PRASA oversight visit: meeting with Minister

Public Accounts (SCOPA)

22 March 2022
Chairperson: Mr M Hlengwa (IFP)
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Meeting Summary


In this virtual meeting, the Committee received a follow-up briefing from the Minister of Transport on the issues emanating from its oversight visits to the Passenger Rail Agency of South Africa.

The Minister highlighted that the Agency’s vacancy rate was sitting at 19 percent, which was nine percent more than the acceptable standards. Key executive positions were not filled due to legal processes that were underway, whilst others were not filled due to the current review of the organisational structure.

The cost to PRASA to repair and rehabilitate the vandalised infrastructure is costed at R4.9 billion.  Gauteng, Western Cape and KwaZulu-Natal had suffered the most devastating vandalism of rail infrastructure.

Members heard that there were 3 000 ghost workers in the system. Since December 2021, the salaries of those people had been halted. This meant that there was a system of corruption within the Human Resources Department.

Members asked when the new operating model would be implemented and completed. Clarity was requested about any actions taken against the former Board. The value of the rail system was emphasised, particularly in benefitting the economy. Concerns were raised about the resettlement of people, specifically those along the railways. Members shared concern about the high vacancy rate and employees performing more than one job. It was suggested that this impacted the morale of employees. Concern was raised about the 3 000 ghost workers within the Agency; clarity was request about if these employees were paid full salaries. The issues of vandalism were highlighted, particularly where there appeared to be targeted operations.

The Chairperson stated that all that the Committee wanted was for Prasa to serve the majority of the people. Prasa was far more strategically important than SAA. Flying was an elite form of travel for the minority Prasa was the backbone of the economy. The strategic importance of Prasa could not be overstated.

Meeting report

Opening Remarks
The Chairperson said this meeting was a follow-up with the Minister of Transport, following the Committee’s oversight visits in January 2022 and March 2022 to Prasa Gauteng and Prasa Western Cape. The Committee had already met with Prasa’s Board. At the time, Prasa had not tabled its annual report to Parliament. The report had since been tabled. It received a disclaimed audit outcome. A hearing would be scheduled for Prasa to appear before the Committee, on the annual report and audit outcomes. Interactions with the Auditor General (AG) would need to take place before that.

This meeting would enable the Committee to interact with the Ministry of Transport on the Committee’s observations following the oversight visits. Issues had been raised with Prasa during the oversight visits in Gauteng and the Western Cape.

The rail system was currently under ‘siege’ in Philippi and Langa specifically. The Committee was concerned about this. The Committee hoped that the turnaround strategy would yield results. He noted the adverse effects of the cancellation of the security contract – and what it meant for Prasa. It was understood that the contract was irregular. The phasing out of the irregular contract resulted in the consequences that were being seen. The observation was made that SASSA had an irregular contract with Cash Paymaster Services (CPS) – NET1, which the Constitutional Court declared to be invalid. An application was made to the court to allow for a structured phase-out to not interrupt the disbursements of funds to South Africans. The same level of proactiveness was not seen on the part of Prasa.

Briefing by the Minister of Transport
Mr Fikile Mbalula, Minister of Transport, introduced those in attendance from the Department of Transport.

Prasa’s acting policy provided for an acting allowance of 12 percent if the employee was performing two functions or six percent if the employee vacated their role and only performed the acting role. Employees were expected to carry two functions whilst acting, therefore most employees acting in higher grades were performing more than one job.

PRASA’s vacancy rate was sitting at 19 percent which was nine percent more than reasonably acceptable standards. Key executive positions were not filled due to legal processes that were underway, whilst others were not filled due to the current review of the organisational structures process. Key vacancies at executive level necessitated the appointment of employees to act in these positions. The organisation was in the process of filling six key positions, the request to fill the positions was approved and funding allocated. The recruitment processes were currently underway. Prasa hoped to fill these vacancies between April and June 2022.

The Minister said since the board’s appointment, government has been emphatic on the need to expedite the review of PRASA’s organisational design and business model in order to make the necessary and suitable changes to the structure and model of the Group. 

The review of the organisational design was undertaken by the board and subjected to independent assessment, which has since been concluded. 
The new operating model and organisational design will be implemented in a phased manner, commencing at the beginning of the new financial year.

A number of milestones were expected by 31 March 2022. This included the completion of the Power supply network on the Mabopane-Pretoria corridor including clearing of the snag list, the budget for Mabopane and Central Line corridor walling programmes approved by BoC and all Gauteng OHTE and substation tenders awarded and construction underway (except for Saulsville-Pta and Daveyton – Johannesburg which require tender re-adverts).  The value of the work was R1.6 billion. The rail tender (150km) was awarded and the purchase order was issued.

The cost to PRASA to repair and rehabilitate the vandalised infrastructure is at the tune of R4.9 billion.  Gauteng, Western Cape and KwaZulu-Natal have suffered the most devastating vandalism of rail infrastructure.

PRASA has committed to returning to service of ten priority commuter rail corridors by the end of the 2022 calendar year. 

A key consideration in achieving this objective is achieving a quicker turnaround time in repairing vandalised stations and rehabilitating damaged infrastructure.  However, challenges relating to the relocation of illegal settlements on the Central Line may affect the ability to return to full service this line before 2023.

See Prasa’s presentation for more information.

Ms B van Minnen (DA) stated that she had not been able to attend the Cape Town oversight visit, but in Gauteng, the train production site was very impressive. The concern was that, given the state of the railway tracks, the country would end up with very smart new trains with nothing to run them on. This was a huge concern when one was seeing diesel locomotives being run due to issues with electrified stations and the appalling theft that had happened due to the security contracts being cancelled. This led to concerns about the viability of Prasa. The Committee had heard a lot about the ‘new operating model’ – there was a lot on pause. She noted the high vacancy rate. When was the new operational model likely to be completed and when was it likely to be implemented? Where was that process? The Minister had spoken about acting against the previous Board – what actions had been brought against the previous Board? What progress had been made on that and what was the hoped-for outcome of acting against the previous Board? Prasa should be getting South Africa’s economy rolling. It was vital that this institution came back to life.

Mr S Somyo (ANC) stated that what the Committee had seen during the oversight visits was largely continued in the AG’s reports. Infrastructure had over time been destroyed – specifically the ability of the rail network to carry the populous. The derailed functionality was evidenced in the inability to move goods and people throughout the country and to facilitate the economy. The new locomotives were an indication of what the country could do when it earnestly committed itself to do what was right. On the acting positions, it looked as if the institution was being taken over by ‘acting’ individuals. Urgency was necessary.

In Cape Town, cindered, derelict infrastructure was destroyed – not necessarily by the institution. He noted the establishment of informal settlements on the rail lines. How could one begin to see the collaboration of the Minister of Transport, the Cape Town Metro and the Department of Human Settlements? An urgent agreement needed to be reached about how people could be moved to settle where there was space for settlement. He suggested the Board needed to be more functional at a strategic level, balanced with tactical and technical staff. He suggested there needed to be collaboration across departments to deal with the situation – particularly those who resided on the rail line.

Minister Mbalula responded to the question asked by Ms van Minnen. The modernisation project was gaining traction with the upgrade of infrastructure. The recruitment had already commenced. The model would be completed by the end of the current financial year. Recruitment would commence from 1 April 2022. The previous Board was dismissed as it was believed that it did not live up to its fiduciary obligations. There was no basis to take any further action than that against the Board. The Administrator was appointed – which was found in law to be flawed. That was rectified by appointing the current Board.

The challenges at Prasa and the deterioration of infrastructure happened over time. Some of these challenges were detailed in the Public Protector’s Report – titled ‘Derailed.’ Work was being done to rehabilitate the vandalised infrastructure and modernise the environment. Prasa was a capital-intensive company. Therefore, proper structure was needed for procurement and supply chain management – which had been depleted over time. It was found that there were 3 000 ghost workers in the system at Prasa. Payment of salaries for the ghost workers was stopped, as of the year before.

He agreed with Mr Somyo about the need to move with speed to restore services as infrastructure was rebuilt. Reinforcements in security had been introduced, this included walling in some sections. The Cape Town situation was receiving priority, through a collaborative effort by Prasa, the National Department of Human Settlements and the Department of Public Works to access land to relocate those people. Walls would need to be established along the Langa and Philippi lines to allow trains to operate, while the problem of resettlement was resolved.

The project could not go beyond July 2022, Since the Mabopane line had been introduced, the security plan model had been working – there had not been a single case of vandalism. It was hoped that the same would be achieved on the central line. The central line was critical as there were volumes of people, particularly the ‘working class,’ who were using other means of transport. The operational model would be implemented in the next financial year, April 2022. The principles included a shared services model, competency and skills alignment

Ms A Beukes (ANC) stated that her central concern was about the vacancy rate and the fact that many of the employees were performing more than one job. How would this impact the commitment and the morale of employees? Were there any timeframes attached to the phases of implementation of the operational model? The other reason that was given for not filling vacancies, were the legal processes that were underway. What was the status of the legal processes?

Mr A Lees (DA) stated that the Minister indicated that 3 000 ghost employees were identified. That was good work, it was sad that ghost employees got into the system – it was an indication that the system was broken – to have so many or any ghost workers. As at the end of February 2022, there were 16 985 Prasa employees – were the 3 000 ghost employees included in that number or had they already been removed? Prasa basically stopped operations for the entire lockdown period. There was massive vandalism taking place. There were now limited operations going ahead. What exactly had the 17 000 employees been doing for the past two years? Were the ghost employees paid full salaries? The Minister indicated success on the Mabopane line. The Committee had seen the operations taking place. Overhead traction lines had been stolen and not replaced. Was it right to say that it was ‘successful,’ when it was still running on diesel?

Minister Mbalula stated that the Mabopane line was not dependent on the Transnet locomotives and was not diesel-driven. That was why it was successful. The 3 000 ghost employees were part of an ongoing process. 3 000 people had been paid. Since December 2021, the salaries of those people had been halted. None of them had come forward to claim that they had been ‘stopped unfairly.’ This meant that there was a system of corruption within the Human Resources Department. Somebody had orchestrated that scam to steal money from the organization. That was how broken Prasa was. Mr Lees was correct in saying that in a normal company, one could not afford to have one ghost worker. Since December 2021, stoppage was conducted on the paying of those employees. He could not confirm if the 3 000 ghost workers were part of the 17 000 employees, more detailed verification of who got paid and to which bank accounts etc, was being undertaken. The forensic work, which was the second phase, would determine that. It would include how the ‘grand scam’ had been implemented at Prasa. He noted Ms Beukes’s concern about the vacancy rate. He would impress upon the Board that acting arrangements did not demoralise employees. The Board would brief SCOPA more fully on the timeframes relating to the implementation of the new model. The question of clearing the system of ghost workers was being undertaken and was being implemented at present. The Board would brief the Committee on this. Money had gone out the system to support ghost workers - a scam.

The Chairperson stated that the rail network was a jobs driver and a necessary reality if things were to move forward smoothly. Trains were a national asset. The country was dependent on them. None of the sites where the trains were housed, stored, repaired, parked etc were national key points. It might sound like a cosmetic label, given recent historic events that had taken place, however it attached a seriousness to the resource, infrastructure and assets. It placed a necessity to protect and secure such assets.

Ms van Minnen had made the point that there were beautiful trains being manufactured and assembled but there was no functional rail system. Those assets needed to be protected. He asked what the Minister’s outlook was on that. The security contract, which was cancelled in the absence of a viable contingency plan, had a ripple effect. There was no sense of urgency or appetite for consequence management around that particular decision. It had devastating effects on Prasa. There was a sense that the intelligence services of the country had not been properly applied in the case of Prasa. What was quite clear from the vandalism that was witnessed, was that it was a targeted operation by people who knew where the critical infrastructure was. It was not difficult to write off the presence of an organised syndicate to derail Prasa. This required attention. A non-functional railway system automatically bred the necessity for alternative transport usage. One could not rule out the very strong possibility of an organised syndicate that was targeting Prasa as opposed to random acts. There was an urgent need for reforms in logistics, movement of goods and road to rail dispensation. It was linked to functional railways. There would need to be collaboration with Transnet.

Transport was a key factor in this scenario. He was a regular user of the N3 carriageway – the Durban, Pietermaritzburg, Johannesburg route – when travelling for constituency work. The increased load of trucks on the road infrastructure, the bullying that truck drivers inflicted on other drivers and the poor state of interventions, particularly at night were challenging. Did the country need a more deliberate and focused outlook toward easing the traffic flow on the N3?

Minister Mbalula agreed that the entire network should be classified as a national asset. The network infrastructure and critical assets should be classified as national key points. Collaboration with law enforcement agencies, among others, was intended to ensure that those assets received maximum attention. The security contracts that were cancelled created a difficult situation in terms of new procurement. The question of consequence management, on the part of the previous Board, in taking those decisions, was a matter that could be pursued, to ensure that those members were declared delinquent as Board members. Vandalism was a well-orchestrated operation. There was a syndicate operation – this had been proven over time. Copper cables were melted in the townships and shipped out to Mozambique and East Asia – some employees of Prasa were likely involved. Sometime back, this operation was busted, with Prasa security in Heidelberg in Gauteng. He had gone to see the operation. Prasa went to scrap metal companies. One needed to consider the law in relation to scrap metal in South Africa. The syndicates were big. One could not determine where the copper originated conclusively. The issue of organised syndicates was being worked on, on an ongoing basis. It was a criminal activity.

The building of shacks was another aspect of vandalism. During level 5 lockdown, stations were vandalised. Roofs and window frames were taken to build shacks. This was not due to syndicates, but people who took advantage of property that was not protected. These assets had not been protected because the Board took a decision and did not put any security on them. A security plan was then unveiled – which involved the employment of 3 100 people. Over and above that, law enforcement was brought in. There were problems of not having enough security boots on the ground. There were about 2 000 railway police who were dedicated to Prasa. The South African Police Services (SAPS) would not provide canines etc to protect these. Prasa would have been vandalised further if it was not defended during the riots. Intelligence had indicated which stations would be targeted for arson. These stations were protected by private security companies, who made use of rubber bullets. During level 5, this was not done. Vandalism happened in broad daylight during lockdown level 5. Instead of spending money on modernisation, part of that money had to be used to fix the vandalism at stations. That work was continuing, over and above that, there was a criminal aspect that needed to be dealt with at Prasa – which was permanent. It was a challenge of scrap metals – stealing of stuff used on rail infrastructure and how to protect that.

These vandals needed to be charged with serious economic offences, such as economic sabotage. There were cases that had appeared in court, where people had been charged and sentenced. Vandals were sent by kingpins to steal and vandalise infrastructure, including stealing copper etc. an approach was needed. Prasa needed to spend money and resources on securing its own property. This was what was happening now. The Mabopane line was fixed, and immediately after that, the criminal element came in. The reason things were running smoothly along the Mabopane line at present, was because that line was well-protected. There were armoured vehicles patrolling. The stealing of copper cables did not occur there. The security plan was being implemented in full force.

In Cabinet the following day, the discussion on the rail policy would be finalised. This would bring into full effect the implementation of this. The migration of freight from road to rail was a key project that was being undertaken. Prasa was working closely with Transnet. This project was adversely affected by Transnet losing the market share as a result of the COVID-19 pandemic. This market share was slowly being rebuilt. Prasa had accelerated its plans to migrate freight from road to rail, in line with the performance agreement. This would deal with the proliferation of trucks on the national roads. He agreed with the Chairperson on this particular point. It was true that Prasa had been targeted by organised syndicates. That problem could not be resolved overnight. A person was paid close to R100 000 to melt copper cables. The runners on the ground would steal the copper through working with Prasa employees. The runners also stole from Eskom. This was then shipped to Mozambique and East Asia – it was easy money – like drugs. Prasa was exposed to syndicates of this nature. Security needed to respond to that.

The Chairperson said the elephant in the room needed to be confronted. There was a situation of informal settlements sprawling across railways. When the Committee had been in Philippi, walking along the rail track, the Acting CEO had indicated the new structures that were being established. There was ongoing verification and registration of persons, as part of the planning that had to happen for their movement. An eventuality needed to be budgeted for, that arose out of criminality. An invasion of the rail tracks was breaking the law. He could not find the logic, which placed the burden on Prasa, nor on the State, to provide alternative accommodation, when the illegal inhabitants had broken the law. All rights came with responsibilities, and consequences, in how they were exercised. Whilst every citizen had a right to shelter and not to be displaced, one ran the risk of an abuse of rights. The costs of this came close to R1 billion. There needed to be citizen accountability on this front. It was illogical. Unless the interpretation of the law was corrected in this regard, this would become a precedent setter. It would leave the infrastructure of the State susceptible to invasion with the view to be entitled to be moved somewhere else. The State would need to bear the cost of that relocation. It was a very complex and difficult conversation, one needed to tread very carefully on it. The bottom line was that the law had been broken. There were now 10 000 households on the Philippi line. Those people should not be there, to begin with. Unless one had difficult conversations, one would continue going around in circles. Invasion should be declared as a criminal act and consequence management should be handed out. That invasion had resulted in the destruction of infrastructure. People were not able to access trains because of the illegal activity. When would the Country start emphasising equal emphasis on the consequences and responsibilities that came with rights – given the importance put on rights. Rights were not open-ended.

Minister Mbalula agreed with the Chairperson. It was indeed a difficult conversation. The constitutional democracy had brought about some of these things. This needed to be looked into as a country in the future, in dealing with lawlessness. The crisis of settlement was largely due to Prasa being in a state of disaster, concerning the lack of security etc. Government was paying a lot of money through contracts – and there was not always value for money. Prasa was now in the business of human settlements, as a passenger rail company. Prasa worked overtime. One did not know if such occurrences were pre-planned. One needed to have police rotating at places, such as national key points – otherwise security became part of the criminal syndicate circles. He emphasised the need for proper security and coordination.

The Chairperson stated that at the Acacia Parliamentary Village, there was a rail line that ran parallel to the village. On his last count, there were eight structures that had been erected along the line. There was a military fort right there – he would not be surprised, if history was anything to go by, if those structures spilled over onto the rail track and caused similar problems. Prasa had a responsibility as this happened on its watch.

He noted the attitude of some of the Board Members toward the AG. He noted the behaviour of one Board Member in particular against the AG. This would be included in the report. The Committee would stand on the side of the AG unless credible information was put to the Committee that the AG was not conducting its work in a manner consistent with the law. The behaviour that was seen, was totally unacceptable. It was behaviour that ran against the grain of good governance. There needed to be a semblance of mutual respect and professional conduct, which needed to play out. It was evidence of the strain that prevailed when the Committee was not present. The Committee would be considering the annual report of Prasa, as it had been tabled to Parliament.

Minister Mbalula stated that everything would be done to turn Prasa around and deal with the challenges that were presented.

Closing Remarks
The Chairperson stated that all that the Committee wanted was for Prasa to serve the majority of the people. It might sound politically incorrect in certain corners – he could not be bothered. Prasa was far more strategically important than SAA. Flying was an elite form of travel for the minority Prasa was the backbone of the economy. The strategic importance of Prasa could not be overstated.

The meeting was adjourned.



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