$40-billion bailout

When the financial year ends in March, taxpayers would have shelled out more than $40 billion in bailout support for two of three agencies involved in the provision of public transportation.

Stakeholders agree that government subsidy is necessary but many are not convinced that enough is being done to reduce the financial costs on taxpayers by improving the efficiencies in the service delivery.

The services are delivered through the Jamaica Railway Corporation (JRC), and the bus companies – the Montego Bay Metro Limited and the Jamaica Urban Transit Company (JUTC).

The JUTC, the largest of the three, provides services to the Kingston Metropolitan Transport Region (KMTR), which comprises three parishes and more than 40 per cent of the country’s population.

More than 200,000 persons use the JUTC daily.

The Metro serves routes from the St James capital to various destinations across the parish and to neighbouring Hanover and Trelawny, while the JRC recently stuttered back into public passenger offerings with a limited service for students.

The JUTC, which subsidises the fares for certain categories of riders, such as students, the elderly and the disabled, operated at a loss of over $70 billion for the period 2010-2022, according to budget documents for the period.

Over that same period, the amount taxpayers were forced to provide amounted to more than $40 billion.

An $8 billion loss is projected for the 2022-2023 financial year that starts on April 1.

The Metro service got taxpayer support for the last five-year period of almost $800 million.

The JRC, whose main income is from bauxite companies that use its rails and lands, did not get any direct government subvention over the last five years.

PUBLIC TRANSPORTATION SHOULD BE SUBSIDISED

Decision scholar at The Mona School of Business and Management at The University of the West Indies, Dr Lawrence Nicholson, said governments do not expect to make profits from their necessary support for public transportation.

But he said an efficient service is important for productivity and other economic benefits that come with moving goods and people.

“There needs to be a more disciplined approach of how buses are run in the urban areas and then those who are served will follow suit,” Nicholson told The Sunday Gleaner, insisting that public transportation should be subsidised.

“The economic benefit [of subsidising] will not be direct. The more efficient the public transportation becomes is the more efficient workers become; they reach work on time. They do not have to spend two hours when they could have spent an hour or maybe 30 minutes in traffic.”

The Jamaica Association of Transport Operators and Owners (JATOO) has called for the downsizing of the JUTC to cut its losses, a view seen as self-serving since those private players would benefit from fewer JUTC routes.

In 2020, the Government rejected rumours that it was pursuing the privatisation of the JUTC.

“The JUTC is a Jamaican company and I have every intention for it to remain that way,” said then Transport Minister Robert Montague.

Multiple reports over the years have raised questions about JUTC’s management and use of resources, confirmed most recently by a 2020 report from the Auditor General’s Department.

That report said the JUTC “lacked a robust maintenance and inventory management system to facilitate adequate supplies of buses on a timely basis to meet the demand of customer”.

It also identified weaknesses in JUTC’s governance practices which were manifested by a lack of financial transparency, breaches of the human resource policy, minimal adherence to government guidelines and limited accountability by JUTC’s leadership.

“These inefficiencies also worsened the JUTC’s financial position over the period,” the report added, lending support to the long-held view that political administrations have historically used the 24-year-old state entity as an employment sponge for their supporters.

However, the management now says it is pursuing various plans to improve the entity’s financial health, which it says “is fairly well known and is as a result of multiple social and economic variables”.

It pointed to several positive indicators, including that up to January 2022, overtime expense was $72 million, or 60 per cent less than projected.

It said staff complement had been reduced from 2,236 in 2016 to 1,789 in January 2022, and that savings on staff costs so far amounted to $540 million, as expenses reduced from $2.55 billion in January 2021 to $1.96 billion in January 2022.

It cost the JUTC $1.5 billion to buy fuel last year, and with the increases in the commodity because of the Russia-Ukraine conflict, the projected amount for this year at $2.5 billion is expected to increase significantly.

The company says it is testing the use of natural gas by using five CNG (compressed natural gas) buses alongside five diesel buses on route 12A in Portmore.

The results show that, per kilometre, the JUTC spends 14 per cent less on fuel for the CNG buses as against that for the diesel-powered units, the company said.

And the bus company says it is exploring the use of biodiesel as an alternative fuel source to improve operational efficiency, while reducing emissions.

A pilot project is expected to start between April and June this year and will see the installation of fuel security devices on fuel tanks and the construction of an above-ground fuel facility at the Portmore Depot.

Other key strategic focuses include the procurement of new buses, including electric buses; expansion of partnerships with private sector to widen access; and availability of SmarterCards that are used instead of cash to pay fares. The JUTC is also in discussions with consultants to upgrade its electronic fare collection system to reduce fare-box leakage.

‘BIG PLANS’ TO MAKE RAILWAY SERVICE VIABLE

The Jamaica Railway Corporation has long been touted as key to the provision of multi-modal transportation for Jamaica, and the Holness administration has insisted on developing routes for public transport.

JRC CEO Donald Hanson says “big plans” are being pursued to make the railway service viable.

“I can’t disclose them to you right now because we’re talking about private investors and I don’t want anybody to come in and get them out,” he told The Sunday Gleaner.

The JRC has a track-user agreement with UC Rusal Jamaica, operators of Windalco, as well as considerable real estate holdings.

The JRC expects losses of $40 million in 2022, well above the approximately $7 million it recorded in 2021, although the COVID-19 pandemic may have played a role.

Its staff count is also expected to rise to 86 compared with the 56 in 2021. That will push the compensation costs to $160 million, up from $124 million in 2021.

The JRC expects to collect $128 million in user fees and $91 million in real estate lease and rentals.

Sunday Gleaner calls to Colin Murray, chairman of the board for the Montego Bay Metro, went unanswered.

The Montego Bay Metro is projecting an operating loss of $180.5 million, an increase over the $118 million for 2021. The Government’s bailout of $245 million is expected to keep the service afloat.

Metro employs 47 persons.

According to budget documents set for approval shortly, the MoBay Metro plans to increase its fleet by three to nine; re-engineer its depot space and acquire spare parts, as well as boost its revenue through charter and advertising services.

jovan.johnson@gleanerjm.com