SARCC Strategic Plan and Budget: 2008/09

Portfolio Committee on Transport

“Accelerating the Momentum for Change”

12 March 2008

Table of Contents

1. Introduction2. Key Features of SARCC3. Strategic Focus of Consolidation4. Key Highlights for 2007/085. Challenges facing Commuter Rail6. Turning Rail Passenger Transport Around7. Strategic Initiatives8. MTEF Allocation and Budget9. Conclusion

INTRODUCTION

• Stabilisation Phase well on course• Visible improvements due to Turn Around

Strategy • Public investment in rail on the increase• Well functioning rail passenger transport

critical• growing economy • congestion• rising fuel costs

Key Features of SARCC

• 2 860 km of the rail network (15%) – owns over 470 stations countrywide

• Total fleet is 4 638 coaches (409 train sets) – only 3 060 coaches (270 train sets) available

• 2.2 million passenger trips per weekday• Five Regions:

1. South Gauteng (Wits)2. Northern Gauteng (Tshwane)3. Durban4. Eastern Cape (PE & East London)5. Western Cape

• Book Value of Assets about R8 billion

Strategic Focus of Consolidation

• Cabinet decision of December 2004 to consolidate passenger rail entities in two phases:– Successful completion of SARCC & Metrorail

merger – 1st May 2006– Shosholoza Meyl transfer to SARCC due on 1st

April 2008

• Consolidation process culminates this year in the establishment of an integrated passenger transport company

Strategic Focus of Consolidation Cont…

• The National Passenger Transport Company will play the following strategic roles:– Provide integrated transport solutions– Be a lever to drive Public Transport Strategic Goals

– Integration– Accessibility– Affordability – Safety

• Plan, Develop and Invest in Rail Infrastructure• Owning and Managing Rail Assets• Contribute to land use integration

Strategic Focus of Consolidation Cont…

• The Integrated Passenger Transport Company will provide the following services: – Commuter Rail (Metrorail) will remain at the

core of the business– Regional & Long distance rail services (SMeyl)– Property and Station Development– Feeder & distribution services in the form of

buses

Critical Path

• Amendments to Legal Succession Act • Conclusion of Definitive Agreements

between SARCC and Transnet on Shosholoza Meyl

• Funding and Turn Around Plan for SMeyl• Approval of an Investment Plan for Public

Transport

Key Highlights for 2007/08

• 415 refurbished Coaches back into service • Passenger trips:

– 12.4% above target – Metro Plus Passenger trips 17% above target

• Fare Revenue: 7.6% above target • Punctuality: – (April 07 – January 07):

– Average Performance: 86.21%– WC = 91. 63%– Wits= 87.97%– Eastern Cape = 96.96%– Tshwane = 81.26%– Durban = 78.08%

• Train Cancellations reduced to less than 2%• Launched the Khayelitsha Express Service and Soweto

Business Express

Key Highlights for 2007/08Cont…

• Customer Satisfaction at 70% • Security: crime related incidents at levels far lower than

2006/07 – incidents at end of January 2008 33% below target for

2007/08. – Roll out of Railway Police: 1 814 deployed in Metrorail

Regions • Safety Incidents:

– Train Collisions – Derailments– Level Crossing Incidents

• BEE: 83% of value of contracts placed were to BEE companies.

• Capex Budget: 85% spent – 93% spent on Rolling Stock

Key Highlights for 2007/08Cont…

• 2010 Projects: – Accelerated the implementation of 2010 Projects – R700m of R1.3bn committed to projects– 12 of the 24 planned contact points completed and

operational• Approval Moloto Rail Corridor by Cabinet

– first phase, 113 kilometres, Tshwane to Siyabuswa - R8.6bn

• Launch of the Kei Rail Service• Completion of technical feasibility for CTIA Rail Link• Bridge City Development – R1.2bn: Construction has

commenced

Construction of Bridge City Station

Key Highlights for 2007/08 Cont..

• Intersite – SAPS Facilities (KwaMashu, DBN, Reunion, Escombe,

Gavendish) • High Commands (Park Station, DBN, Tshwane,

Germiston, CT) – R45m – Phase 1 for SAPS Contact points Wits (Parkstation, New

Canada, Germiston, Springs etc– R40m– Khayelitsha Extension Station 4A completed - R70m– National Station Improvement Programme (40 stations)

underway - R50m– Luxury coach terminus in Tshwane - R27m

Challenges facing Commuter Rail

• Despite visible improvements, commuter rail services remain on a ‘knife edge’– A major incident in one region could trigger a A major incident in one region could trigger a

crisis in the entire system, Tshwane Train crisis in the entire system, Tshwane Train Burnings an exampleBurnings an example

• Underlying causes of Poor Performance:– Enormous Infrastructure backlog of over R25bn– Aged Assets (resulting in high failure rate)– Huge Operational Risks (overcrowding & risk of

stampede)– Skills shortage

Challenges facing Commuter Rail Cont…

• Rail System has not responded to spatial developments in the country

• Customers continue to travel under difficult conditions

• Fare evasion at 8.8%• Stations & Rolling Stock not accessible to people

with disabilities• Customer Dissatisfaction remains high

SARCC Coach Age Distribution

SARCC Coach Age Distribution within a 54 year Life Cycle Model

0

200

400

600

800

1000

1200

1400

1600

1800

0-9 10-18 19-27 28-36 37-45 46-54 55-63

Age period

Co

ach

es

G O

Upgrade

Replacement

.

Acquire New R/S

4117- 5M2A Coaches

383- 10M Upgrades

110- 6/7/8M Coaches

.

Turning Rail Passenger Transport Around

• Strategic approach: – Effecting significant short term improvements

• Punctuality• Safety• Cleanliness• Revenue etc

– Delivering long term infrastructure to secure rail as backbone of public passenger transport

– Laying foundation for future growth e.g. New Generation Rolling Stock

Turning Passenger Rail Around Cont…

The Turn Around Strategy is divided into three phases:

• Stabilisation (2007 – 2010): – securing feasible short term goals by region and corridor– investments intended to make early and material impact

• Recovery (2011 – 2014): – building on stabilisation phase– Increase patronage– deploying new rolling stock etc

• Growth phase (2015 – 2030): – expanding the rail network significantly

MTEF (Incl. S Meyl)

R'000 2007/08 2008/09 2009/10 2010/11 Total1 2 3 4 (2,3,4)

Operational Subsidy 2,259,119 2,485,031 2,683,650 2,844,669 10,272,469Inflation Adjustment - SARCC 18,559 30,307 36,096 84,962Additional for Smeyl 500,000 450,000 400,000 1,350,000

Capital Grant 1,696,078 2,267,686 3,484,144 3,693,193 11,141,101Additional for SARCC 100,000 200,000 700,000 1,000,000

TOTAL 3,955,197 5,371,276 6,848,101 7,673,958 23,848,532

PTIS 476,000 210,000 450,000 0 1,136,000

TOTAL 4,431,197 5,581,276 7,298,101 7,673,958 24,984,532

Grants, Revenue & Appropriations (incl. SMeyl)

2007/08 2008/09 2009/10 20010/11 TotalR'000 1 2 3 4 (2 - 4)

REVENUE & GRANTS 1,085 1,557 1,689 1,835 5,081Rental income 237 275 287 308 870Other income 220 316 320 343 979Subsidy: Operational 2,259 3,003 3,163 3,280 9,446Subsidy: Capital 1,696 2,368 3,684 4,393 10,445Subsidy: PTIS 476 210 450 0 660Total Income 5,973 7,729 9,593 10,159 27,481

APPROPIATIONS

Operational expenditure 3,801 5,151 5,459 5,766 16,376

Capital Expenditure 1,696 2,368 3,684 4,393 10,445Rolling Stock 1,270 1,456 2,274 2,139 5,869Gauteng CTC/Signaling 70 100 350 520Other signaling projects(Dban, CTown) 170 30 100 350 480Intersite/Station upgrades 226 118 180 274 572Intersite/Station additional allocation 100 150 0 250Bridge City 30 81 120 203 404Cape Town International 50 300 450 800Green View - Pienaarspoort project 20 90 120 230Mabopane Station Upgrade 65 0 0 65ERP systems 50 80 120 250Rolling Stock Facilities Upgrades 50 100 150 300

Other 2010 Station Upgrades( Nasrec,Orlando,Windermere,SAPS) 148 0 0 148Other infrastructure projects 130 190 237 557

PTIS 476 210 450 0 660Surplus/Shortfall 0 0 0 0 0

Total Capital 2,172 2,578 4,134 4,393 11,105

RATIOS

SARCC 2007/08 2007/08 2008/09BUDGET FORECAST BUDGET

RATIOS:

Cost Coverage 35% 38% 37%Fare revenue per employee 109,498 115,019 121,599Average personnel cost per employee 167,417 178,775 182,029Subsidy per passenger km 0.161 0.145 0.151Subsidy per passenger journey/trip 4.222 3.808 3.981

OPERATIONAL ACTIVITIES

Subsidy 2,259,119,001 2,259,119,001 2,503,590,000

Passenger kilometres 14,001,603,000 15,632,068,028 16,569,992,110

Passenger journeys/trips 535,030,000 593,259,134 628,854,682Personnel numbers 9,909 10,184 10,184

Key Strategic Initiatives for 2008/09 - SMeyl

• Concluding Definitive Agreements with Transnet• Review services offered by Shosholoza Meyl• Determine feasibility of regional services e.g. JHB

to Rustenburg, JHB to Maputo• Transfer of key assets e.g. Locomotives &

Properties• Amendments to Legal Succession Act• Driving Operational Efficiencies

Key Strategic Initiatives for 2008/09

• Significant Improvements in Priority A Corridors as per Rail Plan

• Focus investments in these Corridors by improving levels of service

• 5 – 10 minutes headway during peak periods• Longer operating hours• Predictable services at 90% availability• Train availability at 96%• Safety and Security • Punctuality at 90%

Strategic Initiatives - Accelerated Rolling Stock Programme

• The Accelerated Rolling Stock Programme aims are:– To improve reliability, availability & safety of rolling

stock– To improve Rolling Stock performance

• The programme will deliver 1 900 coaches into the service during this MTEF period (500 – 07/08;700-08/09;700-09/10)

• Budgeted R1.5bn for 2008/09• The Accelerated Rolling Stock Programme will cost R5

billion over the medium term (R1.270bn – 07/08;R1.456bn – 08/09;R2.274bn – 09/10)

Strategic Initiatives-Gauteng Nerve Centre

• Work will begin to establish a fully integrated Central Train Control Centre for Gauteng – R520m over 3 years– This will include a re-signalling project

• 73% of all public transport trips in Gauteng made within the Wits Metrorail area (Southern Gauteng)

• Steps for the integration of the Wits and Tshwane Metrorail regions into one have begun

Strategic Initiatives - Preventative Maintenance Programme

• Increasing level and quality of maintenance• Increased Maintenance & Materials budget by

18% to R707m for 08/09• Implement project to Upgrade facilities,

equipment & skills at Metrorail depots at a cost of R300m over 3 Years

Strategic Initiatives – Enhancing Operational Safety

• Continuous Improvement of Safety Management System (SMS) – as required by law

• Submission of Safety Plan• Retain operating license• Obtain license to operate SMeyl• Review of 2 year implementation plan

• Integration of Safety Standards & Quality Management through IMS

Strategic Initiatives - 2010 Projects

Accelerating implementation of 2010 FIFA World Cup related projects:

1. Station development and upgrades impacting on the event.

2. Operational improvements i.e. - crowd control, park and ride facilities at stations and fan parks.

3. Improve security and telecommunications at various stations.

4. Refurbishment of SMeyl coaches as well as facilities for the National Mobile Train Unit

5. Total allocation of R1.3bn by 2010

Strategic Initiatives – Skills Devt.

• Establishment of an Academy for Technical disciplines (signaling, electrical etc) as well safety critical grades

• Leadership Development Programme – R4.6m– Executives– Middle Management– Supervisory Staff

• Early Childhood Development – R2m– Training Teachers in 60 centres country wide

• Bursary Programme for students at University and Technikons– Establishment of Centre for Transport Studies with UCT – R3m

• Learnerships – R10m– Train Operations – Technical Training– Protection Services

• Employee Wellness Programme Approved – R9m

Strategic Initiatives - Optimising Asset Value

• SARCC’s strategy requires Intersite to focus on the development of properties and stations in and around the rail environment

• In line with our strategic objective of optimising asset value, the following flagship project have been prioritised-

1. Cape Town Station Redevelopment 2. Mabopane Station.3. Durban Station.4. Park Station5. Berea Station6. Umgeni Business Park

Conclusion

Critical Success Factors:• Sustainability of Turn Around Strategy

dependent on recapitalisation of the business

• Enhanced Operational Efficiencies and Good Corporate Governance

• Continued investment in Skills, Operations and Infrastructure

• Effective co-ordination in implementation of Public Transport Policy