South African National Roads Agency (SANRAL), South African Rail Commuter Corporation Ltd (SARCC) & Cross Border Road Transport

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
16 March 2006
SOUTH AFRICAN NATIONAL ROADS AGENCY (SANRAL), SOUTH AFRICAN RAIL COMMUTER CORPORATION LTD (SARCC) AND CROSS BORDER ROAD TRANSPORT AGENCY (CBRTA): BUDGET AND STRATEGIC PLAN 2006/07

Chairperson:

1 & 2
South African Rail Commuter Corporation Budget presentation (email [email protected])
Cross Border Road Transport Agency (CBRTA) on Budget & Strategic Plan 2006/07

Relevant websites:
South African National Roads Agency
South African Rail Commuter Corporation
Cross Border Road Transport Agency

SUMMARY
The South African National Roads Agency Limited (SANRAL), South African Rail Commuter Corporation Limited (SARCC), the Cross Border Road Transport Agency (CBRTA) presented their 2006/2007 budgets and strategic plans.

Focus of the SARCC discussion were the multi-ticketing system, delays with the extension into Khayelitsha, responsibility for maintenance of lines and signaling, capacity to spend large capex increase, developments around the West Coast and Atlantis as well as rioting and burning of train coaches.

The Committee asked SANRAL about its relationship with municipalities, the challenges that had been faced due to heavy rains, the toll roads debates and funding infrastructure.

Due to time constraints, there was no discussion on the Cross Border Road Transport Agency's presentation.

South African Rail Commuter Corporation Budget Presentation
Ms Neli Xaba, Acting CEO, and her team provided background information on the SARCC. She spoke of the challenges it had faced as well as the issues faced in managing the Metrorail transfer, the safety and security of its assets and passengers, the reliability of its assets and enforcing compliance to the required standards. She outlined the SARCC strategy for 2006/07 under the following headings: safety and security, the Rail Plan, Consolidation of SARCC and Metrorail, asset management and enhancing financial performance such as via its Intersite property portfolio revenue.

Mr Thando Mbikwana, Strategy Group Executive, noted their progress with the Automatic Fare Collection and Control (AFCC) system in priority corridors. This was an electronic ticketing system that integrated the different modes of transport using a single ticket. This would be ramped up for use for the 2010 Soccer World Cup. He then commented on preparations for this event. After the recent confirmation of the stadium venues, SARCC had visited each province to assess where rail could service the transport needs of the 2010 event. From this they had created priorities and government had responded with a Public Transport Infrastructure Fund for SARCC as well as for each host city. SARCC would work out a package with each city on how best to avail rail for that particular area.

Ms Xaba discussed the budget in detail. The marked improvement in capital allocation was welcomed with a major increase in 2008/09. The total additional increase over just one Medium Term Expenditure Framework period was R1,6 billion for Capital Expenditure. She conceded that the subsidy still played a large part of the composition of their income but they aimed to markedly increase their fare and property portfolio revenue. She concluded that they were at a stage where they had the potential to reverse the South African Rail Commuter Corporation Limited Financial Arrangements Act depending on investment strategy. As a consolidated entity, it would look at the business plan and ascertain if they would like to have relaxed the Act (that restricts borrowing) or go to the National Treasury and ask for the required money. Lastly she noted that they were excited and grateful for the support that they had received from the Department.

Discussion
Mr S Farrow (DA) said that the presentation looked encouraging. He asked for clarity on who would be responsible for the maintenance and capital expenditure of signaling. Where did they draw the line in terms of Transnet's ownerships and mutual use of lines? He asked if they had been party to the negotiations of the multi-ticketing system which enables commuters to use all modes of public transport across the board, particularly in Gauteng. Had Intersite merged completely with SARCC? Did the capital expenditure include the extension into Khayelitsha? What plans were there to provide a service for the West Coast and Atlantis? With the major increase in capital, how could that be capacitated in terms of manpower and management? Was there ability to do that in the light of their refurbishment programme or would that be outsourced? He asked for an indication on how they would cope with all the expenditure. How did Intersite operate and would they be affected with the whole consolidation?

Mr Brian Jacobson, Group Executive Operations Compliance, replied that what had happened in the past for signaling and what was still happening was that SARCC had been responsible for the capital expenditure on the infrastructure and signaling whereas Metrorail through the subsidy SARCC provided had done the maintenance. That process was being consolidated so they would still have the same mutual responsibility. What was good about the consolidation was that the whole life-cycle management would be far more efficient. With respect to the mutual use of lines between them and Spoornet or Transnet on the line, that process would continue as well. The Rail Regulator had certain qualifications and restrictions in terms of the quality of the track that is used and that would guide and regulate SARCC and Spoornet.

He said that SARCC was delighted about the capital increase and it was a big challenge for them in terms of the capacity for the spending but they had addressed it and they were looking at capacitating themselves as they went forward.

Ms Neli Xaba added that an industry capacity analysis had been done about a year to a year and a half ago, just to gauge whether the industry was geared for any additional Capex that they might receive from the Department particularly in terms of refurbishment of the fleet. In house they had started their own leadership process and had gone through a whole skills analysis just to ascertain what gaps they had as an organization and how best they could fill them in. They had been looking at graduate recruitment programmes and capacity building among their own employees.

Mr Jacobson explained that the funding for Khayelitsha had been totally different funding from that they had shown in the Powerpoint presentation. In terms of progress, they already had contractors on site. Although there was the challenge of informal settlements, they had been working on this. These had to be moved and this was the responsibility of City Council. They would have to be moved to other locations.

The Chairperson noted dryly that the Estimates of National Expenditure had stated that the Khayelitsha rail extension was scheduled to be completed by June 2006 but perhaps it should rather state June 2016. He pointed out that year after year, promises had been made. He did not think the problem lay with the Department. It had been due to disputes as to whose land it was and so forth. These problems had been sorted out now and the awkward issue was the people living in the informal settlements.

Mr Jacobson stated that as he had said, the contractors were already there waiting. They had also been to Cape Town the previous week to discuss matters with the City Council.

The Chairperson pointed out that this would be the case "assuming that the City Council they had talked to remained the same one". This was something the Committee had to monitor despite the political realities. The promise that SARCC was making was a well intended one but could not be fulfilled. He asked how long would the construction take?

Mr Jacobson responded that construction would take eighteen months from the day it started.

Mr Farrow asked about SARCC's capacity in refurbishing train coaches. Would they use somebody else or would they do the upgrading themselves?

Mr Jacobson stated that they had been using contractors for the upgrading. They had not built that internal capacity for themselves.

The Chairperson asked for responses to the other questions that had been asked earlier.

Ms Xaba explained that they believed that the chosen route had been the best one for the Department to take. Intersite was part of SARCC even though Intersite had its own board. As soon as the organisational structure had been finalised with the Department, they would share with the Committee what the future held for Intersite.

Mr Thando Mbikwana, Strategy Group Executive, noted that they had been involved in the multi ticketing debate. They were part of all the forums discussing the implementation of integrated ticketing nationally. It had to start at province level which would be the first phase. It could then be tied together nationally after working at province level. He explained that if you were to board a Shosholoza Meyl train at Park Station and go to Durban, you ought to be able to get on a bus when disembarking in Durban with the very same ticket you had purchased in Johannesburg.

The Chairperson stated that he was skeptical about the "fare collection" issue. Where would the fares be placed centrally? These fares needed to be aligned with the spatial planning approach. What they had been trying to do was to deal with the mass flow of people in the cities. However this issue was something they could discuss some other time.

On the matter of Atlantis/West Coast, Mr Mbikwana replied that all proposals were in place and were at different levels of design. All the developments around the West Coast and Atlantis would be part of the Western Cape regional plan. The cost of these plans was an issue and they would present this as a coherent provincial plan in the context of public transport. It was being approached in an integrated fashion for the first time.

Mr L Mashile (ANC) commented that he now had the view that SARCC was responsive and proactive. He asked for clarity on the service level agreement especially in relation to the recent Metrorail riots and burning of coaches. What was their relationship with SANRAL? Had they been consulting each other? What was their contribution to job creation? About the capital project that had been set in motion, were there conditions attached to it in terms of the Expanded Public Works Programme, was it sufficiently labour intensive?

Mr D Mabuyakhulu (ANC) stated that he came from a background in Gauteng where they talked of the "train sector" and he had been aware of SAARC's interaction with provinces. He asked if there had been further participation by the community or rather the commuters? In what way did they assist municipalities with their expertise? Were the plans they had come up with a boardroom arrangement or in what way were they letting people know?

Ms N Khunou (ANC) stated that she was impressed by the report on safety. She was however concerned about cleanliness. Companies had been giving projects to "second Blacks". After they got shares they sold them back to the same people. Had there been mechanisms to check afterwards that these people were actually empowered and not doing that for the sake of BEE reports? She also noted that there was a need by South Africans to coordinate issues. To minimise the impact of strikes was there communication between taxis, buses and the railway network? What was SARCC's relationship with the Department?

Mr Mbikwana stated that SANRAL was an agency of the department and SARCC did meet at the department to share ideas. On the matter of rioting, he noted the Director-General's comment that certainly people had not left their houses with boxes of matches and half litres of paraffin just in case the train was late and then set the trains alight. Ordinary commuters were not interested in sabotaging state assets. It was clear that it was a criminal and sabotage issue. The department was on top of this and investigations were being undertaken.

The Chairperson asked if SARCC had been aware of commuter frustration, without excusing criminal behaviour.

Ms Xaba replied that they were aware of the frustration and they were in constant communication with Metrorail. They had invested in trunk radios. These had been delivered so that the drivers could communicate with the commuters.

Mr Farrow referred to the burnt coaches and asked for the cost of these losses.

Mr Mbikwana replied that in all their areas of operation they had rail commuter forums where people came together to evaluate where SARCC was falling short. Nothing new ever came up. It was always issues of cleanliness, safety and so forth. People only wanted to be transported safely. Commuter rail was still a national competence and all the transport plans that related to commuters had to be routed to SARCC and to the national Minister for approval. SARCC was an integral part of integrated development planning. SARCC did commuter counts that translated into Current Public Transport Records (CPTR). This formed part of the Integrated Transport Plans (ITP), the Integrated Development Plans (IDPs) and eventually the Public Transport Plan (PTP).

Ms Xaba stated that if their assets had been burned as result of a riot or arson then they would have to negotiate with the South African Special Risks Insurance Association (SASRIA) as it fell under the ambit of a riot. For assets vandalized by other means, then it would fall under SARCC. To upgrade one motor coach cost R4,2 million and for a trailer coach R2,3 million, which was why they spoke about an average of R3,5 million. Almost 80 coaches had been burnt between the period January and September. This had been a serious setback.

She said that the policies and procedures of SARCC were clear in terms of fronting. SARCC had even gone to the extent of hiring a BEE manager with some resources around him to monitor people awarded contracts. There were visits to sites and inspections before awarding the contracts. There were follow-ups and service level agreements. SARCC had been known to cancel contracts that had been breached.

South African National Roads Agency Limited (SANRAL)
Mr Nazir Alli, CEO: SANRAL, gave statistics on the national road network and pavement conditions and cost of maintenance delay was emphasised. The principle key objectives of the agency were noted as was the multiplier effect of investment in roads. The agency's performance indicators and targets for this year were provided. Mr Alli then outlined SANRAL's road safety strategy and current initiatives. His presentation also covered the following topics:
- the objectives and achievement of the Incident Management System (IMS)
- intelligent transport systems
- community development programmes
- technology transfer initiative 2006 -2007
- planned toll projects (2006-2012)
- current and proposed concessions
- black empowerment
- implementation challenges.

Discussion
Mr Mashile asked how SANRAL helped municipalities with advice on road matters. In terms of flooding and heavy rains, were there any challenges as was the case in Mpumalanga? How had the toll gate debate been progressing?

Ms Khunou asked how long it took to fill in holes on the road.

Mr Nazir Alli, CEO: SANRAL, replied that they cooperated a lot with municipalities although their job was mainly to supplement what the municipalities would do in their community development projects. SANRAL had been working with Emfuleni. In the Orange Farm area, they had been involved with safety issues. He pointed out that SANRAL was not allowed to spend money on non-national roads. The Intelligent Transport System pilot programme that they had been conducting was in partnership with Erkhurhuleni, Tswane and Johannesburg. Also there were the partnerships that SANRAL always developed with municipalities.

He commented that there had not been any flood damage to national roads. There had been a secondary road in the Free State where there was flooding because of a low bridge. SANRAL would go back there to raise the bridge level. A new drainage manual had also been published and updated with the research work being done.

The issue of the funding of infrastructure had been an ongoing debate and would always come up. Time frames for fixing roads depended on the circumstances and what type of damage had been done. One of the major factors had been weather conditions. The N1 had taken quicker to do because of dry conditions, whereas the N2 between George and Knysna took longer. Mr Alli stated that they had been highly disappointed with private sector performance and delivery. A large multinational company had recently let SANRAL down, informing them that they could not supply the required materials. SANRAL should be given their own permit so that they could mine their own material. These were some of the factors that delayed repairs.

He pointed out that that another way of raising funds had been toll roads. These however remained a small portion of the overall number of roads. He referred to the excess fiscus money that the Minister of Finance kept talking about, and suggested that it should strongly be motivated that a percentage be set aside for work specifically on roads in rural areas and not directed generally to the municipalities. SANRAL was quite happy to assist the municipalities in planning this road expenditure and helping with project management.

Cross Border Road Transport Agency (CBRTA)
Mr Sinethemba Mngqibisa, CEO, outlined the agency's mandate in improving the flow of freight and passenger road transport in the region. He gave a report on its status quo, noting that the strategic direction of the organisation and its organisational structure were not aligned to its mandate and revenue was less than expenses. He spoke about CBRTA's service delivery strategy and its future financial sustainability. Finally he outlined the budget for this financial year and its key strategic interventions (see document).

Due to time constraints, no questions were put to the Cross Border Road Transport Agency.

The meeting adjourned.