Rail Model Implementation

1. Rail Model Implementation Presenter: Riad Khan Venue: Portfolio Committee Date :11 June 2003 Time : 11h00

2. Introduction • The Rail Model • The implementation arrangement • Government Policy and Planning Processes • Rail Model Implementation Status • Spoornet Performance Indicators

3. The Rail Model • Process • Task Team • Cabinet Memorandum • Distinction between the two • Tri-partite Structure • Individual Implementation teams • Luxrail Employment Issues Task Team • NFA Transport Sector • Job Loss Mitigation Task Team • Light and Low Density Line Network Task Team • Spoornet Restructuring Committee(Sub Committee of the Transnet Restructuring Committee)

4. The Rail Model cont… • The Model • Integrated General Freight Business(GFB) and CoalLink • OREX to be shadow incorporated and restructuring options to be developed • Extended network - 15 800km, that includes a selection of light density lines • Expanded volumes up to 2020 • Operating efficiencies and productivity improvements supported by the required levels of investment • Investigation of a two-tier management structure for light and low density line network • Tri-partite Task Team to investigate status of low density line network • Government to hold Spoornet accountable for performance and turnaround strategies and projects

5. The Rail Model cont… • The Model cont… • Implementation audit mechanism to be implemented by NFA Transport Sector • 8 000 employer induced retrenchments to be implemented • Tri-partite Job-loss Mitigation Task Team to be established • Appropriate Road to Rail policy initiatives to be developed and implemented by NDOT • Luxrail to be concessioned • Passenger Rail consolidation to be investigated

6. The Implementation Arrangement • Spoornet Tripartite Committee • Decide on implementation teams and areas of responsibility • Agree Terms of Reference • Agree on processes • Steering Committees and Task Teams • Government consensus development • Implementation Teams • Tri-partite consensus on specific restructuring projects

7. Government Policy and Planning Processes • Rail Policy • Rail Plan • Integrated Logistics Task Team(Restructuring) • Integrated Freight Logistics Strategy • BEE Coal Export Forum

8. Rail Model Implementation Status • Integration of General Freight Business(GFB) and CoalLink • Operations and Management have been integrated 2002 • Reporting as an accounting entity within Spoornet 2002/03

9. Rail Model Implementation Status • OREX • Discussions were held with Anglo-American on the optimisation of iron-ore assets and related infrastructure in Northern Cape(commenced June 2002) • MOU signed in Dec 2002 • Anglo-American exits discussions May 2002 • Process forward • Regional Mineral Development strategy to be finalised by DME • Regional economic development strategies and initiatives to be finalised by DTI and Northern Cape Province • Restructuring Model development • Engagement with Labour

10. Rail Model Implementation Status • Extended network - 15 800km, that includes a selection of light density lines • Actual retained operational network may be larger, depending on the outcomes of the regional assessments

11. Rail Model Implementation Status • Expanded volumes up to 2020 • Volume expansion predicated on recapitalisation programme • Recapitalisation plan not finalised • Impact on funding needs of Transnet • Government assessing medium to long term elements of recapitalisation • Re-capitalisation dependant on locomotive delivery schedules (2004+) • Reversal of trend expected post 2004

12. Rail Model Implementation Status • Operating efficiencies and productivity improvements supported by the required levels of investment • Investment case being finalised • Low and light density component still being finalised • Operational efficiency elements still being developed(Labour and Spoornet) • Spoornet Strategy not finalised as yet

13. Rail Model Implementation Status • Investigation of a two-tier management structure for light and low density line network • Investigation currently being performed in Light and Low Density Line Network Task Team(Tri-partite) • Initial structural elements developed • Ring-fenced entity within Spoornet • Separate regional strategy and structure • Business case and regional network components to be finalised • International Comparative Business Model Study and options being developed

14. Rail Model Implementation Status • Tri-partite Task Team to investigate status of low density line network • Currently being performed in Light and Low Density Line Network Task Team(Tri-partite) • Initial investigations completed • Regional strategies and consultative processes commenced June 2003 • Regional strategy and structure to be developed to integrate with Local and Provincial Development Strategies and initiatives

15. Rail Model Implementation Status • Government to hold Spoornet accountable for performance and turnaround strategies and projects • Spoornet performance monitoring consolidated in Transnet performance management by DPE • Spoornet operational efficiency monitoring and performance management being developed alongside recapitalisation plan

16. Rail Model Implementation Status • Implementation audit mechanism to be implemented by NFA Transport Sector • NFA Transport Sector has not commenced the performance audit process as yet, as all parties are awaiting the finalisation of network, operation and financial arrangements • Model implementation structures are functioning and no significant dissatisfaction exists with processes and outcomes • Slow progress on all processes is major concern for Government

17. Rail Model Implementation Status • 8 000 employer induced retrenchments to be implemented to 2006 • Process awaited the establishment of the Transnet Restructuring Committee and the establishment of the Spoornet Restructuring Sub-committee • Reluctance to accelerate retrenchments till finalised structures and operations • Awaiting finalisation of Job-loss Mitigation Process

18. Rail Model Implementation Status • Tri-partite Job-loss Mitigation Task Team to be established • Task Team is operational • Team is developing methodologies and structures to ensure maximum mitigation • Integration with Transnet wide processes being developed (Transnet Social Plan)

19. Rail Model Implementation Status • Appropriate Road to Rail policy initiatives to be developed and implemented by NDOT • NDOT developing a range of these initiatives and are contextualising these in the Rail Policy and Planning processes eg. • Investigating impact of GVM on road maintenance costs • Raising institutional capability to enforce existing regulation • NDOT driving the integration of Provincial development and transport policy and planning with the Road to Rail initiatives

20. Rail Model Implementation Status • Luxrail to be concessioned • Concessioning process was at advanced stage prior to fire that destroyed portion of one train set • Interest in the concession was registered by international hotel and rail companies • Three weeks away from public announcements when suspended • Currently awaiting Transnet decision on timing of refurbishment so as to commence revised financial modelling and due diligence • Agreement reached with Labour on employee issues, awaiting signature of Transnet

21. Rail Model Implementation Status • Passenger Rail consolidation to be investigated • Inter-governmental task team investigated consolidation and developed consolidation options • Outstanding institutional elements have been referred to Principals for resolution • Main issues identified: • Capital subsidy for backlog reversal to be finalised and approval sought • Operational optimisation to be developed with Provincial and Local Transport Authorities • Operational subsidy to be finalised and approval sought

22. Spoornet Performance Indicators

23. Spoornet Performance Indicators cont…

24. Spoornet Performance Indicators cont…

25. Spoornet Performance Indicators cont…

26. Shosholoza Meyl Performance Indicators