AN over GH¢23 million debt owned by the Intercity STC Coaches Limited, a state-owned passenger transport service delivering company in the country has gradually dragged the once celebrated STC to its knees.
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| Can STC survive its current debt crises? |
The debt, GH¢23,236,395.20 is the total amount owned by the company to various financial institutions and some of its service providers in the country. The said debt dates back to nearly a decade ago, virtually after the Social Security and National Insurance Trust (SSNIT) took over the majority shareholding of the company from Vanef Consortium Limited sometime in 2003.
As a result, the company has for about four years now not been able to procure new buses to add to its present 30 roadworthy buses out of a total of 70 fleet of buses that the company owns.
The company's over GH¢23million debt victims ranges from banks to oil marketing companies and to spare part dealers in and around the county.
Although the Business Development, Marketing and Public Relations Manager of the transport company, Ms Gabriella D. Tettey would rather not confirm nor deny the debt owned by the company, she contended that "ISTC is undergoing challenges” adding “but that is not threatening our viability at all."
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| Only 30 out of the company's 70 vehicles are roadworthy |
SSNIT which holds 80 per cent of the company's shares has already hinted of its intentions to offload all shares. Though, neither SSNIT nor ISTC has yet given any reason that could have necessitated SSNIT's hint of its intentions to offload the 80 per cent shares in the company, ISTC's staggering debt of over US$23 million could be playing a lead role in such corporate decision.
Sources within both institutions mentioned that SSNIT was yet to meet government on the matter. It is however not clear if government, the current minority shareholder would express interest in buying off SSNIT's 80 per cent shares to add to its already 20 per cent shares.
Obsessed by its locked-up capital at ISTC in the name of debt owned it, one of the company's mounting debt victims, the National Investment Bank (NIB) sometime in 2009 secured a court order obligating it (the bank) to freeze the assets of the ISTC as it sought ways of getting the company to pay off the debt. Some sources told the GRAPHIC BUSINESS that the said NIB loan that generated the court order was “used to secure 30 Faw buses for the company.
But the STC’s debt to the bank has since continued to soar and currently stands at GH¢5,850,687 million.
The General Manager of the ISTC, Brigadier General ( Rtd) Edward Lord Attivor last week told Asempa FM, a private radio station based in Accra that lack of planning had caused the company to lose about 80 per cent of its customers.
Insider sources, however told the GRAPHIC BUSINESS that the problem was beyond lack of planning. "There's mismanagement, corruption and some supposed mafia groups have emerged here," the source explained.
According to the source, the ISTC generates an average annual revenue of about GH¢10million "yet the company finds itself in debt virtually after the end of every year. ISTC does not control cost. All that happens is the money comes in but were it passes out, no one knows.” Another source wondered if “STC has ever had a serious managing director who has the experience and expertise of the business.”
According to the source, the company’s MDs have so far been “political appointees.” The political coloration of the MDs, the source said was not "as much an issue as their competence. Their expertise in the sector is what I’m talking about.”
To be efficient and effectively carry out its mandate of offering reliable, safe and comfortable transportation services to its clients, the company's fleet of buses ought to be replaced after every four years. Its current fleet are over four years old but the company's lack of finance has virtually stalled every effort by the company to secure new buses. Frequent breakdown of buses has now engulfed the company’s fleet due to what the Business Development, Marketing and PR Manager of the company said was "due to the pressure on the buses.”
She said the STC currently needs “an immediate injection of about new 30 buses”.
STC had initially earned the reputation of being one, if not the only transport service delivering company in the country that could have been associated with timeliness, comfort and quality service delivery throught-out the country and the sub-region at large.
Passengers of the company’s intercity bus services now frequently throng the company’s head offices along the Circle-Kaneshie road complaining of one mistreatment or the other.
But as more private transport service operating companies continue to pop-up nation-wide, thereby tightening up competition in the sector, the ISTC would have to revitalise its operations in other to survive in the present environment.
The Transport Minister, Mr Collins Dauda after paying a visit to the company's offices in Accra last week hinted that the government was seeking a partner to help bailout the company from its present crises, reports Asempa FM.
He noted that, the partnership that saw SSNIT coming in as the ISTC's majority stakeholder has not injected a pesewa into the business "thereby running the company down."
In the meantime, the minister said his outfit had opened talks with the Metro Mass Transit (MMT), another transport service delivering company to assist the ISTC with buses to augment its broken down vehicles
At the moment, stakeholders of the company are hoping that the anticipated offloading of the SSNIT’s majority shares and the government's hint of a possible divestiture of the company, when successful could help “inject the necessary capital and human resources into the company” that a source said was presently needed “to help turn STC around.”
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