The Committee met with the RSR and PRASA boards and executives to discuss their annual reports and audited performance. The two entities presented the pre-determined objectives achieved and the reasons for not achieving some targets. They also gave an outline of their financial performance and, where needed, their plans to clear the audit findings.
RSR explained why it had threatened to suspend the safety operating licence of PRASA, saying that it had used prohibitive directives. A contravention notice had prohibited PRASA on a national basis from operating trains within a degraded mode of train operation, and had provided PRASA with an opportunity to provide a written submission within seven days as to why the Regulator should not suspend its safety permit. As a regulator, it had also invoked its powers in terms of Section 26 of the National Railway Safety Regulators Act, after PRASA had failed to comply on either reducing manual train authorisations (MTAs), or counter-signing every train authorisation. Even when it had lowered the bar by asking PRASA to counter-sign MTAs daily -- as opposed to every MTA -- it had still not complied. RSR had expected PRASA to come up with a plan on how to meet the conditions on the MTAs, but instead PRASA had gone to court to obtain an interdict. However, the court order had been given based on PRASA meeting every milestone in eight conditions, and the specific conditions initially laid down by RSR for Gauteng.
The Committee questioned RSR on whether it had exhausted all lines of communication before threatening to suspend the safety operating licence of PRASA. It asked RSR about the appointment of a new CEO; its audit findings; its audit controls; irregular expenditure; the status of investigations led by the Public Prosecutor; the increasing MTAs carried out by PRASA; the plans that PRASA had presented to address safety on rails; the directives issued to PRASA; and the recurring audit findings and regression in its performance. The Committee noted that the brief of RSR indicated that 80% of the reasons for MTAs were due to PRASA management inaction, rather than vandalism and theft of cables, as claimed by PRASA. Members wanted to know what role the Department of Transport (DoT) and its shareholder representative had played during the disagreement between the two entities.
The Committee asked PRASA executives to account for the increasing MTAs that led to train collisions and train incidents, and why they had not implemented the initial interventions of the DoT on the suspension of its operating licence. It asked about the Werksmans contract; improvements at train stations; the viability of Shosholoza Meyl; basic infrastructure maintenance; rail challenges; irregular and wasteful expenditure; the high comprehensive loss of R928 million; customer satisfaction data; safety and security on rails; rail signal equipment; the status of the Autopax bus fleet; its supply chain and procurement systems; and the situation regarding the use of CCTV cameras in the Western Cape.
The Committee encouraged the board of PRASA to apply consequence management because it had to account for derailments, collisions and fatalities on trains. It criticised the PRASA board for not addressing challenges on governance, leadership, supply chain management and modernisation. It asked the board about its plans to address vandalism and theft, and the mechanisms it would implement to achieve its mandate on rail transport.
The Chairperson welcomed Members, the boards of the Passenger Rail Agency of SA (PRASA) and the Railway Safety Regulator (RSR), and the teams from theDepartment of Transport (DOT), RSR and PRASA. She proposed that the engagement start with RSR and invited Members for comments.
Mr M Sibande (ANC) recalled that at the meeting the previous day, the Committee had requested a response from Dr Nkosinaths Sishi, Deputy Director General (DDG): Oversight, DoT, but he had not been available. He therefore asked that Dr Sishi should clarify why he was not available.
The Chairperson mandated Dr Sishi to give a written explanation on his non-availability to respond to critical governance issues at the Cross-Border Road Transport Agency (CBRTA) and the South African Maritime Safety Authority (SAMSA).
Mr L Ramatlakane (ANC) said he wanted to be sure that RSR was available because the time table had changed.
The Chairperson informed PRASA that the timetable had been changed because the Committee wanted RSR to clarify the reasons for the suspension of operation of PRASA’s operating licence.
Suspension of PRASA safety permit: RSR briefing
Dr Nomusa Qunta, Board Chairperson: RSR, said consequent to the recurring train incidents, the RSR board had taken a decision to suspend PRASA’s licence because it felt that PRASA would change. It had taken this decision in the interests of the commuters, and hoped PRASA would take the necessary steps to avoid the manual train authorisations (MTAs) that had led to incessant train incidents. Instead, PRASA had chosen to go to court. RSR had prepared a report on the immediate factors that led to its decision to suspend PRASA’s safety permit and could present the report to the Committee.
The Chairperson accepted that RSR could present the report.
Ms Tshepo Kgare, Acting Chief Executive Officer (CEO): RSR, said the report would give clarity on whether the regulator had given PRASA enough time to make the changes, or whether it should rather have given a prohibitive directive instead of a suspension order. She recalled that in the past, the RSR and the Committee had expressed concerns on the increase in MTAs which had led to many collisions. Section 26 of the National Railway Safety Regulators Act provided the RSR with the option to suspend or revoke a permit if a permit holder failed to comply with any condition associated with the permit. RSR had been being lenient with PRASA, and had expected it to comply instead of approaching the court to have the suspension overturned.
She commented that PRASA continued to use MTAs, which should be an alternative procedure. It had allowed more than 600 000 manual train authorisations between June 2017 and October 2018, and these had led to four collisions. They were at Elandsfontein (1 June 2017), Geldenhuys (9 January 2018), Booysens (4 September 2018) and Van Riebeeck Park (4 October 2018). In all these collisions, the Train Control Officer (TCO) had wrongfully authorised trains while using MTAs.
The Elandsfontein incident had earned PRASA a prohibition directive in Gauteng, but after an appeal PRASA was issued with a contravention notice and had paid a penalty of R5 million to the RSR for violating the prohibition directive.
After the Geldenhuys incident, RSR had re-instated the prohibition directive, but prohibited PRASA on a national basis to operate trains within a degraded mode of train operations. PRASA appealed the decision of the RSR and had submitted another action plan. RSR had conditionally suspended the prohibition directive and directed PRASA to ensure that supervision was put into place at traffic control centres, and that every MTA was countersigned to ensure the correctness of the MTAs issued. RSR did not want to dictate to PRASA and it expected that it would have come up with a practical solution. She indicated that Transnet ensured that its MTAs are countersigned by TCOs.
After the Booysen incident, RSR provided PRASA with an opportunity to provide a written submission within seven days as to why the Regulator should not revoke the PRASA safety permit. To date, PRASA had not responded.
After the Van Riebeeck Park incident, the RSR board decided to suspend PRASA’s permit to operate trains based on its failure to comply with the conditions of its safety permit. It had issued PRASA with a Notice of Intent requesting PRASA to provide compelling reasons why the permit should not be suspended, but PRASA had failed to respond. RSR had issued PRASA with a letter of suspension providing them with a 48-hour grace period. RSR had to issue PRASA with a letter of suspension, because even after lowering the bar by allowing it to countersign MTAs daily because it might not be practical to countersign every MTA, it was still not complying. Instead, PRASA had opted to seek an urgent high court order to set aside the suspension of the safety permit, and a court order was issued on 12 October. The conditions issued earlier by RSR had now become an order of court and at every milestone PRASA had to comply. The terms involved RSR confirming each milestone and the court would compare outside which milestone the court order would be breached.
The MTA trends from January to September 2018 showed that Gauteng had the highest amount, followed by the Western Cape, and the MTAs were increasing steadily by the month. An analysis of the reasons for MTAs indicated there were faulty tracks (31%), faulty signals (23%), cable theft and vandalism (19.5%), and speed restrictions (15%). PRASA itself said on 16 January 2018 that from previous studies it had conducted, it was found that operational incidents were four times more likely to happen under occupation conditions, and 40 times more likely under abnormal conditions. RSR had noticed that PRASA was not controlling its operations during the abnormal MTAs and decided to suspend PRASA’s operating licence.
PRASA was still failing in most of the categories of the safety management system (SMS) as evidenced in their 2018/19 application for a safety permit. An MTA is a generally accepted fall back procedure when the operator puts in place robust procedures, but PRASA had not assured RSR that its fall back procedures could mitigate against train accidents during abnormal times, because it had a lot of vacancies within critical safety grades and supervisory positions, and its leadership did not show commitment to put measures in place.
The Chairperson suggested that RSR should give the Committee the report, because a life lost was one too many..
Mr Ramatlakane asked PRASA to state who the executive was that was in charge of rails, because the report by the RSR showed that the PRASA did not adhere to any of the conditions set to accept the use of MTA in abnormal times.
The Chairperson asked the board chairperson to identify the executive in charge of rail.
Ms Khanyisile Kweyama, Board Chairperson, PRASA, said the acting CEO of Rail was Ms Martha Ngoye. She was not available, but Mr Richard Walker, a member of the executive committee (Exco), was available and could respond.
Mr Sibande said he had not expected such a response, as the Committee had requested that the whole PRASA component be available at the engagement.
Mr Ramatlakane said the acting CEO Rail must be present to respond, as the Committee wanted direct answers, and Mr Walker, a Metrorail Cape Town Exco member, could not answer for the challenges in Gauteng. He said it took two hours to board a flight from Gauteng, and the Committee could deal with other matters before the executives came. He asked for the comment of the acting group CEO.
The Chairperson mandated that PRASA should call all the CEOs, as the executives in charge of correcting things had been negligent. The negligence of PRASA executives had led to incidents and resulted in getting commuters angry, so they must account.
Mr Sibusiso Sithole, Acting Group CEO said that in anticipation of the Committee’s request, PRASA had asked the whole team to come for the engagement. The executive would board a 10.30am flight.
The Chairperson said the whole complement, including PRASA’s legal and operational arms, needed to be around.
Mr C Hunsinger (DA) said it was critical for all the executives responsible to give clarity, as the brief given showed the reason why RSR had suspended the operational licence of PRASA. He suggested that RSR give Members the report to ensure that it engaged with the executive of PRASA.
Mr Sibande asked RSR to clarify the meaning of the acronym TCO.
Mr Ramatlakane asked for clarity on how the two hours wait would affect the engagement, and he asked the DoT to state its role during the disagreement between RSR and PRASA.
Mr Sibande said officials must be held responsible by the rules of the Public Finance Management Act (PFMA) and the King IV Code. He asked the DoT to give clarity because the executives that were not present were taking the Committee for granted. He said the engagement would end up as fruitless expenditure if the executive did not come, because the Committee would ask PRASA to return with its full complement.
The Chairperson said the meeting would continue with RSR giving its annual performance report for 2017/18, but she asked for the DoT acting DG’s opinion. She asked the acting group CEO why he had not reminded Ms Kweyama that all the executive CEO’s had to be present during the meeting.
Mr Chris Hlabisa, Acting DG: DoT, commended the Committee for taking RSR’s report first and said the fault lay with PRASA because when the Committee invited PRASA for an engagement on an annual report, all the executives had to be present. He believed that all the CEOs would be present by 1.30pm. The role of the shareholder representative on the board was to ensure that it intercedes between the Minister and the entity. Dr Sishi had been the shareholder representative at PRASA since three months ago, and Mr Jan de Villiers was the DDG: Rail, but he had sent apologies because his mother was in the hospital. When the DoT was invited it attended the engagement with its full complement. If PRASA did not bring its full complement, then it would be disciplined. In future engagements with an entity, the shareholder representative, its executive and the board should be present.
The Chairperson invited Dr Qunta to brief the Committee on RSR’s annual performance report.
RSR’s 2017/18 annual performance report
Dr Qunta said RSR had applied its mind when it proposed the suspension, but the RSR board had not anticipated that PRASA would go to court. It had expected PRASA to engage with it on the letter of suspension. She agreed with the RSR acting CEO that the regulator could not dictate to the operator, but it expected some sense of responsibility from PRASA. The RSR board was open, but it had come out that PRASA did not want to engage, so the RSR board had made the decision. It was not that RSR had not considered PRASA’s plight.
The Chairperson said part of what the Committee wanted to know was whether PRASA had a plan of action, if it had reduced the MTAs, and if it had a turnaround plan. The Committee would accept a report on the turnaround plan, but it wanted a response to these critical issues.
Ms Kgare said AGSA had given RSR an unqualified opinion, which had been the same in previous years. The number of findings had increased to 16, with four repeat findings and a drop in its performance to 72%. She outlined the achievements on strategic outcomes, its cost containment measures and the areas where it had not achieved. She presented data on its employment equity, women’s empowerment, and its year on year revenue. RSR had received a government grant of R60 million, and the DoT had augmented this with R25 million towards the end of the year. Its technology audit income had dropped in 2017/18 and its revenue had matched the expenditure for the year.
RSR’s high strategic risks were insufficient cash flow, regulatory capture when entities compromised the regulator, loss of critical data, loss of key personnel, rapid technological advancements and labour relations disputes. It had developed a risk plan, a financial recovery plan, implemented cost containment measures and engaged with operators to mitigate the risk to its finances.
Mr Joseph Natate, acting Chief Operating Officer (COO): RSR, analysed railway safety performance. Highlights were the Regulator’s definition of safety, analysis of the risk involved, an assessment of the risk, and operational occurrences and consequences. He outlined the probability of occurrences that could occur in collisions between rolling stock on a running line, derailments on a running line, people struck by trains, and incidents on crossing lines. He said security incidents had increased by 21% from 2016/17 to 2017/18. PRASA had reported more theft of assets, vandalism and malicious damage. The Western Cape had recorded a high proportion of personal safety incidents at stations and on trains. He informed the Committee that public safety risks had increased over the years.
Ms Kgare said RSR was concerned that the safety conditions on rail were not improving so it was important to develop a profile of risks to see the way forward.
Mr Ramatlakane asked the RSR board to state the process it had undertaken to appoint a new CEO. He asked if Dr Qunta was of the opinion that some staff were loyal to the old CEO, and were party to disadvantaging RSR. He asked RSR to clarify if it had competent skilled staff or relied on consultants, confirm how it dealt with audit findings and clarify if it had audit controls that dealt with audit findings. He asked for clarity on why RSR had not had a joint board engagement with PRASA and why it had decided to escalate the suspension order from Gauteng to a nationwide suspension.
Mr Sibande commended RSR for coming to brief the Committee on why it had decided to suspend PRASA’s operating licence. He asked the DoT to clarify how often it interacted with RSR and advised RSR to ensure that it had exhausted all lines of communication before it suspended licences. He expressed concern on the regression of RSR, even though it had maintained an unqualified opinion. He asked for clarity on the cases it had and the financial implications. He asked RSR to state the executive responsible for fixing burnt bulbs at train stations, and asked if RSR took safety into consideration because some of the signals at stations were aged.
Mr A Seabi (ANC) asked for clarity on the approved budget and the expenditure, because they matched each other. He asked what consequence management had been applied on irregular expenditure, and the qualifications of its top management. He asked for the status of investigations that had been initiated in November 2017 and asked RSR to give a brief on the assistance it had given to PRASA to get out of its safety challenges. He asked RSR to state its impact on commuters.
Dr Qunta said RSR had an acting CEO because the CEO was on technical suspension, but the COO position was vacant because the COO was the acting CEO. Disciplinary cases were being addressed by Commission for Conciliation, Mediation and Arbitration (CCMA) so detailed answers would not be given. The Minister of Transport had agreed that RSR should continue with its disciplinary procedures.
There were definitely camps in the RSR. It had been brought down but it was being rebuilt. The board was not purging staff, but the acting CEO had been directed to implement the outcomes of the disciplinary process. The mechanism of allowing people to retire early had probably contributed to the story going around that the RSR was cash strapped. She assured the Committee that the RSR had the technical skills required and hardly used consultants.
The increased irregular expenditure from R2 million to R14 million was part of the issues that the CEO on technical suspension was being disciplined for, and it was related to contracts for the office building.
The board of PRASA was not too old, and there had been two meetings before the matter occurred. There were commitments to have a third meeting with PRASA. The RSR had attempted to suspend PRASA’s operating licence because of the incident at Kempton Park, but all prohibition resolutions had already been taken earlier. RSR had expected that PRASA would engage with it within 48 hours. She had engaged with the board chairperson of PRASA and had told her to make a submission that would assure RSR, but instead PRASA had gone to court. RSR reported to the DoT on all matters, and it had reported to it on this issue. Several attempts were made and there was a response given by the Minister of Transport. The DoT had been informed of the decision to suspend the operating licence of PRASA before the threat was issued. RSR had decided not to give bonuses to staff because of its present cash challenges.
Ms Kgare said the irregular expenditures had been recorded on contracts that had happened during the technically suspended CEO’s tenure. There had been no termination -- it was a re-deployment and the employee thought it was demotion, so he had taken RSR to the CCMA.
RSR has a good risk management plan that it had submitted to the DoT. Its processes were more robust and it had assisted RSR to pick up issues easily. it agrees with the Member that there are concerns on PRASA’s signalling equipment, and because these concerns were not attended to, it had led to more MTAs. RSR had identified non-compliance in the system, but believed that as it did not run the operations, PRASA would take responsible by informing RSR about what was operationally possible. RSR was of the opinion that countersigning all MTAs might be practically impossible, hence it had lowered the bar by asking PRASA to do it daily, because it understood that PRASA was still filling its vacancies. Over the past years, RSR’s CEO had engaged with all group CEOs of PRASA even though they had been constantly changed. RSR’s CEO might not have engaged with the new acting group CEO of PRASA outside of board meetings.
Mr Regardt Gouws, Chief Financial Officer (CRO): RSR, said the regulator could not meet the requirement of paying its contractors within 30 days due to its cash flow problems, and its performance management problems were also due to its cash flows. AGSA had noted that the irregular expenditure was from prior years and oversight on audit findings were done through internal controls. RSR had followed up on its consequence management and some of the officials had been found guilty.
Mr M Shelembe (NFP) said disciplinary decisions must be taken on non-compliance, because recurrence showed that some staff did not want to adhere.
Mr Hunsinger asked the RSR to clarify if the breakdown of about 600 000 MTAs had been for the past nine months or the past ten years. He wanted to know how many safety conditions PRASA had adhered to, the breakdown of directives issued and directives adhered to, in categories. What did RSR mean by the statement that it had ‘lowered the bar?’ Had it received any plan to assure it that PRASA’s management was committed to the maintenance of signalling equipment, as 80% of the reasons for MTAs were due to management inaction? He asked DoT to clarify its intervention to ensure that PRASA accessed the R53 billion meant for infrastructure. How would RSR align its indicators to reduce safety risks? What was its role as a service provider on safety to protect the commuter while collecting fines from the operator? He expressed concern that private companies were keen to engage with RSR on securing railway crossings, but RSR had not agreed. He asked for more information on the recovery plan that RSR had submitted to the DoT.
Ms S Xego (ANC) expressed concern on the recurrent findings and regressions in performance, and the fact that PRASA could not put in writing what it had discussed with the board chairperson of RSR. She was also concerned that RSR had referred to wrong portions of the PFMA, and asked the board chairperson the plans she had for RSR to work as a team and not in different camps. She asked RSR if it had shared the challenges of PRASA with its shareholder representative.
Dr Qunta said although the board was not supposed to talk with staff directly, she had been mandated by other board members to talk to staff to ensure that they worked as a team. The action of the acting CEO had shown that the executive was committed to its staff. She confirmed that she had briefed the Minister of Transport on PRASA’s safety issues, and during the suspension she had also written to the Minister over the issue of the discipline of the suspended CEO. The human resources files could not be audited because there had been a break-in after the former CEO had been suspended. RSR had lost some files and could not submit them to AGSA for auditing.
Ms Kgare said the staff complement to carry out MTAs was not enough. RSR had brought down the bar because it understood that station managers could not be appointed overnight and this had affected the staff complement to implement the MTAs. RSR recognised the environment of PRASA, and had asked station managers to sign daily instead of on each MTA, because a station manager should check what had been done when he had not been there. The bar was lowered by allowing station managers to countersign daily instead of with each MTA. She had analysed the open non-conformance directives and the ones that had been closed, and indicated that most of the directives were not closed. The safety management system (SMS) template had been introduced to assist PRASA on a broad level by focussing its targets on the SMS. The revised strategy had gone through various staff consultations and would be presented to the board by the end of October.
The Chairperson welcomed the team from PRASA, and said initially its board had taken a long time to submit the 2016/17 annual statement, but the Committee was happy that it had submitted its 2017/18 annual statement on time. RSR had raised the shortcomings of PRASA and the Committee would like PRASA to respond to critical aspects of what its plans were to alleviate the challenges. It also apportioned blame to the shareholder representative for not showing a sense of urgency.
Court interdict on suspension of operating licence: PRASA briefing.
Ms Kweyama, PRASA board chairperson, said its licence was due in July 2018, but it had received a conditional renewal in August 2018. The renewal involved engagements with the RSR board and it was finalised with eight conditions. In September, shortly after the licence was issued, there had been a misunderstanding that PRASA would present a turnaround strategy, and given that PRASA had to report to the shareholder’s representative first, it was not presented. On 5 October, PRASA had received a letter from RSR. The letter did not say PRASA had 48 hours to submit a response, but had threatened that in 48 hours the operations of PRASA would cease. PRASA had had a sense of urgency when the clock was ticking, and had gone to court to challenge the suspension. In the conversation she had with the RSR board chairperson, after speaking with the acting CEO Rail, the agreement was that RSR would consider suspending only the Gauteng operations. The acting group CEO of PRASA had asked RSR to reconsider, but the decision was taken to go to court when PRASA received a letter from RSR that operations would cease. PRASA had proceeded to court at 2.00pm when its discussion with RSR yielded no results at 12.00pm. The DoT had intervened, saying that the matter should be settled out of court. There had been engagements on 5 (Friday), 6 (Saturday) and 7 (Sunday) October 2108.
PRASA: Annual performance report
Ms Kweyama said the period had seen governance and leadership instability at PRASA, but performance had improved from 40% to 55%.
Mr Sibusiso Sithole, Acting Group CEO: said the improvement from 40% to 55% was the highest PRASA had achieved since 2011/12. He gave an analysis of the performance of the entity per branch.
Mr Sango Ntsaluba, Acting Chairperson: Audit Risk, said PRASA had received a qualified opinion with material findings, and the material findings would take some time to clear. PRASA had established a good relationship with AGSA to engage on ways to clear the audit findings. The asset base was still greater than its liabilities, and he assured the Committee that governance would improve at PRASA.
Ms Thobeka Mahlati, Acting Group CFO, said PRASA had posted a comprehensive loss of R928 million, which was 68% greater than its loss in 2016/17. The declining levels of total revenue and the increased operating expenditure had contributed to the loss. She analysed the expenditure, total assets and liabilities, and provided a dashboard of PRASA in 2016/17.
Mr Ramatlakane asked PRASA to explain the things that it could not agree on with RSR that had led to a court interdict, and also to clarify and submit the terms of the agreement and order of court. He asked the acting CEO of Rail and Head of Legal to clarify if the agreement PRASA had with Werksmans Attorneys was available and if available, the contract should be submitted. The status of the Werksmans contract needed to be clarified, as the Committee had identified it as an irregular expenditure based on PFMA rules.
Mr Sibande asked PRASA to identify the owners of Werksmans Attorneys, and asked why PRASA had decided not to comply with RSR’s safety conditions. Was it still bringing services to the people? Were the 88 guard crew in the Western Cape gangsters? He asked why trains were continually burnt despite the procurement of armoured vehicles, and noted that internal controls were weak at PRASA. He asked PRASA why it was still operating with aging rolling stock and faulty signal equipment. He asked PRASA’s new board to state its turnaround strategy to take PRASA away from insolvency. He asked it to assure the Committee that it could fulfil its portion of the Southern African Development Community (SADC) protocol, and clarify when the new trains would be delivered. He expressed concern that the targets it had not achieved were more that the targets it had achieved.
Ms Ngoye said a copy of the Werksmans contract was available, and the company lawyer would present it to the Committee.
The Chairperson said the Committee had received the document, but had not yet received the terms of reference.
Ms Ngoye said her understanding was that it had been made available, but she was confused.
The Chairperson said if the terms of reference or service level agreement was available, it should be forwarded to the Committee through the Committee secretary.
Ms Ngoye said Werksmans Attorneys had completed its contract in June 2017, but there were matters that had been carried forward.
The Chairperson said the Committee was aware that there was no service level agreement or terms of reference, therefore there was no reason for Werksmans Attorneys to continue with the contract. She reminded Ms Ngoye that she was under oath and she should clarify the basis on which Werksmans Attorneys were continuing the contract.
Mr Sithole said PRASA would present a detailed report on the Werksmans Attorneys’ contract -- what was paid and what it was for -- to the Committee. PRASA would have a governance meeting within seven days, and the board would meet on 31 October, after which PRASA would send the report.
Ms Thobeka Mahlati, Acting Group CFO, said PRASA would confirm the amount paid in writing.
Ms Doris Tshepe, Board member: PRASA, said the acting DG had intervened in the matter between RSR and PRASA to ensure that it was settled out of court. The proposed draft had put eight special conditions on MTAs and a special condition on Kempton Park, Gauteng. The judge had requested that certain terms be included. This was that at every milestone, PRASA had to make a report to the judge and RSR had to agree. However, if PRASA did not meet the milestone, the matter would go back to court. The Security Industry Regulatory Authority (SIRA) had investigated the case of the 88 crew in Western Cape, but PRASA would approach SIRA to confirm.
Ms Tara Ngubane, CEO: PRASA Cres Division, said PRASA had embarked on a national train station improvement campaign which targeted stations to improve and modernise. The challenge with Shosholoza Meyl was that the trains travelled once a week and was open to vandalism, and it was difficult to manage security wise. It was not possible to guard every station because of PRASA’s resources. PRASA had introduced cooperative programmes in each Province, and where members of the community cleared the station, there was less vandalism. PRASA was looking at ways of increasing cooperatives in the Western Cape to ensure that communities adopted a station and looked after it. The drainage systems in the subways were challenged during the raining season, and overgrown grass was also a security challenge, but safety, health, environment and quality programmes were being organised in the community. Vandalism and cable thefts had affected PRASA stations, but involving the community would assist in stopping this trend. Encroachment was happening across the country, but PRASA was seeking the assistance of the municipalities to stop the trend.
Mr Sithole said PRASA would present a written report on the modernisation to the Committee after it has been presented to the board. The updated turnaround rescue plan would also be presented to the Committee after the implementation plans were finalised. PRASA took the point on liquidity and insolvency, being mindful that most the assets were earmarked as funds under capital expenditure. Additional capacity for servicing would be provided as PRASA installed signal equipment. PRASA had started reviewing ticketing systems and technology to address declining revenue. The capital expenditure funds were cumulatively R55 billion. It was not meant to be spent in one year, but the capital expenditure funds earmarked for 2018/19 would accelerate spending on rolling stock and would impact on service delivery positively.
Mr Sibande asked PRASA if it had implemented the initial intervention of the DoT on the suspension of its operating licence, and if not why.
Mr M de Freitas (DA) expressed concern that basic infrastructure maintenance was not being carried out. Dilapidated lights at the train stations were not fixed, yet PRASA was making plans on modernisation. He advised PRASA to fix the challenges affecting rail today before projecting on fixing the problems of the future. He asked PRASA its plan to cash in on opportunities at stations that had been built for small units initially, and had now grown into industrial areas such as Olifantsfontein, Gauteng. The data on customer service levels of 70% was not correct, because early busy train schedules had been cancelled and connecting late trains were being delayed. The Committee could not accept PRASA’s report on Shosholiza Meyl, which indicated that PRASA could not afford it.
Mr Shelembe asked PRASA if its legal unit was capacitated and to state how it could reduce MTAs, as it was a contributing factor to train collisions. How did it hope to achieve the goal of security on trains?
Mr K Sithole (IFP) expressed concern that PRASA had not appreciably reduced its fruitless and wasteful expenditure. He asked the DoT to clarify its role during the time that PRASA had embarked on fruitless and wasteful expenditure. He asked PRASA how it would address the rail challenges in Gauteng.
Mr Hunsinger asked PRASA why there had been an increase in irregular and wasteful expenditure during the 2016/17 financial year. The high comprehensive loss posted by PRASA put a doubt on whether it could be a going concern. He cast doubt on the data presented by PRASA on customer satisfaction, because its access control and ticketing did not work. How had it obtained the data? Why had it not made corrections to the audit findings that AGSA had highlighted in previous years? He was concerned that the doors of trains opened while they were in motion. Why were there no depots for new train sets? The RSR report had shown that the major factors that had caused MTAs to increase had not been cable theft and vandalism, but 80% of the problem was indeed the lack of management controls. Also, PRASA could not access capital expenditure funds even though they were available. The final suspension threat had been given after RSR had issued PRASA with 29 prohibition directives and despite the turnaround plans given by PRASA, there had been no implementation. He asked the PRASA board to provide an assurance that it would be able to fulfil PRASA’s service delivery goals.
The Chairperson asked the PRASA Technical CEO to clarify what had been done to improve train signalling. She also asked the PRASA security head what had been done to improve security on trains and in train stations. She asked PRASA to address the Committee on how it would access capital expenditure funds. She joined Members in expressing concern that although AGSA continually pointed out findings in audits, PRASA had not corrected its audit queries. Why had it appointed Werksmans Attorneys to do investigations when state agencies like the Hawks and AGSA could deal with investigations in PRASA? She was concerned that in 2016/17, only PRASA Cres had achieved its mandates, while PRASA Rail could not achieve six out of nine pre-determined targets. Why were six of its targets not achieved?. She said the board must implement consequence management because it had to account for derailments, collisions and fatalities on trains. She joined Members to condemn PRASA for not addressing challenges on governance, leadership, SCM and modernisation, and asked PRASA to indicate the mechanisms it planned to achieve its mandate on rail transport.
Ms Ngoye acknowledged that customer-related issues were caused by a shortage and decline in train sets.
Mr Kevin Moonsamy, Acting CEO PRASA Tech, said in the past PRASA’s leadership did not approve contracts, but now the board had reviewed procurements, and interventions to address rolling stock challenges had been put in place. In the new trains, when doors opened in motion, the power was cut off, and if this happened at the station the driver would not be able to accelerate.
PRASA had implemented risk assessments to increase protection at level crossings. 50% of level crossings were in the Western Cape and six of them had been removed. However, signalling had been improved at the remaining crossings.
In the past, no order had been placed on rails to improve per ways, but processes were in place to call for a tender between the end of October and November 2018. PRASA had signed an agreement with Siemens to get spares for signalling equipment and Siemens would assist with maintenance. Tenders had been prepared to access new depots.
Ms Ngoye said PRASA had dealt with the conditions given by RSR only in 2017 because it had paid a fee in 2016. The new licence issued had some conditions that PRASA had to comply with, but the board was committed and Ms Jenny Shreiner, chairperson: Safety, Health, Environment and Quality (SHEQ), would be monitoring the implementation of the conditions.
Mr Enos Ngujani, Executive Safety Operations Officer, said since 2010 RSR had issued 219 directives and PRASA had closed 165 of them. Only 54 directives still had to be closed, and most of them dealt with fencing and were attached to the budget. PRASA responded to contravention notices. He outlined the directives that had been closed in the Western Cape, Kwazulu-Natal and the Eastern Cape, Main Line Passenger Services, Shosholoza Meyl and PRASA’s head office.
Ms Ngabi Mayeko, Director Safety, experienced unaccepted MTAs in Gauteng. This had been due to a failure of signalling equipment maintenance and security. She said that PRASA had contracted Siemens to repair signalling equipment from Olifantsfontein to Kempton Park. The contracts at Geldenhuys and other stations would soon be finalised. PRASA did not have the resources to maintain the equipment, so the contract had come with a three-year maintenance component which will build in-house capacity. PRASA had made a submission that addressed supervision to beef-up station managers’ timelines.
Mr Makura said that of the 300 closed circuit TV (CCTV) cameras in Cape Town, 165 were working but they could not record. PRASA had employed 625 personnel to guard against burning in stations and had been asking street people to vacate train station corridors. It had intensified the deployment of security personnel.
Ms Ngubani said Park Station was the best performing station. It initially had a 50% lease vacancy, this was now down to 5%. The rates charged on leases were market related. There were 14 stations that did not have electricity because when PRASA replaced the cables, they either got stolen or vandalised again. This occurred almost every day, so PRASA was putting in vandal-proof electric cables in the Western Cape. She gave examples of stations that got vandalised and the ones that do not. She had personally checked the lighting at Kraaifontein station and it had had to be replaced over and over again. The statistic for fencing implemented through capital expenditure could be submitted to the Committee. PRASA Cres had prioritised the fixing of CCTV cameras at Cape Town station, and Park station would be next.
Mr Sithole said PRASA was investigating irregular, wasteful and fruitless expenditure cases and would apply consequence management. It had a plan in place to recover assets and how the remedial plans would be actioned. The internal control framework had been approved and was being implemented. PRASA accepted the point about working with research institutions such as the Council for Scientific and Industrial Research (CSIR), and to maximise the use of their research outputs.
Ms Ngoye said the status of funds paid to Swifambo contractors was that the matter would be going to court on 1 November 2018.
Mr Sibande asked PRASA to clarify if it had implemented the recommendations of the DoT when it tried to save the Agency’s resources and prevented it from going to court on the threat by RSR to suspend its operating license.
Ms Kweyama said the process had reached a stage where it could not be reversed.
Ms Ngoye said when PRASA communicated that it would not continue with the matter any more, the judge had said the matter could not be withdrawn, so it had to proceed.
Mr Hunsinger commented that a lot of the answers showed what the executives had to deal with. He asked Nr Ngujani to clarify why there were still a considerable number of safety cases open in the Western Cape. He asked PRASA to clarify the extent to which the CCTV cameras in the Western Cape were working and recording. He also asked PRASA security to confirm the extent of establishing a satellite forensic unit in Cape Town, and to clarify the mechanisms put in place for commuters to report incidents on trains.
Mr Seabi asked the PRASA board to clarify its plan to address vandalism and theft.
Mr Ngujani said PRASA had a head office at PRASA Rail which was audited on six directives. The office was the purview of the nominated manager.
The Chairperson asked PRASA to clarify the conditions implemented and the ones that were not, because there seemed to be a misalignment between PRASA and RSR’s statements. RSR could not have threatened to suspend PRASA’s operating licence for no reason. She also asked PRASA to clarify if the conditions contained in the court order were among the conditions issued by RSR.
Mr Ngujani said the human resources plan to increase the number of station managers at PRASA’s stations had been submitted to RSR. All the times PRASA had submitted tenders, they were passed through RSR with ‘no objection’. PRASA insisted that when RSR ruled that PRASA’s signals were not compliant, that this must be proved by competent signal engineers. He outlined the plans to address the eight safety conditions issued by RSR that were part of the court order.
The Chairperson said that Mr Ngujani was not helping the Committee as he was not answering the questions directly. She invited Mr Sithole to help the Committee and give it assurances on what PRASA was doing to address safety on rail, giving the statistics in the report presented by RSR.
Mr Sithole acknowledged that PRASA still needed to address a lot of the special conditions laid down by RSR, but assured the Committee that the new PRASA had committed its resources to ensure that there would be safety on rail. He also made a commitment that PRASA would work more closely with RSR to address the conditions it had identified.
Mr Hlabisa said PRASA and RSR were ready to work together The meeting convened by the DoT on 9 October had been an intervention to resolve the differences between PRASA and RSR, and this had been confirmed by the judge on 11 October.
Mr Joseph Makura, Head of Security: PRASA, said that although PRASA had employed eight men per shift to man the CCTV cameras, the cameras were not recording. PRASA Cres had promised to ensure that they were recording. SAPS did not have a forensic investigation capability located in the Western Cape, but would fast track processes to establish such a unit.
Mr Hunsinger said he wanted PRASA to clarify if it was having consultations with SAPS to have a forensic investigation unit in the Western Cape as it was urgently needed due to the increased train fires in the province.
The Chairperson recalled that in the Committee’s last meeting with SAPS in August, SAPS had raised issues on its forensic capability in the Western Cape.
Mr Sibande said PRASA should clarify the value of CCTV cameras procured in the Western Cape that did not record. In the past, some security companies had supplied CCTV cameras that were not recording, and he expressed concern that PRASA must have paid for cameras that were not recording. He advised the PRASA board chairperson to ensure that she was not bullied by her male executives. In the current environment, PRASA needed the use of advanced technology instruments to meet its mandates on safety and to ensure service delivery goals were met.
Mr Walker said PRASA was involved in consultations with SAPS on the need for a forensic unit in the Western Cape, and the capability concerns were presently being sorted out.
PRASA 2017/18 financial performance report
Ms Kweyama apologised for some members of her team who had left the meeting, and said that in 2017/18 PRASA had inherited an entity still plagued with challenges. She asked Ms Thobeka Mahlati, acting group CFO, to present the financial performance report.
Ms Mahlati said PRASA had posted a comprehensive loss of R925 million. The contributing factors to the loss were declining levels of revenue attributed to fares, which decreased by 24%, and material increases in operating expenditure in the form of insurance claims and maintenance expenditure. The major cost drivers were employee benefits (52%), energy expenses (9%), security (5%), municipal charges (4%) material expenses (3%), insurance claims (6%) and maintenance expenditure (6%).
Despite PRASA’s poor performance, the asset base had increased by 10%, from R67 billion to R73 billion. The cash and cash equivalents earmarked for capital projects was about R13.9 billion. She explained why PRASA had been given a qualified opinion, and said irregular expenditure of R4 billion had been incurred in 2017/18. This was due to deviations from competitive bidding processes and expenditure from legacy contracts.
PRASA had a declined overall performance. She presented tables on the financial and divisional performance, and described some of the steps used to address the underperformance.
Mr Hunsinger asked if PRASA had improved its staff complement in 2017/18. Why had its fare revenue declined, and what plans did it have to increase its fare revenue? Had its maintenance expenses doubled, and if so, why? What had been the cost of the nine trains manufactured at Gibela processing factory, and how many of them were assets? Why was its bus fleet not used to assist commuters who were stuck at train platforms?
Mr Ramatlakane asked PRASA to give more information on its irregular expenditure. How many procurement cases had it lost that had resulted in payment without receiving the goods? He asked it to explain its fruitless expenditure in 2017/18 and to clarify what would happen to the trains that it would receive when the contract for depots was just going out to tender. Were its bid committees not meeting, or had they been disbanded? What were the problems that led to vandalism and theft on trains that were stationary? What was its strategy to resolve signalling equipment failure? What was happening to its Autopax fleet?
Mr Seabi observed that PRASAs ‘get on track plan’ was not addressing present challenges. He asked PRASA about its steps to transfer skills from foreign nationals, and whether staff dismissal was the only form of discipline. How did it plan to fill critical posts urgently? What percentage of capital expenditure was being used to address transformation compliance?
Mr Sibande asked why the Autopax fleet had been reduced and why some of its working buses were prone to breakdowns. Which of its stations were still in a good condition? What steps had been put in place to avert irregular expenditure? He asked for more information on the Public Prosecutor’s investigation into cases at PRASA. He advised the DoT to ensure that it carried out its oversight duties on PRASA projects. He noted that some contractors had been appointed without following PFMA rules, and advised the board chairperson not to allow PRASA officials to flout PFMA rules, because this was part of what led to a regression in its performance. Did it have plans to involve communities in its operations and employ citizens geographically?
The Chairperson observed that AGSA had been raising concerns that PRASA had challenges in its leadership, internal controls, consequence management principles, procurements, contracts and information technology systems, but it had unfortunately not attended properly to these issues and was challenged by them. Despite its positive mission and vision, its performance was negative. She advised the acting group CEO and CFO to capture the performance of its subsidiaries by indicating expenditure and revenue in future reports. She asked PRASA to explain the status of Autopax buses, as some had Wi-Fi, but the number of working Autopax buses had been reduced. She mandated PRASA to give written responses to questions they could not answer within 48 hours.
The board chairperson explained the progress by head hunting agencies in filling critical vacant posts and said that the Public Prosecutors’ report was been reviewed by PRASA. She said Gibela factory would be launched by the President on 25 October 2018 and explained that the board members who left had been present since the meeting started. The entire executive that delayed the meeting have not left. PRASA recognises that some technical skills are needed and this is been addressed through head hunting agencies. Job creation is also addressed through the Gibela factory.
Mr Nathi Khena, CEO: Autopax, said the bus complement had reduced because most of the buses had reached the end of their life cycle. This had led to higher maintenance costs, so they had been taken off the road. A few had been involved in accidents and some had challenges with spare parts. When he left Autopax in 2015, it had surplus buses, but since his return the complement had increased from 90 to 190. PRASA would give written reports on more specific progress at Autopax.
Ms Mahlati apologised for not explaining the legends on the data on finances in the tables captured in the report. She would respond in writing to other comments and questions.
Mr Sithole said bid committees were being reconstituted for SCM and procurement activities. PRASA was looking at submitting all tenders for probity checks and was putting further internal controls specifically in place.
Ms Ngubani said PRASA Cres would provide reports on stations that were functional. It had 785 tenants in its houses, made up of staff, retired staff and paying customers. In many cases, staff and retirees were refusing to pay rent and PRASA was threatening to cut off electricity to such flats. Where PRASA Cres had paying customers, the apartments had been upgraded.
Mr Louis Wessie, PRASA Board member, said PRASA had unblocked many of its procurement processes, bid committees had been re-constituted and processes had been put in place to access capital expenditure funds. It would present a written report on its rolling stock from Gibela factory to the Committee. Supply chain management processes had also been re-drafted.
Mr Hlabisa appreciated Parliament’s oversight role. He said that the weaknesses in capital and operating expenditure were being addressed, and the funds would be accessed and spent appropriately.
Ms Kweyama assured that Committee that PRASA would sort out its challenges. Also PRASA would hold is executives accountable and would present improved annual performance reports in the future. It would also work on correcting the audit findings although all the findings would not be cleared off in one year.
The Chairperson appreciated the RSR board Chairperson and the acting CEO of RSR for the good job it was doing. The Committee was of the opinion that RSR wanted to ground the country when the stories on suspension of PRASA’s operating licence was being peddled; however with the explanation the Committee appreciated why it had taken the decision it took. She informed PRASA executives that it owed it to the people of South Africa to put the public transport system in order whether they were PRASA officials at the time when the different group CEO’s were still in PRASA or not. The important issue was that the executives need to account for assets of PRASA, carry out its duties in an orderly manner and treat commuters with respect because commuters and people of South Africa were the bosses of the officials of PRASA. Arguments purported by the executives might be the fact but this was not in the interest of the people, PRASA really needs to treat people with respect and improve. The Committee anticipates that there would be an increase of buses on the road and Autopax would also increase its buses. PRASA needs to removes its graveyard of assets located in its depots at Salt River, Kraaifontein and Braamfontein then the Committee would say that PRASA was on track. She appreciated Members for jealously guarding the budget and how it was used to improve the life of the people in South Africa. She also appreciated board members and the support staff of the Committee for the work done and stated some of the activities of the Committee for the remaining days in the week and said the Committee would resume again. She apologised on behalf of the Committee for the wrong language used by one of the Members during the course of the meeting.
The meeting was adjourned.
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