Department of Transport Annual Report 2019/20; with Minister

Meeting report

Department of Transport Annual Report 2019/20

The Minister of Transport, Mr Fikile Mbalula, briefed the Select Committee on Transport, Public Service and Administration, and Public Works and Infrastructure, on the Department’s annual report for 2019/20.

Mr Alec Moemi, Director-General (DG), DOT, informed the Committee that R10 billion had been allocated for the road-to-rail restructuring, which included funding for the taxi industry.

For the year under review, the Department of Transport (DOT) had received a budget of R64.2 billion and spent R63.9 billion, amounting to 99.5% of its available budget.

Overall, the Department achieved 90% (26 of 29) of its targets for the year under review.

The Department achieved an unqualified audit outcome with findings for the 2019/20 financial year.

Key achievements:

Programme One: Administration:

• Human Resource Development (HRD) Monitoring Report finalised and submitted to the Department of Administration and Administration (DPSA) in March 2020;
• Action plan to address Auditor-General of SA (AGSA) audit findings implemented;
• Risk Management Strategy implemented and monitoring report developed as targeted.

Programme Two: Integrated Transport Planning

• A desktop benchmarking exercise on how different countries implemented sector ICT strategies was conducted, and a benchmark report was developed as targeted. Five countries were used as benchmarks for the exercise;
• Consultations on the Regional Integration Framework Inception Report were conducted, and a draft framework was developed;
• Literature Review on the Pathway for Autonomous Vehicle Technology (AVT) Implementation in South Africa was conducted as targeted;

• The updated Economic Regulation of Transport (ERT) Bill was updated by Cabinet, and a gazette to introduce the Bill to Parliament was issued

Programme Three: Rail Transport:

• The International Benchmarking on Rail Access Regime Guidelines was conducted, and the final draft of the Guidelines was developed as targeted;
• A Monitoring Report on the implementation of the Private Sector Participation (PSP) Framework on Branchlines was developed as targeted. Ten branchlines were identified and approved for concessioning;

• The Railway Safety Bill was approved by Cabinet for submission to Parliament.

Programme Four: Road Transport:

• Implementation of the S’hamba Sonke Provincial Road Maintenance Programme monitored through site inspections, bilateral consultations and progress reports compiled as targeted;
• Final draft of the Due Diligence Report on the Review of Founding Legislations of Road Entities developed as targeted;
• Ten campaigns, operations and dialogues were conducted as part of implementation of the National Road Safety Strategy;
• Consultations on the draft National Anti-Fraud and Corruption Strategy were conducted with Freight Logistics Stakeholders, and the final draft of the Strategy was developed as targeted;

• The Draft National Road Traffic Amendment Bill was approved by Cabinet as targeted, and processes are underway to introduce the Bill to Parliament

Programme Five: Civil Aviation

• A socio-economic impact assessment was conducted on the Draft Air Services Bill as targeted;
• A Working Paper requesting the SASAR Executive Committee’s endorsement of the draft South African Maritime and Aeronautical Search and Rescue Amendment Bill was approved;

• The Business Case for a Government-Owned Aviation Academy was duly updated with stakeholder inputs as targeted

Programme Six: Maritime Transport

• An analysis on the state of public Maritime Education and Training Institutions was conducted as targeted. The focus of the analysis was on Durban University of Technology (DUT) and Maritime School of Excellence (MSoE).
• A situational analysis was conducted on the state of shipping in the Southern African Development Community (SADC). A draft Coastal Shipping Agreement was developed as targeted.
• The Merchant Shipping Bill was submitted to and approved by Cabinet for public comments.
• Trial Audits to assess the state of readiness for mandatory IMO audits were undertaken as targeted during the period under review;
• Stakeholder consultations were conducted on the concept document of the Marine Energy Efficiency Programme and stakeholder inputs were considered. The draft Programme was developed as targeted.

Programme Seven: Public Transport

• The survey on the extent of illegal taxi operations was conducted on the eNATIS data analysed and findings were duly consolidated;
• Bilateral progress engagements were conducted with all implementing municipalities and progress reports were duly reviewed during the 2019/20 financial year;
• The Transport Appeal Tribunal (TAT) Amendment Bill was approved by Cabinet in February 2020, and was duly gazetted for introduction to Parliament.

Areas of non-achievement and remedial action:

Programme One: Administration:

• A GDYC outreach programme that was scheduled for March 2020 was cancelled due to the National State of Disaster declared due to the Covid-19 pandemic.
  • Corrective Measure - The Community Outreach Programme will continue in the 2020/21 financial year.
• The submission of the Annual Human Resource Development (HRD) Implementation Plan for 2020/21 was postponed to 30 October 2020 as per the DPSA circular.
  • Corrective Measure – The plan will be implemented in October 2020 as per the circular.
• The process of finalising the appointment of interns was interrupted due to the National State of Disaster declared due to the Covid-19 pandemic.
  • Corrective Measure - Appointment and placement of interns will be prioritised within the financial year pending the risk-adjusted approach of government.

Programme Six: Maritime Transport

• Draft Marine Pollution Amendment Bill developed and submitted to the National Economic Development and Labour Council (NEDLAC). Ministerial approval to submit the Bill to Cabinet was not secured due to the postponement of the GCAC meeting (sub-committee of the ICTS Cluster) due to Covid-19 restrictions.
  • Corrective Measure - The presentation of the Bill to GCAC has been prioritized for the first sitting of the sub-committee.

Programme Seven: Public Transport

• Detailed Integrated Public Transport Network (IPTNs) plans were not developed for the Amathole and Capricorn District Municipalities as targeted. The Amathole DM IPTN Plan process was delayed due to internal approval processes, while the contract for the Capricorn DM was pending final approval signatures as at the end of the financial year.
  • Corrective Measure - The development of IPTN plans for the two district municipalities will be reviewed in the 2020/21 financial year.

(See attached report for details).

Discussion

Mr T Brauteseth (DA, KZN) referring to page 15 of the presentation, asked about the work that the Department was doing on technology solutions to address transport problems in South Africa. He was surprised that while the DOT was focused on having autonomous vehicles in South Africa, there was no facility to have vehicle licence renewals carried out online. What urgent action was the DOT taking to ensure that vehicle licence renewals go online, considering the Covid-19 health risks associated with people waiting in lines to have their licences renewed?

Drones could be useful in monitoring transport, and they could be relatively cheap. This could create employment opportunities for the youth.

He requested feedback on the interministerial task team between the police and the DOT who were actively investigating the business forums that were interfering with South Africa National Roads Agency (SANRAL) construction projects.

Making reference to page 59 of the presentation, he asked whether the use of consultants was because the DOT lacked capacity, or if there was unavailability of skills for in-house employment.

He asked about the luxury vehicles that were referred to in page 68 of the presentation. Why had the DOT spent a huge amount of money on the vehicles, while page 69 of the same document stated that Volkswagen and Toyota had donated a large number of vehicles for the President’s inauguration?

He enquired about the emergency that had arisen which had required the renting of 260 buses. Who had been given the tender to lease out the buses, and had it gone through the proper procurement processes?

He appreciated the drop in wasteful expenditure to R115 000. What disciplinary measures were going to be taken against those who had not gone through the right processes to have travel and accommodation arranged, causing fruitless expenditure?

Mr S Mohai (ANC, Free State) congratulated the DOT on its achievements. He hoped that the DOT would get a clean audit in the next annual report. He agreed with Mr Brauteseth that  it would be easier if vehicle licensing could be done online.

There had been no explanations as to why the DOT had been experiencing poor perfomance, particularly in regard to the slow rate at which vacancies were being filled.

There were key programmes that had not been implemented because of under-spending, again with no explanations provided. He referred to projects such as the empowerment of small bus operators, the public safety plan and the national transport regulator.

He congratulated the DOT and the provincial departments on their performance with the provincial roads maintenance grant, as most entities had spent the allocation given to them. He was not sure about the municipalities, and their spending had to be monitored closely. He asked why the R98 million allocated to the Nelson Mandela Bay metro had been withheld.

The declaration of the Covid 19-pandemic as a national disaster was not a sufficient explanation for the poor perfomance of the DOT, as the declaration had been made only on 15 March 2020, while its programme ended at the end of that month, so the effects of the pandemic could be expected only in the next year’s report.

He referred to two municipalities involved in the Integrated Public Transport network, and said there was no clarity as to what constituted the internal approval processes that had delayed the implementation of this programme.   

He asked about the reasons for two dismissals and two suspensions --what offences had been committed that had resulted in the suspensions?  Why was the small and medium enterprises’ (SMEs’) disclosure framework at 96 % instead of at 100%? In repect of the unauthorised expenditure, there was no explanation as to how the R1.3 billion had been spent. There was no action that had been taken against those who had misappropriated funds. What was the update on the Gauteng freeway project, as well as the fixing of commuter ranks?

Ms S Boshoff (DA, Mpumalanga) shared Mr Mohai’s concerns on the under expenditure, and asked whether due process had been followed in the transfer of expenditure to the Road Transport programme. She wanted to know which roads under the Road Ramps Programme had been implemented in Mpumalanga. Which roads had been maintained and upgraded, and could this not be done for all roads? Many roads in Mpumalanga, Northwest and the Free State were in a terrible state. These roads had a negative ripple effect on the economy, as many tourists were being deterred because of the terrible condition of the roads.

How was the DOT going to address the shortfall in the number of its personnel with a disability, which was described as constituting only 1.4%? How long would it take to reach the target of 2 to 3%, which was the national norm?

Mr M Dangor (ANC, Gauteng) said that under-spending was not a saving, and it was not delivery. He referred to the stripping of railway lines, particularly at the Kliptown railway station. After the report by the Public Protector, security had been withdrawn. Had security now been brought back, or would railway police be brought back? The stripping of railway lines could stop the reindustrialisation of the country. 

The Chairperson, asked for clarity on the irregular expenditure identified in the Auditor-General’s (AG’s) report, as well as the fact the report stated that the financial statements were not prepared according to prescribed norms. How was the DOT managing its contracts and procurement? How was the management managing expenditure? What measures had been put in place to address these issues? He acknowledged the AG’s appreciation of the improvement in the audit outcome of the DOT compared to previous financial year. What was the DOT doing to address the issues raised by the AG, such as the issue of internal controls, financial discipline and compliance with legislation and consequence management?

Department’s response

Mr Moemi responded to the question of why there was no online facility for the renewal of vehicle licences, said this could be done at the provincial level, as the case was with the Western Cape. There was nothing in law precluding provinces from having vehicle licence renewals online. The DOT believed in moving services online, considering the health risks that Covid-19 imposed with people waiting in lines.

Regarding how far the DOT’s imagination was going in terms of technology solutions, he said it was going wild. The Department was not ruling out any solution and was considering all solutions that could work. It was far ahead of the curve in terms of technology solutions to transport problems, and it was currently considering a single ticketing system across all public transportation systems.

There was room for commercial drones, and in the rail environments a pilot had already been run in the Western Cape. Currently, the Cross-Border Road and Transport Agency (CBRTA) had been requested to consider using drones and microchips for monitoring trucks. It was possible to train the youth to operate the drones, and currently there were four grades for the operation of commercial drones. There were companies that had already secured licences for the operation of commercial drones, although there were no licences for the inter-city drones which would be required to monitor highways.

In response to the question of what the DOT was doing to attend to the challenges posed by business forums on SANRAL’s operations, he said DOT was already dealing with this and had already resolved a case. It was still work in progress.

The reason the DOT was using consultants was because it did not have capacity in some areas. It had done an audit to consider the skills it required and had established that it required an economic advisory bureau on transport matters. The bureau would help the DOT with the determination and writing of policy which consultants were paid to do. There were some systems which would continue to use consultants, as there were some which were uneconomic and cumbersome to use with in-house skills. For example, in the maritime space, it maybe uneconomic to have in-house skills to maintain some services that were not frequently required.

Regarding the vehicles that had been donated, these had been provided only for the duration of the inauguration, after which they were returned to the owners. The DOT did not run a huge fleet of vehicles, unlike in the old days with Public Works, when the Department had run a huge government garage. This was not being done anymore. South Africa was signatory to the Vienna Convention, and it was protocol that diplomats were provided with courtesy vehicles in their engagements.

On the question of the buses, they had never been rented. The DOT was required by law to record all deviations, and they had been recorded. Northwest Transport investments (NTI) had been placed under provisional liquidation and could not provide transport services, so thousands of commuters had been stranded as there was no alternative transport for them to use. The DOT had been forced to intervene, which had prompted an emergency tender with a deviation in order to shorten the period during which procurement was done.

In response to the question of the two dismissals that were made, one of them was an official in aviation licensing who had provided rights of flight to operators beyond the scope of his powers. The other was an official who had fraudulently forged documents and was charged and dismissed.

The filling of vacancies had indeed been slow, but the DOT had since sped up the rate at which vacancies were being filled, and it was filling vacancies almost weekly. The DOT had targeted to fill 78 vacancies within three months.

Regarding the effects of the COVID-19 national disaster on the activities of the DOT, among the 10 activities relating to gender, disability, youth and committee work, nine had been implemented, with the tenth activity scheduled for 20 March. The Covid-19 national disaster had been declared on 15 March, and hence limited the implementation of that programme. At the same time, the selection committee had completed its work of selecting interns for hiring, but the hard lockdown had been declared and placement had been delayed.

The marine bill had been on the agenda for the International Cooperation, Trade and Security Cluster (ICTS) Committee for 25 March 2020, but the meeting could not take place due to the declaration of COVID-19 as a national disaster.

The Amathole District Municipality had been struggling, so the DOT had been having challenges in securing important signatures for it to proceed with important work. At the Msunduzi Municipality, the problem was that there had been conflict between the mayor and the municipal manager, and the municipal manager had been adamant that he was not signing, which had also delayed the speed of decision-making. The DOT could not proceed with work until the legalities were settled and the relevant signatures secured.

R98 million had been withheld from the Nelson Mandela Bay Metro because it had to first take care of the concerns raised by the DOT, such as the planning of the routes which they had not addressed on time during the financial year.

The reason why the DOT had continued with National Traffic Information System (eNatis) while it was declared unauthorised was because there was no choice -- its mission was critical and could not be done without. eNatis had to be internalised to open up gateways. It needed to be domesticated in order to take it away from private hands, and there was no way this could be done without the DOT paying money to make sure that the system continued.  The DOT had continued, even though there had been a declaration that it was unauthorized. It had already been too deep and too late to pull out, and since then it had been normalised and regularised.

There had been resistance to the taxi recapitalisation programme, as associations such as the South African National Taxi Council (SANTACO) were encouraging members not to apply for the recap and not to participate in the scheme until their proposal to own 60% of the project had been resolved.

The feasibility studies for the Moloto rail corridor project had been completed, and it was stipulating that it was feasible as long as there was a government underwriting and guarantee. Treasury had refused to provide the guarantee. This had been because it was felt that the population size in Moloto village was too small to justify the investment in rail. There was also no existing rail, so it was not easy to have that development, as the entire infrastructure had to be laid out from scratch. As a result, it was better to fast-track the investment on the Moloto road corridor by improving the ‘Killer Road’ into a safer road -- straightening, widening, and having a dedicated bus lane if necessary. That was seen as affordable and viable. Negotiations had begun, and both Limpopo and Mpumalanga had handed over their roads to SANRAL quickly. Gauteng had resisted for a time, but later had done the same. SANRAL had begun with work on the Limpopo and the Mpumalanga side.

Work was under way on the commuter rail Central line, and the DOT had sent the implementation protocol to the Housing Development Agency of the Department of Human Settlements, which would start with the relocation process of the people who had settled in the rail reserve. The DOT had finalised a land swap agreement with Phillipi for the relocation of the railway depot, and the tender had been finalised for the design of the corridor protection walls. Work on the recovery of the sub-stations had begun.

The breakdown of the roads improved and the Road Ramp Project in Mpumalanga would be provided as requested. This would be submitted to the Committee’s Secretariat and to the Chairperson, to share with Members.

In regard to the issues raised by the Chairperson arising from the AG’s report, it was important to note that the DOT had never had a full time Director General for a period of four years. It had not been ideal, with too many people in acting positions. This had now been stabilised, as there had been certainty in the processes that had been introduced, and consequence management had been heightened. In the last audit committee meeting, both the committee and the AG had acknowledged that there had been significant improvements, especially in the implementation of the audit action plan. The oversight capacity for entities had been improved. A new branch had been introduced for public entity oversight with requisite skills across all nodes, and its job was to consider the governance matters of entities and provide early warning systems. The DOT would introduce a new instrument beginning on 1 April 2021, which would add a transfer payment agreement signed by the Director General showing in more detail the issues arising out of the audit outcomes.

The DOT was strongly involved in PRASA’s turnaround. In the previous week, the PRASA board had released seven senior executives. After considering the reports from the AG and the Public Protector, the DOT had listed the issues that the new PRASA board needed to follow up. There was a nine-point action plan given to the board, and the cleanup at PRASA was at a heightened level. There had been an agreement with the Special Investigating Unit (SIU) to ensure a fulltime investigation at PRASA, and the recovery of misappropriated funds had already begun.

The DG of the DOT had already written to officials who did not turn up for meetings after being booked for accommodation and flights, asking for the reasons why they had not turned up. Where the reasons were not sound, the recovery of the funds was already under way.

Further discussion

The Chairperson said the Road Accident Fund (RAF) had a R59 billion deficit, which had negative consequences for stakeholders. What was the DOT doing to communicate with its stakeholders on the challenges with the RAF?

Ms B Mathevula (EFF, Limpopo) asked if the DOT had a plan to expand the rail and the road networks of the country, especially in the metros, rural areas and new special industrial zones. Was the DOT considering having state-owned road construction companies?

Department’s response

Mr Moemi said that the DOT had plans to expand both road and rail in South Africa, but it had resolved that state monopolies would not help. The quickest way to expand the rail network was to concession them out to the private sector and to third party players. These were the plans which the DOT currently had. In the year under review, it had finalised the guidelines, and the framework had identified 10 rail networks for expansion, with the proritisation of two. There was a lot of work that was being done with Treasury and the Department of Trade and Industry (DTI).

At this stage, the DOT was not considering having a state road construction company, because this had been the case before. There were challenges in meeting the required standards, and the South African National Roads Agency Limited (SANRAL) did not have the capacity to become a road construction company. Under the current framework, there was provision for the provinces and municipalities to build their own roads.

In response to the question of whether the DOT followed guidelines in effecting virements, he said the DOT did follow guidelines.

Adoption of minutes

The Chairperson proposed the adoption of the minutes of the meeting held on 25 November 2020.

The minutes were adopted.

The meeting was adjourned.