Privatisation remains preferred option, says transport chief

Just two years since Malta's creaky public transport system made way to Arriva's swish fleet of buses, the government has had to nationalise the public transport operation after the Deutsche Bahn subsidiary succumbed to some €50 million in losses.

Now Transport Malta CEO James Piscopo has said he is not completely ruling out the possibility of a nationalised public transport service, but the government's preferred option remains that of a privatised bus service.

Piscopo has been non-committal on whether a public tender to be decided by the contracts department will be issued, after a call for expressions of interest is issued next week.

"It wouldn't be realistic to replace any of the private coaches which replaced the bendy-buses, with newer, environmentally-friendly buses before a new operator is engaged," Piscopo said, referring to the removal of the much-maligned articulated buses from Maltese roads. "What I can be clear about is that neither the bendy buses nor the old buses will return."

The takeover of Arriva Malta's operations brought to an end a discriminatory dual-tariff system which charged tourists a higher fare than Maltese residents.

But Piscopo said the removal of this mechanism is now estimated to cost the public transport operator around €3 million a year in lost earnings.

While the transition to the new national service has been smooth, Piscopo is refusing to divulge the amount of money that government has had to allocate over and above the budgetary allocation committed last year, to finance the new service.

"The government will necessarily have to allocate more money to the newly set up company," Piscopo said of Malta Public Transport Services Limited, which has been set up to run the public transport operation using Arriva's buses.

Piscopo said the new company will be trying to cut on expenses, forecasting a shortfall on ticket revenues and the public service obligation's operating costs, by introducing "more efficiency without compromising the service".

Transport Malta effectively purchased Arriva Malta and its assets, including the buses, for the nominal sum of €1 to take on €3.2 million in creditors from Arriva Malta and a possible €6 million in accrued debts that are yet to be audited.

"It's a successful deal, because we also convinced Arriva to settle its own debts of €68 million through a debt reassignment. This enabled us to offer a stable service until a new operator could be found, without the risk of overnight liquidation which would have resulted in the buses being seized."

One of the first decisions was to remove the discriminatory dual-tariff system through which non-residents paid a higher tariff, estimated to cut €3 million from potential earnings. "However, one must keep in mind the alternative, which could have resulted in action by the European Commission. For such a tourism-dependent country like ours, there is also a cost to discriminating against tourists," Piscopo said.

But he refrained from categorically excluding an increase in bus fares. "It is our priority to make bus use pay and to provide a socially-sensitive service. Therefore, we will push for the best deal possible and no price hikes."

The removal of bendy buses saw Arriva reportedly paying €30,000 every day for private coaches to replace the capacity lost on its long routes. Piscopo has not revealed the amount government will have to pay private operators who providing the coaches. "The new team will negotiate a better deal," Piscopo simply states, standing by the decision to remove the bendy buses "after having proved to be both inappropriate for our roads and unsafe to bus users and drivers".

Piscopo said the hiring of the private coaches, which fail the Euro-5 emission standards previously operated by the brand new Arriva bendy bus fleet, was a measure of last resort. "We will not compromise on environmental considerations... the private coaches are not ideal, especially considering the poor access to people with impaired mobility. The environmental standards are also of concern but it is not realistic to replace these vehicles before a new operator is engaged. The bottom line is that neither the bendy buses nor the old buses - there have been rumours - will return. We are looking forward."

Piscopo would not rule out a nationalised bus service or government shareholding in the new company in the initial phase, but he expressed his preference for a privatised service.

"The preferred option remains that of privatising the public transport, although no option is being excluded. The ultimate objective remains that of providing a socially sensitive, efficient and cost effective public transport service."