Durban – Tansnat Durban CC, the operator of Durban’s troubled municipal bus service, on Saturday welcomed the municipality’s decision to appoint a new intervention team.
“Tansnat is heartened by the decision of the executive committee (exco) of the eThekwini municipality to appoint an intervention team to probe various aspects of the company’s two contracts with the municipality and to oversee its bank account,” Tansnat spokesman Vuyo Mkhize said.
Municipal manager Sibusiso Sithole announced the establishment of an intervention team on Friday at a special sitting of the exco.
While the announcement was welcomed, it is the second time that Tansnat and the municipality have attempted to set up an intervention team to resolve issues plaguing the troubled bus service.
A letter dated January 8, 2016 – sent by Tansnat lawyer Sandile Khoza, of Norton Rose Fulbright, to eThekwini mayor James Nxumalo, Sithole, and eThekwini Transport Authority boss Thami Manyathi – claims that the two parties agreed to an intervention team in October 2014.
According to the letter, a copy of which is in ANA’s possession, the team was established in December 2014 but then disbanded by the municipality.
The letter goes on to claim that the municipality owes the company R128.81 million and that the municipality is disadvantaging the company by having the lease agreement between them operate on a month-to-month basis.
The fleet of 450 buses and the services depots are owned by the municipality, but very little has been done to upgrade the fleet, according to the letter, which has left Tansnat having to pay for extra maintenance to keep the fleet operating.
But a bigger concern for the company, according to the letter, is the fact that there is no long-term agreement.
“The most fundamental issue is the fact that our client is operating the city’s buses and has been doing so for almost five years now, in terms of a month-to-month contract which offers no guarantee of continuity. The impact of this is that our client’s auditors are unable to express an opinion on its going-concern status. The impact of this, in turn, is that our client’s bankers are not willing to extend to it favourable long-term credit facilities.”
This had led to the cash crunch faced by the business, leaving it unable to pay staff salaries, which in turn led to staff strike action.
On Friday, Sithole told the exco that the municipality had been forced to pay R33.3 million to ensure that the bus service kept operating. He said R16 million was paid to the workers provident fund to prevent it being liquidated, and R17.3 million was paid directly to Tansnat workers for their December salaries and bonuses.
The non-payment of salaries and bonuses saw staff – drivers, cleaners, and general workers – striking during December and January after they did not receive their December salaries and bonuses.
On Saturday, Mkhize said: “The company has decided to refrain from commenting publicly on this matter pending the finalisation of this probe, save to confirm that it, indeed, generates an income of R45 millon per month and to record that it, in turn, pays R18 million in bus lease and maintenance fees to the municipality, R15.8 million in salaries, R12 million for diesel, and about R2.5 million for other operational expenses.”
That means, according to Mkhize, Tansnat is operating the bus service at a R3.3 million a month loss.
According to the letter, the company has been severely affected by the municipality implementing a discounted “MUVO” card system that sees commuters paying less than they would normally.
Khoza also claims in his January 8 letter that his clients have been affected by the delayed implementation of a fare increase in 2015 and warned that Tansnat’s finances would also be severely affected by the municipality’s failure to decide on a 2016 fare increase.
The bus service was sold by the municipality in 2003 to Remant Alton Land Transport for R70 million. In 2008 the municipality spent R405 million to buy back the buses from the troubled Remant Alton. The company continued to operate ?the service owned by the municipality for another year, until Tansnat’s appointment in 2009.
African News Agency
* Use IOL’s Facebook and Twitter pages to comment on our stories. See links below.