Department of Transport

1. Department of Transport Portfolio Committee: Department of Transport Annual Report 2006 18 October 2006 1

2. Department of Transport Contents of presentation • Achievements • Key Policy Developments • Transfer Payments • Achievements against set targets for 2005/06 per Programme • Oversight Report • Audit Report • Financial Overview 2

3. Department of Transport Achievements • Transport Policy, Economic Analysis and International and Regional Integration • Transport Regulation and Public Entity Oversight • Transport Logistics and Corridor Development • Transport Policy and Regional and International Integration • Transport Policy • Integrated Planning and Inter-sphere Co-ordination • Public Transport 3

4. Department of Transport Transport Policy, Economic Analysis and International and Regional Integration • An initial draft of the Performance Indicator Framework (PIF) was completed • The draft PIF was then updated to accommodate the various industry stakeholders’ inputs up until December 2005 • After the consolidation of inputs by the various transport stakeholders a technical consultation process was initiated with Statistics South Africa, to assist in determining the measurability of the various indicators identified in terms of the draft Performance Indicator Framework • The technical consultation process with Statistics SA continued beyond the 2005/06 financial year • Baseline studies on the performance of the transport system and data collection in terms of the approved framework is continuing in 2006/07 4

5. Department of Transport Transport Regulation and Public Entity Oversight • The IMO approved in principle the Southern South African Area as a Special Area where no oil spills will be allowed • A draft Ballast Water Policy was developed • The South African Ship Register Advisory Group was established to identify gaps and rectify them in order to advance the South African Ship’s register • The National Ports Bill became an Act • The Maritime Security Coordination Centre was created: • Its objective is to facilitate the implementation of the Merchant Shipping (Maritime Security) Regulations • The Centre performs security clearance of 565 ships per month • The Centre also facilitated the approval of Port Security Officers in all seven commercial ports, including the approval of maritime security plans • The Department concluded Merchant Shipping Agreements with four States i.e. Gabon, Russian Federation, India and the Democratic Republic of Congo 5

6. Department of Transport Transport Regulation and Public Entity Oversight (continued) • Road Traffic Management Corporation: • The Law Enforcement Technical Committee, comprising of the operational heads of the provincial and metropolitan authorities, representatives of the SAPS, Justice, Arrive Alive communications (DOT), South African National Roads Agency (SANRAL), Road Accident Fund (RAF) and private sector bodies, was established and meet regularly to plan a co-ordinate, integrated and cohesive enforcement management strategy • Phases 1 and 2 of Patrol Car Project, comprising of 120 vehicles, were distributed to the various provinces for deployment on their respective identified hazardous locations • The Road Traffic Management Corporation became operational during October 2005 through the transfer of road traffic management functions and the secondment of staff from the Department • Road Accident Fund: • The RAF processed 188 185 claims and reduced its claims backlog through additional funding of R2,7 billion that was secured 6

7. Department of Transport Transport Regulation and Public Entity Oversight (continued) • Cross Border Road Transport Agency: • The entity provided effective Cross-Border Road Transport Law Enforcement to Enhance law enforcement activities: • Road blocks 2869 • Inspections 80652 • Prosecutions 4869 • Cabotage 132 • Overloading 61 • South African Rail Commuter Corporation (SARCC): • The pilot project for rail security in the Western Cape was a success and plans are in place to roll out the project to Kwa-Zulu Natal and Gauteng • Successfully negotiating the consolidation of Metro Rail into SARCC • Railway Safety Regulator: • The development of safety standards was finalised • Safety Management Plans of the operators were assessed and evaluated. During the year under review, a total of 197 Safety Permits were issued 7

8. Department of Transport Transport Regulation and Public Entity Oversight (continued) • Public Entity Oversight: • The majority of the Boards at the public entities were appointed or in the process to be appointed • Department is currently in the process of finalising the Transport Agencies General Law Amendment Bill • The shareholder compacts were signed and concluded with the entities • The performance agreements are currently in the process of being finalised with the public entities • The RAF Amendment Act, 2005 (Act No.19 of 2005) was passed by Parliament to support the sustainability of the fund • A system of quarterly reporting was introduced • Land Transport Regulation: • An improved national training syllabus for traffic officers was introduced during January 2006 while 5000 officers were trained to deal with hazardous materials 8

9. Department of Transport Transport Regulation and Public Entity Oversight (continued) • Land Transport Regulation (continued): • A comprehensive, emotive, television and radio advertising on road safety and public relations campaign was run, reaching 97% of the population. • The migration of the e-NaTIS system has seen good progress with an expected completion date towards the end of November 2006 • The agreement with the Special Investigation Unit resulted in, amongst others, the following: • Current criminal cases 3072 • Current prosecutions 519 • Convictions 480 • The National Call Centre was established, which registered over 5000 voluntary observers and recorded the reporting of a vast amount of offences • Various legislative and regulatory changes were made to the road Traffic Act, including reflective marking of trailers and trucks • Operation Juggernaut continued, screening over a million heavy and passenger vehicles in 2004 and 2005 9

10. Department of Transport Transport Logistics and Corridor Development • The National Freight logistics Strategy was finalised and approved by Cabinet in 2005 • The first draft of the Branch line Strategy was developed to articulate a vision and strategic approach to revitalising non-core rail lines to ensure economic sustainability of small towns and rural communities • A forum structure was established on the Gauteng – Maputo Corridor • A Cape Town Metropolitan Freight Study was completed to develop strategies to deal with challenges regarding freight movements in the City of Cape Town • The Department led the revival of some rail branch lines, which include the Nkwalini Branch Line and the Belmont – Douglas Branch Line • The revitalisation of these lines has helped stop cargo shifts of 430,000 tons of sugarcane and 500,000 tons of grain from rail to road respectively 10

11. Department of Transport Transport Policy and Regional and International Integration • The Draft Charter on Environmental Coordination was finalised • Provincial research and development visits were completed: • To establish a good working relationship towards the development of the research agenda • To initiate a structure for research coordination in all spheres through the formation of a Research Coordination Committee • The National Household Survey results were submitted to Cabinet in July 2005 and was released in September 2005 • The Transport Innovation and Technology Research Strategy were finalised in October 2005 • A draft Research and Development Plan for the Department was developed in February 2006 • A draft document on the Centres of Excellence was developed in June 2005 • The draft Science Technology and Innovation Activities Cooperation Agreement was developed, together with an Interdepartmental Committee to report on progress to the Ministers of Science and Technology and Transport 11

12. Department of Transport Transport Policy • White Paper on National Transport Policy Review – achieved during 2005/06: • Project plans were developed and approved in principle • Methodology document was completed • New trends and issues in transportation policies were identified • Policy Gap analysis was finalised • Provinces consulted on what issues should be included in the review process • Questionnaires were drafted as means of soliciting information from stakeholders. • A Report on the issues raised by Provincial policy units was compiled • Milestones achieved towards the development of the Maritime Transport Policy: • First round of consultations during September to October 2005. • Presentations to Provincial legislatures • The setting up of a dedicated website • The development of the Draft White Paper was achieved by 9 December 2005 • A Core Group was established within the Department to interrogate and fine tune the Draft White paper 12

13. Department of Transport Integrated Planning and Inter-sphere Co-ordination • Developed a capacity building programme on the NLTTA - to raise awareness on the legislative mandate and requirements of land transport planning and to ensure effective management of transport operations • Integrated Rural Mobility and Access (IRMA) projects: • The demonstration phase commenced in three ISRDP nodes • Feasibility studies and pre-implementation plans were completed. • Objectives are to intensify the role of non-motorised transport; to strengthen passenger transport services and strengthen rural freight services • A revised Non Motorised Transport implementation plan was drafted to facilitate the rollout of 1 000 000 bicycles by 2010 • An agreement was entered into with the SABS-Design Institute of South Africa to develop NMT concepts, which will be more responsive to the rural environment and will be more affordable and sustainable • For EPWP purposes, evaluation of road maintenance projects in rural areas indicated that 575 transport projects were in the pipeline with the potential of 223 410 job creation opportunities for local people 13

14. Department of Transport Integrated Planning and Inter-sphere Co-ordination • The Road Infrastructure Strategic Framework for South Africa was completed in 2005 and is currently being prepared for tabling in Cabinet. Based on the action plan, the following projects were implemented: • The Road Asset Management Systems Audit project: • To take an inventory of information systems that are used by roads authorities across the spheres • To define a minimum system that roads authorities should put in place to effectively manage their road networks • To define a system that the DOT should implement for decision support. • A feasibility study for road transport interventions in the Nquthu area, which augmented an access road that was recently constructed with assistance from the DOT. The study will ensure that the community of Qudeni village gets comprehensive services that will enable integrated development. • Transfer of over 3000km of roads from provinces to SANRAL • The 2010 Transport Action Agenda was finalised: • Priority statements have been submitted and evaluated and over 250 projects have so far been approved. Budget allocations include R241,7 million in 2005/06 and R3,5 billion from 2006/07 to 2008/09 from the Public Transport Infrastructure Fund 14

15. Department of Transport Public Transport • Taxi Operations: • Vehicle safety specifications approved • Tender for scrapping agency advertised and evaluated • 98% of operators applied to have their permits converted • Bus Operations: • Passenger Charter was drafted • The Model Tender Document was drafted • Moratorium lifted on the transformation of Interim Contracts to Tendered and Negotiated Contracts for bus subsidies: • MINMEC decision that bus subsidies should be transformed to public transport subsidies • All interim contracts must be transformed into tendered and negotiated contracts • Rail Operations • Interim Passenger Rail Plan was developed focusing commuter rail services on priority corridors with high passenger volumes • Phase 1 of the passenger rail consolidation completed • Designs and tenders for the Khayelitsha rail extension was finalised 15

16. Department of Transport Key Policy Developments 16

17. Department of Transport Key Policy Developments • Draft National Freight Logistics Strategy approved by Cabinet • Interim Passenger Rail Plan approved by Cabinet • National Land Transport Transitional Act (NLTTA) amended to regulate the taxi industry • Vehicle safety Regulations for the taxi industry approved by Cabinet • The enactment of the National Ports Act will lead to the setting up of the Independent Ports Regulator • The Road Accident Fund Amendment Act (19 of 2005) was passed • A new National Road Safety Strategy was developed • The Minister approved the 23rd Amendment, to the Civil Aviation Regulations • Cabinet approval obtained for submission of the Montreal and Cape Town Conventions ratification to Parliament. Requests for ratification and draft bills tabled in Parliament on 15 February 2006 • A template for the fast tracking of the implementation of the Yamassoukro Decision was created • Draft Transport BEE Charter completed 17

18. Department of Transport Transfer Payments 18

19. Department of Transport Transfer Payments 19

20. Department of Transport Transfer Payments (continued) 20

21. Department of Transport Achievements against set targets • Administration • Transport Policy and Regional Integration • Transport Regulation and Public Entity Oversight • Integrated Planning and Inter-sphere Co-ordination • Transport Logistics and Corridor Development • Public Transport 21

22. Department of Transport Administration 22

23. Department of Transport Administration (continued) 23

24. Department of Transport Administration (continued) 24

25. Department of Transport Transport Policy and Regional Integration 25

26. Department of Transport Transport Policy and Regional Integration (continued) 26

27. Department of Transport Transport Regulation and Public Entity Oversight 27

28. Department of Transport Transport Regulation and Public Entity Oversight (cont.) 28

29. Department of Transport Integrated Planning & Inter-sphere Co-ordination 29

30. Department of Transport Integrated Planning & Inter-sphere Co-ordination (cont.) 30

31. Department of Transport Transport Logistics and Corridor Development 31

32. Department of Transport Public Transport 32

33. Department of Transport Public Transport (continued) 33

34. Department of Transport Oversight Report 34

35. Department of Transport Table 3.1 - Employment and vacancies by programme 35

36. 36 Department of Transport Table 6. 2: Total number of employees per occupational band

37. Department of Transport Audit Report 37

38. Department of Transport Audit Report • 4.1 Contract for the production of credit card format driving licenses: • Financial records were written up for 8 financial periods from March 1998 to March 2006 on the PASTEL accounting system • Financial statements were compiled for the Card Production Facility (CPF) for eight financial periods (first period 13 months) • The financial statements of the CPF were first consolidated with the financial statements of the Department and provisionally submitted for audit • At an Audit Committee meeting on 26 May 2006 it was decided that the CPF should be viewed as a Trading Account and that separate financial statements should be submitted for audit. Separate financial statements were submitted for audit by 31 May 2006 • The financial statements and records of the CPF, however, had to be reviewed to comply with Generally Accepted Accounting Practice (GAAP). The reviewed financial statements were delivered to the Department on 12 October 2006 • Way forward: • The Department is in the process of ceding the contract to the RTMC • A decision on whether to apply for a Trading Account under the RTMC is pending 38

39. Department of Transport Audit Report (continued) • 4.1 Contract for the production of credit card format driving licenses: • (continued) • Contractors will be appointed to: • Manage the bank accounts • Manage the assets • Write up financial records • Link transactions to the production of card licenses • Link transaction to the delivery of card licenses to Driver’ License Testing Centres and reconcile the transactions with the NaTIS system • Reconcile transactions to the payment advice to the contractor • 6.1 Fruitless and wasteful expenditure: • The contractor agreed to credit the Department with the amount of R12000 interest. The matter is being followed up by the project manager • Non arrivals and cancellations: • Explanations from officials indicated that the “no show” report that is provided by Imperial Fleet Services is not reliable. Many bookings were cancelled within the required time frames, but still charged for, and the dates of a number of “no shows” on the report do not correspond with the dates of bookings made • An investigation into all the cases is still underway to resolve the issues 39

40. Department of Transport Audit Report (continued) • 6.2 Irregular expenditure • Irregular expenditure declared in 2005/06: • Supplier appointed as Engineer for a project since 1993 without a contract signed between the supplier and the Department: R 8 840 760: • The supplier was appointed as the Engineer in terms of the contract between the Department and the main contractor. The Department applied to the State Tender Board for ex post facto approval and stopped the services of the Engineer • Human Resources obtained quotes for recruitment advertising services, but the cost of cumulative services rendered by two suppliers over two years exceeded the tender threshold of R200 000 and was deemed irregular by the auditors. The total amount declared as irregular amounted to R 3 393 109. An application for ex post facto approval was made to the Bidding Committee • An employee did not obtain competitive quotations in two cases amounting to R 292 282 for gifts and the design of a logo for the African Union Conference that took place in May 2005. The employee was suspended and subsequently resigned. Legal opinion indicated that dismissal would have been recommended, however further State Attorney opinion is being sought. • The Department’s office Services used Chauffeuring services of a supplier without being aware that the transversal tender already expired, resulting in irregular expenditure of R 65 335. Ex post facto approval being sought. 40

41. Department of Transport Audit Report (continued) • 6.2 Irregular expenditure (continued) • Irregular expenditure declared in 2005/06: (continued) • In 19 cases, refreshments were purchased for staff who worked after hours without obtaining quotations, resulting in irregular expenditure of R 30 883. Explanations were requested from the managers who approved the expenditure, and most explanations are outstanding. The matter will be referred for legal advice and disciplinary steps. The Department issued a circular to prevent the purchase of refreshments without placing official orders via Supply Chain Management • In two other instances, amounting to R2 500 and R1 200 no evidence were found that quotations were invited. These cases are being investigated for corrective action. • Irregular expenditure of previous years: • In June 2004 the Department requested an investigation from the Office of the Auditor-General on contracts related to Government Motor Transport. The report revealed that officials irregularly requested an insurance company to pay a contractor for an outsourcing project of a Province. Payments amounted to R 1 187 740. The State Attorney concluded on 7 December 2005 that there seems to be a material dispute of fact as to whether the officials received proper permission for their actions, and that any claim that the Department may have might have expired • The Department applied for ex post facto approval (More details) 41

42. Department of Transport Audit Report (continued) • 6.2 Irregular expenditure (continued) • Irregular expenditure of previous years: (continued) • The escalation of management fees on the contract for oil pollution prevention services ( R 1 655 230) was overseen when the contract was extended (with State Tender Board approval). SAMSA verbally agreed to escalate the management fees (confirmed by their CEO at the time in writing), but the verbal agreement was never put in writing • The Department incurred costs amounting to R1 938 073 to ensure that a taxi conference could proceed during September 2001 because the National Conference Preparatory Committee did not receive all of the donor funds that were pledged. A forensic audit by the Auditor-General was completed and the matter was referred for a legal opinion. The legal opinion concluded that there was no indication that fraud was committed, and that any claim that the Department may have had, has prescribed. It was recommended that the amount should be written off as irrecoverable • The former manager in charge of Arrive Alive communications contracted directly with a service provider contracted by GCIS instead of via GCIS for an amount of R 1 692 034. The Department’s Advisory Committee on Financial Irregularities advised that the matter should be condoned • Thirteen cases of search and rescue services amounted to R 359 382 for which the State Tender Board since provided exemption from tender procedures, but not ex post facto approval for cases already incurred 42

43. Department of Transport Audit Report (continued) • 6.2 Irregular expenditure (continued) • Irregular expenditure of previous years: (continued) • In four cases, totaling R 89 090, written warnings were issued for non compliance with procurement prescripts • In one case of R 7 917, in which no quotations were called for, documentary evidence is inadequate to identify the persons to be disciplined, although printing service was needed and rendered to the Department • In one case amounting to R 9 150, a contract for cleaning services expired but was continued with due to an administrative oversight. The Advisory Committee on Financial Irregularities recommended a verbal warning to employees who may have been involved. The warning was issued • In one case totaling R 26 268, former employees contracted a sole service provider on an ad hoc basis at amounts not exceeding R5000 per case. They were under the impression that services could be procured up to R5000 without the invitation of quotes. The matter was only detected after the employees resigned. The issue relates to the updating of NaTIS datasheets for which the individual was the sole service provider. An application was made to the State Tender board for ex post facto approval. 43

44. Department of Transport Audit Report (continued) • 6.3 Unauthorised expenditure: (link to details) • On 25 February 2004, SCOPA approved the historical unauthorised expenditure, amounting to R23,97 million. The amount of R3,1 million was not written off because no decision was yet made by the State Tender Board • The Office of the Accountant-General prepared legislation for Parliament to approve the SCOPA recommendations • 6.4 Performance information: • Although some performance information was submitted late for audit, the performance information was included in the annual report • 6.5 Incompleteness of income – driver’s license registration fees: 44

45. Department of Transport Audit Report (continued) • 6.5 Incompleteness of income – driver’s license registration fees: • (continued) • Conclusion: The Department over recovered about R962000 from DLTC’s over the period from January 2000 to July 2004 • Further: Since the Regulation was repealed, amounts of R4,277 million were by DLTC’s, which were not taken into account in the above calculations (records available for audit) • Way forward: • The Inspectorate is in the process of compiling a comprehensive record of all receipts issued to DLTC’s for fees paid by them to the Department • The Finance Directorate will provide the Inspectorate with details of all amounts paid directly into the bank account for which receipts were not issued, so that the details of these amounts can be incorporated into the records being compiled by the Inspectorate • Amounts short paid and over paid will then be followed up with DLTC’s 45

46. Department of Transport Audit Report (continued) • 6.6 Non compliance with the National Road Traffic Act • All registered Driver’s License Testing Centres were inspected during 2005/06 • Forty two per cent of Driver’s License Testing Centres did not comply with minimum requirements • Recommendations were made mainly for improvements to operational and testing methods • The Department has no mandate to take any action against a Testing Centre that does not comply. The mandate rests with MEC’s. • 6.7 Internal control weaknesses: • Payments advices were not post-checked – a register is now signed to indicate that batches have been checked • An employee took leave consistently without submitting leave forms – disciplinary action is being taken against the employee • Control measures were put in place to ensure that new appointments of staff are done according to prescripts • Foreign travel claims were submitted late and many advances remained outstanding - new procedures were implemented that substantially reduced the need to submit claims for daily allowances and reduced outstanding advances 46

47. Department of Transport Audit Report (continued) • 6.7 Internal control weaknesses: (continued) • Former employees are now removed from the BAS system to avoid payments to ex employees • Staff did not obtain quotations for meals (after hours work) – new procedures implemented to avoid irregular expenditure • An error was detected on a share certificate of a public entity and steps were taken to have the error corrected • The Director-General’s employee contract was signed subsequent to the finalisation of the audit • Irregular, fruitless and wasteful expenditure was incurred due to non adherence to existing controls and procedures – legal opinions are obtained and where possible, disciplinary steps are taken • High risk weaknesses in general controls surrounding Information Technology were responded to at the date of the report as follows: • The Information technology policy is under review to incorporate the outstanding issues. Physical security issues are included in the security policy under development • Network security procedures are under review • The Security Policy and the Contingency Policy documents are in the process of approval 47

48. Department of Transport Audit Report (continued) • Major weaknesses in general controls surrounding Information Technology were addressed at the date of the report as follows: (continued) • The Disaster Recovery Plan is under review • A proposal for the review of the Master Systems Plan has been presented for approval • Change Control procedures are being developed • Upgrade of the computer room is underway to improve physical controls and security • Documentation of network monitoring procedures has been initiated 48

49. Department of Transport Financial Overview 49

50. Department of Transport Financial Overview 50