Transport Minister Fikile Mbalula. Picture: Werner Beukes/SAPA/African News Agency (ANA) Archives
Transport Minister Fikile Mbalula. Picture: Werner Beukes/SAPA/African News Agency (ANA) Archives

Mbalula: Billions lost in revenue by transport entities during Covid-19 pandemic

By Mayibongwe Maqhina Time of article published May 7, 2021

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Johannesburg - Transport Minister Fikile Mbalula on Thursday painted a bleak picture about state-owned entities falling under his department, saying some have racked up losses amounting to billions during the lockdown.

The situation was so dire that the some of the distressed entities face shortfalls in operational expenditure and will record low revenue in the coming years.

Mbalula revealed this when he briefed the national council of provinces (NCOP), on mitigating the impact of Covid-19 pandemic in the transport industry.

He said the loss of revenue during lockdown, for various transport sub-sectors, presented a challenge as transport operators experienced unexpected shortfalls in their revenue.

“Operations in aviation came to a complete halt, as we closed the airspace to both domestic and international travel, except for repatriation and medical evacuations. This led to airline operators, that were already under financial distress, such as the South African Airways and Comair, to go into business rescue.

“Public transport operators, specifically taxis and buses, faced reduced demand, as operating hours and passenger capacity was restricted,” said Mbalula.

Mbalula also said a large portion of the freight logistics activity was also halted, as only transportation of essential items was permitted during the hard lockdown.

He said Airport Company of South Africa (ACSA) has encountered revenue losses proportional to traffic losses, in the short to medium-term.

“We project that ACSA traffic volumes, by 2026, could still be below 20% of current traffic levels, and its operational expenditure level would likely decline from R4.8bn to R3.6bn by 2026, and its capital expenditure will be R1bn per annum.

“Traffic volumes are projected to be down by 30% in 2021, while in 2022 we project a 9% recovery, with annual 2% growth between 2023 and 2026.”

Mbalula said ACSA was not in any position to make any commitments and investment in the immediate term.

“ACSA requires R10 to R11bn in the next five years. ACSA will, therefore, need to look into a possibility of selling its non-core assets to remain liquid. This is a process the company has already started to work on,” said Mbalula.

The minister said the Passenger Rail Agency of South Africa (Prasa) has requested R771.062 million for loss in revenue, and a further R489.515m for an operational response to Covid-19 equipment, communication, as well as marshals and security.

“The allocation of R1.206bn through re-prioritisation to Prasa was made, which will result in a decrease in Prasa’s capital budget and an increase in operational expenditure to address the shortfall.

“It is important to note that Autopax – Prasa’s bus subsidiary’s – revenue was severely affected due to the lockdown,” he added.

Mbalula also said the Road Accident Fund (RAF) financial position indicated that it was technically insolvent and would invariably face further liquidity challenges, which urgently need to be addressed.

“The onset of Covid-19 culminated in lower fuel revenue collection than budgeted for in the 2020-21 financial year. The department has supported the request for a cash injection to R7.279 billion, and a request for R15 billion, as a bridge facility to address credit facility and liquidity pressure,” added Mbalula.

He told the NCOP delegates that the South African National Roads Agency (Sanral) has made a further loan request of R7 billion to Multilateral Investment Guarantee Agency (MIGA), over a 15-year guaranteed period, to finance old debt and new projects.

“Sanral further requested shifting of funds, from capital to current transfers for R2.5bn, to accommodate the significant operational expenditure from non-toll to toll for 2020-21. In addition, Sanral requested a further R3.5bn in funding for MIGA financing,” he said.

Mbalula also stated that the South African Civil Aviation Authority (SACAA) generated 74% of its total revenue from passenger safety charges.

The Cross Border Road Transport Agency, which was funded through permit fees from operators, experienced significant revenue losses from the decline in applications made, he said.

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Political Bureau

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