Vélez-Málaga Council continues to run up debts relating to the Tranvia tram system and is concerned that, because of this situation, the operators of the trams, Travelsa, may decide to suspend the service.
The Council debt has now reached €1,155,000, of which €800,000 relates to last year and the rest from the first three months of this year.
The problem is the subsidy paid out of municipal funds to Travelsa to keep the ticket price below the true cost of the ticket. As the number of passengers using the trams continues to decline and fall short of the agreed number, the Council has to, in effect, make up the shortfall.
The second phase of the Tranvia system, a 1,200 metre section between Parque Jurado Lorca and the Explanada de la Estación has remained out of service since its completion in March 2009 due to the municipal debt to Travelsa.
The Council is trying to negotiate a payment schedule to avoid that the tram system is suspended. Travelsa have in the past threatened to pull out of the deal if the debts are not paid, something possible under the Law on Public Administration Contracts.
Under this law, the contractor can proceed to suspend implementation of its obligations in cases where payment is delayed by more than four months and provided they communicate this proposed action one month in advance.