Memorandum of Understanding

Between

Nelson Mandela Bay Metropolitan Municipality

and

Nelson Mandela Bay Public Transport Forum

Memorandum of Understanding

Between

Nelson Mandela Bay Metropolitan Municipality(Hereinafter referred to as the NMBM)

Nelson Mandela Bay Public Transport Forum(Hereinafter referred to as the Forum)

Whereas the Nelson Mandela Bay Municipality (NMBM) is desirous ofimplementing an integrated Public Transport System (IPTS) in the NelsonMandela Bay area.

And whereas the NMBM intends implementing said IPTS by means ofNegotiated Contracts with the existing public transport operators in the areaas provided for by Section 41 of the National Land Transport Act.

And whereas the NMBM and the Taxi Forum, which represents the entire taxiindustry in the Nelson Mandela Bay Municipal area, have conductedextensive discussions and negotiations regarding inter alia the full integrationof the latter in the IPTS.

And whereas the discussions and negotiations between the two parties areongoing, the parties have agreed that a memorandum of understandingshould be prepared at this stage so as to document the progress made todate.

Now therefore the parties record the following:

1 Definitions

1.1 Compensation payments - Refers to the Forum's position forcompensation to be paid to the existing taxi operators in the NMBMarea that cede or transfer ownership of their vehicles to the primary co-operatives.

1.2 Forum - Refers to the Nelson Mandela Bay Public Transport Forum,who warrants that it has been authorised by all taxi associations asappear in paragraph 2 hereunder, to enter into this Memorandum ofUnderstanding and to thereafter bind the said taxi associations, andtherefore the entire taxi industry within Nelson Mandela Bay area, innegotiated contracts with the NMBM.

1.3 IPTS - Refers to the Integrated Public Transport System, a scheduledpublic transport service that the Nelson Mandela Bay Municipality

intends to implement and which is explained in detail in the operationalplan.

1.4 Negotiated Contract - Refers to Section 41(4) of the National LandTransport Act which provides for contracting authorities to concludenegotiated contracts with public transport operators in the area.

1.5 NL7A - Refers to the National Land Transport Act No. 5 of 2009

1.6 NWIBM - Refers to the Nelson Mandela Bay Municipality.

1.7 Operational Plan - Refers So the operational plan for the IPTS, thelatest draft of which is dated 21 December 2009,

1.8 Primary Co-operatives - Refers to the co-operatives thai are intendedto provide a portion of the public transport service for (he IPTS ascontained in the Negotiated Contracts to be concluded beiween theparties.

1.9 Profit guarantee - Refers to the commitment made by theGovernment of the Republic of South Africa that operators participatingin the IPTS would not suffer a loss of legitimate profits and jobs.

1.10 Secondary Co-operative - Refers to Laph'urnilanga TransportServices Secondary Cooperative s co-operative that will have as itsmembers the 5 Primary Co-operatives and will provide shared servicesto the latter.

1.11 Transitional Period - Refers to the 3-5 year period proposed by theForum necessary for the formalisation and transformation of theexisting taxi industry in the Nelson Mandela Bay area.

2 Structure for the provision of the public transport service

2.1 The taxi industry in the Nelson Mandela Municipality has organiseditself into the following 5 Primary Co-operatives;

Co-operative

Uncede TransportService Primary

Co-operative

Tax) Association

Uncedo Service TaxiAssociation

Geographical Area

Zwide; Kwazakrtele; New Brighton;KwaDwesi; KwaMagxata;Motherwell; Kamve!ihle:to CBD;Korsten; Uitenhage;Summerstrand; Greertacres; MouniPleasant; Lorraine and longdistance.

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Co-operative

Ubunye NgamandiaTransport Service

Primary Co-operative

Tinarha TransportService Primary

Co-operative

Northern AreasTransport Service

Primary

Co-operative

New Transport ServicePrimary Co-operative

Taxi Association

Port Elizabeth & DistrictTsxi Association

Uitenhage & District TaxiAssociation

Uncedo Service TaxiAssociation

UJtenhage Taxi Association

Algoa Taxi Association

Northern Areas TaxiAssociation

Western Suburbs TaxiAssociation

Eastern Cape LongDistance Taxi Association

Norwich Long Distance TaxiAssociation

Geographical Area

Zwide; Kwazakhele; New Brighton;KwaDwesi; KwaMagxaki;Motherweli; Kamvelihle; Walmer toCBD; Koreten; Uilenhage,Summerstranb; Greenacres; MountPleasant; Lorraine and longdistance.

KwaNoiuihle; Kabah-Langa toCBD; Korsten; KwaZakhele;Kiritwood; Addo and long distance.

Bethelsdorp; Shaudervilte; ClearyPark; Booysens Park; to CBD;Korsten; Greenacres and longdistance.

Korsten to Newton Park; MangoldPark; Kabega Part; Sherwood;Theescombe; Kragga Kamma;Wttteklip; St Albans and longdistance.

2.2 The membership of the aforementioned Primary Co-operatives willconsist of the members of the taxi associations as set out in the tableabove.

2.3 A Secondary Co-operative has been established and has as itsmembers the 5 Primary Co-operatives.

3 Negotiated Contracts

3.1 The Secondary Cooperative will, with its professional skills, negotiate,on behalf of the primary cooperatives with NMBM the terms andconditions of the negotiated contracts, so as to ensure consistency ,between Ihe separate contracts.

3.2 The NMBM will, subject to agreement being reached, conclude aNegotiated Contract with each and every Primary Co-operative for the

provision of public transport services in the relevant geographical areasof the primary co-operative

3.3 The Negotiated Contracts will address the details of the publictransport service to be provided by the relevant Primary Co-operative(e.g. routes; frequency of services to be provided; schedule; penaltiesfor non-performance etc).

3.4 In terms of the Negotiated Contracts, each of the Primary Co-operatives will be remunerated on a per kilometre basis, rather than ona per passenger basis.

3.5 The Negotiated Contracts wll! remain in force, as contemplated inSection 41(3) of the NLTA. It is the responsibility of the NMBM toensure the continuance of the services negotiated in this NegotiatedContract, which will be in strict compliance with Section 42 of theNLTA.

4 Transitional period

4.1 A Transitional Period will be required by the Primary and SecondaryCo-operatives within which to transform the existing taxi industry and toposition it for complete involvement in the IPTS envisaged by theNMBM.

• 4.2 The Transitional Period may comprise the first 3-5 years or less of theNegotiated Contract period.

4.3 An integrated service will however stilt be provided during thisTransitional Period (i.e. a scheduled public transport service with ailvehicles carrying the same branding).

4.4 The Forum / the 5 Primary Co-operatives and the Secondary Co-operative have produced detailed summaries of the start-up costsrequired by each of the Co-operatives. These summaries have beensubmitted to the NMBM for consideration In line with the requirementfor funding, (see annex. A & B)

4.5 It is specifically recorded that in the view of the Forum, no progress canbe made on the matters described in this MOU unless and until, as aminimum, the start-up costs of the secondary cooperative are madeavailable.

4.6 The NMBM will, immediately after finalisation of the negotiations on theStart-up Costs contract, and after having satisfied itself that thecooperatives have the required capacity to manage the funds transferfunds to the other parties of the Start-up Costs contract.

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Fleet composition

To enable the Primary Cooperatives to render their respective servicesas envisaged, the members of the taxi associations, as set out inclause 2 above will, where possible, transfer ownership of the saidvehicles to the corresponding Primary Cooperatives, If transfer ofownership is not possible, the members will cede the right of use of thesaid vehicles to the Primary Cooperatives.

The members of the taxi associations as set out in clause 2 abovecurrently own about 3 200 taxi vehicles. All of these will be transferredto the relevant primary cooperative eilher by cession or transfer ofownership and will be covered by the government guarantee of 'no lossof profits' described in 9.2 below.

During the course of the Transitional Period and thereafter the Primaryand/or Secondary Co-operatives will endeavour to transform their fleetso as to grow the Co-operatives and improve operational efficiency andprofitability, and to comply with the provisions of the NegotiatedContract.

In accordance with the Operational Plan for the IPTS the Primary Co-operatives will be required to provide the relevant number and type ofvehicles.

The 25 new buses recently procured by the NMBM will initially remainthe property of the NMBM, who will make these vehicles available foruse by the Primary Co-Operatives following the conclusion of theNegotiated Contract. Detailed relevant legal and other matterspertaining the transfer of ownership of the vehicles to the cooperativesis ongoing between the NMBM and the Secondary Cooperative.

The NMBM fully supports the Cooperatives operating the 25 busesduring the 2010 FIFA World Cup. It is however recorded that the 2010FIFA World Cup Operations must comply with:

5.6.1 The Host City Contract5.6.2 Section 60 and 61 of the NLTA5.6.3 Section 84 of the Municipal Systems Act

The Transport Operational Plan for the 2010 FIFA World Cup musttherefore be dealt with separately to this Memorandum ofUnderstanding, as it will not form part of the Negotiated Contract.

Operational plan and business plan for the IPTS

A draft Operational Plan {21 December 2009) for the entire IPTS,including the portion to be provided by the Primary Co-operatives has

6.2 The Operational Plan referred to above deals inter alia With traveldemand in the area; the route network; modal interchanges; thecontract areas; fare management; vehicle fleet; vehicle tracking andcontrol and the like.

6.3 A draft Business Plan will be developed from the Operational Planreferred to above so as to determine inter alia the cost of operating thePrimary Co-operatives and io determine the amounl required fromGovernment.

7 Duties and responsibilities of the co-operatives

7.1 Each of the Primary Co-operatives will be responsible for complyingwith the provisions of the Negotiated Contract envisaged to beconcluded between itself and the NMBM (i.e. each co-operative will beresponsible for ensuring that it provides its portion of the publictransport service required by the NMBM).

7.2 It is envisaged that a GPS / ITS vehicle tracking system will beprocured by the NMBM, and will be available for utilisation by each ofthe Primary Co-operatives for purposes of managing its fleet inaccordance with the prescripts of the Negotiated Contract.

7.3 The Primary Co-operatives will also be responsibie for ensuring thatthe vehicles utilised for purposes of providing the contracted service3re suitable.

The suitability of vehicles for use in the IPTS will be described in theNegotiated Contract.

7.4 The Co-operatives will be required to fulfil the statutory duties andresponsibilities applicable to juristic persons in terms of South AfricanLaw (e.g. Co-operatives Act; Labour Relations Act; Basic Conditions ofEmployment Act; Taxi Industry Sectoral Determination etc).

7.5 The Co-operatives will be responsible for paying its suppliers, serviceproviders and employees.

7.6 The Secondary Co-operative will inter alia provide shared services tothe 5 Primary Co-operatives.

7.7 The Forum, the Primary Co-operatives and the Secondary Co-operative undertake to comply with the legislation and regulations ofihe Republic of South Africa, including any and all provincial andmunicipal by-laws, policies and procedures as may be applicable.

8 Role and function of the NMBM

8.1 The NMBM will provide, in a democratic and transparent manner, theinfrastructure for the IPTS and, together with the full consultations of allthe key transport providers and relevant community interests, beresponsible for the overall planning and administration of the system(e.g. routes; frequencies; vehicle specifications etc).

8.2 The NMBM will conclude a Negotiated Contract with each of the 5Primary Co-operatives referred to above, as well as other publictransport operators in the area, such as the Atgoa Bus Company. Suchcontract shall be in place by 31 July 2010.

8.3 The NMBM will be responsible for the fulfilment of its duties andresponsibilities as contained in the Negotiated Contract.

8.4 The NMBM will be responsible for the fare management system of theIPTS, as well as making payment to the Co-operalives, and any otherduties as per the Negotiated Contract.

6.5 The NMBM undertakes to comply with the legislation and regulations ofthe Republic of Soulh Africa, including any and all provincial andmunicipal by-laws, policies and procedures as may be applicable.

0 Guarantee of no loss of legitimate profits and jobs

9.1 The NMBM will comply with the position of the National Government onprofit guarantees and guarantees against job losses, having due regardto all National Legislation and specifically Section 47 (4) of the NLTA.

9.2 The Forum has proposed that government must guaranteeCompensation Payments to the owners of the minibus taxis that areceded to or where ownership is transferred to the Primary Co-operatives. The Forum has with the support of the NMBM proposed anamount of R8, 000 per month per vehicle for the duration of theNegotiated Contract.

9.3 The Nelson Mandela Bay Public Transport Steering Committee willpresent to the National Department of Transport and the NationalTreasury their position for Compensation referred to in clause 9,2,together with other relevant motivation of its position on other matters,and wil! require an early opportunity to do so in order to progress thematters contained in this MQU.

9.4 The NMBM undertakes to, within the framework of GoverningLegislation, assist and support the Forum to achieve this extremelyimportant objective.

9.5 The NMBM undertakes to ensure (hat any component of the valuechain of the IPTS is examined for possibilities of growing thecooperatives

9.6 The NMBM shat! ensure that a! least a minimum of 40% of anytendered work directly related to the IPTS is examined for possibility ofparticipation by the transport cooperatives. No decision on suchtenders will be taken without consulting (he Taxi Forum or thesecondary cooperative.

10 Commitment

10.1 The parties to [his MOU acknowledge lhal negoliafions and contractswrth DoT and Nations! Treasury on key transformative issues such asProfit Guarantees and guarantees against iogs of jobs directly affectthe viability of the IPTS.

10.2 The parties to this MOU are committed to working togelher, united, tosecure, as soon as possible, the co-operation of the relevant nationalgovernment ministries on all outstanding matters.

10.3 The parties to this MOU acknowledge that this document is a reflectionof the work done (o date, as well as a commitment from all partiesinvolved to negotiate the speedy implement of the IPTS.

Thus do™ .nd .ten*. „ «,,. 1.*.* o, . l . . ,the presence of the undersigned witnesses.

Thus done and signed at JS?.,t. .̂ r. .1?.<r*̂ ?" on this J^, day of" ) e=» in the presence of the undersigned witnesses:

Malhemba GivertlMcalo

Duly authorized Iherelo

For the Nelson Mandela Bay Public

Thus done and signed at sklSsS.* this ,.1 A d a y of ..the presence of the undersigned wtMS&ses.

- Executive Mayor

Thus done and sig-

signed at J .̂Ti.M.y.r*̂ . on this J.in the presence of the undersigned witnesses:

WathemBs Given Mqalo

Duly authorized thereto

For the Nelson Mandela Bay PublicTransport Forum

IN MEMORY OF MELEKIUE HANI