The key initiatives of the Railway Safety Regulator (RSR) is to have safer railways, to develop and improve stakeholder management with zero accident occurrences and sustainable institutional growth. The audit findings and progress on the 2015/16 Audit outcomes, names of members the RSR Board, the Board Charter, meetings undertaken and committees on the Board and changes to the 2016/17-2020/21 Strategic Plan were highlighted. Its strategic outcome of Safer Railways had three new objectives, and Improved Stakeholder Service had one new outcome and annual target which was the inclusion of a stakeholder matrix to understand stakeholder satisfaction with RSR activities. Progress on the three targets carried over from 2016/17; strategic risks faced by RSR, such as insufficient cash flows during March and June/July when operator permits were due; current controls and proposals for revenue generation, were highlighted.
The Committee had a robust discussion and RSR was asked to clarify if it had submitted all relevant documents identified in the Auditor General’s 2015/16 audit report; been able to empower people living with disabilities; if the 51% women RSR staff complement could be attributed to RSR’s efforts; the audit outcomes which addressed evaluation criteria; filling of the declaration of interest (SBD4) forms and sub-contracting issues raised in the Auditor General report; if it had risk management structures that verified the relationship between procurement staff and operators; updates on the National Rail Policy and amendments to the National Railway Safety Regulator Act; if awareness programs on safe railways had been put in place; its level of improvement in passenger safety; how RSR aligns its targets for safety performance and how it deals with the safety targets; about the RSR non approval of PRASA train procurement; critical issues important for train procurement but that PRASA does not deem necessary; clarify the conflicts with PRASA, and the extent of PRASA non compliance on improvement directives for platform-train interfaces.
The Committee asked RSR to give percentage updates on supply chain policies that had positively empowered black people; status of signage on public roads near provincial train stations; explain why the RSR board has 85% male members and how board members were remunerated as RSR had had numerous meetings in 2016 and 2017; clarify if these board meetings were approved by the Minister of Transport; give updates on safer railway objectives and state percentages achieved during the financial year; updates on structures in provincial train stations; updates on the progress of stakeholder engagements with non-governmental organisations embarked upon in the last financial year to educate people living around railway lines on safety measures; give percentage of accidents in 2016/17 financial year; give an update on progress so far because RSR was mandated to regulate PRASA; give the minutes of the meeting on the audit report outcomes; explain the intention of the Road Safety Conference; give an insight on the report on passenger safety on trains and its proposed strategies to improve safety on trains and expound on the finances required as supplement from government so that the Committee could assist.
The Committee asked the Department of Transport to state measures put in place to communicate with Department of Performance Monitoring and Evaluation on implementation of the new regulations on security managements on trains; explain strategies employed to make PRASA comply on the ten Improvement Directives Standards suggested by RSR; and give a report on the response of the Minister of Transport to the gender parity of the RSR board.
The Committee advised RSR to get involved earlier in railway improvement in a proactive manner especially in procurement, rather than in a reactive manner, to ensure accountability in terms of stakeholder outcomes and improve performance planning in terms of the Public Finance Management Act (PFMA). The Committee observed that in the past RSR had advised the Committee that the speed of trains had been reduced as a result of the state of rails and signals. The Committee asked RSR to give better insights into these challenges to ensure the Committee would take these challenges into account during oversight visits on service delivery; give the Committee directives on how to engage PRASA and coerce PRASA to perform its duties and deliver its mandate for safe railways for those who use the rail transport service for their livelihoods and economic empowerment.
The Western Cape Member of Executive Council (MEC) on Transport and Public Works, remarked that the purpose of attending the meeting was to protect the interest of the Western Cape in terms of rail safety. He asked RSR to state its strategies for rail safety signals; if any research was ongoing for rail safety signalling such as satellite based controls as done in India as a measure to reduce cancellation of scheduled train services. He proposed the de-regulation of the Rail sector; advised RSR to project future plans to achieve its mandates in the passenger rail sector; observed that it was not in the country’s best interest having two different boards run PRASA and Transnet nor was the emphasis on freight while passenger rail services suffered. He stated that he would engage with the new Minister of Transport and RSR on transportation of commuters.
The briefing by SANRAL included the Auditor-General findings in the 2015/16 audit report; the action plans to overcome these audit findings; updates on the SANRAL board, its meetings, the established committees of the board and the considered increase in board size; statistics on its achievement of its strategic objectives and the challenges SANRAL faced in executing its mandate. The challenges were a further ratings downgrade as a result of poor collection on Gauteng Freeway Improvement Project (GFIP) e-toll; delays in the implementation of critical projects such as N2 Wild Coast Project in Eastern Cape, N3 Van Reenen Development Project, N3 Cedara to Durban Project, GFIP Phase 2 and 3 and N1 and N2 road projects in the Western Cape; inadequate law enforcement on overloading by hauliers and compliance with electronic tolling; driver and pedestrian behaviour which negatively impacted road safety; insufficient high-level planning and co-ordination between inter-modal transport and the three spheres of government and the need for a larger board for effective oversight. SANRAL also identified its budget constraints on roads and concluded that low electronic toll collection had resulted in capital projects depending on toll collection been postponed; negative outlook on credit rating had placed further strains on funding road construction. New funding models were being proposed but would be discussed after their merits have been investigated.
During the discussion, the Committee remarked that the President was interested in fulfilling African Union’s mandate of developing infrastructure in South Africa and asked SANRAL if it could build roads and good road infrastructure to other African countries in the future when the country's cash flow had improved; give updates on the implication of the ratings downgrade on lack of funds for road projects; state the impact of GFIP on SANRAL’s program and state ways in which the Committee could assist SANRAL in building roads that had an economic and social impact for South Africans. The Committee commended SANRAL for building good roads. Members asked SANRAL to explain why some projects were not achieved; the reasons and the progress made since then; if it agreed to a funding model that allowed the Austrian conglomerate Kapsch Trafficom to hold 100% of the shares and how SANRAL would implement skills transfer to benefit citizens; policies in place to ensure that employees declared conflict of interest during procurement; update on status of Moloto Road running through Gauteng; Mpumalanga and Limpopo as communities benefit from road creation through jobs; the number of days for payment on its contracts; where SANRAL’s community development projects are located; the challenges in executing its mandates; the co-ordinating relationship for communities in Integrated Development Plans (IDP); if amounts generated from tolled roads included Public Private Partnerships. Members requested minutes of board meetings; progress report for fixing potholes on N2 road from Cape Town to Durban; strategies to curb traffic jams on N2 from city to the airport in Cape Town as this could affect tourism potential of the city; how many small medium micro enterprises SANRAL had mentored to become big companies; strategies to make small businesses grow to Level 8 to 12; the numbers of bursaries; internships and scholarships for the financial year and how SANRAL encouraged black students to become qualified mainstream engineers; challenges encountered when Western Cape wanted to build roads for buses and wanted to move people from houses on the earmarked road path.
The Committee remarked that SANRAL must comply with Supply Chain Management (SCM) regulations and be responsible for capacitating its SCM and finance staff. Members expressed concern about inadequate law enforcement especially since SANRAL had received favourable court judgements; agreed about the constraint of insufficient high-level planning and co-ordination between inter-modal transport and the three spheres of government as also noted by the Auditor General the previous day; the number of cases that faced disciplinary action; how it intended to build a toll gate for the N2 Wild Coast bridge construction project and if SANRAL had interacted with that community; progress on electronic tolls since the favourable judgement given to SANRAL; if there was a difference in the way provinces were treated on toll fees; observed that Ermelo and Trichardt roads had traffic jams and asked if SANRAL had outsourced road infrastructure there; and the mechanism used to monitor toll gates because people had to wait to pay tolls,
The Committee commended SANRAL for planning road maintenance and making appropriate budget plans on road maintenance; suggested investing the projected funds for road maintenance when the cash flow situation of the country had improved. The Committee stated that it would be visiting some of the road projects during its oversight visits especially the Moloto and Wild Coast Roads projects; expressed excitement that the Moloto Road Corridor, a dream of one past President Thabo Mbeki, was being built as it focused on social and economic development and the possibilities of the development of human capital. The Committee requested a list of critical research and development needed by SANRAL and mandated SANRAL to work with asset development companies to continue to assist in the development of struggling service providers, and provide all documents the Committee had requested.
The Chairperson stated that the presentation of Passenger Rail Agency of South Africa (PRASA) had been postponed to 9 May 2017. He invited the Railway Safety Regulator (RSR) to present its brief on its Annual Performance Plan (APP), Budget and Strategic Plan as it affected railway transportation in the country because the railway sector affected economic trading and social issues.
Railway Safety Regulator 2017/18 Annual Performance Plan briefing
The RSR board chairperson, Dr Zethu Qunta, introduced the members of her team the Chief Executive Officer (CEO) Mr Nkululeko Poya and the Executive Officer Strategy Business Development Ms Renaire Huntley and handed over to CEO to give the briefing.
Mr Nkululeko Poya, RSR CEO, stated that the RSR was committed to the country’s medium and long-term socioeconomic objectives, with specific focus on Outcome 6 of the Medium Term Strategic Framework (MTSF), by ensuring that all industry stakeholders upgrade and expand South Africa’s rail system by complying with safety regulations, standards and improvement directives; by being accountable and ensuring that safety management practices were improved: encouraging investments in safer and user-friendly rail technologies; encouraging safe railway behaviour and improving stakeholder service.
The contributions of RSR to the State of the Nation Address (SoNA) were initiatives on youth development (internships, bursaries in academic institutions, ‘take a girl child to work’ and ‘tracker men in the making’); women empowerment (women constitute 51% of RSR staff and a 6% increase in budget expenditure allocated to women owned companies was achieved in 2016/17) and support for SADC. The contributions to economic transformation included reducing unemployment by offering bursaries on accredited Road Safety Courses for Grade 12 learners to become Safety Inspectors and development of the curriculum for railway engineers in conjunction with University of Pretoria; activation of small businesses through 89% expenditure on Black Economic Empowerment (BEE) firms, 62% total expenditure on Small, Medium and Micro-sized Enterprises (SMMEs) and support of local suppliers by revision of supply chain policies; reducing inequality and poverty and raising the level of investment. The key initiatives of RSR on the MTSF were to have safer railways, lead to sustainable institutional growth and development and improve stakeholder management with zero accident occurrences.
He highlighted the audit findings for 2015/16 and progress in overcoming the findings on human resources, procurement, financial and asset management and stated that all issues had been resolved. As requested by the Committee, he gave the names of members the RSR board, the board charter, meetings undertaken and board committees. He highlighted some changes to the 2016/17-2020/21 Strategic Plan. These included the Strategic Outcome of Safer Railways which focussed on Integration of Engineering, Enforcement and Education initiatives. The top five occurrence categories had three new objectives which are to align the safety objectives of high risk railway operators with that of the RSR, determine the effectiveness of the RSR regulatory instruments and promote safe railway behaviour. The Strategic Targets were refined and the Strategic Outcome of Improved Stakeholder Service had one new outcome and annual targets which was the inclusion of a stakeholder matrix to understand stakeholders’ satisfaction with RSR activities, based on the board’s suggestion.
Progress on the three targets carried over from 2016/17 were Implementation of the Human Factor and Railway Reserve Regulation which were not achieved due to the new requirement for Socio Economic Impact Assessment, both regulations awaited publication and comments from the Monitoring and Evaluation Department. The third target Compliance with Improvement Directives for Platform-Train-Interface (Station Platforms) which was not achieved because PRASA was unable to upgrade its stations to comply with Improvement Directives had five areas of Improvement Directives for Platform-Train-Interface but PRASA had only achieved one out of the ten Improvement Directives Standards to date.
He highlighted the strategic risks faced by RSR and emphasized insufficient cash flows during March and June/July when operator permits were due. Presently RSR was looking into changing the due dates of permit renewal so as to accommodate its operators. Based on insufficient cash flows due to annual operational budgets, he identified current controls as tighter budgetary and expenditure management controls, consultancy reduction program and annual stakeholder/operator engagements. He proposed that RSR could generate revenue through the amendment of the RSR Act to provide for the generation of revenue from new revenue streams, revising the Permit Fee Model to consider future macro-economic trends and investment climates and exploring of new revenue streams. The current controls on the effective implementation of the operational safety mandate of RSR which involved assessments of new state owned technologies and infrastructure projects were engagements with Department of Transport (DoT) for additional funds to supplement government grants. He also proposed a financial oversight of the new state owned rail assets and technologies.
Dr Zethu Qunta emphasized that RSR had been able to employ a radical approach to economic transformation by achieving 89% expenditure on Black Economic Empowerment (BEE) firms and a 62% total expenditure on Small, Medium and Micro-sized Enterprises (SMMEs) in its economic transformation objective of activation of small businesses and cooperatives which supported local suppliers. The procurement committee of the RSR board worked in line with the Public Finance Management Act (PFMA), procurement issues were conveyed to the accounting officer, the board was only involved when procurement was above R2 million, the board ensured a good working relationship and synergy between RSR and its operators to ensure that the RSR mandate would be achieved. The board is also working on generating capacity and ensuring that RSR cash flow challenges are reduced.
Mr M Sibande (ANC) stated that the Committee could not have discussions on RSR cash flow because the RSR did not attach its financial report to the PowerPoint presentation. He asked RSR to clarify if it had submitted all relevant documents identified in the Auditor General 2015/16 audit report. He asked for updates on structures in provincial train stations, and give percentage updates on supply chain policies that have positively empowered black people. He observed that verifying the relationship between procurement staff and operators was challenging and asked RSR if it had a risk management strategy that ensured compliance and who constituted it. He asked for the extent of non compliance on improvement directives for platform-train interface by PRASA.
Mr T Mulaudzi (EFF) asked RSR to clarify if it had been able to empower people living with disabilities and if it had a Memorandum of Understanding with the Department of Small Business Development (DSBD) to measure how DSBD monitors small business development. He asked if the 51% women staff complement of RSR could be attributed to RSR’s efforts. He asked about the audit outcomes on slide eight which addressed evaluation criteria; filling of the declaration of interest SBD4 forms and if sub-contracting issues was part of the Auditor General’s report; to give the status of signage on public roads that were near provincial train stations; to explain why the RSR board has 85% male members, if board members are remunerated as RSR had had numerous meetings in 2016 and 2017 as captured in slide 16, if these board meetings were approved by the Minister of Transport, and to give updates on safer railway objectives and state percentages achieved. He asked RSR to clarify if there were awareness programs on safe railways and give updates on the Railway Safety Amendment Bill and National Rail Policy. He asked the DoT to state measures put in place to communicate with Department of Planning, Monitoring and Evaluation on implementation of its regulations, and explain strategies employed to make PRASA comply with the ten Improvement Directives Standards suggested by RSR.
Mr G Radebe (ANC) asked RSR to give updates on the progress of stakeholder engagements with Non Governmental Organisations embarked upon in the last financial year to educate people living around railway lines on safety measures, to give percentage of accidents that occurred in2016/17 financial year, to give the minutes of the meeting on the outcome of the audit reports and to expound on the issue of finances required as supplement from government so that the Committee could assist. He observed that the non-compliance of PRASA on platform interface at the stations had been a source of concern for the past three years; PRASA had been allocated a budget for the program hence he asked RSR to give an update on the progress of work done so far because RSR was mandated to regulate PRASA. He asked DoT to give a report on the response of the Minister of Transport on the gender parity of the board,
Mr C Hunsinger (DA) agreed that the Committee could not evaluate the financial performance because there was no presentation on finances. He observed that RSR’s report showed that it was organizing a Road Safety Conference and asked RSR to explain the intention of the Conference .He advised RSR to get involved earlier in railway improvement in a proactive manner especially in procurement, rather than in a reactive manner, to ensure accountability in terms of stakeholder MTSF outcome and improve performance planning according to the PFMA. He observed a decline in the quality of service on Shosholoza Meyl train service in terms of customer usage despite incentives and asked RSR to explain. He remarked that RSR had in the past prepared reports on passenger safety on trains. He asked RSR to give an insight on the report on passenger safety on trains because it had the mandate to issue annual safety permits. He requested that the report should state what RSR was doing currently to improve safety and its proposed strategies to improve safety. He asked RSR to state its level of improvement of passenger safety since there had been an increase in passenger related accidents in Western Cape compared with other provinces. He asked if RSR had audited provincial level crossings, increase the numbers of signage and its impact at night.
The Chairperson asked RSR to give insights on strategies that PRASA could use to achieve rail safety performance so that the Committee could recommend these strategies, how RSR aligns its targets for safety performance and to deal with the set safety targets, state the issues behind RSR’s non approval of PRASA’s train procurement and highlight the critical issues that RSR feels are important for train procurement but PRASA does not deem necessary. She observed that the outgoing CEO had advised the Committee that the speed of trains had been reduced as a result of the state of rails and signals. Therefore she asked RSR to give better insights into these challenges to ensure that the Committee would take these challenges into account during oversight visits on service delivery. She asked RSR to give the Committee directives on how to engage PRASA and coerce PRASA to perform its duties and deliver its mandates on safe railways for the citizens of South Africa who use rail transport for livelihoods and economic empowerment.
The Western Cape Member of Executive Council (MEC) for Transport and Public Works, Mr Donald Grant, remarked that the purpose of his attending the meeting was to protect the interest of the Western Cape in terms of rail safety and the de-regulation of the rail sector. He asked RSR to state its strategies on rail safety signals, if any research was ongoing for rail safety signalling such as satellite based controls as done in India as a measure to reduce cancellation of scheduled train services.
Mr Mulaudzi remarked that the Committee should have engaged PRASA and RSR simultaneously.
The Chairperson agreed with Mr Mulaudzi.
Mr Poya, RSR CEO, reported that the conference tagged ‘Railway safety in a digitalized environment’ billed to take place in Durban was important because technology was a game changer for safety. He emphasized that RSR was doing the conference because education was one of the pillars to improve safety, since 85% of accidents was not caused by railway personnel but by people. The trains being launched in Pretoria were better equipped than some airplanes therefore the conference is been organized to educate people and is not a money making venture.
The Chairperson asked the CEO how the Committee could assist the RSR.
Mr Poya replied that the Committee could assist by engaging with the community and all stakeholders to ensure that the purpose of the conference and the importance of safety was understood. Signalling had been a problem with PRASA and RSR has given PRASA an ultimatum to get its signalling right by the end of May and it would issue PRASA a penalty if it failed. PRASA needs to review its procurement process, presently, PRASA and RSR has some conflicts because PRASA believes that RSR is money conscious. Therefore, RSR has invited an independent body from the United Kingdom Office of Rail and Road (ORR) to assess the signalling equipment and safety standards of PRASA. These assessments are based on the ORR relationship with RSR and would not incur any cost.
The Chairperson asked RSR to clarify the conflicts with PRASA.
Mr Poya reported that PRASA feels that RSR is interested in money however the DoT can bear witness that RSR is only interested in addressing the safety of the railways. Additional funding is needed by RSR to fulfil its mandates to train PRASA on safety issues hence the permit fees need to be revisited by the Minister.
Dr Qunta remarked that the Committee should assist RSR by engaging with PRASA to make it known that RSR was only interested in making PRASA put safety priorities in place. For instance RSR detected non-compliance to safety protocols in November 2016 and this led to the delay in extension of PRASA’s permits. She stated that the engagements with PRASA should include ways of changing its attitude because the occurrence of train accidents gave the impression that RSR was not delivering its outputs but train accidents occurred because PRASA did not implement safety guidelines. This made RSR unable to set targets
Mr Poya remarked that the funding framework of Treasury had to move with the times to ensure a reduction of train accidents. RSR has presented a proposal to achieve the Auditor Generals’ smart target of reduction of train accidents for 2017/18. This proposal would also ensure zero train accidence in the future if approved. The mandate of RSR does not give it the power to be involved in PRASA’s procurement at a proactive level however RSR is looking forward to a technical review of the roles and responsibility of the regulator in the railway industry. He made a commitment to present the RSR 2016/17 audit report when the audit was completed. The process of improving stakeholder involvement in the 2017/18 financial year had started through corporate social responsibility programs, a new Swedish signage technology on railway crossings had been piloted in Boshoek (North West Province) and Belfast (Mpumalanga Province). This technology would examine behaviour of drivers at level crossings and the RSR would present progress on this technology in its 2016/17 Annual Report. He confirmed that 51% of employees in RSR are women, apologized for not presenting a slide on financial performance but stated that the financial report had been part of earlier submissions. The RSR was requesting an additional R30 million from the Minister of Transport to assist PRASA on permit fees. Cash flow constituted a risk because RSR’s funding was dependent on operators and puts RSR in conflict with operators. The board has approved allocation of visibility signage in Mpumalanga.
Dr Qunta remarked that RSR had been negatively impacted by the funding model that involved receiving funds from operators through permits as the operators did not want to pay the permit fees. Cash flow constituted a risk because RSR cannot retain funds at the end of the financial year.
Mr Poya reported that as a measure to ensure the security of persons on trains and around trains was improved, the DoT would publish new regulations as recommended by RSR in the next 12 months.
Mr Mawethu Vilana, DoT Acting Deputy Director General: Integrated Transport Planning, reported that the Minister had made recommendations on what would be done about the RSR board’s male dominated appointees but emphasized that four out of the board members were not appointed by the Minister of Transport as there were two from organized labour, one from the South African Police Service and one from Department of Labour hence DoT would liaise with these organizations on the need to consider females instead of males and he noted that the board had two female members. The Railway Safety Amendment Bill, the National Rail Policy and the National Rail legislation are being processed by Cabinet and would be received by the Committee in due course. DoT is working on the security regulations for trains and around trains and the DoT had set up a steering committee on signage that has representatives of the road department examining the effectiveness of signage around train stations.
Mr Grant, Western Cape MEC, remarked that RSR had spoken at length on its challenges concerning PRASA and passenger rail services but had not mentioned Transnet; hence he perceived that the relationship between Transnet and RSR was good. He advised RSR to project future plans to achieve its mandates in the passenger rail sector. He observed that having two different boards to run PRASA and Transnet and putting emphasis on freight while passenger rail services suffered was not in the country’s best interest. He said that he would engage with the new Minister of Transport and RSR on transportation of commuters.
Mr Radebe said that the Western Cape MEC should work within the Constitution during both engagements.
The Chairperson invited Dr Qunta to give further answers.
Dr Qunta reported that where was no written agreement with Department of Small Business Development, clarified that the board did not have a meeting in November but an induction of the newly constituted board was conducted in November, formal meetings only commenced in January after the Strategic Plan was conferred to board members through video conferencing between 17 and 19 January to explain RSR processes, the board plans to have six meetings (four normal and two special meetings to approve recommendations for DoT), remuneration would be based on the stipulated fees and discussions are ongoing to determine the fees and performance standards of the board.
Mr Sibande suggested that in future the financial report should be explained. The Committee would verify that board remuneration would measure up with performance standards to corroborate the board’s achievements. He observed that it was unfair to raise train signalling systems without discussing the way forward. He asked RSR to state the way forward on night rail thefts.
Mr Poya remarked that the financial reports were part of the printed documents that were given to Members and apologized for not having an in-depth discussion on the financial report during his presentation. He emphasized that it was vital for commuter and personal drivers to understand the train signals.
The Chairperson concluded by stating that the Committee would engage PRASA and RSR to finalize the process for better service delivery in the rail transport sector and appreciated the RSR for its presentation and its responses.
South African National Roads Agency Limited (SANRAL) Annual Performance Plan briefing
SANRAL board member and DoT Acting Deputy Director General: Infrastructure, Mr Thabiso Malahleha introduced the new SANRAL CEO, Mr Skhumbuzo Macozoma, Ms Alice Mathew Company Secretary and Ms Inge Mulder Chief Financial Officer.
SANRAL CEO, Mr Skhumbuzo Macozoma, highlighted the contributions of SANRAL to the National Development Plan (NDP), the MTSF and SoNA, He outlined the Auditor-General South Africa (AGSA) recommendations and findings for 2015/16 including the uncertainty of tolling and legal action carried out to address ongoing concern about the Gauteng Freeway Improvement Project (GFIP). However, the test case with Organisation Undoing Tax Abuse (OUTA) was abandoned because the process confused people and citizens of Gauteng were engaged in dialogue because of favourable summary judgements. An additional financial review process has been added to ensure accuracy when material misstatements in cash and cash equivalents were picked up by AGSA. A chartered accountant has been appointed as SANRAL staff. SANRAL concluded a forensic investigation and ongoing disciplinary actions were used to address conflict of interest issues, additional controls such as strengthening Supply Chain Management (SCM) functions were introduced to ensure SCM compliance when bidders did not submit required SCM bid documents or accurate quotations were not obtained and errors in pro-forma documents were addressed when preference points were not calculated based on the Preferential Procurement Policy Framework Act (PPPFA). He discussed the action plan to remedy the 2015/16 audit outcomes which were irregular expenditure on routine maintenance contracts which was not compliant with PPPFA and conflict of interest.
He reported that there had been no recommendations from the Committee on the SANRAL strategic plan and annual performance plan (APP) in its Budget Review and Recommendations Report (BRRR). He gave updates on the board, board meetings, established board committees and stated that the SANRAL board had eight members which was too small to manage SANRAL’s oversight requirements effectively. Therefore, SANRAL was considering an increase in board size and would be discussing this with the Minister of Transport at a later date.
He reported that there were no changes to the 2017/18 Strategic Plan and all program performance indicators for 2017/18 were still the same. However, SANRAL was working on new strategies which could affect the 2018/19 and 2019/20 plans. He gave statistics on the achievement on all its strategic objectives.
The challenges that SANRAL faced in executing its mandate were: The challenges were a further ratings downgrade as a result of poor collection on Gauteng Freeway Improvement Project (GFIP) e-toll; delays in the implementation of critical projects such as N2 Wild Coast Project in Eastern Cape, N3 Van Reenen Development Project, N3 Cedara to Durban Project, GFIP Phase 2 and 3 and N1 and N2 road projects in the Western Cape; inadequate law enforcement on overloading by hauliers and compliance with electronic tolling; driver and pedestrian behaviour which negatively impacted road safety; insufficient high-level planning and co-ordination between inter-modal transport and the three spheres of government and the need for a larger board for effective oversight. Other challenges were budget constraints on roads due to construction price adjustment factors and the price of bitumen, the impact of economic decline which has led to the liquidation of some medium and smaller entities, under spending as a result of project delays on site and delayed expenditure on capital projects as a result of the need for environmental impact assessment approvals, mining permits and the new requirement for an occupational health and safety permit.
In conclusion he stated that low electronic toll collection had resulted in capital projects being postponed and would lead to further road deterioration, the negative outlook on credit rating which resulted in cancellations of bond auctions had placed further strains on funding road construction. Therefore new funding models were been proposed but would be discussed after the merits had been investigated.
The Chairperson observed that the President of South Africa was interested in fulfilling African Union’s mandate of developing infrastructure in South Africa and asked if SANRAL could expand its work to other African countries in the future in terms of building roads and good road infrastructure. He asked for updates on the implication of the ratings downgrade for road projects, to state the impact of GFIP on SANRAL’s program and state ways in which the Committee could assist SANRAL in building roads that had an economic and social impact on the people of South Africa.
Mr Hunsinger commended SANRAL for building good roads and its progress in ensuring that the country had good road infrastructure. He asked SANRAL to explain why some projects were not achieved, and state the progress made since then. He observed that projections had showed that R700 million would be made from electronic tolling fees but the Austrian conglomerate Kapsch Trafficom presently held 100% of the shares with the divestment of the only Black Economic Empowerment (BEE) partner TMT Services and Supplies. Hence he asked the CEO to state if he agreed with this funding model that did not render benefits to citizens and asked how SANRAL would implement skills transfer in a manner that would benefit citizens.
Mr Radebe asked SANRAL to state policies in place to ensure that employees declared conflict of interest, give an update on Moloto Road which runs through the provinces of Gauteng, Mpumalanga and Limpopo as communities benefit from road creation through jobs, state the number of days for payment notices on its contracts, outline where SANRAL’s community development projects are located, state the challenges in executing its mandates, state the co-ordinating relationship for communities with Integrated Development Plan (IDP) and give updates on challenges encountered when Western Cape wanted to build roads for buses and wanted to move people that had houses on the earmarked road path to make way for road construction.
Mr Mulaudzi said amounts generated from tolled roads included Public Private Partnerships. He requested the minutes of board meetings, progress reports for fixing potholes on the N2 road from Cape Town to Durban, state strategies to curb traffic jams on the N2 road from the city to the Cape Town airport as this could affect tourism potential of the city, state how many of the South African small medium micro enterprises SANRAL had mentored to become big companies, its strategies to make small business grow to Level 8 to 12, the numbers of bursaries, internships and scholarships given during the financial year and how SANRAL had encouraged black students to become qualified mainstream engineers.
Mr K Sithole (IFP) queried the point made in slide 16 where SANRAL claimed that the Committee had not made any recommendations on the SANRAL 2015/16 APP. He remarked that SANRAL must comply with SCM regulations and be responsible for capacitating its SCM and finance staff. The SANRAL CEO only spoke about N1 and N2 roads in his presentation (in slide 39). However the Committee had made reference to challenges on the road to the Waterfront and other roads. He expressed concerns about the challenge of inadequate law enforcement especially when SANRAL had received favourable court judgements. He agreed with SANRAL’s constraint of insufficient high-level planning and co-ordination between inter-modal transport and the three sphere of government because the same challenge had been mentioned during the AGSA presentation of 2 May 2017. He asked SANRAL to state the number of cases that needed to face disciplinary action. He was not sure if the N2 Wild Coast bridge construction project had a toll gate hence he asked SANRAL to state how it intended to build a toll gate and asked if SANRAL had started interacting with the community. He asked for the progress on electronic tolls since the favourable judgement given to SANRAL because some organisations were against electronic tolls. He noted his concern with Mpumalanga toll gates as drivers spent about R500 from Mpumalanga to Pretoria on toll fees hence he asked if there was a difference in the way provinces were treated concerning toll fees. He, observed that Ermelo and Trichardt roads had traffic jams and asked if SANRAL had outsourced road infrastructure to Tolcon Group. He asked about the mechanism used to monitor what happened at toll gates because people had to wait to pay tolls.
Mr Macozoma, SANRAL CEO, responded that the downgrade affected SANRAL because it was a state owned agency that operated on Level Three that did not generate cash. This results in the postponing of earmarked projects until there is serious road damage and it owing its service provider. He stated that SANRAL welcomed any support from the Committee. The lack of funds delays projects because from an engineering perspective if a maintenance cycle is missed the costs are higher than the initial costs of the project. The backlog would result in slower projects. Compromised roads affect the Road Accident Fund and people are looking at the long term effect of electronic tolls on other tolls in the country. Some of the issues addressed by the President were what SANRAL proposed to do and SANRAL would engage with the Committee after the board’s approval. He stated that SANRAL appreciated the support given by the Committee politically especially in the community.
Mr Macozoma made commitments to furnish responses in writing on the AG’s audit report, performance target increases and time frames. The BEE transactions of the Austrian conglomerate Kapsch were being controlled by SANRAL; the details of the transactions would be submitted to the Committee. He confirmed that major funds had not been transferred from South Africa to Austria by the firm. The project was operating at a loss as the firm was only getting paid for services rendered and the entire staff complement in the firm were mainly South Africans and only two foreigners. There was good skill transfer to the South Africans working in the firm. The disclosure form was not filled by the officer in this particular case and disciplinary action was carried out on the officer and internal controls were strengthened; SANRAL had made provisions for all employees to be checked on CIPRO, management had also made provisions for staff in SCM and finance department to receive specific training according to job description and SCM staff do not undertake finance duties.
He reported that the SANRAL Head of Communications is presently engaging communities on the benefits of electronic tolls. SANRAL has proof that it adheres to 18 days for turnaround in payments however in some rare cases exceeded payment dates could occur. SANRAL has working relationships with Western Cape government to integrate road infrastructure planning. Presently SANRAL engages with people that have to move to accommodate the construction of roads, the land is valued appropriately and the people are compensated and its land portfolio management programs are used to identify and plan ahead for land that has the potential to become roads. However SANRAL is challenged by people who identify such roads and build houses because they would be compensated. He noted the request for the minutes of board meetings and the request would be conveyed to the board. Road improvements are ongoing on all roads including the N2 and R51. Challenges occur on the sections that belong to the provinces.
Mr Macozoma said the performance targets for number of SMMEs working for SANRAL would be increased from 800 to 1400 over the next three years and the details of this target increase would be presented in the 2017/18 APP Report. SANRAL has set up a database to showcase the quality of SMMEs. Training programs are implemented for approved SMMEs to ensure continued growth and the SMMEs are encouraged to apply for contracts after successful completion of projects. Statistics of success are available and can be presented to the Committee. The statistics on scholarships have been presented in the documents shared and details can be submitted in writing. He apologized that from his presentation it seemed as if the Committee had not given SANRAL any recommendations in its BRRR. He emphasized that SANRAL recognizes the role of the Committee in assisting SANRAL with appropriate recommendations. The correct interpretation was that AGSA had not given any new recommendations outside the recommendations of the Committee.
The N2 and N1 are the roads that SANRAL undertakes much road construction projects but SANRAL does work on the construction of other road projects in the provinces. For instance discussions are ongoing to improve the road network of the A300. SANRAL has discovered that matters of policy are dealt with by National Treasury while transport matters are dealt with by DoT. The N2 Wild Coast project is partly funded by Treasury and the provinces so the decision to toll the N2 Wild Coast project does not rest with SANRAL.
He stated that since he had assumed office as the CEO he had sought to defuse criticism against tolls. For instance, there has been engagements with OUTA, people are given access to information and enquiry channels have been set up, an independent study has been set up to look into the pricing of tolls in Gauteng. The solution to expensive tariffs is to construct roads through private funding. For instance it would have been difficult to construct the N4 road infrastructure without private funding. SANRAL outsources operations. The operator on the S17 road is Tolcon. Performance based contracts are used to monitor the operators at toll collection points and SANRAL would engage Tolcon to explain why call centres are not reachable if the situation persists. He acknowledged the comments of the Committee on the benefits that accrue through construction of roads in provinces such as job creation and training.
Mr Malahleha, SANRAL board member, remarked that hijacking of construction workers at South African borders increased the cost of projects because contractors had to beef up security. He asked the Committee to assist by engaging the communities concerned because the hijackers who threaten SANRAL staff and service providers were known.
The Chairperson commended SANRAL for planning road maintenance and making appropriate budget plans on road maintenance. She stated that one African country invests the budgeted funds that had been projected for road maintenance and ensured that the funds and added profits could be used for road maintenance at the scheduled time. She encouraged SANRAL to employ such strategies in the future when the cash flow situation of the country had improved. The Committee would be visiting some of the road projects during its oversight visits especially the Moloto and Wild Coast roads project. She expressed excitement that the Moloto Road - a dream of one of the past Presidents, Mr Thabo Mbeki, was being built as such road projects focus on social and economic development and the possibilities of the development of human capital. She requested a highlight of critical research and development needed by SANRAL so that the Committee could assist. She mandated SANRAL to work with asset development companies to continue to assist in the development of struggling service providers. She asked that SANRAL provide in writing all information and documents the Committee had requested.
The Chairperson observed that although the Committee had developed a program for the week, several Members had indicated there unavailability on Friday 5 May 2017 and the Committee had scheduled briefings from Road Traffic Management Corporation (RTMC) and Road Traffic Infringement Agency (RTIA).
The Committee discussed whether to go ahead with a five-member committee meeting on 5 May or reschedule the RTMC and RTIA for Tuesday 9 May when it was meeting with the Cross-Border Road Transport Agency (C-BRTA) and Road Accident Fund (RAF) as well as PRASA (who had been postponed from today’s meeting).
The Chairperson asked the Committee to consider having five agencies PRASA, RTMC, RTIA, C-BRTA and RAF on Tuesday 9 May 2017.
Mr Mulaudzi stated that the Committee could meet with the five agencies on 9 May but will have to work late.
The Chairperson asked the Committee Secretary to state the consequences of having of having a five-member meeting.
The Committee Secretary replied that a five-member meeting could be held but decisions would have to be taken later because decisions could only be taken when Members formed a quorum.
Mr Mulaudzi suggested that the Committee could still meet on Friday 5 May 2017 and finish by 12.00pm.
The Chairperson resolved that the Committee would meet on 5 May and requested that Members should read the documents sent by the agencies before the meeting as some questions asked on financial performance had been addressed.
The meeting was adjourned.
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