THE commuter bus industry says it is facing a funding crisis as government subsidies are not keeping pace with increases in its costs, which it is forced to pass on to consumers.
There has been a moratorium on the extension of new, subsidised bus routes for 10 years, but companies are under pressure to expand services despite the lack of state support.
Bus services in Gauteng — which attracts 20,000 new migrants a month — have, in some instances, been extended to protect buses and bus drivers from violence and vandalism by angry commuters stranded without access to public transport.
Putco said on Tuesday it was increasing fares for its Mamelodi service by 15% from February 1. The company transports about 18,000 people a day in Mamelodi and 360,000 nationally.
It said the large increase was needed to cover the cost of providing unsubsidised services into new areas of Mamelodi as the community had grown.
Putco marketing director Romeo More said the company had 12 buses that did not receive any subsidies servicing new areas in the township outside Pretoria. The company had told the Gauteng government it was considering terminating these routes because of the financial burden they placed on it.
Putco had been losing money on these new routes for four years, Mr More said. "It is a sacrifice on our part, but it has come to a point where we can’t sustain it anymore and it is affecting the profitability of all the operations."
The Gauteng provincial government had prevailed upon Putco to suspend its plans to end unsubsidised services and promised to find a funding solution.
Putco MD Franco Pisapia said the increases in Mamelodi could be just the beginning of fare hikes for other areas including Soshanguve and Soweto. "Bus fares in other areas in Gauteng may have to be increased along the same percentage if additional funding for bus subsidies cannot be found."
Putco’s next round of fare increases were scheduled for April and June.
There has been a standoff between the government and bus companies over new subsidy contracts for the better part of the past 10 years. Many of the contracts were signed before 1994 and since then have been rolled over monthly or quarterly.
South African Bus Owners’ Association executive director Eric Cornelius said on Tuesday that the lack of certainty about the length of the contracts meant companies were unable to invest in their fleets with any degree of confidence.
Part of the delay with the renewal or issue of new, long-term contracts has been the lack of progress by municipalities and metros in drawing up plans for integrated public transport.
Mr Cornelius said the Treasury last year allocated a 3.05% increase in the bus subsidy for Gauteng, but the industry had needed a minimum 9.8% escalation.
Putco said that between 2009 and last year, fuel prices increased 73%, labour costs rose 44% and maintenance costs climbed 33%.
Mr Cornelius said the industry regularly met the government to try to resolve the crisis.
"The main problem is funding. The funding from the national Treasury is not sufficient and the Department of Transport is battling to get funding from the Treasury. Many operators are close to having to decide whether to cut services — which may be marginal, unsubsidised or off-peak services — so they can remain viable."
The Treasury and the Department of Transport had not responded to requests for comment at the time of going to press.
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