ASUNCIÓN, PARAGUAY – Grappling with persistent public transportation problems, Asunción is exploring new solutions, with the Asunción City Development Committee (Codeasu) proposing direct subsidies to passengers. This proposal was discussed on July 3rd at the 'Urban Mobility and Transportation Forum' and was presented as an alternative to the "constant blackmail" and poor service provided by transport operators. Codeasu argued that the current carrier-centric subsidy system is the "cancer" of the public transportation problem, and a passenger-centered subsidy model could be an immediate and effective solution.

The forum was co-hosted by Codeasu, the Vice Ministry of Transportation (VMT), the Association of Transport Companies (Cetrapam), the Asunción Metropolitan Passenger Organization (Opama), and transportation experts. It provided a platform for in-depth analysis and discussion of the main issues within Asunción's public transportation system. According to a Codeasu survey, 91% of respondents rated the current public transportation service as 'bad' or 'very bad,' indicating high levels of public dissatisfaction. This suggests serious flaws across the entire public transportation system.

Direct Passenger Subsidies: The Core of the Solution 

The most important topic discussed at the forum was the proposal to provide subsidies directly to passengers rather than to transport operators. Andrés Mallada, a technical advisor and transportation expert, criticized the current transportation reform project as being out of touch with reality, stating that its effects would take years to materialize. He emphasized that the current subsidy system, which pays transport operators, leads to complex administrative procedures and inefficiencies, identifying it as a fundamental problem of the public transportation system.

Mallada explained that the direct passenger subsidy method could be implemented immediately through an electronic ticketing system. He elaborated, "When a passenger taps their card and pays the bus fare of G. 2,300, the subsidy amount is immediately reimbursed to that passenger from a fund, a kind of trust fund, allocated from the Ministry of Finance and Economy's budget." This means that while the fare paid by passengers remains the same, the government subsidy is directly disbursed to the passenger through the system. This method is viewed positively as it resolves the current issue of subsidies being paid regardless of service quality, and it could incentivize transport operators to actively improve their services.

Currently, subsidies to transport operators are allocated from the government's annual budget, based on complex criteria such as operating distance, number of vehicles, and fuel prices. However, there have been continuous instances of corruption, with operators falsifying the number of active vehicles or reporting unnecessary operations to receive excessive subsidies. Furthermore, even while receiving subsidies, operators have intentionally degraded services by increasing waiting times or reducing routes under the guise of "regulation," exacerbating public inconvenience. Direct passenger subsidies are expected to neutralize such "blackmail" by operators and encourage them to focus on improving service quality to attract passengers.

Fare Issues and the Need for Enhanced Capacity of the Vice Ministry of Transportation 

Mallada also pointed out that the current fare system is unrealistic. He stressed, "The first thing the Vice Ministry of Transportation must consider is the fare issue. Current fares do not cover the system's operating costs," emphasizing that fares need to be adjusted to reflect reality while also reducing operating costs.

Asunción's public transportation fares have been kept low due to the Paraguayan government's subsidy policy. As of July 2025, the fare for a regular bus in Asunción is G. 2,300 (approximately USD 0.31), and for an air-conditioned bus, it is G. 3,400 (approximately USD 0.46). While these fares alleviate the burden on citizens, transport operators have complained that they struggle to cover operating costs. If fares are raised to realistic levels, the direct financial burden on passengers could increase, making policies like direct passenger subsidies even more crucial. This would allow passengers to experience a reduced actual burden despite higher fares.

Furthermore, Mallada criticized the Vice Ministry of Transportation's (VMT) lack of capacity. He stated, "Realistically, the regulatory body must have the ability to negotiate, manage, and interact with other agencies, but currently, it does not," urging for the VMT's capacity to be strengthened. The VMT is currently responsible for a wide range of tasks, including public transportation policy formulation and implementation, as well as supervising transport operators. However, there are frequent criticisms that it cannot perform its role effectively due to insufficient personnel and expertise. In particular, the lack of effective conflict resolution and negotiation skills with transport operators is intensifying the instability of the public transportation system.

Introduction of New Technologies and the Importance of Control 

Mallada warned that the transportation reform bill submitted by the Vice Ministry of Transportation, while emphasizing the introduction of new technological systems, would be useless without effective control over transport operators. He criticized, "This law tries to centralize power in the Vice Ministry of Transportation based on technology and reduce the authority of municipalities and state governments, but what good is it if, even with GPS, cameras, and radar, they cannot control operators who don't adhere to schedules, cannot properly manage operating frequency, and still have over 1,000 buses out of service?"

Currently, the Paraguayan government is pushing for the modernization of the public transportation system, including the introduction of GPS-based vehicle tracking systems and electronic payment systems. However, concerns are being raised that these technologies could simply result in wasted budget if they do not effectively control the opaque operations of transport operators and improve service quality. Strong control and management systems must accompany technology adoption to transparently manage operator records, detect illegal activities, and ultimately provide better services to citizens.

Seeking Solutions Through Citizen Participation 

Codeasu has encouraged citizens to complete a survey form to gather proposals on Asunción's overall situation and future prospects. The collected responses will be analyzed, and the results are expected to be shared in the coming days. Active citizen participation is anticipated to play a crucial role in obtaining diverse perspectives and creative ideas for resolving public transportation issues.

Asunción's public transportation problem is not limited to a shortage of buses or fare issues. It is a complex interplay of collusion among transport operators, dependence on government subsidies, and inadequate oversight by regulatory bodies, all of which degrade citizens' quality of life. The direct passenger subsidy proposal raised at this forum could be a significant turning point in untangling this complex problem.

This could mark the beginning of a fundamental reform that shifts the power balance in the public transportation system from transport operators to citizens, encouraging service quality improvements based on market principles. Through continuous discussion and citizen participation, it is hoped that Asunción's public transportation system will be transformed into an efficient and convenient citizen-centered system.

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