Department of Transport

PUBLIC TRANSPORT ,

TAXI RECAPITALISATION PROJECT

AND

PUBLIC TRANSPORT SUBSIDIES

01 JUNE 2004

CONTENTS

1. INTRODUCTION AND BACKGROUND INFORMATION

2. POLICY THRUSTS ON PUBLIC TRANSPORT

3. THE TAXI PROCESS

4. COMMUTER RAIL

5. BUS CONTRACTS

5. AN INTEGRATED PUBLIC TRANSPORT SYSTEM

The overarching objectives for a sustainable public transport system which contributes to the economic growth of our country are:

       To increase investment in public transport infrastructure

       To recapitalise the public transport fleet and

       To increase access to affordable public transport services

• The White Paper on National Transport Policy, 1996

• The promotion of a safe , reliable, effective, efficient, co-ordinated, integrated, and environmentally friendly land passenger transport system in South African urban and rural areas, to ensure that people experience improving levels of mobility and accessibility.

INTRODUCTION AND BACKGROUND INFORMATION

Department

of Transport

         Reducing the need to travel;         Making travel more affordable;         And thus saving people’s income from increasingly used for transport cost. T White Paper on National Transport Policy, 1996, brought a clear focus,

with the following key factors : 

Government recognizing that public transport is a basic need        To be efficiently provided so that resources are used in an optimal manner        Based on transport plans    Creating a comprehensive integrated, multi-modal, public transport system

Approached on the basis of competitive tendering

POLICY THRUSTS

Important for South Africa given its history, addressing significant barriers to social inclusion:

Department

of Transport

THE RECAPITALISATION OF THE TAXI INDUSTRY

The primary aim of the taxi recapitalisation project at conception was aimed at:

  providing vehicles which will provide safe and affordable transport to commuters. (result of the aged minibus taxi fleet, average of 9-10yrs, which increasingly threaten safe to life).

 creating opportunities for jobs in the manufacturing and downstream industries.

  promote the use of diesel fuel as a more cost-effective and efficient fuel and thus lowering the operating cost. Based on the 1998 projections the strategy was to shift the transport sector consumption of petrol and diesel such that diesel exports and petrol imports are reduced..

   Supporting the objective of formalizing the taxi industry and thus have an effective regulatory framework which will assist in operators fairly sharing the benefit of transporting passengers and thus also curbing fights for routes.

   broadening the tax base

 

THE TAXI PROCESS

In 1996 The National Taxi Task Team (NTTT) was established constituted of Government officials, community leaders and members of the taxi industry to:

Investigate the conflict and violence prevalent in the taxi industry at the time.

Make recommendations to Government on how to address findings thereof.

Findings of the NTTT broadly grouped into three main areas, viz: The need to regulate the taxi industry

The need to formalise the taxi industry

The urgent need for economic empowerment for the industry.

PROGRESS MADE POST THE NTTT FINDINGS

On Regulation:The National Land Transport Transition Act ,

(NLTTA),2000

Associations and members thereof, encouraged to register with Provincial Registrars (Section 56 of the NLTTA apply).

Operators currently converting permits to operating licenses as required ( Section 32 of the NLTTA apply).

Establishment of the National Transport Register as required by the NLTTA (Section 52) – this is currently being rolled out with Provinces.

Registration with the South African Revenue Services (SARS) is a pre-requisite for conversion of a permit to an operating license.

Special Legalisation Process (SPL) initiated to give illegal taxi operators an opportunity to legalise their operations provided they met certain basic requirements- the “Be Legal Campaign” (BLC) , closed on the 31st December 2002 as per MINCOM resolution.

PROGRESS MADE POST THE NTTT FINDINGS

On Formalization:

Democratic elections held at association, regional and provincial level in all Provinces.

Democratically elected Provincial Taxi Councils (PROTACO’s) now serve as the mouthpiece of the industry at the Provincial level.

The South African National Taxi Council (SANTACO) elected into office in September 2001, by all Province.

Department

of Transport

PROGRESS MADE POST THE NTTT FINDINGS

On Economic empowerment:

Government initiated and funded pilot taxi co-operatives as part of the economic empowerment suggested by the NTTT.

Pilot co-operatives became unsustainable due to lack of management skills of the industry and lack of funding.

Additional economic empowerment for the industry embedded in capital subsidy through the taxi recap program.

THE TAXI RECAP TENDER

BACKGROUND

• Seeks to replace the current 97 000 ageing fleet of 16 seaters with purpose built larger capacity New Taxi Vehicles (NTV) in the form of 18 and 35 seaters through a government tender process.

• Economically empower the taxi industry, through a once off capital subsidy, the scrapping allowance of 20% per vehicle translating into R4 billion over 4 years.

• Introduction of the electronic payment system to monitor and control data collection, provide audit functionalities, effect modal integration.

• Cabinet approval – September 1999

• The dti issued request for proposals – November 1999

TAXI RECAP TENDER DELAYED

Due to: The need to first formalise and democratise the taxi industry (

completed in September 2001)

De-linking of the Electronic Management System (EMS) from the New Taxi Vehicle (NTV) process, after it was realised that the EMS technology had overtaken developments of the process.( Separate Tender for the EMS issued in March 2001, and four companies short listed.)

Dispute between Government and SANTACO over the ownership and management of the EMS arose, and the matter was resolved end of 2002.

Strategic review report which contained indicative affordability figures done in November 2002.

PROGRESS MADE ON TAXI RECAP TENDER

The following progress has been realized: The Steering Committee chaired by DOT reconstituted with the DTI,

DME, Treasury and Office of Status of People with Disability( The Presidency )

The BAFO instruction document was issued to both NTV and EMS bidders. (21st May 2003)

Government entered into negotiations with the bidders to secure 25.1% equity for the taxi industry.

The BAFO submission was closed by the expected date of 12th September 2003.

The evaluation process for both the EMS and NTV tender processes was completed and a report finalised by 19th November 2003.

PROGRESS MADE ON TAXI RECAP TENDER

The following progress has been realized:

The evaluated remaining NTV bidders are:

TATA IVECO KWONG CHUNG MUDAN AUTOMOBILE DAIMLER CHRYSLER SOUTH AFRICA

The only EMS bid is for :

RSA EMS

CHALLENGES FACING THE TAXI RECAP PROJECT

• The BAFO received is mandated for this project at a funding requirement level of R4 billion.

– Additional funding requirement will be increased burden on the fiscus

• Should NTV prices proposed by the bidders be higher than current taxi prices.

– Some operators may not afford the cost of purchase and maintenance

• Although the project have added advantage of safety and comfort to commuters.

– Commuters may have to ultimately pay for fare increases

• A conditional approval of NTV Suppliers to be followed by Homologation and Endurance tests.

• Negotiations with suppliers still to be done.

COMMUTER RAIL

• Commuter rail is operated by Metrorail on behalf of SARCC (an agency of the Dept.)

• Metrorail is a business unit of TRANSNET , reporting to the Department of Public Enterprise

• Dept has an MOU with SARCC and provides assistance in the form of subsidies.

RAIL FUNDING REQUIREMENTS

2004/05

‘000

2005/06

‘000

2006/08

‘000

Operational 1 873 550 1 973 843 2 092 274

Capital 655 000 688 300 729 598

Total 2 528 550 2 662 143 2 821 872

Operational

Shortfall

- 162 491 196 631

CAPITAL FUNDING REQUIREMENTSRolling Stock Age Distribution

117

911

1031

803

909

538

313

0

200

400

600

800

1000

1200

11-15 16-20 21-25 26-30 31-35 36-40 41-45

Age Group

Co

ach

es

Coaches

CAPITAL FUNDING REQUIREMENTS

ROLLING STOCK

• NO INVESTMENT IN NEW COACHES SINCE 1988

• AVERAGE AGE OF FLEET 30 YEARS

• 4500 COACHES WITH A REPLACEMENT COST OF R 63 BIL

• 264 COACHES REFURBISHED in 2003/04

BUS CONTRACTS

• Interim contract – untendered contract between the DOT and the operator

• Tendered contract – contract awarded by a tender board between DOT and the operator for the provision of public transport service

• Negotiated contract – allowed by the Minister to be negotiated with the operator rather than be put out to tender

PROGRESS REPORT-BUS CONTRACTS

• Tendered contracts – 58

• Negotiated contracts – 2

• Interim contracts – 34

BUS SUBSIDY DISTRIBUTION

• There are 10100 commuter buses (excluding municipal and long distance buses)

• Approximately 7500 buses are currently subsidised

• Approximately 2600 are unsubsidised• Approximately 1.8% of the population was

subsidised in the 2001/02 financial year• On average passengers received R198 in

subsidies per month = 6.7% of the average household income

BUS SUBSIDY DISTRIBUTION

PROVINCE 2001\2002 2002\2003 2003\2004 2004\2005Eastern Cape 65,398,919.11 62,000,000.00 66,733,762.77 82,351,819.96Free State 94,729,760.92 96,000,000.00 112,679,495.81 116,665,078.28Gauteng 672,757,268.44 723,000,000.00 781,134,577.90 790,788,630.14Kwazulu Natal 379,945,998.57 379,742,000.00 448,295,115.14 446,653,044.03Mpumalanga 157,035,418.76 162,000,000.00 190,112,148.87 211,475,250.49Northern Cape 9,901,770.94 12,000,000.00 13,187,493.34 14,411,568.49North West 46,837,580.53 40,000,000.00 24,069,272.94 39,064,324.85Limpopo 61,305,657.84 72,000,000.00 73,006,134.96 83,935,508.81Western Cape 226,883,624.91 260,000,000.00 334,781,998.27 372,694,774.95

1,714,796,000.02 1,806,742,000.00 2,044,000,000.00 2,158,040,000.00

BUS SUBSIDY DISTRIBUTION

0

100

200

300

400

500

600

700

800

EC FS GP KZN MPU NC NW LIMP WC

2003/04

2002/03

PROMOTION OF BEE: ROAD BASED P/TRANSPORT

• Provinces to set aside a minimum of 30% of services to be contracted to companies with at least 50.1% PDI equity

• Remaining 70% of services a minimum of 35% PDI equity ownership required

• 10% subcontracting of the remaining 70% services to SMME/PDIs

QUALITY MANAGEMENT

• A National Supervision and Monitoring team is in the process of being appointed

• Subsidy Management System is being rolled out in all provinces on the National Transport Register

R

A

I

L

B

U

S

T

A

X

I

INTERGRATED TRANSPORT

PLANS

AN INTEGRATED APPROACH

TO PUBLIC TRANSPORT

AN INTEGRATED PUBLIC TRANSPORT SYSTEM

Rational for subsidy

Targets for redistribution

Spatial allocation

Mode to be subsidised

Equity

Distance

Affordability

Workers

Job seekers

Learners

Poorest Needy

Disability

Densification

Urban

Rural

Rail

Bus

Taxi

AN INTEGRATED PUBLIC TRANSPORT SYSTEM

The National Travel Survey Surveyed 50 000 households To analyse:

approximately 3,85 million public transport commuters

2.4 million ( 64%) use mini-bus taxis 21% use buses 15% commune to work by train.

Is due for completion June 2004

Department

of Transport

Thank you