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Transport Enterprises

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Transport Enterprises

Strategic objectives

  • To promote the alignment of the State Owned Companies (SOC) corporate strategies with Government’s objectives in relation to the transport and aviation sectors, by undertaking comprehensive annual reviews of corporate strategies, business plans and annual and quarterly performance within two weeks of submission of the quarterly reports by Transnet and South African Express (SAX).
  • To monitor compliance of the transport enterprises with the PFMA and other legislative prescripts by conducting an annual review and specifying required improvements of the internal controls in Transnet and SAX.
  • To create an enabling environment for transport enterprises and ensure an appropriate balance between the enterprises’ interests, sustainability and developmental objectives by engaging with the policy departments and relevant regulators at least once every quarter to discuss areas of misalignment; and inform the boards of Transnet and SAX.
  • To ensure Transnet puts in place efficient, competitive and responsive infrastructure by:
    • Undertaking a detailed diagnostic analysis of the challenges facing Transnet Freight Rail (TFR) and
      developing an integrated government response to the growing rail market share by the end of the first
      quarter of 2012/13.
    • Developing a framework for private sector investment in rail by the end of 2012/13 to assist with the
      provision of infrastructure in cases where Transnet cannot afford to do so.
    • Overseeing the introduction of multiple private operators on the branch line network within the first
      quarter of 2012/13 to revitalise the network as a feeder to the core network and to realise socioeconomic benefits.
  • To facilitate the introduction of competition in the management of container terminals through the licensing of an operator for the Ngqura container terminal by 2014.
  • To ensure the global competitiveness of the South African freight logistics industry by implementing national corridor performance tools and indicators to quantify the operational efficiency of freight corridors in 2012/13.
  • To optimise the economic impact of infrastructure investments by monitoring the rollout of Transnet’s capital expenditure programme on a quarterly and annual basis to assess any significant deviations from corporate plans, potential cost overruns and time delays on major capital projects, and taking the necessary action
  • To monitor the implementation of the competitive supplier development programme to leverage Transnet’s locomotive fleet procurement for the development of local railway supplier industries, by evaluating progress towards achieving localisation targets in the quarterly and annual Transnet reports.

South African Express

  • Support SAX to achieve sustainable levels of profitability and liquidity in 2012/13 by:
    • Overseeing the implementation of the initiatives relating to the R1.6-billion guarantee to SAA.
    • Assessing the required levels of capitalisation of SAX.
  • Enhance government’s airlift objectives by facilitating approval of the government strategy for SAA in Cabinet, including key success factors to achieve a stronger brand by June 2012.
  • Support SAA to establish South African Airways Technical as a regional maintenance, repair and operations centre of excellence, by facilitating the approval of the business case in Cabinet and enabling legislation.

Strategic objectives and key achievements

Transnet

The Department’s oversight responsibilities intensified as Transnet ramped up its capital programme from R110 billion to R301 billion through the introduction of the MDS. In line with Government imperatives, the MDS planned capital programme presents Transnet with opportunities to drive job creation, localisation, skills development and economic transformation in the country.

Progress was also made by the Department in the roll out of the NCPM project. Complete system acceptance was achieved and the system can be accessed by selected stakeholders during 2013/14 financial year.

The Department engaged Transnet on the enhanced model for the concessioning of the three identified branch lines. It has been agreed that the branch lines will be assessed on a case-by-case basis. The PFMA Section 54 approval process will be undertaken during the 2013/14 financial year to expedite the three concessions as per Outcome 6 of the delivery agreement.

South African Express Airways (SAX)

The Department moved swiftly to address the deficiencies in corporate governance within the SOC. This included the removal of the board and appointment of new board members, as well as requesting the Auditor-General to take over the audit function for this entity. The expected completion date for the audit of the 2011/12 AFS was moved from 31 March 2013 to 31 May 2013.

Changes to planned targets

The complexity of the process to concession the branch lines to private operators and the absence of an overarching rail policy, required the Department and Transnet to refine the existing model to address some of the challenges that had been identified. Given the absence of fiscal support for private operators, new mechanisms need to be explored to ensure the financial sustainability of the branch lines. The new process will be completed in the 2015/16 financial year.

The scale of the capital expenditure programme will require private sector involvement to augment the SOC balance sheet. In this regard, the Department has started to develop an overarching framework for private sector participation in the current build programme. The first draft will be completed in the 2013/14 financial year (refer to progress under sub-programme: Strategic Partnerships).

In the 2012/13 financial year, the Department had committed to complete the Africa Aviation Strategy. However, the need to review and streamline government assets in the aviation sector and define the strategy for the airlines meant that the Africa Aviation Strategy could not be completed. The objective to link South Africa to other fast growing African states has been incorporated into the LTTS. The LTTS will be completed in the 2013/14 financial year.