The Select Committee was briefed by the Passenger Rail Agency of South Africa (PRASA) on its Annual Performance Plan (APP) for the 2019/20 financial year.
The presentation covered the entity’s alignment with priorities of the sixth administration, alignment with the Department of Transport’s Strategic Plan, alignment with the Minister’s key objectives and focus areas of the corporate plan. The presentation then detailed the PRASA war room as a vehicle for turnaround, its interventions and deliverables.
The presentation also looked at Autopax and its challenges, Intersite and its role before moving on to the 2019/20 performance plan for PRASA’s predetermined objectives per programme.
The Committee was concerned that while the PRASA presentation looked impressive, the entity was lacking when it came to implementation – Members wanted to know how PRASA would implement its objective to create jobs and boost the economy. Further questions related to PRASA spending its budget, the decline in the number of passengers, vacancies and lack of procurement. Members questioned progress made in disciplining officials fingered in the Public Protector’s Derailed report
More detail was sought on the war room and how it would achieve its objectives.
Members were concerned that the state of many of PRASA’s facilities left women passengers vulnerable for example the lack of adequate lighting. This was raised in light of increased attacks and killings of women.
The Committee agreed on the need for the Committee to conduct site visits at PRASA facilities and for the Committee to receive quarterly reports on the progress made by the entity.
The Chairperson welcomed the chairperson of the interim board of PRASA, Ms Khanyisile Kweyama, and her team and Members of the Committee. He then asked for the chairperson of the interim board’s remarks before the actual presentation.
Remarks by PRASA Interim Board chairperson
Ms Khanyile Kweyama, chairperson of the interim PRASA board, appreciated the opportunity to meet with the Committee and present its Annual Performance Plan (APP). She said the Interim Board had been at PRASA for just under 18 months. The interim board was appointed in March/April 2018 but then extended for a further six months – these six months would come to an end imminently.
Over the past seven years, PRASA had generally achieved just a little over a third on average of all its Key Performance Indicators (KPIs) which meant the entity was only delivering a third of what it meant to be delivering. Key to those being the modernisation of infrastructure - as the Committee knows, that modernisation programme was launched to take PRASA into an era where it would provide safe, reliable transport to its commuters however this programme was behind by three years.
The presentation would outline where PRASA was, the War Room launched and what some of the quick wins were in terms of kick-starting the programme.
The operational performance and service delivery had been at an all-time low which resulted in a decline on patronage because when people do not get reliable service and they do not know if the train will leave on time, they then moved to other modes of transport.
PRASA APP 2019/20
Dr Nkosinathi Sishi, PRASA Group CEO, took the Committee through the presentation. The APP aligned with the APEX strategic priorities of the Sixth Administration. The APEX priorities will form the basis for PRASA’s dedicated focus in delivering both the primary and secondary mandate through the following pillars: a strong and inclusive economy, capabilities of South Africans and a capable state.
PRASA notes the key pronouncement contained in the Minister of Transport’s Budget Vote Speech which is line with the President’s directive for decisive intervention to turnaround PRASA and improve its operational performance pertaining to:
-To ensure eliminating delays and cancellations in commuter rail network so that those who rely on this mode to get to places of economic activity are able to maximise their productivity by being at work on time
-Finalisation and revisions of feasibility studies in relation to the 130km Moloto Rail Corridor between Siyabuswa in Mpumalanga and Tshwane in Gauteng
-The high-speed rail between Johannesburg and Durban
-Re-building PRASA’s engineering capacity to drive the modernisation programme in place
- Ensure PRASA creates jobs and supports the state in its effort to eradicate the poverty and inequalities in the country
The Corporate Plan responds to the Minister’s directive that calls on PRASA to pursue:
1. Service recovery to focus on rolling stock availability and reliability, infrastructure availability and reliability and train performance focusing on:
-Improved on-time performance of Metrorail from 73.3% to 85%
-Improved Shosholoza Meyl on-time arrivals from 13% to above 50%
-Ensure Metrorail train set availability from the current average of 200 to 291 train sets
-Improved Shosholoza Meyl, improve locomotive availability from 45% to 60%
-Achieved 100% correct configuration of train sets from the current 49.4%
-Reduced speed restriction from the current total of 149km to less than 100km of the network under speed restrictions
2. Safety Management:
-Putting in place effective measures to protect infrastructure, assets and most importantly, passengers on board
-Achieving full compliance with the Railway Safety Regulator permit conditions and directives
3. Modernisation Programme:
-Urgently creating capacity for PRASA to manage capital projects and spend its capital budget
-Sequencing of critical infrastructure that will enable the deployment of the new trains in targeted corridors.
Dr Sipho Sithole, PRASA Group Strategy Officer, then took the Committee through the Informed Corporate Plan. The Corporate Plan was informed by the realisation and acceptance by PRASA that its turnaround strategies developed over the years were consistent and comprehensive but the failure to implement the actions identified in the various strategies had reached crisis levels:
-over the past seven years, PRASA achieved 33.2% on average of all its KPIs
-modernisation of the infrastructure (signalling, perway, stations, electrification, fencing and security) is behind by three years
-For the past three years, operational performance and service delivery had been at an all-time low as seen in the sharp decline in patronage from 634 million passenger trips recorded during 2010 to 269 million passenger trips recorded in 2017 dropping to 208 million passenger trips in the 2018/19 financial year
-Rate of capital spending and delays in implementation of the modernisation programme, as well as declining negative trends in performance of passenger rail services, needed urgent attention.
-In the past few years, the Railway Safety Regulator had been raising serious concerns about PRASA’s poor performance and compliance with its own safety operating procedures
The Corporate Plan has identified five key focus areas as a game changer to getting the business back on track:
-improved operational safety focused on earning back the confidence of the multitudes of commuters who have lost their confidence in the ability of PRASA to ensure their end-to-end journey guarantees their safety to and from their destination
-improved on-time performance by reducing train cancellations and delays through improving the infrastructure condition, reliability and availability of rolling stock
-improved customer and stakeholder communication through the rollout dedicated and focused communication and information dissemination using key touch points and platforms
-consolidation of PRASA Real Estate Solutions and Intersite Asset Investment into a single entity to drive PRASA’s property development commercialisation strategy to support the Primary Mandate
Consolidation of PRASA Rail Engineering and PRASA Technical into a single division in order to ensure reliability and availability of rolling stock and rail infrastructure
Dr Sithole outlined the War Room which was called a vehicle for turnaround. The PRASA War Room was launched on 8 August 2019 by the Minister of Transport and started working on 12 August. It was established as an intervention designed to immediately, and within a particular timeframe, address the current and operational crisis experienced by PRASA in the provision of a reliable, predictable and safe passenger rail and bus service (see document).
PRASA War Room Interventions and Deliverables focused on articulated objectives by the Minister of Transport (see document).
The presentation then moved to looked at Autopax as a wholly-owned subsidiary of PRASA which exists to service the primary mandate of PRASA i.e. provide in-consultation with the Department of Transport for long haul passenger rail and bus services within, to from the Republic in terms of the principles set out in Section 23 of the Legal Succession Act. Autopax also exists to support PRASA Rail Operations in cases of emergencies and occupations (see document).
Moving to challenges and mitigations of Autopax, challenges included:
-the company only managed to achieve 22% of the pre-determined targets in contrast to the previous financial year wherein 25% of pre-determined targets were met
Mitigation measures: capacitated, committed and performance employees- Training and development, performance management, develop fit for purpose organisational structure
-for the past three years, operational performance and service delivery had been at an all-time low as seen in the sharp decline in patronage from 2.25 million passengers to 1.66 million passengers in 2018/19
Mitigation Measures: operational excellence and increased reliability which focused on earning back the confidence of passengers
-operational buses reduced from a total fleet of 517 to an average of 140 buses and buses are on average ten years old and in excess of 80% have operated 600 – 1000 000km.
Mitigation measures: asset optimisation- rebuild/ repair/new buses- roadworthy fleet, reduction in break down, reduction of maintenance
Mr Mthandeni Mntungwa, Intersite Acting CEO, took Members through the Intersite portion of the presentation which outlined Intersite’s mandate as driving the secondary mandate of PRASA i.e. commercial exploitation of assets acquired by the PRASA Group (see document).
The major limitations facing Intersite Assets Investments are zero assets (no assets on balance sheet). Zero borrowing powers (cannot borrow or raise debt) and zero investment (unfunded mandate by its shareholder, PRASA) yet the entity is expected to deliver value to its shareholder. Despite the challenges, the entity has been able to achieve a number of successes.
The presentation went on to look at Intersite’s role in the Strategic Integrated Programmes, retail development, the Umgeni Business Park, exploiting fibre optic, free public WIFI at PRASA stations and on board trains – the free public Wi-Fi service was provided on the back of the optic fibre network which allows for a seamless commuter experience from the train station through trains to the next train station. The WI-FI service is aimed at any users of PRASA stations, shop owners as well as commuters on board trains. PRASA itself will be able to utilise this platform to advertise its services, train schedules or changes thereto, interact with the commuter base using various APPs and potentially have a platform for transacting e.g. train ticket purchases etc.
Ms Anna- Marie Lubbe, PRASA Senior Manager: Business Performance outlined the details of PRASA’s 2019/20 APP. This included PRASA’s apex priorities, objectives and performance indicators and targets linked with the priorities of the Minister of Transport. Objectives included straightening governance and stabilising the organisation, improving financial position, Improving Commuter and Passenger Travel Experience, Ensuring reliability and availability of the service and infrastructure, managing and improving the property condition of railway stations and workplace facilities, improving passenger rail travel experience through modernisation, protecting people, assets and infrastructure, asset management and maintenance, exploiting assets through property development and commercialisation, procuring for the business, effective management of capital programmes, redefining the organisation and building customer and stakeholder confidence.
On the focus area of Metrorail, targets included:
-Metrorail trains on time as percentage of trains operated/run
-Metrorail train set availability
-configuration of train sets to norm
-reduced speed restriction on network
Mr E Landsman (ANC, North West) complimented the PRASA APP but said the entity was lacking on implementation. In the Sixth Administration, PRASA’s priorities included a strong and inclusive economy, capabilities of South Africans and a capable state – PRASA needs to speak to the implementation of these priorities. Regarding the war room established by the Minister, PRASA needs to tell the Committee what it has achieved and completed. More information is also needed on what PRASA lacks and how it plans to improve those areas. PRASA’s mandate is clear and included policy objectives one of which was job creation. However PRASA did not touch on this – clarity is required on the implementation of this objective. PRASA also spoke to its economic strategy and job creation initiatives in its mandate but the information on implementation was lacking.
Regarding safety, would PRASA in-source security? If capital programmes were secured, matters would improve. There is a crisis of women abuse in the country and the Committee could not allow the transport sector to be part and parcel of not defending and protecting women passengers. Many train stations do not have lights – the Committee saw this on some sight visits and it would be discussed.
For how many years has PRASA not been spending its budget? Due to numerous problems, the Committee cannot blame the entity but why does it look for investments when it cannot spend? These concerns are raised from the perspective that the Committee was there to support the entity.
There were 634 million customers in 2010 to now, unfortunately, 208 million customers – this is very sad. What has happened to the millions of customers lost? The population is increasing but why are PRASA’s customers decreasing? Apart from creating jobs PRASA also needs to help vulnerable women coming from late classes at varsity using PRASA services to ensure they are not attacked. PRASA was aware of the unavailability of locomotives but the input of the entity towards that crisis was a little bit slow.
Mr T Brauteseth (DA, KZN) asked if there were people who had used PRASA services in the meeting and there was no one. Looking at the PRASA vision, mission and values, if entity was in a proper system, all people would have used public transport to attend meetings instead of sitting in a car for hours. Looking at the entire presentation, he was concerned with the high level of vacancies at PRASA. PRASA has a mandate, vision, mission and values and has the Minister’s key objectives but where is the team to do this work?
Mr Brauteseth was very concerned, specifically, about procurement vacancies - PRASA has no sufficient staff in procurement to get that procurement machine to work properly. If the entity cannot procure honestly and regularly in terms of Public Finance Management Act (PFMA), and the procurement process breaks down, all systems start to fail. He proposed the Committee have regular engagements and visits with PRASA. The Committee wants to help the entity achieve what it wanted to achieve.
In 2018/19, PRASA lost R3 billion – Mr Brauteseth wanted someone to comment on why this happened and the services PRASA could not supply as a result of this loss of R3 billion.
On the safety and the condition of PRASA properties, specifically in Durban, there were many PRASA properties that are home to drug addicts, prostitutes and opportunist criminals – what is PRASA doing about this? He also invited PRASA officials to visit those sites in Durban. PRASA also lacks adequate lighting of its properties. He proposed PRASA literally clean up the properties, cut the bushes so that criminals cannot hide in the bush and prostitutes cannot do their business in the bushes and also add lighting to the properties.
Ms M Moshodi (ANC, Free State) asked PRASA not to forget to look at the matter of gender when it fills vacancies.
Ms B Mathevula (EFF, Limpopo) asked what plans were put in place to upgrade railway infrastructure especially in places surrounded by mines and industrial hubs. She asked PRASA to ensure the long distance buses have operating toilets and to look into the matter of exchanging buses as passengers often end up losing their goods during such exchanges.
Mr M Rayi (ANC, Eastern Cape) agreed with Mr Brauteseth that the Committee must conduct oversight on PRASA. He suggested the Committee should receive a report on the progress of PRASA on a quarterly basis. Even if the entity had not been invited to the Committee, it should forward the report to the Chairperson of the Committee through Secretary.
He asked how PRASA linked the war room interventions with the normal, strategic objectives of the entity. The Committee needs to know the regular strategic objectives of the performance indicators along with budget and economic classifications. Are there other employees in PRASA, other the technical team, working in the war room? If so, what are these people doing? Are there performance indicators for the work being done in the war room?
There were state-owned companies, for example Eskom, SAA and the SABC, who have turnaround strategies but are still facing problems today.
PRASA had an Interim Board and Interim CEO – is it possible that if the entity had a new permanent board and CEO, they could introduce their own turnaround strategies and drop the war room? What guarantee is there that the war room will work?
Mr Rayi then asked how PRASA was going to implement the strategies of war room when the entity faced challenges of revenue.
Mr Brauteseth said the Public Protector Report “Derailed”, listed many individuals that should face action. He asked the Interim CEO and Board to provide the Committee with full list of people with the action that had been taken within a week or two weeks.
Ms Mathevula raised the challenge of a shortage of buses during the festive season and what the causes might be for the fluctuation of prices for tickets.
On consequence management, Mr Rayi asked what the status of the disciplinary cases were of people identified - it could be that there might be offences committed but there was no one held responsible for that. What is the status with regard to irregular and fruitless expenditure?
The Chairperson believed the interests of Members were informed by the strategic objectives of PRASA. It is important that the Committee focus on the immediate task. A number of matters were raised by the Auditor- General (AG) and he suspected those could be part of PRASA’s action plan. The presentation included the second objective of PRASA which is to improve the financial position. The entity should have reflected on the interventions for matters highlighted by the AG as feedback around that it would be important. Looking at the rationale of the war room, it had desired outcomes but no baseline information from which it is operating on. He asked that PRASA target 100% not 60% on the customer satisfaction survey.
Ms Kweyama replied that some of the responses will require further details which would be submitted to the Committee within seven days – the entity would give as much detail as possible. She and the Board wanted to be as truthful with the Committee as possible about all situations. Some of the questions asked by the Committee went to the heart of where the problem lies at PRASA. The Committee touched on stability and procurement which are the two things that feed into the problems at PRASA in a terrible way. The good thing is that PRASA has an answer and is starting to break those things to make progress. PRASA would ensure that to the best of its ability, it would implement measures put in place to ensure the entity goes forward.
Ms Kweyama agreed stability was a big challenge at PRASA especially as the term of the interim board was coming to an imminent end. However to ensure there was stability in the executive in the meantime, PRASA embarked on a process of starting to fill those roles that had been known for being vacant for many years. By way of example, Ms Japhtalina Fosu was appointed as the permanent CFO on 2 September 2019. On 1 October, two other women will assume the positions of Group Executive for Human Capital Management and Group Executive for Procurement. She did not want to mention their names as they might be serving out their notice. When PRASA next reports to the Committee, those people will be place and they will start fixing the systems again. PRASA shares the concerns of the Committee.
Procurement has also been the nightmare of PRASA. The Department of Transport will tell the Committee that part of the reason it took funds away was because PRASA was not spending the funds and that lies in the fact that the procurement system was broken.
On the war room, when the interim board came in, there were turnaround strategies one after the other and each time new board came in, it brings a new turnaround strategy so the interim board thought this must not happen again. The Interim board took the best of everything that was supposed to happen and put it in what was called the get-on-track strategy. There was work done by PRASA together with Treasury and the DOT in a steering committee. Finally PRASA has the strategy to carry it into the future to take the best of everything and ensure it stays that way. While the shareholder is consistent, the board may change tomorrow - it is the role of the shareholder to ensure no other board may come in with another turnaround strategy but that it implements the existing strategy.
The Special Investigating Unit (SIU) will start doing work at PRASA – the SIU was invited to start working through the challenges raised within the Public Protector’s Derailed report together with National Treasury. Over 200 investigations were done. These reports were just sitting there without being implemented. The board went into implementation mode and disciplinary hearings were held. Other disciplinary hearings are still ongoing. From the Public Protector’s report, there were people that had been dismissed from the system - others were still undergoing disciplinary hearings and others resigned as soon as they saw the disciplinary process was underway and it might lead to dismissal. The full list of cases and people would be provided to the Committee. PRASA also responded to questions asked by the SIU, National Prosecuting Authority (NPA), Zondo Commission and the AG as to how the process was being managed.
Ms Doris Tshepe, PRASA Board Member, confirmed what Ms Kweyama was stating. When the interim board arrived at PRASA, one of the best things it did was to require presentations on all of these reports that had been made and some of the recommendations and put a plan in place to start a phased-in approach to discipline people. She believed there were number of disciplinary hearings happening and a number of employees were found guilty, as the chairperson stated in respect of allegations made by the Public Protector, and some were given written warnings. These disciplinary hearings were chaired by independent people outside of PRASA so that there can be no bias. To reiterate, some people were dismissed, some were given written warnings and others were dismissed.
Back in 2015, PRASA referred the matters that the Public Protector raised to the Hawks and the board was continuously meeting with the Hawks and NPA to ensure investigations are happening. The Committee would know that at some point, PRASA took the Hawks to court to try and force it to investigate some of these matters.
As new people had come within the NPA and Hawks, they were cooperating with PRASA to give feedback as to where the processes were. PRASA admitted the processes were slow but the entity was putting pressure on law enforcement agencies to ensure those investigations were happening. The Zondo Commission and SIU had come out to try and engage with PRASA.
In some of the matters, PRASA had to seek advice even from the SIU in respect of recovery of monies where matters had gone through the courts, where the Constitutional Court said the contracts were irregularly awarded. In respect of those, PRASA was looking at how it can recover those monies. Processes were taking longer but the board had put those systems in place.
On the matter of procurement, one of the first things the board did when it arrived at PRASA was to review the Supply Chain Management (SCM) policy that had been there since 2009 and that Public Protector found that was not in order, to try and put foundations in place to ensure things are working properly. The amendment of the SCM policy was one of those matters and the appointment of the Chief Procurement Officer was to try to implement and put Standard Operating Procedures (SOPs) in place to ensure procurement happens properly within PRASA.
Dr Sishi replied on the war room noting the Corporate Plan articulated very clearly the 13 strategic objectives of PRASA and the get-on-track strategy shows how the war room is going to be done. The Corporate Plan begins to show Members how PRASA was integrated, objectives, apex priorities of the Sixth Administration and also how the entity should be held accountable in that regard.
On economic strategy and job creation, he agreed with Ms Kweyama on her opening remarks that the modernisation programme of PRASA was behind by three years. The war room strategy showed key focal areas one of which was accelerated implementation of the capital programme – this is where the modernisation strategy is. Rolling out of the station modernisation programmes would include job creation and boosting of the economy.
In the Eastern Cape, PRASA will get 100% performance on locomotives. Currently the entity has delivered four of the eight locomotives needed in the Eastern Cape Region - the rest of the four will be given to the province by the end of September.
PRASA heard the concerns of the Committee regarding inadequate lighting at stations. With the signals in the Western Cape, this was already at 100% on the southern line. The entire Mitchell’s Plain and Simons Town was also fitted with signal. On the northern line, PRASA fitted 85% of the signal. Currently signal was being fitted in Bellville and PRASA was happy with the progress. Even though PRASA experienced successes on the northern and southern line in Cape Town, sufficient progress was not made with the central line. This was the focus area of security on the lines along with deployment of reserve trains that had been occupied by illegal human settlers in those areas. Gauteng was already on 85% of the signalling.
He took note of Ms Mathevula’s comments with a great deal of empathy on the design and features of the new buses.
He also took note of Ms Moshodi’s comment on the matter of gender when filling vacancies.
Dr Sithole replied on the matter raised that the war room was not functional saying PRASA has achieved great things since the war room started three weeks ago. The war room was created to deliver on the 100 days commitment by the Minister to work with PRASA to provide a reliable, predictable, and safe passenger rail service. PRASA needed to have 164 train sets in 100 days and last week it was at 168 so the entity has gone above what it said it wanted to achieve in the war room.
Mr G Maluleke, DOT Chief Director, replied to the R3 billion lost saying he would send the detailed document to the Chairperson through Committee Secretary so that Members could read it in detail. It was not something done by the Department but a government decision approved by Parliament.
The Chairperson, in closing, said this was the beginning of the interface and interaction between the Committee and PRASA. The relationship would be dynamic by virtue of the strategic nature of the institution in terms of the commuters.
Ms Kweyama thanked the Committee for the positive feedback - PRASA can only be motivated and encouraged by the fact that the Committee was not about hitting the entity but consistently engaging with it.
The meeting was adjourned.