PRASA

1. PRASA Presentation to the Select Committee on Public Services 19 June 2012

2. CONTENT • Introduction • Background • Government mandate to PRASA • PRASA Strategy 2012 – 2015 • Vision & Mission • Key Thrusts of PRASA Strategy • Capital Plan • Strategies in Rail Operations

3. INTRODUCTION AND BACKGROUND

4. INTRODUCTION • 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: • Contribute to an efficient transport system • Facilitate greater access for the rural and urban poor • Promote socio-economic development

5. Background • 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

6. LEGISLATIVE MANDATE • 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: • To generate income from the exploitation of assets acquired by PRASA – giving due regard to Government’s Socio-Economic and Transport Objectives. • Responsibilities of PRASA • 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.

7. Passenger Rail Agency of South Africa

8. 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 Structural Viability

9. 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 DRAFT

10. Status Quo • Investment in new rail rolling stock had not taken place for over three decades • 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 • The technology is old and inherently obsolete • 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 • SMeyl – Average age of the current coach fleet is in the order of 33 years

11. Status Quo (Cont.)

12. PRASA STRATEGY 2012 – 2015MODERNIZING PASSENGER RAIL FOR QUALITY PUBLIC TRANSPORT IN SOUTH AFRICA

13. 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.

14. PRASA STRATEGY VISION To be South Africa’s Leader in the Provision of Quality Passenger Services by 2015 • Mobility – • through providing high-quality passenger services founded on an integrated network of mobility routes. • 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. • Sustainability – • a focus on sustainable development (financial, environmental quality and social equity)

15. PRASA STRATEGY MISSION To Strive for High-Quality Passenger Service through Service Excellence, Innovation and Modal Integration • 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  • Modal Integration • reframing the basis of business delivery, favouring innovation, seamless integration and partnerships

16. Key Thrusts of 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.

17. PRASA Strategy: Summary of Key Interventions • Strengthening the financial position of PRASA Balance sheet Restructuring, Recapitalization of Prasa. • Improving the financial Performance of PRASA Manage costs & increase revenue. • Operational Effectiveness Service Excellence, 90% Predictable Train service performance, 90 day Action Plan, preventative maintenance, Annual reduction of 5% in incidents. • Modernization and Expansion of Asset Base Modernize operations and invest in new capacity. • Human Capital Management Bridge gap between strategic focus and employee management and performance to improve productivity. • Risk Management Sound management of business risks (e.g. operational safety), Manage risk through controlled compliance to statutory requirements, culture of good corporate practices.

18. Strategies to deal with condition of train service Investing in New Capacity Modernization of Technology: • Acquisition of a New, Modern Rolling Stock Fleet • National Signaling Upgrade Programme • Modern Operating Systems: • Traffic Control Systems • Speed Gates, • Ticketing Systems • Telecommunication Systems • Capacity Enhancement Programmes • Accelerated Rolling Stock Programme • Bridge City • Mamelodi extension • Station Upgrades • Light-Rail and High-Speed Rail

19. New Generation Rolling Stock

20. PROGRESS TO DATE • Progress as at end February 2012 • Market engagement - April 2011 • Feasibility study completed - June 2011 • Project approved by Cabinet – November 2011 • Funding arrangements finalised – February 2012 • Online market engagement on local content with local suppliers and rolling stock manufacturers: between February and March 2012 • Key steps for 2012/13 • Issue Request for Proposal - April 2012 • Bid evaluation and selection of preferred bidder - end August 2012 • Recommendation of selected bidder and technology to Cabinet – end February 2013 • Reach financial close with preferred bidder - end June 2013

21. Key Strategic Projects Rolling Stock Fleet Renewal Programme • Acquisition of 7224 vehicles over a 20 year period, divided into three components: • 5 256 Vehicles to satisfy existing rail passenger demand on current network until the year 2020 • 456 vehicles to satisfy growth in rail passenger demand to the year 2030 on existing network • a further 1512 vehicles to satisfy long-term rolling stock needs on new railway lines to be constructed as part of a possible future expansion of the existing network and development of a new network .

22. Key Strategic Projects National Signaling Programme • PRASA to invest R7 billion in new, modern Signalling over the next 5 years • Progress as at end March 2012 • Preferred bidder selected for Gauteng Phase 1 - October 2010 • Contract for 1st Phase Gauteng commenced - 1st quarter 2011/12 • Interim Lenz Midway solution implemented - October 2011. • Gauteng Nerve Centre EIA completed & Concept Design approved - December 2011 • Tender for KZN phase 1 closed - January 2012 • Key steps for 2012/13 • KZN Tender Phase 1 • Contractual negotiations complete - June 2012 • Construction commence - July 2012 • Western Cape phase 1 • Tender close - March 2012 • Contractual negotiations complete - June 2012 • Construction commence - July 2012 • Gauteng • PHASE 1 • Validation of Interlocking - June 2012 • Detailed design of Gauteng Nerve Centre approved - November 2012 • PHASE 2 • Tender Closure - July 2012 • Contractual negotiations complete - September 2012 • Construction commence - October 2012

23. Major Infrastructure investment (Perway, Electrical and Facilities) Demonstration Corridors

24. MAINLINE PASSENGER SERVICES • Investment in New Generation of Locomotives for ShosholozaMeyl • 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: • Mthatha – Queenstown – Johannesburg (Eastern Cape) • Polokwane - Tshwane (Limpopo) • Vryheid – Durban - Johannesburg – Vryheid (Northern Natal)

25. PRASA STRATEGY - CAPITAL

26. STRATEGIES IN RAIL OPERATIONS

27. Strategies to deal with train time improvements Operational Effectiveness Changing the Nature of Operations, amongst others, through: • Service Excellence • Service reliability • Safety & Security • Preventative Maintenance Programme • Established a Technical Division to focus on all Technical, Rolling Stock and Engineering aspects of the Group • Rolling Stock and Rolling Stock depots for Metro and SMeyl • Accelerated Rolling Stock Programme • Focus on Wheels Business and critical components • Focusing resources on High-Volume Corridors • Human Capital • Human Factor Management Programme

28. Accelerated Rolling Stock Programme 64% of fleet complete

29. Strategies around addressing train accidents • Human error the main cause of accidents • Human Factor Management Strategy developed • Human Factor Standard Roadmap with RSR • Increased supervision oversight to certify “fit for duty” • Train simulator training inclusive of problem solving • Medical Surveillance annually for safety critical grades • Substance abuse monitoring • Longer term – Automatic Train Protection (ATP)

30. Strategies around operational safety PRASA Rail PROGRAMME OF ACTION 2012/13 • 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

31. Strategies around operational safety PRASA Rail PROGRAMME OF ACTION 2012/13: Progress • Safety and Clean environment campaigns have commenced in all Metrorail regions • Special focus on commuter safety particularly the closing of doors and general promotion of safe behavior within the rail environment. • 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. • Special attention required in Gauteng South and KZN. • Gauteng corridor A lines (Naledi to JHB and Kempton Park to Germiston) need particular attention. • Upgrades and improvements addressed through Capital Intervention Projects from CAPEX budget.

32. Accident Trends Inclusive of yard collisions and derailments

33. Time improvement trend Passenger Performance Measure

34. Key Highlights 2011/12 • Approval of the Rolling Stock Recapitalisation Programme • Feasibility study approved by Cabinet • Funding secured from 2012/13 onwards • National Signaling Programme commenced • 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