The Gauteng government’s spending on bus subsidies has increased by at least R400m in the past five years, but operators say they have not received enough money to cover their running costs.
The bus operators claim they have been under-funded by the Gauteng department of roads and transport, leading to them struggling to pay workers’ salaries, buy fuel and maintain busses.
Yesterday, Putco suspended its bus services due to “lack of what the company said it running short of money to buy diesel”. The bus firm said it did not receive its March subsidy to operate. However, Gauteng premier Panyaza Lesufi announced that the bus operations services would resume today after an agreement was reached on the subsidy. Lesufi said government did not pay subsidies on time because the auditor-general said they should only pay service providers after they have rendered a service.
“The compliance matter which relates to meeting the requirements of the auditor-general states that we are supposed to allow service providers to render a service, they invoice us, and we pay them. We are moving away from the prepaid arrangement to the invoice arrangement. “This affected Putco’s planning. They indicated that the service provider providing them with diesel wants an upfront payment and that’s why we find ourselves in this unfortunate situation,” said Lesufi.
According to the Gauteng department of transport annual reports, the provincial government paid a R1,9bn public transport operations grant to bus operators during the 2017-2018 financial year. In the following financial year, R2,1bn was paid to the bus companies.
The department then paid R2,07bn, R1,8bn and R2,3bn in subsidies for the 2019-2020, 2020-2021 and 2021-2022 financial years respectively.
The department manages 30 bus subsidy contracts, which were awarded to 13 bus operators. The subsidised bus services are operated by bus companies on behalf of government in Johannesburg, Ekurhuleni, Tshwane as well as Sedibeng.
Putco spokesperson Lindokuhle Xulu said the bus company had been struggling to keep up with rising costs of living despite the subsidy.
“We do not have money or reserves. The reason we are under this dire financial situation is because government has been under-funding us through their subsidy for the past 26 years Putco has been operating on extended contracts based on conditions that were set in 1997. The government did not take into account the fuel increase over the years, cost of busses, maintenance and other things,” said Xulu.
He said Putco had a fleet of 1,400 busses and ferried about 230,000 people per day.
DA Gauteng spokesperson on transport Fred Nel said there had been a problem of non-payment of subsidies in the past but it had not led to Putco suspending operations.
He said the late payments in the past had seen bus operators scrambling to get money to keep afloat.
“It would affect their cash flow. They would have to get monies from their reserves to pay for salaries, repairs and maintenance. Some operators get short-term loans, which have an interest impact on them,” said Nel.
Passengers with monthly or weekly tickets will be reimbursed for their lost trips.
Xulu said those in the southern parts of Gauteng, like Soweto and Eldorado Park, who bought tickets had an option to extend their weekly bus trips by an additional three or four days.
Those with monthly tickets have two months to use the ticket after purchase.
“But for the northern sides like Ekangala, KwaMhlanga and Tshwane, they use the old system and we will discount them going forward for a ticket. When they purchase the next time, we will discount them and give them all their trips. We will be meeting with the provincial department of transport to find a way forward.”
kokam@sowetan.co.za
Putco to resume operations but subsidy gripe persists
Company did not receive its March subsidy
Image: Antonio Muchave
The Gauteng government’s spending on bus subsidies has increased by at least R400m in the past five years, but operators say they have not received enough money to cover their running costs.
The bus operators claim they have been under-funded by the Gauteng department of roads and transport, leading to them struggling to pay workers’ salaries, buy fuel and maintain busses.
Yesterday, Putco suspended its bus services due to “lack of what the company said it running short of money to buy diesel”. The bus firm said it did not receive its March subsidy to operate. However, Gauteng premier Panyaza Lesufi announced that the bus operations services would resume today after an agreement was reached on the subsidy. Lesufi said government did not pay subsidies on time because the auditor-general said they should only pay service providers after they have rendered a service.
“The compliance matter which relates to meeting the requirements of the auditor-general states that we are supposed to allow service providers to render a service, they invoice us, and we pay them. We are moving away from the prepaid arrangement to the invoice arrangement. “This affected Putco’s planning. They indicated that the service provider providing them with diesel wants an upfront payment and that’s why we find ourselves in this unfortunate situation,” said Lesufi.
According to the Gauteng department of transport annual reports, the provincial government paid a R1,9bn public transport operations grant to bus operators during the 2017-2018 financial year. In the following financial year, R2,1bn was paid to the bus companies.
The department then paid R2,07bn, R1,8bn and R2,3bn in subsidies for the 2019-2020, 2020-2021 and 2021-2022 financial years respectively.
The department manages 30 bus subsidy contracts, which were awarded to 13 bus operators. The subsidised bus services are operated by bus companies on behalf of government in Johannesburg, Ekurhuleni, Tshwane as well as Sedibeng.
Putco spokesperson Lindokuhle Xulu said the bus company had been struggling to keep up with rising costs of living despite the subsidy.
“We do not have money or reserves. The reason we are under this dire financial situation is because government has been under-funding us through their subsidy for the past 26 years Putco has been operating on extended contracts based on conditions that were set in 1997. The government did not take into account the fuel increase over the years, cost of busses, maintenance and other things,” said Xulu.
He said Putco had a fleet of 1,400 busses and ferried about 230,000 people per day.
DA Gauteng spokesperson on transport Fred Nel said there had been a problem of non-payment of subsidies in the past but it had not led to Putco suspending operations.
He said the late payments in the past had seen bus operators scrambling to get money to keep afloat.
“It would affect their cash flow. They would have to get monies from their reserves to pay for salaries, repairs and maintenance. Some operators get short-term loans, which have an interest impact on them,” said Nel.
Passengers with monthly or weekly tickets will be reimbursed for their lost trips.
Xulu said those in the southern parts of Gauteng, like Soweto and Eldorado Park, who bought tickets had an option to extend their weekly bus trips by an additional three or four days.
Those with monthly tickets have two months to use the ticket after purchase.
“But for the northern sides like Ekangala, KwaMhlanga and Tshwane, they use the old system and we will discount them going forward for a ticket. When they purchase the next time, we will discount them and give them all their trips. We will be meeting with the provincial department of transport to find a way forward.”
kokam@sowetan.co.za
Putco to suspend services because Gauteng hasn't paid subsidy
Lack of funds for diesel puts brakes on Putco bus service but commuters to be reimbursed for tickets
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