Business News of 2014-07-15

Gov't turns to private investors over STC

After opprobrium about the ailing Intercity State Transport Company Limited (STC), government is ready to turn to a strategic investor to take over the transport company.

This comes after the Social Security and National Insurance Trust (SSNIT), which holds an 80 percent stake in the transport company, put up its stake for sale early this year.

But government, the minority shareholder (20 percent) with the first option to buy, wants to acquire SSNIT's stake and then find an investor whose business model is in sync with government's public transport plan.

Central to the government's public transport plan is implementation of a rapid bus transport system whereby passenger-buses will use dedicated lanes on selected roads in major regional and district capitals nationwide.

The plan also involves the deployment of comfortable buses for intra-city transport -- seen as an antidote to heavy vehicular traffic to and from major commercial centres in the country, particularly Accra and Kumasi.

Dzifa Attivor, the Transport Minister, told the B&FT on Thursday that government intends to secure a strategic investor to take over the company for the long-run -- as the new management team works around the clock to rid STC of its debts and bring the company up to an appreciable level.

Asked whether it is still part of government's plans to acquire SSNIT's stake and entrust the company to a private investor, Mrs. Attivor said: "Yes, that is what government intends to do. In the meantime, government has acquired some buses for them, and the new management has also entered into an arrangement with some automobile companies for the supply of buses on alliance basis".

President John Mahama last November held discussions with the Scania Group, a Swedish automobile company, for the supply of public transport buses for STC and the Metro Mass Transit Company.

"We have confidence in the new management. Since they took over we haven't heard of any staff agitation," Mrs. Attivor said.

Nuamah Donkor, the Managing Director of STC, is optimistic that his team can turn around the fortunes of the once-vibrant transport company, which has been mired in mismanagement and agitation by employees over the years.

"I believe we can turn the company around, looking at the plans we are putting in place. We want to work hard to bring it to a certain level that will see an appreciation on the value of the company. Then, if government decides to sell, we will get something substantial for it," he said.

STC has secured an alliance arrangement with an automobile dealer in Germany for the supply of 50 new Citra buses.

Management has also successfully concluded negotiations for the supply of a number of Youngman buses from the Youngman Automobile Group in China.

Under the alliance arrangement, STC as a business entity does not pay any money upfront for the buses -- nor does it acquire the fleet outright. It operates the fleet on behalf of its partners and the profit is shared between the two parties.

Source: B&FT
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