Railway Safety Bill: Department response to submissions; Putco bus contract; Rail White Paper; with Minister

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30 August 2022
Chairperson: Mr M Zwane (ANC)
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Meeting Summary


In a virtual meeting, the Committee received submissions from the Department of Transport (DOT) on its response to the written and oral submissions on the Railway Safety Bill, the Putco bus contract, and the Rail White Paper.

The DOT set out the various inputs from the stakeholders on the Railway Safety Bill with which it agreed, as well as those with which it did not agree, along with their reasoning. It would do its best to assist with the comments to improve the Bill.

The Committee said that the safety elements involving railway, staff, infrastructure and assets should be addressed separately. It was emphasised that station operators were important.

The DOT explained how the Putco bus contract had commenced and the origin of the tendered contracts. The current court litigation of Putco Moloto (IC52/97) was discussed, and how the DOT did not agree with the findings of the Public Protector.

The Committee asked for more information on the tendered contracts. What would happen if the court did not set aside the Public Protector's findings?

The DOT set out the key policy statements and the short, medium and long-term objectives of the Rail White Paper. The Committee welcomed the Rail White Paper, and said it was very ambitious. Was the intention of the DOT to have more integration? Why were there frequent changes in railway policy --would this not have an impact on the fiscus?

Meeting report

Minister's overview

Mr Fikile Mbalula, Minister of Transport, said the promulgation of the National Land Transport Transition Act 22 of 2000 had rearranged the public transport landscape by introducing the concept of regulated competition. This was in line with the 1996 White Paper on National Transport Policy. This would have seen the introduction of commercial contracts alongside subsidised contracts premised on demand and supply and the identification of optimal modes on each route. The successful implementation of regulated competition relied strongly on effective planning by municipalities. However, the reality was that the Department of Transport (DOT) was still grappling with municipalities that had not managed the planning function as optimally as they should. This affected public transport operation and, by extension, the structuring of the subsidised regime.

The contracts with Putco were concluded by the DOT on 26 March 1997, and were intended to last for 36 months. The contracts were subsequently ceded to the provincial DOT. In the case of Putco, the affected provinces were Gauteng, Limpopo and Mpumalanga. The contracts were extended every three years, pending the full implementation of the past subsidy reform process, which relied on integrated transport plans and developing adequate capacity at the municipal level to manage these contracts. These arrangements were limited not only to Putco, but to every subsidised bus contract. In the National Land Transport Act (NLTA) of 2009, further changes were made, ensuring that public transport functions were devolved to the lowest level of government in line with national policy.

The most important of these changes was removing a provision that allowed provinces to continue obtaining subsidised bus contracts. The effect of this was that at the end of the expired contracts, the provinces did not have the option to conclude new contracts. Provinces had experienced challenges with complying with the provisions of the law, resulting in findings of irregular expenditure by the Auditor General (AG) in 2001. The Gauteng province wanted to deviate from section 4(2) of the NLTA. It was said that such a tender process would place the province at odds with the law, as various processes which included integration with other modes in line with integrated transport plans, were not in place. The concurrence based on this consideration was withdrawn after consultation with the province. A heads of argument with the South African bus operators association and the bus industry restructuring fund was completed, which was meant to be a road map towards restructuring the bus subsidy system.

This further complicated the tender process that Gauteng had undertaken. The DOT had been engaging in protracted discussions with National Treasury on the issue of the restructuring of bus subsidies and the devolution of the same to municipalities. There had been efforts to reach an agreement with National Treasury on granting exemptions to provinces for the extension of this contract until municipalities were able to go out on tender in line with the provisions of the law. These exemptions would release the provinces from the burden of the regular expenditure findings by the AG for circumstances over which they had no control.

In March 2022, an agreement was reached that current contracts must be extended by a further period of three years while the outstanding matters were being addressed, including the finalisation of discussions with National Treasury. The Gauteng province has since requested support to enter into negotiations with the current subsidised bus operators regarding section 41 of the NLTA. The support given to the province was conditional and had to be within the agreed timeframe. The Public Protector also probed the matter of Putco contracts, and concluded that the Gauteng province must offer them on these routes.

The DOT had requested a legal opinion from senior counsel on the findings of the Public Protector, who had not taken into account relevant provisions of the NLTA in determining remedial action. Executing the Public Protector's remedial action would therefore constitute an illegal act and be impossible to perform. The senior council recommended that the DOT launch an application to review and set aside that remedial action of the public protector. The DOT would be guided by this legal opinion in taking the next steps, with the intent of adopting a uniform approach throughout the country.

Submissions on Railway Safety Bill

Mr Ngwako Makaepea, Acting Director-General, DOT, took the Committee through the Department's responses to the submissions on the Railway Safety Bill. He explained where the Railway Safety Bill came from. The legislation that came into operation in 2002 and was amended in 2008 made the Railway Safety Regulator (RSR) an independent entity that oversaw railway safety in the country. It was a simple arrangement of rearranging those functions allocated in state-owned entities (SOEs). This was before the DOT could think about having independent operators, like in Gauteng. The Department had then really started the process of the Bill.

A railway safety gap analysis was conducted in 2015 to examine the issues of the implementation of railway safety. Some of the findings showed a lack of clarity around the role of roleplayers within the railway safety space and the duplication of functions between the role of the board and that of the Chief Executive Officer (CEO). It was not aligned with the consumer provisions, and there was an absence of a framework for granting licensing, ticket calculations and a lack of a proper mechanism and investigation. Human errors were identified, and it was important to be able to deal with those issues.

The DOT would respond to the submissions made on the Railway Safety Bill. It would outline what the DOT agreed with, those submissions that were outside the scope of the Bill, and those that they disagreed with, along with their reasoning. This included stakeholders such as Commission for Gender Equality, the Bombela Concession Company, etc.

He added that they would assist with the comments that had been made -- for example, the definition of operator and the issue of safety permits.


Mr C Hunsinger (DA) said that it was clear that the process of an opportunity to secure important elements was not being followed. The important elements were passenger safety, staff safety, infrastructure, and asset safety. It was clear that these elements were being dealt with under one umbrella. It was suggested that they be dealt with separately.

Mr P Mey (FF+) said station masters (operators) were the most important. He asked what had happened to these station operators. Did the DOT appoint them? During oversight, it had been noticed that there were no station operators, and when asked about it, there had been no discussion.


The DOT responded that station operators became the responsibility of the operator in terms of how they dealt with the station operators. Safety was a high-level issue that needed to be dealt with in terms of the objectives of the Regulator itself. The objective of the Act to address the four elements of safety, assets, infrastructure and staff, was crucial. Regulations were issued in terms of these elements. The DOT would therefore be considering the guidelines and inputs.

Putco bus contract

Mr Mathabatha Mokonyama, Deputy Director-General (DDG): Public Transport, DOT, said the Minister, in his opening remarks, had provided a background to the Putco bus contracts. Putco operated a combination of interim and tendered contracts in Gauteng, Mpumalanga and Limpopo provinces. Approximately 108 bus contracts in the country were paid directly from the Public Transport Operation Grant (PTOG) allocation, excluding a few that were exclusively paid from equitable share allocations by Limpopo, North West and the Eastern Cape. Although interim contracts were few in number, they were big in size and accounted for over 63% of the PTOG allocation.

No new contracts had been concluded since the publication of the new model tender and contract documents in 2013 due to insufficient funding to address the demand for public transport, since the funding had received only consumer price index (CPI) related adjustments, and sometimes lower than CPI. Some new tenders attempted in early 2000 were stopped through a court order due to contracting authorities not having the prerequisite approved Integrated Transport Plan (ITP).

The Gauteng Department of Roads and Transport issued bus tenders in October 2021 which were interdicted by the Southern African Bus Operators Organisation (SABOA), Putco and the Bus Industry Restructuring Fund. The Minister had withdrawn his consent due to the province not complying/adhering to what had been approved, such as the integration as per the public transport strategy and labour matters. Gauteng province was currently looking at alternative legal ways of ensuring service continuation beyond 31 March 2023. Negotiation of new bus contracts was considered one of the methods on the table, as provided for in section 41 of the NLTA. It should be noted that in terms of the NLTA, provinces were not contracting authorities for new contracts.

The Public Protector (PP) commissioned an investigation in October 2020 into the Putco contract (IC52/97) following complaints and allegations by the Moloto Corridor Concerned Residents group that PUTCO faced no competition, restricted others from entering the market, and enjoyed setting its own prices. The Putco contract IC52/97 operated along the Moloto corridor into Tshwane. A report on the matter was released by the PP in January 2022, indicating that allegations that the Gauteng Department of Roads and Transport had irregularly implemented IC52/97 were substantiated due to non-compliance and contravention of the NLTA, the Public Finance Management Act (PFMA) and section 217 of the Constitution, and had issued remedial actions to the province to regularise the contract. The remedial actions stated that the province must regularise the IC52/97 situation by putting the services out to tender and providing quarterly reports on progress to the PP. The Department's view was that the NLTA provisions cited in the report as having been contravened were incorrect and being misinterpreted; however, the province decided not to take the report on review.


Mr T Mabhena (DA) asked about court litigation, and what the position would be before 31 March 2023 where a contract was in place, whether on tender or where the current contract had been renewed. Passengers could not be stranded and must always be assisted. He asked what the breakdown was of the contracts that Gauteng had subsidised.

There had been a challenge when oversight was done in Mpumalanga. The people present at the oversight were the representatives of an organised group of Putco passengers. There was an issue identified that bus ticket prices were increasing weekly. What was the DOT's view on this? The ticket prices could not be increasing each and every week without fail. Some people, such as domestic workers, did not have job security and could not use 40% of their income on transport. In a normal world, it was best envisaged that transport took 5% of one's income. There were extreme cases involving bus fares. Had the DOT conducted any studies over the past ten years investigating the cost of Putco bus tickets and the services provided? What would happen if the court did not set aside the findings of the Public Protector?

Mr Hunsinger said it was known that Gauteng province had been looking at alternative ways of ensuring service continuation beyond March next year. What were those alternatives? At the end of the presentation, no submission had been made. Was this briefing merely an acknowledgement of the intention of the DOT? Was the DOT flagging a crisis that could occur in March next year? What was the intention of the role of the Committee in submitting this?

Mr L Mangcu (ANC) also asked why the Committee was receiving this report. When were the contracts in Gauteng tendered, because it seemed as if Putco had pulled out because it was not profitable? In one of the slides, the heading said something about the PTOG contract 2019/20, and that contracts expired in 2023/24. What was the DOT communicating here? Was 2019/20 an indication of a financial year?

Was it not possible to include roadworthiness as a condition for the Putco contracts? Did the provinces that wanted to enter into these contracts have transport plans addressing real issues, such as the lack of labour and funding?


Mr Mokonyama said there had been a request by the Committee for the DOT to come and present the Putco contracts. The DOT wanted to highlight the pertinent issues.

The DOT had been approaching National Treasury through the Accountant General to deal with historical expenditure to finalise the contract. However, not much had been done for financial support. These issues should be addressed. The DOT would be communicating with the provinces about all the issues.

The Gauteng province had approached the Minister for consent to negotiate. The DOT supported this position because it addressed the issues of labour and costs.

The prices of the Putco bus tickets could not increase every week. This was done on an annual basis. Putco had to inform the public about the increase and request the increase by contracting with the authority. They could not even change the zone without authority. The DOT would look into this.

Assessments had been made to investigate why the public had been contributing so much of their income to transport. The DOT did not want the public to use more than 10% of their earnings on transport, and it had not reached this point yet. The government was trying to bring these costs down by subsidising. Where the court disagreed, the lawyers would guide the DOT. The intention was not necessarily remedial actions in the Gauteng province, but the gross misinterpretation of the National Road Traffic Act (NRTA), and this point had to be clarified. Insofar as the issues of the NRTA were concerned, the legal opinion must be reviewed, where the DG could fully explain what he or she found incorrect in the report. Even if the DOT lost the case, the remedial actions would stand.

The alternative measure that Gauteng took was to approach the Minister. The road -- the Sandfontein contract along the Moloto Road Corridor between Mpumalanga and Gauteng -- was a tendered route where the contract had expired. The operator had pulled out and said there was no business to operate because the route was too short and there was a lack of passengers. This was where Gauteng had found a replacement operator. Roadworthiness and safety were key matters, and could not be compromised.

There were responsibilities for every sphere of government. Part of what local government should do was to develop integrated transport plans (ITPs). A transport framework should also be developed. The DOT was assisting with a number of these. The issue with Golden Arrow happened after the judgment in Gauteng because there were no proper plans. Buses must conform to the plans. There were capacity challenges.

Mr Mokonyama emphasised that this submission was brought to the Committee because they had been requested to do so. The DOT believed that they had raised some key issues, and would take guidance from the Committee

Rail White Paper

Mr Mokonyama took the Committee through the Department's briefing on the Rail White Paper. The presentation consisted of the primary and secondary policy interventions, key policy statements and the timeline for implementing the national White Paper.

The Rail White Paper would benefit rail infrastructure planning, track gauges, branch lines, rolling stock, economic and safety regulation, security management, market and organisation structure, private sector participation, passenger rail concessioning, and the future of urban rail. There were short, medium and long-term objectives for the National White Paper.

(See the presentation for details)


Mr Mangcu said the Rail White Paper was welcomed, and was very ambitious. What was the intention of the DOT in having more integration? There should be a focus on transport and the different challenges that need to be dealt with.

Why did it seem as if there was this railway policy alone, and then tomorrow, there would be another policy alone? Would this not have an impact on the fiscus? How did the DOT respond to the criticism that privatisation was coming in through the back door?

The NRTA empowered the Minister to dissolve certain functions. It also states that municipalities should be evaluated to ensure no capacity challenges. Had this capacity been established?

DOT's response

Minister Mbalula said that the extension of contracts should not exceed three years, and it should be ensured that there was no disruption to public transport services. This process was equally dependent on National Treasury funding. The implication of putting all contracts on tender meant a substantial reduction of the services if the current funding remained.

Integration with other modes, such as the taxi industry, based on integrated transport plans incorporating an integrated public transport network, was critical. These were interventions that the DOT was working on to ensure perpetual extensions ended.

The crisis of blue-collar workers spending a significant portion of their income on transport had been a focal point in visibility studies. The PP's findings were premised on misreading the law, and implementing the remedial actions would be unlawful. These matters would be left to the courts.

The alternative approach of the Gauteng province included reviewing bus routes and servicing bus operators. The Rail White Paper unpacks the ambitious policy choices that were made to bring about South Africa's railway licence, and would enable the Department to give effect to structural reforms that were not only about seeking competitiveness, but also enable public participation through concession. It was not privatisation. Rail was so much broader than the Passenger Rail Agency of South Africa (PRASA), and it included Transnet.

There was currently an issue with goods and the production line to the harbours, because roads were filled with trucks and were being destroyed. The people that owned the mines had reached out on how they could help. This was what the Rail White Paper would do to ensure partnership. It would ensure policy certainty and introduce radical structural reform enabling broader participation and new avenues for investment.

Prioritisation of current Bills

The Committee had to determine the way forward for its next meetings. Ms Valerie Carelse, Committee Secretary, established that there were currently seven bills before this Committee. Three of the bills were ready to be closed and disposed of. They were the Economic Regulations of Transport Bill, the National Road Traffic Amendment Bill, and the National Land Transport Amendment Bill. Some amendments had to be made by the State Law Advisor, but she was currently on sick leave. The other four bills include two maritime bills, the Railway Safety Bill and the Transport Appeal Tribunal Bill.   There were only 35 meetings/working days left currently to consider all business matters, like oversight and budgets, etc. The public hearings in the provinces could take months, because they happened only during the weekends. These were all section 76 Bills, and the National Council of Provinces (NCOP) had to agree to have hearings.

Adv Alma Nel, Committee Content Advisor, said that it had been agreed to have the bills first in as the bills to be first out. It was important to deal with matters at hand to avoid bills lapsing. It would have been nice to have assistance, since the State Law Advisor was on sick leave.

Mr Mangcu said he wanted conformity on the priority of the Bills. He asked whether the amendments to the Road Accident Fund (RAF) had materialised or not.

Mr L McDonald (ANC) said the Committee should change its way of working. There needed to be more meetings, such as in the evenings. There needed to be a mix of oversight, working on bills, and public hearings. Bills should not lapse, and proper arrangements should be made.

Mr Mabhena said that there should be frequent meetings. One meeting was not enough. He suggested that if the schedule of the Members allowed, there should be meetings on Tuesdays, Wednesdays and Thursdays. Although there were virtual public hearings, there should be physical public hearings. What about joint public hearings? This would reduce costs. How were bills prioritised? Was the Committee looking at the bills coming from the Presidency, or from when they lapsed? How did the process work?

The Chairperson said the Committee should prioritise within the timelines.

Mr Hunsinger said that it was not a failure to have bills lapse. They needed to be mindful of what had been completed. Looking back over the years, the frequency of meetings had been in line. There was no reason not to have any physical meetings. He suggested that the Committee consider having physical meetings. There was no schedule of legislation, so the Committee had not been successful and was struggling to finalise a programme. There was a conflict of balancing.

He expressed concern about the absence of legal advice. He asked the Chairperson to find out more about this situation. There needed to be a schedule of when these bills were submitted for legal advice and if and when they would be returned to the Committee. No new legislation should be introduced. The focus should be on the three bills and oversight.

The Chairperson said that for now, the people who wanted to make presentations on the amendments to the RAF should be allowed to do so.

The Members agreed.

Adoption of minutes

The minutes of the meetings on 7 June, and 23 and 24 August, were adopted with no amendments.

The meeting was adjourned.

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