A S A R P
PRASA: KEEP ON
RRRRRU U U U UN N N N NN N N N NIIIIN IN N N NGGGGG
South Africa Magazine looks at PRASA and the steps it is taking to revive train travel in South Africa.
The Passenger Rail Agency of SA FEATURE
ravelling by train in South Africa is exciting, always interesting, and the view, well the view is spectacular. I have travelled over almost all the main lines, from Cape Town to Johannesburg, from Cape Town to Port Elizabeth and East London, and Johannesburg to Durban. Whatever you may think of our rail network there is no denying its vast scale. It is the biggest (and best) on the African continent and is a “crucial engine” for economic growth and social development. According to Government it is also a key contributor to South Africa’s “competitiveness in global markets”. Many steps have been taken in recent years to revive train travel as a viable public transport option. It led to the launch of the Passenger Rail Agency of SA (PRASA) in March last year. It was heralded as “a new era in passenger rail travel” and was tasked with effectively developing and managing “rail and related transport infrastructure, to provide efficient rail and road based passenger transport services within, to and from urban and rural areas.” Today, Metrorail, Shosholoza Meyl, Autopax and Intersite Property Management Services, formerly under South African Rail Commuter Corporation (SARCC) and Transnet, are now all part of PRASA, offering integrated transport services that prioritise customer needs while leading government efforts to transform public transport and provide better mobility and access in pursuit for a better life for all. Between 2007 and 2010, Government invested over R25 billion into PRASA, which was used as part of its stabilisation and turnaround strategies. “Our five year vision is to become the number one public transport operators in
high-volume corridors in terms of market share and to self fund approximately 50 percent of operational costs,” says Lucky Montana, Group CEO for PRASA. “PRASA has already started to implement its new five-year strategic focus as approved by the Board, transforming PRASA into a commercially-viable entity that will become the number one public transport operator in key high-volume passenger corridors in South Africa by 2015. “PRASA is already in the process of radically changing its business model, the nature of its operations, reviewing its funding model and undertaking a major technology upgrade. We are implementing a radical turnaround plan to ensure that the financial position of the Group is strengthened over the next five years in order to fulfil our government mandate of being the backbone of public transportation,” Montana adds. As part of the New Strategy, PRASA will implement the following: Recapitalise PRASA through an unprecedented programme of asset restructuring. Balance Sheet Restructuring exercise, revalue key commercial assets and ﬁnd the most appropriate home in Intersite. Consolidate Shosholoza Meyl operations with commuter rail operations (Metrorail) under a single PRASA Rail Division as well as undertake a review of long-distance passenger services due to the funding shortfall and poor levels of reliability in Shosholoza Meyl services due to difﬁculties regarding access to the Transnet-owned network. Focus on delivering high-quality, reliable transport services in the following highvolume, priority corridors: Naledi – Johannesburg, Mabopane –
We are implementing a radical turnaround plan
The Passenger Rail Agency of SA FEATURE
Pretoria, Mamelodi – Pretoria, Pretoria – Olifansfontein – Johannesburg, KwaMashu – Durban – Umlazi, Wellington – Bellville – Cape Town, Khayelitsha/Michell’s Plain – Phillippi – Cape Town, Simonstown – Cape Town. Continue with the programme for the upgrade of existing infrastructure and modernisation through the acquisition of new trains, signalling upgrade and network expansion projects such as the Bara-Rail Link, Motherwell Rail Link, Bridge City Rail Link, Mamelodi Rail Expansion and the High-Speed Rail Projects. “Strengthening the Balance Sheet and improving the financial position of the Group will be the single-most important focus of the Board and Management team in the period ahead,” Montana says.
SHOSHOLOZA MEYL TROUBLES The transfer of Shosholoza Meyl from Transnet to PRASA on the 1st of April 2009 along with a funding shortfall of R1 billion were part of the major challenges PRASA faced in 2009/10. It remains a huge challenge. “PRASA took serious strain, as the extent and depth of the economic downturn became 4
evident in declining levels of patronage and revenues. Our core customer base of Metrorail and Shosholoza Meyl was hit hard by the difficult economic conditions and the resultant job losses. Furthermore, we had to carry huge increases in energy, insurance, security costs as well as huge maintenance costs,” says Montana. Shosholoza Meyl has only recently started running again after a three-month dispute with the state-owned Transnet saw its services suspended. “Shosholoza Meyl... announces the re-instatement of its train service and the reviewed schedule which will be fully implemented end of November 2010,” PRASA said in a statement. Shosholoza Meyl head Paul Zikhali added that, “In the past weeks we had to reduce a number of our trains due to, amongst others, the unreliability of locomotives which inconvenienced our passengers to a large extent. We managed to refocus our services in response to the identified customer demands. The reviewed schedule offers services to all corridors maximising capacity on all trains to ensure that no train runs empty.”
NALEDI RAIL ENGINEERING TRAINED TO ENGINEER Despite being the new kid on the railway engineering block, having been in operation for just over two years, Naledi Rail Engineering offers its clients decades of combined experience and a wide range of specialised industry skills that meet all their needs, packaged with a refreshing approach to our trade, customers, and stakeholders. Further, we have already been granted ISO9001:2008 accreditation, so our credentials are assured. One of our primary areas of expertise is Rolling Stock. We concentrate on General Overhauls (GO) (stripping/ mechanical/electrical/painting) to 5M2A motor and trailer coaches, so extending the lifespan of the fleet. Here, focus is on safety, reliability, and cost; focusing on technology, lifecycle management, efficiency, and effectiveness. In addition, we understand the value in skills capacity building, particularly in this niched arena, and we have created an onsite academy to train and improve the skills of potential and active artisans in this field. We fully support the government’s socio-economic programme, and are committed to promoting skills transfer, individual capacity building, professionalism, job creation, etc. We will be delighted to show you first hand our culture of warm, ongoing relationships, and our offerings of innovation, quality, competitive pricing, and service delivery.
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The Passenger Rail Agency of SA FEATURE
PRASA suspended the Shosholoza Meyl service on August 13. While Transnet accused PRASA of owing it around R1.3 billion, PRASA accused Transnet of charging too much and doing a poor job in maintaining its locomotives. PRASA says it had “inherited from Transnet a business that was poorlymanaged, neglected and whose financial management systems and internal controls were non-existent and certainly did not meet acceptable record keeping principles”. “The funding shortfall for Shosholoza Meyl, which was transferred from Transnet into PRASA on 1 April 2009 was R558 million,” says Montana. “Shosholoza Meyl requires R1.4 billion per annum to run the operation, however only R500 million was allocated by Government, and this allocation has since been reduced to R450million for the 2010/11 financial year, and no allocation has been provided for 2011 and beyond. The funding shortfall for the operations of Shosholoza Meyl had to be met by PRASA, which also assumed huge liabilities related to Shosholoza Meyl’s pension, medical cover and payroll.”
NOT THE ONLY CHALLENGE As you may have guessed, PRASA has to deal with and tackle a lot. A funding shortfall of R1 billion impacted severely on its operations during 2009/10. An allocation of R210 million from the PTIS did not materialise, even though PRASA had already committed the funds for station and infrastructure upgrade projects. A fare increase of 10 percent was not approved. To meet the funding shortfall, PRASA had to dip into its own reserves. This could result in major long-term difficulties and it is against this background that the PRASA Board and Executive Management team developed a new strategy aimed at strengthening the PRASA Balance Sheet and recapitalising the business. 6
Internet Solutions (IS) has been the incumbent service provider of WAN and Internet services to PRASA for the past ten years. The partnership extends back to 1999 when MetroRail was one of the first clients deployed onto a Frame-Relay VPN solution in South Africa. Over the years, as technology trends changed from traditional Frame-Relay VPN technologies to newer MPLS solutions that provided a seamless converged platform for data and voice, MetroRail was one of the earlier adopters to be transitioned onto MPLS. In 2009 IS was awarded the tender by PRASA to provide MPLS services to subsidiaries such as Intersite Properties, Autopax, Shosholoza Meyl and MetroRail. The MPLS network is suitably positioned to provide autonomous network performance for each of the subsidiaries within PRASA over a common platform and is the fundamental building block for future business requirements regarding convergence and cloud computing. As Government structures have changed, placing greater focus on service delivery, it has become more important for Government Service Providers to provide efficient service that enables Government to meet its stated mandate. Telecommunications is playing an important role as one of the drivers of efficient service delivery. IS’s public sector division gives National, Provincial and Local Government, including State Owned Enterprises, the right focus and attention from both an interactive and supportive service delivery perspective, and is best positioned to deliver real tangible value to Government based on credible success in business.
Hello World 3181
WHAT IF THINKING THE UNTHINKABLE WAS ONLY THE START? WHERE ACHIEVING THE UNIMAGINABLE WAS ONLY A MATTER OF TIME.
When we launched South Africa’s first Virtual Private Network, we made it possible to instantly be anywhere in the country. When we linked our network to Africa’s fiber optic cables, we made it possible to be anywhere in the world. For the last 17 years we’ve been making the impossible happen. To ever change that would be unthinkable.
But there have been successes, like the successful delivery of transport services during the 2010 FIFA World Cup, and PRASA successfully concluded the stabilisation phase of its Turn-Around Strategy for the period 1 April 2007 to 31 March 2010, while the National Station Improvement Programme was executed at great pace, with 111 stations completed by the end of 2009/10. It also achieved the target of 2000 upgraded coaches by 31 March 2010.
A NEW FLEET “PRASA needs to replace its rolling stock, among other equipment and infrastructure, as they fast approach the end of their useful lives,” Montana adds. “PRASA has identified the need to recapitalise its ﬂeet over the next 18 years. A total investment of over R98 billion will be required for new and refurbished coaches and locomotives alone.” According to Montana, overcrowding would only get worse if PRASA did not get a new ﬂeet.
2010/12/13 5:04 PM
The ambitious Rail Investment Programme, which aims to introduce new rail stock and technology into PRASA over the next two decades, is an absolute necessity, he says. Moving to standard gauge will also be of key importance in new and stand-alone rail applications that are being planned, in order to benefit from the full spectrum of a systematic approach to infrastructure modernisation. PRASA has Government support on this – Government views the upgrade as “important for the creation of sustainable jobs and growth of the economy”. The Department of Transport is also working on a rail development plan that focuses on Urban Transit Systems, Long Distance Transit Systems, Key Strategic Freight Corridors and Rural Access and Mobility. The positive legacy PRASA is in the process of delivering in the passenger rail industry will not only revolutionise travel as we know it, but by its sheer longevity, it also will leave a lasting legacy for future South Africans. END
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