PRIVATIZING PUBLIC TRANSPORT SERVICES IN JORDAN

Transcription

1 6 h Transportation Specialty Conference of the Canadian Society for Civil Engineering 6 e Conférence spécialisée en génie des transports de la Société canadienne de génie civil Toronto, Ontario, Canada June 2-4, 2005 / 2-4 juin 2005 PRIVATIZING PUBLIC TRANSPORT SERVICES IN JORDAN Mohammad M. Hamed 1 and Said Easa 2 1 Professor and Director General, Public Transport Regulatory Commission, P.O.Box 1830, Amman 11118, Jordan. mhamed@go.com.jo 2 Professor and Chair, Department of Civil Engineering, Ryerson University, Toronto, ON, Canada M5B 2K3. seasa@gw .ryerson.ca ABSTRACT: In November of 2001, the Public Transport Regulatory Commission (PTRC) was created in Jordan as an independent regulatory body. This paper presents the major issues pertaining to the privatization process in the public transport sector, medium-term strategic projects, and the long-term strategic plan. The PTRC long-term strategic plan aims at creating a new paradigm of seamless travel. The plan aims at: (1) ensuring that the structure/role of each transport mode is amenable to regulation, (2) acquiring resources and developing procedures to execute its core functions, (3) revising the legal framework to reduce investor s risk, and (4) defining PTRC powers, obligations, and resources. The medium-term strategic projects include upgrading current public transport services, improving infrastructure, creating specialized forms of passenger transport, and maximizing the use of information technology in this sector. The information presented in this paper should be useful to other organizations interested in the privatization of public transport services. 1. BACKGROUND Last decade witnessed a significant increase in the liberalization of transport policies and increased private sector involvement in public transport service delivery (Estache and Rus 2000)). Governments that traditionally pursued the role of design, built, and operate road and rail networks and airport and port systems have come to a conclusion that this type of market intervention creates serious problems particularly with the growing demand for transport services and the lack of financial resources. As such, there has been a worldwide movement toward restructuring transport and other public sector organizations to enable commercialization and privatization. A fundamental step in this process is the separation of policy and regulatory functions from the responsibility for supplying public transport services. Experience and general organizational/management principles suggest that accountability for delivering effective transport services and meeting financial objectives can be best achieved by a clear organizational separation between service supply and wider government policy and regulatory interests. There is a wide body of research activities aimed at addressing market intervention and restructuring, and the commercialization and privatization of transport services (Gwilliam 2000, Foster and Golay 1986, Glaister 1986, Gwilliam et al. 1985, Preston 1991, Walters 1979, Button 1994, Kent and Hochstein 1998, Klein and Leffler 1981, Wright and Coloma 1997). The current modal split in Jordan is 64%PT and 36% private car. The modal split for the PT is: 16% large bus, 20% taxicab, 27% service taxi (jitney), and 37% mini-buses. Around 2 million daily trips (work and non-work) are made through the public transport modes. The majority of trips (49%) are made through small cars (Jitney service and taxicab) which have a seating capacity ranging from 4-7 passengers. Although large buses constitute around 4% of all public transport modes, their contribution in terms of passengers carried is significant. The contribution of Public Transport Sector to total Gross Domestic Product in 2002 was 4.5%, compared with 4.0% in TR

2 The Government of Jordan has approved programs aimed at increasing economic growth and creating sustainable development through the enhancement of productivity in all sectors including the transports sector. The basis for increasing economic sustainability in the transport sector is to create competitive market-based transport. To achieve this, the government pursued a course of institutional and policy reforms. The restructuring and privatization programs in the transport sector emphasized public and private sector involvement and partnership within a framework of sustained development. In this paradigm the public sector has a major role in ensuring transport safety, monitoring the condition and performance of the transport system, and collecting and administering transport revenues. The private sector has the responsibility for providing transport services. This paper discusses several aspects related to the privatization of public transport services in Jordan. The following section presents the structure and mandate of PTRC. Several of PTRC medium-term strategic projects and its long-term strategic objectives are then described, followed by the concluding remarks. 2. PUBLIC TRANSPORT REGULATORY COMMISSION (PTRC) Prior to the establishment of PTRC, the government of Jordan had to deal with two key issues: (1) the form of regulatory regime that is appropriate to the country and (2) ensuring that the chosen regulatory form is effectively implemented. Since free market entry and a minimum level of regulation would not produce disciplined, safe, and environmentally acceptable public transport operations. It was decided to introduce the competition regime for the market and establish an independent regulatory commission. The regulator will have the mandate: (1) to insure the protection of the consumers, willing and able to pay for the services they obtain, (2) to protect fairly the investors/operators and insure their financial viability, and (3) to promote competition wherever feasible to obtain the optimal level of economic efficiency possible and regulate the natural monopolies. PTRC is a new regulatory body for the public transport sector in Jordan. It was established at the end of 2001 by statute and commenced operations in early All passenger transport vehicles that charge fares fall within PTRC s jurisdiction. In practice that includes buses, minibuses, service taxis, metered taxis and rental vehicles. Light Rail will also fall within PTRC s jurisdiction. PTRC took over the regulation of licences previously issued by the Ministry of Transport and Ministry of Interior. Most of these licences were issued to individual bus and minibuses and contain no service obligations. Licences are not transferable, but in practice they are traded for sums depending on the profitability of the route. They are now regarded as perpetually renewable. PTRC s constitution and functions are set out in Law 48 of 2001 On Public Transport of Passengers that also wound up the loss-making state-owned Public Transport Corporation. PTRC s main objectives include promoting competition, attracting investment and ensuring the provision of public transport services and infrastructure at a high standard and appropriate cost. PTRC is required to plan and specify the route network and supporting infrastructure, specify the roles of different modes, and apply the plans and policies, through regulation. Consolidation of operators into companies is a specific requirement. PTRC has only been functioning for two years and during this period have been progressively increasing its resources, staffing, and capability. PTRC has a clear mandate to reform and develop the public transport industry, but it faces difficult transitional constraints, many due to the consequences of policies adopted prior to its establishment. These include: - A hierarchy of public transport modes that is not consistent with efficiency and regulatability, specifically the preponderance of small vehicles in individual ownership, and the extensive network of service taxi routes which will be difficult to displace because of the very large number of individuals engaged in the service taxi business, - A licensing system that has established joint operation of bus routes by multiple operators without any service obligations under licences that are regarded as perpetually renewable, with no fixed term, - An excess of licensed taxis in Amman, TR

3 - The most efficient mode (large buses operated by companies under franchises) carry the financial burden of substantial premium payments to PTRC which disadvantages them in competing in the bus market, - Bus fares remain fixed to scales adopted by the Ministry of Transport which are escalated with reference to fuel prices, and - A route network that remains based on that operated by PTC, and has evolved without demandbased planning. The Jordanian experience in privatizing and regulating public transport services that started two years ago is a success story by all standards. At the outset both the vision and mission were clearly defined. In addition, main and specific objectives were spelled out to accomplish the mission. PTRC main objectives were interrelated and complementary. During the last two years all by-laws, regulations and instructions, and contractual frameworks have been formulated and issued for the purpose of: - Restructuring current public transport operators - Opening up new investment avenues - Protect the interests of both investors and passengers - Provide passengers with more choices by upgrading the level of public transport services - Ensure greater transparency in awarding rights for delivering public transport services. 3. PTRC MEDUIM-TERM STRATEGIC PROJECTS To achieve PTRC objectives PTRC embarked on executing a number of medium-term strategic projects relating to upgrading current public transport services, improving and developing infrastructure, creating a somewhat specialized forms of passenger transport, and maximizing the use of information technology (IT) in this sector. 3.1 Service Quality Improvement Program (SQIP) PTRC recognized the importance to define the appropriate quality standards for particular public transport services and to set its objectives for service providers accordingly. PTRC philosophy in this regard is not to see quality of public transport services as a simple continuum, but as a series of discrete steps. Major elements of the program include travellers information, punctuality, and customers satisfaction, adequate infrastructure at bus terminals and public transport routes, and intensive use of information technology in monitoring the performance of public transport modes. PTRC is working to make sure that users of PT services are aware of what is expected and what the service operator is committed to achieving. This meant designing and adopting a structured approach to inspection, market research and performance monitoring. By identifying/highlighting best practice overall standards can be raised. PTRC in the process of developing detailed elements of service standards for each public transport mode. There will be mandatory standards which operators must have high level of compliance. 3.2 Monitoring Public Transport Services To successfully implement the SQIP there is a need to monitor and audit the performance of operators and the service delivered to customers. SQIP calls for measuring both expectations and perceptions. Differences between the two identify a problem in service quality. PTRC designed a monitoring manual that clearly describes how franchises are to be monitored. The operation of the franchises is governed by special contracts between the operator and PTRC, which place specific obligations on the operator. Franchise monitoring has two main inter-related objectives: (1) to check compliance with the operator s contract and (2) to monitor whether the service is meeting customer needs satisfactorily. The purpose of the monitoring manual is: (1) To set out all the sources of information that is used to monitor the performance of operators which have been granted franchises by PTRC, TR

4 (2) To describe the processes to be followed by the Monitoring department of PTRC in collecting and analysing the information, and (3) To summarize the form in which the results are reported. There are three primary sources of information which PTRC uses to monitor franchises: surveys by PTRC inspectors, which are field surveys of bus operations, company inspections by PTRC staff to monitor compliance with obligations that are not monitored by the surveys, and supplemented by information from PTRC Finance department, which provides reports to the Monitoring department on franchise fee payments, and information from consumers or operators, especially complaints. The range of obligations that PTRC monitor include: provision of services (numbers of buses, route coverage-temporal and spatial, loading and unloading points, frequency of service, fares, and use of tickets), information on services (e.g. route, fare, timetable at terminals and bus stops and on buses) financial (franchise fees to be paid), vehicles (conformity with registration requirements, comprehensive insurance, availability of tacho-graph and communication systems), and drivers (Jordanian, convictions, health status, appropriate driving experience, uniform, and compliance with labour law on-working hours and social security) 3.3 Optimum Use of Information Technology Intensive use of different forms of IT is likely to help create a new IT- Paradigm in which operators, passengers, and citizens will benefit greatly. In addition, PTRC will be in a position to make wellinformed daily or long-term decisions. IT management at PTRC includes the following activities: - Creation of Integrated and comprehensive database for the public transport sector. The database relates to operators, modes of transport, route description, and public transport terminals. The structure of the database allows for the creation of endless number of special reports about the system and operators. About 80% of the work has been accomplished. - Using advanced GIS software. PTRC is using the most tested and up-to-date GIS Software for best convenience and high quality Digital Maps for the whole country showing all public transport routes with a number of layers such as public transport terminals, loading and unloading areas, bus shelters, etc. The GIS-Digital Maps have been connected to the central database. - Public Transport Command and Control Center-PTCCC. PTRC is now contemplating the creation of PTCCC in Amman. The center will be the result of full partnership with the private sector. The center will provide PTRC with a tool to monitor the daily operations of public transport terminals and monitor the performance of public transport modes on routes by continuous tracking of operations. In addition, the center will provide PTRC staff greater flexibility to quickly respond to any situation. - Automatic Fare Collection System. For the first time in Jordan Smart Cards were introduced for the purpose of collecting bus fares. The system introduced by the private sector in March of 2002 and is installed in 100 large buses. The use of smart cards in fare collection has been a success story for both the operator and passengers particularly university students- frequent users of PT. PTRC seeks to expand the coverage of this system to cover all means of public transport particularly taxicabs. 3.4 Bus Information System (BIS) Providing travelers with timely information about the public transport system encourages travelers to make well-informed travel-oriented decisions. The elasticity of transit use with respect to services frequency services expansion, improved information, easy-to- remember schedules, and move convenient transfers can increase the demand for transit usage. The main objectives of this information include: 1- Encourage the use of public transport instead of private cars due to the high level of services and 2- create a new paradigm in which travelers can arrange their journey time according to the published time tables. Comprehensive information is provided to passengers at bus shelters. Such information relate to route name and number, route description, fare, location of bus shelters along bus routes, and frequencies of bus through peak and off-peak periods. Other additional information included PTRC toll-free numbers and address. In addition, brochures with detailed information are distributed on board buses and for use by travelers. Furthermore, adds in daily newspapers describing the BIS and informing travelers of how the system can help them organize their daily trips. Already, three phases of the project have been accomplished. In total 16 major routes in the Capital Amman were TR

5 provided with travelers information. Total daily ridership on these routes amounts to 200,000 serviced by 150 large buses. It is early to assess the extent with which the BIS has initiated a shift of travelers from private vehicle users to public transport system users. This in part can be due to limited time period and due to the introduction of the Smart Cards. However on- board survey results seem to indicate a positive future impact on bus ridership. The BIS has no doubt created a significant degree of awareness among bus travelers. For the first time travelers (bus and non- bus riders) are in touch with PTRC through the tool free number making complaints or asking about the coverage of PT services. 3.5 Infrastructure Development The aim of this project is to restructure existing public transport terminals and create new ones throughout the Kingdom. In addition, the project will provide bus-stops with shelters and travelers information. The restructuring of existing terminals include providing shelters, pavement markings, improved lighting, improved signing to show all needed information at the terminal, separate lanes for taxicabs, and seating arrangements for passengers. The project also includes the creation of a unified terminal for vehicles operating on international routes. 4. PTRC LONG-TERM STRATEGIC OBJECTIVES The strategic objectives for the development of the public transport sector in Jordan, and for individual modes, are divided into six constituent groups as follows: (1) Ensure that the structure and role of each transport mode is amenable to regulation and operators have incentives to meet policy objectives, (2) Acquire resources and develop procedures to execute its core functions, (3) Revise the legal framework (laws, by-laws and franchise terms) to reduce investor risk, and define PTRC s powers, obligations and resources, (4) Extend effective PTRC coverage to all regions, (5) Acquire necessary professional skills, and (6) Widen PTRC s revenue base and develop more sources of funding for the enlarged PTRC. The detailed objectives for each group are presented in Table 1 (Group 1), Table 2 (Group 2), and Table 3 (Groups 3-6) 5. CONCLUDING REMARKS PTRC has an ambitious medium-term plan aimed at providing public transport services to meet the diverse mobility needs of the public in a new paradigm of seamless travel. Elements of the plan include: (1) major improvements to travelers information at bus terminals and along bus routes, (2) improvements to bus services through high frequency services, adoption of automatic fare collection (AFC) system, more spatial and temporal service coverage (integrated mobility plan), and greater service reliability and efficiency, (3) additional well-designed bus terminals at key locations, (4) implementation of service quality improvement program, (5) enhancing personal safety and security at bus terminals, and (6) optimum use of IT in the sector. The SQIP is beginning to give encouraging results. For example, on some major bus routes the daily ridership has increased by as much as three times. We believe that full and effective partnership with the private sector will create a sound base for a public transport industry that is efficient, reliable, safe, and highly responsive to passengers needs. However, PTRC still faces the following key challenges: (1) to consolidate the public transport industry into units of a size at least capable of taking responsibility for the operation of a complete route, (2) to revise the regulatory framework so that operators compete on equal terms and have more effective competitive incentives to improve services, and (3) to establish a database of demand and supply and systematic procedures for monitoring and planning the fixed-route network. TR

6 Table 1. Major Components of PTRC Strategy (Group 1) Strategy Group 1. Ensure that the structure and role of each transport mode is amenable to regulation and operators have incentives to meet policy objectives. Bus/Minibus Strategy Components Consolidate the Industry: - Move from individual vehicle licences to route franchises and then to area franchises. - Tender criteria to favour corporate bidders. - Facilitate expansion by corporate operators - freedom to increase capacity and frequency. - Revise fare-setting procedure and criteria. - Liberalize regulation of premium, long-distance and international routes. - Create incentives for expansion of efficient minibus companies and upgrading to big buses. Favour Big Buses: - Tax concession for buses over 38 seats. - Prohibit transfer of minibus licences between owners and between vehicles. - Prohibit standing in minibuses with less than 180cm headroom. Service Taxis (reducing fleet) - Issue no new licences. - Offer 4 for 1 licence exchange for minibus on same route. - Introduce minibus services to compete with the denser service taxi routes. - Restrict transfer of service taxi licences. - Impose discriminatory PTRC levy on service taxis Taxi Increase Efficiency: - Continue merging of offices. - Incentives to radio call and GPS networks (fare supplement). - Later compulsion to join radio network. - Assist with allocation of radio frequencies. Balance Demand/Supply: - Maintain embargo on new taxi licences in Amman. - Use tariff level and distance scale, quality standards, and number of licences to maintain balance between supply and demand. - Conduct regular checks on taxi availability and market share. Charter Bus Permit chartered private commuter services. Hire Car Leave to market forces TR

7 Table 2. Major Components of PTRC Strategy (Group 2) Strategy Group 2. PTRC to acquire resources and develop procedures to execute its core functions: monitor, plan, and regulate. Strategy Components PTRC Core Functions - PTRC to focus on core roles, to retreat from supervising services etc. - PTRC s core regulatory function is to create a planning and regulatory framework within which operators are exposed to a mix of incentives and directives to meet demand for public transport Monitoring - Require all operators to submit monthly operating data. - Develop PTRC. - Conduct systematic demand/supply survey program. - Conduct regular consultation with public and operators. - Monitor transport input costs for each mode. - PTRC to acquire professional staff to improve monitoring survey and analytical capability. Planning - Initial bus network study for Amman to be done by consultants with participation by PTRC staff. - PTRC to acquire professional staff to improve planning capability both in Amman and regional offices. - PTRC to maintain systematic network planning in all major cities for fixed-route modes, including biennial route development and tender program, horizon 2 years firm, 3 years outline. - Acquire capability with technical modelling tools (e.g. TRIPS/EMME2). - PTRC to integrate planning with land use and traffic/highway plans. - Terminals to be provided according to a long-term plan between PTRC and the municipalities based on the public transport development plan. Regulation - Procure operators by tender to operate new routes identified by planning process. - Re-tender the 1992/93 franchises with more explicit rights and obligations. - Extend tendering to existing routes. - More liberal regulation of big bus corporate sector than individual sector. Service Infrastructure - Annual plans to include infrastructure requirements (terminals, shelters, stops) for all modes. - Infrastructure to be provided and maintained by local authority or leased to private sector. - Commercial exploitation of infrastructure to benefit PTRC, operators and users. - PTRC to assist operators obtain leased land for depots. - PTRC to press local authority to improve pedestrian facilities as these would aid access to public transport. TR

8 Table 3 Major Components of PTRC Strategy (Groups 3-6) Strategy Group 3. Revise the legal framework (laws, by-laws and franchise terms) to reduce investor risk, and define PTRC s powers, obligations and resources. Strategy Components Laws - Revise Law 48 to make more explicit and comprehensive esp. for big bus sector to reduce risk, confer more freedom to adjust routes, assure cost-recovery, freedom from arbitrary regulation. - Review by-laws for consistency with policy objectives Franchises - Revise franchise for equality between big bus operators. All operational responsibilities, such as supervision and service information, to be borne by operators. Licenses - Prohibit transfer of individual minibus licences between owners and between vehicles. Tenders - Extend tendering to existing routes. - Revise evaluation criteria to reflect policy objectives and remove qualitative and ill-defined criteria. - Formalise tender criteria and procedure. - Only corporate bodies may participate in tenders. - Designate vehicle size in tenders. Subsidies - Create legal basis for providing loss-making routes and special services by subsidy from sponsoring agency (such as local authority). 4. Extend effective PTRC coverage to all regions 5. PTRC to acquire necessary professional skills 6. Widen PTRC s revenue base and develop more sources of funding for the enlarged PTRC. - Establish PTRC capability to monitor, plan, and regulate in the four PTRC regions. - Initially PTRC HQ to prepare network plans for regions: regional offices to provide input data and manage implementation of outputs. - Establish consultative links with stakeholders in regions. Staff - Engage core of qualified transport planners, about 8/10 individuals. Initially 4 in Amman, 1 each for regional offices. Consultants - Make use of consultants (such as local universities) for large studies. PTRC Levy - PTRC levy to extend to all regulated green plate public transport vehicles to create a stable revenue base. - Levy PTRC to levy commercial profits from infrastructure inc. terminals, advertising. - Extend levy to private car licences. TR

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