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IOLProperty - South African Property For Sale
Wednesday Aug 08, 2012

Durban has deep pockets for bus consultants

The eThekwini Municipality is to cough up more than R1 million for consultants to investigate the best model for Durban's municipal bus service.

A team from Pegasys, a management and strategy company, briefed the city's executive committee yesterday on the business plan and various legislative processes related to the provision of the Durban Transport Service.

Earlier this year, the council resolved that the municipality would take over the full operation of the bus company.

The city could either operate the Durban Transport Service as a council unit or as a trading service. The municipality could also establish a municipal entity in terms of the Local Government Municipal Systems Act to run the service.

If the city took over the bus service from Tansnat Africa, it would have to pay millions in additional salaries and would lose the R180m subsidy from the KwaZulu-Natal provincial transport department.

Pegasys would investigate both options and determine their feasibility and the financial implications. Monthly progress reports would be tabled to council and, in November, the council would make a decision on the best model for the city.

One of the legal questions raised by Pegasys yesterday was whether or not the public transport operations grant could be used to subsidise a municipal contractor or a municipal-provided service.

A report by Pegasys said the loss of the public transport operations grant "would significantly increase the financial burden on the municipality".

eThekwini Transport Authority head Thami Manyathi said a lot of decisions around the Durban Transport Service had been based on emotion.

"There was pressure from council, and not objective thought, so we brought in an external player to look at the different facts and advise council appropriately," he said.

Pegasys would be paid "over R1m" for their work.

Minority Front councillor Patrick Pillay said the presentation by Pegasys "revealed a lot of uncertainties".

"If the city wants to absorb the buses, we would lose R180m a year, which means the only alternative is to employ private bus operators and divide the contract into smaller routes which will be more manageable," he said.

In August 2003, the Durban Transport bus service was sold to the Remant (Pty) Ltd and Alton Coach Africa Consortium owned by Jay Singh for R70m. At the time, ratepayers were promised the empowerment deal would save them about R40m a year.

Instead, the bus service became riddled with problems. In August 2008, the municipality spent R405m buying back the buses and equipment, and in 2009 the municipality terminated the company's contract a year before the contract was to have ended.

Tansnat Africa was appointed in August 2009 to run a reduced service on a monthly basis.

However, Tansnat's contract was declared illegal by a court in December 2009.

Several local operators complained Tansnat had been given the contract to run the bus service without the matter going to tender after Remant Alton had stopped operating.

The Mercury

 
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