DEPARTMENT OF TRANSPORT STANDING COMMITTEE ON APPROPRIATIONS 9

DEPARTMENT OF TRANSPORT STANDING COMMITTEE ON APPROPRIATIONS 9 SEPTEMBER 2014 Department of Transport Expenditure for Quarter 1 of 2014/15

Contents Expenditure to 30 June 2014: • • Expenditure per Programme Expenditure per Economic Classification Expenditure per Programme per Economic Classification Details of Transfer Payments Plans to Spend Additional Allocations for Rail Transport Plans for Improving Expenditure for Civil Aviation Implementation of Cost Containment Measures 2

Expenditure per Programme Budget Expenditure Available % Spent R'000 382 860 103 315 279 545 27% 81 184 11 617 69 567 14% 3. Rail Transport 15 034 556 7 749 426 7 285 130 52% 4. Road Transport 21 645 287 5 203 740 16 441 547 24% 5. Civil Aviation 148 271 32 126 116 145 22% 6. Maritime Transport 110 589 19 831 90 758 18% 7. Public Transport 11 323 771 1 294 352 10 029 419 11% Total Department 48 726 518 14 407 34 312 111 30% 1. Administration 2. Integrated Transport Planning The Department has a total budget of R 48 727 billion. To date of reporting the department has spent R 14 414 billion or 30% of the allocated budget. 3

Expenditure per Economic Classification Per Economic Classification Budget Expenditure Available R'000 % Spent Compensation of Employees 383 381 83 756 299 625 22% Goods and Services 584 737 286 657 298 080 49% 47 754 194 14 043 183 33 711 011 29% 4 206 811 3 395 19% 48 726 518 14 407 34 312 111 30% Transfers & Subsidies Machinery and Equipment Total Department Compensation of Employees: Underspent as a result of vacant posts. Goods and Services: Overspending due to e. Natis Transfers and Subsidies: Underspent; a second tranche payment of R 363 million withheld for Provincial Road Maintenance Grant (PRMG) (North West & Gauteng) due to non-compliance on submitting the Grant Evaluation Report for 2013/14 and an updated Infrastructure Report Management return for May & July 2014. Machinery and Equipment: Underspent due to the renovation of the building. 4

Expenditure per Economic Classification: Programme 1 Programme Per Economic Classification Administration Budget Expenditure Available R'000 % Spent Compensation of Employees 172 806 37 204 135 602 22% Goods and Services 196 572 65 517 131 055 33% Transfers & Subsidies 11 182 95 11 087 1% 2 300 499 1 801 22% 382 860 103 315 279 545 27% Machinery and Equipment Total UNDERSPENT • Compensation of employees • Machinery and equipment • Transfers & Subsidies; the first quarterly payment to Higher Education Institutions has not yet been paid due to delays in receiving invoices. 5

Expenditure per Economic Classification: Programme 2 Programme Per Economic Classification Integrated Transport Planning Budget Expenditure Available R'000 % Spent Compensation of Employees 39 382 8 924 30 458 23% Goods and Services 41 573 2 438 39 135 6% 229 47 182 21% 81 184 11 409 69 775 14% Machinery and Equipment Total UNDERSPENT • Compensation of employees • Machinery and equipment • Goods and Services is under spending due to the delays in the following projects: National Transport Planning databank projects, development of National Freight Logistics Strategy, Multi Modal Transport Planning and Co-ordination Act and Regional Corridor Strategy. 6

Expenditure per Economic Classification: Programme 3 Programme Rail Transport Per Economic Classification Budget Expenditure Available R'000 % Spent Compensation of Employees 20 770 4 438 16 332 21% Goods and Services 15 909 266 15 643 2% 14 997 804 7 744 650 7 253 154 52% 73 72 1 99% 15 034 556 7 749 426 7 285 130 52% Transfers & Subsidies Machinery and Equipment Total UNDERSPENT • Compensation of employees • Goods and Services mainly due to the prioritisation on the establishment of Project Implementation Management Office (PIMO) between the Department and Passenger Rail Agency of South Africa (PRASA) for the Feasibility study on Moloto Rail Corridor, Rail Policy Act and Branchline Strategy. OVERSPENT • Machinery and equipment is mainly due to office furniture that were purchased during the renovation of the building for the year. • Transfers and subsidies a total amount of R 7 693 billion has been paid to PRASA which constitutes 51% of the total budget of PRASA for the year. 7

Expenditure per Economic Classification: Programme 4 Programme Road Transport Per Economic Classification Budget Expenditure Available R'000 % Spent Compensation of Employees 50 599 10 497 40 102 21% Goods and Services 49 058 166 081 (117 023) 339% 21 544 976 5 027 086 16 517 890 23% 654 76 578 12% 21 645 287 5 203 740 16 441 547 24% Transfers & Subsidies Machinery and Equipment Total UNDERSPENT • Compensation of Employees • Machinery and Equipment • Goods and Services was underspent on S’hamba Sonke programme and Road Infrastructure Policy. OVERSPENT • Goods and Services was over spent by an amount of R 162 million due to the cost of e-Natis maintenance and operations. • Transfers and subsidies; the second tranche payment of R 363 million withheld for PRMG (North West & Gauteng) due to non-compliance on submitting the Grant Evaluation Report for 2013/14 and an updated IRM’s for May & July 2014. 8

Expenditure per Economic Classification: Programme 5 Programme Civil Aviation Per Economic Classification Budget Expenditure Available R'000 % Spent Compensation of Employees 36 060 7 994 28 066 22% Goods and Services 75 586 11 812 63 774 16% Transfers & Subsidies 36 198 12 286 23 912 34% 427 34 393 8% 148 271 32 126 116 145 22% Machinery and Equipment Total UNDERSPENT • Compensation of Employees • Machinery and equipment • Goods and Services is under spent due to delays in the following projects: National Airports Development Plan and the National Civil Aviation Policy. • Transfers and subsidies due to payment of foreign membership fees to the African Civil Aviation Organisation, International Civil Aviation Organisation and COSPAS-SARSAT 9

Expenditure per Economic Classification: Programme 6 Programme Maritime Transport Per Economic Classification Budget Expenditure Available R'000 % Spent Compensation of Employees 22 123 4 728 17 395 21% Goods and Services 69 651 10 049 59 602 14% Transfers & Subsidies 18 468 4 998 13 470 27% 347 56 291 16% 110 589 19 831 90 758 18% Machinery and Equipment Total UNDERSPENT • Compensation of Employees • Machinery and equipment • Goods and Services is due to the delay in the following projects: Maritime Transport Policy and Legislation, Feasibility for undertaking the tug boat and Ratification of African Maritime Charter. OVERSPENT • The membership fees to the International Maritime Organisation and the Indian Ocean Memorandum of Understanding were invoiced and paid earlier than what was projected. 10

Expenditure per Economic Classification: Programme 7 Programme Public Transport Per Economic Classification Budget Expenditure Available R'000 % Spent Compensation of Employees 41 641 9 971 31 670 24% Goods and Services 136 388 30 494 105 894 22% 11 145 566 1 253 860 9 891 706 11% 176 27 149 15% 11 323 771 1 294 352 10 029 419 11% Transfers & Subsidies Machinery and Equipment Total UNDERSPENT • Compensation of employees • Machinery and equipment • Goods and services due to delays on the following projects: National Land Transport Amendment Bill, Review of the Rural Transport Strategy, Integrated Public Transport Network and National Learner Transport Policy. • Transfers and subsidies due to expenditure for Taxi Recapitalisation: an amount of R 66 million has been spent which was journalised in July 2014. 11

Transfer Payments (R'000) Budget Expenditure Available % Spent Conditional Grants: Provincial Roads Maintenance 9 361 498 2 044 026 7 317 472 22% Public Transport Operations 4 832 709 1 250 860 3 581 849 26% Public Transport Infrastructure and Systems 4 968 029 - 4 968 029 0% 902 817 - 902 817 0% 75 223 - 75 223 0% 14 946 300 7 693 146 7 253 154 51% 11 916 947 2 979 235 8 937 712 25% 176 008 - 176 008 0% Railway Safety Regulator 51 504 0 100% S. A. Civil Aviation Authority 19 239 4 809 14 430 25% Ports Regulator of South Africa 16 852 4 213 12 639 25% Road Traffic Infringements Agency 15 300 3 825 11 475 25% 6 887 1 722 5 165 25% 231 - 231 0% Public Transport Network Operations Rural Road Asset Management Public Corporatios: Passenger Rail Agency of South Africa (PRASA) Departmental Agencies & Accounts: S. A. National Roads Agency Road Traffic Management Corporation Maritime Rescue Co-ordination Centre Transport SETA 12

Transfer Payments (Continued) Transfer Payments (R'000) Budget Expenditure Available % Spent Other: Taxi scrapping 423 604 - 423 604 0% 1 606 - 1 606 0% South African National Taxi Council 18 407 3 000 15 407 16% Universities & Technicons 10 790 - 10 790 0% International Organisations 10 082 6 526 3 556 65% 161 317 -156 197% 47 754 194 14 043 183 33 711 011 29% Non Profit Institutions Leave pay and donations Total • Conditional Grants to Municipalities are paid in the second quarter (01 July) inline with municipal financial year. • A total of R 7. 693 billion has been paid to PRASA which constitutes 51% of its annual budget. • The total budget for the Railway Safety Regulator was transferred as per the payment schedule as they receive their permit fees in July onwards. • The transfer payments to the South African Civil Aviation Authority and the Marine Rescue Coordination Centre were delayed due to late invoicing and receiving of compliance certificates. • Taxi scrapping expenditure will reflect in the next report after the journal been processed. • The first quarterly payment to Higher Education Institutions has not yet been paid due to delays in receiving invoices. • The membership fees to the International Maritime Organisation and the Indian Ocean Memorandum of Understanding were invoiced and paid earlier than what was projected. 13

Provincial Road Maintenance Grant (PRMG) Province Budget Transfer R'000 Spent by Province R'000 % Eastern Cape 1 294 279 281 682 108 759 39% Free State 1 025 682 215 126 61 385 29% 514 903 104 101 139 360 134% Kwa. Zulu-Natal 1 788 158 392 192 556 600 142% Limpopo 1 127 310 249 342 145 581 58% Mpumalanga 1 594 840 341 858 409 136 120% North West 690 005 140 431 16 344 12% Northern Cape 640 472 156 054 97 688 63% Western Cape 685 849 163 240 191 188 117% 9 361 498 2 044 026 1 726 041 84% Gauteng Total A second tranche payment of R 363 million withheld for North West & Gauteng Provinces due to non-compliance on submitting the Grant Evaluation Report for 2013/14 and updated Infrastructure Reporting Models for May & July 2014. 14

Public Transport Operations Grant (PTOG) Province Budget Transfer R'000 Spent by Province R'000 % Eastern Cape 195 282 50 960 100% Free State 215 900 56 600 55 319 98% 1 819 854 464 100 422 522 91% Kwa. Zulu-Natal 904 783 237 100 257 607 109% Limpopo 291 852 72 100 73 613 102% Mpumalanga 491 418 126 800 121 224 96% North West 90 318 23 900 18 432 77% Northern Cape 43 937 11 300 9 879 87% Western Cape 779 365 208 000 189 473 91% 4 832 709 1 250 860 1 199 029 96% Gauteng Total 15

Plans to Spend Additional Allocations for Rail Transport • The DOT created capacity in the Rail Transport Branch by employing qualified personnel to manage transfer payments and exercise oversight on both PRASA and the RSR; • PRASA has adopted through its approved Corporate Plan, a five (5) point plan to accelerate delivery of infrastructure programmes; • A detailed presentation on the various plans put in place by PRASA in consultation with the Department are contained in the attached presentation done on 02 September 2014 to the Portfolio Committee on Transport; • The plan covers a five (5) year signalling upgrade programme in Gauteng, KZN and Western Cape Provinces, The accelerated rolling stock programme, infrastructure modernisation and strategy for the deployment of new rolling stock. • The plan also covers: asset life cycle management models, five year contracts with rolling stock contractors and the refurbishments of 500 coaches for both commuter and long distances services. 16

Plans for Improving Expenditure for Civil Aviation Expenditure outcome 2013/14 Standard Item Compensation of Employees Budget Expenditure Available 2014/15 growth on R'000 Expenditure 31 278 31 276 2 36 060 15. 3% Goods and Services 171 052 74 489 96 563 75 586 1. 5% Transfers & Subsidies 34 231 33 887 344 36 198 6. 8% 8 200 8 197 3 - -100. 0% 754 753 1 427 -43. 3% 245 515 148 602 96 913 148 271 -0. 2% Buildings and fixed structures Machinery and Equipment Totals Major savings / under expenditure for 2013/14: Saved R 96. 562 million that was over budgeted for Mthatha airport runway. Saved R 344, 000 on foreign membership fees. It is expected that Civil Aviation will spend its budget for 2014/15 17

Implementation of Cost Containment Measures National Treasury Instruction 01 of 2013/14 was effective from 1 January 2014 - main features: • Engagement of consultants subject to: • Gap Analysis confirmed that Department does not need the requisite skills and resources in it full time employ • A Business Case must be made for the appointment • Approval only by Accounting Officer (irrespective of amount) • Hourly rates set out in DPSA (Department of Public Service and Administration) Guidelines, SAICA (South African Institute of Chartered Accountants) Guidelines, or rates prescribed by the body regulating the profession of the consultant • Restrictions on cost of hotel accommodation, air travel and claims for kilometers travelled (disbursement fees) • All contracts must include penalty clauses for poor performance 18

Implementation of Cost Containment Measures (Continued) National Treasury Instruction 01 of 2013/14 was effective from 1 January 2014 - main features: • Travel and subsistence: • First Class travel not allowed • Restrictions on Business Class flights: Only ranks of Directors-General and equivalent or employees with special needs and Deputy Directors-General for flights exceeding five hours. • Domestic accommodation restricted to R 1, 300 per night person, including dinner, breakfast and parking (Accounting Officer can approve deviations under certain circumstances) • Vehicle hire restricted to Group B for employees (Accounting Officer can approve deviations under certain circumstances) • Employees travelling for official engagements, I. e. Parliament, are restricted to three, with exceptions depending on certain ranks 19

Implementation of Cost Containment Measures (Continued) National Treasury Instruction 01 of 2013/14 was effective from 1 January 2014 - main features: • Catering and Events: • No catering expenses for internal meetings unless approved by the Accounting Officer. • Entertainment allowances limited to R 2, 000 per annum unless approved by the Accounting Officer. • No expenditure on alcoholic beverages except for State Banquets or functions promoting South Africa or its goods and Services. • Team building, social functions and year-end events may not be funded from budgets or by suppliers or sponsors. 20

Implementation of Cost Containment Measures (Continued) Immediate measures – January 2014: • All tenders in progress not yet awarded to include cost containment measures: • Negotiated with preferred bidders before award; or • Cancelled and re-advertised bids • Submissions for overseas trips referred back to amend flight bookings to economy class Departmental Circular issued on Procurement matters: • All submissions to approve Terms of Reference must be accompanied by a gap analysis and business case • Terms of Reference must include penalty clauses, restrictions on disbursement costs (travel and accommodation), and restrictions on hourly rates • Accounting Officer to approve appointment of consultants Compliance is overseen by the Bid Adjudication Committee 21

Implementation of Cost Containment Measures (Continued) General Departmental Circular issued to communicate National Treasury Instruction 01 of 2013/14 Departmental Circular issued on Travel and Accommodation: • Restrictions prescribed for: • Air travel • Domestic accommodation • Vehicle hire • Number of employees travelling for official engagements to attend to the same matter. Departmental Circular issued on claims for meals and parking: • Claims for meals and parking are prohibited if the hotel accommodation rate includes these costs. Compliance to above is overseen by Travel Office and Financial Administration: Travel and Subsistence 22

Thank you