Bus Rapid Tran­sit bleed­ing cash

CityPress - - Business - DEWALD VAN RENS­BURG dewald.vrens­burg@city­press.co.za

The Bus Rapid Tran­sit (BRT) sys­tems set up in ma­jor met­ros are mak­ing losses “sig­nif­i­cantly higher than an­tic­i­pated”, this year’s Bud­get Re­view re­veals. These sys­tems are, at best, re­cov­er­ing 40% of their op­er­at­ing costs through fares, a Trea­sury of­fi­cial told City Press this week.

The prob­lem is largely the apartheid spa­tial le­gacy, which makes cost­ef­fi­cient pub­lic trans­port in­cred­i­bly hard to pro­vide.

The sys­tems in Jo­han­nes­burg, Cape Town, Tsh­wane, eThek­wini and other cities are based on a model that has been suc­cess­ful in South Amer­i­can cities.

The BRT sys­tems in the Colom­bian cities of Bu­cara­manga and Bar­ran­quilla are rak­ing in 150% of their op­er­at­ing costs from pas­sen­gers, ac­cord­ing to an anal­y­sis in the Bud­get Re­view.

Bo­gota in Colom­bia and Lima in Peru have BRT sys­tems that are also com­fort­ably break­ing even, while Leon in Mex­ico and an­other Colom­bian city, Pereira, are cov­er­ing about 90% of their costs them­selves. In South Africa, Trea­sury says achiev­ing 40% is do­ing well. Two ma­jor met­ros with BRT sys­tems, how­ever, chal­lenge that per­cent­age.

Lisa Sef­tel, Jo­han­nes­burg’s ex­ec­u­tive di­rec­tor of trans­port, said: “The per­cent­age is not cor­rect. It is, how­ever, true that fare rev­enue cov­ers less than 50% of di­rect op­er­at­ing costs.”

Ac­cord­ing to the city’s lat­est an­nual re­port, the Rea Vaya BRT sys­tem col­lected fares of R103 mil­lion in the fi­nan­cial year to March 2016.

The MyCiTi BRT sys­tem in Cape Town is do­ing bet­ter than 40%, said Brett Her­ron, the city’s may­oral com­mit­tee mem­ber: trans­port and ur­ban de­vel­op­ment author­ity.

MyCiTi pushed its cost re­cov­ery up to 49% in the past fi­nan­cial year, he said.

The di­rect op­er­at­ing costs are, how­ever, not the whole cost of the sys­tem. Trea­sury al­ready pro­vides two sub­si­dies at a na­tional level. It cov­ers the over­head op­er­at­ing costs ex­clud­ing the fuel and driv­ers’ wages.

This came to R290 mil­lion in Jo­han­nes­burg in the year and about R250 mil­lion in Cape Town.

Trea­sury also cov­ers the cap­i­tal ex­pen­di­ture on the buses and lanes. That came to R864 mil­lion in the year in Jo­han­nes­burg.

This con­tri­bu­tion is de­clin­ing, which is an­other cause for con­cern.

Her­ron said that this month’s na­tional bud­get would cut Cape Town’s cap­i­tal ex­pen­di­ture sub­sidy by R400 mil­lion over the three years to 2020. The city will have to cover more it­self for planned ex­pan­sions of the sys­tem to Mitchells Plain and Khayelit­sha.

It is “not pos­si­ble or de­sir­able” to have pub­lic trans­port that makes a profit, added Her­ron. Cape Town capped its ex­pen­di­ture on MyCiTi at 4% of the city’s rates in­come. It was not hit­ting that cap yet, said Her­ron.

THE PROB­LEM

As a ma­jor pub­lic trans­port ini­tia­tive, the BRT sys­tems were al­ways go­ing to re­quire sub­si­dies.

They were, how­ever, ex­pected to cover a por­tion of their costs “far nearer to 100%”, said the Trea­sury of­fi­cial.

“To en­sure these losses do not break mu­nic­i­pal bud­gets, cities are work­ing with the de­part­ment of trans­port and Trea­sury to max­imise ef­fi­ciency,” said the Bud­get Re­view.

Ef­fi­ciency gains will, how­ever, only get you up to cov­er­ing 40% of your costs, said the of­fi­cial. The prob­lem is the na­ture of South African cities them­selves. Low ur­ban den­sity, and an ex­treme sep­a­ra­tion of res­i­den­tial and busi­ness dis­tricts made the model un­eco­nom­i­cal, said Trea­sury.

Jo­han­nes­burg, referring to the mu­nic­i­pal bound­ary in­clud­ing sev­eral suburbs as well as the in­ner city and busi­ness nodes, has on av­er­age only three in­hab­i­tants per square kilo­me­tre.

In the South Amer­i­can cities where the BRT model is work­ing well, the pop­u­la­tion den­sity is at least dou­ble that and of­ten far more (see graphic).

“It’s only par­tially about [pas­sen­ger] vol­umes and par­tially about struc­tural fea­tures,” said the Trea­sury of­fi­cial.

“In Colom­bia, you have more of a mix of eco­nomic and res­i­den­tial ar­eas. You also have peo­ple get­ting on and off more be­cause they visit more parts of the city. Here, peo­ple get on at one end and get off on the other. That means less fares. To get to these [Colom­bian] com­para­tors, you need a dif­fer­ent ur­ban struc­ture,” said the of­fi­cial.

Both Jo­han­nes­burg and Cape Town say that their fu­ture de­vel­op­ments of res­i­den­tial ar­eas will ad­dress this apartheid-era le­gacy over time.

WHAT TO DO

Iron­i­cally, one of Trea­sury’s pro­pos­als is to “use minibus taxis in ar­eas where for­mal bus ser­vices are not vi­able”.

The BRT routes had orig­i­nally dis­placed taxi routes and taxi as­so­ci­a­tions were paid com­pen­sa­tion to give up their li­cences. Taxi own­ers who were af­fected were given eq­uity in the ven­tures.

Ac­cord­ing to Her­ron, the ne­go­ti­a­tions with the taxi in­dus­try, and the buy­outs, con­trib­uted to the higher than an­tic­i­pated costs.

“These ex­tra costs in the ini­tial con­tract pe­riod are be­ing ac­com­mo­dated and are, in our view, jus­ti­fied,” he said.

Apart from the ded­i­cated “trunk routes” – the spe­cial lanes re­served for the buses – the BRT sys­tems in­volve “feeder” routes us­ing smaller buses that travel through nor­mal traf­fic.

“The feeder ser­vices have proven to be costly to op­er­ate with a low cost re­cov­ery from fares ... the trunk ser­vices have a good cost re­cov­ery ra­tio,” said Her­ron. It seems minibus taxis serve this func­tion more ef­fi­ciently. “The minibus taxi in­dus­try will in the fu­ture al­low for more ef­fi­cient in­te­grated in­ter­modal ser­vices,” he said.

To en­sure these losses do not break mu­nic­i­pal bud­gets, cities are work­ing with the de­part­ment of trans­port and Trea­sury to max­imise ef­fi­ciency

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