Southern African Bus Operators Association on financial state of commuter bus industry; SANTACO, National Taxi Alliance & SA Commuters Organisation on Integrated Public Transport system

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04 August 2015
Chairperson: Mr M Sibande (ANC)
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Meeting Summary

Three transport associations briefed the Committee on the state of the public transport sector.

SA Bus Operators Association (SABOA) noted that there was a financial crisis in the commuter bus industry due to inadequate annual increases of the Public Transport Operating Grant (PTOG). This was seen as a supplementary grant and it was expected of provinces to assist in funding the shortfall between the grant amount and the escalation of costs experienced by operators, along an agreed escalation formula in the operating contracts, and some of the standard clauses in contracts between transport authorities in provinces and bus operators were outlined. The industry was heavily impacted by the exchange rate because it affected the costs of imported engines, components, electronics and diesel. The 2015 PTOG was limited to 2.2%, which was inadequate in the light of historically low escalation prior to that, meaning that the revenue increases were well below the expenditure increases, that profit margins declined each year, and most companies made a loss over five to six years and were bound to fail at some point. If this trend was not reversed, safety standards would be compromised, and this was already seen in Gauteng bus operators, whose businesses were proving unsustainable.

The National Taxi Alliance (NTA) supported the principle of an integrated public transport network (IPTN). Changes to the present situation could improve conditions for both operators and commuters and prepare the way for better taxi participation in the IPTN. The transport and commuter distortions created by apartheid still existed, and the taxi industry picked up much of the need of these commuters. Given the slow implementation of the IPTN, and questions about the viability of the Bus Rapid Transport (BRT) it seemed that the taxi industry would continue to provide the bulk of public transport in cities. Violence in the taxi industry was increasing, and it must stop, in the interests of operators, commuters and government, and perhaps even a judicial commission of inquiry was now needed into taxi violence. The NTA believed that some of the root causes of violence lay with the regulatory system under the National Land Transport Act and the provincial regulatory entities, and municipalities, having responsibility for planning and issuing licences to operate, were effectively being both player and referee. It was suggested that operating licences should be given for an indefinite period, to boost investment. The NLTA would need to be looked at again, as the exclusion of the role of  taxi associations in the amendments had resulted in confusion on the legal position. E-Natis and OLAS systems did not talk to each other in a properly coordinated way, and both systems were regularly off-line. NTA would be asking the Minister to institute an inquiry into and report on the workings of provincial regulation authorities and to set up a system to decide upon operating licences if a provincial authority was delaying. Finally, it suggested the implementation of Public Transport Priority lanes (PTPL) to be used by all public transport vehicles including buses and taxis, to lower operational costs and improve travel times for commuters.

The South African Commuters Organisation (SACO) said that it was concerned that despite the Constitutional imperatives, many commuters were not given the opportunity to reach their destination on time, could be subject to attacks and rape in stations, where there was no security, and family ties were being broken down when women arrived late home. It referred to its arrangement for volunteers to patrol trains, but noted that no new trains were expected and government clearly expected black people to continue using public transport. Instead of subsidising vehicles that may be unroadworthy, the passengers should benefit from subsidies. SACO was very disappointed to hear about the dismissal of former Chief Executive Officer of Passenger Rail Agency (PRASA), Mr Lucky Montana, and called for his reinstatement.

Members asked about the contract escalation formulae, expressed concern at violence in the taxi industry, and asked if SABOA was willing to share the market with small operators and what links and liaison it had with other groups. The same question was put to the other associations. The Department of Transport was requested why licencing offices were not open regularly, and requested to look into the E-Natis system's effectiveness. The major issue with integrated systems lay with integrated ticketing, and good regulation. Members asked why there was not more local manufacture and commented that a commission of inquiry may not help the taxi industry, which had its own responsibility to address the violence, although a special police task force might also be needed. NTA was requested to engage with bakkie transport systems in rural areas, and whether it was likely to get grants, what it was doing about driver training and participation in provincial taxi council meetings, and whether NTA and SANTACO could not form a system for taxi recapitalisation. One Member commented that none of the presentations had touched on the South African mandate for transport in the region, nor on COP 17 commitments or subsidies to rural areas, and asked specifically what would need to be presented to the Department if the Bus Rapid Transit system was not viable in some areas. A few members raised problems with the Moloto Road, and commented that some buses were poorly maintained but this presented opportunities for local jobs. 

Meeting report

Public transport issues: Various briefings
South African Bus Operators Association (SABOA)briefing

Professor Jackie Walters, Strategic Adviser to SA Bus Operators Association, said there was a financial crisis in the commuter bus industry due to an inadequate annual increase in the Public Transport Operating Grant (PTOG) . The PTOG was seen as a supplementary grant and it was expected that provinces should 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. Transport authorities in provinces would contract bus operators to render services, specifying in their contracts matters such as escalation formulae, time tables, fare levels, routes and service frequencies, route kilometres, approval of fare increases and fleet age profile. An estimated 50 to 60% of the industry's costs were impacted upon by the exchange rate, which was affecting the costs of imported engines, gear boxes, rear axles, bus electronics, diesel costs and others. The 2015 PTOG had been limited to 2.2% and was inadequate in the light of historically low PTOG escalation. The revenue of a typical commuter bus company increased by 37% over the past six years, while the expenditure increased by 57%, consisting of employment, fuel and maintenance. The profit margin of a bus company was reduced every year and turned into a loss in years 5 and 6. As expenditure kept increasing, all bus companies would fail; some sooner but others later. Service quality to bus passengers, fleet condition, maintenance standards and eventually safety standards would be compromised if this trend was not reversed. This was already evident amongst Gauteng bus operators, seen by more bus breakdowns and lack of adequate bus replacement programmes. No matter how one looked at the current arrangement with conventional bus operators holding conventional bus contracts in South Africa, it was an unsustainable business model.

National Taxi Alliance Presentation
Mr Alpheus Mlalazi, General Secretary, National Taxi Alliance said the NTA supported the principle of an integrated public transport network (IPTN). Changes to the present situation could improve conditions for both operators and commuters and prepare the way for taxi participation in the IPTN. The apartheid distortions created by apartheid still existed, as low income earners still travelled long distances from townships to work. The taxi industry had been providing transport for these commuters. The implementation of the IPTN had been very slow and questions were now being asked as to the viability of Bus Rapid Transit (BRT). Although the implications were being assessed, the taxi industry would continue to provide the bulk of public transport in cities. Violence in the taxi industry was increasing and this must stop, in the interests of operators, commuters and government. The problem had become so widespread that it justified the establishment of a judicial commission of inquiry into the taxi violence.

The NTA believed that the root causes of violence lay in the regulatory system, both the National Land Transport Act (2009) and the provincial regulatory entities (PREs) legislation. The core of the problem was that municipalities acted as both referee and player, as they were responsible for planning public transport and also decided who should be allowed to operate, and for how long.

It was suggested that operating licences should be given for an indefinite period, as their uncertain lifespan currently inhibited investment in the taxi industry. The dropping of the role of taxi association in the NLTA (2009) had resulted in confusion about the legal position and was the main reason for route disputes. The situation was worsened by the fact that E-Natis and OLAS systems did not talk to each other in a properly coordinated way and both systems were regularly off-line.

The NTA believed that the provincial In the view of NTA, PREs were, if anything, worse in respect of maladministration and corruption than were the Operating Licensing Boards (OLBs). The NTA would approach the Minister to institute an inquiry into and report on the workings of PREs, and to implement a system where the National Public Transport Regulator (NPTR) could receive and decide on operating license applications, when a decision had been delayed by a PRE. The NTA proposed that, rather than having the BRT lanes, cities should implement Public Transport Priority (PTP) lanes used by all public transport vehicles, including buses and taxis. PTP lanes would lower the costs of operation and improve travel times for commuters.

South African Commuters Organisation (SACO) briefing
Mr Stephen Sangweni, President, SACO, said commuters were not being given priority in being assisted to reach their destinations on time, and family ties were being broken down, especially when women arrived home late . There was no security in stations and trains, leading to increases in numbers of and incidents by gangsters, including raping, with some victims then becoming HIV-positive, and murders. People also smoked dagga in trains.

From 2008 and 2010, volunteers were deployed to be safety patrollers in trains. There were no new trains coming this November despite a locomotive being tested in Cape Town. It was the political agenda of the government for black people to continue using public transport. He did not believe buses were getting subsidies, and they were neither heated nor cooled to suit the climate. He also suggested that rather than government subsidising unroadworthy buses it must rather subsidise the passenger. SACO had arranged a taxi feeder into trains with Mr Lucky Montana before he had left the Passenger Rail Agency of  South Africa (PRASA). Government must spend money on rail infrastructure, but there had emerged a parallel rail system, in the form of "Gautrain for the rich". The Department of Transport must tell people why there were delays in the Moloto Rail Corridor. Rumours said it would be given over to the private sector.

SACO commented on the viability of Gautrain to be extended to Soweto and Mamelodi. There was no visibility of integration of public transport, and SACO did know the vision of the Minister as she only appeared to be "a supervisor of provinces". She was only visible when dissolving a functioning PRASA board and replacing it with someone from Petro SA. This company had collapsed and the same was likely to happen at PRASA . SACO asked that Mr Montana must be reinstated at PRASA.


Mr C Hunsinger (DA) wanted an explanation on the contract escalation formulae, and asked to what extent the budget cut back had affected passenger subsidies.

Mr R Radebe (ANC) asked if the main concern of SABOA was transporting people or making a profit. He was concerned with violence in the taxi industry. He asked if SABOA was willing to share its market share with small, medium and micro enterprises (SMMEs). He did not understand why operators would fight for commuters rather than sharing the cake and providing effective transport.

Mr Radebe asked the Department of Transport (DOT) to comment on the reasons for not opening license offices every day.

Mr Radebe wanted to know how the judicial inquiry would resolve taxi violence and said people would complain that it was wasting a lot of money. He wanted some explanation of how the regulatory system would cause violence. He disagreed with having indefinite licences, saying that operators would abuse those, including by using unroadworthy vehicles.

He asked DOT to transfer E-natis to PMTR to make it effective. 

Mr L Ramatlakane (ANC) said questions about the subsidy and whether it was sufficient had been asked since 1996. He commented that SABOA had declared operating costs and wage shares in the past ten years, but asked what else it did not declare. The big issue in having an integrated public transport system was having an integrated ticket. There was a need for efficient public transport systems that were regulated.

Mr Ramatlakane asked if NTA and SANTACO would meet, as taxi operators. With over 180 000 taxi owners in the country, he asked where the discussion on subsidy to taxis would start, since government was not able to subsidise 180 000 taxi owners.

He asked why SABOA could not start making engines and gearboxes in SA, instead of importing, to lower the costs.

He asked if SABOA was ready for an IPT feeder system. He felt that a commission of inquiry was not going to help the taxi industry, as it was just going to gather views. He asked when the taxi industry was going to meet and clean itself of taxi violence. A special police task force was needed to combat violence in the taxi industry.

Mr T Mulaudzi (EFF) asked if BRTs were part of SABOA membership and if it held bilateral meetings with SACO. He asked what NTA was doing to engage on bakkie transport systems in rural areas. He asked if NTA would get any grant from DOT, like SANTACO. He supported the concept of a passenger subsidy.

Mr Mulaudzi asked what NTA was doing for driver training. He asked SACO's participation in provincial taxi council meetings with NTA. He asked why NTA and SANTACO were not coming together and forming a cooperative bank for taxi recapitalisation.

Mr Mulaudzi was also concerned with developments at PRASA.

He asked if SACO was available at local levels.

Ms D Magadzi (ANC) said the Minister of Transport was given a mandate on transport in the SADC region including road, air and rail. Those operating in Namibia and Zimbabwe were used to operating without subsidies and she asked if the system was integrated. At COP17, the government made a commitment to cut greenhouse emissions but this presentation had not touched on those issues. The critical issue was how to make routes more profitable. The RDP noted the need to provide safe and reliable transport but  the presentation had, in addition, overlooked questions around subsiding rural areas in Limpopo, Northern Cape, Upington and Eastern Cape. In those communities, people suffered in trying to reach schools and health centres. 21 years after democracy, these people were still disadvantaged.

She suggested that if BRT was not viable, then what else needed to be taken into cognisance to present to DOT?

She asked SABOA and NTA to look into how to compete and cooperate.

Ms Magadzi said she did not hear anything policy-related from SACO, such as comment on the Moloto road users who demanded a passenger charter.

She asked SABOA how to expand the PTOG. She was of the opinion that subsidies must go to government buses that travelled right to the periphery, not "buses that were like weather". SA was affected by economic challenges that occurred globally and there was a need to think outside the box by looking into manufacturing and maintenance within South Africa, to create jobs.

The Chairperson said South Africa was one country and one state. Taxi violence affected everyone, since both parents and children had been injured. Taxi associations were here to stay and he asked when they were going to come together and talk as one body - similar to how this Committee operated, although made up of representatives from DA, ANC, EFF and NFP. While SABOA received subsidies, it was contributing to some of the problems in Moloto, as the buses were leaky, hot and dusty.

Ms Magadzi requested that questions be replied in writing as they could not be answered in the limited time.

Professor Walters replied that BRT operations were in high density routes, with high volumes of people and lower flow of traffic to and from outlying areas. There were cheaper ways of getting benefits from BRTs than the current status. BRTs were members of SABOA, including MyCiti and the Johannesburg Bus Company. SABOA members ranged from those with over 100 buses to smaller operators with ten buses. The passenger subsidy was, in theory, the best solution to go for, but in practice the worst solution. Wherever it had been implemented in the world, it was evident that such a system was expensive to maintain. It was possible however, to have these kinds of subsidies dedicated for one situation - like an old age home, where a budget spend of R200 a week could be set from the outset.

SABOA supported having an integrated transport system, but it could not force the issue. Every company existed to make a profit, otherwise there was no reason to invest in public transport and they might  end up like airlines that had to be bailed out by government. Bus companies needed to fund salaries, wages and maintenance of fleets. SABOA could not force local authorities to implement IPTN, as it was made of service providers. The government-operated public transport system was inherently inefficient and models had failed in United Kingdom, Australia and New Zealand. SABOA was not against transformation and new operators were welcome. He thought the NPTR was not functioning properly for the industry.

Mr Mlalazi replied to questions put to the NTA. He said that subsidising the passenger and not the mode was the best way go so that the passenger will choose which mode of transport to use. The Constitution of SA guaranteed its citizens the right to life, and that right was protected by the state. If there were taxi operators who were not operating to make profit, and were instead there to kill others, there was little that NTA could do; it was not police or the courts. Such people were criminals and belonged in jail.  He suggested that a judicial inquiry was needed, because they were many elements connected to this. Police stations sometimes did not respond to warnings of confrontation of taxi associations, as was evident in Thembisa where some passengers died in the cross fire. Officials from DOT and PREs were selling routes from one association to another, resulting in fights. Court orders on associations were not implemented because there was lot of money and corruption involved by people working in transport offices, again resulting in passengers being killed. Routes and permits were allocated by officials in provincial offices and there were a lot of irregular activities taking place there. The officials were being empowered by the NLTA. There was a registration process that took place, and although resources were  in place some associations had not yet been registered even to date.

He suggested that the OLAs and ENatis system should be scrapped as they were not working - sometimes they were off line for over a week. The EMV was a card used internationally by banks, and such an initiative could also be used in transport.

He told the Committee that the NTA had embarked on regularisation and transformation of the taxi industry. NTA was not happy that the government continued to subsidise buses that were owned by individuals. The bus passengers were as important as taxi passengers, so why then was the government, led by the ANC, discriminating against others? The BRT was not working. The most sustainable ridership of a BRT system in one country was 2.4 million passengers per day. That operation was too expensive and difficult to maintain for South Africa. The taxi industry could work with the BRT system very well, as evidenced by one location in Tshwane, where integration had resulted in there being no protest marches, stoppages or incidences of violence.

He said that an indefinite licence was needed because a seven year licence limited investment. Nobody invested in a business that was going to run for seven years only.

He reiterated that the NTA was not receiving a grant similar to that given to SANTACO. The Minister of Transport did not recognise the Constitution of this country as far as freedom of association was concerned. NTA appreciated the opportunity to present to this committee as the previous committee tended to be selective and it was felt that it had ignored some people.

Mr Sangweni replied to questions posed to SACO. He said that trains did not have security and SACO had taken the responsibility, from 2008 to 2010, to put its own safety patrols in place. The Commuter Charter raised some of the rights commuters needed to be able to have, from public transport. There were provincial structures and alliances of community forums in SACO, focusing on a particular locality, so that they could discuss socio economic issues together. SACO was limited as it was not funded by government. Instead, government was funding buses and SANTACO who made money out of  passengers.

He believed there was a major problem that needed to be attended to, at the Moloto Road, for the Mpumalanga government did not have any control on public transport. PUTCO was from Gauteng, and could not be given a subsidy to operate in Mpumalanga. SACO was committed to addressing problems in public transport, but the problem was that when a new administration came in, negotiations started afresh rather than there being continuation from the last stage. 

Mr Freedom Sotshantsha, Deputy President, SACO, replied that SACO did not have any relationship with SABOA and SABOA did not recognise it. It was having weekly meetings with the NTA and some with SANTACO. He expressed concern that women were getting raped in trains and others were getting home  late, which was even leading to breakdown of families. After providing safety patrols from 2008 to 2010, SACO took the matter further with PRASA, and agreed with PRASA to take its people to provide safety to commuters. These people were trained and should have started last Monday, but developments in PRASA meant that this did not materialise. That was the reason why Mr Sangweni was talking a lot about Mr Montana, as SACO was ready to provide 400 security people.

The Chairperson commented that the Department of Transport was losing opportunities and the Director General must make himself available to attend these kind of meetings.

Ms Lusanda Madikizela, Chief Director: PTID, Department of Transport, replied that the NLTA had guidelines on working with PREs. The Department would, on a regular basis, get requests for assistance with taxi associations if they had challenges with a specific PRE, and it then followed up on the issues with the specific PRE. It had also noted the tendency by PREs to hide behind the lack of a functioning online system, when in most cases the situation was just an administration error.

The meeting was adjourned.


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