1. STANDING COMMITTEE ON APPROPRIATIONS 19 October 2016

2. Service delivery in relation to NDP Performance Quarter 1 2016/17
Content
Service delivery in relation to NDP
Performance Quarter /17
Financial
Non-financial
Efficiency, effectiveness and economy in utilisation of the budget
Risks, opportunities and challenges in investment programme
Governance, internal controls and accountability

3. PRASA support of the National Development Plan
The National Development Plan (NDP)
calls for integrated, holistic, long-term perspective on all transport networks informed by growth priorities, the environment, inclusivity and access.
Transportation cuts across the economy, environmental sustainability, spatial transformation, global connectivity, state capability, social cohesion and health.
PRASA apply the following strategic focus areas and planning priorities focusing on the creation of workable urban transit solutions that will streamline an effective urban transport system, thus contributing to:
Provision of affordable, faster, reliable and safe transport
Bridging geographical distance between work and human settlements
Transport plans that are aligned with spatial development
Eradication of economic exclusion and a move towards inclusivity
Eradication of poverty
Creation of Black industrialists
Opportunities for Women and Youth

4. PRASA support of the National Development Plan

5. Status of Financial Performance Quarter 1, 2016/17
Poor performance(28% less) in income can be attributed to a negative variance in Fare Revenue for the Group of R226.4m. The performance is noted in Metrorail, MLPS and Autopax with shortfalls of R160.6m, R22.3m and R43.5m respectively. Fare revenue shows a decline of R89.0m or 13% when compared to same period in prior year.
Expenses 4% below budget of R m. In comparison with the same period in prior financial period reflects an increase in expenditure of R154.6m or 7%.

6. Status of APP performance Quarter 1 2016/17
HIGHLIGHTS:
79 Metrorail coaches for quarter in target range between 77 – 93 coaches completed
Public injuries and fatalities at 1.77 within range set between 1.05 – 2.3
Crime incidents on assets 752 within range set of between 581 – 764 incidents
MLPS passengers of within the range set of between – passengers.
11 MLPS coaches complete higher than range set of 6-8 coaches
Only 0.57 injuries per passengers for Autopax well below the range of 3 – 4.5.
Only 0.6 breakdowns per km for Autopax well below the range of 1 – 1.1.
Duff’s Road station modernisation completed thus 1 target completed for 2016/17 (1-2 stations)
Facility for housing the testing and commissioning of new trains handed over to GIBELA.
Signalling target of commissioning 2 station Interlockings in Gauteng completed.
197 employees in training above the range of for quarter 1. The lower limit for 2016/17 of 200 – 250 employees met in July with 206 employees in training.
Spending on designated group – Black Women Owned at R338.6m above the range of between R222m – R242m.
CHALLENGES
Passenger environment challenge:
Metrorail (passengers, trains on time and availability, passenger injuries & fatalities index, crime incidents involving passengers)
Autopax passengers
Project delays: Pienaarspoort Deployment corridor, PRASA Technical (120km/h track project)and Intersite (Umgeni development).
Delays from Transnet in completing General Overhaul of Rolling Stock(50% in the current year, and 70% cumulatively.
Asset ownership and access costs.
Spending on BWO:
Largest amounts go to Construction (CRES & TECH), Refurbishment & Upgrade of coaches (TECH), Repair of rolling stock equipment (Rail), maintenance (Rail).
Challenges:
Pienaarspoort deployment Corridor involves the infrastructure readiness as well as the operational readiness (train operations, customer services, security and maintenance). The Provisional Acceptance certificate for Train 1 is delayed; the stray current project completion date December 2016; platform rectifications will also still be in progress.
PRASA Technical – The 120km/h track tender is one the major supporting infrastructure works to commence for the deployment of the new trains. The target was to ensure completion of the tender and contracting work in 2016/17 so that work can commence in 2017/18.
The Intersite project in Umgeni is dependent on the approval from the EThekwini municipality. The approval is subject to a period of 21 days for any objections. (This expires August 2016). (Target was to have this completed by end Quarter 1).

7. Metrorail Challenges Action plans to address challenges:
Recovery plans for Service provision, Rolling Stock and Infrastructure. (Transnet continues to miss performance targets on Rolling stock General Overhauls)
Security action revolve around interventions to address hotspots and targeting scrap metal dealers, working with the SAPS. Closing off the railway reserve through our fencing programme and strategic deployment of security personnel.
Revenue collection program to address shortfalls on revenue and reduce fare evasion
Developing a Turnaround Plan for the PRASA Group targeting operational efficiencies, including cost reduction , revenue generation strategy and realignment of Group.

8. Efficiency, effectiveness and economy in utilisation of the budget
PRASA revised SCM policy approved by BOC July seeks to ensure sound, sustainable and accountable Supply Chain Management whilst promoting Black Economic Empowerment (BEE), and includes general principles for socio-economic objectives of :
stimulate and promote local economic development in a targeted and focused manner;
Introduce a systematic approach to the appointment of professionals and other consultants;
promote resource efficiency and reduce the negative environmental impact of daily operations of the PRASA;
promote the competitiveness of local businesses by promoting youth, women, disabled people and military veterans; and
promote consistent application of 'best practices' throughout government's supply chain, whilst embracing the "value for money" principle
Subscribing to the Central Database of suppliers in Government
Use of Transversal contracts in government for Infrastructure recovery and other initiatives.
Major cost cutting drive to form part of the turnaround plan to reduce wastage and drive efficiencies.

9. Risks within the Investment Programme

10. Challenges and Opportunities within the Investment Programme
PRASA major challenge is in balancing between “providing current services” and “implementing a New Service”. Construction activities negatively impact operations and provision of services to commuters.
During implementation of programmes, PRASA faces challenges such as:
Obtaining relevant legislative approvals such as Environmental Authorisations, Township establishments and general approvals from Municipalities. These processes introduce severe delays in programmes.
Community occupation and unrest in rail reserves. Once these have occurred, indefinite delays can occur in programmes.
Budget availability.
Opportunities
PRASA’s programmes provide an opportunity for impactful localisation and Economic Development (programmes such as the Rolling Stock Fleet Renewal Programme)
The expansion programme provides an opportunity for Public Private Partnerships (PPPs) for construction activities
Increase commercial activities at stations
The implementation of modernisation programme has provided two integration opportunities:
Integration with other modes of transport (such as taxis and buses)
Integration of a one service for all South Africans.

11. Governance, internal controls and accountability
PRASA Board and Management has:
Instituted reviews of policies, processes and procedures, SCM and HCM and ICT Policy;
Re-aligned current existing organizational structures to increase efficiencies and enhance controls environment;
Initiated process for filling scarce and critical vacant positions including compliance function; and
Introduced and implemented proactive assurance in key processes.