T Mhlahlo: Eastern Cape Transport Summit

20 April 2006

STRATEGIC PERSPECTIVE AND CHALLENGES IN THE TRANSPORT SECTOR

Executive Mayor
Honourable Premier
Honourable Minister
Honourable Member of the National Assembly
Honourable MECs
Honourable Members of the Provincial Legislature
Members of the taxi, bus, aviation, rail and maritime industries
Members of the big business community
Distinguished guests
Ladies and gentlemen

I would like to firstly express my sincere gratitude for your attendance,
which shows your commitment to assist the Department of Roads and Transport in
the Eastern Cape in its quest to provide a quality transport service for all
our people.

The economy of the Eastern Cape is characterised by extreme levels of uneven
development. This is evident through a number of dualisms:

* The two urban industrial manufacturing centres and the poverty stricken
and underdeveloped rural hinterland particularly in the former homeland areas
of the Transkei and Ciskei;
* Between a developed commercial farming sector and a floundering subsistence
agricultural sector; and
* Between concentrations of fairly well developed and efficient social and
economic infrastructure in the western parts of the Province and its virtual
absence in the east.

Today we are testing our mandate as we strive to achieve our vision of
improving the mobility of our people, especially the rural poor through
provision of safe, accessible, efficient and affordable transport system in
this province. We are further charged with a responsibility to align our
programmes with the Provincial Growth and Development Plan (PGDP) and
Accelerated and Shared Growth Initiative for South Africa (AsgiSA) for the
benefit of our communities.

Eastern Cape is a rural province, which has its unique needs in terms
transportation infrastructure and our Provincial White Paper on Transport seeks
to address that. As we propel our transport infrastructure development
programme, we are mindful of the necessity to ensure that we simultaneously to
explore economic development and job creation opportunities.

Public transport transformation

As we gear up for 2010 Soccer World Cup, we are expected to accelerate the
provision of transport infrastructure in order to present our people and
visitors with a transport system that would meet world-class standards.

Our province has made visible advances in preparation for the Taxi
Recapitalisation Project. The National Land Transport Transition Act, 2000
(NLTTA) requires all public transport operators who have permits, which were
issued on the basis of a radius or area of operation to apply to the Provincial
Licensing Board for conversion of their permits to operating licenses on a
route basis.

All district and metropolitan municipalities in the Eastern Cape Province
have prepared Current Public Transport Records (CPTRs) and Integrated Transport
Plans (ITPs), which indicate the routes currently operated by public transport
operators, as well as the number of vehicles operating on these routes and the
number of passengers boarding public transport vehicles at formal taxi ranks,
bus stops and train stations.

The Licensing Board has already received about 7 000 applications for
converting permits into route operating licenses, which indicates that 40% of
the registered operators have responded. These applications will now be
forwarded to the district municipalities for recommendations in terms of their
ITPs, before the Board approves the licenses.

This process has its own challenges as some taxi operators and vehicle
manufacturers have pointed out that the difference between the cost of the
existing 16 seater minibus and a new 18 seater vehicle is much more than R50
000 and manufacturers are reluctant to produce the new vehicle if it will be
unaffordable to operators. Visible and decisive advances have been made with
regard to the restructuring of the bus industry in this province.

The Department of Roads and Transport currently subsidises three bus
operation entities in the Province, namely Africa's Best 350 Ltd, which is a
new company comprising previously independent bus owners in the former
Transkei, Mayibuye Transport Corporation which was the previously government
owned Ciskei bus company operating in the former Border region and Algoa Bus
Company, a Section 21 company based in the Nelson Mandela Metropole.

Africa’s Best 350 Ltd is a product of the restructuring process, which has
been established by 185 small bus operators, who get subsidies from government
as individuals. These operators came together to establish this single legal
entity, which is a 100% black owned company in which all the operators are
equal shareholders. The state’s role is to subsidise the 166 identified routes
for seven years with a R16.7 million subsidy per year, which makes R73 million
fare income for the company with a R100 million annual turnover.

This year, we will officially launch this company, which is going to service
poorest people of this province. We have allocated R15 million for the
recapitalisation of Mayibuye Transport Corporation, and a further R30 million
over the Medium Term Expenditure Framework period. The challenge is to ensure
that subsidies are spent efficiently by the incumbent operators and that their
performance is monitored to check that service delivery is satisfactory.

When new routes for subsidised public transport services are identified by
planning authorities, opportunities must be provided for other local operators
who do not currently receive subsidy to obtain contracts for subsidised service
delivery. This can be done either by competitive tendering or by negotiation on
the basis of subsidy rates paid to current contracted operators. The rural
nature of our province and transport infrastructure backlogs have been another
challenge that still confronts us, which makes it difficult for rural
communities to access public transport.

This has resulted in bakkies being the only vehicles that are prepared to
provide a public transport service to people in those areas, which are not
served by minibus taxis or buses. However, bakkies are not considered to be a
safe mode of passenger transport in terms of the Road Traffic Act and cannot
obtain an operating licence as a public transport mode, unless they are
lawfully adapted according to acceptable safety standards and the Minister
makes provision for their use as a special category of vehicle by notice in the
Government Gazette, in terms of Clause 31(1) of the National Land Transport
Transition Act.

We have attempted to resolve this matter through calling upon all registered
vehicle manufacturers to design a vehicle that would be suitable for rural
conditions. Debbis Fleet Management developed a prototype and presented to us.
We made our inputs, which were based on the improvement of safety measures.

Such adapted vehicle would be submitted to the Minister for permission to be
used in a pilot project in a rural area of the Province to monitor their
effectiveness and acceptability as a public transport mode.

Infrastructure development for job creation and economic growth

The Provincial Growth and Development Plan (PGDP) contain a 10 year strategy
to reduce poverty and attain sustainable levels of economic growth and job
creation. Transport plays a vital role in economic growth and reduction of
poverty by enabling access to markets and economic opportunities, as well as by
providing job opportunities in the construction of the infrastructure (i.e.
roads, railways, harbours, airports) and in the operation of vehicles to carry
people and goods for business and recreation purposes.

Of our R1.98 billion allocation, the roads infrastructure development
programme has the largest allocation of R1.48 billion to ensure that we provide
strategic road network, which is aligned with the PGDP. This year, we will
spend R630 million on new roads. Over the Medium Term Expenditure Framework
period, the department plans to design and construct 1 100km of new surfaced
roads.

In contributing to Accelerated and Shared Growth Initiative for South Africa
(AsgiSA) and to create more jobs, the Department will this year set up a new
Community Based Transportation Programme with a budget of R84,5 million.

This new programme will specifically deal with community-based and labour
intensive methods of road construction and maintenance to build sustainable
livelihoods and push back the frontiers of poverty. Through this programme,
households will maintain certain stretches of road and obtain permanent
salaries from the department. This includes road maintenance, upgrading,
construction, focus on roadside animal management, pedestrian safety,
footpaths, non-motorised transport, etc.

An amount of R48 million for the 2006/07 financial year for this community
based transportation programme, will be equally allocated R8 million per
district and will result in an estimated 30 000 additional work opportunities
over the Medium Term Expenditure Framework period. It will result in the
construction of approximately 300 km of new low volume roads and the
maintenance of approximately 5 500 km of existing roads, thus significantly
improving the quality of the overall provincial road network and transportation
system. The targeted roads will assist in improving accessibility to economic
activities, tourism opportunities, schools, clinics and other government
services.

Accelerating our moving back to rail

The railway network in the Province is a valuable asset that is under
utilised, with many branch lines and stations falling into disrepair as a
result of loss of market share and line closures by Spoornet. The increase in
volumes of freight traffic being carried on the road network is causing many
roads to need frequent repairs or total reconstruction, as well as contributing
to more traffic congestion and more accidents. We strongly believe that there
is a need for us to “Move Back to Rail” and make the railway system in the
Province assist in the movement of freight and passengers, so that rail
services which were previously curtailed due to decline in use can be restored
to viability and contribute to economic development.

The Department has been involved in a number of planning and implementation
initiatives to improve the efficient utilisation of existing rail
infrastructure in the Province and to promote multi modalism. During the last
few years, a number of rail orientated projects have been initiated and this
included the refurbishment of the railway line between East London to Mthatha,
widely known as the Kei Rail Project.

We will have a fulltime operator on this railway line this year. In
accelerating our moving back to rail strategy, we will extend commuter rail
services between East London and King William's Town, Port Elizabeth/Motherwell
to Coega Industrial Development Zones (IDZ) and reopen the railway line between
King William’s Town and Alice. Planning has been done for the two Industrial
Development Zones (Coega and East London) to upgrade their rail links to the
hinterland and Saldanha Bay to transport the bulk materials they require for
production of exports in the IDZs. The motor industry in the province has
expressed interest on this strategy as it will assist in conveying vehicles to
other parts of the country.

Opportunities for aviation and maritime transport

The Department is responsible for the Bhisho and Mthatha airports and
provides assistance to municipalities who have airports and airfields falling
under their own jurisdiction. The White Paper on Civil Aviation (2005), states
that Government should not be involved in airports operations, but should
encourage private sector involvement.

Government, however, remains responsible for ensuring that airports
contribute to the socio economic development of the area in which they are
located.

Together with the South African Police Service (SAPS), we are looking at
ways and means of ensuring that we strengthen our security measures on our
airstrips.

We are currently involved in a process of restructuring the operation of the
Bhisho and Mthatha airports with the aim:

* To reduce the financial cost on the province;
* To enhance the usage of the airports; and
* Involve the private sector by outsourcing the airports management.

Although the operation of the Port Elizabeth and East London harbours is the
responsibility of Transnet, the province needs more assistance in the
development of other maritime facilities in smaller coastal towns that can
provide opportunities for economic development through the fishing industry and
for recreational tourism.

We have many coastal areas with huge economic potential such as the Wild
Coast, Port Alfred and Jeffery’s Bay. All we have to do is to invest on these
areas to ensure that they benefit from the opportunities within the maritime
sector.

Conclusion

The transport sector is beginning to take its rightful position in the
economic development of this country. Our role as various stakeholders is to
invest on this sector to ensure that future generations benefit. We need to
further ensure that the previously marginalised get priority, especially women
and physically challenged individuals.

Issued by: Department Roads and Transport, Eastern Cape Provincial
Government
20 April 2006
Source: Eastern Cape Provincial Government (http://www.ecprov.gov.za)