Minister Progress Report: Transport

Meeting report

Briefing by the Minister of Transport

Minister Mbalula centred his briefing on eight key items: Black Industrialist Programme; Economic Regulator of Transport Bill; introduction of a 24/7 work shift within traffic law enforcement; planned road shows; appointment of contractors to work on the Moloto Development Corridor; R10.75 billion for the S'hamba Sonke Programme; 580 trains to be built in South Africa; and the deployment of new trains.

On the Black Industrialist Programme, he stated that the structure of the economy would be transformed through the creation of black industrialists with the biggest chunk of investment in infrastructure in order to empower the youth, women, and people living with disabilities in the various modes of transport. The Department of Transport through the Passenger Rail Agency of South Africa (PRASA) was investing significantly in the acquisition of new trains and the modernisation of the commuter railway network. In 2012, the Gibela Rail Transport Consortium was announced as the preferred bidder in the New Rolling Stock procurement process.  The Gibela Rail Consortium’s equity shareholding consists of Alstom Southern African Holdings, a French Company with 61%, and South African Companies, namely New Africa Rail with 9% and Ubumbano with 30%. 

The Gibela Consortium commenced with manufacturing activities in January 2018. The site for the local factory is approximately 72 hectares and would house the factory, Supplier Park and Rail Training School. Within the consortium, Ubumbano has been given the responsibility to develop and manage the supplier park. The local factory was targeting the creation of 1500 new jobs and of that employing 99% South Africans, 85% historically disadvantaged South Africans and minimum of 25% women. To date, a total of 908 employees have been employed across various categories, for both manufacturing and maintenance work. Of the 908 employed, 809 were South African citizens, 413 were women, 681 youth, 733 skilled black citizens, and 839 South African citizens.

Skills Development was critical to enable the creation of meaningful, sustainable jobs and as such the Rolling Stock Fleet Renewal Programme has a strong focus on skills development. A training centre has been established to enable skills development. The skills development programme provides bursaries for universities and TVETs, internships, learnerships, apprenticeship, Railway Introduction Course and other relevant interventions. Gibela has, therefore, partnered with various institutions of high learning (universities and TVETs), SETAs and other training centres to deliver world-class training as of June 2019. To date, 3 647 individuals have been up-skilled including artisans, trade workers, engineers, engineering technologists, professional engineers, technologists, designers and other staff. By the end of this programme, 19 527 individuals would have undergone training in the various and relevant technical fields.

There is a strong focus on skilling artisans and engineers as a result of the train manufacturing process. By the end of the programme, Gibela would have, at minimum, achieved to train 6’766 artisans, 1957 engineering technicians and 596 professional engineers. To enable this, Gibela was expected to spend 1.75% of the contract value (approximately R928 million) towards skills development.

The total percentage routine road maintenance (RRM) expenditure paid to black-owned SMMEs and contractors (based on black ownership of main contractors) was 75% and 74% in 2017/18 and 2018/19 financial years, respectively. According to SANRAL’s 2019 Integrated Report, 15 299 jobs were created (full-time equivalents). Of the 15 299 jobs created, 75.9% was towards males, 24.1% was towards females, and 56.8% was towards youth.

In terms of the Oceans Economy Programme (Operations Phakisa), R9.2 billion has been secured from both government and privates sector. This would lead to a creation of 4 589 jobs. The government’s contribution was about R8 billion and that of the private sector was R1.2 billion. The government investment towards ports infrastructure provided for an additional R2.7 billion to the 2019/20 financial year for further upgrades. These upgrades include R700 million in dredging and berth infrastructure works that TNPA would fund to enable a concession for a floating dock in Richards Bay to a private sector. There has been R561 million spent by TNPA to date since commencement of Operation Phakisa on upgrades of current Ship Repair Facilities.

To date, a total of 684 construction related jobs have been created through 5 completed projects. Temporary and permanent jobs created went to the following beneficiaries: 75 were for women, 209 for youth, and 39 for people with disabilities. Through these projects 13 SMMEs and 19 B-BBEEs were created and sustained.

Concerning the Economic Regulator of Transport Bill, the Minister stated the intention was to deal decisively with regulatory shortcomings across the transport sector, which would lead to transparency in pricing and leveling the playing field within the transport industry. The Department’s Economic Regulation of Transport Bill was aiming to play an effective oversight and regulatory role to ensure technical, operational and pricing efficiency in the transport sector; as well as to reduce the cost of trade and improve the overall competitiveness of the economy.

Through the ERT Bill, the Department of Transport (DOT) was intending to consolidate, rationalise and, where necessary, redesign economic regulation in the transport sector into a single multi-modal regulator: the STER (Single Transport Economic Regulator). It was reported there were processes that unfolded during the development of the ERT Bill since 2018 up to now. Currently, the ERT Bill (2019) comprised comments received from the public. The DoT would table to cabinet the Update Cabinet Memo, the ERT Bill, and supporting documents before the end of the current period on receipt of the legal opinion from the Office of the State Law Advisors.

Regarding the introduction of a 24/7 work shift within the traffic law enforcement fraternity, he reported that they have intensified the collaboration and engagement between the Department of Public Services and Administration, the Road Traffic Management Corporation (RTMC), provincial governments, and labour formations to ensure the availability of officers on the road at all material times.

The RTMC submitted the 24/7 shift system business case to the DPSA on the 30th of November 2016. The RTMC together with the provinces has developed Provincial Business Bases and held meetings with the Provincial Treasuries on the needs detailed by the provinces for them to implement the 24/7 shift system. To date, the only process still to be finalised was the tabling of the Provincial Business Case to their provincial cabinet for approval. Once that was finalised, global business cases would be submitted to the DPSA for further processing. 

About planned road shows, he indicated that his department would conduct road shows with provinces, municipalities and the private sector to deal with the scourge of road fatalities and injuries. The 4th Road Safety Summit 2018, themed “Working Together Saving Millions of Lives”, was held in Polokwane (Limpopo) on 16-17 November 2018. The objective was to assess achievements and challenges in the implementation of the NRSS 2016-2030 which is aimed at addressing road fatalities. The summit included, among others, taxi associations, law enforcement agencies, local government, other departments of government (such as the Department of Health), interfaith groups, youth, business, NGOs, and CBOs.

Furthermore, Minister Mbalula reported that they have appointed contractors to commence with the Moloto Development Corridor by expanding the current road, making it more user-friendly. At the end of the project, they would have created 12 500 jobs. The DoT was also going to unbundle the bus contract in this corridor to widen participation by small localised and designated groups. The upgrade of the R573 – Moloto Road – was progressing steadily, but progress has brought with it some challenges. Encroachments, in the form of structures being erected without approval inside the building restriction zone and informal businesses close to the road reserve, have caused disruptions and put the safety of road users at risk. SANRAL has partnered with local municipalities and consulted local traditional authorities to try to address these issues, but the problem persists. SANRAL embarked on a road show to educate stakeholders on statutory control issues and the allocation of tribal land to communities.

Pertaining to the R10.75 billion allocated for the S'hamba Sonke Programme or Provincial Maintenance Grant, he made it clear that they would continue to address spatial inequalities, create job opportunities, and also open the rural economy to new investment and development. During the 1st Quarter, a total of R2 630 840 was transferred to the provinces and R 2 238 538 was spent. The purpose of the grant is to supplement provincial roads investments and support preventative, routine and emergency maintenance of the provincial road networks; ensure that provinces implement and maintain road asset management systems; and promote and support the use of cost effective labour-intensive methods in road maintenance programmes though the Expanded Public Works Programme (EPWP).

Moreover, Minister Mbalula informed the Committee that the remaining 580 trains would be built in South Africa at a local factory located in Nigel, Ekurhuleni. The government was facilitating the development of a supplier park that would support manufacturing at the factory with local components. Manufacturing at the local factory began in January 2018 and was officially launched by the President of the Republic of South Africa in December 2018. To date, major milestones have been reached with the manufacturing of three locally manufactured trains that would be delivered to the Western Cape, KwaZulu-Natal, and Gauteng.

A supplier park would be constructed next to the local factory and it was a critical enabler to support localisation and develop a rail industrial hub. Some delays were experienced in the sale of the construction site and securing funding for the development of the supplier park.  PRASA and Gibela were in the process of reviewing the funding arrangements for the supplier park and finalising the sublease agreements.

Lastly, he said the next deployment of the new trains would be at Saulsville, Mabopane, Naledi, Khayelitsha, Umlazi, and KwaMashu. PRASA has experienced delays in the readiness of infrastructure for the deployment of the new trains that were being manufactured. The Minister has intervened by establishing the War Room at PRASA, to ensure corridor readiness. PRASA was preparing mitigation for the commercial operation of new trains across all three regions: KZN, Western Cape and Gauteng.

Discussion

Mr S Zandamela (EFF, Mpumalanga) remarked that nothing has been said about the rail line that has been there when the Moloto Road Project was started. He was of the view that the work that was currently being done on Moloto Road was not going to decrease road fatalities because the lane for cars was too narrow. He asked for the breakdown on the number of students to be absorbed by the DoT seeing that it was increasing the intake of students in TVET Colleges.

Mr B Hlabisa, DDG for Public Roads: DoT, informed the Committee that the rail line along the Moloto Road got no funding from the fiscus. The economics were not dictating a justification for its improvements, but were dictating that they put a bus lane that was going to be active between 5 am and 9 am and during peak hour traffic in the afternoon. There was likelihood that the rail line would be funded by China. He also indicated that a bigger road reserve was needed to expand the road, but that needed to be discussed with the landowners adjacent to the road. To make the road safe, it would take five years. The number of cars that use the road must justify the expansion, but the road was mostly used by buses. He informed the Committee the Moloto Road issues were historical. The road was segmented into three parts because it was serving the provinces of Gauteng, Limpopo, and Mpumalanga. There have been issues about the manner the road has been handled in terms of the allocation of the resources. But now it has been agreed that it has to be taken back to the National Department. Certain sections of the road from Limpopo and Mpumalanga have been handed back to the National Department. Gauteng still has to come on board. New designs have already been done in Mpumalanga and Limpopo. A socio-econo impact study was being undertaken because many communities were divided by the road. He stated further that students with bursaries were trained according to the needs of the DoT and would be absorbed into the system

Mr I Sileku (DA, Western Cape) wanted to understand if there has been any research done on the road fatalities because they were increasing yearly. He also wanted to find out if attempts have been made to deploy law enforcement personnel in accident hotspots areas around the country; and asked further how many trains have been vandalised.

Mr Hlabisa indicated that the Road Safety Strategy has identified alcohol consumption; unworthy road vehicles; and careless pedestrians as the main causes of road fatalities along the Moloto Road. He stated that the hotspots were not easy to police due to the topography of the areas. They only erected a big warning sign to alert motorists. The allocation of resources on hotspots was disproportionate. The vandalism of trains has been reduced by 60% in the first three months. On-time performance has improved by 15%. Commuter numbers were also improving. The train performance and service was also slowly improving.

Mr A Gxoyiya (ANC, Northern Cape) commented that he encouraged the programme of black industrialists, but his main worry was the 61% shareholding of the French Company in Gibela. He felt the majority of shares should be held by the locals because the bulk of the profit was going to leave the country. He also stated that he was concerned that there was no exit strategy to ensure that up-skilled individuals would either get work in the private or public sector. He said the emphasis should be on road maintenance service providers rather than on road building companies that were already established.

Mr Hlabisa explained that they had to agree on an upscale of shares regarding Gibela Consortium. There was no funding for the transaction, but by 2032 it was envisaged that the French Company would be gradually phased out because 60% of the work was already done by South Africans. The French Company was only providing skills development, training, and expertise until such time that the SA government was satisfied. Gibela has been asked not to build more trains at a fast pace until things were improved in the sector.

Ms S Shaick (ANC, Limpopo) wanted to find out if the expiration term of the Transport BEE Charter Council was not going to affect transformation because the annual report of the DoT indicated there would be delays in the appointment of members for the Council and the process would be finalised at the end of the 2020/21 period.

Mr Hlabisa agreed that there were delays in the appointment of members. All the BEE Charters have been reviewed across the government. Objections have been received from the tourism sector.

Mr T Dodovu (ANC, North West) observed that the black industrialist programme was the centerpiece in SA’s transformation policy. It must be focused to ensure the geographic spread was taken care of instead of focusing on urban centres, and it must address the issue of gender. Black industrialists should be owners of the assets so that they could see the value of their work. The focus should also be on localisation instead of relying on foreign companies that were producing for the country. He suggested that the 2015 DTI seed the injection of R1 billion for black industrial policy must be followed up. He noted that the Moloto Road Project needed a national focus and its limitations have to be attended to.

Mr S Mfayela (IFP, North West) asked if there were any plans to help the taxi industry that is owned by blacks to grow because it has got the potential to grow the economy of the country. He said he would like to see the taxi owners owning spare shops and filling stations.

Mr Hlabisa indicated that the taxi industry does not want formalisation because they do not want to pay taxis and bank the money. The industry wanted to remain informal.

Ms Z Ncitha (ANC, Eastern Cape) enquired if there were any plans in place to develop the East London port; and wanted to know if there has been any standardisation in the allocation of funding for the bus rapid transport development.

Mr Hlabisa explained that they have done a review on the East London port and came to a conclusion that it has not reached full capacity in terms of utilisation because it was still at 68%. They were not envisaging many improvements. Bulk investment has been done on Coega. It was important to look at the IDPs of the regions as they develop. Subsidies to bus companies vary according to areas and depend on the purpose of the route. The service could run in rural areas, but commuters would pay dearly.

Minister Mbalula said a new agenda was to be set for the taxi industry around the country. The DoT was negotiating a consensus with them, and they had to address the recapitalisation challenges. The Moloto Road Project was still on track, and the DoT needed to ensure that the Gauteng Transport Department was on board.

The Chairperson remarked that the ball was in the Members' court to monitor the implementation of the plans. The BEE Charter review process needed to be finalised to ensure beneficiaries were benefiting from it. Lastly, it was important to engage the taxi industry about the benefits of being formalised.

The meeting was adjourned.