FLEET POLICY OF GOVERNMENT OF RWANDA Kigali: July 2014

REPUBLIC OF RWANDA

MINISTRY OF INFRASTRUCTURE

FLEET POLICY OF GOVERNMENT OF RWANDA

Kigali: July 2014

FOREWORD

The VISION 2020, envisaged as the term development strategy for Rwanda,

assigns fundamental importance to reconstruction of the nation and its social

capital anchored on good governance, underpinned by a capable state and

development of an efficient private sector spearheaded by maximization of

efficiency and competitiveness. In order to ensure good governance, which

affects many a spheres of Rwandan life and success which will be crucial in

fulfilling the promises of the VISION 2020, it is imperative to develop an

efficient civil service in close harmony with private sector. The Zero Fleet

Policy, which was introduced in February/March 2005, was designed to

improve operational mobility and efficiency of the Government officials in

partnership with the private sector. The Rwandan Government’s Zero Fleet

policy was designed to align the interest of civil servants/officials with the

interests of the government. As such this policy was designed to reduce

capital cost, maintenance and running costs and minimise waste, misuse and

abuse of public facilities. It also intends to reduce the task of the government

to manage, maintain and oversee a fleet of vehicles and to delegate the

responsibility to the private sector for ensuring transparency, efficiency and

competitiveness in the in the allocation and use of government resources. It

had an additional objective of rewarding, retaining and motivating senior

civil servants.

The policy intends to develop an appropriate fleet management system, to

motivate Government officials with appropriate transport facilities ensuring

efficiency and operational mobility while performing official duties and to

formulate policy guidelines for vehicle hiring contracts for developing

effective private sector contributions for management of Government vehicle

fleet ensuring efficiency, productivity and cost effectiveness.

The Minister of State in Charge of Transport

Dr. ALEXIS NZAHABWANIMANA

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TABLE OF CONTENTS

Foreword ................................................................................................................. ii

Table of Contents .................................................................................................. iii

Definitions .............................................................................................................. iv

1 Background ................................................................................................................................... 1

2 PoLicy statement .......................................................................................................................... 2

3 Policy Objectives and expected outcomes .............................................................................. 4

3.1 Policy Objectives ........................................................................................... 4

3.2 Expected Outcomes ...................................................................................... 5

4 Scope of the Fleet Policy ............................................................................................................. 5

4.1 Domain of the Fleet Policy .......................................................................... 5

4.2 Development of a Fleet Management System .......................................... 5

4.3 General Guidelines for Government Vehicle Usage ............................... 7

4.4 Modifications of the 2008 Fleet Policy ....................................................... 8

4.4.1 Scope of the Scheme – .......................................................................... 9

4.4.2 Duration of the Schemes .................................................................... 11

4.4.3 Acquisition of New Vehicles ............................................................. 11

4.4.4 Insurance Coverage against Damage of Vehicle from Accidents 13

4.4.5 Replacement of Vehicle in Case of Breakdown, Accidents and

other Mechanical Failure ................................................................................. 14

4.4.6 Annual Re-evaluation of Vehicle Running Cost ............................ 14

4.4.7 Annual Re-evaluation of Km Indemnity ......................................... 18

4.4.8 Implications of the Change of the Position/Status of the

Beneficiary .......................................................................................................... 20

4.5 Project Vehicle Fleet Policy ....................................................................... 22

4.6 Motor Pool Vehicle ..................................................................................... 23

4.7 Mission and Local Car Hires .................................................................... 26

4.8 Contract Agreement with Vehicle Leasing/Hiring Companies ......... 27

4.8.1 Contract Packages of Vehicle Leasing/Hiring ............................... 27

4.8.2 General Terms and Conditions for Contract Agreement .............. 28

4.9 Development of Digitised Fleet Management Database ...................... 30

5 Conclusions ................................................................................................................................. 31

DEFINITIONS

Business Miles: Kilometre driven in Government vehicles by Government

employees, while performing official Government business.

Competent/Relevant Authority: Ministry/Government department, agency,

boards, commissions, institutions, and unit, etc. who have the professional

skill and administrative power to enforce policy directives of the

Government.

Commuting: Direct travel between home and headquarters.

Employing Agency: The ministry, agency, board, commission, committee,

council, local government or department that appointed an employee to the

employee's current state position.

Equipment: Government owned, leased or hired trailers, vegetation and

agriculture equipment, etc

Government Vehicle: A vehicle owned by the Government of Rwanda for

use to conduct official Government business. A state vehicle also includes a

commercially leased or rented vehicle that is assigned to an individual,

agency or business sub unit for use to conduct official Government business.

Headquarters City: The area within the city, town or village limits where an

employee’s permanent work site is located and the area within a radius of 30

km (based on odometer mileage) from the employee’s permanent work site.

Home: The employee's place of residence.

Motor Pool: Motor pool vehicles are available to all employees without

regard to funding source, and are billed back on a daily use basis to the

appropriate funding source.

On-Call: Generally, when the Employer requires that an employee must be

available for work and able to report for work in less than one hour.

Definition of “on-call” may vary between collective bargaining

agreements/Compensation Plan and may also be called “standby.”

Personal Miles: Miles driven in a Government vehicle that are not business-

related. Commuting is an example of personal miles.

Personally Assigned Vehicle: A Government vehicle assigned to an

individual employee for business use.

Pool Vehicle: A work shared vehicle available for business use through

reservation.

Public institution: is an entity in Rwanda which is backed through public

funds and controlled by the State. It includes all Government Ministries,

institutions and agencies including all full or semi- autonomous Government

organizations.

Qualified Non-Personal Use Vehicle: Those vehicles used primarily by law

enforcement or fire fighting personnel.

RDF: Rwanda Defence Force

RNP: Rwanda National Police

Travel: the absence of an employee from headquarters on government

business with the prior approval of the appropriate authority

Usage: employee use of Employer vehicles and equipment

Vehicles: Government owned, leased or hired automobiles, trucks, graders,

loaders, etc

1 BACKGROUND

The Zero Fleet Policy, which was adopted in February/March 2005 by

the Government of Republic of Rwanda (GoR), was designed to align

the interest of civil servants/officials with the interests of the

government. As such this policy was designed to reduce capital cost,

maintenance and running costs and minimise waste, misuse and abuse

of public facilities on one hand and to provide incentives for retaining

and motivating senior civil servants on the other.

In principle a zero fleet policy appears to be a good policy. However,

costs savings were less than anticipated because of number of reasons,

such as: (i) high increase in Local and Mission car hires, (ii) lack of

clarity in the policy guidelines, (iii) absence of an effective fleet

management system, (ii) absence of proper recording and analysis of

data in a digitised database, (iv) potential extension of the scheme

beyond practical limits and thereby leading considerable extra costs,

(v) inclusion of vehicle loan on the basis of grade rather than

operational needs, (vi) inappropriate application of the policy in

projects, which not only increased operating costs of projects but also

deprived government from receiving substantial number of project

vehicles by donation at the end of the project and (vii) weak

contractual agreements with private operators without adequate

safeguards against negligence and substandard service.

The cost savings from the policy has largely been nullified or even

overturned due to high increase in Local and Mission car hires. The

overall cost is going to increase further if the new value of vehicles and

existing lump sum level of payments are adjusted to take into account

price rises and/or the scheme is extended to include judges and other

professionals.

It is therefore imperative to develop a new fleet policy, which will not

only reduce capital, maintenance and running cost but also ensures

that those who are conducting government business use the most

appropriate and cost-effective mode of transportation that enables

maximization of mobility and operational efficiency.

2 POLICY STATEMENT

Brief Policy Statement:

This Policy will supersede the 2013 Fleet Policy, and any guidelines,

procedures and agreements previously written or understood for new

beneficiaries as of 1

of August 2014. However, current beneficiaries

will continue to use the existing contracts until the end of their terms,

after which they will be subjected to the new fleet policy.

All ministries/agencies of the Government of Rwanda will manage the

operational mobility and commuting travel needs of the staff in a

manner that ensures maximum mobility and accessibility to

Government officials mainly through:

(i) outlining the scope of the current vehicle loan and special

schemes explicitly making it transparent and easy to operate;

(ii) ensuring that Government provide 100% vehicle operating and

loan repayment costs for vehicle loan scheme;

(iii) downsizing the domain of the fleet policy by dropping majority

of the Subsidiary Schemes;

(iv) ensuring that where possible the government vehicle fleet on

vehicle loan scheme will be established by combining

operational need and remuneration benefit to staff considering

both full private and commuter use;

(v) making provisions for annual reassessment of purchase and

operating costs of vehicle considering cost escalation and

inflation;

(vi) not encouraging officials at Director levels and below to take

vehicle loan but to provide them with monthly transport

allowance for official mileage as a part of monthly salary,

(vii) keeping provision to rent/purchase vehicles as Qualified Non-

Personal Use Vehicles on the needs of the concerned

ministry/organization where there are needs for operational or

pool of vehicles, such as RDF, RNP, ambulance and forest

management services as this need cannot be accommodated by

or it is not appropriate to purchase a vehicle as part of a vehicle

loan and special scheme;

(viii) keeping some development projects, where there are special

needs for operational field vehicles for providing services in

remote/rural areas, outside the scope the vehicle loan and

special scheme and reviving the provisions of the transferring

the ownership of the project vehicles to government after the

completion of the project at the end of project either selling

project vehicles through an open bidding process or reallocating

them to RDF, RNP and other emergency services in accordance

with their potential transport needs,

(ix) Allowing districts and Central Government School Inspectors,

governmental high schools, universities and other institutions of

higher education as well as local health centres in Provinces and

some government institutions where there is a need for

operational or pool vehicles that cannot be accommodated by or

it is not appropriate to offer the vehicle as part of a staff

member’s remuneration or Vehicle Loan Scheme to own or lease

a limited number of vehicles as motor pool vehicles, which will

be made available to all employees on legitimate travel demand;

(x) establishing and assigning a Government Fleet Management

Team at MININFRA with the responsibility for overseeing the

policy implications and operational strategies of the fleet

management including the supervision and monitoring of the

implementation of the Government owned vehicle, vehicle loan

and special schemes; and

(xi) including penalties in the contract of the hiring companies for

providing late or substandard services.

Application

This policy will apply to the all public institutions and private vehicle

operators, who provide the transport services and cover all

Government owned, leased, and/or hired vehicles/equipment

employed for Government business.

Responsibility:

The responsibility of the public institution as well as that of employee

in relation to the Fleet Policy will be as follows.

Public institution:

It is the responsibility of individual public institution to:

• ensure that all employees and private vehicle operators are aware

of all policies related to the use of any government owned, leased

or hired vehicles or equipment;

• monitor usage of vehicles and equipment, where necessary; and

• enforce the rules and regulations of this policy directives.

Employee:

It is the responsibility of employees to:

• use Government owned, leased or hired vehicles and equipment

for work related purposes; and

• not to participate in any activities which are in violation of laws,

rules and regulations of GoR or this policy.

3 POLICY OBJECTIVES AND EXPECTED

OUTCOMES

This Policy will provide strategic framework for reducing capital,

maintenance and running cost of vehicle fleet while ensuring mobility

and operational efficiency to eligible government employees. The

policy objectives and the key expected outcomes of the initiative are

outlined in the following sections:

3.1 Policy Objectives

The objectives of the policy are to:

(i) develop appropriate fleet management structure and

assign responsibilities for the supervision and

implementation of different components of the fleet

policy to a central fleet management authority at

MININFRA as well as relevant ministries/agencies;

(ii) modify the “2008 fleet” policy by restricting both the

domain and the magnitude of the policy to reduce

Government’s subsidy to an affordable limit;

(iii) formulate the policy guidelines for vehicle hiring/leasing

contracts providing adequate safeguards against

substandard service and negligence;

(iv) develop a central fleet management database at

MININFRA.

3.2 Expected Outcomes

In line with the objectives listed above, the key outcomes of this policy

will be:

(i) A comprehensive strategic framework for Government

fleet management that is well defined and transparent;

(ii) Efficient fleet operation and management system for

GoR;

(iii) A strong Government Fleet management team as well as

central fleet management database at MININFRA

4 SCOPE OF THE FLEET POLICY

In line with the objectives listed above, the policy will have

corresponding specific components as outlined in the following

paragraphs;

4.1 Domain of the Fleet Policy

This policy will apply to all public institutions and covers all owned,

leased, and/or hired vehicles/equipment. This policy will supersede

any policy, guidelines, procedures and agreements previously written

or understood.

4.2 Development of a Fleet Management System

A Government Fleet Management Team shall be set up under

MININFRA, who will be responsible to oversee the overall policy

implications and operational strategies of the fleet policy including

overseeing the management of Vehicle Loan scheme and Special Group.

However, the responsibility of enforcing any policy directives of the

Government Fleet Management Team will be vested on all concerned

public institutions. The relevant public institution will be responsible for

policy enforcement. It will be the responsibility of each public institution

to make employees aware of this policy, provide employees enough

guidance concerning this policy, and take appropriate actions, as it

deems necessary.

Effort shall be taken so that the Government Fleet Management Team

will be not only the provider of traditional fleet services but will act as a

overall coordinator, joint service provider and vehicle asset manager in

close collaboration with private sector operators. The ultimate goal of

the Government Fleet Management Team will be to establish strategic

public private sector partnerships that assist in providing safe, reliable

and cost effective transportation for the government officials. The

Government Fleet Management Team shall be innovative in designing

and implementing some of the best business practices in providing

competitive fleet services for:

• vehicle fleet planning, management and utilization;

• acquisition, disposal, replacement, inspection and maintenance of

vehicle fleet;

• operation and management of group transportation alternatives

(e.g., ride sharing, government or rental vans/buses) giving

priorities over individual vehicle travel for groups of employees

who are required to travel to the same business location.

• overall operation and management of the loan scheme contracts;

• planning and evaluating the running and operating costs of loan

scheme annually;

• providing suggestions regarding appropriate package for vehicle

lease/hiring agreements;

• determination of the optimum level for Government subsidy and

selection of appropriate financial package for fleet management.

• communicating vehicle management policies and procedures

across different public institutions;

• assessing the transport needs, operational mobility and scope for

the gain in operational efficiency for government officials;

• developing and managing of fleet database.

The fleet managers at public institutions should:

• ensure that vehicles are appropriately assigned, utilized and

managed;

• develop the institution fleet plan;

• act as the public institution contact with the Government Fleet

Management Team for overall fleet management and practices

related vehicle insurance and vehicle loan scheme; and

• collect and supplying fleet management information to fleet

database including vehicle inventory, vehicle usage log and

service planning;

• assess the transport needs, operational mobility and the scope for

the gain in operational efficiency for government officials;

• develop and managing of fleet database.

4.3 General Guidelines for Government Vehicle Usage

Vehicle Usage

The user of Government owned/leased/hired vehicle shall abide by

general guidelines as specified in the Fleet Policy. Failure to abide by

the following guidelines will result in disciplinary action by the

employer up to and including dismissal for the concerned employee or

imposition of fines and including cancellation of the service contract

for the private vehicle operators, who are selected through open

bidding process:

(i) any person using a Government vehicle shall do so only with

the proper departmental authorization and in accordance with

Fleet Policy;

(ii) persons operating a government-owned/leased/hired vehicle

must have a valid driver’s license;

(iii) all drivers shall comply with the rules and regulations of

driving, and traffic laws in the region where operating. Any

traffic violations shall be the responsibility of the operator and

outstanding fines must be paid immediately; and

(iv) safety belts must be worn at all times when operating a

Government vehicle;

Guidelines for Operators

(i) operators are responsible for completing any log books or report

forms placed in the vehicles by Fleet Management;

(ii) operators shall be responsible for keeping their vehicles clean

and tidy at all times;

(iii) operators are required to comply with any maintenance

schedules set out for the vehicle and replace any unfit vehicle as

determined by the competent authority;

(iv) operators shall be responsible in reporting to the duties in time

and any late arrival will be penalised proportional to the time

being late from the schedule arrival time;

(v) operators shall be responsible for providing continuous service

while on duty and any disruptions of service due to break

down, lack of fuel or any other substandard services will be

subjected to appropriate fines as determined by competent

authority as per service contract;

(vi) operators shall be responsible for providing mechanically fit

vehicle intended for a any specific task on demand from the

relevant authority and failure to provide requisite service on

demand will result in imposition of appropriate fines as

determined by the competent authority as per conditions of the

contract;

(vii) operators may be required to participate in safe driving

programs from time to time;

(viii) in the case of accidents, involving Government vehicles,

operators must report to the appropriate authority as well as

police as required by the relevant traffic law; and

(ix) persistent violations of the standard practices as specified in this

policy or service contract may result in the cancellation of the

lease/hiring contract after issuing at least two cautionary

notices for improvement by the appropriate authority.

Permanently Assigned Vehicles/Equipment

All government vehicles/equipment operated from a permanently

assigned place of work shall be parked at the end of the day‘s work at

the assigned location. Exceptions to this rule will be as follows:

(i) for periods during which the employee is officially on call, the

Government vehicle may be kept at his/her place of residence.

During circumstances where a Government vehicle is parked at an

employee’s residence, the vehicle shall not be mobile for any reason

other than official Government business. The vehicle will be at the

employee’s residence for parking only. No employee shall be

permitted to use a Government vehicle from his/her place of residence

to work on a daily basis unless such use is authorized by the

appropriate authority.

Travel Status

Vehicles/equipment operated by employees on travel status shall be

used for Government related business only.

4.4 Modifications of the 2008 Fleet Policy

The following modifications of the 2008n Fleet Policy will be introduced

in the design and the management of the scheme. The structure of the

existing schemes is kept the more or less the same dropping majority of

the Subsidiary Scheme but an increase to maximum the government’s

contribution to equity and Government taking full responsibility for

expected running cost for official business while downsizing the ceilings

is suggested.

4.4.1 SCOPE OF THE SCHEME –

There shall be provisions for two variants of the scheme as follows:

Vehicle Loan Scheme

Vehicle Loan Scheme will be applicable to Ministers, Ministers of State,

Permanent Secretaries, Senators, Deputies (member of Parliament),

Mayors, Director Generals, Vice Mayors, Executive Secretaries of

District and their equivalents, selection being on the basis of operational

needs. Under the scheme the beneficiary shall be entitled to receive:

• A full tax exemption on the retail cost of a vehicle;

• A portion of monthly lump sum that will cover 100% of the

expected running costs; and

• A 100% contribution towards the repayment of monthly loan

instalments including interest for 100% purchase cost of the

vehicle without tax for a period of 5 years, to be received as a part

of monthly lump sum.

The Government Fleet Management Team collect and analyse data

during the year and will adjust the amount of the lump sum for vehicle

running costs under this scheme annually before 1

April every year

taking into account the category of the beneficiary, intended use, cost

escalation and inflation. All new as well as existing contracts, if any,

after the cost adjustment will fall into the new price regime and

monthly lump sum for vehicle running cost will be adjusted for every

beneficiary accordingly.

In addition the beneficiary under the Vehicle Loan Scheme will be

entitled to receive a Km Indemnity to cover the additional fuel,

maintenance and depreciation costs for using the vehicle for long

distance travel (outside the 30 km of the radius of the main workplace,

that is, outside Headquarters City) instead of hiring another vehicle

during the period of loan repayment. In order to be eligible for Km

Indemnity payment, the concerned beneficiary shall obtain necessary

authorisation for business miles outside 30 km radius from the

competent authority. However, car hire for beneficiaries of the Vehicle

Loan Scheme may be a preferred option where payment of Km

indemnity for a single or a group beneficiaries travelling in the same

destination is more expensive.

Special Group

The Special Group has three categories of officials as follows:

Category I

The Category I under Special Group will consist of Executive Secretaries

of Local Government at Sector level, the selection being on the basis of

operational needs;

A beneficiary under this category shall be entitled to receive:

• A full tax exemption on the retail cost of a vehicle;

• A fixed monthly lump sum as determined by the most recent

ministerial instructions related to this policy.

Category II

The Category II under Special Group will consist of a selected group of

Government officials, such as Agronomists and Veterinary of the Sector,

Veterinary, Agronomists and Inspectors of Education at District level,

the selection being on the basis of operational needs;

A beneficiary under this category shall be entitled to receive:

• A full tax exemption on the retail cost of a motorcycle;

• A monthly transport allowance as a part of monthly salary as

determined by the Ministry of Public Service and Labour

(MIFOTRA)

Category III

The Category III under Special Group will consist of Specialist Doctors

of public hospitals and Senior Lecturers and Professors of public higher

learning institutions.

A beneficiary under this category shall be entitled to receive on full tax

exemption for the retail cost of a new vehicle in accordance with the

maximum ceiling as specified in the most recent ministerial instructions

related to this policy. A beneficiary under this category shall not be

entitled to get any monthly lump sum or Km Indemnity

All other employees of the Government of Rwanda who will remain

outside the scope of monthly lump sum payment shall be entitled to

receive a monthly transport allowance as a part of monthly salary as

determined by the Ministry of Public Service and Labour (MIFOTRA).

4.4.2 DURATION OF THE SCHEMES

The duration of Vehicle Loan scheme and Special Group for the

management of the fleet as well as the renewal period for all the

schemes shall be five (5) years. After 5 years the beneficiary will be

entitled to take over the full ownership of the vehicle. The beneficiary

will then be able to re-enter the scheme. The minister having transport

in its attributions will provide, through ministerial instructions,

guidelines to manage the transitional period between the end of the

period of the scheme (5 years) and the re-entry of the beneficiary into

the scheme in case the beneficiary decides not immediately purchase a

vehicle after the period of five years has ended.

Any beneficiary under Vehicle Loan scheme or Special Scheme category

I and II will be allowed to use the vehicle for both official and private

purposes. However, beneficiaries under Vehicle Loan scheme or Special

Scheme category I should not be allowed to use the vehicle for any

commercial purpose, such as hiring, leasing, etc. during the loan

repayment period of the vehicle.

4.4.3 ACQUISITION OF VEHICLES

Before purchasing a vehicle, a beneficiary of the vehicle loan scheme

may be requested by the Government Fleet Management Team to enter

into contract with the Government of Rwanda concerning the purchase

of a vehicle under the Vehicle Loan Scheme. This contract, if any, will fix

the terms and conditions of purchasing the vehicle under this policy.

Lump sum values of the cost of the acquired vehicle

The proposed maximum ceilings are communicated through

accompanying ministerial instructions by the Minister having transport

under his/her attribution. These lump sums transport allowances under

various schemes will be readjusted before 1

April every year and

communicated through ministerial instructions. These adjustments

should take effect on the following 1

July.

Vehicle Loan Scheme

The Government Fleet Management Team will adjust maximum ceilings

for the purchase of a vehicle annually before 1

April every year, taking

into account the rank of the beneficiary, intended use, cost escalation

and inflation. All new contracts after the cost adjustment will fall into

the new price regime, while terms and conditions of the existing

contracts will remain unchanged. These adjustments should take effect

on the following 1

July.

Special Group

The Government Fleet Management Team will adjust maximum ceilings

for the purchase of vehicle under different groups annually before 1

April every year taking into account of the intended use, cost escalation

and inflation. All new contracts after the cost adjustment will fall into

the new price regime, while terms and condition of the existing

contracts will remain the same. These adjustments should take effect on

the following 1

July.

Selection Criteria for Government Owned, Leased or Hired Vehicles

In order to fulfil the demand for new vehicles, the competent authority,

that is, Government Fleet Management Team will collect information

regarding the needs of each Government institution and make

arrangement for new vehicle acquisition considering among other the

following key criteria:

Type of Government Owned, Leased or Hired Vehicles

While selecting vehicle for acquisition, competent authority will review

the vehicle type and its potential use that are well suited to performing

the work needed to be accomplished but neither exceed the needs for

the intended use deemed relevant for the concerned Government

institution nor exceed the costs ceilings as concealed in the ministerial

instructions. The relevant authority will prepare a written statement of

justification while recommending any vehicle type taking into account

anticipated costs, fuel and operational efficiency, potential risks of

mechanical failure and break down, safety standards and pollution

rating that meets the needs of the potential users. While preparing the

specification for acquiring new vehicle, the authority will follow

manufacturer ratings, including load carrying capacity and trailer

pulling capacity. In addition all applicable government laws, rules, and

regulations will have to be followed concerning vehicle type selection.

Vehicle Life Cycle Selection for Government Owned, Hired and

Leased Vehicle

The Government Fleet Management Team will establish a life cycle for

each vehicle type at the time of vehicle acquisition taking into account

vehicle type as well as the work environment and road condition in

which the vehicle will likely to perform. This life cycle will be used

while calculating vehicle depreciation, running cost per km and Km

Indemnity annually.

Financing Considerations

The competent authority will make cost effective decisions considering

available budget, relative amount of Government’s subsidy and

alternate financial options like vehicle rental, vehicle leasing and shared

vehicle ownership when acquiring new vehicles.

Preference of the Beneficiary under Vehicle Loan Scheme and Special

Group

While acquiring a vehicle under Vehicle Loan scheme, the beneficiary

will be allowed to choose any vehicle in respect of the prescribed

financial ceiling limits for each eligibility category as indicated in the

accompanying ministerial instructions. The vehicles under Vehicle Loan

Scheme and Special Group will be acquired directly by the concerned

beneficiary. It should be bear in mind that beneficiaries who buy

vehicles whose values are in excess of the maximum ceilings shall be

liable to pay extra taxes.

Acquisition Process for Government Vehicles

The Government owned vehicles will be acquired under an open

bidding process in accordance with the procurement law, rules and

regulations of the Government of Rwanda.

4.4.4 INSURANCE COVERAGE AGAINST DAMAGE OF VEHICLE FROM ACCIDENTS

The beneficiary shall be responsible for purchasing insurance coverage

that is adequate for the vehicle's use (e.g., Vehicle Loan Scheme vehicles

must be covered for business and private purposes). The appropriate

employing agency in each Ministry/Agency must ensure that valid

comprehensive liability coverage has been obtained. The scope of the

comprehensive insurance shall cover:

(i) the driver's legal liability for damage to property belonging to

other persons such as cars; fences; street lighting etc. It also

includes the driver's legal liability for death of or bodily injury

to passengers and third parties caused by his negligence;

(ii) accidental loss or damage by fire and/or theft of the vehicle;

(iii) any accidental damage to the insured's own vehicle, accessories

and spare parts arising in Rwanda.

As per provision of the Vehicle Loan scheme, the Government shall bear

100% of recognized working days as indicated in the ministerial

instructions (displacement on official government business) of the

insurance premium for any comprehensive insurance policy as a part of

monthly lump sum contribution for vehicle running cost. The

government will not pay any additional insurance premiums arising

from the loss of safe driver discounts resulting from an accident.

4.4.5 REPLACEMENT OF VEHICLE IN CASE OF BREAKDOWN, ACCIDENTS AND

OTHER MECHANICAL FAILURE

In order to minimise the potential detrimental impacts of accident,

breakdown and other mechanical failure and to continue providing

transport facility, a vehicle replacement insurance policy will be

compulsory for every Vehicle Loan Scheme. The replacement insurance

shall cover the costs for at least 10 consecutive days of replacement

service in case of breakdown and repair for:

(i) Towing or transporting the insured vehicle;

(ii) Accommodation and/or transport home;

(iii) A replacement vehicle for at least 10 consecutive days.

The Government shall bear 100% of the cost of vehicle replacement

insurance premium as a part of the payment for monthly lump sum for

vehicle running cost. Any vehicle received as a replacement vehicle

from the concerned insurance company will be under the responsibility

of the beneficiary.

4.4.6 ANNUAL RE-EVALUATION OF VEHICLE RUNNING COST

In order to take into account the impacts of inflation and cost escalation,

lump sum amounts for running costs will be re-evaluated annually

before 1

April each year on the basis of a detailed investigation by

Government Fleet Management Team subject to the approval of the

Fleet Management Team of the Government. Every new as well as

existing contract after the annual re-evaluation will fall into the new

price regime and monthly lump sum for vehicle running cost will be

updated accordingly. These adjustments should take effect on the

following 1

July. The recommended procedure for calculating lump

sums for various schemes is outlined in the following sections:

Vehicle Loan Scheme and Special Group

The lump sum amount for running cost will be revised annually

considering constituent elements of the running cost of the vehicle on

the basis of average market price during the previous quarter of the last

fiscal year. The recommended approach for calculating monthly lump

sums under Vehicle Loan Scheme and Special Group is described in the

following paragraphs:

Every beneficiary under Vehicle Loan Scheme will be entitled to receive

a monthly lump sum for 100% of the estimated running costs. A

beneficiary under the Category I of the Special Group will be entitled to

receive a fixed monthly lump as determined in the most recent

ministerial instruction. For the Vehicle loan Scheme, the constituent

elements of the lump sum for running costs are as follows:

(i) Variable Vehicle Running Costs; and

(ii) Overhead Vehicle Running Costs

The elements of these costs are outlined in the following paragraphs,

(i) Variable Vehicle Running Cost

The constituent elements of the variable cost are:

• Fuel consumption cost, and

• Maintenance and repair cost;

The standard procedure for estimating Variable cost is outlined in the

following paragraphs.

Fuel Consumption Cost

For estimating fuel consumption under the Vehicle Loan scheme, i.e.

Ministers/Ministers of State, Permanent Secretary, Mayors and Vice

Mayors (and equivalent), Senators and Member of the Parliament will

be entitled to use their vehicle every day of the year for work purpose,

whereas other officials will be eligible to use their vehicles 6 days a

week. All officials under the scheme will be entitled to use the vehicle

on average 70 km per day for work. The fuel efficiency in terms of

vehicle-km per litre will be determined by the Government Fleet

Management Team considering type of vehicle appropriate for the

position of the beneficiary, terrain and operating environment. Since

fuel efficiency in terms of vehicle-km per litre is dependent on road

condition, the Government Fleet Management Team will be encouraged

to make proper use of standard vehicle operating cost estimation

package, such as HDM-4 to have a reliable estimate of annual average

fuel consumption of the vehicle per km depending on the average

roadway condition of the country. The cost of fuel per litre will be

adjusted annually before 1

April every year taking average fuel price of

the previous quarter of the current fiscal year. These adjustments should

take effect on the following 1

July.

Maintenance and Repair Cost

The constituent elements of Maintenance and Repair costs are:

• Lubricant costs;

• Tyre replacement and rethreading costs; and

• Parts consumption and repair costs

The annual maintenance and repair cost per beneficiary will be

determined by the Government Fleet Management Team considering

operating terrain, vehicle type, nature and extent of use corresponding

to the position of the concerned beneficiary group and after collecting

all relevant information either from different motor vehicle workshops

and garages or using appropriate vehicle operating cost estimation

software as deemed appropriate. The average maintenance and repair

cost per beneficiary will be adjusted annually before 1

April every year

taking average price of different constituent elements of the

maintenance and repair cost of the last quarter of the previous financial

year. These adjustments should take effect on the following 1

July.

In absence of reliable data, the Repair and Maintenance costs can be

taken as 36% of the fuel costs got from industry standards

(ii) Overhead Costs

The elements of the Overhead costs are:

• Insurance cost;

• Driver cost; and

• Road tax;

The estimation process of the Overhead cost is described in brief in the

following paragraphs.

Insurance Cost

The total annual insurance cost per beneficiary will consist of providing

a comprehensive insurance cover as specified in the section 4.4.4 plus

the cost of providing insurance cover for vehicle replacement for at least

10 consecutive days in case of breakdown on the basis of the

appropriate vehicle type for the position of the beneficiary as

determined by the Government Fleet Management Team. The total

annual insurance cost per beneficiary will be determined considering

average annual premium costs for standard insurance companies in the

previous fiscal year. Every new as well as existing contract after the

annual re-evaluation will use new insurance premium and monthly

lump sum for vehicle running cost will be updated accordingly.

Fleet News Calculators as retrieved in http://www.fleetnews.co.uk/

Driver’s Cost

Only Ministers and equivalent will be entitled to include the salary of a

driver as part of their monthly lump sum.

Road Tax

The annual road/transport tax per beneficiary will be determined by the

Government Fleet Management Team considering amount of tax

payable for the type of the vehicle corresponding to his/her official

position. The total annual road/transport tax per beneficiary will be

determined after collecting relevant tax rates from the Rwanda Revenue

Authority for the current fiscal year before 1

April every year. Every

new as well as existing contract after the annual re-evaluation will use

new tax rates and monthly lump sum for vehicle running cost will be

updated accordingly. These adjustments should take effect on the

following 1

July.

Lump Sum for Monthly Loan Repayment Instalment (MLRI) for all

schemes

The lump sum for monthly loan repayment instalment will be

calculated considering interest on a declining balance. The following

mathematical formula will be used to calculate the monthly

amortization schedule for loan payments:

−+

××=

1)1(

)1(

iPVMLRI

Equation 4.1

where MLRI = monthly loan repayment instalment;

i = interest rate per payment period, that is, for monthly loan repayment

instalment it is equivalent to annual interest rate divided by 12;

n = number of payments;

PV = principal amount of the loan.

While calculating monthly lump sum for loan repayment for a

beneficiary the maximum price ceilings for purchase of a vehicle, as

instructed in the latest Ministerial Order, will be used. However, the

terms and conditions of lump sum amount for loan repayment of the

Fleet Policy will remain unchanged. In order to take into account the

impacts of inflation and cost escalation, lump sum amounts for monthly

loan repayment will be re-evaluated annually before 1

April of every

fiscal year after conducting a detailed investigation on vehicle purchase

costs and interest rates by Government Fleet Management Team subject

to the approval of the relevant authority of the Government. These

adjustments should take effect on the following 1

July.

The Government shall pay a lump sum as a transportation allowance

towards the monthly loan repayment instalment for each beneficiary,

which will be equivalent to 100 % of the total monthly loan repayment

instalment including interest calculated based on a period of 5 years.

4.4.7 ANNUAL RE-EVALUATION OF KM INDEMNITY

For travel outside a 30 km radius (i.e. outside Headquarters City) only

beneficiaries in the Vehicle Loan Scheme will be entitled to receive a Km

Indemnity to cover the additional fuel, maintenance and depreciation

costs in accordance to their rank and thus to encourage the use of

his/her vehicle for business miles rather than hiring another vehicle.

In order to take into account the impacts of inflation and cost escalation,

average Km Indemnity per km for a beneficiary will be re-evaluated

annually before 1

April of every fiscal year after conducting a detailed

investigation by Government Fleet Management Team. These

adjustments should take effect on the following 1

July. Every new as

well as existing contract after the annual re-evaluation will fall into the

new price regime. The estimation of the Km Indemnity will be

determined considering 50% of the depreciation of the price of the

vehicle including tax per km plus 100% of the fuel and maintenance cost

per km of travel for business miles. The recommended sequential steps

to be followed for calculating lump sum for Km Indemnity under

Vehicle Loan scheme is outlined in the following sections:

Step 1: Calculation of the Total Cumulative Vehicle-Km

For estimating fuel consumption under the Vehicle Loan scheme,

Ministers, Ministers of State, Permanent Secretaries, Mayors, Senators,

Members of Parliament, Executive Secretaries of District and Vice

Mayors (and equivalent) will be entitled to use their vehicle every day

of the year for work purpose, whereas other officials will be eligible to

use their vehicles 6 days a week. All officials under the scheme will be

entitled to use the vehicle on average of 70 km per day of work. The

annual cumulative vehicle-km for Ministers, Ministers of State,

Permanent Secretaries (and equivalent), Mayors, Senators, Members of

Parliament, Executive Secretaries of District and Vice Mayors (and

equivalent) will therefore be determined by multiplying 365 days with

70 km per day, whereas that for Director Generals (and equivalent) will

be calculated by multiplying 312 days 70 km per day. The total

cumulative vehicle-km for any beneficiary during the whole life of the

scheme will be determined by multiplying annual cumulative vehicle-

km by 5

Step 2: Calculation of Average Variable Vehicle Running Cost per km

The annual variable vehicle running cost per beneficiary will be

determined as described in section 4.4.6. The average variable vehicle

running cost per km will be determined by dividing annual variable

vehicle running cost by the corresponding value of the annual

cumulative vehicle-km for the concerned beneficiary.

Step 3: Calculation of Average Depreciation Cost per km

It is proposed that the equity percentages be changed to reflect

decreasing balance depreciation that is more realistic than the straight

line pro-rata method. The declining (or reducing) balance method of

depreciation assumes that the item depreciates at a constant percentage

rate each year. The formula for declining balance method is:

( )

rVS −×= 1

Equation 4.2

Where,

S = salvage (current) value of asset

= the purchase price of asset

R = the percentage interest rate, per time period, expressed as a decimal

n = the number of time periods

In order to estimate average depreciation, the purchase cost of a vehicle

with tax for each category of beneficiary will be determined by adding

full purchase tax to the duty free value of a vehicle. While calculating

the after tax price of a vehicle for a beneficiary, the maximum ceilings

for duty free purchase of a vehicle will be determined in accordance

with the latest Ministerial Order. The total depreciation cost during the

recommended contract period, i.e. 5 years will be obtained by

deducting the salvage value from the vehicle purchase price including

tax as per Equation 4.2.

The average depreciation cost per km will be estimated by dividing the

total depreciation cost by the total cumulative vehicle-km as determined

in the Step 1

Step 4: Calculation of Average Depreciation Cost per km with Discount

Assuming 50% discount, average depreciation cost per km with

discount will be obtained by multiplying the average depreciation cost

per km without discount as determined in the Step 3 by a factor of 0.50.

Step 5: Estimation of total Km Indemnity cost per km

Total Km Indemnity cost per km will be determined by adding the

average variable vehicle running cost per km obtained from Step 2 plus

average depreciation cost per km with discount as determined in the

Step 4

The average Km Indemnity per km per beneficiary will be revised

annually considering the constituent elements of different variable costs

on the basis of average market price during the previous fiscal year by

the Government Fleet Management Team before 1

April every year.

These adjustments should take effect on the following 1

July.

4.4.8 IMPLICATIONS OF THE CHANGE OF THE POSITION/STATUS OF THE

BENEFICIARY

Exit treatment for all beneficiaries shall be uniform to minimize

administrative costs of implementing the policy. Treatment of

beneficiaries on termination of contract shall be clearly defined in the

contract.

In case of change of position/rank of the beneficiary under various

schemes, the following provisions shall apply depending on a number

of possible scenarios:

Scenario 1: Promotion to a Higher Rank

If a beneficiary who receives 100% government contribution and tax

exemption after receiving a vehicle for a certain rank, is promoted to a

higher rank, he/she will have two alternatives, that is, either (i)

continuing driving the existing vehicle but receiving the higher rate,

which is entitled for his/her new position or (ii) selling the vehicle,

repaying the government on a pro rata basis and start a new vehicle

loan scheme from scratch.

Scenario 2: Demotion to a Lower Rank

If a beneficiary who receives 100% government contribution and tax

exemption after receiving a vehicle for a certain rank, is downgraded to

a lower rank, he/she will be entitled to remain with the current vehicle

(if she/he wishes) and to pay the loan balance by monthly instalments

until the end of the repayment period. He/she will be untitled to the

lump sum, if any, corresponding to the new position. If she/he is not

able to keep the current vehicle, she/he will be allowed to get a vehicle

corresponding to the new position. The beneficiary will be given

maximum six months to sell the current vehicle. Before selling the

vehicle, this latter will have to be valued by a government authorised

expert. The beneficiary will have to use the money from the sale of the

vehicle to refund the government contribution on pro rata basis, and to

repay the bank loan if any.

If a beneficiary under Special Group who is receiving a monthly lump

sum as transport allowance is downgraded to a lower rank, he/she will

be eligible to receive new monthly lump sum, if any, corresponding to

his/her present position.

Scenario 3: Provisions for Replacement Staff

If a staff member is acting officially in replacement of a staff member

entitled to the Vehicle Loan Scheme or Special group for more than 60

days but the acting staff is already a beneficiary of the scheme, he/she

will continue to receive the lump sum for running cost and Km

Indemnity at the level he/she entered into the scheme. On the other

hand if the acting staff is not already a beneficiary of the scheme, he/she

will not be entitled to enrol into the vehicle loan scheme. However, the

beneficiary will be given a fixed lump sum per month to pay the cost of

hiring a vehicle for business miles from private operators as deemed

appropriate by the competent authority of the Government Fleet

Management Team

If a staff member is acting officially in replacement of a staff entitled to

the Special Group for more than 60 days but the acting staff is already a

beneficiary of the scheme, he/she will continue to receive the lump sum

as transport allowance at the level he/she entered into the scheme. On

the other hand if the acting staff is not already a beneficiary of the

scheme, he/she will be entitled to receive the same monthly lump sum

as transport allowance for tenure of his/her temporary assignment.

Scenario 4: Long term Absence from Service Due to Training or Other

Overseas Assignment

If a beneficiary of the Vehicle Loan Scheme or Special Group who

receives 100% Government contribution and tax exemption remains

absent from normal official duty due to long term training or other

overseas assignment and if the leave is less than 3 months, he/she will

be allowed to continue his/her Vehicle Loan scheme or Special Group as

usual. If the leave is for more than 3 months, he/she will be allowed to

continue his/her scheme provided he/she pays monthly loan repayment

contribution as per conditions of the contract. He/she will be entitled to

receive reduced monthly loan repayment contribution from the

Government without receiving any contribution for running costs and

Km Indemnity.

If a beneficiary of the Special Group who receives monthly lump sum as

transport allowance remains absent from normal official duty due to

long term training or other overseas assignment and if the leave is less

than 3 months, he/she will be entitled to continue to receive the monthly

lump sum as usual. On the other hand if the leave is for more than 3

months, he/she will not be eligible to receive monthly lump sum any

more for the whole period of his/her absence.

Scenario 5: Officials Enjoying both Vehicle Loan Scheme Vehicle as

well as Qualified Non-Personal Use Vehicles

The Government will provide Qualified Non-Personal Use Vehicles for

officials of the defence/police and emergency services, and the same

beneficiary will not be entitled to receive any further facilities under

Vehicle Loan Scheme or Special group. However, if a beneficiary who is

a member of the defence/police/emergency services, is already in

possession of a vehicle through Vehicle Loan scheme, but also has been

provided with Qualified Non-Personal Use Vehicles as a member of a

special service, he/she will no longer be entitled to remain in the Vehicle

Loan Scheme or Special Group. However, he/she will be entitled to

receive a monthly loan repayment contribution from the Government

for his/her vehicle, without receiving any contribution for running costs

and Km Indemnity.

4.5 Project Vehicle Fleet Policy

In order to maintain operational flexibility, efficiency, reduction of

operating costs and to retain the customary provisions for projects to

donate vehicles at the end a project to the Government exchequer, the

vehicle fleet of development projects (for which there is substantial need

for field vehicles in remote/rural areas), will remain outside the scope

the vehicle loan and shared ownership schemes. In order to remain

outside the scope of these schemes, the appropriate coordinating

authority of the project will have to seek ‘no objection’ clearance from

the Minister having transport in his/her attribution.

It is recommended to consider linking the Special Project

Implementation Unit structure to determine the need for project

vehicles. While preparing project concept papers for approval, the

competent authority will have to prepare a detailed list of the number

of vehicles, vehicle type and their potential use that will be well suited

to but not exceed the needs for the intended use as deemed appropriate

for the successful completion a project. The relevant project

coordination authority will prepare a written statement of justification

while recommending the total number of vehicles, along with detailed

specifications of the vehicles to be procured during the life of the project

taking into account: anticipated costs; fuel and operational efficiency;

potential risks of mechanical failure and break down; and safety

standards and pollution ratings that meet the needs of potential users.

While preparing the specifications for acquiring vehicles for any project,

the authority will follow manufacturer ratings, including load carrying

capacity and trailer pulling capacity. In addition, all applicable

government laws, rules and regulations, and standard practices of the

concerned donor agencies will have to be followed while planning

vehicles for a project. The relevant coordinating authority of the project

will have to prepare a list of the potential vehicles, capital and

operational costs, which will be required during the life of the project

for the approval of the designated authority of the concerned ministry.

After the end of the project, ownership of all vehicles, including the

vehicles owned by the donor agencies, will be transferred to the

Government. After receiving the project vehicles after the end of the

project, Government will either sell them through open bidding system

or reallocate them to RDF, RNP and other emergency services as

Qualified Non-Personal Use Vehicles in accordance with their potential

transport needs as determined by Government Fleet Management

Team.

4.6 Motor Pool Vehicle

Local districts and Central Government School Inspectors,

governmental high schools, universities and other institutions of higher

education as well as local health centres in Provinces and some

government institutions where there is a need for operational or pool

vehicles that cannot be accommodated by or it is not appropriate to offer

the vehicle as part of a staff member’s remuneration or Vehicle Loan

Scheme then a vehicle will be procured either through replacement

purchase of existing vehicle upon authorization of the minister in charge

of transport or through term lease agreements with private operators

based on the needs of the organisation and will be housed in a secure

location as determined by the relevant authority. However, new

requests for operational vehicles need to be subjected to thorough

scrutiny. Mechanisms for monitoring the use of operational vehicles

shall be enhanced.

In order to maintain operational efficiency and basic transport needs,

each local district authority, Central Government School Inspectors,

Governmental high schools, universities and high education institutes

as well as local health centres in each Province and district will keep at

least one (1) motor pool vehicle, and to minimise the misuse of such

provision, the maximum number of motor pool vehicles in any local

district authority/Province shall not exceed two (2) under any

circumstances excluding emergency vehicles in health centres. In order

to procure more than 1 or 2 motor pool vehicles, the competent local

authority/relevant education authority and health centre authority at

each Province shall have to seek ‘no objection’ clearance from the

Minister in Charge of transport.

The competent authority will have to specify the number of vehicles,

vehicle type and their potential use that will be well suited to the

intended use. The relevant authority will prepare a written statement of

justification while recommending the number of vehicles, along with

detailed specifications of the vehicles to be procured through purchase

or term lease agreement: required capacity, anticipated costs; fuel and

operational efficiency; safety standards and pollution ratings. While

preparing the specifications for acquiring the vehicles through purchase

or term lease agreement, the relevant authority will follow manufacturer

ratings, including load carrying capacity and trailer pulling capacity. In

addition, all applicable government laws, rules and regulations, will

have to be followed. While the operational conditions will lead on the

choice of vehicle, the specified ceilings and CC’s shall be abided by.

The maximum ceiling for the number of motor pool vehicles will not be

applicable for RDF, RNP and other emergency services, where vehicles

will be classified as Qualified Non-Personal Use, and in order to provide

for efficient and economic services and management, the following

policies and procedures shall prevail for Motor Pool Vehicles:

(i) A competent official appointed by the concerned local authority

shall be responsible for the effective implementation of the

policies and procedures pertaining to the Motor Vehicle Pool

and shall work closely with the fleet management team;

(ii) All motor vehicles required by any staff for casual, short and

long term or continuing use shall be provided through a

designated official appointed by the concerned local authority

unless specific exemption has been authorised by the competent

authority;

(iii) Written authority in prescribed forms from the appropriate

authority shall be required before a vehicle may be released to a

user. The concerned local authority shall prepare and make all

requisite forms available to the prospective users.

(iv) The appointed private operator(s) for motor pool vehicle

services shall ensure that every vehicle including a qualified

driver will be available on-call at all times as required by the

appropriate authority. Drivers shall be personally responsible

for traffic violations and criminal charges arising from their

failure to observe traffic regulations and reasonably safe driving

practices.

(v) All arrangements for providing fuel, servicing, repairs and

replacement for vehicles shall be vested to the private

operators/suppliers selected through competitive bidding

process.

(vi) Tentative bookings for vehicles shall be made by telephone,

written or verbal request. Users shall be able to make

reservations as far as possible in advance for casual, short and

long term or continuing use. The user shall confirm the

bookings by completing a "Request for Pool Vehicle" form

specifying the vehicle requirements and shall obtain the

signature of the appropriate authority of the concerned local

authority.

(vii) The authorized driver of a motor pool vehicle bears full

responsibility for ensuring that the vehicle is used only for

official business; limiting passengers of the motor pool vehicles

to employees of the concerned local authority others on official

business and official guests; observing all traffic regulations; and

practising safe driving habits. It will also be the responsibility of

the driver to report all accidents and damage to the operator, the

appropriate authority in the ministry as well as the police.

(viii) Since the vehicles will be rented on term lease agreement with

private operators, the driver/designated official shall record

mileage at the time of vehicle issue and at the time the vehicle is

returned to the Pool by the driver (user). For term or continuing

use, a mileage log shall be kept on the form provided, and a

signed copy shall be submitted to appropriate authority of the

concerned Ministry at each month’s end.

(ix) Designated Motor Vehicle Pool maintenance personnel from the

private operator and a counterpart official from the concerned

local authority shall be jointly responsible for inspecting each

vehicle before assigning it to a Government staff. The inspection

shall ensure that the vehicle is clean, in operating condition, gas

tank filled and a record made of all visible defects at the time it

is signed out. A copy of the record shall be given to the user.

When vehicles are returned to the Pool, Motor Vehicle Pool

maintenance personnel shall complete the vehicle inspection to

verify mileage and other information reported by the user at the

time the vehicle is returned.

(x) A joint investigation comprising representatives from the

private operators and Government officials shall undertake

monthly, periodic and annual inspections of vehicles to verify

the condition of any vehicle to provide the intended service, and

recommend any repair or replacement of vehicles to ensure

uninterrupted service. There shall be provision for imposing a

penalty on the service provider in the contract agreement for

any failure to comply with specified standard service criteria.

(xi) The Government fleet management team shall work in close

collaboration with the local authorities having the Motor Vehicle

Pool under their responsibility to gather all data on a continuous

basis with regards to the number and types of vehicles used,

purposes, long and short term rental costs; components costs of

fuel and maintenance on the overall rental costs, incidents etc..

This data shall be consolidated and used for future policy and

regulations updates as well as for future rental contracts

negotiations.

(xii) It is the responsibility of the user and the relevant authority to

insure that the vehicles pool is exclusively used for operational

activities.

(xiii) The Government fleet management team shall strive to check

the efficient use of the existing government vehicle fleet before

engaging in new purchases, hires or term leasing contracts for

new pool vehicles.

(xiv) For new acquisition where justified, buying option will be

preferred to term lease agreements.

(xv) Short-term leases will be accepted only in exceptional cases and

only upon clearance from the Government Fleet Management

Team.

4.7 Mission and Local Car Hires

The cost of Mission and Local car hire has skyrocketed due to unlimited

travels and has made the Fleet Policy very costly. The contribution of the

costs of Mission and Local hires was only 2.5% of total fleet management

cost in 2004 when Government employees were provided with

Government vehicles. In 2013 the contribution of Mission and Local

hires has increased to as high as 35.6% of the total cost of fleet

management. It is therefore essential to reduce the cost of Mission and

Local car hire to an affordable limit.

To keep the Mission and Local car hire to a minimum, each

agency/ministry shall submit annual cost estimate for Mission and

Local car hire to the Ministry of Finance and Economic Planning

(MINECOFIN) for business travel only. Accordingly MINECPFIN will

allocate annual budget for Mission and Local hire for each

ministry/agency. To this end, a number of actions may be taken as

follows:

• Efforts should be made to employ Information Technology and

advanced communication methods to limit the need for travel;

• Establish strong control mechanisms for mission and local car

hires and ensure that expenditure limits are controlled to

minimize wastage;

• Expenditure ceilings for local hire and mission hire will be

established every year during budget consultations;

• Transport outside office premises for staff other than those in the

Vehicle Loan scheme will be hired by the Agency on business

case basis. However, transport to and from their home to office

will be organized privately by the employees as has been the case;

and

• Car hire for beneficiaries of the Vehicle Loan Scheme may

however be a preferred option where payment of Km indemnity

for a single or a group beneficiaries travelling in the same

destination is more expensive.

4.8 Contract Agreement with Vehicle Leasing/Hiring

Companies

The relevant Finance and Accounts unit within each government

institution will be responsible for administering the contracts for the

provision for motor pool vehicle fleets including leasing services. All

organisations operating under each ministry will be obliged to source

their vehicle leasing and fleet management services under the

contractual arrangements administered by the concerned ministry. The

competent authority within each ministry will explore different

alternative financial packages for hiring vehicles under both short and

long term lease agreements. In order to ensure coordination of the

services, the Government Fleet Management Team will provide

technical assistance and guidelines for the effective planning and

management of vehicle leasing/hiring contracts.

4.8.1 CONTRACT PACKAGES OF VEHICLE LEASING/HIRING

The following will give a brief explanation of alternative models eligible

for consideration as an acceptable package for lease agreement. Rather

than a ‘one size fits all’ approach, the competent authority in each

ministry shall explore a tailored solution to meet their needs in terms of

risk, balance sheet, gearing ratios and fixed cost requirements for any

vehicle leasing agreement. Before making a final selection, relevant

financial/contract experts of the Ministry shall prepare a comparative

analysis of different contract packages from the following alternative

options for approval from the appropriate authority:

Finance Lease

Finance leases will allow the Government to use the vehicle from

private operators throughout its useful working life without ultimately

owning it. At the end of the lease agreement there will be two options

for the Government: the fleet can either continue to use the asset by

simply paying nominal rentals; or sell it and benefit from a proportion

of the sale proceeds. Either way, the exposure to risk on the vehicle’s

residual value for both the Government and the private operator is

minimised.

The competent authority shall consider both potential Finance Lease

options as it deems appropriate to maintain an efficient fleet service. The

first is a Residual Value Lease, which provides fixed monthly payments

over the period of the contract followed by a 'balloon payment'. The

second is a 'Fully Amortised Lease'. With this type of lease, the monthly

payments account for the entire value of the vehicle over the contract

period. A designated auditor from the ministry shall maintain the cash

in and out flows on any Finance Lease agreements on the balance sheet

to offer the transparency that is desirable for any lease agreement.

Operating Lease

This finance product can be treated as 'off balance sheet' for accounting

purposes, which can lead to improved financial ratios such as gearing

and liquidity. At the end of the leasing period, the private leasing

company will have to take on the residual value risk of the vehicle,

protecting the Government from the volatility of the market and any

unforeseen changes in legislation. In addition, when calculating the

rental payments on an operating lease, the residual value of the asset

will be taken into account. This is likely to result in significantly lower

rental costs than those offered on a hire purchase agreement.

Contract Hire

Contract Hire is a method of hiring motor vehicles for use over an

agreed time and mileage without ownership, where the monthly rental

is fixed (often referred to as an Operating Lease). The competent

authority in each ministry shall bear responsibility for a range of

additional services such as servicing; maintenance; tyres; road fund

licence; and repair and replacement of any unfit vehicle to maintain a

worry-free upkeep of the service throughout the terms of the agreement

and to have a better understanding of forecasting and budgeting of the

fleet service. Qualifying agreements will be treated as off-balance sheet,

which means that financial ratios such as gearing and liquidity are not

adversely affected.

4.8.2 GENERAL TERMS AND CONDITIONS FOR CONTRACT AGREEMENT

In order to provide for efficient and problem-free fleet services and

minimising risks, important conditions of the contract following general

terms and conditions shall prevail:

(i) There shall be mandatory provisions for joint investigation

comprising representatives from private operators and

Government officials (preferably representatives from the fleet

management team) on monthly, periodic and annual inspection

of hired/leased vehicles to verify the condition of any vehicle to

provide intended service and recommend the repair or

replacement of vehicles to ensure uninterrupted service.

(ii) There shall be provision for imposing a significant penalty on

the service provider in the contract agreement for any failure to

comply with specified standard service criteria including late

arrival; failure to provide uninterrupted service; unscheduled

break down of vehicles while on duty; failure to provide an

appropriate vehicle for its intended purpose; failure to provide

the requisite amount of fuel and other resources to accomplish

any specific task on demand; and any other substandard

services.

(iii) There shall be mandatory provision for cancellation of the

service contract upon repeated failures to provide the specified

service. The termination of the contract will come into effect

after two cautionary notices to the concerned service provider

have been issued by the relevant authority;

(iv) There shall be provision in the contract agreement to employ the

services of designated Motor Pool Vehicle fleet maintenance

personnel from the private operator and a counterpart official

from the concerned authority for undertaking joint inspection of

each vehicle before assignation. The inspection shall ensure that

the vehicle is fit for its intended use, clean, in operating

condition, gas tank filled and a record made of all visible defects

at the time it is signed out. A copy of the record shall be given to

the user. When vehicles are returned to the Motor Vehicle Pool,

Motor Vehicle Pool maintenance personnel shall complete the

vehicle check-out to verify mileage and other information

reported by the user at the time the vehicle is returned. A copy

of the check-out document shall be given to the user. Both

records at hiring and check-out shall be transmitted regularly to

the fleet management team for record keeping, future reference

and analysis.

(v) There shall be provision in the contract agreement to ensure the

service provider bears responsibility for operating all

hired/leased vehicles safely and according to the applicable

laws, rules, and regulations;

(vi) Any vehicle lease/hiring contract shall assign the sole

responsibility of the vehicle to service providers for any fines

and/or penalties resulting from improper use of a vehicle;

(vii) The operators shall bear responsibility for keeping all

leased/owned/rented vehicles maintained in safe operating

condition.

(viii) The vehicle operator shall be responsible for purchasing

insurance coverage that is adequate for the vehicle's use (e.g.,

Vehicle Loan scheme vehicles must be covered for both business

and private purposes). The appropriate authorities must ensure

that valid third party liability coverage has been obtained and

rated business use for vehicles that are used for business

purposes for more than six (6) days per month.

4.9 Development of Digitised Fleet Management Database

The Government Fleet Management Team will bear overall

responsibility for maintaining the Government’s centralised vehicle fleet

database including the management of the vehicle loan scheme. The

fleet management team will handle the recovery process, insurance files,

will perform economic analysis and projections, will submit periodic

reports and liaise with all ministries fleet representatives on a regular

basis. All ministries/agencies shall report vehicle data to Government

Fleet Management Team at least on a monthly basis using an

appropriate data transfer mechanism. The mileage logs and an

inspection form shall be provided by the team in electronic format to

each ministry for exporting such data to the central database at

MININFRA on a monthly basis. There shall be provision for all

ministries to provide information to the central database at MININFRA

through an appropriate reporting system.

The Government Fleet Management Team will design a digitised fleet

management database to automate the day-to-day duties required to

operate and maintain a fleet of both owned and hired vehicles. Its main

functions will include:

(i) manage vehicle data including number and types of

owned/hired/leased vehicles; expenditure on fuel and

maintenance of vehicles;

(ii) record of acquisition of new/replaced vehicles; assign vehicles to

employees and/or sections;

(iii) track vehicle mileage;

(iv) manage installed equipment;

(v) deadline old vehicles instead of deleting them from the database;

(vi) track accidents record employee incidents;

(vii) incorporate employee pictures;

(viii) manage the Vehicle Loan and Special schemes including

updating every new contract, calculation of lump sum and Km

Indemnity, monitoring of monthly payment,

(ix) automatically schedule inspections and calibrations;

(x) generate a random list of vehicles for joint inspections with

inspection forms;

(xi) save annual scenarios for new and condemned vehicles and;

(xii) perform economic analysis and base subsequent years’

projections on previous scenarios ;

(xiii) produce reports; and export data to Excel.

The administrator of central database at MININFRA shall also be

responsible for keeping each and every record related to the vehicle loan

and Vehicle Loan scheme and Special Group, and report them to the

Government Fleet Management Team on monthly basis. In addition, the

Government Fleet Management Team shall be responsible for the

construction of a brief and accessible policy guideline document to be

made accessible on the government website and distributed throughout

the civil service.

5 CONCLUSIONS

The key conclusions, as drawn from the Fleet Policy are as follows:

(i) The current Fleet policy did not fail, was good in essence,

but was not properly implemented;

(ii) For the revised policy to succeed, the government fleet

management team must be reinforced and fully

operational.

(iii) The revised Fleet Policy will assist developing an

appropriate fleet management system for the

Government of Rwanda by reducing capital and

operating costs, and misuse and abuse of Government

facilities;

(iv) The Fleet Policy will provide transparent guidelines for

the management of vehicle loan and special scheme

ensuring efficient and effective management of the

schemes;

(v) The policy will guide decision makers to develop

appropriate and efficient fleet management strategies for

all government owned/hired/leased vehicles;

(vi) The policy will provide appropriate guidance for the

efficient and appropriate management of project and

motor pool vehicles;

(vii) The policy will provide guidance to develop an efficient

transport system for Government officials ensuring

maximum operational mobility and efficiency;

(viii) The policy will encourage the Government to implement

the adopted Public Transport Policy and Strategy; and

(ix) The policy will assist in formulating policy guidelines for

vehicle hiring contracts providing adequate safeguards

against substandard service and negligence.