Prasa House in Hatfield, Pretoria. File picture: Thobile Mathonsi/African News Agency (ANA) Archives
Prasa House in Hatfield, Pretoria. File picture: Thobile Mathonsi/African News Agency (ANA) Archives

National Treasury open to relief funding for Prasa, says Transport DG

By ANA Reporter Time of article published Feb 25, 2020

Share this article:

Parliament - National Treasury has responded favourably to a request from the Passenger Rail Agency of South Africa (Prasa) for relief funding, director-general of transport Alec Moemi said on Tuesday.

Moemi told the portfolio committee on transport the treasury reacted "quite warmly" to a request from Transport Minister Fikile Mbalula to help shore up the rail agency, which is in disarray after years of mismanagement and corruption.

He said a tranche of funding had been approved on Monday, but declined to give further information for the time being.

Finance Minister Tito Mboweni is on record saying he would rather help Prasa - which now has an operating deficit of R1.8 billion - than shore up South African Airways because the majority of the country's citizens needed a functioning commuter rail system rather than an airline.

Moemi was briefing the committee along with Mbalula and said one of Prasa's big problems was debt arrears because it took an average 225 days to pay service providers. 

This was ten times as long as the average in 2012/13 and created a backlog that could never be met by the income from commuter ticket fares. 

This was compounded by the fact that mainline commuters service passenger numbers had declined from 3.8 million in 2009 to 387 530 in 2019, mostly due to the fact that locomotives are not available or reliable.

Moemi said there was a firm commitment to extricate Prasa from flawed contracts and if these had been flagged as such, the department would have no qualms about approaching the courts to have such deals set aside. 

Cumulative irregular expenditure reached R24.2 billion in 2017/18, according to the Auditor-General.

Mbalula, in colourful language, described Prasa as "a bottomless pit" and "a place that has completely collapsed".

"This place has been a spooky place, people have been stealing left, right and centre," he said, adding that high turnover of board members did nothing to help the crisis.

Mbalula defended his decision to sack the agency's interim board and appoint Bongisizwe Mpondo in the role of administrator for a 12-month period, telling MPs that he first consulted with President Cyril Ramaphosa on the step, and also informed Mboweni that the board had failed to carry out its fiduciary duties.

He said a review of the board's performance in late 2019, showed that Prasa had challenges that needed decisive intervention at leadership and management levels.

"It became glaringly obvious that merely replacing an interim Board with a permanent Board would not address the deep-rooted fault lines at Prasa," he said, adding that this was backed up by the Auditor-General's finding that the board had failed to take steps to stem wasteful and irregular expenditure.

"Since the interim Board’s appointment, the affairs of the entity had not improved, but had instead regressed, as evidenced by the disclaimer audit opinion, following two financial years of stagnant audit outcomes of “qualified with findings”.

"I arrived at a conclusion that a more incisive intervention that would enable quick turn-around times in decision-making with a view to stabilise operational performance was more urgent that an appointment of a permanent Board. This view was supported and agreed to by Cabinet."

Mbalula and Moemi said the urgent steps they were taking to restore a reliable rail service, included securing copper cable in such a way that it would not be stolen and appointing security officers to manage both carriages and platforms to secure commuters safety.

African News Agency (ANA)

Share this article: