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SWB balance sheet up to 2025: Bonn’s public utilities are heading for substantial deficits in the millions

SWB balance sheet up to 2025 : Bonn’s public utilities are heading for substantial deficits in the millions

Bonn’s public utilities are forecasting 70 million Euro in losses for the next five years. Although it had hoped to make a profit, the city will have to make up the deficit.

The Bonn Stadtwerke (SWB) are forecasting significant losses for every year up to 2025. As the SWB’s business plan for the current year shows, the corona pandemic and significant expansion planned for local transport services will make a considerable hole in the balance sheets. For the current year 2021 alone, the municipal company expects a consolidated result of minus 16.3 million Euro, followed by minus 11.1 million in the following year.

For 2025, it is expected to be minus 16.9 million Euro. In total, the Stadtwerke would need 70 million Euro in these five years, according to their own estimates, in order to be able to show a balanced result. This is a problem for the city in that it (or the taxpayers) will have to pay this amount from the budget. Formally, however, a political resolution is still in force that the SWB should generate increasing profits and pay these out to the city.

Losses in the millions due to “corona-related additional burdens”

As of next year, the highest amount of five million Euro per year should be reached. However, as the city explained upon request, it has adjusted its budget planning. For 2021 and 2022, a profit of 3.2 million Euro has been allowed for. From 2023 onwards, however, the city's budget plans foresee losses of initially just under 1.4 million Euro (2023) and in each of the following two years just under 5.4 million Euro.

The considerable loss is “largely due to the SWB’s assumption that corona-related additional burdens will have a negative impact on operating results”, said Vice Spokesperson for the city Marc Hoffmann. The city wants to isolate these losses as an accounting convenience (Bilanzierungshilfe), he explained, show them separately and either offset them against equity or write them off over a period of up to 50 years from the financial year 2025.

‘Bilanzierungshilfe’ is a law that makes it possible to report pandemic-related losses in such a way that they do not directly affect municipal budgets. Should further bailouts for local transport follow this year and next year, this isolated amount would be correspondingly smaller, Hoffmann said. Incidentally, last year the SWB was able to generate a surplus for the sixth time in a row, even if it shrank from the hoped-for 3.1 million euros to 1.7 million euros due to the pandemic.

26 new trams in Bonn from 2022

The current forecast does not come as a surprise. In its business plan, which was discussed by the central committee for the council in a non-public session on Thursday evening, the SWB lists the negative effects of the pandemic as well as the considerable additional tasks from previous years. The paper is available to the GA. The company has introduced the bike and e-scooter rental system and continued to make politically desired improvements from the once federally funded Lead City project at its own expense. This includes increasing the frequency of weekend services. Moreover, the SWB subsidiary Bus und Bahn considers that revenue losses due to the pandemic are to be expected until the end of 2022.

In addition, 26 new trams (Straßenbahn) are to be successively put into operation from 2022 and twelve additional urban tramway vehicles (Stadtbahn) from mid-2024 (the SSB will purchase ten more). “Overall, the additional services of these extra vehicles, including a higher demand for drivers and greater maintenance works, will have a considerable impact on the 2025 result,” the business plan states. On the other hand, revenue was lost because the politically staffed special-purpose association assembly of the Rhine-Sieg Transport Association (VRS) had spoken out against fare increases for individual journeys.

This does not even include the financial impact of the planned conversion of the entire bus fleet to electric mobility, which not only concerns the purchase of the vehicles, but also the infrastructure for charging them. Marco Westphal, Managing Director and Director of Labour at the SWB, said the associated investments would cost ten million Euro annually until the final stage. SWB Bus und Bahn is sticking to its goal of completely converting to an electric fleet by 2030. So far, however, not even ten of the over 200 buses are battery powered. Politicians from all political groups had repeatedly stressed that any additional task for the municipal company will involve costs and will reduce possible profits.

Upon request, Westphal explained that the company’s biggest challenge is “to be climate-neutral by 2035. This requires great efforts in all lines of business”. Mayor Katja Dörner, just elected as chairwoman to the SWB Bus und Bahn supervisory board, also added the change in transport policy and mobility. She sees the enormous challenge but believes that these goals are achievable.

From an economic point of view, the local transport division is the Achilles’ heel of the public utility companies. It has constantly recorded losses. Last year, despite the federal bailout - which mostly covers revenue losses of 15 million Euro - it ran up a deficit of 40.6 million Euro. This minus is offset within the group. In the financial year 2020, the SWB subsidiary Energie und Wasser expects a surplus of 48.7 million euros.

The waste incineration plant is likely to generate a plus of 700,000 Euro. Bonn's City Parkraum GmbH suffered economically last year. “Instead of the planned surplus of around 0.5 million Euro, a loss of around 0.5 million Euro must now be assumed for 2020,” writes the SWB.

(Original text: Andreas Baumann and Philipp Königs, Translation: Caroline Kusch)