– This response is written in my personal capacity. Please direct queries or corrections to me at warwick@thusa.net
This post is a response to an email doing the rounds among (ex)Durbanites. The email is riddled with errors and is written with what appears to be no purpose other than to defame our City. The email is reproduced here for your reference.
Sure, we would’ve all done it differently if we were running the City, but we aren’t. (Yet). Durbanites have water, electricity, refuse removal, road maintenance, verge maintenance among other services. Are they perfect? Nope, not by a long way, but they are mostly certainly far from non-existent.
I enjoy living in Durban and I relish the challenge of pressuring the ANC-led City Government to shape up or get voted out (eventually). A more positive and supportive attitude from fellow Durbanites would make all the difference in convincing all the people in this City to vote the under-performing ANC-led eThekwini Government out of power.
Local Government Elections will be held within the next year or so, so let’s straighten up the facts on this story and get working on motivating every single person in this City that their vote counts and only they can make the difference they want to see in this City.
Africa is most certainly wonderful and I whole-heartedly suggest you “rush back here”. This country needs good people willing to help make it work out.
– Warwick Bruce Chapman | 083 7797 094 | warwick@thusa.net
Here are the facts:
The eThekwini bus service is presently running, albeit with a smaller operational fleet than previously, operated by a new contractor, Transnat Africa. As of June 30, 2009, Remant Alton ceased operations relating to the contract to run the buses in the City.
The City sold the fairly well-run Durban Transport Authority on June 1, 2003 to Remant Alton at a cost of R70 million.
The City Manager does not live in the point development (rates-free zone). All his property appears on the valuation roll and he does pay rates at a market value on these properties. He does not own a luxury vehicle (at least by the politician-style standards he is brushed with), nor does he have bodyguards, let alone a cavalcade of them.
Here is the story:
The Durban Transport service did not run at a profit and instead incurred huge running costs and was unable to maintain the required bus refleeting program. The ratepayers of the City had to transfer massive amounts of cash from the rate and general account on an annual basis just to balance the books.
The Constitution has nothing to do with this case. The Ethekwini Municipality privatised the municipal fleet in 2003 because the National Land Transport Transition Act of 1998 stipulated that municipalities with transport authorities, such as eThekwini, should not run bus services themselves. This Act required the Metropolitan Municipalities to set up Transport Authorities and regulate all modes of public transport in their jurisdiction. This meant that councils could no longer be operators in the industry as well as regulators.
The decision to privatise the service was supported by the DA but was not implemented on a fitness for purpose basis. Instead, it was packaged into one mega contract and awarded to Remant Alton, a consortium with former ANC provincial treasurer Diliza Mji as chairperson and Daniel Jagadasan who was previously convicted of bribing a municipal official as chief executive.
The model preferred and strongly motivated for by the DA envisaged breaking the contract into sub-contracts on a route, district or zone basis and award them to multiple operators rather than retain the cumbersome and financially difficult single-operator system.
The service under Remant Alton soon began experiencing problems and the service went into a slow but steady decline between 2003 and 2009. While mismanagement and negligence were factors in the problems experienced by the service, there is significant reason to believe that funding shortfalls contributed to the problem too.
Paul Rush, operations executive at Remant Alton said the Company had to cater for increased passenger demand in 2004, including scholar services a year later, which was unfunded, despite the Department of Education committing to cover the costs. He said that in April 2006, the company lost 59 buses in a fire at the Umlazi depot, worsening the already critical bus shortage.
Rush contended further that “[i]n addition to the purchase figure of R70 million, we also took over bus leases to the value of about R100 million and we have purchased 370 buses, at a cost of about R420 million, since commencing the contract. This is a clear indication of our commitment to this contract.”
According to a report laid before the City Council, the National Transport Department subsidy intended to cater for rising fuel prices was set at 10.2% of total operating costs when it may have needed to be closer to 30%. The report also indicated the Department was under-subsiding the Company. Remant received R27 151 a month per bus, compared to the national average of R42 914.
The report stated that “[d]etailed analysis and modelling revealed that Remant’s dire financial position cannot be primarily attributed to ‘mismanage- ment’ . . . (but) can definitely be attributed to the fuel price increase and the inadequate fuel price increases by the national Department of Transport.
The DA still felt that mismanagement was one of the key factors that led to the breakdown of the service and questioned the nature of the awarding of the contract in the first place. The DA alleged that it was “not based on know-how, but on know-who”.
The report did vindicate the DA’s preference for smaller sub-contract across the City, citing one of the major problems since privatisation being that the large scale of the operation – with one operator running across the metro – was “not ideal”.
The relevant legislation prevents the City from running a bus service, but does allow it to own the assets. Thus, in 2008, eThekwini bought the buses and equipment back from Remant Alton at a cost of R405 million as part of an agreement whereby Remant Alton would operate the service and Council own the fleet. This arrangement did not last and on June 30, 2009 Remant Alton finally stopped operating the bus service on behalf of the City.
It is not true that the City paid R405-million for buses that were sold to Remant Alton for R70-million in 2003. The City did not buy all buses back from Remant Alton as some were in an extremely poor state of repair or were too old. Out of 824 buses belonging to Remant Alton’s city fleet, 514 were said to have been bought by the City.
The City contended the pricetag of R405m comprised many new buses and the actual value of the fleet was determined by an independent valuator at R390 million. The fleet bought by the City was said to have borne no resemblance to the fleet sold in 2003 to Remant Alton. Equipment such as ticket machines totalling R15-million, made for a total of R405 million.
The City thus owns the buses and is fully responsible for maintenance contracts with the manufacturers. The buses are leased to the operator and since the start of the contract in 2003, the City’s bus depots have been owned by the City and leased to the operator.
Transnat Africa was appointed July 9, 2009 as the operator with effect from August 3, 2009 until the original Remant Alton contract expires in October 2010. Due to their track record running a large subsidised bus service throughout KZN, Transnat was awarded the contract in order to restore the service as quickly as possible.
Derek Naidoo, Deputy City Manager: Infrastructure and Procurement, eThekwini Municipality has stated that while the original Remant Alton contract expires at the end of September 2010 (currently being serviced by Transnat Africa), “it has been agreed by all parties that the City will appoint a transaction advisor to arrange the splitting up of the existing contract into smaller, ring-fenced operations that will then be advertised, probably in early 2009.”
– This response is written in my personal capacity. Please direct queries or corrections to me at warwick@thusa.net