STC Folds Up August

Posted on: www.businessguideghana.com

By William Yaw Owusu

Accra, Tuesday  July 24, 2012

Barring any last minute financial intervention, the state-owned Intercity STC will cease operations in August.

The company needs about GH¢7 million to remain solvent until December 2012.

Social Security and National Insurance Trust (SSNIT), which owns equity shares of about 80 per cent in Inter City STC, has declared its intention to pull out of the beleaguered company.

In the past, SSNIT intermittently helped Intercity STC to offset its debt, but according to Cyrus De Graft Johnson, Communications Manager of Intercity STC, management presented a proposal to Cabinet for Government to support the company with GH¢7 million until December, but no response has been given.

He told BUSINESS GUIDE that the amount would be used for the payment of salaries of staff and settlement of debt it owes other institutions.

“If the government supports us with the amount, we can stand on our feet up until December. We are capable of making a projected GH¢400,000 profit within that period,” he said.

Mr. De Graft Johnson said for the past three months, salaries of staff of the company had not been paid, noting that the development had affected output since morale and motivation was low.

He said the once vibrant company currently owes banks and other suppliers over GH¢4 million, adding “there is a longstanding debt and the situation is not getting any better.”

The Communications Manager said certain aspects of the company’s operations including parcel services and vehicle valuation as well as maintenance had helped to keep the company on its feet in recent times.

Currently, Intercity STC has a fleet of 47 buses on its normal routes but there is uncertainty about the fate of the 557 workers of the company.

The company pays GH¢7,500 weekly to JA Plantpool which recently supplied it with buses. 

The company was forced to make weekly payment under the agreement because it failed to honour its purchasing agreement with JA Plantpool, which seized 10 of its buses following a court order.

SSNIT’s decision to discontinue its support to Intercity STC would adversely affect Ghana’s transport sector.

“We are no more interested in STC. The agreement that established the shares said if we want to offload, the first option should go to Government of Ghana. 

And since we are no more interested, we’ve written to government that we are no more interested so we want to offload our shares. So if it is interested, we wouldn’t mind repaying the money by installment. We are awaiting its response,” Corporate Affairs Director of SSNIT, Eva Amegashie, told an Accra-based radio station recently.

While some experts believe public-private partnership could help rescue Intercity STC, others are of the opinion that if the government decides to put the company on sale, it should solely be private.

The Minister of Transportation, Collins Dauda recently put the final nail in the coffin of Intercity STC when he said that he would recommend to the government to stop running the company.

“One thing that must be very clear is that in making my recommendation to Cabinet, I’ll not recommend to government that it should continue to run STC. 

I’ll certainly not. I’ll ask for private sector participation in the management of STC because several companies run transport businesses in Ghana...and they are doing very well. So one wonders why that of government is not performing,” Mr Dauda said.

“Anything owned by government lacks supervision and in doing business, if your ability to supervise is not good enough you better don’t venture. If you find that the private sector is better placed to do it, get the private sector to do it for you. 

 
“This ministry has a history. We used to have Ghana Airways, where is it? We used to have Black Star Line, where is it? STC is the next on line. Railways is gone. And you know the attitude of Ghanaians towards state-owned businesses.”