Make way for the trolleybus!

21.10.2013 — Analysis

But where's the money to come from?

The passenger-transit enterprise in Kamensk-Uralsky that manages the city's transportation system has gone bankrupt.  The city's administration has proposed that the government of the Sverdlovsk region either close the trolleybus routes or subsidize the unprofitable lines.  After considering the suggestions from the transportation executives, Denis Pasler, the region's chairman, stated that the authorities are willing to help the municipality, but that using public money to stanch the flow of red ink would not resolve the problem.  Municipal transportation will not be able to fulfill its social function if the economics of the business are not addressed, in addition to the need to settle the relationships between the carriers regarding the city routes.

The PTP Management Company, OJSC was established by the municipality in 2003 by merging a passenger-transportation enterprise with Gorelektrotransport.  Since then, the company's economic position has deteriorated significantly: the number of passengers has fallen from 30 million to 20 million per year and revenues have declined from 199 to 150 million rubles.  Not a single new trolleybus has been purchased in the last five years, and 70% of the cars are more than ten years old.  The company is now 35 million rubles in debt, an amount that increases by three million rubles each month.

In addition to the high costs of maintaining aging transportation equipment, more red ink is generated by high rates for electricity, which have risen fourfold in the last 18 months.  The head of Kamensk-Uralsky, Mikhail Astakhov, suggests that the best solution to this situation would be to run the trolleybuses less frequently or to replace them with regular buses, but the city is not able to take this route - road-safety concerns make it unfeasible to stop using electrically powered vehicles.

City hall has estimated that private carriers, which use a simplified tax system and pay their wages in envelopes, are depriving PTP of 2.5 million rubles a month.  Illegal operators also exist, who cannot be legally "corralled," even with the assistance of the prosecutor's office – some of these wily entrepreneurs have been caught red-handed offering their vehicles for use as tourist buses and even music lounges!  And if the trolleybuses run irregularly, this would free those operators from any culpability for their illegal business.

The general director of PTP, OJSC, Vladimir Kaysarov, suggests that the authorities not hunt down the illegal operators, but instead give the mayors legal leverage to create a route network and to regulate the number of carriers.  He suggests another option might be "killing off" the illegal carriers with high utility rates that would be reduced through public subsidies for the municipal lines.

The chairman of the Sverdlovsk region, Denis Pasler made the point that officials cannot provide preferential treatment to certain market players, nor is the regional budget able to absorb the rapidly increasing red ink of the municipal company.  He is prepared to send to the regional legislative assembly the municipality's proposals for changes to the law, and he is certain that if legal mechanisms existed that would allow the illegal carriers to be removed from the road, the deputies would support them.  What's most important is for the government to suggest that Kamensk-Uralsky use regional and federal targeted programs to replace its aging rolling stock with more modern and efficient equipment.  To be competitive, more active influence is needed on the passenger-transportation market - not to report how private entrepreneurs are circumventing the municipal unitary enterprise, but to become competitive by making travel faster and more comfortable.

Vasily Starkov, the deputy minister of transportation and communications for the Sverdlovsk region, claims that Ekaterinburg has virtually no illegal carriers: municipal officials literally monitor the routes each day and come down hard on illegal operators.  Obviously the administration of Kamensk-Uralsky also needs to do some "mopping up" of the transportation market. 

"Trolleybuses will operate in Kamensk-Uralsky, there is no other option.  We have held detailed discussions about the origins of the economic problems and ways to solve them.  The regional government will help the municipality out financially, but on a one-time basis, and only after a business-development program has been submitted.  Three million a month is not a huge amount of money, if there is a clear-cut program to escape the crisis and realistic measures are taken to fundamentally alter the situation," emphasized the chairman of the regional government, Denis Pasler.

Viktor Yakimov, a deputy in the legislative assembly of the Sverdlovsk region and the former mayor of Kamensk-Uralsky, believes that the main problem faced by the municipal transportation system is not the "gimmicks" of private carriers (which make up only 10% of the market in Kamensk-Uralsky), but the constant increases in utility rates, which reduce passenger traffic.  Officials need to think about how to bring people back onto the buses and trolleybuses.

Experts questioned by RusBusinessNews see increasing the cost of motor fuel for passenger cars as a solution to the latter problem, as well as making public transportation faster and more comfortable.  Accordingly, the authorities should design attractive utility rates for buses and trolleybuses, and allow them to travel freely on the roads.

Vladimir Terletsky