CEO outlines plans to address Prasa challenges

Source: Col André Kritzinger via Wikimedia Commons

Addressing a media briefing on Tuesday on the status quo of the organisation, Matthews said key areas that require urgent attention to unlock inefficiencies have been identified.

"Unfortunately, Prasa is currently facing serious cash flow challenges purely because of erosion in our revenue streams. These included fare collected from rail operations, which has significantly been reduced due to non-availability of the product, and rental income around our stations reduced significantly because of lack of train operations, which contribute substantially to the business operations," the CEO said.

Covid-19, Matthews said, has had an immense impact on the business operations of PRASA and some of its tenants, who have not been spared from economic hardships.

"Prasa in the main has an Operational Expenditure challenge, which has contributed to complaints from the public, particularly around Opex payments where Prasa has been paying its debtors on 160 days payment terms to manage its debts.

"The above is untenable to our debtors but together with the group chief financial officer (CFO), we are addressing the situation, which includes reviewing the payment terms. Most importantly, we are going to be resolute in collecting what is due to Prasa," the CEO said.

He acknowledged that Prasa’s capital programme has failed to meet its targeted plans.

"Sadly, this has also affected Prasa’s modernisation programme aimed at replacing aging operations and improve efficiencies. Fortunately, the challenge in the space only requires internal capacity to resolve.

"We have amplified our Supply Chain Management (SCM) Policy together with its Standard Operating Procedures. To this extent, we have appointed competent colleagues to serve in our Bid Committees to finalize specifications, evaluation and adjudications," he said.

Recently Prasa issued numerous packages and projects as part of its targeted implementation of the Capex programme.

In addition, the CEO has established, iSitimela saBantu Project Office – a Prasa wide coordination of projects and unlocking of bottlenecks for accelerated delivery of station, network and rolling stock rehabilitation with estimated investment of R12bn for the current fiscal year.

Security Issues

With the unprecedented levels of both vandalism and sabotage at Prasa, security issues ranked amongst the top three risks facing the agency.

"Security remains a critical aspect of the rail services. To this end, various measures were introduced including in-sourcing security functions with 3,100 employees recruited.

"We had commenced with engagements with sister companies in Eskom and Airports Company South Africa (ACSA) to participate in their security contracts. Unfortunately, this was not successful. We will be issuing to the market contracts for private security to support the work we are doing in this space," the CEO said.

In an effort to address security issues, Prasa needs to follow modern interventions, which include deployment of technology as a force multiplier to protect its assets.

“In this regard, procurement processes have commenced. We are looking at sourcing different technology options, which will also assist us to move away from old security plans and focus on modern interventions.

"I have also enlisted the services - on short-term contracts - of additional security experts to focus on some of our security challenges and threats. Their initial assessment has been quite revealing and we will soon make serious pronouncements around their work," the CEO said.

According to a preliminary audit, vandalism across the business amounts to just over R4 billion.

"For a business as big and complex like PRASA, its operating structure reflects the old business. A process has commenced to develop a new operating model, which will also assist towards finalisation of an optimum funding model for the business," the CEO said.

The operating model will also address the question around the required personnel and skills for a modern rail company.

Moreover, Prasa has nominated a manager to focus specifically on Rail Safety Regulator (RSR) related issues, in relation to the lack of an operating permit.

Autopax bus service

Prasa has decided to review its bus operations, Autopax – operator of Translux and City-to-City buses.

"Notwithstanding the negative impact of Covid-19 to the bus industry, Prasa had already taken a decision to divisionalise Autopax from a subsidiary.

"Extensive consultation has commenced with labour, as some of the plans involve reduction in employee numbers. Currently, the target is for the reduction of 350 employees. We are, however, looking at the possibilities of absorbing a certain number of these employees into the Prasa Group where vacancies are available," the CEO said.

A new model and operations of Autopax will become possible once the divisionalization process has been established.

This would include a revised mandate on the operations of Autopax to support the primary mandate of PRASA on rail operations.