PUBLIC TRANSPORT , TAXI RECAPITALISATION PROJECT AND PUBLIC TRANSPORT SUBSIDIES

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PUBLIC TRANSPORT ,TAXI RECAPITALISATION
PROJECTANDPUBLIC TRANSPORT SUBSIDIES
Department of Transport

• 01 JUNE 2004

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CONTENTS

• 1. INTRODUCTION AND BACKGROUND INFORMATION
• 2. POLICY THRUSTS ON PUBLIC TRANSPORT
• 3. THE TAXI PROCESS
• 4. COMMUTER RAIL
• BUS CONTRACTS
• AN INTEGRATED PUBLIC TRANSPORT SYSTEM

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Department of Transport
INTRODUCTION AND BACKGROUND INFORMATION

• The overarching objectives for a sustainable
  public transport system which contributes to the
  economic growth of our country are
• q       To increase investment in public
  transport infrastructure
• q       To recapitalise the public transport
  fleet and
• q       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.

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

         Reducing the need to
travel          Making travel more
affordable          And thus saving
peoples 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
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Department of Transport
THE RECAPITALISATION OF THE TAXI INDUSTRY

• The primary aim of the taxi recapitalisation
  project at conception was aimed at
• Ø  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).
• Ø creating opportunities for jobs in the
  manufacturing and downstream industries.
• Ø  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..
• Ø   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.
• Ø   broadening the tax base
•  

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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.

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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.

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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
  (PROTACOs) 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.

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PROGRESS MADE POST THE NTTT FINDINGS
Department of Transport

• 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.

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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

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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.

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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.

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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

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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.

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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
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CAPITAL FUNDING REQUIREMENTS
Rolling Stock Age Distribution
Coaches
1200
1031
1000
911
909
803
800
Coaches
538
600
400
313
200
117
0
11-15
16-20
21-25
26-30
31-35
36-40
41-45
Age Group
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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

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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

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PROGRESS REPORT -BUS CONTRACTS

• Tendered contracts 58
• Negotiated contracts 2
• Interim contracts 34

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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

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BUS SUBSIDY DISTRIBUTION
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BUS SUBSIDY DISTRIBUTION
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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

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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

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AN INTEGRATED APPROACH TO PUBLIC TRANSPORT
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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
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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

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Department of Transport
Thank you