CHAIRMAN'S REPORT
The state of the economy has a direct impact on the demand
for commuter rail service. The depressed economic climate continued
in the period under review resulting in a decline in passenger
trips by 2,3% to 485,4 million (1997/98: 497 million). Other factors
including unemployment, vandalism (causing damage to coaches and
also breakdowns) affected levels of reliability of the service.
Notwithstanding these comments, I am confident, with measures
being taken that we will see improved ridership and hence increased
fare revenue in the year ahead.
During 1999 the National Department of Transport embarked on
the Institutional Reform project aimed at restructuring the commuter
rail industry. This project is a result of the Moving South Africa
Policy (1998) which, advocates that transport powers should be
devolved to the lowest sphere of Government. Management is actively
involved in the project, which will change the Corporation's future
role and responsibilities.
REVIEW
I am pleased to report that negotiations on the exclusive concessioning
agreement between the Corporation and Metrorail has been concluded.
A stage has been reached where both parties have agreed to implement
the new agreement with effect from 1 April 1999.
The Pilot Project (previously referred to as the demonstration
project), that will see about 10% of the rail network put out
for private tender has progressed reasonably. However, timeframes
have been extended due to further consultations being necessary.
Concerned with the condition and efficiency of the rolling stock
fleet, the Corporation appointed a consortium of consultants to
report on the need for the modernisation (refurbishment, renewal
and replacement) of the fleet and to determine a range of financing
options. As a start to the upgrading process, the necessity for
which was endorsed by the report of the consortium, in August
1998, the Corporation launched a new upgraded train set which
forms part of a commitment to upgrade 32 coaches. Furthermore,
tenders were called for the supply of 60 new coaches (5 train
sets) for the Soweto service in the Wits region. A final decision
to proceed with the tenders would be conditional on securing funding.
Whilst the Corporation is not directly involved in providing
the commuter rail service at the operational level, there are
certain fundamentals, which we at the Corporation consider essential.
I want to comment specifically on two, namely commuter rail safety
and security and affordability.
The Corporation and Metrorail have made strenuous efforts this
past year to provide safer and secure means of transport. This
has not been an easy task with an ageing rolling stock and a prevailing
environment of violence and vandalism. The other essential, affordability,
is important for the majority of our commuters who come from the
low-income levels. It has therefore become incumbent on both the
Corporation and Metrorail to implement cost efficiency programmes,
which unfortunately have meant some reduced services.
Cost efficiency has, however, not been easy to achieve particularly
with the impact of vandalism and train accidents on cost. An example
is the continually increasing cost in insurance, where premiums
and claims settled increased to R63.3 million from R38.1 million
in 1998.
Intersite has, again, increased its contribution to the Corporation's
income. I am proud of the entrepreneurial and inventive way it
conducts its business. The National Roads Agency portfolio, which
was acquired in 1997, strengthened Intersite's position in the
competitive Property Management market in which it operates.
I am pleased that the Corporation's transformation programme,
which began in 1997, has been implemented and more black people
employed in decision-making positions. We have continued with
our policy of Black Economic Empowerment.
CHALLENGES
The ageing rolling stock problem continues to plague our industry.
It has reached a crucial point and despite the modest investment
referred to earlier, innovative ways of funding rolling stock
has become critical if we are to maintain the level of service
and safety provided.
Continuing budgetary constraints are a reality and it is crucial
that ways and means of securing funding be found. This is a challenge
for us all in the years ahead.
THE FUTURE
The new concessioning agreement between SARCC and Metrorail will
become a practical experience for both. Together with knowledge
to be gained from the Pilot Project, the new agreement will provide
lessons, which will assist in preparing for the full-scale concessioning
in 2003.
The Institutional Reform project will undoubtedly change the
role of the Corporation in the industry. The project is expected
to provide more efficient and effective ways of managing commuter
rail and realising the objectives of the Moving South Africa Policy.
THANKS
I thank the Minister of Transport, Mac Maharaj and his Director-
General, Dipak Patel, for their guidance and input. It has been
a pleasure to work with these gentlemen. We are most appreciative
of the efforts which the Minister and his department have made
towards securing increased funding. It was not easy for them with
the increased financial demands from all other government departments.
The Board of Control continues to provide invaluable input and
advice.
I acknowledge their relentless efforts to address the challenges
facing commuter rail. I thank the Members of the Board most sincerely
for their services.
To the Chief Executive Officer of Metrorail, Zandile Jakavula,
his executive management and staff, my thanks for implementing
tough decisions in the quest to provide better commuter rail services
amidst difficult times. I record my appreciation to the Corporation's
Managing Director, Wynand Burger, for leading his team during
the year, Intersite's Managing Director, Jack Prentice, for his
contribution, and the Executive Managers and the staff for their
belief in the Corporation's cause and working hard to realise
the set vision.
JTM EDWARDS
CHAIRMAN
