Scania buses bring “happi­ness, com­fort and peace of mind”

Balmy and bustling, the Caribbean coastal city of Barranquilla is Colombia’s fastest-growing urban centre and its third largest – and the hometown of cultural icons such as Shakira, Gabriel García Márquez and Sofia Vergara. A network of river and maritime ports supports economic growth driven by rapid industrialisation and trade with the US, Europe and Asia.

Under the motto “Taking Barranquilla to the next level”, city mayor Alex Char has championed public transport, healthcare and infrastructure as priority investment areas. As a result, more than half of all urban trips are now made on public transport, while fewer than 20 percent are made by private motor vehicles.

The public transport system comprises 3,240 buses operated by Transmetro, including 260 articulated buses from Sweden’s Scania serving the BRT (Bus Rapid Transit) system.

BRT has become the system of choice in a growing number of cities, particularly in Latin America and Africa. It combines the capacity and speed of a metro with the flexibility, lower cost and operational simplicity of a bus system.

The concept includes dedicated bus lanes, priority at intersections and elevated platforms located in the middle of the street, accessed via footbridges. Passengers board and purchase tickets in advance, reducing dwell times and preventing fare evasion. The purpose-built buses are often articulated or bi-articulated to maximise capacity and minimise emissions per passenger.

EKN-backed financing enables fleet renewal

When Barranquilla decided to modernise its BRT fleet by replacing vehicles that had been in operation for more than 15 years, the city wanted to continue working with Scania and ordered 40 new buses and a service agreement with financing from Scania Finance Colombia.

However, as Scania Finance Colombia was unable to further extend the credit limit of Transmetro given credits relating to previous orders, Scania turned to the Swedish Export Credit Agency (EKN) for support.

EKN issued a guarantee in which a controlled intermediary acts as supplier under an export contract, explains Nina Börjemalm, senior underwriter at EKN: “In this case, Scania Finance Colombia signed a leasing contract with Transmetro but the guarantee beneficiary is Traton Financial Services in Sweden, the financial arm of Scania’s owner Traton Group.”

A prerequisite for the EKN guarantee was a payment guarantee from the city of Barranquilla. “This is quite unusual for a city and demonstrates a strong commitment and a genuine desire to retain Scania as supplier,” notes Andrés Giraldo, structured finance director at Scania  Finance Colombia.

According to Victoria Piirainen, country analyst at EKN, the city’s commitment was essential: “The guarantee from the city, combined with a solid credit rating and a favourable economic outlook for the city was decisive to render the project bankable.”

From risk-sharing to real-world impact

The EKN guarantee allows Scania to discount invoices from the leasing deal with Transmetro through a bank and receive full payment upfront. “The discounting bank’s fee for this is lower if the deal is backed by the Swedish state,” Börjemalm says and adds that “the intermediary structure makes it easier for EKN to cover local-currency financing since payments are done locally in Colombian pesos.”

The buses are assembled in neighbouring Brazil using locally manufactured chassis, while remaining components are shipped from Scania in Sweden, to make logistics more sustainable and reduce tariffs.

Under the contract, if Transmetro were to miss a leasing payment, the city’s guarantee would take effect after just ten days. In the unlikely event of default, EKN would then usually take over the claim.

What did EKN’s support mean for the transaction? “It was definitely a deal-breaker,” says Giraldo. “Without EKN we could not have done this deal, and we are very thankful for their support. The ten-year duration made the instalment fit with the repayment capacity of Transmetro.”

Reduced congestion

He adds that the public transport system has significantly reduced congestion and expanded housing options for residents. “When people are able to commute to and from work in the city centre, they can access lower real estate prices further out.”

Alex Char, the mayor of Barranquilla, highlights the importance of the new fleet for both the system and its users: “These are the new children of Barranquilla. Transmetro is launching a new fleet for the comfort, happiness, and peace of mind of Barranquilla residents, as seen in this fleet. Public transportation in Barranquilla is on another level.”

The Scania buses are powered by natural gas and can easily be converted to biogas at a later stage. Giraldo also notes strong public acceptance: some residents even escape the city’s sometimes oppressive humidity by boarding a BRT bus to enjoy the air conditioning and work onboard using the USB charging ports.