The City of Joburg is running the risk of its bus services, Metrobus, being run down if a proposal to sell off and unbundle the current operation of the municipal entity into four private companies is approved.

This was a warning issued by Dr Vaughn Mostert, a senior lecturer at the University of Joburg’s transportation department this week.

The city is investigating the possibility of unbundling Metrobus into four companies linked to the three existing depots – Milpark, Roodepoort and Village Deep. The fourth company will assume all responsibility for the maintenance of the three fleets.

The city plans to subsidise the entity by paying a per-kilometre subsidy to the companies. The companies would then be subject to a service-level agreement with penalty clauses to protect the city from failure to deliver on their agreed mandates.

Metrobus made a net loss of R6 million for the 12 month period of the financial year ending June 2011 because of decline in revenue and higher depreciation expense of its buses. The company reported that there had further been a negative decline of R19.2m in results compared to previous financial years.

And it was reportedly running at an increased loss of R14m between September 2011 and January 2012.

The increased losses were in spite of cost cutting.

But Mostert, whose doctorate included route analysis of the Metrobus, said the financial position of the municipal entity can be improved even under municipal control.

“Whoever runs bus services in Joburg can improve passenger numbers by 20 000 a day without a proportion of increase in the cost of that. Financial performance of Metrobus can improve considerably by simply re-organising its routes and schedules.”

He warned that Joburg could suffer the same fate as eThekwini metropolitan municipality, which has been trying to buy back its city bus service from a private operator nine years after it was sold.

In August 2003, the Durban Transport bus service was sold to the Remant (Pty) Ltd and Alton Coach Africa Consortium for R70m. At the time, ratepayers were promised the empowerment deal would save them about R40m a year.

Instead, the bus service became riddled with problems after the Remant-Alton takeover.

The SA Municipal Workers Union is also opposed to the unbundling of Metrobus stating its financial problems were as result of “tender irregularities and poor planning”. – Saturday Star