The City of Cape Town had to adjust its expansion plans for its MyCiTi bus service due to funding constraints.
A council meeting on Thursday outlined the City’s long-term strategy for public transport funding and sustainability, as presented in its Multi-Year Financial Operational Plan and Medium-Term Strategic Business Plan for Public Transport 2024 – 2038 (MYFIN 2024).
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The MYFIN 2024 focuses on the long-term financial implications of operating MyCiTi and Dial-a-Ride (DaR) services.
The MYFIN 2023 forecasted a large shortfall in funds over the 15-year MYFIN period (in escalated figures which account for inflation). However, the MYFIN 2024 plan focuses on providing certain services with the available funding without needing loans.
This means that MYFIN 2024 aims to prove what can be achieved with only the available funds.
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The City expects the tight national budget to persist because of slow economic growth, which also impacts future tax revenue increases.
‘The wheels on the bus go round and round, but those wheels will come off unless we at Urban Mobility take a conservative approach and map a budget that plans as if there will be no future funding, and to build our infrastructure and services gradually to avoid creating unused white elephant assets,’ Rob Quintas, the City’s Mayco member for Urban Mobility, told News24.
‘We have planned according to what we can afford within our existing budget, and therefore, no deficit.’
‘Our finance executives have crafted a way to continue with our MyCiTi Phase 2A rollout, including the purchase of electric buses, within the conservative parameters required, while serving all communities as promised.’
According to the City’s long-term financial plan (LTFP), no additional finance can be provided to capital programmes not prioritised over the next 10 years, even though the City is in a healthy cash position.
Due to this, sources of borrowing and other loans can no longer be used to finance fleet procurement.
The MYFIN 2023 report also included costs for diesel buses because details on other types of buses were not yet clear. In 2023, a feasibility study on alternative energy buses recommended:
- Using a mix of diesel and battery electric buses for the next fleet
- Considering various types of bus technology
On 27 March 2024, the council approved a strategy for buying buses for the full MyCiTi service. Urban Mobility can now purchase both diesel and alternative energy buses.
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Certain construction projects now also face delays until funding is secured, including:
- South Road leg
- Wynberg Couplet
- A portion of the Wynberg PTI
- Some NMT and PTIs
- Wynberg could possibly be served via Wetton Road until further funding is available to implement the South Road leg
Construction of the following projects will continue:
- Completion of the Claremont leg via the M24, M9 east of M17 (some parts reduced at specification), M36 leg and Nyanga, Nolungile and Vuyani PTIs.
- Continuation of other committed projects.
Furthermore, the City’s most conservative outcome limits procurement to 80 buses, given that funding for these buses is confirmed. This includes an estimated order of 30 battery electric buses and 50 diesel buses.
Since 221 buses are needed for the complete Phase 2A service, the 80 buses will cover around 45% of the anticipated passenger demand for Phase 2A, including those who use the N2 Express service, which will continue with the current 29 N2 Express buses.
‘As can be seen, the need to balance the budget for Phase 2A services has come at a compromise of reduced service,’ the City states.
Overview of MYFIN 2024 deficit outcome
The scaled-back Phase 2A service significantly lowers the projected deficit due to the focus on affordability. As a result, the MYFIN 2024 estimates a deficit of about R144 million, which is just 0.26% of the total cost.
The R 144 million deficit includes:
- Operating deficits: A deficit of R33 million is recorded in 2025/26 and will be corrected by reducing the operating budget in the February 2025 Draft budget. A deficit of R35 million in 2036-37 and 2037-38 is projected, and services will be reduced in those years should the deficit materialise.
- Capital deficit: A deficit of R76 million emerges to supplement funds for vehicle replacement purchases for Phase 1 Stage 3 in 2031-32 as the PTNG allocation will be insufficient to finance these purchases on its own. If additional funds cannot be sought, the number of buses replaced in 2031-32 will be reduced.
‘Urban Mobility is committed to further limiting future deficits,’ the City adds. ‘If additional funding cannot be sourced, MyCiTi services and fleet size may not be able to expand further.’
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Picture: Misha Jordaan / Gallo Images