PASSENGER RAIL CONSOLIDATION

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PASSENGER RAIL CONSOLIDATION
Department of Transport
19 October 2005
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Contents

• Background
• Rationale for Consolidation
• Process of Consolidation

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BACKGROUND

• COMMUTER RAIL INSTITUTIONAL ARRANGEMENTS
• SARCC
• Responsible for commuter rail
• Own the assets
• Report to Minister of Transport
• Receive operational and capital subsidy from
• Dept. of Transport
• Pay management fee to operator
• Metrorail
• Operator
• Receive management fee for operations
• Division of Transnet
• Transnet report to Minister of Public Enterprises
• Shosholoza Meyl
• An integral part of Spoornet, which is a business
  unit of Transnet.

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BACKGROUND

• CURRENT STATE OF COMMUTER RAIL
• BACKLOG IN INVESTMENT IN COMMUTER RAIL OVER LAST
  30 YEARS
• OLD ROLLING STOCKHIGH MAINTENANCE COST
• INFRASTRUCTURE OLD ESPECIALLY SIGNALLING AND
  COMMUNICATION SYSTEMS(also old technology)
• INSTITUTIONAL ARRANGEMENTS FRAGMENTED
• SERVICES UNRELIABLE AND FRAGMENTED
• 2.2m PASSENGERS DAILY

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RATIONALE FOR CONSOLIDATION

• Economic aspect of rail-movement of goods
• Transnet focus on economic aspects -freight
• Socio-economic role of passenger relates to
  passengers responsibility DoT (access to
  economic opportunities and social activities
• Current institutional arrangements fragmented and
  impacts service levels
• Efficiencies in passenger rail not being
  exploited
• Cabinet approved the restructuring of passenger
  rail by consolidating the various entities into
  one reporting to DoT-December 2004

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RATIONALE FOR CONSOLIDATION cont.

• Implement a Stabilisation Programme to halt the
  deterioration in service levels (short term)
• Close the gap between operations and
  infrastructure delivery
• Improve implementation of the Refurbishment
  /General Overhaul Programme
• Improve Safety and Security
• Improve fare collection and signaling
• Better scheduling of train services in the
  short-term

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RATIONALE FOR CONSOLIDATION cont.

• Medium Long Term (31 March 2006 onwards)
• - Creation of a consolidated Passenger Rail
  Entity to house commuter and long distance
  passenger services, as well as the property
  portfolio of the entity
• - Implement the Passenger Rail Plan which will
  guide planning and investment in rail
  infrastructure
• - Develop and implement funding strategy for
  the financing of rolling stock (Standardisation
  of fleet)
• - Build capacity of Metros/Provinces in
  preparation for devolution of commuter rail
  functions in the next 8 10 years

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PROCESS OF CONSOLIDATION

• STEERING COMMITTEE
• DoT, DPE, Treasury, Transnet, SARCC
• Phase 1-Metrorail under SARCC-1 June 2005
• Phase 2-Bring Shosholoza Meyl-31 March 2006
• Completed Due Diligence on all three entities
• Developed Interim Passenger Rail Plan
• Developed the Business Plan for consolidation

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PHASE 1 OF CONSOLIDATION

• Metrorail under SARCC
• 1 June 2005
• Appointed Acting CEO
• Board to appoint Transitional EXCO
• Minister filled vacancies on the Board
• Going concern S 197 of LRA
• Minister appointed Transition Executive Team
• Task Team - DoT, Metrorail and Organised
  Labour-finalise agreement and work plan to
  address 197 issues
• Business Plan final draft

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Phase 2

• Formation of new PaxCo
• (consolidation of SARCC, Metrorail and
  Shosholoza Meyl)
• Need for amendments to Legal Succession Act for
  phase 2
• Finalise transfer of assets
• Harmonise condition of service

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Current Status

• Draft Legal Agreement developed between SARCC and
  Transnet for the transfer of Metrorail into
  SARCC.
• Delays due to other considerations
• Pension Fund issues.
• Conditions of Service for employees.
• Precedence in the context of Transnets disposal
  of Assets.
• However, it is expected that consolidation of the
  three entities will be completed by the end of
  the financial year 31 March 2006.

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Conclusion

• Any delay in consolidation will simply see a
  deterioration in the quality of commuter rail
  services.
• There should be an improvement in service levels
  as a result of funding over the past few years.
• Critical to our success in the short term is the
  need to redefine the relationship between SARCC
  and Metrorail (operational risks, penalties,
  incentives, etc).

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Department of Transport
Thank you