SABOA Presentation to the Parliamentary Portfolio

Transcript:SABOA Presentation to the Parliamentary Portfolio:
SABOA Presentation to the Parliamentary Portfolio Committee on Transport on the commuter bus industry 4 August 2015 Overview of the presentation The financial crisis in the industry A cost model to depicting the impact of the lack of adequate industry funding The operational impact of the lack of adequate funding on operators (Gauteng example) SABOA initiatives to address the funding issue Conclusions on the funding issue Options in dealing with the funding issue The empowerment of SMMEs Operational issues Conclusions The context of the financial crisis in the commuter bus industry The financial crisis in the commuter bus industry is escalating due to the inadequate annual increase of the PTOG supplementary grant Since 2009 commuter bus subsidies have been included as a conditional grant in DORA To remove the funding uncertainty for the DoT due to the passenger-type subsidy that existed up to 2009 (unknown and escalating passenger volumes) To ensure that the commuter subsidies are used by the provinces for this purpose (ring-fenced) To change from a passenger subsidy to a kilometer-based subsidy and to cap the kilometres operated for each operator To provide a three year forward view of expected subsidies The PTOG is seen as a supplementary grant and it is expected of provinces to assist in funding the shortfall between the grant amount and the cost escalation experienced by operators – based on agreed escalation formulae in the operating contracts The contractual relationship between provinces and bus operators Transport authorities (provinces) contract bus companies to render services. These authorities specify in their contracts with operators matters such as: Escalation formulae (agreed to with industry) Time tables Fare levels Routes and service frequencies Route kms Approval of fare increases Fleet age profile The industry renders these services based on the contract specifications whilst being exposed to exchange rates, uncontrollable fuel costs and Bargaining Council decisions on wages. An estimated 50% - 60% of industry costs are impacted by exchange rates affecting the costs of imported engines, gearboxes, rear axles, bus electronics, diesel costs, ticket machines etc. To compensate for cost increases contracts contain negotiated and agreed escalation formulae Escalation formula a = 0.47 (Proportionate value of the Consumer Price Index) x = 0.15 (Efficiency Increase Factor) C = Consumer Price Index Ct = Current index Co = Base month index b = 0.38 (Proportionate value of the Labour Index) c = 0.15 (Proportionate value of the Fuel