Rail Model Implementation

1
Rail Model Implementation

• Presenter Riad Khan
• Venue Portfolio Committee
• Date 11 June 2003
• Time 11h00

2
Introduction

• The Rail Model
• The implementation arrangement
• Government Policy and Planning Processes
• Rail Model Implementation Status
• Spoornet Performance Indicators

3
The Rail Model

• Process
• Task Team
• Cabinet Memorandum
• Distinction between the two
• Tri-partite Structure
• Individual Implementation teams
• Luxrail Employment Issues Task Team
• NFA Transport Sector
• Job Loss Mitigation Task Team
• Light and Low Density Line Network Task Team
• Spoornet Restructuring Committee(Sub Committee of
  the Transnet Restructuring Committee)

4
The Rail Model cont

• The Model
• Integrated General Freight Business(GFB) and
  CoalLink
• OREX to be shadow incorporated and restructuring
  options to be developed
• Extended network - 15 800km, that includes a
  selection of light density lines
• Expanded volumes up to 2020
• Operating efficiencies and productivity
  improvements supported by the required levels of
  investment
• Investigation of a two-tier management structure
  for light and low density line network
• Tri-partite Task Team to investigate status of
  low density line network
• Government to hold Spoornet accountable for
  performance and turnaround strategies and
  projects

5
The Rail Model cont

• The Model cont
• Implementation audit mechanism to be implemented
  by NFA Transport Sector
• 8 000 employer induced retrenchments to be
  implemented
• Tri-partite Job-loss Mitigation Task Team to be
  established
• Appropriate Road to Rail policy initiatives to be
  developed and implemented by NDOT
• Luxrail to be concessioned
• Passenger Rail consolidation to be investigated

6
The Implementation Arrangement

• Spoornet Tripartite Committee
• Decide on implementation teams and areas of
  responsibility
• Agree Terms of Reference
• Agree on processes
• Steering Committees and Task Teams
• Government consensus development
• Implementation Teams
• Tri-partite consensus on specific restructuring
  projects

7
Government Policy and Planning Processes

• Rail Policy
• Rail Plan
• Integrated Logistics Task Team(Restructuring)
• Integrated Freight Logistics Strategy
• BEE Coal Export Forum

8
Rail Model Implementation Status

• Integration of General Freight Business(GFB) and
  CoalLink
• Operations and Management have been integrated
  2002
• Reporting as an accounting entity within Spoornet
  2002/03

9
Rail Model Implementation Status

• OREX
• Discussions were held with Anglo-American on the
  optimisation of iron-ore assets and related
  infrastructure in Northern Cape(commenced June
  2002)
• MOU signed in Dec 2002
• Anglo-American exits discussions May 2002
• Process forward
• Regional Mineral Development strategy to be
  finalised by DME
• Regional economic development strategies and
  initiatives to be finalised by DTI and Northern
  Cape Province
• Restructuring Model development
• Engagement with Labour

10
Rail Model Implementation Status

• Extended network - 15 800km, that includes a
  selection of light density lines
• Actual retained operational network may be
  larger, depending on the outcomes of the regional
  assessments

11
Rail Model Implementation Status

• Expanded volumes up to 2020
• Volume expansion predicated on recapitalisation
  programme
• Recapitalisation plan not finalised
• Impact on funding needs of Transnet
• Government assessing medium to long term elements
  of recapitalisation
• Re-capitalisation dependant on locomotive
  delivery schedules (2004)
• Reversal of trend expected post 2004

12
Rail Model Implementation Status

• Operating efficiencies and productivity
  improvements supported by the required levels of
  investment
• Investment case being finalised
• Low and light density component still being
  finalised
• Operational efficiency elements still being
  developed(Labour and Spoornet)
• Spoornet Strategy not finalised as yet

13
Rail Model Implementation Status

• Investigation of a two-tier management structure
  for light and low density line network
• Investigation currently being performed in Light
  and Low Density Line Network Task
  Team(Tri-partite)
• Initial structural elements developed
• Ring-fenced entity within Spoornet
• Separate regional strategy and structure
• Business case and regional network components to
  be finalised
• International Comparative Business Model Study
  and options being developed

14
Rail Model Implementation Status

• Tri-partite Task Team to investigate status of
  low density line network
• Currently being performed in Light and Low
  Density Line Network Task Team(Tri-partite)
• Initial investigations completed
• Regional strategies and consultative processes
  commenced June 2003
• Regional strategy and structure to be developed
  to integrate with Local and Provincial
  Development Strategies and initiatives

15
Rail Model Implementation Status

• Government to hold Spoornet accountable for
  performance and turnaround strategies and
  projects
• Spoornet performance monitoring consolidated in
  Transnet performance management by DPE
• Spoornet operational efficiency monitoring and
  performance management being developed alongside
  recapitalisation plan

16
Rail Model Implementation Status

• Implementation audit mechanism to be implemented
  by NFA Transport Sector
• NFA Transport Sector has not commenced the
  performance audit process as yet, as all parties
  are awaiting the finalisation of network,
  operation and financial arrangements
• Model implementation structures are functioning
  and no significant dissatisfaction exists with
  processes and outcomes
• Slow progress on all processes is major concern
  for Government

17
Rail Model Implementation Status

• 8 000 employer induced retrenchments to be
  implemented to 2006
• Process awaited the establishment of the Transnet
  Restructuring Committee and the establishment of
  the Spoornet Restructuring Sub-committee
• Reluctance to accelerate retrenchments till
  finalised structures and operations
• Awaiting finalisation of Job-loss Mitigation
  Process

18
Rail Model Implementation Status

• Tri-partite Job-loss Mitigation Task Team to be
  established
• Task Team is operational
• Team is developing methodologies and structures
  to ensure maximum mitigation
• Integration with Transnet wide processes being
  developed (Transnet Social Plan)

19
Rail Model Implementation Status

• Appropriate Road to Rail policy initiatives to be
  developed and implemented by NDOT
• NDOT developing a range of these initiatives and
  are contextualising these in the Rail Policy and
  Planning processes eg.
• Investigating impact of GVM on road maintenance
  costs
• Raising institutional capability to enforce
  existing regulation
• NDOT driving the integration of Provincial
  development and transport policy and planning
  with the Road to Rail initiatives

20
Rail Model Implementation Status

• Luxrail to be concessioned
• Concessioning process was at advanced stage prior
  to fire that destroyed portion of one train set
• Interest in the concession was registered by
  international hotel and rail companies
• Three weeks away from public announcements when
  suspended
• Currently awaiting Transnet decision on timing of
  refurbishment so as to commence revised financial
  modelling and due diligence
• Agreement reached with Labour on employee issues,
  awaiting signature of Transnet

21
Rail Model Implementation Status

• Passenger Rail consolidation to be investigated
• Inter-governmental task team investigated
  consolidation and developed consolidation options
• Outstanding institutional elements have been
  referred to Principals for resolution
• Main issues identified
• Capital subsidy for backlog reversal to be
  finalised and approval sought
• Operational optimisation to be developed with
  Provincial and Local Transport Authorities
• Operational subsidy to be finalised and approval
  sought

22
Spoornet Performance Indicators
23
Spoornet Performance Indicators cont
24
Spoornet Performance Indicators cont
25
Spoornet Performance Indicators cont
26
Shosholoza Meyl Performance Indicators