Tag Archive | fuel subsidies

Transport fuel subsidies to business are wrong, says Parliament.

Parliamentary committee says transport fuel subsidies should go to consumers

The chairperson of the portfolio committee on transport, Ms “Nellie” Bhengu, told the department of transport (DOT) that in her view by not actually giving the consumer, or the household, any portion of state transport fuel subsidies, the  integrated public transport system (IPTS) plan as presented to Parliament, particularly on the subject of fuel pricing, “was not really speaking to the needs of the people.”

Although under considerable pressure to explain why government’s approach to the IPTS should not be driven by commuter subsidies, Mathabatha Mokonyama, deputy director general, public transport, of the department of transport (DOT), explained that this was not a practical suggestion. The reality was that DOT had to deal with operators, he said.

Mokonyama said the current system of fuel pricing was likely to stay the same in South Africa for the foreseeable future.

He told parliamentarians that South Africa system was to negotiate subsidies with transport operators in terms of the legal structure governing the country and explained that both the history of private bus operators in SA and the growth of an independent taxi industry had mitigated against a commuter subsidy system and had led to the current system, however ideal other proposals might be as far as government was concerned.

MPs argued that in countries such as the England, Canada, Germany Sweden and even Kenya, such systems existed and citizens could purchase open tickets across of whole range of forms of transport and commute therefore at lesser costs to their already strained household budgets.

All is not well in the transport system in South Africa, DDG Mokonyama admitted to the committee, “and we cannot not hide from this fact. We are dealing with up to forty years in backlog of capital items, particularly rail rolling stock”, he said.

He told parliamentarians in the portfolio committee on transport that the proposed integrated public transport networks (IPTNs) in SA, some partially implemented and some still in planning, involved the integration of local rail, bus, mini-bus, taxi and “on-demand” services, and also to which link long distance services such as air, train, coach and midi-bus taxi were tied in.

Current constraints, as were well known, included lack of pre-travel information, poor sidewalks, badly maintained directional signage, lack of vehicle destination information, lack of real-time travel information and lack of safety.

Whilst the public may appear to prefer private transport, in census results this only came about because of the lack of public systems, the public being aware of the very poor maintenance aspect to bus and coach services, insufficient rail alternatives and no provision for cycling.

97.5% of the vehicles used for transport were acquired in the ‘fifties, DDG Mokonyama said, and effective vehicle mobilisation and surbanisation of the population only occurred in high and relatively high middle-income groups. Added to which problems it was to be noted that approximately 3.1m RDP housing units had been “inappropriately” located, he said.

Poor planning at local government level had exacerbated the problem, he said, and when questioned by MP Ian Ollis (DA) which came first; building a housing area near a rail line or insisting a rail line is taken to a housing area, the answer came from DDG Mokonyama that DOT worked through the integrated planning committees, some of which worked well and others not, but nevertheless that DOT could only recommend, not give instructions. He said he understood what Ollis was saying.

DOT noted with statistics that whilst London, Jakarta and Paris handle slightly over 30 million people in a sprawling areas in total area probably equalled by Gauteng (Jhbg, Benoni, Brakpan, Sandton etc). The situation was not the same just because of geographic size.

Although apartheid and forced removals had started the decentralisation, distance problems with urban sprawl were much of the problem and the urbanisation of millions of potential commuters from rural areas to cities had completely altered the scenario and made any comparisons irrelevant.

The commuter impact, he said, of the this “sprawling” in SA was high peak rushes and a “tidal flow” demand pattern, leaving vast amounts of transport idle for three quarters of a working day, coupled in SA particularly with “patchy” weekend services which also did not happen from a comparative viewpoint in many countries. Many developing counties worked through a seven-day week.

Mokonyama said DOT had identified the short distance commuter transport bus system known as BRT (Bus Rapid Transport); high quality long distance bus services and what was referred as “rapid rail”. All three were as critical elements of the department’s IPTN but stated there were “the municipal situations that warranted an intervention.” He did not expand on this.

He confirmed earlier survey reports that South Africa “had a poor public transport system” and 31% of SA households had access to a car – the “split” for travel to work being 32% for car travel; 23% of people walked to work and 25% used a taxi. The number of persons using bus and train only amounted to 15% of the total, whilst 5% used “other means”.

Meanwhile, Mokonyama  said, whilst it might look like that in SA that operational subsidies given by the state were relatively similar to other countries, the vast difference in incomes compared with SA and overseas showed SA as having “cost of transport” as one of the major and highest items in household expenditure.

Statistics also indicated that whilst only 31% of South Africans owned a vehicle, operational subsidies allocated to rail and buses was R3.5bn and R4.3bn respectively for 2012 and 2013.  Persons earning less that R500 a month spent 35% of their income on transport; those earning between R501-R1000 spent 23% and households earning between R1, 001 – R2, 000 spent 14% of their income on transport.    On government interactions and interventions taken recently, the first approach had been the National Land Transport Act to bring about some form of regulation, infrastructure oversight and operational funding process to the situation. Following this, the main metros had been instructed to commenced integrated transport systems, which was now process of happening, he said.

DDG Mokonyama then gave a city by city report on each (IPTS), showing that Cape Town, Johannesburg and Tshwane were relatively advanced, Johannesburg’s Rea Vaya scheme from Soweto to City having come into operation in February 2011 and already had carried 1.1m passengers but labour unrest had shut down the system for two months.

The second phase of Rea Vaya to Parktown was 90% complete and the Parktown to Sandton route had been changed to incorporate Alexandra township but had not yet started.

In Cape Town, the feeder service, My Citi, was carrying 12,000 passengers per month on 42 buses, 50% being former vehicle commuters.    R1.5bn was due to be spent by June 2013 to complete Phase 2 of My Citi which was in part operation.   Phase 3 incorporated metro east operations and would be underway in the following two years.

An Example of an integrated system for the whole of Tshwane was shown, indicating a combination of buses, existing rail, Gautrain, the existing BRT corridor and new rail for places as far apart as Mamelodi, to Mabopane, Garankuwa and Rosslyn, from Centurion to Hammanskraal taking in the national rail line, all inked to the CBD and Hatfield in the centre. Such IPTNs were in place for most cities in SA, he said.

When asked if the Moloto Corridor programme was part of the integrated transport plan, DDG Mokonyama told parliamentarians that it was. “We are doing the analysis.  Rail is so much safer than bus on open roads over a long distance and this fact has given more impetus to the plan”.    He admitted that the plan had originally turned down but said this was not a wish not to proceed but that no feasibility study had been conducted.

Again ANC MPs asked why subsidies did not go to commuters but in reply, DDG Mokonyama quoted an example with Sasol and their commuters, Sasol running a bus system where they, as employers, were paying an operator a bus subsidy.

However, the union involved had demanded the sum and there were, Mokonyama said, “bad consequences for the commuter”.   The department had learnt from this, he said to parliamentarians.  “I would like to believe we can get rid of some of the unintended consequences by not dealing with matters in this way”, he added.



Posted in Energy, Finance, economic, Fuel,oil,renewables, Public utilities, Trade & Industry, Transport0 Comments

This website is Archival

If you want your publications as they come from Parliament please contact ParlyReportSA directly. All information on this site is posted two weeks after client alert reports sent out.

Upcoming Articles

  1. Jeremy Cronin back on land expropriation issue
  2. Integrated Energy Plan reflects cleaned-up thinking
  3. Changes to Companies Act headed for Parliament
  4. State Bank a strong possibility with certain provisos
  5. No more Competition Commission yellow card warnings
  6. Business to meet transformation targets by law

Earlier Editorials

Earlier Stories

  • AARTO licence demerit system studied  …. In what has been a legislative marathon, the update of the Administrative Adjudication of Road Traffic Offences Act (AARTO) has now reached a stage […]

  • SARS role at border posts being clarified …. In adopting the Border Management Authority (BMA) Bill, Parliament’s Portfolio Committee on Home Affairs agreed with a wording that at all future one-stop border […]

  • Modernising SAPO a culture change ….. sent to clients 27 February…. Stage by stage, Mark Barnes, Group Chief Executive Officer of South African Post Office (SAPO), appears to be reforming cultures and […]

  • OECD money task force waiting for SA   ….sent to clients Feb 7…. Chairperson of the Standing Committee on Finance, Yunus Carrim, made it quite clear in terms of parliamentary rules that […]

  • President Zuma vs Parliament on FICA Bill …..editorial……The convoluted thinking that is taking place in South Africa to avoid the consequences of the law has once again become evident in […]