JIS News

The Jamaica Urban Transit Company (JUTC) is to benefit from $300 million injection, which will provide interim financing for aspects of its operations, in particular its maintenance programme. The House of Representatives yesterday (Oct. 4) approved a government guarantee for the loan, which will be provided by RBTT Jamaica Limited.
Finance and Planning Minister, Dr. Omar Davies, who tabled the resolution for the government guarantee, said the money would be used to provide the JUTC with the funding needed to implement an improved maintenance programme, including the purchase of spare parts, and to undertake critical capital expenditure prior to realizing the full benefits of the increase in revenues resulting from the recent bus fare hike.
He noted that the JUTC would “be solely responsible for servicing the loan through the revenue from its fare box,” over the five-year loan period.
Giving an update on the company’s maintenance programme, Dr. Davies informed that a 10-year old articulated Volvo bus was recently overhauled at a cost of $1.6 million. He said the vehicle would be operational for another 7 to 10 years and marked an investment for the future.
A number of other vehicles were due for major overhaul, he said, noting that plans were being finalized to commence this systematic maintenance programme by year-end.
In addition, spare parts have been ordered for some 92 buses and the process would be continued to enable the vehicles to be in service between the end of October and December.
Meanwhile, the JUTC is projected to realize an operating deficit of $233 million for the 2005/06 financial year from the recent bus fare increase.
With approximately eight months of increased fare revenues, a cash surplus of approximately $80 million is projected for the year. The cost of servicing the RBTT facility is also included in the projections.
The fare increase, which was implemented on August 21, saw a move to a flat fare of $50 per adult passenger with the concessionary rate for senior citizens, children and disabled persons remaining at $15. In addition, an agreement was reached within the context of the Memorandum of Understanding between the government and the public sector workers, which sees workers utilizing the services of the JUTC benefiting from reduced fares until March 31, 2006. They will pay $35 per ride up to a maximum of 10 rides per week.
Information provided by the JUTC shows that the discount given to public sector workers totaled just over $200,000 for the two-week period September 1-15 with 466 smart cards being sold for the period from the five distribution centres, which were established to treat with the special facility.
Minister Davies said prior to the increase, the revenue earned by the JUTC from the fare box was insufficient to meet the cost of providing service to commuters in the Kingston Metropolitan Transport Region, and had resulted in continued losses to the company, estimated at more than $3 billion as of June 30.
With the new arrangements, the company is expected to fund its operating expenses from the fare box while the government will continue to support the company with its main fixed assets.
In addition to other provisions, the government’s financial support for the JUTC amounts to approximately US$25 million per year.