GUANGZHOU: The city's biggest bus company officially became a shareholding company on Sunday (Dec. 12), marking a bold step forward in the reform of Guangzhou's public transportation system.

Hongjia Weiye Development Co Ltd now holds a 50-per-cent stake in Guangzhou No 1 Bus Shareholding Company, the city's first shareholding bus company now.

The new company has a registered fixed asset investment valued at 311.69 million yuan (US$37.87 million).

It is the first time private money has been used to operate public transportation in the capital of Guangdong Province, said an official from the Guangzhou Municipal Communications Commission yesterday.

It means that the Guangzhou municipal government's monopoly on public transportation has been broken, the official told China Daily yesterday.

The reform and new competition are expected to help improve the city's public transportation service.

The establishment of Guangzhou No 1 Bus Shareholding Company is just the first step in the reform, said the official speaking on condition of anonymity.

"Guangzhou has decided to attract even more non-governmental funds to help develop its public transportation industry and provide better services," said the official.

All the operation licences of bus routes will be granted to bus companies via public bidding in the years ahead, the official added.

Li Hua, general manager of the new Guangzhou No 1 Bus Shareholding Company, said: "Our company is expected to turn losses into profits in the first year of operation."

The new shareholding company will operate according to market demand and scrap all monthly coupons starting next year, Li said.

Li said his new company will give priority to developing a "green" public transportation system and introduce an intelligent management system to help further improve its services and work efficiency.

And all the staff of the new shareholding bus company have become contract workers, Li said.

"But their income and other benefits remain intact," Li said.

The new shareholding company will put 70 new buses into operation next month.

And a total of 608 new buses will be put into service throughout 2005, Li said.

Meanwhile, more than 500 buses will be reconstructed into "green" buses that consume liquefied petroleum gas (LPG) in 2005.

And all the company's buses will run on LPG before 2007 to help reduce air pollution, Li said.

Li promised the fares will not be raised next year.

Established in 1952, Guangzhou No 1 Bus Company, the largest bus company in Guangzhou, has 1,700 buses in operation.

Editor: Olivia