KUALA LUMPUR (April 11): Running a public utility company is never an easy job, especially when the tariffs or fares are regulated, The Edge weekly reported in its latest edition this week.
 
Writing the cover story,The Edge associate editor Jose Barrock said that Azmi Abdul Aziz, who took over as managing director of Prasarana Malaysia Bhd in January, already had a taste of the tough task ahead of him.
 
The Edge reported that the government recently announced a rise in public transport fares but has since backpedalled on the decision.
 
The Edge quoted Azmi as saying that the bus fare from Bangsar to KL Sentral was RM1 and that it was the busiest route.
 
“ … it’s cheaper than teh tarik,” it reported Azmi as saying.
 
Nonetheless, the magazine said Azmi was hopeful that there would be a hike in light rail transit (LRT) fares this year.
 
The Edge said while bus fares were slated to be bumped up by more than 22% in the middle of next month, an increase in rail transport fares is still pending.
 
Currently, rider fare is the key source of income for Prasarana, accounting for 90% of its revenue.
 
The public transport operator is still loss-making, although on the bright side, ridership has been growing each year.
 
The Edge said Azmi expects Prasarana to soon hit the one million passenger a day milestone.
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In its financial year ended Dec 31, 2013, the company suffered a net loss of RM619.32 million on revenue of RM484.48 million.
 
As at end-2013, it had non-current assets of RM14.27 billion, current assets of RM1.37 billion, long-term debt commitments of RM12.39 billion and short-term borrowings of RM490.25 million.
 
It had negative reserves of RM4.07 billion as at end-December 2013.
 
The Edge said Azmi was quick to point out that due to Prasarana’s large asset base of RM14.27 billion, it would incur hefty depreciation and finance costs.
 
He also stresses that the company’s rail operations have always been cash-flow positive and thus sustainable, it said.
 
“Putra LRT and Star LRT were okay in terms of operational expenditure but they had difficulty in repaying debt. Prasarana bears the holding cost of the assets, so we get hit by the depreciation and finance costs. Every year, because of the accounting standards, we have to make provisions for depreciation of  RM400 million,” Azmi told the Edge.
 
The magazine reported that Azmi rubbished the public misconception that Prasarana was subsidised by the government.
 
“That is far from the truth, he says, because the government backs Prasarana only on raising funds for capital expenditure (capex), not opex. “We have to generate our own income [to sustain our operations],” it wrote.

For more on the Prasarana’s future going forward, read the complete story in this week’s edition of The Edge (April 13- April 19) available at newstands now.

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