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SELECT COMMITTEE ON PUBLIC SERVICES 14 JUNE 2011

SELECT COMMITTEE ON PUBLIC SERVICES 14 JUNE 2011. 435423. MANDATE. Responsible for proclaimed national roads Toll and Non-Toll network Maintain, upgrade, operate, rehabilitate and fund national roads Levy tolls to service toll roads Manage concessionaires

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SELECT COMMITTEE ON PUBLIC SERVICES 14 JUNE 2011

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  1. SELECT COMMITTEE ON PUBLIC SERVICES14 JUNE 2011 435423

  2. MANDATE • Responsible for proclaimed national roads • Toll and Non-Toll network • Maintain, upgrade, operate, rehabilitate and fund national roads • Levy tolls to service toll roads • Manage concessionaires • Advise the Minister on road related matters • Create public value

  3. SANRAL RELATIONSHIP TO MINISTER/NDOT Minister of Transport (Regulator Owner) MOT Board Of Directors Governance and Control Chief Executive Officer Day to Day Business and Operations Management Planning, Design, Construction, Operation, Management, Control, Maintenance & Rehabilitation of National Roads SANRAL Staff

  4. STRATEGIC OBJECTIVES SANRAL has eight Strategic Objectives • Manage the national road network effectively • Non-toll roads • Toll Roads – ITIS, ITS • Concessions • Overload Control • Provide safe roads • Maintenance • Road Safety Management System • Engineering • Education • Enforcement

  5. STRATEGIC OBJECTIVES CONT’D • Carry outGovernment’s targeted programmes • Community Development • Social and Entrepreneurial Development • Development of Human Capital • Internal • External • Education • Co-operative working relationships with relevant Departments, Provinces, Local Authorities and SADC member countries • Environmental relationships • Reputation Management • Other local efforts • Co-operation between neighbouring countries

  6. STRATEGIC OBJECTIVES CONT’D • Achieve and maintaingood governance practice • Corporate Governance • Risk Management • Prevention of Fraud and Corruption • Internal Audit • Credit Ratings • Performance Agreement with the Executive Authority

  7. STRATEGIC OBJECTIVES CONT’D • Transformation • External Environment • Procurement Policy • Developing Human Capital • Community Development Programme • Higher education – support tertiary institutions • Technology transfer • Internal Environment • Employment Equity • Bursaries • Scholarships • Internships • Young Professionals Cluster

  8. STRATEGIC OBJECTIVES CONT’D • Achieve financial sustainability • Non-toll: Treasury allocations • Optimum cash flow and liquidity management • Toll: Borrowings : Currently close to R29 billion • DMTN Programme • Export Credit Agencies • Direct Foreign Investments • Bank Loans • Pursue research, innovation and best practice • Road Infrastructure Research • Performance Certification of Materials • Social Sciences Research • Psychology behind pedestrian behaviour

  9. KEY PRIORITIES FOR 2011/12 • Asset Management Systems for the timely maintenance of national roads • Planned increase of national road network by incorporation of roads as requested by Provinces • Good co-operative relationships with relevant government departments, provincial and municipal authorities • Toll Road development: Gauteng Freeways, N1/N2 Winelands • Community Development Projects (rural areas) • Using appropriate technology • Incident Management Systems • Research and Development – pavement standards

  10. NATIONAL ROAD NETWORK (km) Total RSA Road Network Estimated at 606,000 km

  11. Please Note: 72% of Network Older than Original 20 Year Design Life

  12. COST OF MAINTENANCE DELAY – AGENCY Repair Cost = X / km Repair Cost = 6X / km (Ratio 1:6) Good Fair Repair Cost = 18X / km (Ratio 1:18) Poor 3-5 Years Very Poor 5-8 Years Please Note: Typical Costs for 11.4m Wide Road in Flat Terrain

  13. COST OF MAINTENANCE DELAY - ROAD USER (2009R) Good Condition Poor Condition Very Poor Condition Good Poor Based on HDM-4 Modeling

  14. Strengthening/Regravel Backlog: Roads in Poor to Very Poor Condition

  15. Actual numbers – Roads Infrastructure and Fuel Levy RAF Component 2009/10 – R12,556 billion 2010/11 – R14,386 billion (est.)

  16. MAINTENANCE • Routine Road Maintenance: all the time • Repairing potholes within 48 hours • Replace guardrails, sign posts etc. • Grass cutting • Patching • Clearing up after accidents • Fencing etc. • Periodic Maintenance ( every 7 – 8 years) • Special Maintenance

  17. Community Development Programme • Focus on the provision of much needed transport infrastructure within poor communities • Focus on method of infrastructure delivery • Method of construction (labour enhanced construction, maximize job creation) • Transfer of skills • Small contractor development • Maximise retention of wealth in communities

  18. CAPITAL INVESTMENT State Toll Network Development • N17 East Toll Road Extension • N1 South and R30 Bloemfontein – Kroonstad • N1 Polokwane Bypass • N3 Mariannhill Extension • Gauteng Freeway Improvement Project: Tolling planned to commence – subject to outcome of further consultations led by the Ministerial Steering Committee

  19. BUDGET Total expenditure

  20. FUNDING • Government Grant for the non-toll network • Cannot budget for a deficit • Toll Revenue – to be used only on toll roads • Borrowings from capital markets and financial institutions • Other income (minimal) – rental income etc • Alternate Funding Sources finalised/under discussion • EIB • ECA • Foreign investors - roadshows

  21. Ratings • Moody’s • Global Scale Issuer Ratings: • (Non-guaranteed notes) • Long-Term: A3 • Short-Term: P-2 • National Scale Issuer Ratings: • (Non-guaranteed notes) • Long-Term: Aa2.za • Short-Term: P-1.za

  22. Gauteng Freeway Improvement Project and Open Road Tolling

  23. Gauteng • Most freeways in Gauteng reached their capacity • Peak hours are extending by 10 to 15 minutes each year • Results in congestion and uneconomical use of time with increased vehicle operating costs and carbon emissions

  24. Economic Impact of Congestion & Insufficient Maintenance • SACCI comments (Jan 2010) : • Expressed concern about impact on business due to congestion and insufficient maintenance • Based on conservative assumptions, cost of congestion on Ben Schoeman amounts to R15m/hour • Excludes costs associated with: • Fuel and maintenance • Late freight deliveries • Lost business opportunities • Accident costs

  25. Economic Impact of Congestion & Insufficient Maintenance • AA conducted tests (August 2007) : • 1600cc vehicle travelling between Pretoria and Johannesburg • 122 Minutes additional driving per day (40 additional hours per month) • Engines operating for longer times – 1,5l/hr when idling • Additional 705 litres wasted (469 hrs idling) per annum – Extra R4 935 (R7 per litre) • 80 000 people – R395 m per year wasted • Excludes working time, frustration, accidents

  26. Maintenance and Repair Cost Increases due to Worsening Road Conditions * “The results obtained from the comparison indicate that the maintenance and repair costs of a truck increase as the condition of the road on which the truck is travelling deteriorates. When moving from a good condition road to a bad condition one, increases in vehicle maintenance and repair costs of approximately 121% can potentially be experienced. In addition, the increase in truck repair and maintenance costs due to deteriorating road conditions can potentially lead to an estimated increase of around 10% in the total logistics costs of a company. Other costs that can potentially be attributed to deteriorating road quality are increased vehicle operating costs, increased fuel consumption, increased cargo damages and ultimately increased vehicle design and manufacturing costs.”

  27. Maintenance and Repair Cost Increases due to Worsening Road Conditions *When comparing the average repair and maintenance costs of vehicles of two companies travelling on specific routes, associated to the condition ... the results potentially indicate that a truck (truck 1) from Company B travelling from Newcastle to Gauteng (300 km) has on average maintenance and repair costs of R627 per trip. A similar truck (truck 2) from the same company travelling on the N3 between Gauteng and Durban for 300 km will have on average maintenance and repair costs of only R270 per trip. If we assume that both trucks make 100 round-trips a year (200 trips in total), the total maintenance and repair costs of truck 1 could potentially amount to R125 400 per year and for truck 2 it would be R54 000. This indicates a potential percentage increase in maintenance and repair costs of 132% per year when comparing a truck travelling on a bad road with one travelling on a good road for company B. .

  28. Background: Economic Impact Analysis • SANRAL conducted an economic impact study by the Graduate School of Business of the UCT • Economic impact analysis provided robust indication of project value to economy • Indicators show that project is economically viable and provides very high benefits to the Gauteng Province and South Africa

  29. Background: Approval Processes • Approached Minister of Transport 2005 – project proposal • Inter governmental (all spheres) workgroup agreed project principles • DOT, SANRAL and Gauteng Government played leading role in compiling a document: “Gauteng Network Integration Process: Proposal for a Gauteng Freeway Improvement Scheme” • This report was concluded in May 2006. • Participants presented the report to political decision makers for acceptance

  30. Background: Approval Processes • Several other interactive sessions followed with metropolitan authorities and The Gauteng Province. The project was presented to the Gauteng Province at: • The Gauteng Indaba (initiative of then MEC Jacobs) May 2006 • Workshop with Gauteng Province in April 2007 • Gauteng Legislature: Transport Portfolio Committee in August 2007

  31. Background: Approval Processes • Cabinet approval – mid 2007 • Intent to toll process – October 2007, indicated a tariff of 50c/km • Advertised in local and national papers • Directly informed other authorities • Presentations made • Declared as a toll road – March 2008 • Procurement of contracts commenced thereafter

  32. Road Works • Road construction : • Civil Works • 17 Projects • Value: R16.9 billion, including CPA, excl VAT

  33. GFIP – Improvements Made • Widening of the freeways • 34 interchanges are significantly upgraded which will result in less congestion • Median lighting has been provided on the route to allow for a safer journey.

  34. GFIP – Improvements Made • Result of Improvements: • Less congestion • Time savings • Greater production • Safer journey • Reduced carbon emissions • Created 20 000 jobs during construction

  35. Toll Operations Components: • Design and Build (project implementation) • Operations (toll collection) • ORT roadside, back office, points of presence, systems maintenance and facilities – 8 Years • Transaction clearing house (TCH) – 5 Years • Violation processing centre (VPC) – 5 Years • Asset Replacement

  36. Toll System • Scope of Works – Design & Build: • Installation of roadside and other system hardware (tag readers, electronic vehicle classification, CCTV, servers, work stations, communications, etc); • Development and integration of software; • Provision and fitment of equipment and furniture for points of presence such as permanent kiosks, temporary kiosks, roadside customer service centres, mobile pay stations, etc; • Tag packaging, logistics

  37. Toll System • Scope of Works – Operations: • ORT Back Office operations - road side transactions validated • Customer services at ”Point of Presence” • 14 Customer Service Centres • 16 Kiosks at Shopping Centres • 25 Mobile Service Centres • 20 Mobile Pay Stations

  38. Toll System (cont.) • Call centre • Account management • Financial transaction settlement • E-Tag logistics and testing • System/equipment maintenance • Facilities maintenance, rentals and rates • Violation processing • The toll operations of the project will provide at least 900 permanent quality jobs (Technicians, IT, Points of Presence, Admin, Call Centre, etc)

  39. Imports • Specialist equipment • Software development • Salaries ZAR 500 million

  40. Other Investments • ITS and Incident Management: • Network Monitoring • Provides information to road users, radio stations • Incident management (towing vehicles, medics on bikes, incident vehicles, etc) • Objective to clear road as soon as possible in the event of incident, and assist road users • R50 m per year • Routine road maintenance: • Fixing guardrails, potholes, do crack sealing, pick up litter, grass cutting, lighting maintenance and electricity, etc) • R120m per year

  41. Other Investments • Periodic Maintenance • Comprise periodic maintenance actions such as rehabilitation and overlays. • Scheduled to take place as follow : • Overlays (2020/21 – 2022/23): R2 895 million • Rehabilitation (2030/31 –2032/33): R8 683 million

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