South African National Roads Agency Limited: 2006/07 Annual Report briefing
NCOP Public Services
24 October 2007
Meeting Summary
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Meeting report
SELECT
COMMITTEE ON PUBLIC SERVICES
24 October 2007
SOUTH AFRICAN NATIONAL ROADS AGENCY LIMITED: 2006/07 ANNUAL REPORT BRIEFING
Chairperson: Mr R
Tau (ANC, Northern Cape)
Documents handed out:
South
African National Roads Agency Ltd Annual report 2007 Presentation
South African
National Roads Agency Ltd (SANRAL) Annual Report 2006/07
Audio
recording of meeting
SUMMARY
South African Roads Agency Limited (SANRAL)
The Committee was briefed on the Annual Report and performance of the South
African Roads Agency Ltd (SANRAL). The presentation covered issues of corporate
governance, noting that the risk assessment system was comprehensive. In regard
to operations, it was noted that congestion was particularly a problem
in Johannesburg. SANRAL’s role was limited to safe engineering, but could not
control drivers’ adherence to road rules. It worked with Arrive Alive and
emergency services. A stable flow of funding remained a challenge, because of
the timing of road maintenance. Furthermore, SANRAL had not managed to achieve
its targets for private sector investment. It had also failed to reach the
target for incorporation of provincial roads into the national road network.
Expenditure targets and percentages achieved were set out. The financial
performance statistics were also included.
Members asked questions on monitoring of fees collected at toll gates, road
inspections, the relationship between concession holders, agencies and the
National Department of Transport, and the benefits given by concession holders
to the local communities. Further questions related to the repairing of
potholes, the budget of SANRAL to the different provinces, and the lack of maintenance
of roads in the North West, particularly the N12, whether there were district
road agencies, whether there was integrated planning, and the reasons for the
loss of R172 million, which were explained in the Annual Report.
MINUTES
South African Roads Agency Limited (SANRAL)
Mr Nazir Alli, CEO South African Roads Agency Limited, briefed the
Committee on the Annual Report and performance of SANRAL. He firstly addressed
issues of corporate governance, stating that independent assessors came in and
did an assessment in areas of governance. The Enterprise Wide Risk Management
system included the risk register and Internal Audit Review.
Turning to the operations of SANRAL, Mr Alli said that SANRAL noted that
congestion happened mainly in Johannesburg. Vehicle travel per 1 km of road
(density) had decreased because SANRAL had introduced more roads. He
highlighted that SANRAL could not be responsible for drivers’ lack of adherence
to road signs and all other road rules. SANRAL was responsible for ensuring
safely engineered roads. It worked closely with the Arrive Alive campaign and,
together with the emergency services, they had
developed a strategy of how to deal with road incidents. Further focus areas
were the flow of traffic nationally and the traffic trends.
Mr Alli tabled the proposed road safety strategy, which included a road safety
management system (see attached presentation). Current projects towards road
safety included maintenance, special safety projects, and moves towards an
integrated strategy.
Mr Alli said that a stable flow of funding was important and that was still a
challenge within the agency, because of the timing of maintenance of road
infrastructure. Also in terms of their business plan, SANRAL had budgeted for
85% investment by the private sector, subject to obtaining all the necessary
approvals from relevant authorities for planned projects, but instead the
private sector only invested in 23% on SANRAL’s projects. Incorporation of
provincial roads was targeted as 1 600 km of provincial roads to be
incorporated into the national road network by 31 March 2007. Instead, only 604
km of provincial roads were actually incorporated in this period.
For the financial year 2006/07, the smooth travel expenditure target was set at
95% for travel
on less than 4.2 metres per km roughness,
but reached only 94%. The target for High texture exposure was 95% for
travel on higher than 0.4 metre texture, although this target was exceeded,
reaching 97%. The Bridge condition exposure target was 90% of travel over or
under bridges, with
overall Condition Index higher than the 80% target, reaching 84%.
Mr Alli then tabled a number of graphs and tables to show the status, operating
and capital expenditure on the various projects, and compared the performance
to the previous year. The amount of empowerment work had risen. He also
detailed the public/private partnerships and the private sector investment and
showed maps of where new contracts were awarded. He detailed the property portfolio of SANRAL. Environmental
management plans were discussed. Finally he tabled the job creation through
SANRAL’s operations, and detailed the gender and race statistics for the
organisation.
Discussion
Mr M Mzizi (IFP) commented that the fees at the tollgates increased all the
time and asked how the money collected was monitored, and what happened to the
funding. He added that nothing seemed to monitor the number of cars that passed
by the tollgate, and that he feared that those collecting the funds would be
able to pocket the tolls. He said that his understanding was that the monies
were put towards maintaining the roads. He then asked when a road inspection
would take place.
Mr Alli responded that people should always ask for a receipt at a toll
gate. The monies received went to the
maintenance and up-keep of roads and repayment of loans. As to the number and
weight of vehicles passing through, he said that SANRAL implemented Traffic
Control Centres in order to weigh vehicles. However that system was not good
enough for prosecution purposes as it was a monitoring tool only, and people
would simply be charged for overloads. When it came to prosecuting, SANRAL
would inevitably lose out because people accumulated fines and then would go to
the magistrate’s court and plead poverty. The centres were recommended to do
roadworthy checks. Centres were located so as to look after a network of roads.
With respect to road inspection, he said that every kilometer was covered by
routine maintenance road contractors.
The Chairperson encouraged the members to ask questions relating specifically
to their provinces if they so wished.
Mr L van Rooyen (ANC, Free State) asked what the relationship between
concession holders, agencies and the National Department of Transport was. He
said he asked this in the light of trying to understand services and who owned
the roads. He asked further whether there was a concession holder on the N1 and
also requested information of how the community benefited from concession
holders.
Mr Alli responded that none of the roads in South Africa were privatized. They
entered into a concession for 30 years. At the end of the concession period,
the concessionary should not be able to undertake road maintenance on that
stretch for five years. The roads were not privatized, but the operation over
those roads was. In concession contracts, there were clauses about social
responsibilities of the concessionaries. There were four concessionary roads in
South Africa, including the N3, N4 Platinum Highway and N4 going East.
Mr van Rooyen asked what the acceptable period for repairing potholes was,
because even though Mr Alli had said that there was period allowed for repairs,
no action seemed to be taken to repair.
Mr Alli noted that the repair period of potholes depended on their size, and he
requested that if members were driving and came across potholes, they should
contact the number for the road agency so that they could mobilise a contractor
to repair them. He said that in theory if a contractor failed to attend to
repairs in a designated period there as a penalty.
Rev P Moatshe (ANC, North-West) asked what criteria were used to allocate the
budget of SANRAL to the different provinces.
Rev Moatshe said that there were national roads and provincial roads and asked
whether there were any municipal roads, and how these were distinguished and
who maintained them.
Rev Moatshe raised concerns that there was no maintenance of roads in the North
West province.
Rev Moatshe said that toll gates were increasing in number and asked who had
control over when and where a tollgate should come into place. He also asked if
privatisation of toll roads would be phased out and eventually become
government roads.
Mr Alli said that SANRAL did not have authority to decide on toll roads as that
was done under the authority of the Minister. He said the process involved
writing to municipalities, and premiers of the provinces would have to be
consulted. He then explained that there
was a legislative process of what constituted a national road. He said that
routes were distinguished using route numbers with an ‘N’ representing a
national road, and ‘P’ a provincial road. In response to the budget allocation
between provinces, he said that an explanation of that would need to be very detailed
and suggested that the Committee set another date to meet with SANRAL to
specifically discuss this.
The Chairperson said that the roads in the North West were very bad. Trucks
would leave Johannesburg and drive through Kimberly to avoid the bad roads in
the North West. Now those routes ended up being congested. He said that SANRAL
made a commitment to work on those roads, and specifically the N12.
Mr Alli said that the blockage in terms of work being done on that road had
emanated from the Department of Mineral Affairs. He said that the first things
that had to be done were an assessment, and then a separate environmental
impact assessment had to be done, and that had to go to the Department of
Minerals and Energy. This Department requested that SANRAL give them
guarantees, which were not in line with legislation. SANRAL organised a meeting
with the Department but they had cancelled it a day before the meeting. Mr Alli
said that already a contractor had been contracted to start work and it was merely
the delay from the Department of Minerals and Energy that was stopping the work
at this stage.
The Chairperson said that he knew about SANRAL and the provincial agencies but
on their visit to Gauteng, the Committee had seen a big board of “District Road
Agency”. He asked if there were any legitimate district agencies in place.
Mr Alli replied that there were only three road agencies in South Africa, which
included Johannesburg and Limpopo. There were no district road agencies.
The Chairperson said that the kind of work being done on the road did not take
into account integrated planning. He asked whether there was any kind of
integrated planning with respect to infrastructure.
Mr Alli said that one challenge that was faced was integrated planning. He said
that such planning would happen at the DG’s cluster, but there was not enough,
and that SANRAL needed to look into that.
The Chairperson noted that the Auditor-General had said that SANRAL had
incurred a loss of R172 million, and asked what the reasons for this were, and
how SANRAL planned to better its financial health.
Mr Inge Mulder, CFO,
SANRAL, referred the Members to page 108 of the report for a
detailed explanation. She said that when a toll was constructed, no money would
be received until the toll began to operate. The life of the toll must also be
taken into account. Non-toll roads could only spend money actually received.
However, in accounting terms, some of the income would be deferred over the life of the non-toll
road because the Accounting Standards said that grants of government assets
must be deferred. Therefore the more that was spent on capital expenditure, the
bigger that deferral became. The loss stated by the Auditor-General was in
effect a book loss.
The Chairperson thanked SANRAL for the report and said that there was certainly
room for improvement with respect to road maintenance and improvements.
The meeting was adjourned.
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