PARLIAMENT ON Tuesday approved the guarantee of a loan facility of $425 million from the Bank of Nova Scotia to the Jamaica Urban Transit Company (JUTC).
The loan facility has been set up to liquidate overdraft facilities at the National Commercial Bank (NCB) and Royal Bank of Trinidad and Tobago (RBTT).
The amount being liquidated at NCB is $250 million, while that at RBTT is $150 million.
"The overdrafts that are being replaced were at interest rates much higher than has been negotiated here," Finance Minister Audley Shaw told the House of Representatives.
The JUTC, a national company which provides bus services in the Kingston Metropolitan Area, has been regarded as one of the many burdens on the Budget. The company receives a monthly subsidy of $67 million from the public purse.
loan guarantee
On Tuesday, Shaw, in moving for the loan guarantee, said it was intended to help the bus company improve its efficiency.
The finance minister pointed to cost-containment efforts, such as redundancies, the conversion of vehicles into single-operator units, the retraining of drivers, and the addition of new buses to the fleet, as efforts being undertaken to improve efficiency. However, Shaw said the company would not stand on its own anytime soon.
"The JUTC has a (long) way to go. I am aware that the ministry (transport and works) is looking at applying for a fare increase ... but a nominal increase to the fare will still not cover the cost," Shaw said.
not enough
Central Kingston Member of Parliament Ronald Thwaites said that enough information had not been presented to the Parliament for them to agree on the guarantee.
"It should only have been brought to this House within the context of an overall plan for the transformation of the JUTC ... . The terms of this instrument and the explanation of the minister appear to give the JUTC a blank cheque," Thwaites said.
He added: "I appeal to the sense of prudence for which this minister of finance is rightly to be credited, that he should insist that before one further penny of public funds after this is brought, that it should only be within a carefully monitored and supervised plan for the rationalisation of this public company."