the Chapter 5, the construction project is assumed to start in September of 2016.
The construction of the DART Phase 2 system infrastructure will be completed by the end of
2019. Since the DART system is a completely new system to WCB ltd training of staff is crucial
to operate the system safely. Training is scheduled to start six months towards the completion of
the construction to secure reliable and safe operation of the system.
(5) Ridership
Ridership of the DART Phase 2 system was estimated as 495,000 per day by the Study Team.
Although the number is a bit bigger than the system transport capacity, the ADB Study Team
considered the number as realistic. The ridership is assumed to stay same level during the project
life period.

7-2-2 Capital Cost

(1) Initial investment cost
The total initial investment cost is estimated as US$ 42,6 million, which includes the personnel
costs and other costs. Pure project cost is estimated as US$ 30,232,486.00 as summarized in
Table 7-1. The cost is shown in 2016 constant price.

Initial Investment cost in US$

F/C L/C Total
Buses
20,040,000.00 9,519,000.00 29,559,000.00
Workshop Equipment
142,500.00 34,500.00 177,000.00
Administration cost
496,486.00 496,486.00
Total
30,232,486.00

Table 7-1 Initial Investment Cost of the WCB ltd BRT System Project

(2) Additional investment cost

No additional investment cost was appropriated, because number of passengers is estimated
same as the opening year during the project life period.

(3) Depreciation and Re-investment cost

Buses are to be depreciated over a 10 year period while the workshop equipment will be
depreciated over 15 years.

25
The DART project is given a lifespan of 30 years for the purposes of this plan. Invested assets,
which have less useful life than 30 years of the project life, should be re-invested before the
useful life is expired. BRT buses and Workshop Equipment are re-invested as shown in the Table
below. The costs in the table are converted by 1.1 against the original investment cost to include
physical contingency, consulting services and administration to the re-investment cost.
Table 7-3 Re-investment Cost by Year

Re-Investment cost by year in US$

Re-investment in 2040
Re-investment in 2030 Re investment in 2035
F/C L/C Total F/C L/C Total F/C L/C Total

Buses
20,040,000 9,519,000 29,559,000 20,040,000 9,519,000 29,559,000
Workshop
Equipmen 142,500 34,500 177,000
t

Administr
ation cost 496,486 496,486 496,486 496,486 496,486 496,486

Total
30,055,486 673,486 30,055,486

7-3 Financial Statements

The calculation sheets are shown below. Price escalation was considered for the analysis. The
conditions of the calculation and the major indices are shown below.
(1) Financial Internal Rate of Return (FIRR)
The FIRR of the project was calculated as 14.3%. The calculated rate exceeded the hurdle rate of
14.0%.
(2) Profit and Loss
Regarding the profit and loss, the project shows a very good performance. The BRT system
appropriates operating profit from the second year of the commercial operation, except for the
first year of operation, when the training program takes place for 6 months and the revenue
operation is assumed only for six months. The operating profit increases year by year because the
fare revenue increases every year by the assumed inflation rate.
(3) Cash Flow & Net Cash Flow
The cash flow also shows a stable situation except for the years when re-investments are required
as same as the Base Case. The net cash flow, which shows the actual cash reserve of the project,
exhibits good performance as well, except for the first year when the training scheme takes
place. The project needs some extra cash of US$ 12 million through the domestic monetary
market at a very high interest rate of 9%. However, as the accumulated net cash flow shows, cash
reserve of the project is affordable to pay for the huge re-investments in future years. The future
cash reserve is considered sufficient.

(4) Other Indicators

The Debt Service Coverage Ratio (DSCR) indicates affordability of interest payment and
repayment of the principal. The indicator shows high enough value through the project life,
except for the years of the re-investment. Affordability of the project seems high enough. The

26
indicator showed better values than the Base Case. The operating ratio indicates profitability of
the project, by calculating ratio of sum of O & M cost and depreciation cost against the operating
revenue. If the value is less than 100, the project is considered profitable.

PROFORMA CASHFLOW STAEMENTS

Monthly Projection Detail
Bus Type Fare Trips Capacity No of Availability Productivity Cost Sales
* 30 \buses
140 Seater 0.272727 600 140 97 0.9 0.8 485,610
1,599,970.91
70 Seater 0.181818 600 70 105 0.9 0.8 485,610
577,309.09
Total 971,220
2,177,280.00
Labour 178,970
cost

PROFORMA PROFIT & LOSS STATEMENT (PENDING)

7-4 SWOT ANALYSIS

Strengths Weaknesses

New concepts in the industry New to the type of operation

Focused player Finance
Strong skills base
Valuable physical state of the art
equipment and buses
Innovativeness
Opportunities Threats

Sharply rising demand in the industry Other established and well financed players
Commuters who value quality service and Likely entry of potent new competitors.
products
Training
Other geographical markets

27
Chapter 8 Economic Analysis

8-1 Economic Benefits of the Project

8-1-1 Quantitative Impact
(1) Travel Time Reduction of Bus Passengers
Presently, the average speed of a minibus is approximately between 10 and 15km/h in Dar es
salaam due to the heavy traffic and road conditions. It is expected that the BRT system will be
operated at an average speed of 25 km/h. This will reduce the travel time of bus passengers. The
benefit from the travel time reduction is expected to run into billions of shillings per year due to
increased productivity.
(2) Reduction in Vehicle Operating Cost (VOC)
Introduction of large buses for the BRT system will reduce the number of buses, which will save
fuel consumption and vehicle operating costs. The total VOC saving is expected to be billions of
shillings per year.
(3) Traffic Impact
The phasing out of Daladala units along the trunk and feeder routes is expected to bring relief to
other road users as a significant chunk of vehicles will be moved from the roads.
(4) Job Creation
The operation will create employment for almost a thousand people

8-1-2 Qualitative Impact

The following impacts are expected by the project, although measuring the impacts in numeric
units are difficult.
(1) Improvement of Citys Image
Megacities in the world have introduced mass transit system including BRT systems in recent
years, which have impressed the world that the cities are economically growing. Mass transit
system in these cities became a symbol of the steady growth of the city. DART system with
modern type vehicles will improve the image of Dar es salaam.
(2) Increase in the Elderly, Women, and Children s Trips
Presently, the trip rate of the disadvantaged members of the society including the elderly, women
and children in Dar es salaam is very low because of the lack of safety and a poor transport on
the roads. DART system will provide a safer transport system than existing minibuses. The
project will encourage the previously disadvantaged members of the society to make more trips
and to participate in social activities.
(3) Crime Reduction
DART system will ensure transparent fare collection by installing ticket gates and monitoring
cameras to avoid free riders. Cameras will be also installed at major intersections to monitor the
operation of DART buses. The presence of security cameras can reduce crime in the city.
Lighting at stations will also contribute to reduce crime in night time.
(4) Pedestrian Safety
Pedestrian bridges will be constructed to access DART stations. People can use the pedestrian
bridges even if they do not use BRT. The new pedestrian bridges will increase the number of
crossing points along the corridors, which encourages people to use the bridges instead of

28
crossing roads of heavy traffic. It is expected that traffic accident on road involving crossing
pedestrian and cars will decrease.

(5) City Development

Development in Mbagala is one of the important land use development in the city. Since the
DART corridor connect Mbagala to the center of the city, urban development in that area will be
promoted.

29