Time to di­vest JUTC

Jamaica Gleaner - - OPINION&COMMENTARY -

THE REV­E­LA­TION that Con­trac­tor Gen­eral Dirk Har­ri­son is in­ves­ti­gat­ing the award of a se­cu­rity, and per­haps other, con­tracts, at the Ja­maica Ur­ban Tran­sit Com­pany (JUTC) is just the lat­est in a se­ries of con­tro­ver­sies at that firm, which re­in­forces our view of the ur­gent need for a frank con­ver­sa­tion about its fu­ture, in­clud­ing of its own­er­ship and man­age­ment.

The JUTC is the state bus com­pany. It was es­tab­lished in the late 1990s to bring or­der to what, in the decade and a half af­ter the clo­sure of its pre­de­ces­sor, the Ja­maica Om­nibus Ser­vice (JOS), had be­come a sham­bolic pub­lic trans­port sys­tem in the Greater Kingston area. For a while, the JUTC seemed to be achiev­ing its man­date. Dis­ci­pline largely re­turned to the city’s bus routes. The JUTC’s mod­ern, de­cently ap­pointed buses mostly ad­hered to sched­ules and didn’t race along the roads.

The com­pany, how­ever, failed to make money. Rather, it lost it by the buck­ets. In the cur­rent fis­cal year, the JUTC projects to lose J$7.3 bil­lion, be­fore a di­rect gov­ern­ment sub­sidy of J$2.5 bil­lion. Its deficit will reach J$30 bil­lion. Even those fig­ures mask the real sit­u­a­tion, given that there are some costs, in­clud­ing for cap­i­tal stock, that are not for its ac­count. If the JUTC were a pri­vate com­pany, without the cush­ion of tax­pay­ers, the re­ceivers would have long been in.

There are sev­eral rea­sons for this state of af­fairs at the JUTC. A ma­jor one is that the 58 mil­lion pas­sen­gers who will ride JUTC buses this year won’t pay the eco­nomic cost of their trips. They re­ceive gov­ern­ment sub­si­dies, es­pe­cially stu­dents and pensioners. But sub­si­dies to pub­lic trans­porta­tion are not unique to Ja­maica. It is a mat­ter of pol­icy in many coun­tries, given how cru­cial the sys­tem is to an ef­fi­cient econ­omy.

The JUTC con­fronts an­other is­sue: com­pe­ti­tion on its routes, much of it from il­le­gal route taxis. Then there is the peren­nial bur­den of state com­pa­nies: their use as ve­hi­cles through which gov­ern­ments dis­pense largesse. They are also of­ten badly man­aged.

A fort­night ago, the cur­rent JUTC CEO, Paul Abra­hams, reap­pointed to the job at the change of gov­ern­ment a year and a half ago, com­plained of the com­pany be­ing over­staffed by nearly 500. Staff num­bers had risen af­ter he demit­ted of­fice in 2012. The im­pli­ca­tion was that the for­mer ad­min­is­tra­tion had en­gaged in po­lit­i­cal hir­ing. There would have to be job cuts.

The Op­po­si­tion hit back: Staff in­creased be­cause they ran more buses. Now, bad man­age­ment meant that the JUTC had a smaller op­er­a­tional fleet.


The ini­tial contretemps were fol­lowed last week with a call by the Op­po­si­tion for the res­ig­na­tion of the JUTC board over al­le­ga­tions that the com­pany had hired a se­cu­rity com­pany, to which a board mem­ber is con­nected, in breach of pro­cure­ment rules. Worse, the se­cu­rity firm was to do work that should be done in­ter­nally. Mr Abra­hams re­jected those claims, but con­ceded that the firm had been hired on a short-term con­tract. An­other ar­range­ment was aban­doned when it was dis­cov­ered that a com­pet­i­tive ten­der was re­quired – an ac­tion aimed, the Op­po­si­tion said, at a clean-up once they were caught out.

We don’t know where the truth lies in these charges and coun­ter­claims. But peren­ni­ally, con­tro­versy can’t be good for the morale of work­ers and for the at­mos­phere within which man­agers op­er­ate. We pre­vi­ously called for a thought­ful con­ver­sa­tion on the fu­ture of the JUTC, and pub­lic trans­porta­tion more gen­er­ally. That needs to be ac­cel­er­ated.

The Gov­ern­ment must de­ter­mine whether it should be in the bus busi­ness, or if it should be merely its reg­u­la­tor. If it leaves the busi­ness, it has to de­cide if it pro­vides the sec­tor with sub­si­dies, and the process by which this is done. In the mean­time, the ad­min­is­tra­tion should em­ploy an ex­ter­nal firm with ex­per­tise in pub­lic trans­port to man­age the JUTC.

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