ATC160317 : Report of the Portfolio Committee on Transport on its Oversight visit to the Passenger Rail Agency of South Africa (Prasa) and Mamelodi Autopax Bus Depot, dated 9 February 2016

Transport

REPORT OF THE PORTFOLIO COMMITTEE ON TRANSPORT ON ITS OVERSIGHT VISIT TO THE PASSENGER RAIL AGENCY OF SOUTH AFRICA (PRASA) AND MAMELODI AUTOPAX BUS DEPOT, DATED 9 FEBRUARY 2016

 

The Portfolio Committee on Transport, having undertaken an oversight visit to PRASA and the Mamelodi Autopax Bus Depot on 22 and 23 July 2015 reports as follows:

1. Oversight visit to PRASA

1.1        Introduction

The Committee conducted an oversight visit to PRASA on 22 July 2015. The objectives of the visit were to:

1. Receive an update from PRASA and the Department of Transport on the implementation of the Rolling Stock Fleet Renewal Programme, especially in relation to the construction of the manufacturing plant for the new rolling stock.
2. Conduct a site visit at Dunnottar, north of Nigel (Gauteng) where PRASA intends to establish a manufacturing plant for new rolling stock.

 

During the visit the Committee received a briefing on the following:

1. The newly acquired AFRO locomotives compliance with local standards;
2. The state of rail safety, in the light of recent derailments; and
3. Autopax, a PRASA subsidiary, operations in Mamelodi.

Members of the Committee that attended the oversight visit were Ms DP Magadzi (Chairperson), Mr SG Radebe (ANC), Mr L Ramatlakane (ANC), Mr MP Sibande (ANC),  Mr M S de Freitas (DA), and Mr TE Mulaudzi (EFF). The support staff were Ms V Carelse (Committee Secretary), Dr S Ngesi (Committee Researcher) and Ms Z France (Committee Assistant).

Department of Transport: Mr PG Selepe (Director-General); Mr JD de Villiers (Acting Deputy Director-General: Rail Transport); Ms MC Maleho (Director: Rail Infrastructure); Ms MD Tselapedi (Deputy Director); Ms G Semenya (Deputy Director); and Mr M Mkalipi (Director: Strategic Support and Stakeholder Management).

Passenger Rail agency of South Africa: Mr N Khena (Acting CEO); Mr S Zamxaka (CEO: PRASA Technical); Ms PT Ngubane (CEO: PRASA Cres); Mr EM Mofi (CEO: Rail Operations); Mr ZA Mayaba (Executive: Strategic Projects); Mr N Kondlo (Senior Manager: Business Performance); Mr NP Sebola (Group Executive); Mr S Sithole (Group Chief Strategy Officer); Mr V Kobuwe (Executive Manager); Mr ZA Mayaba (Executive Manager); Mr LL Gantsho (Acting Executive Manager); Ms N Zenani (Senior Manager: Communications); Mr KE Chinnappen (General Manager: Office of CEO); Mr H Emeran (General Manager); Mr RP Malaudzi (Programme Director).

Railway Safety Regulator: Ms TN Msisi (Chairperson of the Board); Mr N Poya (Chief Executive Officer); and Ms T Kgare (Chief Operations Officer).

The report provides an overview of implementation of the Rolling Stock Renewal Programme, the construction of the Dunnotar Manufacturing Plant, the compliance of the AFRCO locomotive with local standards and the state of railway safety.

 

1.2        Background information on the Rolling Stock Fleet Renewal Programme and the Dunnotar Manufacturing Plant

 

1.2.1     PRASA Rolling Stock Fleet Renewal Programme

The PRASA Rolling Stock Fleet Renewal Programme is the catalyst for the transformation of Metrorail services and public transport as a whole. It is a critical part of the rollout of the Government’s Comprehensive Rail Programme over the next two decades. The Rolling Stock Fleet Renewal Programme has been designed to achieve a number of key Government objectives. These include:

 

•           The delivery of quality services to citizens;

•           Revitalisation of South Africa’s rail engineering industry through local manufacturing and ensuring local content (more than 65% local content is set) as part of Government’s Industrial Policy Action (IPAP 2);

•           Employment creation;

•           Skills Development; and

•           Broad-Based Black Economic Empowerment (B-BBEE).

 

A new funding baseline has been allocated for the Rolling Stock Fleet Renewal Programme to procure 7 224 new rolling stock over a period of 20 years. The procurement of new rolling stock is a critical component of PRASA’s mandate to provide for modernisation and growth. PRASA has since made considerable progress to achieve this objective.  Gibela Rail Transport Consortium was the preferred bidder to supply 3 600 new Metro Rail coaches at a cost amounting to R51 billion, subject to indexation, over a ten year period (2015-2025).  The first trains were expected to be delivered in 2015.

 

1.2.2     Dunnotar Manufacturing Plant

Gibela would spend R1 billion to build a manufacturing plant in Dunnotar, 10 km north of Nigel to produce the 580 trains which will be manufactured in South Africa. The project aims to create over 33 000 direct and indirect jobs over 10 years. Gibela will train an estimated 19 000 people (artisans, technicians, train drivers, technologists etc.) during the life of the project.

 

1.3        Update on the implementation of the Rolling Stock Fleet Renewal Programme

During the visit at PRASA’s offices in Braamfontein, PRASA officials provided an update on its Rolling Stock Fleet Renewal Programme on the following areas:

• Details pertaining to the contract with Gibela,
• The salient features of the programme,
• The local factory, progress made to date and key implementation dates.

The procurement strategic objectives focus on the following areas: High localisation (including the local manufacturing factory), acquiring the latest technology, competitive pricing and the building of a sustainable industry.

PRASA followed a one supplier approach to take advantage of economies of scale based on volumes and with a view to developing a sustainable supply chain. The one large contract approach also allowed for pricing benefit through the tender process. The long-term contract allows the local industry to develop over time, allows PRASA to grow internally and to modernise the supporting structure. It further allows for more sustainable procurement.  The aim is to develop a sustainable local supply chain that would eventually become globally competitive.

1.4        The economic development impact of the programme

PRASA aims to spend R35.8 billion to empower local entities, R5.3 billion to develop Small, Medium and Micro Enterprises (SMMEs) and R1.7 billion to develop women-owned enterprises. Approximately 19 500 individuals will be skilled including 6 800 artisans, 5 200 engineers, 2 000 engineering technicians, 3 400 trade workers, 1 500 production staff and 600 technologists. Production will focus on local content; 67% in the 3rd year of the delivery and 75% in the final year of deliver.

 

1.5     Update on the construction of the local manufacturing plant

The site selected for the local factory is at Dunnotar Park in Ekurhuleni.  According to PRASA, the factory would be operational from July 2016. The total land area selected for the site was 288 ha and PRASA has allocated 78 ha for the development of the factory. Gibela would be responsible for the development of the local factory for the manufacturing and assembly of the new trains. At the end of the programme, PRASA would retain the local factory, tools and equipment. PRASA would develop the remaining site over the course of the programme to support the development of a local rail industry.

PRASA planned to hand over the Dunnotar Park to Gibela for construction by July 2015. The environmental authorisation and the township proclamation was completed and PRASA received the environmental authorisation (Record of Decision) 10 months after the financial close had been reached. This was performed with the support of the city of Ekurhuleni and the Department of Environmental Affairs.  However, certain environmental conditions were found during the environmental authorisation process which required Gibela to amend the layout plans.

After the wetlands study was conducted and reviewed in line with the Environmental Authorisation process, it was found that the park had two wetlands areas that impacted on the factory site. The record of decision prescribed a 30 meter buffer zone from the wetlands area. PRASA and Gibela redesigned the layout of the factory site and have also developed mitigation measures to ensure minimum impact on the wetland area. PRASA submitted for an amendment of the Record of Decision to address the conditions of the wetlands to the Department of Environmental Affairs. It is expected that the amended Record of Decision will be received by the end of July 2015. Handover of the site to PRASA will occur after the amended Record of Decision is received.

PRASA reported that an estimated 8 088 direct jobs would be created from the modernisation programme. An estimated 19 500 individuals would be part of the skills development programme as follows: Artisans, Engineers, Trade workers, Engineering technicians, Technologists, and Production staff.

1.6        Compliance of AFRO locomotives with local standards

PRASA CEO for Rail provided the Committee with a report on the AFRO locomotives compliance with local standard, as there were media reports about the safety standards of the locomotives.  PRASA acquired AFRO 4000 diesel locomotives from Spain in 2015 and had received 13 at the time of the oversight visit. The procurement of the locomotives was to service the long distance routes.

The acquisition of AFRO and Hybrid locomotives was informed by the following key factors:

•           High failure rate of locomotives received from Transnet Freight Rail (TFR), in particular diesel locomotives and 7E locomotives (Obsolete components of 7E locomotives and their discontinuation by Transnet);

•           Turnaround strategy for long-distance passenger services within the business;

•           Dieselization strategy of TFR;

•           Regional Services (Rural - Accessibility);    

•           Cross-Border Services (Access to South African Development Community countries);

•           Minimise time and cost of multiple locomotive changes per route; and

•           The modernisation programme within PRASA.

 

According to PRASA, the current AFRO 4000 was a modified version of the EURO 4000 and has been modified to suit local conditions (including height reduction to meet TFR Electrical Safety Instructions; BBF3690, 2012). The AFRO 4000 complies with the standard specified in the Transnet Freight Rail Electrical Safety Instructions (BBF3690, 2012). PRASA has been granted permission for testing and commissioning by the Railway Safety Regulator (RSR). Transnet has allowed PRASA to conduct tests on its network. The testing and commissioning programme has been running for the past 6 months under normal operating conditions both within the Metrorail and Transnet lines. There were ongoing discussions with TFR on the Standard regarding 3kV network before the locomotives could operate in that section of the network.

PRASA reported that the height of the AFRO 4000 was 4.1 meters. The minimum safety standard was 4.5 meters, allowing a 360 mm distance between the electrical contact wire and the top of the locomotive. PRASA reported that the AFRO 4000 locomotives therefore met the minimum standards for operations.

The RSR further reported that the evaluation of the AFRO 4000 locomotive would be finalised by the end of 2015.

1.7        State of Rail Safety

The Chief Executive Officer (CEO) of RSR reported on the state of railway safety during the 2014/15 financial year.

The increase in the number of occurrences is mainly attributed to the following areas:

• Collisions during movement of rolling stock;
• Persons struck by trains;
• Derailments during movement of rolling stock;
• People-related occurrences: trains outside station platform areas or in section; and
• Passenger-related occurrences: travelling outside designated area of train.

South African railway lines were generally safe. The CEO provided an update on investigations into recent train collision at Peelton, Booysens and Denver.  The RSR further identified key challenges for the rail industry which were:

• Ageing infrastructure;
• Inadequate maintenance practices;
• Inadequate human resource capacity leading to non-adherence to Standard Operating Procedures;
• Risks associated with the introduction of new infrastructure and technologies;
• Inadequate land use planning resulting in communities residing within rail reserves.

Signal infrastructure maintenance therefore had to be prioritised as non-maintenance could increase the risks of accidents and the discontinuation of services.

1.8        Committee observations: PRASA

• The Committee did not conduct a site visit at Dunnottar, north of Nigel (Gauteng) where PRASA intends to establish a manufacturing plant for new rolling stock as the handover of the site had not yet taken place.
• The delivery date for the first train from the Rolling Stock renewal process was November 2015. The commencement date for the construction of the manufacturing plant was planned for July 2015, but the site was not yet handed over to the contractor.
• Concern was expressed about the state of commuter rail safety due to the train accidents.
• The Committee noted the report from PRASA on the delivery of the AFRO 4000 diesel locomotives. The Committee further noted from the report that the locomotives conformed to the prescribed height specifications for operations on the South African rail network. The Committee further noted that the Railway Safety Regulator (RSR) was conducting an evaluation process regarding the safety of the locomotives. The evaluation process was expected to be finalised by the end of 2015.      
• Concern was expressed about the train accidents at Denver and Booysens. The Committee further noted the report from the RSR with regard to the lack of maintenance of rail infrastructure on commuter rail operations.

1.9        Recommendations

The Committee recommends that the Minister of Transport ensure that:

1. The RSR provides the Committee with a report on the outcome of the evaluation of the AFRO 4000 locomotives.
2. PRASA provides the Committee with an update on: (i) the completion of the depot, (ii) delivery of coaches, (iii) cancelling of contracts and (iv) the costs and consequences associated with the cancelling of contracts.

 

 

 

1. Visit to Mamelodi Autopax Bus Depot

The Committee visited the Mamelodi Autopax bus depot on 23 July 2015 during early morning peak hour traffic to assess the status quo after the recent bus commuter challenges since PUTCO had suspended its bus operations in the area. The report contains (i) observations made by members during the visit, and (ii) the outcome of a meeting with the Department of Transport and the Gauteng MEC for Roads and Transport on the Autopax/Mamelodi Bus Contracts held on 18 August 2015 at Parliament. 

2.1        Observations: Mamelodi /Autopax visit

Officials of the Gauteng Department of Roads and Transport and Autopax addressed the Committee on the challenges experienced in the implementation of the Autopax/Mamelodi bus contracts and on the way forward. The Committee would receive a full briefing by the Gauteng MEC for Roads and Transport on the way forward on a meeting to be held at Parliament on 18 August 2015.

Members travelled on the routes and the following matters were raised by commuters:

 

• Bus fares were cheaper than taxi fares on the route;
• There was no central point to lodge taxi-related complaints;
• Commuters had no problem with taxis and buses operating on the same routes as the demand for transport was high;
• Commuters were generally happy with the service provided by Autopax and wanted the status quo to continue after the three month period that Autopax will be operating on the route;
• The following concerns were raised by commuters regarding Autopax: buses were sometimes late during peak hours, destination signage was not clear and Autopax did not offer the option of a monthly ticket. The overall service of Autopax was good compared to the PUTCO service; and
• The cash fare based operations were regarded by members as a security risk and needed to be addressed by Autopax.

 

 

 

1. Briefing by the Gauteng MEC for Roads and Transport on the Autopax/Mamelodi Bus Contracts

Subsequent to the oversight visit of the Committee to Mamelodi, the MEC briefed the Committee on 18 August 2015 at Parliament about the Autopax/Mamelodi Bus Contracts.  Officials from the National Department of Transport were present at the meeting. The MEC in the follow-up briefing indicated that Autopax was currently operating 73 buses and with 5 buses as its spare capacity in Mamelodi. Permits were issued by the Gauteng Provincial Regulatory Entity. Drivers were recruited and trained in routes and operations. There was an increase in the number of passengers due to improved satisfaction levels with Autopax services. Ticket sales were currently conducted at 4 different points within Mamelodi, namely, Denneboom Station, Gardens Station, Pienaarspoort Station and at Mamelodi Depot.

3.1        Operational challenges

Autopax had not acquired electronic ticket machines to enable it to sell tickets electronically on-board. It was reported that 50% of buses would have electronic ticketing machines by the end of August 2015 and a further 50% would be installed by the end of September 2015. Autopax reported that prior to its withdrawal of service, Putco unfairly reduced fares, which influenced the initial fare structure. This meant that Autopax charged similar fares as those reduced by Putco in its last month, which status would also apply for the month of August 2015.

Autopax has commenced with consultations with commuters to inform them of the readjustment of fares to the initial fares that were charged by Putco prior to the last reduction referred to above.

3.2        Way forward

The MEC outlined the following options in terms of the current Autopax contract:

• Extend the existing Autopax contract and simultaneously initiate procurement process in terms of either Section 41, 42 or 46 of the National Land Transport Act (NLTA);

• Negotiate an extension of contract in line with clause 6.2 of the current contract with Autopax;
• The Minister should devolve the function to municipality and appoint the Municipality as a contracting authority;
• Allow for GNTA/Matrans Court Application to run its course.

A working group was established by the Department with current bus operators to develop proposals for 7-year contracts. Engagement with the taxi industry on the integration of the industry in the public transport system in the province would be continued through the Joint Working Committee established by the Premier. A Public Transport Technical Committee led by the Gauteng Director-General composed of officials from the Office of the Premier,  GDRT, the National Department of Transport, National Treasury, Provincial Treasury, the municipalities, Departments of Education,  Economic Development, Community Safety and Education, and the CSIR was established to review the current policy framework on subsiding public transport and to make recommendations on the procedures to follow to conclude long-term subsidised contracts with public transport operators. This Committee would report to a Political Committee led by the Premier.

3.3        Current funding situation

The Public Transport Operations Grant was a supplementary grant for “public transport services provided by provincial departments”. National Policy Framework specifies that it is for “bus commuter services” and not other public transport services. R1.86 billion was allocated to Gauteng for 2015/16. The province was supplementing this grant for contracts that were ceded from the North West Province to Gauteng. The CSIR was appointed by the Department to review all existing bus routes in the province and make recommendations on possible rationalisation of routes. The study would take into account a recent household travel survey, municipal ITPs and new service offerings such as the bus rapid transit systems.

3.4        Financial and Fiscal Commission (FFC) Recommendations

Municipal ITPs must indicate how they intend to exercise control over the public transport network, including required resources. This should be one of the minimum requirements for preparing ITPs and should be gazetted. The National Department of Transport (as custodian of national transport policy) should formulate and implement a transport subsidy framework, which explicitly incorporates social welfare, service productivity and environmental management as endorsed in current national policy. Given the ever increasing complexity of modern transport networks, municipalities should be guided on the minimum skills set required to manage modern transport systems. This was one of the critical interventions to unlock service delivery constraints and should be carried out by the Department of Transport and SALGA. A comprehensive review of municipal ITPs should be conducted with a view to identifying gaps that needed to be addressed. 

 

3.5        Observations

Members raised the following observations during discussions with the MEC and the Department of Transport:

3.5.1     The Committee noted that the Gauteng National Taxi Alliance and Mamelodi Transport Solutions have filed a Notice of Motion against the Department and Autopax seeking a declaratory order to review and set aside the decision to appoint Autopax and direct the Department to publish, evaluate and adjudicate an open tender for the provisioning of public passenger services for the eight contracts. The Committee further noted the intension by the Department to oppose the Court application. However, the Committee recommended that the Department consider the possible impact of a successful application by the applicants on bus services. The Department was urged to consider a mitigating strategy.

3.5.2     The MEC was commended for establishing the working group, reviewing of routes, the initiative to transfer the bus operating function to municipalities and working with all spheres of government to find solutions for transport matters.

3.5.3     The Committee noted the recommendation from the FFC that Municipal Integrated Transport Plans must indicate how they intend to exercise control over the public transport network, including required resources, but queried the capacity of municipalities to provide the services.

3.5.4     The discussion on the subsidisation of taxi operators and integrated public transport needed to continue. The Committee noted the undertaking by the Deputy Director-General that going forward the Division of Revenue Act (DORA) will not only make reference to the subsidisation of the bus industry, but the taxi industry will also be incorporated. This will be effective from the issuing of the Medium Term Budget Policy Statement for 2015.

3.5.5     The Committee observed that the issues pertaining to the subsidisation of public transport, within the current allocation, needed further consideration. In addition there should be further discussions on the integration of Small, Medium and Micro Enterprises (SMMEs) and cooperatives in the public transport industry.

 

Report to be considered.