1. Department of Transport PUBLIC TRANSPORT, TAXI RECAPITALISATION PROJECT AND PUBLIC TRANSPORT SUBSIDIES 01 JUNE 2004

2. CONTENTS 1.INTRODUCTION AND BACKGROUND INFORMATION 2.POLICY THRUSTS ON PUBLIC TRANSPORT 3.THE TAXI PROCESS 4.COMMUTER RAIL 5.BUS CONTRACTS 5.AN INTEGRATED PUBLIC TRANSPORT SYSTEM

3. The overarching objectives for a sustainable public transport system which contributes to the economic growth of our country are:  To increase investment in public transport infrastructure  To recapitalise the public transport fleet and  To increase access to affordable public transport services The White Paper on National Transport Policy, 1996 The promotion of a safe, reliable, effective, efficient, co-ordinated, integrated, and environmentally friendly land passenger transport system in South African urban and rural areas, to ensure that people experience improving levels of mobility and accessibility. INTRODUCTION AND BACKGROUND INFORMATION Department of Transport

4.  Reducing the need to travel;  Making travel more affordable;  And thus saving people’s income from increasingly used for transport cost. TWhite Paper on National Transport Policy, 1996, brought a clear focus, with the following key factors : Government recognizing that public transport is a basic need  To be efficiently provided so that resources are used in an optimal manner  Based on transport plans Creating a comprehensive integrated, multi-modal, public transport system Approached on the basis of competitive tendering POLICY THRUSTS Important for South Africa given its history, addressing significant barriers to social inclusion:

5. Department of Transport THE RECAPITALISATION OF THE TAXI INDUSTRY The primary aim of the taxi recapitalisation project at conception was aimed at:  providing vehicles which will provide safe and affordable transport to commuters. (result of the aged minibus taxi fleet, average of 9-10yrs, which increasingly threaten safe to life).  creating opportunities for jobs in the manufacturing and downstream industries.  promote the use of diesel fuel as a more cost-effective and efficient fuel and thus lowering the operating cost. Based on the 1998 projections the strategy was to shift the transport sector consumption of petrol and diesel such that diesel exports and petrol imports are reduced..  Supporting the objective of formalizing the taxi industry and thus have an effective regulatory framework which will assist in operators fairly sharing the benefit of transporting passengers and thus also curbing fights for routes.  broadening the tax base

6. THE TAXI PROCESS In 1996 The National Taxi Task Team (NTTT) was established constituted of Government officials, community leaders and members of the taxi industry to:  Investigate the conflict and violence prevalent in the taxi industry at the time.  Make recommendations to Government on how to address findings thereof. Findings of the NTTT broadly grouped into three main areas, viz: The need to regulate the taxi industry The need to formalise the taxi industry The urgent need for economic empowerment for the industry.

7. PROGRESS MADE POST THE NTTT FINDINGS On Regulation: The National Land Transport Transition Act, (NLTTA),2000 Associations and members thereof, encouraged to register with Provincial Registrars (Section 56 of the NLTTA apply). Operators currently converting permits to operating licenses as required ( Section 32 of the NLTTA apply). Establishment of the National Transport Register as required by the NLTTA (Section 52) – this is currently being rolled out with Provinces. Registration with the South African Revenue Services (SARS) is a pre-requisite for conversion of a permit to an operating license. Special Legalisation Process (SPL) initiated to give illegal taxi operators an opportunity to legalise their operations provided they met certain basic requirements- the “Be Legal Campaign” (BLC), closed on the 31 st December 2002 as per MINCOM resolution.

8. PROGRESS MADE POST THE NTTT FINDINGS On Formalization: Democratic elections held at association, regional and provincial level in all Provinces. Democratically elected Provincial Taxi Councils (PROTACO’s) now serve as the mouthpiece of the industry at the Provincial level. The South African National Taxi Council (SANTACO) elected into office in September 2001, by all Province.

9. Department of Transport PROGRESS MADE POST THE NTTT FINDINGS On Economic empowerment: Government initiated and funded pilot taxi co-operatives as part of the economic empowerment suggested by the NTTT. Pilot co-operatives became unsustainable due to lack of management skills of the industry and lack of funding. Additional economic empowerment for the industry embedded in capital subsidy through the taxi recap program.

10. THE TAXI RECAP TENDER BACKGROUND Seeks to replace the current 97 000 ageing fleet of 16 seaters with purpose built larger capacity New Taxi Vehicles (NTV) in the form of 18 and 35 seaters through a government tender process. Economically empower the taxi industry, through a once off capital subsidy, the scrapping allowance of 20% per vehicle translating into R4 billion over 4 years. Introduction of the electronic payment system to monitor and control data collection, provide audit functionalities, effect modal integration. Cabinet approval – September 1999 The dti issued request for proposals – November 1999

11. TAXI RECAP TENDER DELAYED Due to:  The need to first formalise and democratise the taxi industry ( completed in September 2001)  De-linking of the Electronic Management System (EMS) from the New Taxi Vehicle (NTV) process, after it was realised that the EMS technology had overtaken developments of the process. ( Separate Tender for the EMS issued in March 2001, and four companies short listed.)  Dispute between Government and SANTACO over the ownership and management of the EMS arose, and the matter was resolved end of 2002.  Strategic review report which contained indicative affordability figures done in November 2002.

12. PROGRESS MADE ON TAXI RECAP TENDER The following progress has been realized: The Steering Committee chaired by DOT reconstituted with the DTI, DME, Treasury and Office of Status of People with Disability( The Presidency ) The BAFO instruction document was issued to both NTV and EMS bidders. (21 st May 2003) Government entered into negotiations with the bidders to secure 25.1% equity for the taxi industry. The BAFO submission was closed by the expected date of 12 th September 2003. The evaluation process for both the EMS and NTV tender processes was completed and a report finalised by 19 th November 2003.

13. PROGRESS MADE ON TAXI RECAP TENDER The following progress has been realized: The evaluated remaining NTV bidders are:  TATA  IVECO  KWONG CHUNG MUDAN AUTOMOBILE  DAIMLER CHRYSLER SOUTH AFRICA The only EMS bid is for :  RSA EMS

14. CHALLENGES FACING THE TAXI RECAP PROJECT The BAFO received is mandated for this project at a funding requirement level of R4 billion. –Additional funding requirement will be increased burden on the fiscus Should NTV prices proposed by the bidders be higher than current taxi prices. –Some operators may not afford the cost of purchase and maintenance Although the project have added advantage of safety and comfort to commuters. –Commuters may have to ultimately pay for fare increases A conditional approval of NTV Suppliers to be followed by Homologation and Endurance tests. Negotiations with suppliers still to be done.

16. RAIL FUNDING REQUIREMENTS 2004/05 ‘000 2005/06 ‘000 2006/08 ‘000 Operational1 873 5501 973 8432 092 274 Capital 655 000 688 300 729 598 Total2 528 5502 662 1432 821 872 Operational Shortfall - 162 491 196 631

17. CAPITAL FUNDING REQUIREMENTS Rolling Stock Age Distribution 117 911 1031 803 909 538 313 0 200 400 600 800 1000 1200 11-1516-2021-2526-3031-3536-4041-45 Age Group Coaches

18. CAPITAL FUNDING REQUIREMENTS ROLLING STOCK NO INVESTMENT IN NEW COACHES SINCE 1988 AVERAGE AGE OF FLEET 30 YEARS 4500 COACHES WITH A REPLACEMENT COST OF R 63 BIL 264 COACHES REFURBISHED in 2003/04

19. BUS CONTRACTS Interim contract – untendered contract between the DOT and the operator Tendered contract – contract awarded by a tender board between DOT and the operator for the provision of public transport service Negotiated contract – allowed by the Minister to be negotiated with the operator rather than be put out to tender

20. PROGRESS REPORT -BUS CONTRACTS Tendered contracts – 58 Negotiated contracts – 2 Interim contracts – 34

21. BUS SUBSIDY DISTRIBUTION There are 10100 commuter buses (excluding municipal and long distance buses) Approximately 7500 buses are currently subsidised Approximately 2600 are unsubsidised Approximately 1.8% of the population was subsidised in the 2001/02 financial year On average passengers received R198 in subsidies per month = 6.7% of the average household income

22. BUS SUBSIDY DISTRIBUTION

24. PROMOTION OF BEE: ROAD BASED P/TRANSPORT Provinces to set aside a minimum of 30% of services to be contracted to companies with at least 50.1% PDI equity Remaining 70% of services a minimum of 35% PDI equity ownership required 10% subcontracting of the remaining 70% services to SMME/PDIs

25. QUALITY MANAGEMENT A National Supervision and Monitoring team is in the process of being appointed Subsidy Management System is being rolled out in all provinces on the National Transport Register

26. RAILRAIL BUSBUS TAXITAXI INTERGRATED TRANSPORT PLANS AN INTEGRATED APPROACH TO PUBLIC TRANSPORT

27. AN INTEGRATED PUBLIC TRANSPORT SYSTEM Rational for subsidy Targets for redistribution Spatial allocation Mode to be subsidised Equity Distance Affordability Workers Job seekers Learners Poorest Needy Disability Densificat ion Urban Rural Rail Bus Taxi

28. AN INTEGRATED PUBLIC TRANSPORT SYSTEM The National Travel Survey Surveyed 50 000 households  To analyse:  approximately 3,85 million public transport commuters  2.4 million ( 64%) use mini-bus taxis  21% use buses  15% commune to work by train.  Is due for completion June 2004

29. Department of Transport Thank you