Transnet on COVID-19 impact & infrastructure build programme

Meeting report

Transnet presentation

The Chairperson welcomed everyone and asked the Transnet team to deliver its presentation. The presenters were Dr Andrew Shaw, Chief Strategy Officer; Ms Sizakele Mzimela, Chief Executive: Transnet Freight Rail, and Mr Velile Dube, Chief Executive Officer: Transnet Port Terminals.

The following were key points of the Transnet presentation:

• The year to date (YTD) volumes of all key rail, pipeline and port commodities were lower compared to the previous financial year due to low customer demand. However, there had been steady monthly improvements of the YTD revenue upon the easing of the lockdown restrictions.
• Petroleum volumes on the Durban to Johannesburg pipelines were heavily impacted due to the lockdown.
• As of August 17, there were 1 047 COVID-19 cases identified, and 14 deaths.
• Cape Town was the first port to be hardest hit byCOVID-19, but its berthing days were currently down to zero days.

Discussion

Mr A Arnolds (EFF, Western Cape) extended condolences to the families of workers who had been lost during this COVID-19 period. He asked about the procurement practices during this period, and if there had been any illegal, unlawful or corrupt activities in this area. He requested a list of the reduced capital expenditure that indicated which projects had been curtailed. He said that according to the report from the National Treasury, Transnet was very inefficient in expenses. How was the Department assisting Transnet with regard to its financial viability?  He stressed that cable theft had been an ongoing issue that impacted on the quality of the services delivered by Transnet, but the Committee had not seen anything about a comprehensive plan to curb cable theft.

Mr M Nhanha (DA, Eastern Cape) said he was pleased at the management turn-around time at national ports and applauded Transnet for reducing the time vessels spent in the ports during this period. He support Mr Arnolds’s stance regarding cable theft.  However, he extended the issue to the Johannesburg - Durban pipeline regarding fuel theft, as advertised on the entity’s app. What was Transnet doing to mitigate theft along this pipeline? To what extent had African countries benefited or lost during this period. If there had a loss, how would the lost ground be regained?

Ms T Modise (ANC, North West) echoed that Transnet had to come up with a strategy to deal with cable theft.  She asked if it had a plan to practically address the challenge of trucks damaging the roads by expanding the rail freight capacity. She asked for an update on the Passenger Rail Agency of South Africa (PRASA) and Transnet dispute over the money owed by PRASA after train maintenance. Had this serious matter been resolved, and if not, how were they planning to resolve it?

Ms W Ngwenya (ANC, Gauteng) asked which rail network corridors were common targets for theft, looting and vandalism, and how they had affected the users of the Transnet services. She wanted to know what Transnet’s Phelophepa health care train’s contribution towards COVID-19 mitigation had been. What kind of health services had been provided, and at which provinces? If none, why were they not provided?

The Chairperson commented that nothing had been mentioned about personal protective equipment (PPE) procurement challenges in the presentation. He asked what the entity’s strategies on the reduction of congestion from the road network and cable theft were.

Transnet response

Ms Portia Derby, Group Chief Executive Officer, Transnet, said that responses would be across the board from the Transnet team, and asked to be excused at 10:30 am to participate in a union meeting.

Referring to the changes to capital expenditure projects, she said the entity was happy to come back and give details of this, because they were currently going through governance processes with the board to ensure clarity on the adjustments. This exercise had been affected by the obvious delays imposed by the lockdown which had halted progress at the major engineering companies.

Transnet had tried to have a clear, centralised process for PPE procurement, but before the lockdown it had been was tasked to distribute PPE to all its operations across the country, which had been a sharp learning curve. It had not been sure whether to deal with it at the corporate centre, or to require the various operational centres to run their own PPE procurements. She added that PPE procurement was reviewed monthly and sent to both the Department of Public Enterprises (DPE) and the Treasury. Transnet would present later regarding changes in its procurement processes and policies.

Regarding security, the entity had managed to re-establish the chief security functions inside the corporate centre and to increase coordination between Transnet and the law enforcement agencies. Some of the successes included arrests made for cable and fuel thieves using economic crime legislation, which carried a minimum 15 years’ sentence. Collaborations were under way between Eskom, PRASA and Telkom to curb and solve cable theft. 

Ms Mzimela said that internally, the entity had managed to start replacing a less attractive mineral -- copper magnesium -- to thieves than copper.  This initiative would take about three years to be fully implemented. Transnet Freight Rail had acknowledged the importance of technology, such as drones, closed-circuit television (CCTV) installations and improvement in intelligence around the cable theft hotspots to deal with this crime. The Natal, Pretoria and Krugersdorp Corridor had been the highest hit as a result of COVID-19. Therefore, PRASA and Transnet had jointly agreed that operating diesel locomotives (provided by Transnet) was better than replacing the cables to maintain operations where cables had been removed. 

She said Transnet had agreed with various customers to remove about 3 500 trucks from the roads, and to use rail infrastructure to transport freight. 

Regarding the financial issue between PRASA and Transnet, she said that work streams had been established and there were currently monthly engagements in various business areas to find various solutions. However, challenges remained around payments within these two entities.

Mr Dube highlighted that the road congestion leading into the port in Durban was not just a Transnet problem, but a precinct problem.  A formal structure had been created for various stakeholders in and around the Durban port to systematically deal with road congestion issues. This structure reduced the number of trucks from Bayhead Road and increased the number of trains that fed one of the private operator’s terminals in Durban. A truck booking system had also been introduced to minimise the traffic and maximise the state resources, by boosting the economy through a 24/7 service operation. To reduce congestion further, the entity ensured that there was accurate, quality and timely information shared between terminal operators, shipping lines and truckers, which facilitated better planning and execution of operations.

Ms Mzimela said that the Phelophepa trains had been deployed from May to July in KwaZulu -Natal and the Eastern Cape, in collaboration with the Department of Health, and as result about 12 700 people had been tested and screened for COVID-19. In August, Phelophepa had reopened the rest of its clinics on board the train and was now offering a full basket of primary health care services in Gauteng and Northwest Province.

Follow up questions

Mr Arnolds said that there had been no real serious effort to protect the network infrastructure, because this trend had continued in terms of damage and its effect on the performance of the entity. The Committee needed to give the Department a directive in terms of what it needed to do, because the situation could not remain as it was. Transnet could not say that it is going to install CCTVs -- they should have been in place a long time ago.  He asked for further information on Transnet’s procurement needs and the capital expenditure that had been reduced.

Mr Nhanha urged Transnet to work even harder in moving commodities previously transported by road to rail. 

Ms Modise commented that the operational time for the Phelophepa had been too short, and asked if it could not be extended.

Mrs Ngwenya asked about the current condition of the rail trucks that were used by freight and passenger trains, because the responsibility for maintenance was Transnet’s.

The Chairperson asked about the role of the Portfolio Committee in assisting Transnet to deal with cable theft crime hotspots.

Ms Mzimela took note of the request for the Phelophepa programme to be extended. 

Regarding the protection of Transnet’s assets from theft, there were various initiatives taking place in collaboration with various stakeholders, such as the South African Police Service (SAPS), to reduce infrastructure theft. When she had spoken about a three-year period, she had been referring to the significant amount of time it would require to fully convert the cables on their 33 000 km rail network.

Lastly, she said that most of the people who had succumbed to COVID-19 had been between the ages of 30 to 55. Four of the cases had been more than 50 years old.

Mr Dube added that employees who were above the age of 60 and had co-morbidities had been kept at home, and had been allowed to come to work only after they were medically and thoroughly examined.

The Chairperson asked the Transnet to present all the answers to the questions that had been posed by the Committee in a written form. He released the Transnet team and asked the Committee to remain to deal with the internal issues.

Committee matters

Mr Arnolds asked for the minutes to be corrected, as Ms Ngwenya had arrived late for the meeting. 

The Chairperson thanked the team, and adjourned the meeting.