Saturday , June 23, 2018

Editorial: Renting vs buying

CEBU City Mayor Tomas Osmeña has always been partial for renting garbage trucks from service providers instead of the Cebu City Government buying them. The mayor’s argument is that City Hall would save money that could have been spent for repairing defective trucks.

“I don’t have to care whether it’s made in China, or Africa or America and whatever, the truck has to be running. We don’t care if the tires were bought in the recycled, second hand or whatever it is as long as the truck is running,” the mayor told reporters in July this year.

The problem with that argument is that it lacks details. The mayor didn’t say, for example, how many garbage trucks are fixed every year on the average and how much the City has been spending on it annually. He didn’t also tell us how much leasing garbage trucks would cost the city in one day, one month or one year.

Without the figures, it would be difficult to assess the virtues of leasing as opposed to buying garbage trucks.

For example, also in July, City Councilor Eduardo Rama Jr., who is with the opposition Barug Team Rama, commented on the budget proposal presented by the Department of Public Services for the lease of garbage trucks. The plan then was to rent each of the proposed 15 trucks at P850 per hour. That would mean the City would have to pay P20,400 in 24 hours (one day).

“The proposal of P56 million is only for six months. If they plan to make it regular for one year, the 15 trucks would cost us P112 million, plus gasoline and manpower. That’s unreasonable because we can buy trucks every year for that amount,” Rama had said then. He added that 15 trucks will only cost the city around P40 million.

Fast-forward to this month. The City finally rented 21 garbage trucks from Pasajero Motors Corp. (Pamocor) at P700 per hour per truck. Pamocor pays for the maintenance and repairs of the trucks and provide the drivers but the City pays for the gasoline and the pays of the loaders, an expense conveniently downplayed by the proponents of the lease.

So which is advantageous to the city, renting garbage trucks or buying them? An objective appraisal should have been done before City Hall entered into a contract with Pamocor.