Mediterranean Portrait: Adnen Ben Salah, STC (Société de Transports Collectifs), Tunis
Meeting with Adnen
CEO of STC (Société de Transports Collectifs)
Private operators appeared in Tunisia in 1989. During this period, public transport had a supply deficit of around 20%, and investments could no longer be secured by public money. The solution to develop public-private partnerships (PPPs) in order to ensure a part of the investments led to the launch of concessions of several lines. The objective was to encourage the private sector to contribute to the development of public transit in order to reduce the burden of public investment and improve the quality of public transport.
Created in 2004, the STC (Société de Transports Collectifs) is a private transport operator that manages the commercial sign “City Transport”, which operates in Greater Tunis. There are three other private transport operators in Greater Tunis: TCV (Public Transport of Passengers), TUT (Urban Transport of Tunisia) and TUS (Urban and Suburban Transport). Today, the STC operates 5 lines and manages a fleet of 80 vehicles.
STC’s first years: developments and partnerships
In 2004, two calls for tender for the concession of new lines had been launched. STC won a tender, the TUS won the other. The tender specifications drawn up by the Ministry of Transport then imposed a certain type of bus. We took the challenge to offer different, more modern and ergonomic vehicles and won it.
In the first years of operation, we had normal growth, and the customer reception was exceptional. Our management of the operation of the fleet was notably endowed with an SAE since 2005, and a system of Closed Circuit Television. In 2010, we started working on a contactless payment system, but it was not successful. We then operated without a ticket’s controller in the buses (“ticket man”) which saved our costs and improved operation. The company had 2.4 employees per bus.
We started a partnership with the Lacroix group, the leading French independent operator, the fourth largest French operator (behind RATP, Transdev and Keolis) and the only French transport company based in Tunisia. The Group’s shareholding in the company started at 15%, and rose rapidly to 30%. This participation was to increase with the growth of the STC, but the situation evolved differently.
In 2008, the State decided to freeze the development of new concessions. The last call dated 2006 was won by the TUS for 12 lines, making him the most important private operator in Tunis. Since then there have been no tenders for new lines and the situation has begun to deteriorate.
Tense relations between public and private
Faced with ever increasing loads, we needed to operate more lines. The choice of the State to stop the development of concessions has undermined the activity of the sector. In particular, we were forced to increase our rates to try to maintain our balance, until we reached the maximum for transit services. And in the meantime, new lines were created for public exploitation by the Transtu, despite the weakness of its means. Faced with the increasing demand, private operators have been increasingly blocked.
In 2009, the concept of collective taxis was created by the Ministry of Transport. Two private companies managed the licenses issued by the Ministry and then by the governorates according to quotas allocated by the Ministry. These licenses then became individual as for taxis. The scope of the service has also been expanded by the Ministry. Transporting passengers from point A to point B, passengers developed on the same routes as public transport operators. This unfair competition has given rise to a real cannibalism situation which is still contributing to the destruction of the public transport sector..
Following the upheavals of 2011, there were numerous strikes in the companies that had to be settled without the intervention of the Ministry and which weakened us. In addition, the Post-Revolution Damage Compensation Act promulgated at that time offset many sectors but not transport. In this context, we had to pool the charges of private operators to avoid dying by 2012. The STC then bought the TUT, pooling costs for 34 additional buses. TUS and TCV still had reservations to stand alone for some time. This redemption allowed us to centralize our operations, while leaving the independent TUT legally speaking. This operation has made us survive until today.
However, in February 2013, a 6-month strike cost the group the equivalent of € 800,000 in damage to the labor courts. The state has not lifted a finger, and our treasury has gone up in smoke. Today, the STC and the TUT are in the process of companies in difficulty and in the restructuring phase. We can not buy new vehicles for lack of funds, and we barely pay for maintenance. We sell our assets, and try to refocus ourselves to get a better start.
As part of a strong involvement of the supervisory authority in the rescue of companies in the sector, we also proposed, in partnership with the Lacroix group, a development project in Zaghouan, including the creation of a regional operator, a transport hub, a logistics center and a training center. This region does not have its own regional service and is part of the highly disadvantaged areas. But there was no return, and no follow-up was given.
A critical situation for private transport companies that could easily be improved
As General Manager, I am assumed to be responsible for the management of the company. Today, I spend my time managing the restructuring of the group and dealing with the shortage of equipment. Our recovery plan is based on the renewal of our fleet and we need to import new buses. The Ministry of Transport has recently agreed to align the private operators on public operators and granted our right to an import license, still not been issued. The file has been in the hands of the Ministry of Commerce for more than four months. We fight every day to make the sector survive, save jobs and reinvest investment is our daily life.
Sectoral professional representation is now considering several avenues for action to bring the supervisory authorities to bear their responsibilities in view of the critical situation of jobs and businesses and hence the public service of public transport. An obligation of transparency and clarity towards the Tunisians is necessary.
Solutions that can improve the situation are not out of reach. A better control and reassignment of collective taxis are for example axes that can have an impact. Today we have agricultural taxis on one side and urban ones on the other. If we redirect all the urban collective taxis to new suburban lines, they are taken out of the city center and public transport can be redeveloped with a higher level of profitability for professionals. Moreover, there is a real need in peri-urban areas around the peripheral governorates, with new districts appearing and in which the buses do not yet go. There will be no competition, and everyone can win! We can go even further and give them school pick-up in these areas.
In addition, with the system of compensated reductions, school transportation costs the State a lot of money, and the balance sheets are vague. This service could easily be concessioned. This would save a lot of money. Why not put it in competition with other operators? A study on the organization of school transportation is under way and we will see its findings. But I believe in quick and effective solutions. We already know the number of students, the data is easy to recover. We set up the circuits and bid on daily shuttles.
Another solution against competition between the public and the private sector would be to operate in geographical areas rather than on a line-by-line basis. If the operators operate the lines of a defined area (with certain transverse lines), and not certain lines allocated throughout the agglomeration according to successive calls for tenders, this would allow better organization of the operators. There would be, for example, less overloading as is the case on the lines between Tunis and La Marsa.
To restructure, and before demanding more public funds, companies can also sell a portion of their non-productive assets accumulated throughout the projects at a high price. They have accumulated considerable real estate and land holdings. For example, Transtu has oversized depots for their current fleet. If it sells, it can buy and maintain new vehicles more easily without resorting to public money and focus on its role as a public transport operator.
Funding for the sector is a key issue
We need a medium- and long-term strategy, but we must also act in the meantime. The survival of private operators can be summed up in three points: launching new concessions and reviewing contracts, unblocking import licenses, and reviewing mechanisms for financing transport.
Funding is essential to the sector as a whole, and solutions can be found quickly. One can start by taxing private vehicles and taxing public transport. We also talk about transport payments in Tunisia, but companies are already paying a tax dedicated to transport. It is necessary to clarify the point of taxation relating to existing taxes before putting new ones in place. If necessary, results can be palpable in a few months. Revenue can quickly increase and the debt of diminish. With better profitability, we will be able to focus on quality of service and make PPPs attractive again. Today, if local PPPs are bankrupt and investors are watching, and there are no procedures out there, how to ensure security for foreign investors under these conditions? The consequences can be serious for the country.
Blocking at the state level
From a banker to a transporter: an atypical career path
Before being a carrier I was a banker. I studied finance in market, and did my third doctoral cycle in France at the Sorbonne to become a banker. I then started my first professional experience by joining Crédit Commercial de France, a bank subsequently bought by HSBC. I worked for a while on what was called special credits and then on the SVT Desk (Treasury Values ??Specialist) in the trading room. Then in the project of a return to Tunisia, I made a passage with AXA Bank on the asset management side.
In 1992 I returned to Tunisia and I participated in the creation of the first house of securities for the companies of the country’s subsidiary of a banking group of the place. Then I participated in the creation of an independent project. By making asset management, we were able to bring in foreign funds and accompany the mutation of the stock exchange in Tunisia. At that time, I had the advantage of participating in the reform of the management of the debt of the State and the creation of the OAT (Assimilable Obligation of the Treasury) of the SVT.
I joined the IMBank private bank for 3 years. I then followed many projects in Tunisia, Morocco and Europe. Although tiring, it was a fascinating period and extremely rich in experiences and encounters. Then I joined Best Rè (international reinsurance company) to focus on corporate investment.
In 2004, I was on the verge of early retirement when tenders for transportation concessions were issued, and I started in that area.
If I had remained simple investor, the situation was such that I will have put everything in liquidation in 2011 to recover the investments. I would have “taken the apple” as they say in the language of bankers. But this sector took me, I adopted this new profession and I stayed. The work with the Lacroix group and the transmission of their experience are for many. It is a job that gives the taste of a privileged relationship with people. A transport operator can not stay in his ivory tower, he must be in contact with people. Every day, we know that people who need to travel, to work, are being served. This sense of being useful that has no price. Doing private in this sector is not just making money. Especially if we lose it! But money really serves something.
What projects for tomorrow?
My goal today is to save this public service. I give myself a year to try to revive the activity of these companies, and after I pass the hand, I would have deserved my retirement. I could then devote myself to other activities and projects.
Interview conducted March 14th, 2017