Members of the Standing Committee on Public Accounts (SCOPA) have expressed growing frustration with the management of transport State-owned enterprises (SOEs), particularly focusing on Transnet, which yesterday they described as being on the brink of collapse due to mismanagement.
In a heated session with Transport Minister Barbara Creecy, MPs probed the performance of South African Airways (SAA), Transnet, the Road Accident Fund (RAF), and the Passenger Rail Agency of SA (PRASA), suggesting the entities were unlikely to meet their performance targets.
SCOPA members urged Creecy to submit the CVs of Transnet executives, highlighting their belief that incompetence was at the heart of the entity’s management woes.
Creecy acknowledged the problematic situation surrounding Transnet, revealing that total irregular expenditure for the 2023/2024 financial year amounted to R1.763 billion, a significant but still troubling 37% decrease from the previous year.
In tandem, fruitless and wasteful spending has dropped dramatically, from R120 million to R15m.
Despite these reductions, Creecy noted Transnet’s current recovery plan has seen it achieve only 28% of its targeted freight volumes.
With the freight movement goal set at 190 million tons annually by the end of the 2025/26 financial year, current performance raises serious doubts about the feasibility of this objective.
“During the course of 2024, the entity has failed to reach its own targets on recovery of freight volumes. In the 2023/24 financial year Transnet achieved only 28% of its targets,” Creecy said
“Our ports are under-performing. The industry standard is 25-30 crane moves per hour. Currently, our ports are performing at less than 20 moves per hour. This results in long waiting times for vessels.”
In anticipation of gradual improvements, Creecy confirmed that new cranes were expected to arrive in November, accompanied by essential Original Equipment Manufacturers parts for older machinery such as straddlers and rubber tyred-gantry cranes.
Meanwhile, Transnet has introduced haulers and forklifts to reduce waiting times until the new equipment is operational in the new year.
“We have introduced haulers and forklifts to cut down on waiting times in our ports until the new machinery arrives and is operational in the new year,” she said.
Creecy asserted that Transnet’s annual financial results reflected a measure of improvement, with revenue up by 11.6% to R76.7bn and cash generated from operations rising by 13.6% to R28.8bn.
However, the entity’s mounting debt, which stands at R137bn, casts a long shadow over the organisation’s future.
Transnet needs between a R100bn and R120bn cash investment to reach a healthy financial level. Transnet will get some of the funds from investments in third party operators and the rest is expected from the government.
The National Treasury has designated a borrowing facility of R47bn in the upcoming budget, aimed at financing capital expenditure projects to bolster operational efficiency and ultimately accumulate funds for debt repayment.
Turning to SAA, Creecy presented a far more optimistic picture.
Since exiting business rescue, SAA has repositioned itself as a competitive national carrier, taking full advantage of its capacity to provide long-haul and intercontinental flight services. Currently, SAA operates 16 aircraft servicing 3 domestic, 10 regional, and 2 international routes.
“As it stands SAA is debt-free and not looking for additional funding from the National Treasury. The airline is in discussion with financial institutions regarding a loan facility should any difficulties arise,” Creecy said.
“Government remains open to securing an equity partner for SAA. This would assist in ensuring the ability of the airline to continue as a going concern and help to facilitate the expansion of regional and international routes.”
On the rail front, PRASA has commenced recovery efforts for its networks and station infrastructure, gravely damaged by theft and vandalism during the COVID-19 pandemic.
According to Creecy, 31 out of 40 priority lines have been returned to service, with restoration efforts ongoing to reinstate signalling on these lines, aimed at increasing service frequencies. The long-term target remains ambitious, with an objective to reach 600 million annual passenger trips.
SCOPA chairperson Songezo Zibi urged the government to speedily resolve capital funding shortfalls at SAA, PRASA and Transnet, saying these amounted to between R220bn and R240bn for Transnet and PRASA alone.
“The impact of funding challenges is profound. For PRASA commuters it means far fewer trains can run on the same line because there is no electronic signalling equipment, which can double the time it takes to complete each journey,” Zibi said.
“Transnet’s problems mean tonnages have dropped precipitously, leading to penalties, delays at ports and extensive damage to the road network resulting from increasing trucking volumes. The government needs to respond and act with urgency, and ensure the funding is available.”
Meanwhile, the Road Accident Fund is under scrutiny, with calls for a renewed evaluation of its business model.
The RAF’s reliance on the fuel levy has been deemed problematic, leading to further recommendations for urgent legislative reform. Notably, the Road Accident Benefits Scheme (RABS) Bill, designed to address the RAF’s inherent challenges, remains stalled in Parliament since it was not adopted during the Fifth Administration.
“Under the Bill claimants would qualify on a no-fault basis, and claimable damages are replaced by defined benefits. The Bill lapsed, as it was not adopted by Parliament in the Fifth Administration. The department is currently assessing whether the Bill is fit for purpose and whether it can be re-tabled,” Creecy said.
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