Wednesday, 18 December 2013 00:00
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SRI Lanka’s public transport sector, particularly the buses, has long been accused of inefficiency. It has been pointed time and again that even with a fuel subsidy the 5,000 odd buses of the Sri Lanka Transport Board (SLTB) consistently make losses while their private counterparts thrive. Now the Government is putting out ambitious plans to turnaround the SLTB by buying over 2,000 new buses, introduce new joint timetables and break even. But will it work?
Weekend newspapers reported the Government will buy 2,200 new buses at a cost of more than Rs. 5 billion for SLTB from next year. The recommendation came from Transport Minister Kumara Welgama who has proposed that a supplier’s credit be negotiated with the manufacturer — Lanka Ashok Leyland PLC — for this purpose.
Cabinet has appointed a negotiating committee to discuss bulk discounts offered by the company. The committee, chaired by Technology and Research Ministry Secretary Dhara Wijethilake, will include Transport Ministry Secretary Dhammika Perera, Petroleum Industry Ministry Secretary R.S.S. Samaratunga, Productivity Promotion Ministry Secretary Damitha de Zoysa, and the Treasury’s Deputy Secretary B.M.S. Batagoda.
The Cabinet has also agreed to allocate Rs. 1 billion a year for five years from the Treasury to settle the cost of buying these buses for the SLTB and for the SLTB to bear the balance costs. Under the new policy, Budget allocations will be only for the losses of income to the SLTB due to operations on uneconomical routes and for issuance of school season tickets and to settle the statutory dues such as EPF and ETF contributions from the funds generated through the sale of non-economical and unserviceable buses.
Attempts to make SLTB financially viable will certainly be welcomed by the burdened taxpayer. Earlier this year the Treasury doled out Rs. 2.8 billion to SLTB as an attempt to keep the haemorrhaging entity viable. The SLTB has certainly not been lacking in cash infusions but has seen little results.
Driven by increases in 2011 in the fuel bill of 6%, and salaries and wages of 15%, SLTB’s total expenditure increased by 3% to Rs. 3 billion from Rs. 22.3 billion in 2010. Operational losses increased by almost 14.4% to Rs.2 billion in 2011 from Rs. 830 million in 2010, according to Finance Ministry data.
In 2011 the SLTB had been given a Rs. 3.94 billion subsidy on top of a Rs. 4.6 billion rupee cash handout the year earlier as well as a 100 new buses and over 800 repaired buses, but it still failed to make a profit. In fact despite an increase in the Government budgetary support to Rs. 5.18 billion in 2011 from Rs. 4.46 billion in 2010, the SLTB’s total revenue declined to Rs. 21 billion from Rs. 21.5 billion in 2010.
In the latest edition of the Budget, the SLTB will be handed Rs. 58.5 billion, over Rs. 10 billion more than what was allocated in 2013. Such a large chunk of cash needs to be handled responsibly. An improvement in a quality of Sri Lanka’s public transport is essential. So far the Government has concentrated mostly on road construction, but increasing levels of vehicle taxes, pollution and urban congestion demand that public transport be upgraded quickly.
However, the overhang of SLTB’s financial mismanagement is a real threat and managing it while providing a efficient service to the public remains the greatest challenge moving forward.
