Commuters to pay more

2018-06-06 06:00
George Mokgothu, chief executive officer of Interstate Bus Lines.Photo: Teboho Setena

George Mokgothu, chief executive officer of Interstate Bus Lines.Photo: Teboho Setena

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Thousands of commuters in the greater Mangaung Metro using Interstate Bus Lines (IBL) as their main mode of transport should expect a hike of 7,5% in fares with effect 1 July.

The tariff hike announced on Friday (01/06) is part of the company’s annual increase of its fares.

The 7,5% is for multi-journey tickets; with 5,1% on cash tickets, versus an increase of 9% in expenses. The previous hike was a 5% increase for cash tickets.

George Mokgothu, IBL’s chief executive officer, said the tariff hike of 7,5% had been approved by the provincial Department of Roads and Transport after consultation with stakeholders. These include the Passengers Focus Group, a body representing commu­ters on the stakeholders’ body, the Joint Route Management Committee.

“The proposed increase was communicated to the passengers after consultation with the department and the Passengers Focus Group. Consultation was from 19 May till 1 June,” said Mokgothu.

Mokgothu held the strong view that the hike was reasonable, saying it was below the inflation rate.

“Based on its calculation the company is entitled to a 11% fare increase. This is still far below the 9% increase of last year, which the company was forced to review after a protest by passengers,” Mokgothu explained.

“It was a difficult decision to propose the bare minimum of a 7,5% increase.”

The protest, which attracted attention due to the vandalism of a few busses, saw the company introduce various journey tags in line with passengers’ demands, which included the extension of expiry dates of multi-journey tags.

“In 2017 the company had to reduce the approved 9% increase to 6,5% after passengers’ protest.

“This impacted negatively on normal operations of the company and resulted in losses.”

While Mokgothu cited the latest huge increase in the fuel price (82c a litre petrol, 87c a litre diesel) effective midnight today (6 June), he stated tariff hikes were also influenced by the rising costs of spares, which included tyres.

Tyres remain a increasing expense as a result of the bad conditions of the roads they are using.

Government’s subsidy is increased by a mere 3,2% for 2018-’19, while it was 5,2% in 2017-’18, which is not in line with the company’s expense increasing trends, explained Mokgothu.

“The increase is due to factors such as salary increases above inflationary rates, which are subject to national collective bargaining, thus the company cannot influence it on its own.”

He said the increase in VAT to 15% had added to the burden of the company’ expenses.

“The VAT increase to 15% is negative on the company, representing R1,5 million in losses, since the company is VAT exempted and is not entitled to claiming any VAT input.”

Mokgothu stated that the below-inflation tariff hike of 7,5% and the VAT increase to 15% was not balancing on the company’s sustainability and possible growth.

“In 2017 the cost of a train-bus was R3,2 million and in 2018 it is R3,4 million.

“This current financial year IBL will procure two rigid buses at the cost of R4,4 million and eight train-buses at the cost of R27,2 million as part of its annual bus replacement programme.”

Currently IBL has 242 buses operating, having increased from 169 in 1998 when the company entered into a contract with the department.

“The additional 73 buses received no subsidy since 1998.

“The company had no choice but to continue operating, due to growth in settlement areas within its operational area.”


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