South African Rail Commuter Corporation; Air Transport Navigational Services; Intersite: Annual Reports

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29 May 2002
Chairperson: Mr J Cronin (ANC)
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Meeting Summary

Documents Handed Out:
The following documents are awaited.
Presentation by Air Transport Navigational Services (ATNS)
Presentation by Intersite

The SARCC highlighted some of the problem areas encountered by SARCC in its endeavors to provide and sustain commuter transport from the budget point of view. One such problem was the lack of authority by the Board of Commuter Corporation to borrow funds to sustain its operational requirements.

Intersite dealt with property that is managed on behalf of Transnet and Metrorail. ATNS briefed the Committee on air transport navigational services, including their attempts to provide navigational infrastructure which is safe and cost effective within the SADC region.

Meeting report

Briefing by SARCC
Mr J Van Niekerk: Finance Manager, highlighted some of the problem areas encountered by SARCC in its endeavors to provide and sustain commuter transport from the budget point of view. One such problem was the lack of authority by the Board of Commuter Corporation to borrow funds to sustain its operational requirements. He pointed out that borrowing was still allowed only until 1999, but Parliament enacted legislation which prevented any further borrowings by SARCC. Since then, there has been a capital subsidy injection from government. This is really good from a finance management point of view. It was also mentioned that in terms of the agreement with Transnet a management fee is being paid to SARCC to assist it in meeting its mandate. Notwithstanding this agreement a view has been held within the Treasury that it does not make business sense for one Department to pay another a fee.

Another problem was that the Board of Commuter Corporation cannot utilise the current management fee as it is still awaiting the approval of the Department of Transport. This has been a major obstacle which hamstrung the progress in terms of service delivery at commuter level. Therefore the Board has put forward certain investment scenarios and business impact as proposals to avoid borrowing.

He commented that he was not a keen proponent of fancy finance structures: he would like to see government providing the funding. If service delivery at commuter level was done through borrowing, this could place a burdensome financial risk on the Corporation. He also alluded to the fact that cable theft remains one of the many problems faced by his corporation. In fact, cable theft accounted for a very huge chunk of insurance costs. He cautioned the Members that if additional funding is not secured within a fortnight from now, then the board will have no option but to discontinue some of its programmes. This additional funding is necessary if the project is to be sustained. The board is now busy with the refurbishment of commuter trains (couches) as part of infrastructure development. Therefore an urgent appeal was made to the Committee for its immediate intervention to secure this much needed extra funding.

Mr Slabbert (IFP) asked if vandalism was covered by insurance under operational requirements of the corporation. And was there still e "rolling stock" within our borders.

Mr Van Niekerk replied that rolling stock applies to long distance trains in areas such as Komatipoort where SARCC does not have jurisdiction. In short, it does not apply to commuter trains. On insurance, he outlined that the underwriters have increased their package, but there is insurance cover on operational budget to cover vandalism especially cable theft.

Mr Farrow (DP) asked if there is no viable business plan in place on cutting back costs.

Mr Van Niekerk replied that there are three ways of doing that. Firstly, by making efficient use of stock, secondly, further cash injections and rationalisation of services.

Mr Cronin asked if there has been any structured cutbacks on commuter trains. He replied that there has been no formal cutbacks on these trains except in Cape Town and Gauteng where services were cut mainly during the night.

Ms Coetzee-Kasper (ANC) asked whether "Letsema", meaning voluntarism, is being applied in Metrorail and if it is, how it is applied.

Mr Van Niekerk replied that they are not a private sector organisation and will be guided by government in the application of such a programme.

A Member referred to the recent incident in which a commuter was thrown out of a moving train, sustaining serious injuries. Is Metrorail going to incur liability and what are its implications for commuter safety?

Mr Van Niekerk responded that there is great concern over commuter safety and informed the Committee that the matter in now in the courts. As this matter is still subiudice, he was not in a position to comment further. However if such commuter can prove negligence on the part of Metrorail, then compensation will be paid without the need for litigation.

A Member asked what the costs are for IT in terms of the operational requirements of SARCC.

Mr Van Niekerk replied that hardware accounts for the major cost of infrastructure development rather than software. In conclusion, he pointed out that after investigation on cable theft, it was found that no company in SA has the machinery to recycle stolen copper and aluminum cables. Cable theft was the work of much bigger syndicate operating in and outside South Africa.

Presentation by Intersite and Air Transport Navigational Services
The presentations are awaited. Due to time constraints there was no discussion on the presentations.

The meeting was adjourned.


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