Egged subsidy to be cut

“The agreements will gradually make the Egged Cooperative more efficient,” says budget director.

egged bus 88 (photo credit: )
egged bus 88
(photo credit: )
The Egged Cooperative, Israel’s major bus line operator, agreed to see its government subsidy gradually cut by some NIS 400 million by 2015 from this year’s level of about NIS 1 billion, the Finance Ministry said Sunday. “The agreements will gradually make the Egged Cooperative more efficient,” said budget director Kobi Haber, adding that “the agreements express the government’s policy relating to further opening the market to competition.” Egged, which reached the deal with the Finance and Transportation Ministries, agreed to sell 15.5% of its lines by the end of 2008, of which 9.5% would be put up for sale via tenders from which Egged subsidies will be banned. Mechanisms would be established for the sale of Egged buses to other operators who also would receive additional benefits to create fairer conditions for competition, the ministry said. The subsidy also would be adjusted by bringing Egged’s cost of operation in line with the competitive cost of other private operators of public transportation systems, as reflected in the tenders. Egged also would begin to purchase buses through competitive tenders, according to the agreement. If Egged does not cooperate in further steps to increase competition from 2009 on, the cooperative would be fined through docking of its subsidy for each month of foot-dragging, according to the agreement, which was expected to be signed shortly. Separately, the Finance Ministry and Israel Railways signed a subsidy agreement Thursday, by which Israel Railways would receive some NIS 250 million yearly until the end of 2008 and smaller sums thereafter. Calculation of the subsidy would take into account ridership levels and Israel Railways' operational plans. The deal also encourages Israel Railways to enter into unrelated commercial activity, such as real estate and advertising. Israel Railways and Dan, the Tel Avivarea bus line operator, launched a series of combined tickets Sunday, in the context of a public transportation fee reform initiated by the Transportation Ministry and the Finance Ministry, together with the two transportation providers. The “red ticket” grants a 20% discount on monthly passes involving interurban travel or commuting by rail and travel inside metropolitan Tel Aviv (including Ever Hayarkon, Ramat Aviv, Givatayim, Bnei Brak, and Ramat Gan) on Dan bus lines. For example, the monthly pass for train travel between Beersheba and Tel Aviv, including bus travel within Tel Aviv, would cost NIS 769, down from a cost of NIS 961 today. Day passes combining interurban rail travel and use of Dan buses would include a 15% discount on the train ticket and a 45% discount on the Dan day pass.