NCOP PRESENTATION 05 FEBRUARY 2008 Report on Conditional Grants and Capital Expenditure 3rd Quarter 2007/2008 Financial Year NCOP PRESENTATION 05 FEBRUARY 2008

Eastern Cape Department of Roads & Transport Presentation outline Purpose of the Conditional Grant and Capital Expenditure managed by the department in terms of the DORA Expenditure trends on Conditional Grants and Capital Expenditure for the MTEF period 2005/06 – 2007/08 Explanation of expenditure variances. 4. Management & monitoring of Conditional Grants and Capital Expenditure Social & EPWP indicators for new roads 2007/2008 Results in 07/08 7. Challenges faced in management of grants and Capital Expenditure. Future budget trends: MTEF Eastern Cape Department of Roads & Transport

1. Purpose of this Conditional Grant and Capital Expenditure To accelerate construction and rehabilitation of new and existing Eastern Cape Provincial road infrastructure and Transport Services. Accelerate implementation of the Provincial Growth Development Plan. The grant requires us to focus on the application of labour intensive methods in order to maximise job creation and skills development. Enhance capacity to deliver Road Infrastructure and Transport facilities. Create the necessary Transport Services facilities in Municipal Areas as supported by ITP and MTABs. Eastern Cape Department of Roads & Transport

DEPARTMENTAL EXPENDITURE Expenditure as at 31/12/07 Eastern Cape Department of Roads & Transport

Eastern Cape Department of Roads & Transport 3. 2. Expenditure Trends CG Provincial Infrastructure Grant Provincial Infrastructure Grant 2005/06 R’000 2006/07 2007/08 Budget 675,330 742,057 838,937 Expenditure to 31 December 2007 742,139 682,580 % Expenditure to 31 December 2007 100% 81,36% Eastern Cape Department of Roads & Transport

3. Explanation for expenditure variances The variance (R53,337 000.00) or 6.36% over expenditure was due to: The accelerated programme of the contractor on the Maclear to Mount Fletcher and Middledrift to Alice projects which will be completed three and two months before scheduled completion time, respectively. Early start on the Mthatha Quarry Road. However, the programme is expected to break even, come the 31 March 08. Eastern Cape Department of Roads & Transport

Expenditure Trends – PIG and (Total) Capital Expenditure Sub-programme 2005/06 R’000 2006/07 2007/08 2ND Q Prov. Infr Grant (PIG) 675,330 742,139 682,580 Transfers to Municipalities (from Equitable Share) 25,478 52,248 Current Projects 521,399 Capital Payments 223,675 137,393 137,998 Total Capital Expend 924,483 931,780 1,341,977 % PIG 73 80 50.9% Eastern Cape Department of Roads & Transport

PROJECT BREAKDOWN Project Information 2007/08 Budget Expenditure up to date % Exp. Number of projects Capital Projects 1,103,210 820,578 74.4% 75 Current Projects 781,833 521,399 66.7% 56 Total 1,885,043 1,341,977 71.2% 131   EPWP Projects Total Available this Financial Year 903,575 695,914 77.0% 66 619,234 415,621 67.1% 50 1,522,809 1,111,535 73.0% 116 Eastern Cape Department of Roads & Transport

9. Management & Monitoring mechanism Departmental officials attend monthly site progress meetings In addition the CFO and programme manager conduct random site visits on the progress of the contracts. District Roads Engineers visit and inspect projects in their particular areas. Professional Engineering Consultants on site monitor the projects. The Department submits a detailed quarterly report to Provincial and National Treasuries, which captures the full details of the projects including the allocation for the year, the expenditure for the period in question and outputs achieved. Specific reports are submitted on progress with respect to social indicators such as employment, BEE, local resources etc. Monthly In-Year Monitoring reports are also submitted to the provincial treasury to monitor the expenditure. SANRAL(SA National Roads Agency) implements 6 projects on behalf of the department in terms of a Service Level Agreement monitored by Departmental staff. Eastern Cape Department of Roads & Transport

10. EPWP SOCIAL INDICATORS Project Name Total local Labour Employed for 1st, 2nd and 3rd Q 07/08 Male Female Youth Disabled Local Labour Value for 1st, 2nd and 3rd Q 07/08 Local Resource Value for 1st, 2nd and 3rd Q 07/08   Rands 1. Ugie to Langeni Phase 1 45 5 16 24 996,342 5,797,698 2. Ugie to Langeni Phase 2 661 261 131 267 2 7,242,312 13,214,324 3. Ugie to Langeni Phase 3 691 245 156 289 1 8,708,432 15,142,421 4. Middledrift to Alice 667 239 164 262 9,131,234 12,984,534 5. MaClear: Halycon Drift to Ketekete 321 109 77 133 4,342,425 9,425,323 6. Motherwell Intersection 15 9 21 985,643 1,926,453 7. N10 to Alicedale 120 37 61 1,060,000 1,264,231 8. Graaff Reinet to Jansenville 38 11 6 1,123,245 5,174,640 9.. Xuka Bridge 26 36 1,320,043 953,429 10. Klipplaat to Jansenville 145 42 66 2,154,324 3,699,359 11. Sulenkamma Hospital Road 974 345 241 386 9,142,657 13,245,324 12. Mt Frere to R56 Ph 1 123 19 2,126,747 12,574,325 13. Peddie to Bira River 22 8 365,937 98,453 13. Chintsa Bridge 12 55,678 14. Routine Maintenance Programmes 3256 651 488 2084 33 15,985,643 36,954,654 Community Based Transport Programmes 1971 389 583 977 11,345,261 4,323,546 9168 2420 1978 4704 63 76,085,923 136,778,714

Eastern Cape Department of Roads & Transport RESULTS Launched train service between Queenstown and Molteno in October 07. Received Testing License from Rail Safety Regulator. Linked MaClear with Mount Fletcher with surfaced road. Renovated Bhisho airport such that aircrafts are able to land. Handed over to contractors the Greenville Hospital Road, Madwaleni Hospital Road and Zithulele Hospital Road. Eastern Cape Department of Roads & Transport

Eastern Cape Department of Roads & Transport 12. CHALLENGES Acute shortage of road building materials . Lack of adequate funding for roads impacts negatively on delivery of a good Road Network and Transport Services. Ever increasing road construction costs The construction industry CPIX is currently 24%. Many of the Access Roads are still impassable and inaccessible. High Ratio of Gravel to Surfaced Roads (85:15). Eastern Cape Department of Roads & Transport

Eastern Cape Department of Roads & Transport 14. Future budget trends: MTEF before reduction CG allocation Budget 2005/06 R’000 2006/07 2007/08 2008/09 Conditional Grant (PIG) 675,330 742,139 984,943 1,055,321 Total Capital Exp budget 924,483 931,780 1,247,778 1,263,163 % Conditional grant of Total Capital budget 73 80 79 84 Eastern Cape Department of Roads & Transport

Eastern Cape Department of Roads & Transport 16. Future budget trends:MTEF after reduction of CG allocation Budget 2005/06 R’000 2006/07 2007/08 2008/09 PIG 675,330 742,139 838,657 838,937 Capital Exp Portion 249,153 189,641 263,721 279,106 Total Capital budget 924,483 931,780 1,102,378 1,118,043 % PIG of Capex budget 73 80 76 75 Eastern Cape Department of Roads & Transport

Eastern Cape Department of Roads & Transport 17. Future budget trends: MTEF after reduction CG allocation Eastern Cape Department of Roads & Transport

Eastern Cape Department of Roads & Transport 18. BUDGET SUMMARY   2005/06   2006/07  2007/08  Nominal Growth % of total budget   2008/09  2009/10 Administration 107,123 151,867 144,030 ( 5.2 % ) 6 % 152,386 158,695 Roads Infrastructure 1,368,965 1,494,437 1,615,105 1.38 % 69 % 1,566,248 1,605,001 Public Transport 129,181 162,261 191,884 18.26 % 8 % 212,696 221,784 Traffic Management 113,346 123,792 146,472 18.32 % 7 % 160,835 167,530 Community Based Transportation 54,392 82,056 241,574 194.4 % 10 % 354,053 510,686 Total   1,773,007  2,014,413   2,339,065 11.15 %  100 %   2,446,218  2,663,696 Eastern Cape Department of Roads & Transport

19. Effect of PIG reduction Eastern Cape Department of Roads & Transport

21. Impact of Infrastructure backlogs on MTEF   Financial Years (R '000 000) 2005/06 2006/07 2007/08 2008/09 Maintenance allocation 424 561 629 701 Maintenance needs 1,991 Backlogs 1,567 1,430 1,362 1,290 Accumulative backlog 8,067 9,508 10,870 12,160 Eastern Cape Department of Roads & Transport

23. Estimated Cost of backlog Item Rand x '000   Gravel roads to surfaced roads 4,479,000 Rehabilitation of surfaced roads 2,520,000 Bridges 89,500 Hospital accesses 1,251,350 Total Provincial backlog 8,339,850 Access roads 3,500,000 Total Backlog 11,839,850 Eastern Cape Department of Roads & Transport

Eastern Cape Department of Roads & Transport Province of the EASTERN CAPE Department of Roads & Transport Quality service delivery through transportation excellence I thank you… Eastern Cape Department of Roads & Transport