Cairo city drowns in financial obligation, threats shutdown

Author: Amira Sayed Ahmed Posted March 26, 2017

The specter of accumulated financial obligations is haunting Cairo’s metro, putting Egypt’s most popular methods of transportation in jeopardy.

SummaryStruck by a severe money crunch, the state-run Egyptian Company for City Management and Operation cannot pay big water and electrical energy expenses worth about 300 million Egyptian pounds ($16.6 million) for the previous 18 months. Compounding the problem is that water and power business have cautioned that they will halt their services if these expenses are not paid. In between the hammer of these arrearages and the anvil of substantial annual losses, the three-line metro network is having a hard time to curb its budget plan deficit.Metro spokesman Ahmed Abdel Hadi said the company owes 260 million pounds in electrical energy expenses and 40 million pounds in water bills. He said the utilities have actually alerted that they will carry out legal treatments against the metro business if the expenses are not paid.The metro

business likewise owes money to maintenance, cleansing, security and spare parts companies. Abdel Hadi stated ThyssenKrupp, a leading German industrial group in charge of keeping the metro stations’ elevators and escalators, has refused to restore its agreement with the metro company until it receives payment. He stated some elevators and escalators may become nonoperational under these circumstances.He noted the metro is likewise afflicted by continued losses due to the vast distinction between exactly what a ticket costs the consumer and what each journey really costs the company.The problem of increasing metro ticket costs has actually sparked a

heated dispute recently. The metro ticket is supported by nearly 96 %and up until this month, its cost had not altered given that 2002, despite the pound’s major decline against the US dollar. The transport minister in 2014, Hani Dahi, stated the metro company’s yearly loss was 180 million pounds; since that time, the pound has lost half its worth versus the dollar. Current Transportation Ministry data show the metro’s yearly loss is around 250 million pounds.The transportation minister in 2016, Galal el-Saeed, said ticket prices ought to be raised to ensure the extension of

this essential service. Prime Minister< a target=_ blank href =http://english.ahram.org.eg/NewsContent/1/64/247304/Egypt/Politics-/Egypt-metro-cannot-operate-on-current-ticket-price.aspx > Sherif Ismail Said last year that the price of metro tickets is too low to cover functional costs. On March 23, the Cabinet authorized doubling the ticket cost. Transport Minister Hisham Arafat stated the ticket price will increase to 2 Egyptian pounds(about $0.11 )to assist balance out the city’s annual losses.Some financial professionals stated increasing ticket rates is not a magic wand that will resolve the problem, mentioning that bad management is another crucial reason for the unpleasant economic scenario of the Cairo metro. Economic specialist Rashad Abdo informed Al-Monitor,”Administrative failure is one of the main factors the Cairo city business is in the doldrums. The whole administrative system ought to be upgraded. The company should depend on [outside] professionals to reach imaginative and sound options. Simply speaking about increasing rates whenever faced by any economic difficulty is an indication of bad management and a lack of future vision.”Abdo stated halting metro service is not an option, as it would paralyze the entire country. He stated increasing ticket costs is simply a partial solution.” This concern mainly comes from the socialist economic technique embraced by previous President Gamal Abdel Nasser [in office from 1956-1970] Socialism provides the social aspect a top concern at the expense of the economic one. Therefore, numerous public services are greatly subsidized by the state. But this does not mean that such subsidies must be entirely lifted to cope with economic obstacles. There ought to be comprehensive research studies about the nation’s and residents’economic conditions to reach a compromise,”Abdo noted.Metro tickets are supported in numerous nations worldwide, the specialist stated, and the subsidy portion typically can be changed without severely damaging citizens’pockets.The Cairo city went into operation in 1987 and was the first of its kind in Africa and the Arab world. The metro has a daily ridership of more than

3.5 million. The 4th line is scheduled to be inaugurated by 2019-20. The lack of funds is considered the main obstacle hindering the development of the city system.

Adding to its debt problems, the city business reportedly got a loan of 10 million pounds from the Egyptian Railway Authority to pay employees’salaries.Trying to find a way out of this predicament, member of parliament Mohamed Fouad sent a parliamentary motion getting in touch with the transportation minister to right away supply the company with 30 million Egyptian pounds as a momentary solution to ensure the regular operation of the metro system.Saad Teima, the head of parliament’s Transport Committee, told Al-Monitor that the panel is planning to hold an urgent session with the transport minister to discuss possible services.”We will also consult with many authorities at the city business and the train authority to pay attention to their issues. These sessions will help the committee figured out the source of these built up financial obligations

, “Teima said. Find out more: http://www.al-monitor.com/pulse/originals/2017/03/egypt-cairo-metro-debt-crisis-ticket-price-transportation.html!.?.!Commuters are seen inside the Sadat city station beneath Tahrir Square in Cairo, June 17, 2015. (photo by REUTERS/Asmaa Waguih )

Source

http://al-monitor.com/pulse/originals/2017/03/egypt-cairo-metro-debt-crisis-ticket-price-transportation.html