Meeting SummaryThe Passenger Rail Agency of South Africa (PRASA) briefed the Committee on its railway recapitalization strategy, and how this would contribute to broad-based black economic empowerment (BBBEE) and local community economic development, with specific focus on skills development and the creation of employment opportunities for women and youths. At the outset, it was noted that a BBBEEE market engagement meeting was set for 22 November, at which PRASA would encourage meaningful participation by BBBBEE companies, enterprise development and training, familiarise the South African market with its project requirements, and to emphasise the broad based nature of the acquisition programme. In line with the Industrial Policy Action Plan, PRASA required increased participation of historically disadvantaged people, and support would be offered for meaningful BBBEE participation in the programme. PRASA was in the process of developing a skills development plan that would form part of the fleet renewal programme. It was also engaging with the Department of Higher Education and Training on skills development for local production in manufacturing. The successful bidder would be required to assist with training of engineers, artisans and technologists, and partnerships with third parties would be encouraged. PRASA gave a breakdown of the likely employment opportunities and economic multipliers. It was agreed that there was a need to include black women in senior management, middle management and junior management. There was also need to have goods and services procured from black people, based on BBBEE procurement recognition levels, including procurement from qualifying small and micro enterprises and cooperatives. A minimum target of 65% local content for manufacturing was set. A Competitive Supplier Development Programme (CSDP) would be applied. PRASA was fully committed to empowerment.
Members were impressed by the presentation, which indicated that PRASA had already put in a lot of work. They asked how the BBBEEE meeting on 22 November had been publicised, noted an invitation from PRASA and a request that they should also spread the word in their constituencies. They asked if PRASA had taken steps to guard against the intended costs of R123.5 billion being cushioned, to ensure that it did not escalate. They enquired if PRASA was looking at use of fiber optics as an alternative to cooper cables. The Committee also highlighted the importance of spreading wealth to poorer provinces like the Eastern Cape. The Chairperson urged that the programme should be translated into a reality, and stressed the need for continuous monitoring by PRASA and regular reporting to the Committee. With some fine-tuning, this model could be use by other industries and perhaps also other countries. There was a need for strategic planning to address imports through the ports, and onward rail transport from there. She urged that all procurement and employment plans should be geared to helping communities to become self-sustainable.
Railway Recapitalisation’s contribution to empowerment and skills development: Passenger Rail Agency of
The Chairperson welcomed the Chairman of the Board of the Passenger Rail Agency of South Africa (PRASA) and noted that the Committee had had positive interaction with the entity, although there was some room for improvement.
Mr Sifiso Buthelezi, Chairman, PRASA Board, thanked the Committee for interacting with the board. He stressed that PRASA was well aware that it was using taxpayers’ money and was fully accountable. He noted that this briefing would address some of the issues on which PRASA had been deliberating.
A forecast of commuter rail volumes and market engagement indicated that there was a need for new passenger fleet, including about 7 224 coaches. PRASA aimed to acquire about 360 coaches per year. A total of R123.5 billion would be used over a 20-year period. Furthermore, 65 000 direct and indirect jobs would be created. Long-term procurement would allow local capability to evolve to above 65% of the value of a coach produced locally. The Industrial Policy Action Plan (IPAP) had called for the implementation of strategies to stimulate local manufacturing and rail engineering, and to increase the local procurement of goods.
PRASA's strategy to encourage local production and local development was to align the procurement initiatives to the government’s primary objective for localisation, to assist in creating industries that could sustain local production, to focus on manufactured and non-manufactured areas such as engineering, technology transfer, design and components manufacturing, and to set high standards for BBBEE participation in the recapitalisation programme. In addition there would be a minimum target of 65% local content for manufacturing. There would also be skills development and transfer for local labour to sustain local production, and a commitment was made to stimulate local and economic development.
A framework for the alignment policy was given. In terms of the Industrial Policy Action Plan (IPAP2) there would be increased participation of historically disadvantaged people, and support would be offered for meaningful BBBEE participation in the programme. There would also be a Competitive Supplier Development Programme (CSDP) which would increase the competitiveness, capacity and capability of the local supply base, as well as a National Industry Participation Programme (NIPP), which would increase local sales, small, medium and micro enterprise (SMME) involvement, and BBBEE promotion, and there would also be research and development and technology transfer.
The 65% local content would be achieved through foreign currency spending on localisation, local job opportunities, skills development, technology transfer and sourcing of locally manufactured components.
A skills development plan was then outlined. PRASA was in the process of developing a skills development plan that would form part of the fleet renewal programme. There would be an engagement with the Department of Higher Education and Training (DHET) regarding skills development for local production in manufacturing. The successful bidders would be required to undertake training of engineers, artisans and technologists. Partnerships with third parties were also being encouraged. A breakdown was given of the employment opportunities and economic multipliers.
He noted that PRASA would strongly emphasise equity participation, although it could not dictate to companies. There was also need for management control by black people. In terms of employment equity there was need to include black women in senior management, middle management and junior management. There was also need to have goods and services procured from black people, based on BBBEE procurement recognition levels, including procurement from qualifying small and micro enterprises.
He concluded that empowerment was a priority of the PRASA Board and the Minister of Transport, and it was felt that there could be no compromise on these critical issues in order to strengthen local manufacturing capacity.
Mr S Farrow (DA) asked how PRASA would ensure that the necessary transfer of technology, skills and training would happen and that technikons would make the necessary skills available locally. He highlighted that there was need for PRASA to ensure a spread of wealth, especially in the
Mr L Suka (ANC) appreciated the presentation, and urged that now PRASA must implement what it had stated. There was a need for the Committee to continue to have dynamic interaction with PRASA, monitor PRASA closely and see PRASA’s quarterly reports. Furthermore, there was a need to tell the nation what the intentions of PRASA were. He asked whether the R123.5 billion could be cushioned, so that PRASA would not be adversely affected if this amount inflated, if the economy went into recession or if any financial global challenges arose. He also wondered if it would be advisable that penalties or a law be enacted which would ensure that PRASA complied with its objectives. He said he would be keen to attend the BBBEE meeting on 22 November.
Mr M De Freitas (DA) asked whether PRASA had done an analysis of the black talent that was in
Mr E Lucas (IFP) said that the presentation highlighted a promising picture for the railway industry. He asked whether PRASA was looking at using fibre-optics as an alternative to copper cables. He believed that the empowerment targets could be achieved. He pointed out that South Africans built Sasol 1 and 2, and those who had done so were probably still available to assist.
Ms D Dlakude (ANC) commended PRASA on its good presentation. She said that the Committee must support PRASA to help it achieve its objectives.
He thanked Members for their comments and said that PRASA could take on board suggestions on how it should set up local facilities in order to benefit the whole country, including poor provinces such as the
Mr Piet Sebola, General Manager, PRASA, added that PRASA had already set some measures in place. The normal inflation rate would, however, apply to the deals.
He noted that an assessment was done in order to determine the skills and capacity that PRASA already had and what it still required. There were some areas in which PRASA had the capacity but there were also areas where it did not. There were a number of engineering companies that could be used and they would be mobilised.
Finally, Mr Montana noted that PRASA would invite Members of the Committee to the BBBEE meeting in November
Mr P Mbhele (COPE) said that he was impressed by the presentation, and it was clear that a good deal of hard work had already been done by PRASA. He asked whether the BBBEE meeting for 22 November had been properly advertised, and how whether people in rural communities had been informed.
Ms N Ngele (ANC) noted that many of her questions had already been addressed, but noted that monitoring would be vital.
The Chairperson said that the model that had been presented to the Committee by PRASA was a good model, but there was need to fine tune it so that it could become a model that could be used in other industries of the country and even perhaps be used by other countries. She highlighted the need for PRASA and the Committee to work closely together. She noted that there was need to strategically plan for the building of plants and rail facilities, especially since a large number of imports arrived by sea, through ports in Cape Town, Richards Bay, East London and Durban.
The Chairperson noted that Government had to reduce poverty and make communities self sufficient and self-reliant. The procurement by PRASA should be driven 90% by socio-economic development factors, and 10% by price. A procurement system that was cost-driven was profit motivated, and would not help the poor. She noted that transport should lie at the heart of social development and economic growth.
The meeting was adjourned.
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