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TRANSPORT PORTFOLIO COMMITTEE
26 October 2005
SOUTH AFRICAN NATIONAL ROADS AGENCY LIMITED (SANRAL) AIRPORTS COMPANY SOUTH AFRICA LIMITED (ACSA) RAILWAY SAFETY REGULATOR (RSR) ANNUAL REPORTS: BRIEFING
Chairperson: Mr J Cronin (ANC)
Documents handed out:
TRANSPORT PORTFOLIO COMMITTEE
South African National Roads Agency Limited (SANRAL) Annual Report 2005: PowerPoint presentation
Airports Company South Africa Limited (ACSA) Annual Report 2005: PowerPoint presentation
Railway Safety Regulator (RSR) Annual Report 2005: PowerPoint presentation
SANRAL and ACSA briefed the Committee on their 2005 Annual Reports. On SANRAL, Members were concerned about sources of funding for building and maintaining roads, issues raised by the Auditor-General, the toll road debate, overload control, skills shortage, tariffs, mobile weighing stations, and empowerment. On ACSA, Members were concerned about training of security personnel, cost of air travel, baggage control, low-cost carriers, security measures, upgrading of airports, pricing methodology, and empowerment of women, employees and Small Medium and Micro Enterprises.
Mr N Alli, Chief Executive Officer, briefed the Committee on their Annual Report and Financial Statements. He stressed two key objectives, viz. carrying out government targeted programmes like job creation and developing entrepeneurs to better the life of all citizens and creating safer roads for all users. SANRAL ensured safe engineered roads, but driving behaviour accounted for 70% of accidents on the roads.
Ms M Hlahle, Managing Director, briefed the Committee on their Annual Report and Financial Statements. She outlined the strategic objectives, viz. to exploit new opportunities, to increase shareholder value, to attain international benchmarks, to unlock human capital, and to attain good corporate citizenship. Challenges related to: safety and security, capital structure and expenditure, regulatory environment, traffic, and the Dube Trade port. A key concern was the gearing ratio.
Questions posed to SANRAL
Mr S Farrow (DA) commented that SANRAL had built roads in provinces. What was the source of SANRAL’s funding? They could go into overdraft if funds were used disproportionally. Mr Alli admitted that there was a shortage of funds. They made use of available funds optimally. Treasury had promised additional funds, while the Department had given additional funds to the provinces. Bitumen used up 60% of the cost of road maintenance or building.
Mr Farrow remarked that, in terms of Section 26, money had been raised from the fuel levy for road maintenance. How did SANRAL comply with the Act, since the regional services levy had been phased out? Mr Alli replied that the issue of ringfencing would be discussed with the Minister at a meeting scheduled for 8 November 2005. Section 26 was an ongoing debate between SANRAL and Treasury. They never had sufficient funds, but enough to maintain roads for asset preservation. Money from conditional grants was to be spent on roads. SANRAL paid the regional services levy.
Mr D Schneemann (ANC) commented that although the Auditor-General had given an unqualified report, they still had concerns regarding the asset register, fixed assets with no number, automatic vehicle classification (AVC), non-compliance with regulations, and draft legislation. Mr Alli said that he had apologised to the Auditor-General for not numbering their fixed assets. They had an asset register and everything had been computerised. He stated that SANRAL had suffered no loss of revenue from toll roads. They had implemented a new technological system to classify the vehicles. The system had not classified all vehicles, but they now knew the volume of heavy and light vehicles. He noted that lessons had been learnt from this research exercise. A different way to encourage research was needed, because the penalties imposed were passed down to the smaller companies. Non-compliance had been the fault of the accountants. Meetings were planned in advance and the person was paid every quarter if they had attended that meeting. They had not heard anything from the Minister regarding the draft legislation.
Mr L Mashile (ANC) needed clarity on the relationship between SANRAL and the provincial departments regarding road building. Mr Alli explained that it was not a complicated process, because they worked within the framework of the legislation. They identified a strategic road network.
Mr Mashile asked whether SANRAL had a pedestrian crossing policy. The Chairperson remarked that 70% of road accidents were due to driver behaviour and not because of road design. 40% of these fatalities were pedestrians. This type of fatality accounted for the highest mortality rate amongst children aged between 5 and 14 years. During an oversight visit to the Winelands, the Committee had heard about one school, which had had three fatalities in one year. This was as a result of children not having transport to farm schools nor pavements/sidewalks. The Department had rolled out one million bicycles. Roads were dangerous for pedestrians and bicycle riders, because they had been built for cars. The Chairperson would like to see these issues (land use policy and city design) reflected in annual reports/audits. Spatial planners should be pressured by road engineers, because soccer was being played along roads and pedestrians were walking across roads making them unsafe. Mr Alli said that historically national roads had been built for high speed cars. The Traffic Act stated that roads could not be used by pedestrians or bicycles. Urban sprawl had grown along the highway. The issue of land use and planning was one for the Departments of Housing and Provincial and Local Government. SANRAL would revisit their philosophy and provide pedestrian and bicycle facilities to cater for children.
Mr Mashile asked whether proceeds from toll roads could be used for maintenance on non-toll roads. Mr Alli replied that legislation required that the one could not be used for the other.
The Chairperson commented that the toll road debate had become boring. There had been a Car Free Day recently that had not really been car free. He felt they needed to open the debate around the ‘traffic demand management tool’ and ‘privatisation vs non-privatisation’. What would be the costs to motorists? The oil price affected everybody, which was probably why public transport had been popularised. Mr Alli concurred that the toll road debate had become boring. It was a tool, but it was not the ‘answer to all ills’.
Ms N Khunou (ANC) enquired why skills had been imported from outside South Africa. Mr Alli agreed that there was a shortage of skills in the country, especially civil engineering skills. SANRAL wanted to build the skills base in South Africa to empower citizens with education qualifications. They wanted to increase the depth of the ‘knowledge pool’. SANRAL’s mathematics and science TRAC programme had been used in schools.
Ms Khunou remarked that Grade 12 learners had the opportunity to obtain their learner’s license at school. But did SANRAL have the capacity for more cars on the road? She commented that R780 000 had been spent to teach children about road safety. How did this initiative help to stop fatalities? Mr Alli replied that SANRAL had developed educational material for the teacher to use in the classroom. The aim was for the children to become responsible road users and to change their mindsets.
Mr O Mogale asked when the pilot project initiated in Gauteng would be rolled out to other areas. Mr Alli responded that the idea was to roll out the pilot project to other areas. They had offered it to other provinces. They would be collecting data from February 2006.
Mr Mogale queried the relationship between SANRAL and the provinces regarding overload control. SANRAL had estimated that there had been 60% unnecessary road damage. Big trucks damaged roads. Mr Alli replied that overload control was not the responsibility of SANRAL, but of the provinces. SANRAL had a ‘very good’ relationship with the provinces. They even paid for infrastructure and salaries. It was a small investment, but with long-term involvement. SANRAL located and protected the network of roads and provided manpower.
Mr B Pule (UCDP) commented that toll roads in the North-West province charged different rates for different roads. Mr Alli replied that charges on toll roads were based on operating costs. They had located plazas to break the long stretch of road (100 kilometers). Tariffs were tendered regarding pricing. A solution would be to put a weight restriction on the road and enforce the law.
Mr Mogale asked whether a discount had been gazetted for frequent users. Mr Alli responded that all tariffs were gazetted.
Mr M Swathe (DA) enquired about the upgrading of roads and bridges in Limpopo province. Mr Alli said that the R101 was partly national road and partly not. The road would be maintained. The bridge in question was not SANRAL’s, but they would take it up with the Limpopo Road Agency. It had been disturbing to hear about the road conditions.
Mr Farrow expressed his worry about the report. SANRAL was building and maintaining more roads. Costs would increase. The Automobile Association (AA) had quoted a R64 billion backlog in road building. The Committee should be given a more realistic appraisal otherwise SANRAL would have a huge problem. Mr Alli replied that the report was over a twelve-month period. It had been a ‘stock-take exercise’ in terms of the budget. They provided assistance to provinces on a request basis. SANRAL had limited human resources to meet the demand of the provinces. They needed to build local capacity.
Mr Mshudulu (ANC) said that the Council for Scientific and Industrial Research (CSIR) had found a lack of engineers and expertise. The subject needed to be addressed. Mr Alli replied that they had used the CSIR as a partner for research.
Ms B Thomson (ANC) commented that the key objective was to better the lives of people. How many contracts were awarded to black people or were they still not skilled enough? Mr Alli responded that 80% of the work had been done by SMMEs. 90% of these SMMEs were black-owned.
Mr Farrow remarked that SANRAL had spent R400 million on fixed weighing stations. Why could they not invest in mobile stations where weighing and spot checks could be undertaken? Mr Alli said that mobile scales had been sent to assist fixed stations.
Mr Farrow asked whether the consultant SANRAL had appointed to do environmental impact assessments had been independent. Mr Alli replied that SANRAL had followed legislation regarding the appointment of consultants. The appointees had to meet the criteria. He said that the present system worked and did not compromise their integrity.
Mr Alli thanked the Committee for their concern about the shortage of funds.
Questions posed to ACSA
Mr Mogale found the lack of baggage control disturbing, because valuables were being lost. Mr C Hlekane, General Manager: Johannesburg International Airport (JIA) replied that infrastructure had been provided to minimise the problem. They had upgraded the control centre by installing closed-circuit television cameras (CCTVs) and monitored on the ground. They used police services and security staff to monitor on the ground. He agreed that they could improve the situation to minimise the problem. Ms Hlahle added that, according to international law, once baggage had been checked in, it became the responsibility of the airline. They had established a committee to address the issue. The control staff wore a uniform. Nobody was allowed to use a cellphone on the airside, only with special permission. They had installed CCTVs and moveable cameras to guard the baggage area. The new police unit had made staff reapply for a permit in a vetting process. It was the responsibility of the South African Police Services (SAPS). Serious measures were taken against crime. ACSA had to protect their image.
Mr Mogale commented that air travel was costly for the ordinary person in the street. It was discriminatory. ACSA had claimed that an air ticket could cost the same as a bus ticket. Ms Hlahle answered that low-cost carriers’ tickets between Johannesburg and Durban and Limpopo and Durban were cheaper than bus tickets. The amount of seats was limited. ACSA encouraged low-cost carriers to target the black market. Stokvels and churches needed to be made aware that it would be cheaper in time and money.
Mr Mogale expressed his concern about drug-trafficking, especially with new airline routes opening up. Mr B Maseko, Executive Director: Aviation Operations encouraged the Committee to invite the Head of Police at JIA to give input about security. The new police unit had proved effective, because incidents had been limited. Scanning was done on passengers arriving from the Middle East, South America and West Africa as these were areas of concern.
Mr Mogale pointed out that police personnel were not eager to work and were tired. What was their level of training? 500 new police officers had been deployed to JIA. What about Cape Town and Durban airports? Mr Maseko agreed with Mr Mogale’s observation about police officers. A pilot project of 3 000 new police recruits would be rolled out over eighteen months from the South African Police Academy. The officers would be drawn from all areas, receive specialised training and be deployed to areas like Beit Bridge and Durban Harbour. South Africa had porous borders regarding drugs, smuggling and counterfeit goods.
Mr Mogale asked how effective the CCTVs were. Mr Maseko said that a new control room had been built and operators trained to enhance the effectiveness of the CCTVs.
Mr B Pule (UCDP) remarked that Ms Hlahle had avoided talking about King Shaka airport, but that Durban airport was being upgraded. What was going on? Ms Hlahle explained that ACSA worked according to five-year capital plans, which had been generated from demand and future requirements to meet those demands. Dube Trade port was not part of those plans. The challenges for ACSA were threefold: how could they interface with that, privatisation and shareholder agreements, and regulatory policy guidelines for stakeholders. How could ACSA accommodate a new entity in this process?
The Chairperson commented that ACSA had flagship provincial projects like Gautrain and King Shaka airport. The problem was that the Department of Transport had not been playing their part. The issue could have national implications. The Committee would look at the King Shaka issue. Ms Hlahle said that that would be helpful and would assist her.
Mr Swathe remarked that airports in South Africa would be upgraded. But what about Polokwane airport? Most citizens would be using it, because Polokwane had been identified as a venue for the World Cup. Ms Hlahle replied that ACSA managed nine airports and the Pilanesberg airport. The rest of the airports either belonged to the city or province like Polokwane and Umtata. ACSA had agreements whereby they would assist in managing these airports.
Mr Swathe commented that low-cost carriers were competitive in transportation of passengers. Ms Hlahle responded that airlines chose their marketing routes.
Ms N Mbombo (ANC) agreed with Ms Hlahle that low-cost airlines were cheaper than bus tickets, because even her grandchildren could afford to fly by using their pocket money.
Ms Mbombo wanted clarity on employment equity and the empowerment of women. Ms Hlahle said that the development of women proved challenging. The opportunity for mobility was vast, but constraints for women included their children and family. ACSA’s talent map looked at individual women to take advantage of opportunities and to add value to the company. Male managers had to identify opportunities. They had had some success.
Mr Farrow commented that there were conflicts of interest at board and management level. Were there any ‘checks and balances’? Ms Hlahle said that staff members could not abuse their positions, because board members, shareholders and the Minister were tough about issues like that. There was no room for error.
Mr Farrow said that prices for goods at retail shops were expensive, even at duty free shops. Could it be because rentals were too high? Was ACSA not pricing themselves out of business? How competitive was South Africa in this regard? Ms Hlahle answered that people that travelled by air had disposable income. The aim was to grow the retail market within the airport. The retail sector was sustainable and added value to the public. ACSA could not outprice themselves. ACSA charged landing fees in rands and not dollars. They had the cheapest rates in Africa, comparatively speaking.
Ms Khunou remarked that ‘once a thief always a thief’ regarding theft. Society needed to be changed. CCTVs were not the answer. ACSA had to get to the root of the problem. Ms Hlahle agreed that theft was a ‘people issue’. Customer service training was needed. A survey had found that 40% of staff would steal at some point. Staff members were fired every day for stealing at JIA.
Ms Khunou asked whether ACSA had contingency plans for disaster management. Ms Hlahle replied that ACSA had the best emergency programme at every airport in South Africa. They ran checks every two years.
Ms Khunou enquired about ACSA’s SMME programme. She only saw ‘people shining shoes’. Ms Hlahle said that SMMEs were a growth industry. They had had an example of mohair scarves being sold at Port Elizabeth airport that had been quite successful. They were looking for unique ideas that would flourish and not flounder.
Ms Khunou had observed that there were opportunities to smuggle goods at Cape Town airport, because no security checks were undertaken. Ms Hlahle agreed that Cape Town had proved a challenge in this regard. They needed more resources.
The Chairperson assured Ms Hlahle that the gearing ratio and regulatory situation would be included in the report to Parliament and Department of Transport. There would also be coherence in policy regarding King Shaka airport. Security and safety was a concern that would also be raised.
The meeting was adjourned.
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