Parliament Transport Portfolio Parliament Transport Portfolio CommitteeCommittee
Budget PresentationBudget Presentation
29 May 200229 May 200229 May 200229 May 2002
SARCC Presentation
Presentation Overview
Challenges Identified
Solutions - Critical Requirement
Rail Commuter Business - FundingRm
2001/2002Rm
2002/2003
IncomeSubsidy
•Operational•Capital
Fare Revenue (Metrorail)
Rental of assets (SARCC)
Property (Intersite)
Interest
2 838 2 970
1 856 1 9511 366 490
1 386 565
744 783 60 66
151 170
%
4.6
5.1
10.29.2
15.3
ExpenditureOperational
•Commuter Services•Metrorail Management Fee•Asset Rental•Heavy Repair•Property•Insurance•Administration and Other
Capital
2 917 3 215
2 427 2 6501 828
7948
163147
42
490
1 9958654
1981719947
565
Shortfall 79 245
27 0
120
Rail Commuter Business - Capital Subsidy
TOTAL 300 300 355 490 565
Normal Allocation
98/99Rm
99/00Rm
00/01Rm
01/02Rm
02/03Rm
300 300 355 355 405
Additional Allocations
•10 M’s
•Khayelitsha extension
•Other
135 60
20
80
Capital Expenditure
Rolling Stock
Stations
Perway (track)
Signals
Electrical OH
Telecommunications
Information Technology
01/02Rm
02/03Rm
281
99
29
26
18
4
33
TOTAL 490 565
296
148
25
48
19
13
16
Operational Subsidy Resumé
* Increased insurance premiums (vandalism) and imported rolling stock components
Requested
Original Allocation
1 247 1 407 (12.8%) 1 422 (1.1%) 1 461 (2.7%) 1 631 (11.6%)*
840 845 1 322 1 266 1 386
Shortfall
Additional Allocation
407 562 100 195 245
300 432 50 100
Adjusted Shortfall
Savings Effected
107 130 50 95 245
23 82 28 16
Final Shortfall 84 48 22 79 245
Rm2001/02
Rm2002/03
Rm2000/01
Rm1999/00
Rm1998/99
Total Allocation 1 140 1 277 (12%) 1 372 (7.4%) 1 366 (-0.4%) 1 386 (1,5%)
Operational Subsidy (Excl Capex & Interest)
800
1000
1200
1400
1600
1800
2000
2200
2400
2600
94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03
1990/91 Base Year
94/95 Base Year
Actual Subsidy
The Effect of Inflation
Ran
d M
illi
on
Challenges Identified
•Financial/Funding Challenges
•Short-term operational shortfall (Current and following year)
•Long-term - Inadequate capital investments
•Business Challenges
•Manage capital programme as best we can.
•Priorities/trade-offs between standards, service quality, an obsolete
signalling system and ageing rolling stock
•Increasing pressure of maintenance cost of a deteriorating system
•Dysfunctional regulatory and institutional regime
•Passenger safety from crime - initiative with SAPS
•Integrity of the system (assets, operations and management), in relation to accidents
•Integrated public transport plan - Partnerships with local government
Short Term - Immediate Operational Shortfall
Result: Base line established for MTEF in 2001/02 inadequate
2000/2001 • Subsidy Requirement = 1 777
• Take over loans = less budgeted interest = - 355
1 422
• NT further reduced allocation as a forced = - 100
saving
1 322 (100)• Request/Intervention for additional allocation = + 50
1 372 (50) 1372
• Subsidy allocated = 1 266
• Request to TCom - Plus R100m = 100
1 366 (95)
2001/2002 • Subsidy Requirement = 1 461 (2.7%)
(No interest and Mercer savings)
Inadequate MTEF Allocation Shortfall Projected:
2002/2003 R245m
2003/2004 R295m
2004/2005 R258m
+ R79 = R324
R79m shortfall - Options submitted by NDOT (Transnet Management Fee)
Implications = BOC in default of PFM Act.
= Approve budget at end of Feb which is not finalised.
= 2002/03 Very serious service reductions and rationalisations.
Increase in requirement Requirement Allocation
• Increase 98/99 - 99/00
(First year of contract)
•Increase 99/00 - 00/01 (Mercer)
•Increase 00/01 - 01/02 (Mercer)
•Increase 01/02 - 02/03
•Increase 02/03 - 03/04
•Increase 03/04 - 04/05
1 407 12.8%
1 422 1,1%
1 461 2.7%
1 631 11.6%
1 771 8.6%
1 930 9.0%
1 277 12%
1 372 7.4%
1 366 -0.4%
1 386 1.5%
1 477 6.6%
1 672 3.2%
Long Term - Inadequate Capital Investments
Actual Requirement - Backlogs and Current needs = R1 400 - R1 700 ad infinitum
Actions to identify and quantify the problem:
•Analysed requirements since the 1990’s.
•SIG Consortium investigation on Rolling Stock - 1997.
•Audit: Capital Investment Programme - 1999.
•NDOT: Request investigation:
•Consultants investigate and verified backlog and investment needs.
•Utilised asset condition assessments.
•Proposed investment scenarios and impact on business (safety and risk)
Funding level 01/02 02/03
Base allocation 355 405
Additional allocation 135 160
490 565
Capital Investments (R’m) (all figures in 2000 rands)
Rolling Stock 5 109 850 1 400 220
•40 Year threashold
(Average 27 yrs).
•Overhaul cycle 12 yrs (Currently = 17 yrs)
•45% contribution to train cancellations.
•1300 coaches out of service (70% vs 95% Int nom)
Assets Backlog
Requirement
Realistic Solution (20 Yr Plan)
10 Yrs pa 11 - 20 Yrs pa
Allocation ito limitations
(Annual Average)
Critical Issues
Signalling 1 568 200 20 60
•Obsolete system.
•25% contribution to train performance.
•Create abnormal
operational conditions.
•Cable theft.
•System capacity (less r/s) (Need less rolling stock)
Capital Investments (R’m) (all figures in 2000 rands)
Stations 1 560 200 100 80
•Commuter experience.
•Development (socio +
economic - empowerment)
•Station effectiveness.
•Security/safety.
•Ticket verification/control
Assets Backlog
Requirement
Realistic Solution (20 Yr Plan)
10 Yrs pa 11 - 20 Yrs pa
Allocation ito limitations
(Annual Average)
Critical Issues
Electrical OHS 237 80 100 20 •Reliability
•Cable theft
Capital Investments (R’m) (all figures in 2000 rands)
Perway (Track) 10 20 20 10 •Safety
•Operability
Total
(Maintain
System)
8 504 1 385 1 675 400
Assets Backlog
Requirement
Realistic Solution (20 Yr Plan)
10 Yrs pa 11 - 20 Yrs pa
Allocation ito limitations
(Annual Average)
Critical Issues
IT 20 35 35 10•Efficiency
•Management
Capital Investments (R’m) (all figures in 2000 rands)
Total
Maintain
System)
8 504 1 385 1 675 400*
Assets Backlog
Requirement
Realistic Solution (20 Yr Plan)
10 Yrs pa 11 - 20 Yrs pa
Allocation ito limitations
(Annual Average)
Critical Issues
Network Development
•Infrastructure
•Rolling Stock
3 750
4 000
375
400
375
400
19
•Static rail system.
•Access to basic mobility.
•Development.
•Road based solutions.
Total 16 254 2 160 2 450 419
* Nominal value investments = R350 - R400m per annum
Effect of Inflation on Capital Allocation
393
427
458
498
532
569
596
629
670
250
288 292
317339
356
399
429
467
250 250 250 250
300 300
355 355
405
200
250
300
350
400
450
500
550
600
650
700
94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03
Inflation - 1990/91 Base Year
Inflation - 1994/95 Base Year
Base Capital Allocation
Ran
d M
illi
on
495
560
Investment ScenariosIn
ves
tme
nt
Sc
en
ario
s
0 5 10 15 20 30 40
Business Survival Years
50
Actions Taken
•Divert continuing pressure for improvements/expansion.
•Manage system best to ability, within constraints.
•Switched to condition based maintenance.
•Optimisation investigations - Reduce need for rail services and assets.
•Efficiency opportunities - (Initial investment required however).
•Prioritise investments - Balance between operability, critical needs, safety and
improvements.
•Audits - Stations (critical safety improvements)
- Condition and integrity
- Crashworthiness
- Extend Life cycle processes
- Cost effective/alternatives as a result of limitations (10M - R2m vs R12m)
Actions Taken (continue)
•Rail plans in relation to Local Transport Plans (Total system optimisation
alternatives).
•Alternative funding mechanisms (R1,2bn in station upgrades and developments).
•Reduction in vandalism (actions and materials used) Fibreglass overhead
structures - reduce rust tendencies).
•Regulatory and Business structure options to introduce incentives for effectiveness
and investment possibilities.
•Involving private sector in cost effective and sustainable alternatives and funding
options with Treasury.
Implications of Underinvestment
•Maintain degenerating system.
•Jeopardising operability and safety.
•Impact on efficiency and effectiveness.
•Does not assist in addressing poor
•Decreasing patronage and market share, which effects the cost effectiveness of
system and subsidy deployment.
•System not corresponding with developmental changes.
•Becoming technically obsolete - Availability of components and basic safety of the
system.
•Increasing maintenance costs.
•Image of the rail system.
Solutions - Critical Requirement
How could the committee assist in maintaining the current rail commuter system towards a growth and
development scenario?
•Support in resolving the immediate short term operational shortfall (R79m) and MTEF
shortfalls based on an inadequate base.
•Support for long term solution/intervention on the backlog and immediate investment
requirements.
SARCC Budget Request to NDOTRm
2001/2002Rm
2002/2003%
IncomeRental of Assets
Property Development
214 236
60
154
66
170
10.3
10.0
10.1
Operational Subsidy (1 461) (1 631) 11.6
11.5Less Expenditure•Commuter Services•Metrorail Management Fee•Asset Rental•Heavy Repair•Property•Insurance•Administration and Other (SARCC)
2 914 3 210
1 1077948
16415479
1 2128654
198171994742
9.58.9
12.520.79.6
25.311.9