Cross-Border Road Transport Agency & South African National Roads Agency Limited briefing

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06 October 2009
Chairperson: Ms R Bhengu (ANC)
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Meeting Summary

The Chief Executive Officer of the South African National Roads Agency Limited (SANRAL) briefed the Committee on the organisation’s background, mandate, programmes and challenges.  SANRAL was a state-owned entity established in 1998 and was governed by the SANRAL Act.  The Agency was currently responsible for 16 000 km of national roads (expected to increase to 20 000 in the near future).  81% of roads controlled by SANRAL were toll-free and 19% were toll roads.  The major challenge faced by the Agency was the lack of adequate funding for the construction of new roads and the maintenance of existing roads.  The Agency reported that there was no backlog in the maintenance of roads but a backlog existed in the construction of new roads and the strengthening of existing road surfaces.  SANRAL made extensive use of technology at traffic centres and was implementing an Intelligence Transport System and an Electronic Toll Collection System.  The Agency received high credit ratings from international credit rating agencies.

Members asked questions about the financial viability of SANRAL, the financial assistance provided by provincial Transport Departments, the backlogs in road maintenance and new road construction, road construction methods and the length of time required for road construction, the different payment methods available for toll fees, job creation initiatives, Black Economic Empowerment initiatives and the location of toll gates on national roads.  SANRAL was requested to present a more detailed strategic master plan, which would enable the Committee to offer the necessary support for the fulfillment of the mandate.

The Chairperson of the Board of the Cross-Border Road Transport Agency (CBRTA) and an official from the Strategic Advisory and Transformation Management department of the Agency briefed the Committee on the functions, key programmes and challenges.  The CBRTA was a state-owned entity established in 1998 and was governed by the Cross-Border Road Transport Act.  The Agency was responsible for the implementation of memoranda of understanding signed with the Southern African Customs Union and other bi-lateral agreements reached with other Southern African countries.  The Agency issued inter-provincial and cross-border transport permits.  The position of Chief Executive Officer was vacant and there were currently only five members serving on the CBRTA Board instead of the ten provided for in the Act.  Only eight of the 52 border posts were fully manned, posing a serious concern over the expected influx of visitors for the 2010 FIFA Soccer World Cup.  The Agency was currently on a financially sound footing but lacked the capacity to carry out its law enforcement responsibility.

Members asked questions about the composition of the CBRTA Board, the implementation of recent amendments to the governing legislation, the situation at the Ladybrand border post, the issuing of emergency permits, the opportunity for increased illegal activities as a result of under-manned border posts, the constraints imposed by inadequate funding, other challenges faced by the Agency and the lack of capacity experienced by the organisation.

Meeting report

Introduction of Delegates
Ms A Nchabeleng, Acting Deputy Director-General: Integrated Planning and Intersphere Co-ordination branch, Department of Transport (DOT) introduced the delegates from the Public Entity Oversight and Border Operations and Control sections: Ms T Letsoalo, Director, and Mr J Mmekoa, Deputy Director, Performance Management and Analysis. Mr N Alli, CEO and Ms I Mulder, Chief Financial Officer (CFO) represented SANRAL. Ms D Loedolff, Strategy Advisory and Transformation Management, Mr R Stuurman, Executive: Legal Risk and Compliance, Mr G Phalafala, Chairperson of the Board and Ms M Mvulane, CFO represented CBRTA.

Briefing by the South African National Roads Agency Limited (SANRAL)
The Chairperson reminded SANRAL that any challenges needed to be shared with the Committee so that timeous intervention could take place. She explained that that the Committee required details of the mandate, strategic plan, programmes and programme progress, any gaps identified, challenges faced by the organisation and intervention (turnaround) strategy proposals.

Mr Alli briefed the Committee on the background, organisation and programmes of SANRAL. The Agency was established in 1998 and had previously operated as the South African Roads Board. SANRAL was a state-owned enterprise, accountable to the Minister and Department of Transport, which was the sole shareholder of SANRAL. SANRAL was governed by the SANRAL Act, rendering the bankruptcy remote. However, Parliament had the power to change SANRAL at any time.

SANRAL was currently responsible for 16 000 km of the national road network, expected to increase to 20 000 km. National roads were proclaimed by SANRAL through a legislative process. A national road was not considered as such by simply prefixing the road number with an ‘N’. SANRAL was responsible for toll-free roads (81%) as well as toll roads (19%). National Treasury funded toll-free roads whereas toll roads were reliant on capital markets and were deemed to be self-funded. Toll-free roads could not borrow money under any circumstances from toll roads and vice versa. Insufficient funding for roads was a major challenge for SANRAL and this issue warranted a detailed presentation at a future date. At the end of the concession period, a toll road could revert back to SANRAL at no cost to the State. During the concession period, the asset remained the property of the State. In addition, SANRAL was responsible for major bridges and culverts. The Bloukrans Bridge offered the highest bungee jump in the world and was considered a tourist attraction.

The provision of sufficient funds for maintenance was essential. A three to five year delay in the maintenance of pavement (road surface) caused a six-fold increase in cost.  A five to eight year delay resulted in an eighteen-fold cost increase. There was no a backlog in the maintenance of national roads but there was a backlog in strengthening the pavement. The deterioration of roads directly affected the public.

SANRAL considered the preservation of assets and the maintenance of good roads as a priority. New advanced technology applied at traffic centres included the electronic determination of incidents of truck-overloading. Surface friction tests indicated the remaining lifespan of the road. A centralised database and sophisticated computer programming ensured the accurate drafting of the budget. The asset management system ensured the preservation of assets.

The road network required expansion to ease traffic congestion, which resulted in decreased productivity. Spending on roads had the benefit of both job creation and preservation of assets as jobs were created from spending, not saving.

Roads had a design lifespan of 20 years. The road from Oliver Tambo International Airport to Johannesburg carried over 200 000 vehicles per day.  Other busy road networks carried 180 000 to 200 000 vehicles per day. The average trend in South Africa was 5000 vehicles per day. A balance between toll and toll-free roads had been established.

The CPA, PPI and CPI indices and the price of bitumen (which SANRAL had no control over) affected the cost of road construction.

Current concessions included the N4 East, Maputo Development Corridor (420km), N3 Cedara/Heidelberg (512 km), N4 West and the Platinum Highway (484 km). Proposed concessions included the N1/N2 Winelands Toll Highway, N2 Wild Coast Toll Highway and R300 Ring Road.

A 185 km stretch of the total of 561 km identified for improvement was currently under construction by the Gauteng Freeway Improvement Project.  The project was concentrated in a single area and was the largest road construction programme in South Africa in 20 years.  The completion date was May 2010. During the 2010 FIFA World Cup, road construction would cease, but bridge construction would continue.

The Intelligence Transport System (ITS) was tested and proved and had the ability to improve the management of traffic and emergency situations. Research had shown that this technology would increase capacity of the network and reduce the need to build more roads and played a role in law enforcement.

Electronic Toll Collection (ETC) made use of an electronic tag, also known as a transponder or on board unit (OBU).  ETC was both convenient and boosted safety and security on the roads.

International independent credit rating agencies had awarded SANRAL the highest national rating of A2 for the long term and P1 for the short term and the highest global rating of A3 for the long term and P2 for the short term management of its programmes and assets. The high ratings reduced the cost of borrowing and allowed SANRAL to retain a Government guarantee for an unlimited period. SANRAL had to obtain the permission of National Treasury and the Minister of Finance to borrow funds.  Financial restrictions included annual borrowing limits per financial year. In 2009/10, SANRAL was allocated R12.33 billion.  The allocation for 2012/13 was reduced to R3.2 billion.  The Domestic Medium Term Note (DMTN) programme (the highway bond issued by SANRAL for R31.91 billion), allowed SANRAL to tap the capital market at regular intervals. The DMTN was listed on the Bond Exchange of South Africa (BESA). SANRAL attended the bond auction on the first Wednesday of each month, as agreed with National Treasury and the Minister of Finance.

Mr S Farrow (DA) said that obtaining money outside of normal grants created more toll roads, and people would have to pay for the use of that road. It was clear that SANRAL did not have sufficient funds and that liabilities exceeded assets. Although the Agency was bankruptcy remote, it was technically insolvent. The roads controlled by SANRAL had increased from 7000 km in 1999 to 20 000 km by 2010 (i.e. a three-fold increase on ten years) but the budget was not even keeping up with inflation if transfers for the infrastructure needs of the 2010 FIFA World Cup were excluded. He supported the need for the timeous maintenance of roads to prevent increased costs down the line and suggested that the ideal solution was for SANRAL to receive additional grant funding from National Treasury. Toll roads, which allowed for the recovery of funds, primarily affected the poorest of the poor.

Mr S de Freitas (DA) asked for comment on the fact that the company was technically insolvent, and what plans were in place for recovery of funds.

Mr Alli replied that SANRAL was not technically bankrupt and that the CFO would respond to the concerns raised by Members. SANRAL’s asset base was just over R135 billion. The challenge of identifying the assets and obtaining this value had been faced as was revealed by the current report.

Mr Farrow said that the provinces had transferred responsibility for the national roads to SANRAL. The Act permitted SANRAL to take over and maintain the roads of provinces that did not have the necessary capacity.  He asked if provinces were in fact paying and if there was a contract with SANRAL, which specified the distance and cost allocation of the national road transferred.

Mr Alli explained that money was not transferred from the province when provinces transferred roads to SANRAL. It made no difference if the road incorporated into the national road network was accompanied by payment or not as the same problems with the state of the roads in South Africa would continue to exist. The major challenge was insufficient funding for roads and he appealed to the Committee to intercede on behalf of SANRAL to increase the amount of grant funding made available.

Mr Alli said that SANRAL did not have a cavalier approach as far as toll roads were concerned. There was space for both toll roads and toll-free roads and a balance needed to be established. He doubted that the 80/20 split would change in future. If more provincial roads were incorporated into the national road network, the ratio of toll roads to toll-free roads would possibly decrease of the challenge of obtaining sufficient funding from National Treasury was addressed.

Mr Farrow commented that the funding of roads had nothing to do with the CPI. Funding for construction was based on construction price adjustment figures, which were much higher than the CPI. The Committee needed to meet with National Treasury and discuss the construction adjusted prices and CPI index issue. He asked what factors determined which road would be built before another, as part of the N2 Grahamstown to King Williamstown road, which was in a bad condition, had not featured on the medium term framework for construction for several years.

Mr Alli undertook to investigate the matter concerning the N2 Grahamstown to King Williamstown road and respond to Mr Farrow’s question in due course.

Mr De Freitas asked if the claim made by SANRAL that there was no backlog in road maintenance meant that there were currently no roads in a bad to very bad state in the country. He asked which other types of backlogs existed.

Mr Alli replied that he had stated in the presentation that there was a backlog in terms of expansion of the road network.  SANRAL was addressing the challenges of expansion with ITS. New technology helped to address the problem. There was a backlog in strengthening roads but the agency had a strategy in place to address this issue.

Mr De Freitas asked if there were alternative options to electronic toll gates, which were designed to suit first world-type systems. He wanted to know what options would be available for those South Africans who did not have bank accounts if payment of toll fees was by means of automated debits.  He asked what alternative payment methods were available if a pre-paid toll system was in place.

Mr Alli replied that he did not believe that there were different technologies for first world and third world countries as the use of technology was beneficial for all. It was important that people understood and had access to the relevant technology. Electronic Toll Collection (ETC) had been implemented on the Platinum Highway in Pretoria. Different prepaid options (similar to the system for prepaid cell phones) were available for persons who do not have bank accounts. A survey in Gauteng indicated that more than 90% of road users had bank accounts. Although this was not the case throughout South Africa, road users would have the opportunity to register on-line, at a kiosk along the road network or at toll plazas. RTMC would deal with the collection of defaulted payments.

The Chairperson commented that interventions were intended to solve particular problems. The presentation did not explain the need for ETC. SANRAL could not introduce a system which contradicted poverty reduction policies.

Mr Alli replied that on a road carrying 180 000 vehicles per day, physical toll plazas did not address the problem of traffic congestion. SANRAL catered for the poor through pre- and post-paid options. SANRAL was able to present the results of studies and could provide job-creation statistics, which superseded the current number of jobs. Toll-booth attendants would be re-deployed in different jobs, for example in the distribution of tags, in call centres and in automated number plate recognition systems.

Mr De Freitas asked for an explanation why SANRAL laid a thin waterproof layer of asphalt on roads.  The asphalt layer on European roads was much thicker.

Mr Alli replied that South Africa’s engineering expertise was second to none in the world. 25% more load was carried on South African roads than anywhere else.  The problem was not whether thick layers of asphalt (at a higher cost) should be used but whether timeous maintenance was done.

Ms P Ngwenya-Mabila (ANC) asked if there were initiatives and bonuses associated with toll roads.

Mr Alli replied that discounts applied to frequent toll road users, local users and public transport operators.

Ms Ngwenya-Mabila asked if the target of job creation would be met by introducing the transponders and whether other modes of transport (such as bicycles) were considered. Roads in Secunda, which were designed for light vehicles, now carried heavy trucks which increased the challenge of maintenance. She asked if the private sector, which transported coal in heavy trucks, were contributing to the maintenance of the roads. She said that the cost of tolls adversely affected South Africans as there was a high rate of poverty in the country. The length of time applicable to road construction and escalating petrol prices and toll fees meant that the children of the country would be paying for present roads in the future.

Ms N Khunou (ANC) asked how long it took to construct or maintain a road and if there were quicker and cheaper options.

Mr Alli replied that it was not in the interest of SANRAL to take too long over road construction.  The Agency continued to investigate alternative methods and technologies to reduce the cost of roads. A university research project had resulted in the development of a fibre-reinforced concrete and it was hoped that this innovation would compete with the current method of bituminising roads.

Ms N Ngele (ANC) recalled repeated incidents where a truck had crashed into a house at a bend in a road in Qunu. She asked if the community concerned should complain to the municipality, national, or provincial Government entities. To date, nothing had been done to install crash barriers at the bend.

Mr Alli requested further details of the incident.  He said that the public needed to know that they were provided with a well-maintained, safe road and that damaged roads would be dealt with
timeously. It was SANRAL’s responsibility to make the public aware of who to contact in situations of need.

Ms Ngele asked who was responsible for delays in the maintenance of roads.

Mr Alli explained that every millimeter of the national road network was covered by routine road maintenance contracts. Technically, there should not be a pothole in a road for longer than 24 hours. The contract allowed for penalties to contractors should that time be exceeded.

Mr Farrow asked if certain lanes at toll gates could be used for transponders and others could accommodate cash payments. A single lane for cash payments on the side of the road would not impact on traffic flow and would solve the debate.

Ms Ngwenya-Mabila asked if it was a reality that the number of jobs created would increase if the physically operated toll booths were abolished.

The Chairperson noted that the presentation did not include information about the number of jobs applicable to the current system of manual and credit card collection or the job opportunities related to the introduction of ETC. Parliament was the public representative and it was important to understand and defend the system in conjunction with SANRAL.

Mr Alli replied that the new system would be introduced in the Gauteng Freeway Improvement Project. SANRAL would not remove the present toll plazas. The Agency was introducing a hybrid system which would include cash payments and post-paid accounts. Citizens could use the road and pay an account for toll fees at a later time. The system would not immediately only include ETC. He could present studies on the increase and better quality of jobs associated with the new technology to the Committee.

Ms Khunou asked if SANRAL met with the Road Accident Fund (RAF), the Road traffic Maintenance Corporation (RTMC) and provincial Departments of Transport. She asked who owned the toll roads and if there were alternative routes for people who could not afford the tolls, for example the R66 between Mafekeng and Rustenburg.  She asked how many BEE companies had been empowered and if statistics were available.  In a previous report, mention was made of roads in the rural areas. Rural areas still suffered from limited accessibility to roads and there was a need for development in these areas.

Ms Nchabeleng advised that one of the strategic objectives of the DOT for the following five years was the revitalisation of rural areas through enhanced rural transport network accessibility and services. This would ensure the linkage of the feeder rural roads to the provincial network and optimise the current railway system. A focus plan developed with Transnet prioritised key service areas to rural settlements. The public transport action plan would introduce rural periodic transport services, which would form part of the rural public transport system. The challenges of possible low volume transport and traffic and travel patterns would be monitored. Unity of interventions within the economic sector such as mining, environment, tourism and agricultural would be established to allow rural areas to benefit from economic development. Overloading was a mutual challenge. Law enforcement was the mandate of the RTMC and the Corporation had been initiated into the overload control strategy.

The Chairperson said that the country’s citizens needed to be taken on board and educated on the impact of overloading on road infrastructure. Education was important to enhance awareness and understanding of the impact of the actions of road users. Intervention strategy had to do with policy and law enforcement and not the education of the community.

Mr Alli said that he would like to believe that SANRAL would always be acting in the interest of the country as a whole. He explained that a committee under the chairmanship of the DOT met with the provincial Departments to share knowledge and to strategise on the provision of an improved road network.

The Chairperson said that consultants tended to extend the time spent on project management in order to increase their financial reward and that well-established companies were being contracted. She asked what systems were in place to ensure that there was a balance between the emerging road construction companies and the well-developed companies, the reduction of construction time and cost and the use of advanced technology.  The SANRAL presentation did not include motivations and strategies for the future development of road network infrastructure.  She asked if there was a master plan for the future.  She noted that toll roads were concentrated in KwaZulu Natal and Gauteng but not in the Western Cape. She suggested that pilot studies should be limited to Gauteng as rapid progress had been made with the Gautrain and Bus Rapid Transport (BRT) system.

The Chairperson asked what SANRAL’s financial exposure was and how the Agency intended to recover funds. She asked if SANRAL had achieved the R25 billion target set and how the Agency planned to spend the amount of €120 million received from the European Union Investment Bank in May 2009.  She asked if the funding provided by the European Union Investment Bank was a loan against a Government guarantee.

The Chairperson said that the position of the tollgate along the Wild Coast in the Eastern Cape meant that people would have to pay to pass through a toll gate without making use of the N2. She asked why that was necessary.  Referring to earlier questions concerning BEE programmes, she asked what percentage was spent on empowerment programmes and what future empowerment plans were in place.

Mr Alli replied that the 50 year strategic plan developed by the DOT was not only for roads but for transport as a whole. SANRAL had a national strategic plan in place, which included infrastructure development plans and fitted into the overall national transport plan.

The Chairperson said that SANRAL was given a mandate in 1998 and programmes were undertaken to address certain needs. The strategic plan was developed as a guidance tool for all SANRAL programmes.

Mr Alli explained that when SANRAL was established, the strategy was to cater for the national Economic network of South Africa. SANRAL had to first establish the number of kilometers of the road network in conjunction with provincial authorities and other role players. Toll roads and toll-free roads came into play as a result of the need to fund the roads.  The process of awarding concessions had to be established. Scholarship and internship programmes were developed to support the development of human capital. SANRAL included BEE progress in the annual report of the Agency. The construction charter stipulated that 80% of the work had to be contracted to small and medium-sized enterprises and 90% to Black-owned enterprises. Asphalt was not a new technology and other new technologies had been used. The Agreement Certificate included the approved products to be used.

Mr Alli said that the Wild Coast toll road was not a new project. It would be incorrect to assume that paying for the use of roads in another province did not benefit all provinces.  Although poverty was rife, the rural population had become poorer in the last ten years. He asked why these citizens should not look forward to a decent job and participate in economic growth. The debate was wider than the isolated issues referred to during the discussion.

Mr Alli reported that the Western Cape N1 and N2 projects would go to tender in November 2009. The first toll roads were introduced in KwaZulu Natal and Gauteng and established an inherent trend.  He remarked that the important question of sourcing funding for infrastructure development in view of the huge challenges faced by the country warranted further debate.

The Chairperson requested SANRAL to return with a master plan detailing how the programmes and strategy related to the master plan for the country.  The relationship with other players in the transport industry, inter-governmental framework and the RTMC had to be included.  In addition, plans to reduce congestion, accidents, the number of road users and the overall situation of road traveling in South Africa should be covered. The Committee required the information in order to support SANRAL with carrying out its mandate. The policies agreed at Polokwane formed the basis of the Department’s strategic plan. The work done by SANRAL was appreciated but the Committee was unable to determine its role and the intervention required at the present time.

Briefing by the Cross-Border Road Transport Agency (CBRTA)
Mr Phalafala advised that the structure of the presentation had been changed in recognition of the earlier proceedings and in the interest of time.

Ms Loedolff presented an overview of the functions and key programmes of CBRTA. The Agency was established in terms of the Cross-Border Road Transport Act No.4 of 1998, as amended. The Southern African Customs Union Memorandum of Understanding (SACU MOU) agreement with Botswana, Lesotho, Namibia and Swaziland and the bilateral agreements with Malawi, Mozambique, Zimbabwe and Zambia influenced the regulation of cross-border transport. These agreements regulated the carriage of goods and conveyance of passengers by road within the Southern African Development Community (SADC) states and attempted to achieve equal distribution of traffic and permits between territories and establish an equitable, non-discriminatory infrastructure cost recovery system.

The CEO position was currently vacant. The mandate of CBRTA included the critical functions of regulation (through the management of permits), law enforcement (through the monitoring of carriers), facilitation to ensure that partnerships within South Africa and SADC were maintained and advice to the Minister on cross-border policy. The advisory function commenced operations in 2009 and was therefore new to the strategy document. Other strategic objectives were to achieve full corporate governance and sustain good financial performance, to increase accessibility, to increase capacity of the law enforcement inspectorate through training, strengthen relations with SADC counterparts and to prioritise critical national programmes.

Key programmes included the redesign of permits, re-engineering of the permit regulatory system, development and implementation of standard operating procedures in prosecution and the management, control and operation of the Beit Bridge Traffic Control Centre. The focus was on bilateral and multilateral agreements at SADC and SACU levels, as well as with other SADC countries (Angola, DRC and Tanzania) by 2011, normalisation of cross-border operations between South Africa and Lesotho and participation at Regional Transport Structures (SACU, Trans Kalahari Corridor, Maputo Corridor, SADC). CBRTA advised on management strategy, information systems, route audits and studies. In preparation for 2010, CBRTA aimed to improve cross-border transport, introduce regulated competition in respect of cross-border road transport and reduce operational constraints, maximize business opportunities in the cross-border industry and improve safety, security, reliability, quality and efficiency of services.

Mr Phalafala said a serious challenge for the Agency was monitoring and operations through the subcommittee.  Currently, the subcommittee had only five members and no CEO. In terms of the Act, the Board was supposed to have ten members, appointed by the Minister of Transport. Nomination and appointment of members to the Board usually took three months. This turnaround time was posing a challenge and the assistance of Parliament in reducing this time lag would be welcomed. CBRTA had proceeded with recruitment processes and had a short list to fill the current vacancies. The organisation had initially not been financially sound, which affected recruitment success, but CBRTA was currently on a financially sound footing and was technically solvent. Of the 52 border posts, only 8 were properly manned as a result of insufficient funds. Now that CBRTA was financially sound, the focus would be on recruiting sufficient personnel to man all 52 border posts.

CBRTA did not have sufficient capacity to carry out law enforcement duties.  The questions of CBRTA’s status as a regulatory entity only and the possible outsourcing of the law enforcement function were open for debate with the Minister and the Committee. Provision was made for the law enforcement function, but it continued to be a challenge.

Ms Khunou asked if there had ever been a full complement of ten Board members since the establishment of the CBRTA in 1998.

Mr Phalafala answered that in 2008, there had been eight members but three had since retired.

Ms Khunou asked when CBRTA legislation would be implemented in full.  She believed that some of the concerns mentioned in the presentation would be solved if the legislation was fully implemented.

Mr Stuurman answered that the amendments to the Act and the implementation legislation were enacted in August 2008 and made provision for a window period of six months for the conversion of operator
licences to CBRTA permits and jurisdiction around cross-border transport.  The window period expired on 28 February 2009.

Ms Khunou asked what was being done about the situation at the Ladybrand border post where passengers were dropped by taxis at the border gate and then had to pay another taxi to proceed to their destination. In conjunction with truck driver permits, there should be strict legislation compelling truck drivers to take rest periods.  Truck drivers should not be expected to take stimulants to stay awake, which had precarious side effects.

Mr Stuurman explained that the
licence operating boards had jurisdiction to regulate intra-provincial transport only and the operating licenses issued to transport operators excluded neighbouring countries.  The problem was not unique to Ladybrand, but applied to the other Free State, Limpopo and Mpumalanga border posts as well. The amendments to the Act allowed for more certainty with regard to cross border transport and the new National Land Transport Act distinguished between cross-border and intra-provincial transport.  Since March 2009, CBRTA was in a position to deal with applications received for passenger transport licenses to Lesotho. He pointed out that amendments to the Act had resulted in the amendment of requirements for permits.  The administration of applications required engagement with and approval of applicants by the Regulatory Committee. CBRTA currently issued temporary permits to ensure free flow of traffic across Maseru Bridge and Caledonspoort into Lesotho and to comply with the provisions of the SACO MOU.

Ms Khanou asked what progress had been made with legislation concerning number of passengers permitted to be transported across borders.

Mr Stuurman answered that current legislation was clear on the point that in the normal conduct of an enterprise, a minimum of eight passengers for reward was applicable. In the case of an ad-hoc operation, (for example where a family hired a minibus to transport them from Ladybrand to Maseru) a special permit restricted to a specific event can be issued.  Alternatively, a permit could be issued for a 14 day period.

Ms Khunou asked how applications for emergency permits for people who required immediate access were dealt with.

Mr Stuurman explained that applicants could fax the application to the office and the permit would be couriered to the applicant. Other initiatives to increase accessibility for communities were investment in information technology and extending regulatory functions to regional offices. There were currently six regional offices serving South African border posts.

Mr Phoho asked what the situation was at the border posts which were currently not adequately manned.

The Chairperson asked if it was by default or a strategic decision to man only eight of the 52 border posts.  He requested an explanation of the consequences of this situation.

Mr Stuurman confirmed that there was a fulltime presence at only eight border posts and a rotational presence at 26 border posts. Law enforcement and visibility deterred illegal operations and CBRTA aimed at extending operations by basing law enforcement inspectors at ports of entry to ensure compliance to permit conditions and to other legislation which CBRTA was required to enforce. The lack of presence of CBRTA officials created the environment for illegal operators to increase activity. Joint operations with the South African Police Services (SAPS), provincial and local traffic authorities allowed for optimisation of limited resources.

Mr De Freitas understood that, if only 8 border posts had full time presence, 26 had a part time presence and the remainder was jointly managed, this situation would be ideal ground for illegal operations to flourish. He asked what CBRTA was doing to ensure full time presence at all 52 border posts and how the Agency monitored the fulfillment of its mandate at the remaining 24 border posts. Of particular concern was the expected influx of visitors in 2010. If the CBRTA was unable to overcome the current problems, the Committee would have to meet with the Minister to address the issues.

The Chairperson requested that details of the constraints caused by a lack of available funds and a turnaround strategy were presented to the Committee. It was essential to identify challenging areas such as child and drug trafficking, stolen vehicles, the transport of stolen goods, fraudulent permits and issues around 2010 so that Government could formulate an effective response. CBRTA was a Government entity, established to solve problems. When issues were identified, the Minister could be approached for assistance. For example, the RAF had enormous challenges, but the challenges were explained to the Committee so that solutions could be found. Entities should not suffer because of a lack of capacity. It was the DOT’s responsibility to intervene and provide additional capacity to entities, if only on a consignment basis. It was not the responsibility of only the CBRTA Board. Although the CBRTA had its own budget and mandate, the Committee and Department had to work together to overcome problems on all levels.

Capacity challenges were supposed to be included in the report presented to the Committee. The presentation had focused on the organisation but not on the problems. It was imperative to present the mandate of the institution, the strategy to execute the mandate, the programmes related to the strategy, progress made, the impact, results and challenges of programmes and any subsequent changes made to the strategy or programmes. It was necessary to identify congruence between programme effectiveness and progress in implementation to achieve the strategy plan.

Mr Phalafala noted the points made by the Chairperson and thanked the Members of the Committee for the valuable input. He acknowledged that 2010 posed serious challenges and it was necessary to deliver observable results. He requested an opportunity to return at a later date to address all the questions asked by Members and thanked the Committee for the offered assistance with fast tracking recruitment efforts.

Mr J Mmekoa remarked that public entity oversight would elevate the matter and assist with the Agency’s efforts in achieving its mandate.

Ms T Letsoalo said that the Department had identified in 2008 that CBRTA required assistance from public entity oversight in respect of strategy and performance targets for the financial year and had engaged with CBRTA on the issue. The challenges would not be solved overnight. One of the strategic objectives was to conduct a review of due diligence of CBRTA in November/December 2009 by a panel of experts approved by the Minister. This would allow Departmental intervention to ensure that CBRTA operated effectively.

The Chairperson asked about the composition the CBRTA Board.

Mr Phalafala explained that he was the Chairperson of his own private sector company. He required a strong committee and CEO for a sustainable business period of five years to satisfy the shareholders.

The Chairperson remarked that the private sector typically focused on the entity working as a business without realising the prevailing social conditions in the country. Few Boards had a balance of social and business skills. The role of the Board was to achieve the mandate of the entity. Five Board members were not adequate and without a strong Board, the entity would be weak.

Consideration and adoption of the previous minutes:
The minutes of the meeting held on 2 September 2009 were approved without amendment. Adoption of the minutes was moved by Mr Farrow and seconded by Ms Khunou.

The minutes of the meeting held on 8 September 2009 were approved without amendment.  Adoption of the minutes was moved by Ms Ngwenya-Mabila and seconded by Mr Farrow.

The minutes of the meeting held on1 September 2009 were approved without amendment.  Adoption of the minutes was moved by Ms Ngele and seconded by Ms Khunou.

The minutes of the meeting held on 25 August 2009 were approved without amendment.  Adoption of the minutes was moved by Ms Ngwenya-Mabila and seconded by Mr Farrow.

The meeting was adjourned.

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