Do we need another State company to manage bus terminals?

By Dhananath Fernando

Originally appeared on The Morning

Among the recent Cabinet decisions was a proposal to establish a new State-owned company to operate multimodal transport hubs such as Makumbura and Kadawatha.

At first glance, this may sound like a sensible idea. Anyone who uses public transport knows that Sri Lanka badly needs better terminals. Buses, trains, taxis, parking facilities, and passenger information systems must be properly connected. Toilets must be clean. Timetables must be reliable. Passengers must be able to move from one mode of transport to another without confusion.

But the real question is not whether these facilities should be managed better. The question is whether we need another Government company to do it.

Sri Lanka has tried this model before. The common facilities at the Southern Expressway interchange are operated through Canowin Hotels and Spas Ltd., a Government-linked company associated with Canwill Holdings and State-owned institutions. Although the facility remains at a reasonable standard, anyone who has visited it would know that its commercial and service potential is much greater.

The Government also attempted a similar approach with metro bus operations by setting up a new company and injecting public money into it. Every such company requires a board of directors, senior management, office space, staff, vehicles, and an initial capital contribution from the Treasury. Before a single passenger receives a better service, taxpayers must first finance another institution.

We have seen a smaller version of the same problem at the renovated Central Bus Stand in Pettah. A large amount of attention and public money went into reopening the facility. Yet within a very short period, even some of the washroom facilities had been damaged.

A better management model

This is not simply a problem of investment. It is a problem of maintenance, incentives, and accountability.

Multimodal transport hubs, airports, ports, and large terminals require specialised management skills. They must deal with thousands of passengers, multiple transport operators, retail spaces, security, cleaning, traffic flows, ticketing, and commercial activities. The quality of the service depends on countless small decisions being made every day.

Governments are generally not good at making those decisions quickly. They do not have the same flexibility in hiring, procurement, pricing, and operations. More importantly, those responsible for failure rarely face any direct consequences.

If a washroom is dirty, a signboard is broken, or a timetable is not displayed, which official is held responsible? If passenger numbers decline or commercial spaces remain empty, who bears the loss? In most Government institutions, the answer is the taxpayer.

A better model is already available within Sri Lanka’s transport sector.

The Colombo International Container Terminals and the South Asia Gateway Terminals operate within the Port of Colombo with significant private sector participation. The Government remains the landlord and retains an important regulatory role, but private operators bring capital, technology, management systems, and international expertise.

This model is not perfect. The Government continues to play multiple roles as owner, shareholder, and regulator. That can create conflicts of interest. But it is still more effective than the Government attempting to operate every terminal directly.

The lack of progress at the East Container Terminal provides a useful contrast. When politics, State ownership, and operational decisions become mixed together, projects are delayed and opportunities are lost.

The Government’s responsibility 

The same principle can apply to multimodal transport hubs.

The Government can retain ownership of Makumbura, Kadawatha, and other transport centres while allowing professional operators to manage them under clearly defined contracts. This can be done through a public-private partnership, a build-operate-transfer arrangement, a concession, or a management contract.

The contract should specify the standards expected from the operator: cleanliness, safety, passenger waiting times, availability of information, maintenance of toilets, parking management, retail services, and accessibility for people with disabilities.

Performance indicators must be measurable. Penalties should apply when standards are not met, while the operator should be able to earn a return by improving the facility and attracting more passengers and commercial activity.

Even when the Government wants to provide public transport at a subsidised rate, it does not have to operate the terminal itself. Subsidies can be transparent and targeted. The operator can be paid based on passenger numbers, service standards, or the availability of essential facilities.

The Government’s responsibility is to ensure that passengers receive a good service, not necessarily to employ everyone who provides that service.

Airports around the world, including major hubs such as Delhi and Heathrow, operate with substantial private sector management and investment. Their success does not come merely from building modern terminals. It comes from the discipline, systems, and incentives required to maintain them every day.

Sri Lanka has many Government buildings and infrastructure projects that were opened with modern technology and great publicity. Within a few years, equipment stops working, repairs are delayed, and facilities begin to deteriorate.

The difficult part is rarely cutting the ribbon. The difficult part is maintaining the facility after the politicians and television cameras have left.

The best way to provide a public service

There is also a much larger opportunity.

Railway stations in areas such as Pettah, Kollupitiya, and Bambalapitiya sit on some of the most valuable land in the country. With the right concession structure, private investors could modernise the stations, improve passenger facilities, and develop commercial spaces without requiring the Government to finance the entire project.

The railway could retain ownership of the land and receive concession fees or a share of the revenue. Passengers would receive a better service, while valuable public assets would generate income instead of becoming another expense to the Treasury.

A similar approach could have been considered for metro bus operations. Instead of creating another State company, the Government could have allowed multiple private operators to enter the market under common standards, routes, and digital timetables.

Even companies with experience in mobility and technology could contribute. A transport management company could use traffic data, passenger demand, and digital payments to utilise buses more efficiently. Platforms such as PickMe and Uber have already shown how technology can make mobility more convenient when barriers to entry are reduced.

Sri Lanka does not lack buildings, companies, or Government institutions. What we lack are structures that connect responsibility with performance.

Rather than establishing another State-owned company, the Government should develop a clear policy framework to outsource the management of transport hubs. It should set standards, regulate safety, monitor quality, and protect passengers.

The Government can own the asset. But it does not have to clean every toilet, manage every shop, park every bus, or operate every terminal.

Sometimes the best way for the Government to provide a public service is not to provide it directly, but to ensure that someone competent is held accountable for delivering it.