TRANSPORT: Subsidy Worries (Again) For Golden Arrow
Recent Western Cape Business News
CAPE-based empowerment company Hosken Consolidated Investments (HCI) thinks government could be heading down “a path obliging the curtailment of bus services nationally.”
HCI, which owns Golden Arrow Bus Services, says this is an issue that is completely destabilising the bus industry – something that is likely to cause significant retrenchments, commuter dissatisfaction and disruption to businesses.
Last year GABS needed to go to the High Court in order to force government to meet its obligations in terms R100 million owed in terms of subsidies.
Writing in HCI’s latest annual report, CEO Johnny Copelyn says while government complied with the court order for the fiscal year to end March 2009, there are worrying indications that insufficient funding has been budgeted by the state for the new financial year.
“This shortage of funds will, undoubtedly, have a very negative impact of the Department of Transport’s ability to meet its existing contractual obligations and is likely to put further pressure on the GABS’ cash flow and services.”
While some may feel HCI is calling government’s bluff on the subsidy matter, the truth is that GABS does play a meaningful role in the local economy.
Currently GABS operates 1 116 buses, which convey around 250 000 passengers every working day.
Since HCI took over GABS in 2004 around R460 million has been spent on new buses and refurbishing the existing fleet.
In the past 12 months HCI disclosed that 95 new buses and 19 refurbished buses were added to the fleet – including the acquisition of five MAN Lion Explorer Bus Trains.
In the year to end March 2009 GABS generated R939 million in turnover and R92 million in pre-tax profits. That means the division accounts for over 10% of HCI’s R8 billion turnover, but only 3.5% of the group’s pre-tax profits.
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