Why is Mayor Sadovyi taking so long to implement the e-ticket?

The story of the introduction of an electronic ticket in Lviv has been going on for seven years now, and no one can predict its completion. However, in the early fall of this year, Lviv Mayor Andriy Sadovyi promised city deputies that if the e-ticket was not implemented by the end of the year, the city’s mobility department responsible for this process would cease to exist. After analyzing the history of e-ticketing in Lviv, LVIV.MEDIA came to the conclusion that the mayor is once again “selling” Lviv residents a partial reform, presenting it as a full-fledged one. Unfortunately, we may not see any major changes in public transportation until the end of the year.

Why is there a problem with public transportation in Lviv and how to solve it? Let’s analyze this issue.

Almost since independence, Lviv residents have been paying for public transportation by handing cash to the driver and ignoring tickets. This system has numerous drawbacks:

1. Drivers, in addition to their main duties, also serve as conductors and controllers. This is not very attractive to them, and according to Orest Oleskiv, head of the city’s transport department, Lviv lacks 120 city bus drivers, which further deepens the staffing crisis in the carriers.
2. The cash collected by drivers cannot be adequately accounted for. They have a certain “plan” for the day, and anything that raises more than a certain amount is kept by them. Therefore, drivers have an incentive to drive in such a way as to collect as much money as possible from passengers and spend as little as possible on fuel. This leads to “races” for passengers with competitors, fewer flights in the evening, and even closing doors to pensioners or people with disabilities.
3. There is no precise information on how many privileged people use certain routes. This leads to constant conflicts between transportation firms and city authorities when it comes to compensation for transportation of privileged persons.
4. Due to the underestimated profits collected in cash, transportation firms cannot get loans to purchase new buses. This leads to the fact that old minibuses continue to run in the city, which often break down and get into accidents.

Switching to an “electronic ticket”, namely an automated fare collection system (AFCS), can fix all these problems. The essence of the reform is to create an operator of the ACS as an intermediary between the passenger and the carrier. This operator will collect funds from passengers and distribute them among carriers, paying them for kilometers traveled, not for the number of passengers transported.

This reform has many benefits for all parties:

• Drivers are free from handling cash, which allows them to pay more attention to their immediate duties and keep to the schedule instead of chasing money.
• Carrier companies receive predictable non-cash income and the opportunity to receive loans to upgrade their vehicles.
• The city government receives accurate information about the number of privileged passengers, which allows it to compensate carriers for their expenses.
• Passengers are able to pay for their fare as they see fit.

What happened to these seven years?

As early as 2016, the Lviv City Council began to take the first real steps in public transportation reform. At that time, with the participation of Mayor Andriy Sadovyi, an agreement was signed with the European Bank for Reconstruction and Development for a loan of EUR 10 million. The agreement was signed by Oleh Bereza, then director of Lviv’s municipal enterprise Lvivavtodor, and Shevki Adjuner, director of the EBRD’s Ukraine office.

Mayor Sadovyi signs a loan agreement with the EBRD in 2016

After six months, the city council approved the agreement, and Lvivavtodor, as the customer, announced a tender to select a contractor to implement the e-ticket in Lviv. In July 2017, tender offers were opened. But in November 2018, Lvivavtodor surprisingly announced another tender. Deputy Mayor Andriy Moskalenko explained that the first tender was intended to select the terms of reference, and the second to select the best proposals for this task. However, both tenders included both technical and economic aspects, and nothing became clearer.

The winner of the tender was selected in 2019. Perhaps the delays were caused by a change in the management of Lvivavtodor. The new director, Oksana Esteferova, replaced Oleg Berega. In December 2019, the main contractor of the project was selected – a consortium of Mikroelektronika companies from the Czech Republic and Ukrainian SoftServe. They offered the best terms in terms of price and quality. The cost of the system for 10 years was 11.6 million euros, which was loaned by the European Bank for Reconstruction and Development, Sadovyi reported at the time.

However, due to a complaint from one of the bidders to the EBRD, the contract was signed with the contractor only in March 2020. It took 17 months from the signing of the agreement to the introduction of the system, and the expected reform was to be implemented in August-September 2021. However, this process was slowed by the COVID-19 pandemic and subsequent lockdowns, and city officials were cautious about launching the e-ticket in early 2022.

“Wrong contractor” and personnel changes

In March 2021, during the pandemic, Lvivavtodor announced a tender for infrastructure configuration and administration services in cloud data centers worth UAH 370 thousand. There were two bidders in this tender: ” Astwell Software, a Lviv-based IT company, and Yuriy Kyshynskyi, a sole proprietor. Surprisingly, the sole proprietor Kishinsky was declared with the type of activity “Advertising agencies”, which may indicate his incompetence in cloud server configurations.

Surprisingly, Astwell Soft offered a lower price than the sole proprietor Kishinsky. However, Lvivavtodor rejected their offer on the grounds that the bank guarantee was not timely. “Astwell Soft appealed this decision to the Antimonopoly Committee and won. In the next two months, both key executives, Andriy Bilyi and Oksana Esteferova, were dismissed from their positions. Although it cannot be said for certain that these events were connected, it was simply a coincidence. Oksana Yesteferova left the city council and was replaced by Mykola Vlasiuk, former chief operating officer of Alliance Market, which runs the Arsen.

According to the director of Astwell Soft, Volodymyr Strohush, their company did not receive payment for its services, and after the first two months, funding stopped. Contrary to the promises, the e-ticket was not implemented within the stated timeframe.

In February 2022, Astwell Software seems to have managed to negotiate an additional agreement with the contractor for almost a million hryvnias. However, Volodymyr Strohush, the head of the company, claims that their company has not been paid: “We received funding for the first two months. After that, Lvivavtodor stopped paying for our services.”

Oleh Zabarylo, director of the Lviv City Council’s Mobility Department, said that after February 24, all key contractors notified Lvivavtodor of the force majeure situation. It is known that Mikroelektronika withdrew its employees before the full-scale invasion, and they never returned to Lviv to provide technical support. In addition, Lvivavtodor blames Astwell Software for not handing over access passwords and working documentation. For its part, Astwell Soft accuses Lvivavtodor of disrupting the project and refusing to cooperate. In June 2022, Lvivavtodor filed a police report on the forgery of official documents related to Astwell Soft. It turns out that from the very beginning, the city council did not establish a favorable interaction with the winner of the tender and took measures to remove it from the project. At the same time, this struggle was more important than the completion of the transportation reform.

Director of the Mobility Department of Lviv City Council Oleh Zabarylo

Let’s do tenders in a new way!

In November 2022, Lvivavtodor will hold a new tender for approximately UAH 7.5 million. Two firms apply for the tender, and the lower offer of 6.7 million hryvnias is made by Ademrius LLC, which, coincidentally or not, also belongs to Vladimir Strogush, the head of Astell Soft. Further developments almost repeat the story that happened a year and a half ago. Ademrius’s proposal is rejected, but its participant successfully appeals the decision to the Antimonopoly Committee. “Lvivavtodor finds a new reason to refuse to select the company. At this stage, Ademrius LLC decides not to appeal the decision, but leaves a statement for Lvivavtodor expressing its dissatisfaction with the delays and blocking of the tender. In the end, the tender is canceled, and Lvivavtodor again appeals to the police, this time regarding Ademrius LLC. While public transport in Lviv continues to operate with installed but not launched validators.

In February 2023, Lvivavtodor announces the third tender. The only one willing to manage the e-ticket servers is Dev Hub Consulting LLC, which has signed an agreement with Lvivavtodor for more than five million hryvnias.

Oleh Zabarylo called Astwell Soft “a contractor who, in our opinion, did not fulfill its obligations” and said that this delayed the project for a long time, and key elements of the project had to be rebuilt almost from scratch. Thus, almost two years were spent fighting “unscrupulous” IT companies and searching for “bona fide” partners. The only positive in this situation is that Lviv residents had additional time to learn how to use the e-ticket.

Moving on

At the beginning of June 2023, some signs of life began to be observed regarding the implementation of the e-ticket. The cashless payment functionality was launched on four bus routes, and drivers began issuing tickets to “cash” passengers. Controllers also appeared on the buses, who did not fine fare dodgers but helped them pay for their fare. In the following months, the number of cashless routes increased to ten (there are 47 bus routes in Lviv).

Oleg Zabarylo said that by the end of this year, cashless payment will be available for all types of public transport in Lviv. Two to three weeks before that, LeoCards will be sold. At the same time, an electronic ticket will be introduced for Lviv electric transport. Initially, it will be possible to pay for fares via mobile phone, but this option will be discontinued later. Fares for buses, trams, and trolleybuses will be the same. Oleg Zabarylo did not specify specific fares, but noted that they would depend on the payment method: the cheapest would be using LeoCard, the most expensive would be paying by bank card, and the most expensive would be buying a ticket for cash from the driver. Passengers will continue to pay separately for each trip, and Lvivavtodor will distribute these funds among carriers.

According to Andriy Bilyi, former deputy director of the Department of Housing and Infrastructure of the Lviv City Council, this procedure for introducing cashless fares is inappropriate. He points out that the original idea was to introduce all components of the reform simultaneously, not to delay it for several months. The first payment method was to be a mobile app that would be simple for passengers, providing convenience through downloading the app and connecting a bank card. It was also planned to provide Lviv residents with the opportunity to purchase a long-term public transportation pass for different periods of time, from one day to one year. However, these proposals were never put into effect. Most passengers would consider purchasing season tickets a more convenient option. Payments for individual rides were supposed to be more expensive and remain the exception, and cash payments from the driver were to be a rare occurrence. If such a system were introduced, Lvivavtodor could bring fares out of the shadows by collecting money upfront.

Bilyi also points out that the project could have been implemented much faster and without significant costs by engaging a private cashless payment operator who would have received a commission for its services. He compares this approach to the one used by the regional administration, which held a tender and allowed the operator to install free validators and introduce a payment system. Bilyi believes that the introduction of a cashless fare system will not improve the operation of public transport in Lviv.

Oleg Zabarylo argues that this interim stage is important for the transition to the next stage of the reform. Critics, in his opinion, do not appreciate the importance of this stage, believing that the costs were high. However, he emphasizes that this phase is important for introducing transportation work into a system that will be transparent and synchronized. Such a system will help to find ways to bring fares out of the shadows, ensuring a transparent workflow, and this will be the basis for the next stages of the reform.

What will be implemented at the second stage of Lviv ticket reform

The third and final stage of the ASOP implementation envisages two key initiatives: providing Lviv residents with the opportunity to purchase season tickets for all types of public transport in the city, and paying for transportation based on bus-kilometers instead of paying for the number of passengers. However, no specific date has been set for this stage. It seems that the implementation of the reform will require a lot of time and financial resources, and it is difficult to estimate the amount of costs for Lviv residents, as the project lasts for several years and involves many complex processes.