By Lehlohonolo Lehana.
Johannesburg’s Rea Vaya bus operator, Piotrans, has been placed under business rescue due to mounting financial challenges and allegations of mismanagement and maladministration.
The company, once hailed as a model of South Africa’s Black Economic Empowerment (BEE) initiative, is teetering on the brink of collapse.
It reportedly owes SARS R64million, can’t pay staff bonuses and, last week, an unpaid creditor tried to seize 25 of its busses.
Piotrans was initially seen as a success story for the BEE initiative in South Africa.
However, the current financial strain paints a different picture. The severity of the situation was underscored when a creditor attempted to seize buses, highlighting the dire circumstances Piotrans finds itself in.
In a bid to avert a complete shutdown, Piotrans has been placed under business rescue.
“The BEE model of [Piotrans] is worthy of being saved in the greater public interest,” Ismaeel Dockrat, the CEO and managing director of Durban-based fuel supply company Rockville Investments (Pty) Limited, stated in court papers.
“If Piotrans is liquidated then bus services to the city will stop and this would be catastrophic for working-class people who rely on the Rea Vaya bus service,” he stated, adding that the “possible restructuring of [Piotrans] debts or post-commencement finance will allow it to proceed on a solvent basis.”
Dockrat said his company and repair centre PBC Projects (Pty) Limited had “become aware on 19 December that the Sheriff of the court had attached Rea Vaya buses and other assets of [Piotrans] pursuant to judgments obtained by other creditors and will be shortly removing these assets”.
“Should the Sheriff remove these 25 attached buses, which he said had been massively undervalued at a total R1.3 million, Dockrat said it would “immediately result in the collapse of [the Piotrans] business and any business rescue plan would become academic”.
The intervention aims to restructure debts and revive the beleaguered company, bringing Johannesburg’s Rea Vaya bus system back from the precipice.
The situation with Piotrans raises critical questions about the effectiveness of BEE initiatives and the viability of businesses operating under such models.
The company has found itself in many controversies lately, including failing to pay more than R9-million to Litsamaiso, another Rea Vaya bus operator.
Pio Trans management apologised to employees for not paying their salaries.
“Pio Trans wants to apologise to employees regarding the delay of salaries as a result of non-payment from the City of Johannesburg due to outstanding contractual submissions,” it said in a letter.
The Rea Vaya Rapid Bus Transport (BRT) project has been over 10 years in the making, having begun initial operations in 2009 ahead of the FIFA World Cup.