PRASAPresentation to the Select Committee on Public Services

19 June 2012

Introduction Background

o Government mandate to PRASAPRASA Strategy 2012 – 2015

o Vision & Missiono Key Thrusts of PRASA Strategyo Capital Plano Strategies in Rail Operations

CONTENT

INTRODUCTION AND BACKGROUND

Passenger Rail on a Threshold of a Major Transformation with Government Approval for PRASA to acquire New, Modern Rolling Stock

A defining moment that will secure the future of Passenger Rail for the next 40 years

The Portfolio Committee on Transport played a Critical Role through Advocacy, Study Tours, and highlighting the Risks of failure to replace the current aged fleet

Potential of Passenger Rail: o Contribute to an efficient transport system o Facilitate greater access for the rural and urban pooro Promote socio-economic development

INTRODUCTION

PRASA established to house the assets, finances, personnel and

operations of the former SARCC, Intersite, Metrorail, Shosholoza Meyl

and Autopax

PRASA Owns, Manages, Operates and Maintains Assets under its

control.

PRASA established to be the leading provider of Integrated Public

Transport Solutions

Background

The Primary object of PRASA according to the Legal Succession Act is to:• Provide Urban Rail Commuter Services in the public interest• Provide Long Haul Passenger Rail services• Provide Long haul Bus Services

The Secondary Object of PRASA according to the Legal Succession Act is:o To generate income from the exploitation of assets acquired by PRASA – giving

due regard to Government’s Socio-Economic and Transport Objectives.

Responsibilities of PRASAo To effectively develop and manage rail & rail related transport infrastructure and

to provide efficient rail road based passenger transport within, to and from urban and rural areas.

LEGISLATIVE MANDATE

Passenger Rail Agency of South Africa

PRASA GROUP

PRASA CRES

INTERSITEINVESTMENTS

PRASA RAIL

AUTOPAX

PRASA TECHNICAL

METRORAIL (Commuter)

SHOSHOLOZA MEYL(Long Distance Pax)

· City to City· Translux

· Real Estate Asset Management· Station / Facilities Management

· Leverage investments on key property assets

·

Challenges of Our Railways

• Railway infrastructure and technology has reached the end of its design lifespan

• Poor levels of reliability and predictability

• High costs of maintenance

• Failure to contribute to an efficient transport system

• Inability to support economic development

• Limited access to socio-economic opportunities for rural and urban poor

• Long - Distances

• Low – Densities

• Low - Incomes

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Structural Viability

DRAFT

Modernization drive underway poses challenges to PRASA

• The delays in capital expenditure 2011/12 – Accelerated Rolling Stock Programme a main contributor.

– PRASA needed to establish itself as a serious business operation, with the capacity to protect its interest.

– Negotiations yielded significant savings in accelerated rolling stock budget-allowing for more refurbishment of coaches.

• The significant growth in Capital budget not accompanied by commensurate growth in the Operations budget

– Place significant limits on technical & professional skills

• The multiplicity of major projects taking place due to the aged and technology obsolescence

– PRASA joins other major capital intensive companies in competing for skills, resources and expertise.

• Testing the capacity of PRASA to keep the operations running, requiring complex project management capabilities.

– Compounded by shocks to the system from time to time, e.g. the lightening strike at Kaalfontein

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Investment in new rail rolling stock had not taken place for over three decadeso The last new train sets were purchased in the mid 80s

4 638 coaches for Metrorail operations 1 223 coaches & 124 locomotives for SMeyl operations The design and technology dates back to the 1950’s

o The technology is old and inherently obsoleteo Metrorail – average age of the current coaches is 40 years

while the life span of rail rolling stock is of the order of an average 46 years

o SMeyl – Average age of the current coach fleet is in the order of 33 years

Status Quo

Status Quo (Cont.)

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0-5 6-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 46-50

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5M2A

PRASA STRATEGY 2012 – 2015MODERNIZING PASSENGER RAIL FOR QUALITY PUBLIC

TRANSPORT IN SOUTH AFRICA

PRASA Strategy

“Shift Focus:

From Stabilisation of Commuter Rail Services towards the delivery of High-

Quality Passenger Services by 2015: The long-term goal of PRASA is to be a commercially viable entity capable of

delivery efficient, high-quality passenger transport services on a sustainable basis.

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To be South Africa’s Leader in the Provision of Quality Passenger Services by 2015

o Mobility – • through providing high-quality passenger services founded on an integrated network of

mobility routes.

o Accessibility – • that enable individuals and communities to access socio-economic opportunities and

contribute to a better quality of life of the people as a whole.

o Sustainability – • a focus on sustainable development (financial, environmental quality and social equity)

VISION

PRASA STRATEGY

To Strive for High-Quality Passenger Service through Service Excellence, Innovation and Modal Integration

o Service excellence – • superior performance that is safe, reliable and affordable, provide a dignified travel

experience that makes a lasting value adding impression and builds brand loyalty for employees and customers 

o Modal Integration • reframing the basis of business delivery, favouring innovation, seamless integration

and partnerships

MISSION

PRASA STRATEGY

Deliver on the Legal and Transport Policy Mandate

Building a commercially viable and sustainable entity

Investing in new capacity through the acquisition of new, modern trains,

signaling and operating systems to address service imbalances inherited

from the past.

Key Thrusts of Strategy

Strengthening the financial position of PRASABalance sheet Restructuring, Recapitalization of Prasa.

Improving the financial Performance of PRASAManage costs & increase revenue.

Operational EffectivenessService Excellence, 90% Predictable Train service performance, 90 day Action Plan, preventative maintenance, Annual reduction of 5% in incidents.

Modernization and Expansion of Asset BaseModernize operations and invest in new capacity.

Human Capital ManagementBridge gap between strategic focus and employee management and performance to improve productivity.

Risk ManagementSound management of business risks (e.g. operational safety), Manage risk through controlled compliance to statutory requirements, culture of good corporate practices.

PRASA Strategy: Summary of Key Interventions

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Modernization of Technology:1. Acquisition of a New, Modern Rolling Stock Fleet2. National Signaling Upgrade Programme3. Modern Operating Systems:

i. Traffic Control Systemsii. Speed Gates, iii. Ticketing Systemsiv. Telecommunication Systems

4. Capacity Enhancement Programmesi. Accelerated Rolling Stock Programmeii. Bridge City iii. Mamelodi extensioniv. Station Upgrades

5. Light-Rail and High-Speed Rail

Investing in New Capacity

Strategies to deal with condition of train service

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New Generation Rolling Stock

Progress as at end February 2012o Market engagement - April 2011o Feasibility study completed - June 2011o Project approved by Cabinet – November 2011o Funding arrangements finalised – February 2012o Online market engagement on local content with local suppliers and rolling stock

manufacturers: between February and March 2012

Key steps for 2012/13 o Issue Request for Proposal - April 2012o Bid evaluation and selection of preferred bidder - end August 2012o Recommendation of selected bidder and technology to Cabinet

– end February 2013

o Reach financial close with preferred bidder - end June 2013

PROGRESS TO DATE

Rolling Stock Fleet Renewal Programme

Key Strategic Projects

National Signaling Programme

Key Strategic Projects

Demonstration Corridors

Major Infrastructure investment (Perway, Electrical and Facilities)

Region Demonstration

Corridors Service

Route Distance (km)

Gauteng Mabopane - Naledi

Mabopane – Pretoria 39.0 Pretoria – Johannesburg 69.0 Pretoria – Johannesburg

(Business Express) 69.0

Leralla – Germiston 33.0 Johannesburg – Naledi Incl.

George Goch & Crown 29.6

Soweto Business Express 35.0

KZN Umlazi – Kwa Mashu

Umlazi - Durban 26.0 Isipingo - Durban 19.0

Kwa Mashu - Durban 19.0 Bridge City - Durban

Western Cape Khayelitsha – Cape

Town

Chris Hani – Cape Town 29.0 Khayelitsha – Cape Town

(Business express) 29.0

Kapteinsklip – Cape Town 32.0

Investment in New Generation of Locomotives for Shosholoza Meyl Vital to creating a reliable and efficient long-distance service passenger

service for over 3 million migrant workers who travel between cities and rural areas

Reduce travel times on mainline passenger services Increase running speeds to an average of 140 km/hour Modernize long-distance Passenger Coaches to create a new feel PRASA has prioritised the following corridors:

o Mthatha – Queenstown – Johannesburg (Eastern Cape)o Polokwane - Tshwane (Limpopo)o Vryheid – Durban - Johannesburg – Vryheid (Northern Natal)

MAINLINE PASSENGER SERVICES

PRASA STRATEGY - CAPITAL

Capital Programme2012/13 2013/14 2014/15 Total

MTEFRolling Stock Fleet Renewal Programme - - 5 130 000 5 130 000New locomotives for Smeyl 300 000 202 129 - 502 129Corridor Modernization Programme 450 106 580 192 569 202 1 599 500 PRASA Rail 854 000 1 015 550 1 006 328 2 875 878 Capital Intervention Programme (minor w orks, safety & SNP) 429 000 450 450 442 973 1 322 423 Electrical Programme: Substation, New Overhead Lines & OHTE 180 000 305 400 308 170 793 570 Footbridges, Level Crossings and Structures 105 000 111 300 116 865 333 165 Perw ays 140 000 148 400 138 320 426 720 PRASA Technical 2 676 000 3 157 831 2 996 475 8 830 306 General overhaul of Metrorail Coaches 1 931 000 2 179 971 2 072 222 6 183 193 General overhaul of Shosholoza Meyl coaches 193 000 204 580 214 809 612 389 General overhaul of Shosholoza Meyl locomotives 117 000 124 020 130 221 371 241 Depots Infrastructure & Equipments 270 000 450 860 423 403 1 144 263 Rolling Stock facilities 140 000 148 400 155 820 444 220 AY-Type Wagons 25 000 50 000 - 75 000 PRASA Corporate Real Estate 772 000 777 970 816 869 2 366 839 Station Improvement Programme 239 000 303 340 318 507 860 847 Station upgrades/transit oriented developments 248 000 332 880 349 524 930 404 Mabopane station upgrade 150 000 - - 150 000 Workplace Improvement Programme (incl facilities) 135 000 141 750 148 838 425 588 Information and Communication Technology (ICT) 86 000 91 160 95 718 272 878 ICT Systems 86 000 91 160 95 718 272 878 Infrastructure and related capital 1 563 000 1 560 335 1 242 687 4 366 022 Signaling & Telecommunications 768 000 814 080 854 784 2 436 864 Bridge City 260 000 - - 260 000 Green View - Pienaarspoort project 164 000 - - 164 000 Queenstow n - Umtata 100 000 150 000 200 000 450 000 National Speed Gates Project 205 000 367 300 - 572 300 Motherw ell Rail Extension - 178 955 187 903 366 858

Metrorail/Gautrain Stray Current Mitigation 66 000 50 000 - 116 000 Total 6 701 106 7 385 167 11 857 277 25 943 550 2012 MTEF Allocation 6 701 106 7 385 167 11 857 277 25 943 550 Unallocated - - 0 0 Year-on-year growth 9.2% 10.2% 60.6%

Medium-Term Expenditure Framework

STRATEGIES IN RAIL OPERATIONS

Changing the Nature of Operations, amongst others, through:1. Service Excellence

i. Service reliabilityii. Safety & Security

2. Preventative Maintenance Programmei. Established a Technical Division to focus on all Technical, Rolling Stock

and Engineering aspects of the Groupii. Rolling Stock and Rolling Stock depots for Metro and SMeyliii. Accelerated Rolling Stock Programmeiv. Focus on Wheels Business and critical components

3. Focusing resources on High-Volume Corridors4. Human Capital

i. Human Factor Management Programme

Operational Effectiveness

Strategies to deal with train time improvements

64% of fleet complete

Accelerated Rolling Stock Programme

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2005/06 2006/07 2007/08 2008/09 2009/10 2009/10 2010/11 2011/12

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Accelerated Rolling Stock Programme: Coaches completed

Human error the main cause of accidents

Human Factor Management Strategy developed

o Human Factor Standard Roadmap with RSR

o Increased supervision oversight to certify “fit for duty”

o Train simulator training inclusive of problem solving

o Medical Surveillance annually for safety critical grades

o Substance abuse monitoring

Longer term – Automatic Train Protection (ATP)

Strategies around addressing train accidents

Improve revenue to sustain current operations. Quality and reliable service. Safe Operations Safe and orderly environment. Cleanliness of stations and trains. Effective Information dissemination to customers. Professional appearance , positive attitude and improved customer care by

staff Taking care of our employees Effective Management of performance. A sound and healthy relationship with key stakeholders (mainly commuter

forums, labour, community structures, business and local government). Sound management of operational costs

PRASA Rail PROGRAMME OF ACTION 2012/13

Strategies around operational safety

Safety and Clean environment campaigns have commenced in all Metrorail regionso Special focus on commuter safety particularly the closing of doors and general

promotion of safe behavior within the rail environment. o Conducted in collaboration with Prasa CRES, Commuter Forums, Local

Government, SAPS and the RSR On time performance for Metrorail in May was 82.33% compared to 81.13%

in April 2012 which shows steady improvement from 76% in January, 77% in February.

On Infrastructure, a perway assessment report has been completed. o Special attention required in Gauteng South and KZN. o Gauteng corridor A lines (Naledi to JHB and Kempton Park to Germiston) need

particular attention. o Upgrades and improvements addressed through Capital Intervention Projects

from CAPEX budget.

PRASA Rail PROGRAMME OF ACTION 2012/13: Progress

Strategies around operational safety

Inclusive of yard collisions and derailments

Accident Trends

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Collisions Derailments

Linear (Collisions) Linear (Derailments)

Passenger Performance Measure

Time improvement trend

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100%

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Trend in Passenger Performance Measure

Approval of the Rolling Stock Recapitalisation Programmeo Feasibility study approved by Cabineto Funding secured from 2012/13 onwards

National Signaling Programme commencedo Stage 1, phase 1 in Gauteng commenced

• Lenz Midway Interim Solution implemented• Gauteng Nerve Centre Environmental Impact Assessment completed• Gauteng Nerve Centre Design approved.

Bridge City Rail link construction progress is on schedule for completion March 2013.

Growth in the Autopax bus business with year on year increase of 22% in fare revenue

Safety performance of commuter rail improved with accident rate down by 6%. Awarded over 240 bursaries that focus in the main on civil, electrical and

mechanical engineering for 2012 . Unfunded mandate of long-distance rail

2011/12

Key Highlights