Provincial Roads Maintenance Grant Evaluation Report 2012/13: Department Transport & Treasury briefings, in presence of Minister of Transport

NCOP Appropriations

20 August 2013
Chairperson: Mr T Chaane (ANC)
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Meeting Summary

The Minister of Transport was in attendance at the meeting, at which both National Treasury (NT) and the National Department of Transport (DOT) briefed the Committee on the 2012/13 Provincial Roads Maintenance Grant Evaluation Report.

NT explained that the provincial roads maintenance grant (the grant) came into effect in 2011/12, to supplement provincial roads investments and support preventative, routine and emergency maintenance on provincial networks. In the 2012/13 year, 90.6% of the allocated budget was spent, an improvement on the previous year’s spending of 88%. However, North West had consistently underperformed, which was ascribed to its constantly-changing leadership. There were various problems observed in compliance by the provincial departments of roads. The grant required provinces to implement road asset management systems that would ensure that data was kept on road conditions, traffic and climatic conditions. The provinces, however, tended to give limited information on the evaluations and how they had been conducted. There was lack of clarity on the setting up of evaluation teams and the methodology for data collection. Reports did not contain executive summaries, they provided risk, impact and mitigation outlines, instead of a SWOT analysis, and there was insufficient narrative to explain the variances on blacktop patching and maintenance of coal haulage networks. There had not been reporting on certain data analysis, despite the allocation of R488 million to specific projects. The issues that the provinces raised were not the same as those reported as challenges by the national DOT. The recommendations given in the implementation report lacked detail and no specific interventions were supplied. National Treasury further commented that in recent years, various provincial departments had been plagued by poor technical capacity, and in Free State and Mpumalanga there were also problems around poor contract management and supply chain management. National Treasury was now trying to implement the principles of the Infrastructure Development Programmes to the roads sector and was making funding available to upgrade capacity in the provincial departments.

Members asked if the provinces had been made aware of how NT wanted reports to be made, and whether there was a guideline, but noted the response that although the format of the report may be used, the quality of data was often poor. They asked if NT was trying to investigate challenges and problems in the provinces, asked if the outsourcing in Limpopo was acceptable, asked where the data for provincial paved roads was sourced, and why Mpumalanga had spent so little of its target for maintaining the coal haulage network.

The Minister and Department of Transport also gave a report. The Minister highlighted some successes of the grant, which included creation of over 114 000 jobs, uniform planning, and the introduction of a formula that gave more emphasis to maintenance. It was conceded that there were challenges around implementation, evaluation and coordination, and meeting job targets, as well as the need for better financial tracking and resource management. DOT noted that the S’hamba Sonke programme, launched in April 2011, was intended to assist in the development and maintenance of the provincial road networks, and concentrate on providing job opportunities to local people in road maintenance, and the grant was essentially directed through this programme. A budget of R7.9 billion was given in the 2012/13 year. The Department noted that the achievements in this year included standardisation of road asset management systems, the creation of updated road condition data, the focus on maintenance and jobs. It agreed that the challenges included inadequate technical capacity to implement the programme, which led to an increase in backlogs and lack of quality assurance, lack of compliance in reporting that could lead to grants being withheld, delays in procurement that led to under-performance against objectives, and inadequate funding for flood-damage repairs. Some of the objectives of the Department were outlined, and it was noted that it planned to develop small businesses and use labour-absorptive methods to improve outputs and quality. It had prepared a guideline for a road asset management plan to be implemented by road authorities.

Members were critical of the lack of detail and clarity in the DoT presentation, wanted to know how exactly the money was spent to maintain roads, and why incorrect and inconsistent figures were used. One Member commented that he was not in favour of grants being withheld, as this was counter-productive to service delivery, and other Members demanded what exactly the DOT was doing to get transport off the roads and on to rail, particularly for heavy goods. The Chairperson commented that some of the figures were not realistic, and asked that the Department verify and re-submit those slides within seven days.
 

Meeting report

Provincial Roads Maintenance Grant 2012/13: Evaluation Report by National Treasury
Mr Edgar Sishi, Chief Director, National Treasury, briefed the Committee on the evaluation of the Provincial Roads Maintenance Grant 2012/13. This grant came into effect in 2011/12 to supplement provincial roads investments, and to support preventative, routine and emergency maintenance on provincial road networks. In the 2012/13 year, 90.6% of the allocated budget was spent, compared to 88% the previous year (see attached report for total expenditure outcomes). Since the grant was established, North West province had been the most consistent underperformer, while KwaZulu-Natal had shown a strong spending performance. Mr Sishi said the underperformance in North West was as a result of instability in the provincial department, as it had five different heads of department in the last two years. A critical provision stipulated in the grant framework was the implementation of road asset management systems (RAMS) by provinces, which ensured that data was maintained on road conditions, traffic and climatic conditions.

Mr Sishi described how the grants must be evaluated. As required by sections 9 and 11 of the 2012 Division of Revenue Act, which related to schedule 4 grants, the evaluations should focus on the service delivery outcomes that were stipulated in the business plans and conditional grant framework. Evaluations should include data from the quarterly performance report and should be conducted at both provincial and national level. A National Treasury (NT) circular issued on 20 March 2013 laid out evaluation guidelines, which focused on evaluation approach, evaluation reporting and evaluation timelines (see attached report for more details).

The following compliance problems were observed:
- Limited information on provincial evaluations and how these were conducted;
- Lack of clarity on the setting up of evaluation teams and the data collection methodology;
- No executive summary was included
- The evaluation outlined the risk, impact and mitigations, instead of a SWOT analysis;
- There was lack of narrative explaining variances with regard to blacktop patching and maintenance of coal haulage networks;
- There was no data analysis reported on pavement and bridge conditions, on traffic data, as well as rehabilitation and repair of roads and bridges damaged by floods (to which R488 million was allocated)
- Issues raised by provinces did not reflect the challenges the Department had noted in terms of implementing the programme;
- The recommendations in the report were too broad
- No details in terms of challenges and specific interventions were supplied.

Mr Sishi outlined some of the issues affecting expenditure and remedial action. In recent years, the poor technical capacity of certain roads departments for planning and project management, as well as leadership instability, had affected expenditure. In the Eastern Cape, there was inadequate project management and construction supervision. In Limpopo, the technical activities were outsourced to an agency. In Northern Cape, there was inadequate technical capacity. In North West there was both leadership instability and poor technical capacity. Poor contract management and supply chain management in the Free State and Mpumalanga had also affected expenditure. A shortage of bitumen was affecting the country also.

To address these challenges, NT has looked at ways of implementing Infrastructure Development Improvement Programme (IDIP) principles into the road sector. In addition, funds had been made available for the capacity requirements of provincial roads departments.

Discussion
Mr C De Beer (ANC, Northern Cape) referred to the reporting structure used by the provinces, asking whether the provinces were aware of what NT wanted, and whether there were guidelines to which they should adhere.

Mr Sishi replied that there was a template, or guideline, but that the quality of the data provided was poor. Provincial departments did not pay enough attention to the quality of the information, only to merely completing and sending the reports.

Mr B Mashile (ANC, North West) expressed concern about the challenges the provinces were facing, and enquired why there were reports of inadequate supervision, capacity problems and project management failures.

Mr Sishi replied that National Treasury (NT) was trying to diagnose the problems. In the Eastern Cape, for instance, there were qualified people, but the roads remained in a poor state. In some provincial departments there were very few people who had qualified as engineers.

Ms F Memela (ANC, KwaZulu Natal) asked how long the outsourcing in Limpopo had been going on, and why this had not come to light earlier.

Mr Sishi replied that the outsourcing to the roads agency had been established under legislation, and so there was nothing untoward about it from a legal point of view, but there was a process under way questioning the feasibility of the model.

Mr R Lees (DA, KwaZulu Natal) referred to the “Provincial Paved Road Condition” graph and asked where this information came from.

Mr Sishi said NT got the data from South African National Roads Agency Limited (SANRAL).

Mr Lees asked whether the Provincial Roads Maintenance Grant was supposed to be used for upgrading or maintenance.

Mr Sishi replied that the grant should be used for maintenance of existing paved road networks, so that their design life could be extended.

Mr Lees wanted to know why Mpumalanga spent only 6% of its target for the maintenance of its coal haulage network.

Mr Sishi explained that the 6% was a “non-financial delivery number”.

Mr S Montshisi (ANC, Gauteng) referred to the paved road condition graph, and asked why the Free State, a smaller province than Gauteng, was nonetheless comparable with Gauteng on the figures.

Mr Sishi replied that the road network referred to was the provincial road network. The fact that Free State was more rural than Gauteng was of no consequence.

Minister and Department of Transport briefing on grant evaluation
Ms Dipua Peters, Minister of Transport, highlighted the successes of the Provincial Road Maintenance Grant (the PRMG). These included the creation of over 114 000 jobs, uniform planning and the introduction of a PRMG allocation formula which favoured maintenance. Challenges included implementation, evaluation and coordination, the need for clustering provinces, ensuring that job creation targets have been met, financial tracking and ensuring better management of resources, such as obtaining value for money from contractors.

Mr Chris Hlabisa, Deputy Director General, National Department of Transport, briefed the Committee on the Department’s S’hamba Sonke Programme (SSP), which was launched in April 2011 to develop and maintain South Africa’s provincial road network, to improve access to social amenities, and place the rural economy on a labour absorbing growth path. The Provincial Roads Maintenance Grant (PRMG) was designed after consultation with National Treasury (NT), and was implemented through SSP, to address the current road conditions and capacity challenges. The PRMG also served to address job creation and economic transformation, as well as to reform objectives in the road construction and maintenance industry of South Africa. The SSP budget allocation, through the PRMG, for the 2012/13 year amounted to R7 981 845 billion to the nine provinces. The allocation criteria was based on a scientific formula to meet the needs. The formula took into consideration topography, climatic conditions, road network length and traffic volume within the various provinces. The new formula had not been fully implemented for the current financial year, as it reduced the budget allocations for Gauteng and the Eastern Cape by a significant amount compared to the initial allocations. Therefore, a revision on the current allocation was done to cushion the affected provinces.

The key achievements by the Department for the 2012/13 year included uniformity and standardisation of RAMS, updated road condition data (visual condition assessments of road and bridges), and introduction of a PRMG allocation formula to favour maintenance and jobs created since 2011/12 through SSP (see report for figures).

Mr Hlabisa outlined some of the constraints that had impacted on the outcomes, which included:

- Inadequate technical capacity to implement the programme, which led to an increase in backlogs and lack of quality assurance;
- Non-compliance on reporting, which could result in grants being withheld, stopped or redirected in line with conditions set out in the Division of Revenue Act (DoRA)
- Delay in procurement processes, which resulted in an underperformance on outputs
- Adoption of projects already designed for conventional construction, which presented few employment opportunities
- Shortages and high prices of materials resulted in lesser outputs
- Inadequate funding levels for flood-damage projects led to increased backlogs of maintenance and rehabilitation of infrastructure.

The Department’s monitoring and oversight role encompassed the following:
- Implementation of strategic integrated projects;
- Participation in government programmes of action through cluster meetings;
- Oversight of the branch- and roads-based public entities;
- Management and regulation of roads transport and traffic management;
- Infrastructure development and maintenance of the secondary road network through the SSP;
- Creation of jobs through SSP
- Development of engineering standards, guidelines, effective and efficient network planning and management.

The Department also planned to develop small medium and micro enterprises, cooperatives, use labour absorptive methods and the use of contracts at provincial spheres for improved outputs and quality assurance.

Quarterly progress reports were extracted from signed-off infrastructure reporting models, as well as quarterly performance reports, to measure progress against the targets that were defined on the annual business plans. The data was analysed and reports were drawn for stakeholders that included the Department of Transport, National Treasury, National Department of Public Works and provincial Departments of Roads and Transport.

The DOT had developed a guide and format for preparation of a road asset management plan (RAMP) to be used by South African road authorities in preparation for their annual RAMPs. RAMP should set out the road authorities’ planning approach to identification of needs for maintenance and rehabilitation of existing infrastructure, as well as the specific needs for improvements to roads, upgrading and new infrastructure.

Discussion
Mr Mashile asked if the grant was new, or if Mr Hlabisa had not had much experience in reporting on the grant before. If it was a new grant, then he wondered if the Department of Transport had representatives in place to monitor it on the ground, so that the Department would be supplied with correct figures.

The Minister said that Mr Hlabisa had only been involved with the grant for four to five months. She added that capacity in the DOT overall was a concern. This Department had a high vacancy rate.

Mr Mashile said that the withholding of grants for non-compliance was counter-productive, and he was not in favour of this principle.

Mr Lees was shocked to note that the DOT failed to provide figures and detail on how “the money was spent to maintain roads”. The pictures that were tabled in the presentation spoke to new projects having been implemented, but he hoped that the Department was not using money on new projects and failing to maintain matters.

Mr Lees further pointed out that the roads were being “hammered” by trucking, and wanted to know what exactly the DOT was doing to get traffic off the roads and on to rail.

Mr D Joseph (DA, Western Cape) asked why the Department did not investigate rail as an option in the Northern Cape.

Mr D Bloem (COPE, Free State) said the rail system in Kroonstad was not used and could be an alternative to the road used by trucks through the town.

The Minister replied that the Department was in the process of finalising a rail policy. The ideal would be to have an appropriate transport system – whether this be rail or road - wherever there was mining development activity.

Mr Lees said he frequently submitted questions to the Minister in writing and wanted to know why he never received a response,

The Minister said that she did indeed receive the query from Mr Lees, that it had been addressed, and the response was in the mail.

The Chairperson said he had difficulty understanding the figures in Slide 20 of the presentation. The figures were not realistic.

Mr Hlabisa replied that the Department would be working with the provinces to “clean up” the slides.

The Chairperson replied that this still did not address his concerns

The Minister asked that the Department be given time to verify and correct the figures on the slide.

The Chairperson asked that the corrected slide be sent to the Committee Secretary within the next seven days.

The meeting was adjourned.
 

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