Fuel and electricity prices dramatically increase HSL’s costs – significant uncertainty in the forecasts
In January–August, HSL’s operating expenses were significantly higher than estimated. The projections indicate that our operating expenses will exceed the budget by EUR 14.6 million this year.
Especially the service operating costs are increasing rapidly with the unanticipated increases in the prices of fuels and electricity. Operating compensation for bus services is estimated to exceed the budget by EUR 18 million. For metro services, the overrun is EUR 2 million, for tram services EUR one million. There is no corresponding increase in the operating costs of train services thanks to the fixed-price electricity contract currently in force.
We have not yet recovered from the decrease in passenger numbers caused by the coronavirus pandemic. We anticipate that passenger numbers will be 24 percent lower this year than in 2019. It is estimated that boardings on our transport services will amount to 304 million this year, which is close to the 306 million boardings estimated in the budget.
However, in January–August, ticket revenue was 4.2 percent above the budget, at EUR 195 million. According to our forecasts, ticket revenue will amount to EUR 310 million this year, which is 3.9 percent above the budget. Municipal contributions paid by member municipalities from tax revenue continue to be HSL’s biggest source of income. Our strategic objective is that municipal contributions would account for 50–55 percent of our operating expenses. This year, we estimate that municipal contributions will account for 56.8 percent of our income, when the Government’s covid subsidies are not taken into account.
Without subsidies from the Government, we forecast a deficit of EUR 8.9 million for the year. We anticipate to receive EUR 65.8 million in Government subsidies this year. When the subsidies are taken into account, we are forecast to run a surplus of EUR 56.9 million. The surplus will be used for the amortization of the budget loan raised in the acute coronavirus situation and to prepare for future increases in costs. The subsidies have enabled us to maintain a good level of public transport service, without any drastic cuts to it.
As a whole, HSL’s economic situation continues to be difficult. Projecting the future level of costs is exceptionally difficult due to the current global situation, which poses an additional challenge.