Transdev's contract to run a third of Melbourne's city buses is not being extended by the Andrews government in the wake of the company's chronically poor performance.

Unlike Metro Trains and Yarra Trams, who had their franchise agreements extended for seven years in 2017, Transdev’s $1.7 billion, seven-year contract signed in 2013 will not be rolled over for an extra three years.

Public Transport Minister Melissa Horne will announce on Saturday that Transdev’s contract to run 47 bus routes including several Smart Bus routes will wind up in 2021.

A Transdev bus in Lonsdale Street. Credit:Daniel Pockett

The company, which has only once met its contractual punctuality target in five years, will be granted an extra six months to January 2021 before the contract likely goes out to tender.