The Department of Transport (DoT) explained and motivated for adjustments to its 2018/19 appropriation. It explained that the additional allocation of R33 million was for the City of Cape Town for Phase 2A of MyCiti Bus Rapid Transit System infrastructure project. The R33 million will be used to finalise the operational plan; fast-track the completion of Phase 2 Bus Depot in Mitchells Plan and Khayelitsha by mid-2019; the construction of 4.4 km trunk bus ways in Jan Smuts Drive and design infrastructure for projects associated with Ottery and Wynberg Roads.
The City of Cape Town budget facility for infrastructure had been approved. It funds its Road-based Integrated Public Transport Network into the Metro Southeast Township Corridors spanning areas such as Khayelitsha, Mitchells Plain, Philippi, Crossroads, Nyanga, Gugulethu, Manenburg, Hanover Park, Lansdowne, Ottery, Wynberg and Claremont. This will assist the City of Cape Town in achieving 200 000 passenger trips per day by 2024 (as opposed to 100 000 passenger trips in 2035).
DoT was also requesting approval for a virement shift of R3 billion from Passenger Railway Agency of South African (PRASA) to South African National Roads Agency (SANRAL). This money will be used for implementation of SANRAL’s infrastructure and maintenance of road networks such as Moloto Road, N2, N3 and N4. The money will assist in increasing the operational budget and financial position of SANRAL.
The Committee expressed its concern why R3 billion should be transferred from PRASA when there are many infrastructure projects such as signalling and rolling stock overhaul not yet implemented by PRASA.
DoT assured the Committee that the R3 billion transfer to SANRAL will not be detrimental to PRASA as it is still not in a position to spend or accelerate expenditure on its capital programme. PRASA’s capital programmes were seriously delayed because of procurement challenges, but DoT is working with National Treasury and PRASA to implement the capital programmes.
DoT presented its mid-year performance report. It spent R22.1 billion from March to September 2018 of its R59.8 billion budget which meant a R7 billion underspend. This was due to the many DoT vacant posts which led to underspending for compensation of employees and procurement of goods and services. Underspending in the Public Transport Programme was attributed to project non-compliance by municipalities.
The Committee expressed concerned about the vacancies within DoT which totalled 89 and urged it to fill the vacant posts so that programme implementation can be fast-tracked. It asked how DoT would improve in areas where there is under expenditure as underspending more than 3% is considered deviation and an offence. DoT was asked its position on scholar transport.
The Chairperson said that the Department of Transport (DoT) must motivate and convince the Committee why Parliament should approve the proposed adjustments to the DoT 2018/19 appropriation. The Committee would deliberate on the proposed adjustments in line with section 43 of the Public Finance Management Act to understand why the adjustments should be approved. The Committee was interested in the virements, funds allocated for specific projects, as well as the performance of DoT in the first half of 2018/19.
The apologies from the Minister and Deputy Minister of Transport were noted.
Adjustments Appropriation Bill 2018: Department of Transport briefing
Mr Chris Hlabisa, DoT Acting Director General, informed the Committee that the additional allocation of R33 million was for the City of Cape Town for Phase 2A of MyCiti Bus Rapid Transit System infrastructure project currently underway. The R33 million additional allocation will be used for finalising the operational plan for Phase 2A; fast-tracking the completion of Phase 2 Bus Depot in Mitchells Plan/Khayelitsha by mid-2019 instead of December 2019; construction of 4.4 km of bus ways in Jan Smuts Drive; designing of infrastructure for Work Package 5 and 6 associated with Ottery Road and Wynberg Road.
In August 2017 City of Cape Town applied for a Budget Facility for Infrastructure (BFI) to fund the Road-based Integrated Public Transport Network (IPTN) into the Metro Southeast Township Corridors (Phase2A). In response to Cabinet’s call for IPTNs to be rolled out into townships, Phase 2A targets townships such as Khayelitsha, Mitchells Plain, Philippi, Crossroads, Nyanga, Gugulethu, Manenburg, Hanover Park, Lansdowne, Ottery, Wynberg and Claremont. The funding requested was R7.1 billion over 9 years. National Treasury approved the request this year. Through the additional allocation, Cape Town City will able to increase efficiencies in more township areas. If the funding is approved there will be 200 000 passenger trips per day by 2024 as compared to 100 000 passenger trips that would have been achieved later in 2035. DoT will be able to be fast-track the completion of construction projects by 2026/27 as compared to completion in 2040. If the allocation is approved, the operations will start in 2023/24 as compared to 2035/36.
On virements, DoT requested approval to transfer R3 billion from PRASA to SANRAL. If approved, the money will be used for implementation of SANRAL infrastructure projects, maintenance of road networks such as Moloto Road, N2, N3 and N4. The money will also assist in increasing operational budget and financial position of SANRAL. This virement requires parliamentary approval of the Adjustments Appropriation Bill. The R3 billion transfer to SANRAL in 2018/19 will not be detrimental to PRASA as the organisation is still not in a position to spend the funding or substantially accelerate expenditure on its capital programme.
PRASA’s capital programmes are seriously delayed due to procurement processes. DoT is working with Treasury and PRASA to implement the capital programmes of PRASA. The capital programmes implementation will entail signalling, station upgrades, rolling stock overhauls and upgrades and depot modernisation. The Minister of Transport has set up a team to fast-track the implementation of these capital programmes. The team consist of Treasury, PRASA and DoT.
Department of Transport mid 2018/19 performance
Ms Dalian Mabula, DoT Chief Director: Compliance, said DoT had spent R22.1 billion from March to September 2018 which was an underspending of R7 billion for the seven programmes of DoT which has a total budget of R59.8 billion. The highest underspending is on compensation of employees and goods and services. The reason is the many vacant posts which it has advertised. Further, DoT revised the procurement plan for goods and services to align other programmes within DoT. The Railway Transport and Public Transport programmes also contributed to the underspending within DoT. The reason for underspending in the Public Transport programme was due to non-compliance of invoices submitted by service providers. DoT has started to spend money on furniture and machinery for new employees due to the vacant posts that are now being filled.
Mr Chris Hlabisa, DoT Acting Director General, said that PRASA has a turnaround plan which DoT has been monitoring together with Treasury. DoT is confident that the new PRASA Board will ensure that they turn around the organisation and implement the capital programmes.
Mr Hlabisa discussed the achievement of the targets for each of its seven programmes. Its Administration programme had managed to appoint a Chief Financial Officer (CFO) and Chief Operations Officer (COO). There were challenges in the Railway Transport programme and two of its targets were not achieved because DoT relied on other departments such as the Department of Public Enterprises to finalise the Rail Safety Bill. Nonetheless, DoT hopes to achieve all the targets by the end of 2018/19.
Similarly, the Road Transport programme also encountered some challenges due to the Access Road Development Plan which covers all provinces. The funding chapter of the Access Road Plan is what resulted in the failure to meet the set targets. Due to the funding challenge, the programme was then moved to the Road Policy for South Africa. For the Civil Aviation programme, two Bills had been submitted to Parliament’s Portfolio Committee on Transport which will assist DoT in achieving the targets set for civil aviation. For the Maritime Transport programme, there were challenges getting inputs from stakeholders on the Merchant Shipping Bill. DoT is gradually getting responses from the public. In total DoT achieved 77% of targets set for Quarter 2 of 2018/19.
Ms M Manana (ANC) asked if PRASA was consulted about the transfer of R3 billion to SANRAL. She asked for the location of the capital projects to be implemented by PRASA. What prompted the shift of R3 billion from PRASA to SANRAL? She was concerned about the mid-year underspending of R7.1 billion and asked if DoT would be able to spend the entire budget by the end of 2018/19.
According to Treasury, the DoT underspend in the Administration programme is due to procurement delays or poor information technology. DoT should confirm if the information from Treasury is true and whether the delays have been resolved.
Mr M Shackleton (DA) said that he was worried about the money being transferred from PRASA when the railway network is not functioning properly. He needed to understand if the PRASA budget will be affected in future and if so, from where the money will be obtained.
Ms D Senokoanyane (ANC) asked where the R3 billion was and why PRASA was failing to spend the money which was allocated to it. She asked why DoT was requesting R7.1 billion over nine years for implementation of the IPTN in Cape Town. What informed the timeframes given by DoT that it would achieve 200 000 passenger trips by 2024 instead of 2035 or complete the construction by 2026 instead of 2040? There is a big gap between the years. Had DoT always planned to implement IPTN or did it come up with the plan because there was money available within PRASA. She needed clarity on the financial performance of DoT.
Mr N Gcwabaza (ANC) asked the reason for delays in upgrading the signalling and rolling stock overhaul of the railway. Signalling is outdated and is one of the major contributing factors for train collisions. The rolling stock overhaul has been on the cards for a very long time. He asked the cause of the delay in implementing the required capital projects and utilising the R3 billion by PRASA.
He asked when PRASA will implement the critical projects that have been outstanding for a long time. He asked if the DoT R7 billion underspending is for the first or second quarter or for both. It is a great concern that DoT is not spending its allocated budget yet public transport is very important for the country.
Mr Gcwabaza asked how DoT would correct the underspending so that no money will be returned to Treasury as public transport is not effective. While the Committee was asking DoT to spend its budget, it was not asking DoT to be irresponsible. He needed to understand the number of vacancies because there was underexpenditure on compensation of employees.
Mr Hlabisa replied that PRASA was consulted about the transfer of R3 billion to SANRAL. DoT is working together with PRASA and Treasury to fast-track the implementation of the programmes earmarked by PRASA in its turnaround plan. The joint team is looking into the delays in the implementation of signalling and rolling stock overhaul programmes. DoT is working with the new PRASA board and management to ensure that all the infrastructure projects are realised.
Mr Hlabisa stated that PRASA will not be affected by the transfer of R3 billion to SANRAL. There is still R14 billion that PRASA has not used. The R3 billion will be used by SANRAL for construction and maintenance of roads, starting with the Moloto Road.
Mr Hlabisa pointed that DoT is worried about the underspending within Administration. However, the procurement plan was reviewed and DoT is working on it to improve its spending. He assured the Committee that there will not be fiscal dumping but DoT will utilise the money for real projects that will improve transport in the country.
Mr Hlabisa requested that he would like to engage with Treasury colleagues to understand the issues raised by Ms Manana concerning delays caused by inadequate information technology. However, the vacancy rate is contributing to the under expenditure for compensation of employees. There have been many vacancies with DoT senior management. The vacant posts include five deputy director general posts as well as senior chief directors. These posts were budgeted for and that is why there has been under spending. The Minister had prioritised senior management posts and people have been shortlisted for the five DDG posts. This will make an impact on operations of DoT.
Mr Gcwabaza asked Mr Hlabisa to explain the vacant posts in DoT so that the Committee could understand the DoT organogram.
Mr Hlabisa replied that the first post to be advertised was the Chief Operations Officer because it is critical for DoT. The post was vacant for a long period. Some of the long vacant positions are: DDG: Integrated Transport Planning; DDG: Rail Transport, DDG: Civil Aviation and DDG: Maritime Transport. DoT prioritised those posts and they will be filled soon. The Director General position is vacant. There are other vacancies below the DDG posts such as that of chief directors that are still vacant. He did not know the exact number of vacant chief director positions and would submit a report to that effect.
Mr Mathabatha Mokonyama DoT Deputy Director General: Public Transport, said that if DoT was doing things normally without asking for more money, it would realise 100 000 passenger trips per day in Cape Town by 2035. However, the injection of more funds into the infrastructure project will assist DoT to achieve double the target by 2024. The R33 million will help Cape Town City increase the number of passenger trips faster and earlier than if the money is not injected. If the MyCiti road network extends to other townships like Khayelitsha, it means that more people commuting to work will be able to access the buses.
He replied that the under expenditure for the Public Transport programme in DoT was caused mainly by the slow progress in the Taxi Recapitalisation Programme. However, DoT is reviewing that programme. Another reason is that DoT withheld money for municipalities that are not adhering to DoT reporting conditions and requirements such as Tshwane and Mbombela municipalities. DoT is acting responsibly by not giving money to municipalities to spend on projects that have not been agreed to or without proper planning or adhering to the law. DoT is working with municipalities to ensure that they comply with the law and effectively implement projects that have been agreed to. When they have complied, DoT will then release the money. Hence, the underexpenditure under Transfers and Subsidies is a result of the challenges faced by municipalities.
Mr Mokonyama stated that the Civil Aviation Amendment Bill and a maritime bill were submitted to Parliament in March 2018. However, other transport bills were considered first such as the Land Transport Amendment Bill and the Road Accident Benefit Scheme Bill which Parliament prioritised. After those Bills are considered and completed, the Civil Aviation Amendment Bill and the maritime bill will then be considered. DoT cannot proceed with establishing the regulations if the Bills have not been passed.
Mr Hlabisa asked Ms Mabula to go through DoT expenditure per programme
Ms Mabula noted that the R48.9 million which was not spent in the DoT Administration programme was due to overcharging by the Department of Public Works on invoices for office accommodation. DoT and DPW have been engaging in a process of reconciling the office rental charges. Out of the R54 million for office space and accommodation, DoT has only paid out R2 million. In terms of Integrated Transport Planning, DoT has revised the procurement plan which will utilise the R9.6 million which has not been spent. In the Railway Transport programme, DoT is working on implementing the PRASA turnaround strategy that includes the signalling and rolling stock overhaul infrastructure projects. Some money that was supposed to be spent for public transport was not due to non-compliance with regulations by municipalities. She told the Committee that DoT will ensure that the money is spent by the end of the financial year.
Mr Hlabisa said that the PRASA governance structure has been a priority for DoT. There is an Interim Board that is working with PRASA management and dealing with corruption. He applauded the PRASA Interim Board for its work in ensuring that PRASA functions properly.
The Chairperson was worried about the high vacancy rate and that DoT was only prioritising five posts out of 89 vacancies. She asked why DoT was delaying the filling of funded posts. To implement DoT programmes, the posts must be filled so that its employees assist with programme implementation. She asked DoT to clarify why there have been delays in implementation of the National Airports Development Plan and the White Paper on Civil Aviation and the payment of outstanding invoices for watch keeping services.
Mr Hlabisa replied that the critical posts have already been filled. DoT ranked the positions and came up with a list of 14 positions out of 89 that were critical. At the time, the Treasury had not given DoT enough money to fill all the critical posts. DoT filled the 14 posts which were funded by Treasury. He conceded that there are many vacant positions in DoT. The target for DoT to finalise the Civil Aviation Amendment Bill was not achieved. However, the Bill is now being considered by the Portfolio Committee on Transport. On watch keeping services, DoT has been having problems with Telkom to agree on figures. Telkom is the single source for DoT but they could not agree on the figures.
The Chairperson asked Mr Hlabisa to give his closing remarks and inform the Committee on how DoT would improve in areas where there is under expenditure. In terms of the Public Finance Management Act, underspending is deviation and is considered to be an offence if the under expenditure is more than 3%. She asked DoT to address virements in the closing remarks. She reiterated that the vacancy rate is alarming considering the high unemployment rate in the country. Unemployment reduction is a priority for the government and DoT should align its objectives with government priorities.
Mr Hlabisa appreciated the inputs from the Committee and said that DoT is prioritising the procurement plan. The Minister directed DoT to focus on critical areas. As such, DoT is working to ensure that its programmes are in a line with the directives from the Minister. DoT has therefore reviewed the supply chain bodies. There is now free flow of correspondence and handling of matters within DoT.
He assured the Committee that DoT does not support virements. The reason DoT chose to request a transfer from PRASA to SANRAL is PRASA will not utilise that money. This was coupled with SANRAL’s need to fulfil its mandate and backlogs in road infrastructure. DoT chose virements because roll-overs are not acceptable. The R3 billion to SANRAL will improve the capacity of provincial governments to assist in road networks and improve the quality of road infrastructure.
Mr Hlabisa said DoT is concerned about the high vacancy rate. Nonetheless, DoT took a decision to prioritise critical positions. By the end of the financial year, there will be an improvement. The Minister is currently working with the Deputy Minister to fill the five DDG positions. He stressed the importance of the five positions and the Chairperson was correct that many people are needed to implement DoT projects. After the DDG positions have been filled, DoT will then proceed to fill the chief director vacancies.
The Chairperson said that DoT should speed up the process of filling vacant posts. She asked DoT’s position on scholar transport. The Committee had directed DoT to meet with the Department of Basic Education (DBE) to engage on the need to ensure that scholar transport is implemented.
Mr Hlabisa replied that scholar transport has been controversial between DoT and DBE for a long time. DoT is of view that it is its responsibility to transport children to school. However, there are different views across all the provinces. Some provinces want to hold on to both teaching and transporting children to school. He reiterated that DoT believes that it should implement the scholar transport programme and not DBE. It is for DoT to transport and for DBE to educate children.
The Chairperson thanked DoT and stated that the Committee will consider the Adjustments Appropriation Bill and recommendations that will assist DoT with some of the issues raised.
The meeting was adjourned
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