CHAIRMAN’S REPORT
Commuter
rail plays an important role in the economy and, in turn, the
state of the economy has a direct impact on the demand for rail
services.
South Africa experienced a better economic climate during the
year under review and as a result passenger journeys increased
by 1,19% to 491,0 million (1998/1999: 2.3% decrease).
The Minister of Transport, Dr Dullah Omar has stated, in Parliament,
his quest to attract more people to rail transport and to make
it the preferred mode of public transport in South Africa. Commuter
rail is an essential means of transport and serves the lowest
income groups of the economy who depend on it to commute to and
from work. The promotion of the service will help achieve the
Minister's objective as well as increase fare revenue.
REVIEW
The 1999/2000 financial year signified the beginning of a new
era in commuter rail in South Africa with the implementation of
the exclusive concessioning-type agreement between the Corporation
and Metrorail, which came into effect on 1 April 1999. The agreement
had, however, not been signed by year-end due to a few outstanding
issues, although a Recordal referring to the negotiated concession
agreement was signed on 26 July 1999. The final agreement has
since been signed. The new contract is output based and it incorporates
internationally recognised concessioning business principles,
in contrast to the previous contract, which was mainly based on
inputs.
The Pilot Project, which would constitute about 10% of the rail
network, gained momentum in 1999. In February 2000, a feasibility
study to determine a suitable area for the Pilot Project was integrated
in the year and however, in Gauteng, was selected. The Minister
of Transport put the project on hold subject to the institutional
review of commuter rail.
Intersite increased its contribution to the Corporation's income.
The company upgraded several stations including the rehabilitation
and re-instatement of the Katlehong-Kwesini line at a cost of
more than R50 million. With the exception of Lindela, all other
stations on the line have since been completed.
Safety and security remains key to the Corporation in ensuring
the provision of services to commuters. In most cases of capital
projects, safety considerations play a major part in the prioritisation
exercise. It is incumbent upon the SARCC as asset owner, to ensure
that the end-user is not subjected to abnormal risks due to the
condition of our assets. Notwithstanding this business principle,
the condition of our rolling stock, if not addressed urgently,
will compromise safety and service levels in future.
The Corporation embarked on a plan to purchase 60 new coaches
for the Soweto line in the Wits region in 1998, as part of its
modernisation of the fleet programme. However, financial constraints
prevented the actioning of the plan. Subsequently, in February
2000, the Corporation awarded two tenders for the refurbishment
of 176 coaches for the Johannesburg and the Cape Town regions
at a total cost of some R390 million over two years.
Affordability is a prime attraction to commuter rail transport
for the majority of commuters from the low-income levels. The
Corporation endeavours to be cost efficient in its capital expenditure
and in providing the service through Metrorail. However, fare
evasion and vandalism of assets add to the increasing cost of
running the service.
Intersite continues to engage in public and private partnership
(PPP) programmes, which bring private sector capital into the
business.
I am pleased to report that the Corporation's transformation
programme was strengthened during the year by the establishment
of the Employment Equity Forum in line with the Employment Equity
Act. All service conditions and policies have been reviewed in
line with the employment equity requirements.
CHALLENGE
The deteriorating condition of rolling stock continues to be
a challenge to the industry. It has reached a crucial state where
innovative ways of funding rolling stock have become crucial.
THE FUTURE
Both Metrorail and SARCC are getting ready for full-scale concessioning
in the future. The Corporation is planning for the restructuring
of the Contracts Management Division for the better management
and monitoring of the new negotiated concessioning contract.
The Minister has indicated that the institutional arrangement
of commuter rail needs to be reviewed before full concessioning
could be implemented. The responsibilities and role of the Corporation
will certainly change as the industry reforms take shape.
THANKS
I thank the Minister of Transport, Dr Dullah Omar, who joined
us during the course of the year for his encouragement and guidance
and also for the support of his Director-General. It has been
a pleasure to work with the Minister of Transport and his Department.
To the Chief Executive Officer of Metrorail, Zandile Jakavula,
his executive management staff, my thanks for continuing to provide
the service as per our agreement and working hard in increasing
ridership.
I record my appreciation to the Corporation's Managing Director,
Wynand Burger, for his continued efforts for the Corporation during
the year, Intersite's Managing Director, Jack Prentice, for his
contribution and the Executive Managers and the staff for their
hard work in striving to achieve the mission of the Corporation.
The Board of Control continues to provide invaluable input and
advice. I acknowledge their relentless effort in addressing the
challenges facing commuter rail. I thank the members of the Board
most sincerely for their services during this past year.
The term of office of the current Board of Control expired on
31 March 2000 but the Minister extended the period of appointment
of the members by six months. I shall not be seeking reappointment
and it is likely that there will be other changes. I have served
the Corporation as a non-Executive Board member for some 10 years,
8 of which as Chairman. The 'commuter rail route' has not always
been smooth and I consider the Corporation has successfully overcome
the many difficulties some might say obstacles, obviously the
future presents many challenges, some of which have already been
referred to.
When I look back I see that a great deal has been achieved. Many
are due thanks for the successes, and I acknowledge that the Corporation
has been fortunate to have had as members of the Board of Control
over the years, persons dedicated to improving rail commuter services,
who have our understanding of the needs of the commuters and of
the Corporation staff, and who have endeavoured to improve conditions
for all. I also recognise the valuable role played over the years
by the Directors of Intersite and for their part in contributing
to the successes of our property developments. I thank them all
most sincerely. I have been privileged to serve the Corporation.
J.T.M. Edwards
Chairman
