Department of Transport Annual Report Presentation 2015/16 NCOP 24 January 2017

1. Department of Transport Annual Report Presentation 2015/16 NCOP 24 January 2017 1

2. Contents • Background • DoT Overall Performance • Performance per Programme • Provincial Focus • Human Resource Management • Human Resource Development • DoT Equity Statistics • Financial Statements 2015/16

3. Background • Report focuses on the progress made with the implementation of programmes & projects in 2015/16 • Focus was on optimal performance of deliverables in terms of the MTSF & MTEF • Targets were guided by the outcomes-based approach (Outcome 4, 6, 7 & 10)

4. Overview of the Transport Sector for the 2015/16 Financial Year • NDP emphasizes necessity of sound economic infrastructure as a pre-condition for economic growth; • The APP 2015/16 highlights the DoT’s commitment to address major social and economic challenges facing the sector through interventions aimed at accelerating service delivery, increasing job opportunities, rural development and skills development; • This report emphasizes the DoT’s continued restatement of the need for increased investments in public transport infrastructure, restructuring of current subsidies to promote integrated settlements and transport infrastructure projects to improve access to opportunities for the urban and rural poor.

5. Annual Performance • Total Number of targets - 50 • Targets Achieved - 45 targets • Targets Not Achieved - 5 targets Overall % Achievement – 90%

6. Annual Performance…

7. Department Of Transport (Summary of performance per programme)

8. Key Achievements Programme 1: Administration • 53 interns were appointed and placed with effect from April 2016 translating in 7.6% of staff establishment. • Health and Wellness campaings conducted; 256 electronic news updated and circulated; DoT Language Policy reviewed; Engagement with Government Communication and Information System (GCIS) conducted on the DoT Corporate Identity Manual; 98% of Presidential Hotline cases resolved as at the end of Q4 • International Relations Strategy approved • Departmental Intranet site finalised and rolled out • Implementation of action plans to address audit findings monitored on a quarterly basis; and action plans for strategic risks monitored on a quarterly basis

9. Key Achievements… Programme 2: Integrated Transport Planning • Drafts of the frameworks for Infrastructure Funding and Transport Funding were completed and submitted for approval as targeted • The Road Freight Strategy was also completed and submitted for approval • The Single Transport Economic Regulator (STER) Bill was submitted to Cabinet and consultations on subsidiary regulations conducted with the Ports Regulator • The Private Sector Participation (PSP) Framework was successfully developed and is being transferred to the National Treasury for inclusion (as a chapter) in the overarching PSP currently being developed by the National Treasury • The draft of the Green Transport Strategy has been successfully developed as targeted during the period under review.

10. Key Achievements… Programme 3: Rail Transport • The draft White Paper on National Rail Transport Policy has been finalised • Guidelines for submission of rail economic regulatory information were completed and approved during the period under review • The Branchline Strategy has been finalised and will be presented at the next sitting of the Economic Sectors, Employment and Infrastructure Development (ESEID) Cluster • The Draft National Railway Safety Regulator Bill has been successfully developed during the period under review • The draft National Railway Safety Stratey has been completed and consultations on the draft strategy conducted with Passenger Rail Agency of South Africa (PRASA) and Rail Safety Regulator (RSR) during the period under review

11. Key Achievements… Programme 4: Road Transport • The draft Green Paper on the Roads Policy has been completed and submission to Cabinet has been approved • All approved Provincial Road Maintenance Grant (PRMG) projects have been monitored in line with the budget. An Annual Monitoring Report has also been compiled as submitted for quality assurance • The Status Quo Analysis Report for the development of the Access Road Development Plan has been completed and submitted for quality assurance • The Administrative Adjudication of Road Traffic Offences (AARTO) Amendment Bill was submitted and approved by Cabinet during the period under review. The Bill will be submitted to Parliament in the new financial year.

12. Key Achievements… Programme 5: Civil Aviation • The National Civil Aviation Policy (NCAP) and the National Airports Development Plan (NADP) have been completed and submission to Cabinet has been approved • Air service agreements were reviewed with Egypt, Guinea, Guinea-Bissau, Mauritius, Curacao, Namibia, Turkey, Australia, Israel, Austria, Serbia and Sierra Leoneduring period under review • A draft Civil Aviation Amendment Bill was completed during Quarter 4 and submitted for quality assurance • A monitoring report on the upgrade of Mthatha Airport was completed and recommendations on the transfer of the asset to the Eastern Cape Provincial Government were duly approved.

13. Key Achievements… Programme 6: Maritime Transport • Drafts of the Cabotage Strategy and Cabotage Bill were completed and submitted for quality assurance • The African Maritime Charter was approved by Cabinet in May 2015 and by Parliament in February 2016

14. Key Achievements… Programme 7: Public Transport • The Reviewed Rural Transport Strategy has been completed and submission to Cabinet has been approved • The National Learner Transport Policy was approved by Cabinet and subsequently published for implementation as targeted during the period under review • A total of 3 226 old taxi vehicles were scrapped during the period under review due to the increase in demand by operators; and the Taxi Recapitalisation Programme (TRP) Review Document was developed and submission of the report to Cabinet has been approved • Final draft of the Integrated Public Transport Turnaround Plan was completed and submitted for quality assurance

15. Provincial Focus Targeted interventions to improve rural access, infrastructure and mobility aimed at the poor and indigents • The DoT has developed integrated Public Transport Networks (IPTNs) in rural municipalities of Bojanala and the OR Tambo District in the North West and Eastern Cape Provinces respectively, to improve access of public transport to the poor. • The National Learner Transport Policy was approved by Cabinet in the 2015/16 financial year and has been commissioned for implementation. The implementation of this policy will ensure the provision of norms, standards and operational guidelines for leaner transportation • This policy will also enhance a safe transportation environment by ensuring that operators comply with the National Road Traffic Act (Act 93 of 1996) as well as the provisions of the National Land Transport Act (Act 33 of 2009) • The Shova Kalula Project distributed 3,500 bicycles to schools

16. Provincial Focus… Road Infrastructure Maintenance • The S'Hamba Sonke programme, supports the government’s job creation drive and also provide a platform for empowerment for small contractors. • With regard to the development of the integrated rural roads plan for the country, the DoT has aligned its rural gravel roads plan with that of the Department of Public Works (DPW) and the Department of Rural Development and Land Reform (DRDLR). This eliminates duplications & saves costs • 66km road P64/2 between Kestel and Reitz (P64/2) in Free State was successfully rehabilitated at a value of R147 Million. 30% of the project value was set aside for local SMME’s, cooperatives and emerging contractors to create work opportunities for youth, disabled and women beneficiaries. • Repair of flood-damaged road infrastructure in Lephalale was done on Roads D171, D1836 and D1959. These roads provide access to basic economic and social amenities to the rural community in Lephalale. • The ThabaNchu Public Transport Route S110 was successfully upgraded. • The re-sealing and road markings for Phase 1, as part of the road rehabilitation programme were concluded in September 2015.

17. Provincial Focus… Improved Public Transport Systems • The Department continued to support the rollout of Integrated Rapid Transport Systems (IRPTN’s) in 13 municipalities to the tune of R5,9bn during the year under review. • R4,9bn was spent across the the provinces through the Public Transport Operations Grant (PTOG) • A total of 3 226 old taxi vehicles were scrapped during the period under review due to the increase in demand by operators

18. Provincial Focus… Schools Reached to promote aviation as a career choice amongst learners(576 schools visited in 2015/16) Northern Cape Province: • ZF Magcawu & John Taolo Gaetsewe Districts Career Exhibition: Schools – 33; Learners – 2 841 North West Province: • TETA Career Awareness Expo: Schools – 61; Learners – 503 Gauteng Province • TUT Ga-Rankuwa Open Week Exhibition:Schools – 73; Learners – 6 637 • Mango Career Day & Swartkops Airshow: Schools – 11; Learners – 700 • Soweto Schools Visit:Schools – 05; Learners – 191

19. Provincial Focus… Schools Reached to promote aviation as a career choice amongst learners(576 schools visited in 2015/16) Northern Cape Province: • NCP Department of Education Grade 12 Learners Programme: Schools – 10, Learners – 700. Limpopo Province: • Phalaborwa Schools Visit & Eskom Expo for Young Scientists: Schools – 15, Learners – 300 Mpumalanga Province: • Sasol Techno X 2015 – Secunda: Schools – 104, Learners – 994

20. Provincial Focus… Schools Reached to promote aviation as a career choice amongst learners(576 schools visited in 2015/16) Northern Cape Province: • Handing over ceremony of the computer laboratory to the Colesberg Combined School & Career Awareness: Schools – 10: Learners – 573 KwaZulu Natal Province • Dundee Aviation Career Expo & Air-Show: Schools – 21: Learners – 750 North West Province • Aviation Career Awareness & ICAD 2015: Schools – 3; Learners –1 362

21. Provincial Focus… Schools Reached to promote aviation as a career choice amongst learners(576 schools visited in 2015/16) Free State: • Thirteen (13) schools visited and • Reached 988 learners; North West: • Seventy (70) schools visited and • Reached 6 777 learners; Western Cape: • Three (03) schools visited and • Reached 136 learners

22. Notable Challenges to be Prioritised for Remedial Action Programme 1: Administration • Only 63 vacant posts (against a targeted 115) were filled during the period under review. The underperformance was due to budget cut on compensation of employees and a moratorium placed by the National Treasury on the filling of vacant posts • Corrective measures: DoT will continue to engage the National Treasury to ensure that a solution is reached to enable the Department to fill critical vacant positions

23. Notable Challenges to be Prioritised for Remedial Action Programme 2: Integrated Transport Planning • NATMAP 2050 was not re-submitted to Cabinet due to non-conclusion of the Presidential Infrastructure Coordinating Committee (PICC) consultation process • Corrective Measure: Consultations with the PICC secretariat have commenced and the NATMAP will be prioritised at the next PICC Management Committee (MANCO) engagement. • The development of the Harrismith Hub Framework was not completed. • Corrective Measure: Option Analyis and Value Assessment reports were completed in collaboration with the Free State Department of Roads, Police and Transport. These reports will be tabled as the basis of the overarching Harrismith Hub Framework.

24. Notable Challenges to be Prioritised for Remedial Action Programme 6: Maritime Transport • The Green Paper on the National Maritime Transport Policy was presented to the International Cooperation, Trade and Security (ICTS) Cluster in March 2016. Submission of the Green Paper to Cabinet was not approved by the DoT Executive Authority. • Corrective Measure: DoT will prioritise the Green Paper in the new financial to ensure all outstanding issues are addressed to enable submission to Cabinet. • The Cabotage Policy has been completed and included as a chapter in the Green Paper on the National Maritime Transport Policy that was presented to ICTS Cluster in March 2016. However, as with the Green Paper on the National Maritime Transport Policy, submission to Cabinet was not approved by the DoT Executive Authority. • Corrective Measure: The process to develop the National Maritime Transport Policy process has been re-arranged to consider the Cabotage Policy.

25. Human Resource Management Vacancy Rate • 53 positions filled during 2015/16 (target for the financial year was to fill 80 positions); • Vacancy rate decreased from 22,16% to 19.61% • Under-performance due to budgetary constraints

26. Human Resource Development Initiatives • 68 interns were recruited and placed across Departmental branches • 9 junior employees completed Project Management Learnership at NQF Level 4 • 152 bursaries managed during the period under review • 454 employees trained across 1 052 training interventions

27. Employment Equity Statistics Race • African – 92% (target – 79.5%) • Coloured – 1.29% (target – 9%) • Indian – 1.88% (target – 2.5%) • White – 4.76% (target – 9%) Gender • Male – 304 (44%) target = 54.20% • Female – 389 (56%) target = 45.80%

28. Employment Equity Statistics… SMS • Male – 68 (61%) • Female – 44 (39%) (Target = 50% female representation in SMS) Disability • Male – 3 • Female – 10 • DoT Disability Status – 1.88% (Target = 2%)

29. FINANCIAL STATEMENTS

30. Report of the Auditor-General

31. Report of the Auditor-General (continued)

32. Report of the Accounting Officer Overview of financial results – Departmental revenue: The department did not expect to receive dividends of R205.6 million, and expected revenue from unspent conditional grants of R80 million for the year.

33. Report of the Accounting Officer (continued) Overview of financial results – Programme expenditure:

34. Report of the Accounting Officer (continued) Overview of financial results – Programme expenditure (cont.): Administration under spent R1.34 million after funds were shifted across programmes to cover expenditure on transport provided for State funerals. An amount of R1.3 million was under spent on the Road Accident Benefit scheme, which was requested as a rollover. Integrated Transport Planningspent its budget for the year and there were no material variances in expenditure. Rail Transportunder spent on a number of projects: White Paper on Rail Transport, Establishment of a Rail Economic Regulator, National Rail Safety Amendment Bill, National Rail Safety Strategy, Branchline Strategy Review and Moloto Development Corridor.

35. Report of the Accounting Officer (continued) Overview of financial results – Programme expenditure (cont.): Road Transport over spent on the Electronic National Traffic Information System ( eNaTIS) by R121.4 million; over spent on operational expenditure mainly due to traveling and over spent on the S'HambaSonke project. Funds were shifted across programmes to cover the over expenditure. After funds were shifted, the programme under spent by R275,691,000, which was withheld from the Provincial Road Maintenance Grant for Kwa-Zulu Natal, and was requested as a rollover. Civil Aviation under spent on a number of projects and over spent on operational expenditure mainly due to traveling. The project "Watchkeeping Services" was under spent by R7.8 million, and R4.1 million was paid for the management of the Mthatha Airport project, which was covered by under expenditure on other projects.

36. Report of the Accounting Officer (continued) Overview of financial results – Programme expenditure (cont.): Maritime Transport over spent its budget mainly due to R36.6 million paid to the International Oil Pollution Fund, and under spent on a number of projects, mainly the Feasibility Study on Tug Boat Services (R6.8 million). The shortfall was covered by shifting funds across programmes. Public Transportunder spent on a number of projects, mainly the Review of the Taxi Recapitalisation Model (R55 million) and the Implementation of Integrated Public Transport Network Plans in District Municipalities (R28.8 million). The programme also under spent R82.6 million on the scrapping of taxis. A total of R184.3 million was shifted to other programmes to cover over expenditure on State funerals, eNaTIS and the International Oil Pollution Fund.

37. Report of the Accounting Officer (continued) Overview of financial results – Virements:

38. Report of the Accounting Officer (continued) Overview of financial results – Virements (continued): Compensation of employees: Programmes experienced relatively low over and under expenditure on compensation of employees, which was shifted across programmes to compensate for the shortfalls. Goods and services was over spent in Administration due to the cost of State funerals, and in Road Transport due to the cost of eNaTIS, both of which were not budgeted for. Funds were shifted from Maritime Transport and Public Transport to cover the shortfalls. Machinery and equipment was over spent because leases for photocopy machines are classified as capital expenditure while the expenditure was budgeted as goods and services, mainly in Administration. The over expenditure was covered by shifting funds within and across programmes.

39. Report of the Accounting Officer (continued) Overview of financial results – Virements (continued): Foreign governments was over spent due to R36.6 million paid to the International Oil Pollution Fund, which was not budgeted for. Funds were shifted across programmes to cover the cost. Households was under spent because less taxis were scrapped than budgeted for and funds were shifted to other programmes to cover costs.

40. Report of the Accounting Officer (continued) Overview of financial results – Rollovers requested: The rollover of R275.7 million for the Provincial Road Maintenance Grant withheld from Kwa-Zulu Natal Province was approved on the Adjusted Budget for 2016/17.

41. Report of the Accounting Officer (continued) Unauthorised, Fruitless and Wasteful and Irregular Expenditure: • Unauthorised expenditure: • Unauthorised expenditure amounted to R2,368,571,000 at 31 March 2016: • Unauthorised expenditure incurred during 2008/09 and 2009/10 as a result of over expenditure on bus subsidies R1,207,374,000. The Standing Committee on Public Accounts recommended the approval of the amount as a direct charge against the National Revenue Fund. • Over spending of Road Transport in 2013/14 and 2014/15 because eNaTIS is unfunded R1,161,197,000. • No further unauthorised expenditure was incurred in 2015/16 because the over expenditure on eNaTIS could be covered by the shifting of funds across programmes and because the Road Traffic Management Corporation (RTMC) carried the cost of eNaTIS from May 2015 onwards.

42. Report of the Accounting Officer (continued) Unauthorised, Fruitless and Wasteful and Irregular Expenditure (continued): • Fruitless and wasteful expenditure: • Fruitless and wasteful expenditure that was declared and not yet transferred to receivables, amounting to a total of R1.436 million is made up as follows: • Services paid for but not delivered for which litigation is underway R546,945. • An overseas trip that was undertaken that exceeded the authorization by R639,725, which is under investigation. • Other fruitless and wasteful expenditure under investigation R61,253. • To be written off R87,708. • To be recovered R100,230.

43. Report of the Accounting Officer (continued) Unauthorised, Fruitless and Wasteful and Irregular Expenditure (continued): • Irregular expenditure: • A total of R123,044,000 was declared as irregular expenditure in 2015/16: • Relating to prior years: Contract extended for a period of five years without following procurement procedures R121,429,000. The case was investigated and is still under investigation by the Special Investigating Unit. • Relating to prior years: Advertisement placed without following procedures R55.803. The responsible employee is no longer in the employ of the Department and the responsible component was requested to make representations to the Bid Adjudication Committee.. • Relating to the current year: Five cases were declared as irregular totalling R1,559,231 because the scope of two contracts and the period of three contracts were extended without approval. Disciplinary steps were taken in two cases and were requested for three cases.

44. Report of the Accounting Officer (continued) Other (Continued): The Office of the Auditor-General indicated via an audit finding that the department should disclose eNaTIS assets in its financial statements in accordance with the provisions of the Modified Cash Standard. Numerous court orders interdicts the department from interfering with the business of the eNaTIS service provider A dispute was raised with the Office of the Accountant-General regarding the disclosure of the assets in the financial statements. The Accountant-General indicated that a departure on the disclosure on eNaTIS assets would impact on the fair presentation criteria for the tangible and intangible assets disclosure notes, and the department disclosed the assets in the financial statements. Because the department could not obtain detailed lists of all the assets, the eNaTIS assets have been disclosed as assets under investigation in the financial statements.

45. Statement of Financial Performance

46. 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 18,222,047 PRASA 12,843,488 SANRAL 9,531,744 Provincial Roads Maintenance Grant 5,953,090 Public Transport Network Grant 4,939,448 Public Transport Operations Grant Other transfers (next slide) 729,562 Expenditure Breakdown for 2015/16 Transfer Payments R’000

47. 250,000 200,000 150,000 100,000 50,000 0 Expenditure Breakdown for 2015/16 (continued) Transfer Payments (continued) R’000 Other Transfers 248,402 Taxi recapitalisation 96,842 Rural Road Asset Management Grant 46,824 Foreign organisations 21,669 Non Profit Institutions 10,908 Bursaries and Households Total of Transfer Payments (97.9% of expenditure) 52,219,379

48. Expenditure Breakdown for 2015/16 (continued) Other expenditure R’000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 701,351 Goods and Services Compensation of Employees 382,866 13,866 Machinery & Equipment 3,325 Payments forFinancial Assets

49. Statement of Financial Position

50. Statement of Financial Position (continued) No further unauthorised expenditure was incurred. Prepayments and advances include R38.3 million paid in advance for the scrapping of taxis. Receivables include R22.2 million owing by the South African Maritime Safety Authority and R6.8 million owing by the Road Traffic Management Corporation. The bank overdraft decreased by R278.5 million due to under expenditure against the budget, mainly the amount of R275.7 million that was withheld from the Provincial road Maintenance Grant for Kwa-Zulu Natal.