SA National Road Agency: Budget and Strategic Plan 2007

TRANSPORT PORTFOLIO COMMITTEE
21 February 2007
SA NATIONAL ROAD AGENCY: BUDGET AND STRATEGIC PLAN 2007

Chairperson: Mr J Cronin (ANC)

Documents handed out:
South African National Road Agency Ltd Budget and Strategic Plan 2007/2008

Audio Recording of the Meeting

SUMMARY
The South African National Road Agency Ltd presented a review of its achievements over the last year and its proposed budget and strategic plan for 2007/2008. It gave an overview of the national road network, the findings of the Corporate Governance Review, and a summary of national pavement conditions, congestion and annual traffic trends. There was a need for a more coordinated safety approach and a Road Safety Management System was proposed. There was also a need for an integrated management system due to the increase in commercial transportation, which would incorporate a number of features from planning to system maintenance. The business plan was tabled, and it was indicated that stability of funding posed an ongoing challenge. The pricing trends and budget allocations were set out. SANRAL’s main focus areas were fully described, being community development, toll roads, job creation and contracts. SANRAL was in the process of implementing an intelligent transport system in Gauteng on the freeways, and this pilot project would form an integral role in traffic management during the 2010 World Cup.

Questions asked by members included clarity on construction activities that were affecting the road network, small enterprise involvement in construction, traffic control centres, the working of the safety management system indicators, and the increase in prices. Other queries addressed the proposed budget’s limitation to maintenance of the existing road network, the community development projects, the intelligent transport management system, truck stops and road management and flow on the George and Knysna route.

The minutes from the previous meeting were approved.

MINUTES
Proposed budget and strategic plan 2007/8: South African National Road Agency LTd (SANRAL) briefing
Mr Nazir Alli, CEO, SANRAL presented a review of the achievements over the last year and the proposed budget for 2007/2008. He gave an overview of the national road network and the multiplier effect of investment in roads. He tabled the findings of the Corporate Governance Review, which showed that SANRAL had scored high in most areas against the benchmarks. There was a fraud hotline.

Mr Alli then summarised the pavement condition, congestion and annual traffic trends. He outlined the safety strategy, stating that although there was a lot of good safety work, there was a need for a more coordinated approach. It was proposed that a Road Safety Management System (RSMS) be set up, which was an international trend that formed part of the overall management system for the roads. Current initiatives in this area included routine road maintenance, safety improvements on periodic projects and special projects. There was also a need for an integrated management system due to the increase in commercial transportation. The pillars of this would be programming and pre-planning, resource allocation and management, communication improvements, capacity building and system maintenance.

Mr Alli set out the business plan, stating at the outset that one of the challenges was stability of funding. He set out the various pricing trends and tabled a number of graphs on operational expenditure. He indicated that with the current budget allocation there would be a deficit, added to that which had been carried forward from previous years.

SANRAL set out its approach to community development, which fell into “conventional” identified projects and region-specific projects. Ten new projects had been identified and five in the OR Thambo District Municipality. There were 7 projects in the stage of empowerment impact assessment and three in detailed design stage.

Toll Roads were another focus of the briefing, and Mr Alli tabled maps and indications of the stage of each. Private sector investment applied to some areas.

The financial year for 2005/6 had used the performance indicators of road network, road agency indeces, road systems user satisfaction and the National Road Development Index. The achievements for each were outlined. The capital expenditure, operating expenditure and empowerment figures for toll and non-toll roads were presented in tabular form. The job creation and contracts were also given.

Mr Alli said that SANRAL was in the process of implementing an intelligent transport system in Gauteng on the freeways, which would use different technologies to collect information on traffic conditions and incidents. Information would be given to the public through variable message signs, radio reports and SMS services. This project would be extended along the M1, implemented on major freeways in Gauteng and would form an integral role in traffic management during the 2010 World Cup.

Other aspects handled during 2005/6 included acquiring additional property, and complying with the ISO 1400i Environmental Management System.

Discussion
The Chairperson asked for clarity on the statement that construction in various metropoles such as the Gautrain and 2010 stadia were affecting the road network.

Mr Alli replied that although the agency had sufficient funds to deal with road issues, it was having difficulty getting value for money. Although they were good for the economy in the long run, construction projects were hampering the operation of the road network, with increases of traffic and diversions. He continued that the agency’s function was to manage the risk on roads and the condition of the network was good considering its age.

Mr M Moss (ANC) asked if risk management and road maintenance was the agency’s fundamental objective, and why some provinces had higher accident rate than others. His second question was related to road construction projects and why Small Micro and Medium Enterprises (SMMEs) were not included in the signage.

Mr Alli replied that less than ten percent of accidents were a result of road condition. In regard to SMMEs 80 percent of road construction was carried out by such enterprises. Traffic volumes had not decreased, but the lower figures were a result of other types of roads, such as those in the Northern Cape, being incorporated in the national grid. He added that it was important to develop a culture of road safety in the country.

Mr M Swathe (DA) mentioned that in Limpopo there was a Traffic Control Centre on an R-designated road but it was a SANRAL project. He asked how this was so if R-roads were not part of the national grid.

Mr Alli replied it was a result of other roads being incorporated in the national grid, but their designation had not been changed. One of the reasons was that to do so would cause havoc to the country’s maps.

The Chairperson asked how the safety management system indicators worked.

Mr Alli responded that the agency used international benchmarks and operated in clusters, but once a decision had been made on SMS all the clusters had to carry out the same measures. One of the outcomes of this was the Incident Management System (IMS). He said that increased volumes of traffic meant more incidents and, although these could not be avoided they could be managed better. One of the problems was a lack of coordination between various emergency services and a course would be put in place to deal with this issue. So far the programming and pre-planning stages of IMS had been done. In relation to Construction Price Adjustment Indices the agency did not use the Consumer Price Index (CPI) but rather a Civil Engineering Plant Index, Fuel Index, Civil Engineering Material Index and Labour Index. Labour followed the CPI and the Plant Index was heavily dependent on the rand as many of the parts for heavy machinery were imported. The most erratic index were fuel costs.

Mr S Farrow (DA) asked if the Civil Engineering Index included the cost of bitumen.

Mr Alli said it did not as these costs were paid on invoice.

The Chairperson asked why prices had spiked in 2006.

Mr Alli replied that this related to the fuel price.

Mr Farrow asked if the high price of bitumen was a result of a lack of competition among suppliers.

Mr Alli said that was the case to some degree as there was a trend of only one or two tenders coming in and when the agency asked for a re-tender the prices were often higher.

Mr Farrow asked why the proposed budget only indicated the maintenance of the existing road network.

Mr Alli said that South Africa had a mature road system on the national grid, but the incorporated of other networks, such as resurfacing gravel roads could be termed new construction. In light of the projected budget, the agency could not foresee spending more due to ongoing construction projects. In relation to toll roads construction prices had risen as the agency was now required to obtain permits from the Department of Environment and Tourism (DEAT) and the Department of Minerals and Energy (DME), which took time and caused delays. In addition the allocation of new mining rights was also affecting costs because in the past farmers were given a once off payment, but now they were acquiring mining concessions and demanding royalties for land usage. All the projects undertaken by the agency also contributed to community development, particularly in rural areas.

The Chairperson said that the presentation was a little abstract as to precisely what the community development projects were, and asked for some elaboration.

Mr Alli said some of these projects were simple, such as providing bridges for accessibility to schools and the like, and upgrading access roads to the national grid. All such projects included road safety training. The guidelines used on allocating community development projects were the State President’s 13 nodes of poverty. 1% of the agency’s non-core budget was used for community development. In relation to the previous financial year the agency had met most of its performance indicators.

The Chairperson asked whether the visual display of the data for the intelligent transport management system was real time.

Mr Alli replied it was and it could even read number plates to some degree. However, this did raise privacy issues and the agency had to sort out how and when this information could be used.

Ms B Thompson (ANC) asked why the SANRAL truck stops in KwaZulu-Natal were not being utilised.

Mr Alli replied that truck stops were built by the agency, but managed by the local authority, and truck drivers were reluctant to use them because of the cost to them. He elaborated that sex workers were also a problem as they prevented truck drivers from using the facilities. The rules had been changed so that if a sex worker arrived at a truck stop with a driver they would be permitted entry, but were not allowed to solicit on the property.

The Chairperson said he had received complaints from constituents in the Eastern Cape about delays resulting from road works between George and Knysna and asked if the process regarding traffic flow was well managed.

Mr Alli stated that the process was being managed and the agency appreciated the frustration caused by these delays. He added that the public was more than welcome to contact the agency directly with such issues

Committee Minutes
The minutes from the previous meeting were approved.

The meeting was adjourned