Department of Transport

1. Department of Transport Select Committee on Finance Public Hearings on Division of Revenue Bill 2009/10 3 March 2009

2. Contents of presentation • Additional allocations: • List of additional allocations • MTEF Overview: • Budgets per Programme • Breakdown of major budgets • Growth in major capital budgets • Other budgets and major projects • Conditional Grants: • Bus subsidies • Gautrain • Other Grants: Roads, overload control & rural transport • Public Transport Infrastructure and Systems (PTIS) 2

3. Additional allocations 3

4. Budgets per Programme 4

5. Breakdown of major budgets 5

6. Breakdown of major budgets (Continued – excl. once off allocations in 08/09) R’000 Gautrain PTIS Grant • Allocations for rail operations and capital remain the largest single budget item. • The budget for road infrastructure overtook that of bus subsidies from 2007/08 onwards. • Allocations for infrastructure from the Public Transport Infrastructure and Systems Grant was introduced in 2005/06 at R241,7m, growing to R3,1bn in 2009/10. • The National contribution to the Gautrain Rapid Rail Link was introduced in 2006/07 at R3,241Bn, and declines to zero in 2011/12 6

7. (R’000) Growth in major capital budgets 7

8. Breakdown of other budgets and major projects 8

9. Breakdown of other budgets and major projects (Continued) 9

10. Breakdown of other budgets and major projects (Continued) 10

11. Bus subsidies • Subsidy levels have been insufficient since 2005/06 to halt the declining levels of service, escalation in costs and the growth in demand • In order to improve operational and financial efficiency a more focussed approach to determining service priorities will need to be developed Implementation Plan: • Conditional Grant to Provinces introduced • Phased implementation in co-operation with Provinces • Negotiated performance based contracts for route operations • Formalisation of unscheduled Interim Contract services • Define operating areas that will not be served • Implementation of supporting infrastructure • Continued enforcement and monitoring of all contracted Public Transport Operations 11

12. Bus Subsidy Funding - Conditional Grant in DORA Critical conditions: Interim contracts to be converted to negotiated (kilometre based) contracts by September 2009 Alignment with IRPTN` Operators will have to accept: • Change in compensation method – based on fixed kilometre • KPI’s • New national monitoring model • Fare levels as set by the authority • Fleet replacements to be based on requirements of the contracting authority • Contracting authority may purchase existing assets (eg depots) and contract compliant vehicles Contracting authorities will have to: • Finalise integrated road based networks • Develop KPI’s • Identify key role-players who are to be part of the operating entity • Engage with all parties to establish operating entity • Implement depots and vehicles if so decided • Recruit/develop admin capacity to manage the contracts Bus subsidies: Interventions for achieving change 2009/10 onwards 12

13. Bus subsidies: Intervention conditions  • Operators that accept will sign an negotiated contract that includes: • KPI’s • Provision that the operator will be provided with an opportunity to be party to a new integrated contract regime for some or all of the services within the contract area Operators that do not accept will continue on month-to-month basis and their contracts will be terminated as and when required  13

14. Gautrain Allocations from 2006/07 to 2010/11 14

15. Gautrain • Annual allocations are paid in terms of a payment schedule • Key and General Milestones have to be achieved before payment • The Provincial Support Team then checks whether Milestones have indeed been achieved • The Milestones are certified by the Independent Certifier (IC) • The certified claim is submitted by the IC to the Gauteng Management Agency to check claims for compliance • The GMA then sends the claim to the Department with a request for payment from the DORA Grant • The Department satisfies itself that there has been compliance with the DORA requirements and the conditions contained in the DORA Framework • Currently, indications are that Phase 1 of the Project, i.e. the section between OR Tambo International Airport and Sandton will be completed in September 2010, while the rest of the Project will be completed in September 2011. 15

16. Roads, Overload Control and Rural Transport Grants R’000 These grants to be introduced in 2010 budget 16

17. Road Grants • The grant was introduced to develop road infrastructure projects that promote regional integration, development and connectivity between neighbouring states • Construction of the Sani Pass: • Phase 1 – Upgrade of P318 Sani Pass (km 0 to 13.6) - completion scheduled for April 2010. • Phase 2 – Upgrade of sections 1 and 2 (km 14 to 25 and 25 to 33): • Environmental Impact Assessment Studies underway with record of decision scheduled for announcement in September 2009 • Engineering designs are underway and are at various stages of completion by the joint venture consultant team • Future road construction projects to be identified for inclusion in the Division of Revenue Act 17

18. Overload Control Grants • To achieve the objectives of the national overload control strategy, a 3-year grant has been developed inconjunction with National Treasury • Grant funds are currently being used for upgrading the weighbridgeinfrastructure facilities in Mpumalanga and Limpopo • In Mpumalanga, projects for the upgrade of weighbridgeinfrastructure were completed in October 2008: • Kinross Traffic Control Centre • Ermelo Traffic Control Centre • In Limpopo, the detailed design, planning and bill of quantitieshave been compiled, and construction works are set to begin in 2009/10 on: • Rathoke Traffic Control Centre • Mooketsi Traffic Control Centre • Future allocations: 18

19. Rural Transport Grants • Purpose : • To improve mobility and access in rural municipalities in support of Integrated Development Plans • Reasons for not incorporating in equitable share: • This is a specific purpose grant mainly for the provision of rural transport infrastructure and services. • This grant ensures that district municipalities are giving priority to the following rural transport interventions: • infrastructure construction • maintenance, upgrading and rehabilitation • support rural development and • accelerated and shared growth initiatives in line with government priorities • It is also used as vehicle for stimulating the use of labour intensive methods in large infrastructure programmes / projects to create jobs and develop required skills in terms of the Expanded Public Works Programme 19

20. Rural Transport Grants • Timeframes : MTEF Allocations • R8.9 million 2008/09, • R9.8 million 2009/10 • R10.4 million 2010/11 • R11,1 million 2011/12. • Details of Projects : 2008/09 Allocations: 20

21. Public Transport Infrastructure and Systems Grants • Contents: • PTIS Background • Allocations • Conclusion 21

22. Background Information • The PTIS grant is aimed at improving transport infrastructure & systems for 2010 and beyond; • Total PTIS grant from 2005/06 to 2010/11 = R13.639bn • Total Host Cities PTIS grant = R10.979bn which is 80% of PTIS Grant • Ongoing Monitoring and Evaluation of progress is in place, with monthly reporting • Five Host Cities currently receiving technical assistance (Polokwane, Rustenburg, Mangaung, Mbombela and Tshwane) 22

23. PTIS Allocations per City and/or Entity 23

24. PTIS Allocations per City and/or Entity Total R13,64 Billion from 2005/06 to 2010/11 24

25. Thank you 25 25