INLSA
FILE PICTURE
For the first time, the eThekwini municipality has admitted that dodgy deals were struck when the city’s Durban Transport system was privatised nearly 10 years ago.
City manager S’bu Sithole told The Mercury that the municipality was developing a model that would be financially viable and in the best interest of ratepayers to put right a “defective” situation.
“We are trying to correct the mistakes that happened in the past. When the bus service was privatised a lot went wrong and the service collapsed. We sold the assets and bought it back in deals that even today are regarded as questionable,” he said.
The city’s executive committee yesterday deliberated on whether the municipality should take over the full operation of the bus company and re-employ its staff within six months.
The matter will be discussed again during today’s full council meeting.
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.
Illegal
Tansnat’s contract was declared illegal by a court in December 2009. Several local operators had complained that Tansnat had been given the contract to run the bus service without the matter going to tender after Remant Alton had stopped operating.
“They are still operating on a month-to-month basis so we have to regularise payments that have been made to the company (since December 2010) which is in excess of R300 million,” he said.
A report tabled before the committee yesterday outlined that the municipality could run the bus service on the basis that it establish a municipal entity in terms of the Local Government Municipal Systems Act to operate the service.
This would involve taking over the staff and operations from Tansnat, or taking over Tansnat as a “going concern”. However, Section 45 of the National Land Transport Act stipulates that a municipal operator may not tender for any commercial service contract or subsidised service contract.
Further, a municipality may not use its funds to subsidise a municipal operator unless that body is a unit separate from the municipality and the subsidies are paid in terms of a service contract.
Sithole said the running of the bus service had been defective from 2003.
“Within six months we will be in a position to say what needs to be done.”
Minority Front councillor Patrick Pillay said the city should consider getting multiple contractors to operate different routes.
DA caucus leader Tex Collins said the city must own the assets, but unbundle the contractors because if one “went down”, the city would be in a better position to repair the damage rather than running the risk of the entire service collapsing.
ANC councillor Nigel Gumede said it was better to have an entity to run the service that could be in control and accountable for the revenue that was generated.
