Measures Identified to address JUTC Debt

Minister of Transport, Works and Housing, Hon. Dr. Omar Davies, is expected to make an announcement soon as to how the government intends to clear some $11 billion in debt owed by the Jamaica Urban Transit Company (JUTC).

Dr. Davies, who disclosed the extent of the debt on May 1, during the debate on a motion brought to the House by Opposition Spokesperson, Karl Samuda, said the public bus company will be unable to clear the debt by using hard cash.

He said that “there has to be some creative arrangements” to deal with the sum, and while proposals are on the table, they will first have to be approved by Cabinet.

“The reason why I cannot announce the solutions is that I will have to have formal endorsement from Cabinet (on) some of the measures which we are proposing. We are clear in our minds what is possible and what is not possible,” Dr. Davies said.

According to the Minister, the debt includes $10 billion for statutory deductions and taxes, which have been drawn from the salaries of workers as well as the employer’s contribution that have not been paid over to the revenue authorities, and pension funds. The company owes $1 billion for accident claims.

“Then, there are sums owed to creditors. The JUTC is what they would call an ‘equal opportunity debtor’; they owe everybody. They owe tyre suppliers, they owe Petrojam, they owe everybody,” he stated. 

The Minister assured that the relevant state agencies such as the National Housing Trust (NHT) and National Insurance Scheme (NIS) will not deny benefit to an employee, but the arrears will have to be settled over a period of time.

He noted however that he recently received a copy of a letter from the Chairman of the Pension Fund Management Committee “saying we have a finite time to make good or else you run the risk of undermining the viability of the Pension Fund”.

Mr. Samuda, in his remarks, said the public transport sector is in “dire need of a major overhaul and a sense of direction that will restore reliability in terms of its ability to earn its way through its operations and not to rely on government support by way of a subsidy.'

He said that the total amount of subsidies over the past five years is $5.7 billion and the JUTC loses $2 million per day while in operation. He argued that the government will have to either grant a fare increase to the JUTC or continue to provide subsidy to the bus company.

In his response, Dr. Davies, said it is important for the government to identify a feasible subsidy programme for the JUTC.

“We believe it is possible to have quality service with a cap in terms of the level of subsidy, but we should not expect, neither in the near term or long-term, that the JUTC will be able to fully support its efforts. So, what we wish to do and what I’ll be proposing to the Minister of Finance and Planning, is to provide for us, on a reliable basis, this level of subsidy and we will sign a contract with the people to provide service of a given quality,” Dr. Davies said.

The motion, which called on the Portfolio Minister to present to Parliament, a comprehensive policy/strategy, to bring financial viability and an early solution to these problems, was approved without amendments.

By Latonya Linton, JIS Reporter