Bus route auctions cut subsidies

18:10' 18/04/2008 (GMT+7)
More private advertising and interest could mean a better bus system
Allowing public buses to display adverts and auctioning off bus routes to bus companies could reduce the need for city subsidies for the bus system, transport experts have said.
Advertisements on buses would also help HCM City reduce its subsidies for the bus system.
The city has 151 bus routes, but only five routes were auctioned by the end of last year. The city planned to auction bus routes four years ago.
The auction has helped the city reduce its subsidy for each route by VND1bil (US$62,000) a year, according to the HCM City Department of Transport and Public Works.
Le Trung Tinh, deputy head of the city Department of Transport and Public Works’ Transport Management Division, said the city was not able to auction bus routes on a large scale.
The city lacks consultants and post-auction measures to help bus companies that lose in auctions, Tinh said, adding that auctions were being done in a gradual manner.
Advertisements on buses would also help the city reduce its subsidies for the bus system, said experts.
With 2,000 large buses, the city could earn about VND60-90bil ($4-6mil) a year from advertisements.
However, the city is still considering allowing public buses to display advertisements.
Earlier in the year, the HCM City People’s Committee approved VND450bil ($28.1mil) for the bus system this year.
The city People’s Committee last month approved an additional VND122bil ($7.6mil) in bus subsidies following price hikes of fuel costs in February.
According to the city Department of Transport and Public Works, with current fuel prices, the city will need to subsidise an additional VND130bil ($8.1mil) for the bus system this year.
The city expects to spend a total of more than VND700bil ($43.8mil) in bus subsidies this year, an increase of 50% compared to the city’s initial approval.
The city wants the bus system to meet 8% of public transportation needs by 2010 compared to 5% last year.
With this target, city subsidies for buses will continue to increase in following years, said experts. The city subsidised bus transport by VND600bil ($37.5mil) last year.