In the National Assembly |09 September 2021
Transport minister makes statement on financial situation of SPTC, hike in bus fare
Transport minister Antony Derjacques yesterday made a statement to the National Assembly to clarify and provide further details in regards to the financial situation at the SPTC and the increases in SPTC bus fare, to come into effect as from October 1, 2021.
The increase will see the bus fare go from R7 to R10 with a smartcard and R12 with cash while bus fares will be R15 during the weekends, nights and public holidays.
Minister Derjacques explained that this increase was among four options which the cabinet considered but it ultimately went with option number two.
Aside from increases in bus fare, option number two includes the conditions that SPTC is to receive a R27.3 million to cover for SPTC’s shortfall for this year, that regulations should be brought about to address the issue of bus fare invaders and that reforms are to be undertaken at the SPTC.
To address the impacts of the increases in bus fares, Minister Derjacques noted that SPTC is considering plans to introduce schemes such as discounted bus passes, day cards, family special cards and corporate cards which employers can buy in bulk for their staff.
“The R6 increase in bus fare, which is about R120 for an employee who works 20 days a month, is a cost that is being applied during difficult times. If we want SPTC to improve and become more efficient and reliable, we will have to find a way to fix SPTC and we all have to do this by sending in our comments and giving us ideas.”
Minister Derjacques noted that the previous government had made plans to increase SPTC bus fare from R5 to R10 in 2018 but backed out from this decision and only increased the fare to R7.
From the 2021 budget, SPTC received a government subsidy of R50 million to support its R214 million operation costs for this year.
However SPTC has expressed that this sum would not be enough to cover all of its costs throughout the year, and following discussions between the Ministry of Transport, Ministry of Finance, Trade and Economic Planning, Public Entity Monitoring Commission and the department of land transport it was concluded that the SPTC would have to restrategise its operations and revise its revenue collection.
Already plagued with budget deficits which started in 2020 through 2021 and which expect to continue for the next two years, the government was adamant that SPTC must reduce its costs and become more efficient so as to rely less on subsidies.
“Based on these discussions, the principal secretary for transport received the mandate to organise consultative meetings with SPTC, PEMC, Ministry of Finance and Ministry of Transport to review the matter and provide recommendations to the government so that the cabinet could consider,” explained Minister Derjacques.
From there, the government looked at how SPTC could overcome its fiscal challenges in the 2021 and 2022 budgets, and analysed the future of the public transport company.
“It is important to note that, in the first quarter of 2021 SPTC made a loss of R12.4 million, after depreciation. Hence the total loss that is forecasted for 2021 is R40.4 million,” added Minister Derjacques.
“For this year SPTC is predicting a loss of R132.7 million with a deficit of R88.6 million in its operation cost and this includes R12.5 million which it received as subvention this year. SPTC had a negative balance of R4.3 million in January 2021 and gained a negative balance of R7.5 million by the end of June 2021,” said the minister.
“SPTC used a system of gross cost and divided it by the number of passengers it expects to receive and the factors that would affect the profitability of SPTC are the total costs it will incur, the kilometres it will cover, the amount of money that it is not collecting, the number of passengers it carries, the price structure that it will implement.”
“We also deduce that the deficit SPTC is experiencing is due to these following factors: SPTC is not collecting enough money that it needs to cover its expenses, less money from the redistribution in the number of passengers due to Covid-19, shift in fuel costs, increase in operational costs, inefficiencies in regards to routes that are not profitable and a lack of proper planning.”
To overcome these challenges, Minister Derjacques said that SPTC needs to restructure its long routes with at least two different bus fares, introduce bus routes on secondary roads that connects to main roads, revise routes so as to minimise kilometres its buses travel to, explore other options such as advertisements for revenue collection aside from bus fares.
Aside from the bus fare increases, other changes expected at the SPTC are right-sizing of non-operational staff in the first quarter of 2022 to optimise efficiency and this expects to reduce its costs by R8 million.
SPTC also is not employing the 25 new staff members it had been planning to and for this year it only employed 10 drivers and cut back from taking in 75 persons that were on the Unemployment Relief Scheme and only took 18.
MNA Sandy Arrisol, who spoke on the SPTC issue during the committee stage, noted that the new price of R10 makes sense at a point when the country is in financial difficulties but that R12 and R15 is too much of an increase for the pockets of average bus commuters.
He suggested that the R15 bus fare should for now only apply to foreigners who make use of SPTC buses.
Wavel William, representative of Grand Anse Mahé, called for the inclusion of private companies in the transport system to reduce the burden on the SPTC which has monopolised the public transportation for decades.
However MNAS from the opposition remained mostly mum on the issue aside from the leader of the opposition who explained that the minister’s statement showed that a decision has already been taken with regard to SPTC, without any proper consultation, and therefore useless to provide any propositions.