Tag Archive | department of transport

Green Paper on rail transport published

sent to clients 12 October…..

National rail policy mapped out…..

metrorailA Green Paper on South Africa’s National Rail Policy has been published for comment naming the country’s challenges in rail transportation, recommending policy direction and containing broad proposals for the way forward to develop the current rail network.

Gazetted recently, the Green Paper represents work commenced in 2010 and says the document “Seeks to revitalise the local railway industry by means of strategic policy interventions”.   Not only is freight rail included in the proposals but long-distance rail passenger and localised commuter services.

Road dominates at a cost

Minister Peters said in a media statement at the time that railways in South Africa had operated for almost more than a century without a proper overarching policy framework to guide development.   “The railway line and its railway stations have played a pivotal role in the day-to-day lives of communities, especially those in the rural areas, but as far as freight is concerned, 89% of freight is still transported by road and the future of commuter rail conducted on an ad hoc basis”.

roadsThe emphasis of road transport is costing the country millions of rands annually in road maintenance, money that could have been well spent on developing freight rail, she said.

The process

Cabinet last month approved the release of the Green Paper for public consultation. When all is finished, a final White Paper on National Rail Policy will be released to guide and direct development of infrastructure and develop more modern commuter systems. A National Rail Act will be the final result of the White Paper.

These interventions, according to Minister Peters, will reposition both passenger and freight rail for inherent competitiveness by “exploiting rail’s genetic technologies to increase axle load, speed, and train length.“

Lining things up

railway lineWider-gauge technologies are on the cards.   The government has said it is converting 20 000km of track to standard gauge from the narrower Cape gauge. This would bring the network in line with an African Union resolution on the subject and at the same time would boost capacity of goods carried, with longer trains and a reduction in transportation costs.

With both passenger and freight rail falling within its scope, part of the envisaged national transport policy includes involvement by the department of transport (DOT) in the local government sphere to create capabilities to move more passengers by rail with infrastructure, more rail line and technical assistance.

Creating local commuter rail

Secondly, once the localised capacity is in place, DOT says it will be able to appropriate subsidies for urban commuter rail, the management of the mini-systems then being devolved to municipalities themselves.

The Green Paper talks of investment and funding, private sector participation, inter-connection with the sub-Continent, skills planning, investment strategies and the start of a regulatory system.     Part of the master plan at operations level would include a branch line strategy with the private sector involved to improve connection between cities with towns and industrial areas.

Other articles in this category or as background

Transnet improves on road to rail switch – ParlyReportSA

South Africa remains without rail plan – ParlyReportSA

Minister comments on taxi and rail plans – ParlyReportSA

PRASA gets its rail commuter plan started – ParlyReport

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South Africa remains without rail plan

 Feature article….

Minister Peters fails on rail policy…

dipou Peters2In a written reply to Parliament on the whereabouts of the promised Green Paper on rail policy, transport minister Dipuo Peters told her questioners that such a document which has the intention of outlining South Africa’s rail policy was to be presented to cabinet in November. GCIS statements for cabinet meetings for November and the final cabinet statement in December 2014 made no reference to any such submission having been made – alternatively, the minister might have failed to have it put on the agenda. The country therefore went into Christmas recess once again without an established government policy on both freight and passenger rail transport matters, worrying both industrialists, investors and, not the least, built environment planners.

Just talking together

A draft Green Paper was first submitted to cabinet a year ago but cabinet instructed that more consultation on the proposals was necessary, particularly interchange between the transport and public enterprises departments. The portfolio committee on transport stated that policy on freight rail upgrading and infrastructure development was unclear, plans for commuter and long-distance passenger services confused and no clear picture had emerged on Transnet’s promised policy of structural re-organisation. Subsequent to this, the department set up a national rail policy steering committee to oversee the consultation process and introduce the required changes to policy. It has also divested itself of a number of non-core assets but no clear picture has emerged in statements on the promised policy of giving direction on the privatisation of branch lines.

Since time began…

According to the minister at the time, cabinet’s concerns had also involved the adoption of a standard gauge, private sector participation and economic regulation.  Subsequently, DoT indicated that standard gauge has been selected as the most suitable gauge for the South African rail network and as a result a final revised Green Paper was tabled before the steering committee in October 2014. Nothing has emerged. In the absence of any agreed policy, particularly to meet the proposed idea of rail freight re-assuming its dominant role over road transport in the light of the deteriorating national road picture, a number of developments have indeed taken place with regard to the purchase of diesel and electric train stock, signal systems upgrades and station re-building and passenger coach rolling stock manufacture. Nevertheless, no clear picture has emerged on the road ahead with regard to the freight/road picture, branch line privatisation, commencement dates for full long distance passenger services nor satisfactory plans and targets expressed on domestic commuter rail services.

All said before

Jeremy Cronin, when deputy transport minister, told Parliament in April 2011 that by establishing a local manufacturing base for the new rolling stock, benefits would ensue by creating a substantial number of local jobs. He added that as a result of the redevelopment of rail engineering capacity, skills that have been lost over decades of underinvestment in the local rail engineering industry would be recovered. The then deputy minister also said, “We are currently (2011) in the Green Paper phase with the primary objective of preparing the way for effective stake holder engagement. We are poised to reverse the decline in our critical rail sector that began in the mid-1970s and gathered pace in the late 1980’s.” In April 2015 therefore the country will be the fourth year of waiting for South Africa to outline its rail policy, “a system critically in decline” according to minister Cronin.

Recent update from Maties

A few months ago, a most important paper on rail transport, now in the in the hands of DoT, was published and out into the public domain by Dr Jan Havenga, director: centre for supply chain management, department of logistics, Stellenbosch University, who led a team of transport logistics experts to complete this erudite and informed report. The report is entitled “South Africa’s freight rail reform: a demand-driven perspective” and opens with a definition of government’s responsibilities in rail transport matters. “The role of the government is, primarily, to facilitate the development of a long-term logistics strategy that optimally equilibrates demand and supply through ‘anticipation’ of the market character.” “The definition of a national network of road and rail infrastructure and their intermodal connections will flow from this, presupposing neutrality across modes by taking full account of all relevant social, environmental, economic and land-use factors.” “This ensures that the mix of transport modes reflects their intrinsic efficiency, rather than government policies and regulations that favour one mode over another. The strategy is subsequently enabled by a clearly defined freight policy, a single funding regime for the national network and, lastly, the establishment of appropriate regulatory framework.”

Volume of freight critical

The report notes that “the American Trucking Association (2013) forecasts that intermodal rail will continue to be the fastest-growing freight mode in the next decade. Only the very busiest railway networks, which can exploit the density potential of volume growth, are likely to generate sufficiently high financial returns to attract substantial risk capital in long-term railway infrastructure.” “The Association of American Railroads as well in 2013 also highlights the impact of density on efficiency, revenue and, ultimately, the ability to reinvest.”

Lacking in market intelligence

Dr Havenga says, “The failure of South Africa’s freight railway to capture this market is attributable to a lack of policy direction regarding the role of the two modes (road and rail) in the surface freight transport industry and according to the Development Bank of Southern Africa, caused by the absence of sufficient market intelligence to inform policy.” He goes on to confirm that “one of the key requirements for an efficient national freight transport system is better national coordination based on market-driven approaches.”

Pressing need

“To avoid the ad hoc policy responses of the previous century, which led to sub-optimisation, increasing complexity and decreasing end-user quality, the pressing reform issue for South Africa, therefore, is agreement on the design of an optimal freight logistics network based on a market-driven long-term strategy that holistically addresses the country’s surface freight transport requirements.” Dr. Havenga’s final comment in the report, only a few weeks old, states that South Africa’s freight task is expected to treble over the next 30 years, with further concentration on the long-distance corridors. He points out that the country desperately needs a profit-driven market related core rail network to serve industry and manufacturing, as well as a developmental-driven branch line network to serve rural development. Other articles in this category or as background http://parlyreportsa.co.za/transport/minister-comments-taxis-e-tolls-road-rail/ http://parlyreportsa.co.za/finance-economic/prasa-gets-its-rail-commuter-plan-started/ http://parlyreportsa.co.za/uncategorized/transnet-says-freight-rail-operations-coming-right/ http://parlyreportsa.co.za/uncategorized/rail-is-departments-main-focus-in-year-ahead/

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Troubled bus industry goes to Parliament

SA bus industry operators in trouble

lowveld-bus-The South African bus system is on the verge of collapse, says the Southern Africa Bus Operators Association (SABOA) and, as the second largest mode of transport in SA behind only taxi transport, this fact was bad news for both commuters and those in industry and commerce whose workers use it extensively, Parliament was told.

Professor Jackie Walters, of the University of Johannesburg and strategic advisor to SABOA, told the portfolio committee on transport that, by its nature, the bus industry in South Africa was partially subsidised and was one of the only countries in the world that seemed to manage on month-to-month contracts.

Subsidies out of date

The bus industry in the past, in order to receive it’s subsidies, worked its calculations on the basis of commuters carried but the industry had slowly switched to contracts where kilometers covered are now the basis for calculation, a preferable system in the industry.  However there had been no extensions or expansion allowed in kilometers covered by subsidies for thirteen years.

Prof. Walters maintained that the bus industry performed a critical role in balancing demand and the pricing system within the public transport system.

The policy applicable to the commuter bus industry was founded on the White Paper on National Transport Policy of 1996, and in a number of other documents such as the Moving South Africa Strategy (MSA), the National Land Transport Transition Act of 2000 (NLTTA) as well as a Model Tender Document and the Heads of Agreement (HOA) between organised labour and the Department of Transport (DOT).

Money disappearing

He told parliamentarians that it was the Southern African Bus Operators Association (SABOA) that regulated aspects of the tendering system but the industry was under stress due to the unintended consequences of Division of Revenue Act (DORA) and the bus contracting system to the government, which was supposed to provide financial stability for industry. Whilst funds may be allocated under DORA to provinces, what happened after that was out of control of central government.

The financial stability intended for the bus industry to provide for commuters was a theory but on the ground quite the opposite was happening, he maintained.   This short-term horizon for the industry made longer-term investment decisions difficult and banks were reluctant to provide funding because of the uncertainty over the future of the contracts.  “No industry can operate on this basis‚” Prof. Walters said.

No windfalls, no shortfalls even

He attributed the problem again to the negative effect of DORA, which left it to provinces to make up the difference between the public transport operations grant allocated to provinces by national treasury and an agreed-upon escalation rate‚ which was linked to increases in the consumer price index.  Provinces continually claimed that they did not have the money to make up the shortfall.

Prof. Walters said the government had not taken into account at any stage the onerous operational cost increases that bus companies had to bear; namely 44% for labour‚ 28% for maintenance and the national escalation on fuel. There had to be risk sharing between government and the operators, he said.

 

No conformity

There were different types of contracts in the industry, he went on to explain, some which were seventeen years old and which were supposed to have been transformed after three years with competitive tendering and negotiation of contracts.

He said that in all there were 39 interim contracts in operation, 66 tender contracts and 10 negotiated contracts. The contract types in operation were based on a user-pays principle regarding the subsidies.

In conclusion, Prof Walters said that above all it was important to get national treasury to acknowledge the contracts and not leave things to the provinces.

DOT to investigate

MPs generally agreed that in the longer term, common ticketing systems over all services in the country generally had to be introduced, similar to that in the BRT system but a short term answer also had to be found to keep the industry alive in terms of the explanations from Dr Walters. 

DOT was told to  report back to Parliament.

Refer previous articles in this category
http://parlyreportsa.co.za//energy/transport-subsidies-to-business-are-wrong-says-parliament/
http://parlyreportsa.co.za//bee/all-not-well-in-the-trucking-industry/

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All not well in the trucking industry

Call that corruption exists

trucksIn answer to a call made by the portfolio committee on transport on the state of the trucking industry in South Africa, it became evident from responses by the department of transport (DoT); from the Road Freight Association (RFA) and examples given by an independent small operator, that large truckers dominated in an industry in an unfair manner that was rife with corruption.

Mawethu Vilana, deputy director-general DoT, said that going back to 2002/3, the department had begun an exercise to look at how to provide opportunities and also broaden the space for participation by smaller operators in the road freight sector. It became clear that smaller entrants lacked finance; that an “unscrupulous broking sector was part of the industry” and generally there was a lack of skills and know-how in the trucking industry generally due to poor provision of training facilities and an industry which was undercapitalised except but a few large operators.

DOT not playing proper role

Vilana admitted that when it came to black empowerment opportunities, the main player was the department of trade and industrydot logo (DTI) and not DoT, DTI having the BEE verification control system in their court, DoT playing virtually no part in either reform of the industry or the development of SMME’s.

On the subject of crime, little could be done about bribery and corruption, Vilana admitted under questioning by parliamentarians, unless legislation was beefed up with proper powers and a full, properly constituted investigation carried out into the industry.

Road users must pay

roadsHe also admitted that permit fees were high because of the principle of “user pays” which had been adopted by government “since road truckers caused great damage to the road system.”

Gavin Kelly, RFA said his association had 385 members, with 109 affiliates and 40 associates representing different levels of possible enforcement and ability to develop skills and training but complained of massive permit fees (the last being 412%); large levels of corruption amongst government officers and no value being added by the government’s road agency to the industry in general.

RFA also stated that there appeared to be no proper government road freight strategy and single government officials determined policy without ministerial approval.    Kelly said “no real consultation exists between the state road agency and the industry” and it was the RFA view that DoT “was just going through the motions.”

Trucking group says market closed

One medium sized operator, Tramarco, said that despite heavy investment in trucks and bearing in mind the “ever rising price of

tramarco site

tramarco site

fuel”, it was almost impossible to break into the transport business to obtain long-term “tangible” contracts from major mining groups and state utilities.   They appeared to feel “safer” using old contacts and larger companies and quite clearly favours were being granted, they said.

Their spokesman said that the entire industry was dominated by a number of large trucking groups and smaller entrants were effectively “locked out” of the industry because the industry was either not regulated properly.

AARTO somewhat dubious

They also said the licensing AARTO system was not working properly; there was a lack of legislative enforcement; too many corrupt officials had too much power and there appeared a lack of interest by large companies generally to uplift smaller operators, little interest in encouraging training and building the trucking job market.

Tramarco said that no favours or finance was called for by the medium and small sized companies but merely a fair chance to compete for tenders.   They called on government to provide leverage within its own government departments, state utilities and with industry to break up monopolistic habits and encourage more black empowerment opportunities.

“Large groups and utilities make lots of statements on freeing up the market but nothing happens”, Tramarco said.

MPs demand better skills development

MPs demanded of DoT that concrete steps be taken to assist small entrepreneurs and to provide proof of a record in the area of skills development. “It was clear that little had been done by the DoT in this area”, said one ANC member.

Opposition members said they were convinced that DoT “had no meaningful understanding of what the situation was on the ground.” One MP said the City of Cape Town had provided a solution by cutting the bigger contracts into smaller parts, supplying smaller quantities and increasing the number of entrants slowly. He called on DoT to start thinking of similar solutions on a national scale.

Roads to nowhere

Ruth BhenguChairperson Ruth Bhengu told DoT that the meeting had been called because an examples had been given to parliamentarians whereby “large companies gave small companies short-term contracts and rates that would not take them anywhere and businesses that were desperate could not only pay for their trucks but could not maintain them, the business going ‘broke’ as a result”.

There was also an immoral business broking sector emerging, she felt.

Vilana of DoT said there was nothing government could do to protect such entrepreneurs and that this was the nature of the industry which was high capital risk with a road system that was deteriorating.

The committee found this all very unsatisfactory and called for further meetings with DoT stating that these matters had to be resolved and that the challenges facing the trucking industry were to be investigated further. Also cross-parliamentary meetings with public enterprises and trade and industry committees were to be called. DoT was told it would be re-called for further reports.

Further archived references

http://parlyreportsa.co.za//public-utilities/aarto-amendment-bill-gives-back-up-to-road-law/

http://parlyreportsa.co.za//finance-economic/transport-laws-bill-on-e-tolling-amended/

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