PRASA Board and Metrorail service delivery challenges

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08 March 2017
Chairperson: Ms D Magadzi (ANC)
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Meeting Summary

The meeting was scheduled to discuss the Status of Metrorail but Members opted to continue the heated discussion from the previous day on the firing of Acting Group Chief Executive Officer, Mr Collins Letsoalo, by the PRASA Board and the performance of the Board. Members requested written responses from the PRASA Board to their questions. They noted that the Board had not responded in writing to their questions the previous year. They again wanted to see the secondment agreement as stipulated in the Regulations of the Public Service Act which should set out the terms and conditions of Mr Letsoalo's secondment. They asked if Mr Letsoalo was not given a legitimate expectation of and was he not supposed to get the salary applicable to GCEO which was the same package that the former GCEO, Mr Lucky Montana, had earned.

Members raised concerns about the Minister’s inability to attend the committee meeting as she was the right person to answer most of their questions. They expressed disappointment that she did not attend the important meeting the day before due to her being ill but after the meeting had ended they were surprised to see her in the National Assembly.

Members said that the attitude of the Board was frustrating and they saw very little development in rail and major amounts of the budget had been wasted. They asked if the Board had paid back the supplementary board fees as per agreement with the Minister. They requested that an ad-hoc parliamentary committee be constituted to look into PRASA.

The question of whether Werksmans Attorneys had been paid was also raised. They asked how Werksmans Attorneys got the tender to work with PRASA.

The PRASA Board responded that a written response would be furnished within five working days. They disputed the claim that board members had been embezzling millions. Board members had been paid ethically and at some point they were actually not paid for the work done. The Board suggested that Werksmans Attorneys appear before the Committee to provide a detailed report on its work. The Board accepted that they were going to use the state entities to carry out investigations and that up to 60 cases had been taken away from Werksmans Attorneys and given to the legal department within the DOT. Mr Letsoalo’s salary package could not be the same as Mr Lucky Montana as that amount had been fraudulently obtained.

The former Acting GCEO said that he knew of the Board scheme to oust him. He was warned that this scheme would start with the media publishing his salary increment which would then lead to an outcry. He pointed out that some board members had not paid back a cent of the supplementary board fees they had to pay back. On 6 February 2017, he sent those board members a letter requesting them to pay back the money, failing which he would institute legal action against them. The Board did not want him from day one.

PRASA then gave a briefing on Metrorail challenges, which presented the operations problem statement, its current performance, the key interventions in its operations/engineering turnaround and rolling stock/infrastructure capacity constraints. The turnaround strategy – aimed at stabilising the organisation and addressing its poor offering and financial distress – was discussed in detail. They recognised customer dissatisfaction led to vandalism as a way of expressing dissatisfaction. They however noted that cable theft occurred due to criminal activities as some criminals made theft of cables their business.

Members said that last time they met with the Board, there were challenges about the centralisation of decision making and the Regional Directors having no powers because the system was centralised. They noted that the issues raised in the turnaround strategy were the same issues raised previously. Members asked if the presentation suggested that the current board was underperforming compared to the previous boards. An example was the operational timetable capacity was at 88% but had dropped to 78%.

PRASA accepted that centralisation was not working. They gave a confirmation regarding rolling stock and stated that they had already received sixteen new trains and that the new signalling system was 87% complete.

The meeting ended by taking a whole new turn of events when the Minister through her representative, the DOT Acting Director General, sent a letter that dissolved the PRASA Board with immediate effect.

Meeting report

The Committee went straight into a discussion continued from the previous day.

Mr G Radebe (ANC) commented that if the Board wanted to give a written response from the previous August 2016 briefing, they would have done so. The Board had in the previous year’s briefing to the Committee, promised to give a written response but did not do so. The attitude of the Board showed a degree of reluctance to answer questions. If that was the case, then they would be in breach of parliamentary rules that the Committee had to take into account. He did not want a situation where the Committee was ‘put in a box of accusations’.

Mr M De Freitas (DA) said that he understood that there was a reluctance to answer questions by the PRASA Board. The Board had a recalcitrant attitude and that was the reason PRASA was the way it was. They received many complaints from members of the public about people who lost their jobs because the trains had not arrived on time or there had been a criminal case and that he had heard nothing about it from the Board. All he heard was about people that were trying to fatten their pockets. He agreed with Mr Radebe's statement that they were reluctant to answer questions and that it was serious and that someone needed to be subpoenaed. He appealed to the Board to respond to the questions raised. He had written to the Minister asking questions about PRASA and every time he got ‘’nonsense’’ answers and he had to rephrase the questions to try and ‘’zoom out’’ the answers. He believed that the Board had a problem and had to be accountable to the Committee and urged them to answer the questions to see if they were on top of the game.

Mr C Hunsinger (DA) stated that he also understood the reluctance to answer. There were several contradictions in the short responses given in the previous meeting. The DOT said there was a secondment agreement but the PRASA Board said there was no such agreement. In terms of the conditions of the agreement, there were a lot of contradictions by the Board about Mr Letsoalo’s salary. There had been an error in procedure, the structure of the agreement as well as testimonial error. He proposed that an ad-hoc committee be appointed in Parliament which would launch a full investigation.

Mr Matabatha Mokonyama, DOT Acting Director General, stated that he was also not informed about the termination of Mr Letsoalo’s contract but had read it in the media and was only informed much later in the week.

Mr Tefetso Phitsane, PRASA Board member, stated that it was not the Board’s intention to tell the Committee on how to perform, but if that was the case, he rendered an apology. He explained that when a decision is taken by the Board, the Board chairperson was responsible for communicating the decision to other stakeholders; therefore, he did not want gaps in terms of communication. He said he had not been communicating with the shareholder (The Minister). It would be proper for all the stakeholders to be present here so that they could deal with all the concerns. He could only deal with questions that related to him. The reception from the Minister was not good and it was not conducive for them to respond objectively to that. The Board would, however, meet to deal with the questions and could give responses.

The Chairperson remarked that they would be glad to receive written responses on the questions raised that the Board could not immediately answer.

Mr M Sibande (ANC) said that he was a bit perturbed. He referred to Mr Mokonyama's apology and stated that once a person apologises and uses the word but, it becomes conditional. Procedurally, he was aware that at times you might not have responses but that conditions must not be put to the Committee. He asked the PRASA Board how many times they were requested to appear before the Committee and that the blame could not be put on the Committee. The Committee was simply following procedure.

Mr De Freitas said that the attitude of the Board was frustrating. From his perspective, he saw very little development in rail and there had been major amounts of the budget wasted. He raised a concern that an announcement had been made in the previous day’s meeting that the Minister was ill and could not attend the Committee and yet she was seen in the National Assembly yesterday. The Committee was being lied to by the Minister and she should explain why she did not attend the previous and current Committee meeting.

Mr Hunsinger referred to previous minutes dated 28 March 2015 which stated that ‘the then chairman of that Board was informed of the group chief executive officer (GCEO) not wanting to continue office. The then chairman of PRASA Board stated that he was informed as such by the Minister and he got legal advice. He then quoted from minutes dated 15 July 2015 were it was noted that it was not necessary for the GCEO of PRASA not to serve the remainder of his notice period and be paid out in lieu of his notice. The GCEO would be paid his remuneration up to the 1 December 2015 and such payment would be made within seven days. A letter should be sent to the Minister informing her of the decision and the resolution’. It was quite clear in terms of normal administrative procedure the Board knew what to do and that when Mr Letsoalo was sending emails enquiring about his salary, the Board should have known what to do and approached the Minister. He then referred to minutes dated 28 August 2015 which stated that it approved the terms and reference agreed on by the Auditor-General on the remuneration of the Board. He ended by asking why the Board address the matter if it concerns their pocket yet if it is someone else, they have difficulty explaining procedure.

The Chairperson reminded Members about the time and appealed that the Committee focus on the agenda of the day which was Metrorail.

Mr De Freitas said he was keen to hear the Board responses and they should respond truthfully.

Mr L Ramatlakane (ANC) asked if the Board had paid back the money since the 14-day deadline had passed as per agreement with the Minister. He then quoted a letter sent to the company secretary seeking advice on whether HR was right or wrong. He said he had a problem about why the PRASA company secretary did not respond on an issue that was directed to him by the company. He questioned the gap in communication and ended by saying that their actions become suspicious.

Mr Radebe emphasised that the Board pays back the money. He noted that other board members were paying bit by bit and Mr Phitsane was an example. He raised concern why other board members were not present. He needed clarity from Ms Zodwa Manase, Board member and Asset and Resource Management board committee chair, on the supply chain and stated that she was detecting their terms. He wanted her to be answerable. He also requested the formation of an Ad-hoc Committee to deal with PRASA as there were bigger issues of corruption. Some board members had stopped attending parliamentary committee meetings as they knew that their terms were coming to an end in July 2017. He called for a proper investigation to be carried out on the culprits and that they be banned from public service.

Mr Sibande asked if Werksmans Attorneys was paid or not, and if it was, what was it paid for. He questioned whether the recommendations in the Public Protector and Auditor-General reports were implemented, and if not, why because the term of the Board was almost ending. He wanted the Board to clarify whether Mr Letsoalo was appointed because he had been seconded as there had been issues as to if he was appointed. He quoted section 38(g) of the Public Finance Management Act (PFMA) which states the Responsibilities of an accounting officer, “on discovery of any unauthorised, irregular or fruitless and wasteful expenditure, must immediately report, in writing, particulars of the expenditure to the relevant treasury and in the case of irregular expenditure involving the procurement of goods or services, to the relevant tender Board”. He asked what had been done as this had been signalled in the Public Protector and AG reports. He lastly wanted to get clarity on Board meetings. He asked how many meetings the Board had thus far per year.

Mr M Maswanganyi (ANC) asked if the secondment of Mr Letsoalo was irregular as it did not adhere to the Public Service Act Regulations as regulation 62 provides as follows:
“A Secondment in terms of section 15(2) or (3) of the Act may only take place if – (b) the period of secondment does not exceed 12 months unless due to operational reasons determined otherwise by the Minister and; (c) an agreement has been concluded between the receiving and the sending department, organ of state, other government or any other body agree otherwise.”

There was no such agreement and the Act required a contract to be signed but what was present was only the appointment letter signed between Molefe and Letsoalo on 7 July 2016. He quoted from the appointment letter: “During your term of office, PRASA will pay your salary at the annual rate applicable to this position and in accordance with the applicable remuneration policy, payable at such at the company’s normal pay roll being the 27th day of every month. You will be eligible to receive all the benefits applicable to this position and to the PRASA senior officers. The details related to your compensation and benefits will be discussed and shared with you by the group executive responsible for human capital portfolio”. He asked if Mr Letsoalo was not given a legitimate expectation and was not supposed to get the salary applicable to GCEO which was the same package that Mr Lucky Montana earned. He asked what was said by Mr Popo Molefe at the August 2016 committee meeting where he said the ANC had benefited illegally from the locomotive deal. He questioned the tender procedure of how Werksmans Attorneys was appointed and why the Board was refusing to let go of the services of Werksmans Attorneys.

The Chairperson requested the new company secretary respond to the questions in five working days.

Mr William Steenkamp, PRASA Board member, assured the Committee that in five days the answers to the questions will be furnished. He said he and Mr Phitsane where not trying to undermine the Committee. It was quite difficult for him to answer questions because what was on the ground was contradicting their mission statement as they appeared in a negative space. There was no agreement between PRASA and the Department of Transport regarding the secondment of Mr Letsoalo as GCEO. There was no contract; hence a range of errors in the procedure would follow, including the package. He said the Acting GCEO was brought into PRASA by the Minister hence making it difficult for him to be accountable to the Board. This was as a result of the letter given to him by the Minister, he carried himself as if he were the administrator of PRASA .This facilitated a difficult relationship between the Board and the Acting GCEO. Mr Steenkamp requested that the Minister be questioned on the authority she gave the Acting GCEO as it was not possible to govern a GCEO who acted as if the Board accounted to him. They were asked by the Minister to restart the hiring process of the GCEO which he said demobilised the Board. The matter of hiring the GCEO does not lie with the Board; they did their part. He said the appointment of the GCEO is done at cabinet level as cabinet appoints the Board. They later discovered there has been an agreement between the Department of Transport and Mr Letsoalo but there had never been an agreement between the DOT and PRASA.

On 26 September 2016 they had an AGM meeting to discuss the position requirements and role of the GCEO. They did not treat the issue of Mr Letsoalo differently from the previous GCEO. They had the same meeting with the Minister though it did not bear fruit. An ad-hoc meeting had been scheduled to discuss the rates for board committees, board fees and retainer paid as it does not outline fees for engagement or any other committees. They had to seek authorisation from the Minister regarding the payment of ad-hoc committee fees. On the question of whether the Board had paid back the supplementary board fees, he said the Board chairman has taken a different approach to deal with this. The Auditor-General found out that the remuneration of the PRASA Board had not been signed off by the Minister but it was signed off by the Remco [remuneration committee]. PRASA had been operating on a Remco policy so that explains the remuneration, however the Board had agreed to let go of the eight months’ supplementary or additional meetings attended and the Board was going to be paid only for the one financial year. He disputed the claim that board members had been embezzling millions and that they were being paid for smses. PRASA board members had been getting paid ethically and at some point they were actually not paid for work done. They had been paid according to the PRASA policy and he disputed the Minister and the claimed AG request that they should pay back the money. This was incorrect as they had engaged with the AG and were waiting for the response from the Minister on the issue. He said it would only be fair for Ms Manase to come and answer for herself. He said the allegation of Board members being corrupt was addressed in the previous day’s meeting. On Werksmans, he said yes they had been paid but he said that is a very broad question. On the recommendations of the Public Protector, he said the investigation taking place was as a result of their legal obligations. Their ad-hoc committee was having a meeting the following week to investigate any money and was waiting feedback from Treasury.

Mr Sibande enquired what exactly Werksmans Attorneys was doing.

The Chairperson reminded members that in the August 2016 meeting when Mr Phitsane was still there they had agreed that they were in support of the Public Protector recommendations. She remarked that that there are state institutions capable of conducting investigative work such as the Police, Treasury, and Auditor-General and they were capable of assisting PRASA. She said that in last year’s Committee meeting, they had agreed that they will assist.

Mr De Freitas asked what Werksmans Attorneys had produced and it should be broken down on a month to month or week to week basis as he needed to know that the R100 million was spent well.

Mr Steenkamp said he was dealing with the contract. He suggested that Werksmans Attorneys appear before the Committee as they would provide a detailed report. He accepted that they were going to use the state entities to carry out the investigation. He said some of the cases had been taken away from Werksmans Attorneys and 60 of the cases had been taken to the Board for investigation and the legal department of PRASA is handling these issues. He noted that Mr Phitsane does not run the Board individually like a ‘puppet’. They were all individuals on the Board and that it was not being controlled by one person. When they receive an invitation from the Portfolio Committee, they use their discretion to decide who of the board members will attend and it was not a matter of disrespect from the Board that some were not present.

Mr Phitsane said that the Minister came to the PRASA Board and informed them that Mr Letsoalo would be seconded. He said they were left with the same questions that everyone else was asking. What were the conditions of service, salary and the terms? They failed to have a meeting with Minister and prior to that HR had asked what the position was in regards to the GCEO salary. Mr Phitsane read out an email sent to Bhekani Khumalo but copied to him:

Dear Bhekani

My instructions to you are clear and lawful. You are once more being brought to adhere to instructions. Failure to so will be viewed in serious light as it will be regarded as insubordination. I am not aware that you report to the Board. Kindly give me such instruction and from whom this instruction comes. I have noted with great concern, you continuously conduct to ignore my instructions and second guess my instructions. I repeat that if the Board of Directors has an issue, they can address this with me. Yours is to give what the GCEO benefits are, the salaries, the allowances, all other benefits entitled to the post. Lastly, if you take this approach you are taking, then you have to stop all the benefits of almost all senior management in PRASA as I’m sure there are allegations of irregularities on how they got those packages and whether they are entitled to them, let alone employed. Kindly refrain from insubordination, do adhere to lawful instructions in all time periods


Collins Letsoalo.

Mr Phitsane indicated that Mr Lucky Montana’s salary was fraudulent and inappropriate and this was confirmed in the Public Protector report. The salary was to be determined by the Board Chairperson and that there was no secondment that is indefinite. The Board was still in control of personnel irrespective of how they were brought in, including a seconded person who will be subject to their policy. He therefore stated that in his opinion, they would determine how much an incumbent was supposed to earn. The salary of the GCEO had to be approved by a resolution of the Board and they could not have a situation where the official negotiates his salary including the inflation. Mr Phitsane had asked the Minister to address the communication and attitude of the Acting GCEO as he had zero interpersonal aptitude with people, which she did not do. A memo written by a PRASA executive to the Department stating: “Please note that as per resolution of the Board, the Board has agreed to remunerate Mr Letsoalo at this rate: R 5 986 000.” Mr Phitsane said that the Board had never made such a resolution, and they never concluded the issue of the salary. He then sought the Minister’s assistance in resolving this issue with the Board.

Mr Phitsane said nobody had the right to dismiss an executive in government without notifying the Board, the way Mr Letsoalo was doing. He said Mr Letsoalo went on dismissing people at his own discretion and the issue was the procedure followed during these dismissals. They requested Mr Letsoalo to inform them when he wanted to take a decision to dismiss. Mr Bhekani Khumalo's acting capacity was terminated by Mr Letsoalo. Mr Phitsane said that in the human capital and remuneration board committee meeting that Mr Letsoalo should have had the courtesy of informing Mr Phitsane of the terminations he had made.

Mr Phitsane addressed Mr Letsoalo's secondment, stating that it was irregular and there had been no terms and conditions set out. Mr Phitsane said he joined the PRASA Board later than the others and by the time of his joining, the Board had been faced with so many issues including the issue of Mr Lucky Montana. In response to the Committee’s question as to what the Board had achieved since its appointment, he said that they would furnish their agenda as well as minutes of board meetings to highlight issues they had dealt with when Mr Letsoalo joined PRASA. He brought in additional staff without the Board’s knowledge and they had only picked this up later. On the Sunday Times article on Mr Letsoalo’s salary, the Board chairperson told him that he had been phoned by a journalist about Mr Letsoalo’s salary and the Board received questions from journalists to which they did not respond. On the question of whether the Board was fit to function, he replied the Board was competent and he had personally received appraisals from the different boards he served; hence he understood corporate governance. On the charge Mr Letsoalo was charged with, he replied that they got a legal opinion that they could not charge a person who was not their employee hence they decided to terminate the secondment. He said Mr Letsoalo had been shown the door within six weeks of being at PRASA due to his attitude, as they could not work with him.

Mr Mokonyama replied to the question on whether Werksmans Attorneys was paid. The last invoice paid to Werksmans Attorneys was paid on 6 February 2017 and it was a November 2016 invoice. He said a meeting was supposed to be held to discuss the payment of Werksmans Attorneys.

Mr Steenkamp added that the invoice was R4.4 million and he was not sure from where the other amount was coming.

In his response, Mr Collins Letsoalo, former Acting GCEO and now back at the DOT as CFO, stated that the company secretary, Mr Zide, was excluded from all the board meetings. He said when he arrived at PRASA on the 30 June 2016, a full day meeting was held by the Board with the Minister discussing why the Board did not want him. On 7 July 2016, another meeting was held and the Minister was not present. On 28 July 2016, a meeting was held to discuss Mr Letsoalo’s progress and the Board told him that they were happy with what he was doing. Two weeks later, the Board said that they did not want him and an insulting email was sent to him. Then Mr Steenkamp the man who had spent more time in PRASA than anywhere else asked people to destabilise PRASA because if not, it would seem as if Mr Letsoalo was doing a good job. He alluded to the fact that Mr Phitsane had discovered the issue about Mr Letsoalo’s salary but had never once asked to hear Mr Letsoalo’s side of the story. He said the Sunday Times article all started when he and Mr Molefe were in London and Mr Molefe told Mr Letsoalo that he heard that Mr Letsoalo had bought a Porsche car and asked for confirmation; to which he agreed he had bought a Porsche car. He said Werksmans Attorneys continued to do criminal investigations and were not empowered to do this in terms of the law. He quoted from a letter stating:

“PRASA has throughout the investigation tendered its full cooperation with DPCI and the AFU to investigate reported matters promptly and effectively with priority given to Swifambo and Siyangena matters and to enable presentation of assets PRASA believes are proceeds of crime. To this, at its own cost, PRASA has made available a highly resourced and experienced investigation team and the services of two private prosecutors (Advocate Lawrence and Advocate Naomi) and has conducted extensive relevant investigation insofar as within its powers……in light of the investigation history to date and the importance of progressing the Swifambo and Siyangena matters to finality, I have called upon the DPCI to do the following: in respect to the Swifambo and Siyangena matters to advise within seven days, to commit every two weeks to report to PRASA and Horwarth Forensics, within one week of the date of this letter, to arrange a meeting with Horwarth Forensics. In respect of Siyangena matters, within one week, appoint Horwarth Forensics to conduct financial analysis. Noting that Horwarth Forensics will conduct preliminary first phase cash flow reports within 21 days. Please be advised that while PRASA remains cooperative to assist the DPCI to conduct its investigation, I have requested PRASA officials to refrain from further meetings with DPCI until I have received a response to this letter……I request your undertaking to do what I called for in clause 26 to 37 on or before 15 February, failing which PRASA reserves the right to approach a competent court for relief.”

Mr Letsoalo said how would you instruct a person not to talk to the hoax; is it not against the administration of justice? Mr Steenkamp forgot what he said as he stated that the decision to remove Mr Lestoalo was taken in November and then further extended it to January. He stated that the decision was a coincidence. Mr Phitsane said Mr Letsoalo was removed and investigation that did not take Mr Letsoalo’s side of the story while Mr Steenkamp gave a contradictory account that the decision to remove Mr Letsoalo was taken in November. Mr Letsoalo then referred to the decision of dismissing Mr Bhekani Khumalo; he said Mr Khumalo had been suspended twice since he joined PRASA. Regarding the people he fired, one of them included a Group CFO who had not been reporting to work. On hiring, Mr Phitsane requested all the CVs but at the same time recommended himself. On his being disrespectful, he was told that he “smokes” and he was the one being disrespected.

Mr Letsoalo said that he knew of the scheme to oust him. He was warned that this scheme would start with the media publishing his salary increment which would then lead to an outcry, thereby triggering an investigation. He then said that some board members were supposed to pay back the money they had unduly obtained. Mr Phitsane and Mr Steenkamp had not paid back a cent. Mr Molefe was the only one who had paid and Mr George had made arrangements to pay. They were refusing to pay and had asked for a legal opinion on top of a legal opinion in order not to pay back the money. On 6 February 2017, he sent the board members a letter requesting them to pay back the money, failing which he would institute legal action against them. He gave an example of Mr Molefe who was earning R75 000 per board meeting but he had paid back. He asked what the use of a retainer was if you would be paid per meeting? He told Mr Phitsane that if the retainer was too little for him, then he should not have had accepted the position. The Board approved the turnaround strategy and approved several irregularities. Mr Letsoalo remarked that the Board did not want him from day one. He went to every region to check what was going on and conducted several road shows. He accused the Board of being disingenuous. He requested Bongani Nkomo be brought before the Committee as he was the person that calculated his salary package.

Mr Hunsinger commented that a lot of things had been said and he requested the Werksmans report so that they could get firm details on their appointment and reasons for their contract. He requested the appointment of an ad-hoc parliamentary committee to look into the matter.

Mr Sibande said that there was no difference between the PRASA Board and the SABC Board. There was no mention of the Board paying back the bonuses they had received. He agreed with Mr Hunsinger’s request that an ad-hoc parliamentary committee be formed.

Mr Ramatlakane said that more work had to be done and stated that besides the formation of an ad-hoc parliamentary committee, the Portfolio Committee was empowered to conduct an investigation and suggested that a resolution to this effect be adopted.

Mr Maswanganyi suggested that the Committee deals with the matter of the enquiry at its next meeting.

Metrorail service delivery: briefing by PRASA
Mr Lindikhaya Zide, Acting Group CEO of PRASA, commented that more time would be allocated to the discussion than the presentation. He said he agreed with the issue raised by Mr Radebe including that of corruption. He agreed that the Committee conducts an in depth investigation pertaining to the issues at PRASA. The instability at PRASA had a personal impact on the many employees of PRASA. He accepted that Metrorail had always been an issue for the Minister. There was a lot of dissatisfaction about the service of Metrorail. He agreed with Mr Letsoalo that the work they were currently focusing on was the work began by him. There were gaps in the model of Metrorail service delivery. One of the things at the heart of service was excellence in service delivery. As management, they needed to deal with the operations, competence and capabilities. Metrorail had unreliable service as their trains did not complete the journeys according to schedule because of breakdowns, and customer service – in the way they communicated to customers – was lacking. The security of customers as well as Metrorail assets was of concern. They had to deal with signalling challenges and needed to put in speed restrictions.

• Background (Operations problem statement)
• Unreliable Service
• Maintenance of Rolling Stock and Infrastructure
• Security
• Supervision
• Revenue management
• Customer service

Mr Zide indicated they had not been meeting their targets and that they lacked a reliable service which led to customer dissatisfaction.

• Current performance
This was marked by customer dissatisfaction, decreasing capacity and poor service.
PRASA assets have been under siege since 2013. Over the last four years PRASA has suffered and recorded the following incidents relating to theft and vandalism on rolling stock and infrastructure, train fires – this in turn has led to commuter backlash and service delivery protests:
• 2013: 1621 incidents
• 2014: 2 568 incidents
• 2015: 1 773 incidents
• 2016:  470 incidents (Jan-April)
• Coaches/Trains set on fire: 20 fire incidents between April 2016 and 20 May 2016.

Mr Zide indicated that they experienced vandalism and theft of cables. He remarked that theft of cables was just a business to criminals.

• Key interventions: Operations / Engineering Turnaround Plan
These were aimed at stabilising the organisation and addressing its poor offering and financial distress. Our customers require reliable, safe, clean and dignified transport. The Plan will assist PRASA to achieve the objectives required for service.

PRASA turnaround interventions:
• Operational Turnaround
• Engineering (Technical) Turnaround
• Human Capital Turnaround
• Property portfolio Turnaround
• Systems and processes Turnaround
• Finance and funding Turnaround

Objective of Turnaround Plan
Service restoration/improvement to 2008/09 service levels. Provide predictable service within current capacity constraints over the short term (12 months), as measured by increased ridership, customer satisfaction and efficiency ratios.

Mr Zide said that the Board met on 24 February 2016 and approved the turnaround plan together with the corporate plan. For the operational turnaround, the introduction of a regular/clock-face timetable for peak/off-peak service was imperative. Regarding the Engineering Turnaround plan, they were running on an old fleet that needed to be replaced.

Summary of Operations Turnaround Plan
• Service redesign to ensure demand driven services according to customer travel needs, and ensuring a predictable service with an easy, understandable timetable in the form of regular head ways around the hour (i.e. every 15 minutes in peak, or every 30 minutes in off peak).

• Customer responsiveness through listening to customers, dignified treatment of customers and communicating to customers. Using various communication and digital channels for customers to understand services, buying tickets and be kept informed on the status of services, as well as improving customer experience on board and at stations.

• Improve supervision and control in key areas such as security, train operations and station operations to ensure efficiencies aligned with peak period demands.

• Revenue improvement plan to ensure customers can obtain/pay for tickets and tickets are verified to reduce fare evasion through technology assisted automation. The revenue and cost coverage improvement program includes efficiency initiatives to optimise and reduce costs to impact on the bottom line.

Mr Zide gave an example that Cape Town supposed to have 88 fleets but currently had 75. You could not have a predictable service if you did not have the correct number of fleets. He said a complete new fleet will be available in 2033.

Improving customer experience
- Marked improvement in customer experience as measured against customer satisfaction and driven through the following Action Plans:
• Functional communication platforms such as integrated website, PRASA smartphone apps, social network, public address systems and loudhailers
• Integration of Railcom / Integrated Station Access Management Systems (ISAMS) to provide commuters with real time service level information
• Establishment of Customer Desks at Key Stations
• Integration of Call Centres for Metrorail/ Mainline Passenger Services (MLPS) and Autopax
• Driving the total station management programme that ensures accountability at a frontline level for service performance.

- Improve rail system performance
Reverse the current operational performance and improve service offering to the users of the rail system.
• Marked improvement in operational performance levels to restore to the 2008/09 levels through:
• Service predictability by introducing a regular/clock-face timetable for peak/off-peak service, introducing inner / outer services

- Marked improvement in financial performance and sustainability through:
• Fare revenue collection by monitoring revenue budgets for high level corridor / stations, and reviewing the ticketing / tariff regime
• Fare evasion is being addressed by increasing the closure of the rail system through walling and fencing of stations and corridors, automation of ticketing and verification.

- Marked improvement in passenger safety through:
• Reduction in crime related incidents involving passengers
• Reduction in the number of passenger injuries and fatalities through improved service availability, reliability and predictability that addresses overcrowding on trains as well as order at stations.

• Rolling Stock/Infrastructure focus – capacity constraints
Mr Zide indicated that they did not have condition-based maintenance. They had an old signalling system that affected them particularly in bad weather but they currently had a programme in place to replace the old signalling system.

Mr Phitsane said that PRASA lacked consequence management for it to be managed and properly dealt with.

Mr Ramatlakane said that he thought that the Regional Directors present in the meeting would have talked to the regional challenges that they experience. He lives in the Western Cape and knows the challenges of Metrorail. Last time he met with the Board, there were challenges about decision making and its centralisation. The Regional Directors had no powers because the system was centralised. He asked what the purpose of the Regional Directors was if they had no powers. What was happening with that? He asked when the problem about train sets in Pretoria and Cape Town would be fixed as this resulted in community revolt.

Mr De Freitas asked about the rolling stock available and if they could provide that information by province. What was the number of units that comprised one train set? He asked when the whole plan would be ready to be presented to the Minister. He requested a time line. The presentation was hopeful and good.

Mr Sibande said that the issues raised in the turnaround strategy were the same issues raised last year and the previous year. He asked what the status quo was on the concerns raised last year. Old rolling stock was previously raised and that currently they were supposed to say how many they had revamped. The signals were very old and trains were still late because of the signals. He asked if they risk management. Some of the infrastructure was very old, and he expected a follow up on the old infrastructure. Next, he asked about the relationship between Metrorail and Transnet, how often they interact. He asked about Gautrain which took some of the lines and is expensive as some people still depended on the old Metrorail system.

Mr Maswanganyi asked if the presentation suggested that the current board was underperforming compared to the previous boards and there was only three months left of its term. Over the years, the operational timetable capacity was 88% but had dropped to 78%, showing a decline. Between 2008 and 2009, the situation was much better than what it was currently. The questions being asked were the same questions asked the previous board and their performance had gone down, why was that the case? Budget for developmental structure had been allocated and was the fastest growing, but performance was declining. He asked how much they had spent so far from their budget allocation as the end of the financial year was the following month.

Mr Sibande asked for an update on the progress in litigation by Werksmans Attorneys. He asked for an update on the wage negotiations. What would be Plan B if there were to be disruptions by the union or a strike? He asked what plans there were to increase the patron fares.

Mr Radebe remarked that last year they spoke to PRASA about fixing the signalling system as most accidents were caused by this. He asked about the turnaround strategy as they wanted to outsource it. He asked for clarity as to whether they would outsource or do it internally as they were capable of doing it internally. He commented that vandalism mostly happens because there was no fencing around the rails and he asked about the progress in fencing.

Mr De Freitas asked how they dealt with the staff employed by the previous Group CEO as most of them were ill qualified for the job as they were appointed according to wrongful procedures. Staff that were qualified and fit for the job was needed.

The Chairperson said that she had received a lot of complaints from customers about the lack of service and late trains and lack of communication. The train stations were dirty, toilets were not clean and customers asked about their safety. The Committee had conducted a site visit at Salt River Station where they found massive vandalism. She asked how far they had gone with maintenance throughout the country. On human capital development, she asked if there were sufficient engineers who could work on maintenance and the modernisation plan.

Mr Zide replied by addressing the issue of modernisation, stating that there were areas that required expertise and specific skills. The turnaround strategy would be specific in terms of what they required from that expertise. In response to Mr Ramatlakane who raised the issue of centralisation, he accepted that it was not working. The status quo on trains was that it was ongoing. They would respond in writing about the litigation within five working days.

Mr Piet Sebola, PRASA Group Executive: Strategic Asset Development, said that they were on target concerning modernisation. On rolling stock, he confirmed that they had already received sixteen new trains and of those sixteen, they had accepted nine trains. They were due to accept three more trains. The accepted trains were already running in Pretoria. The training centre for the training of the engineers and artisans was 90% complete. He reported that the new signalling system was 87% complete. The Swifambo contract was underway which would allow PRASA to get 16 more trains. 27 stations had been identified under the station modernisation programme. Park Station had been modernised.

Mr Cromet Molepo, Acting CEO: PRASA Rail, spoke about the delegation of authority. He said that they needed to ensure that the particular delegation was in line with what was needed at that particular level. The reviewing of delegation of authority was underway. On the lack of improvement in infrastructure despite there being lots of money allocated, he said the process from the time of putting in a request to the time of delivery was exceptionally long. He said travel delays were caused as a result of trains sharing platforms and the impact of the delays had consequences on the economy. He said forty stations had been identified for the initiative of providing free Wi-Fi.

At the end of the meeting, Mr Mokonyama read out a letter that had been sent to the Committee from Minister Dipuo Peters in which she dissolved the Board of PRASA. The letter responded to the questions concerning her absence – to which she responded that it was per doctor’s orders.

The meeting was adjourned.

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