Address during the handover to the Taxi Industry Shareholders of Phase1A Bus Operating Company By
Mr Sibusiso Ndebele, MP Minister of Transport, Johannesburg

Programme director, MMC Rehana Moosajee
Transport Portfolio Committee Chairperson: Ms Ruth Bhengu
Transport MEC, Mr Ismail Vadi
City of Johannesburg Mayor, Amos Masondo
Chairperson of the Section 79 Committee, Councillor Connie Bapela
Members of the Mayoral Committee
Members of the Section 79 Committee on Transport
Director-General Department of Transport, Mr George Mahlalela
Mr Sicelo Mabaso of the Piotrans Bus Operating Company
Designated Board of Directors of the Bus Operating Company
Board Members of the Taxi Operator’s Investment Companies
CEO of Taxi Scrapping Agency and key officials
Members of the Gauteng Operating license Board
Metrobus Board and Management
Clidet acting CEO, Jackie Huntley
Rea Vaya Project Office management team
Members of the media
Ladies and gentlemen

Today we celebrate a major milestone in the life of the taxi industry and of our country. Today we reaffirm that this important industry which is owned, managed and controlled by black entrepreneurs will no longer be defined primarily by violence and disorder. Together, we are giving meaning to a future of peace, progress and prosperity for the taxi industry.

Today we hand over to the taxi industry shareholders Phase 1A Bus Operating Company of the Rea Vaya Bus Rapid Transit system. In that context we will also be scrapping vehicles which belong to the taxi operators who have now become part of the Rea Vaya BRT here in Johannesburg.

I wish to take this opportunity to congratulate the taxi industry in obtaining a major shareholding and stake in the BRT system in Johannesburg. I also congratulate the City of Johannesburg for its commitment to working with the taxi industry despite the difficulties encountered. With this single act, the City of Johannesburg has confirmed that since the 2010 FIFA World Cup, public transport in South Africa shall never be the same again!

Timeline to today’s event

Ladies and gentlemen, today we say judge us not on the heights to which we have ascended, judge us on the depths from which we have come. We have come a long way and we still have a long way to go.

• In April 2009, ahead of the elections of 2009, President Jacob Zuma asked the taxi industry to defer negotiations with him until after the elections. Later, following the elections, during the State of the Nation Address, President Zuma announced that the Minister of Transport would resume discussions with the industry by 11 June 2009.
• On 11 June 2009 we met over 2 000 representatives of the industry made up of taxi associations and their national structures.
• Prior to that, we had held fruitful discussions with leaders of the South African National Taxi Council (SANTACO).
• On 26 June 2009, we met the leadership of the National Taxi Alliance (NTA) and held similar consultations with provincial departments and affected municipalities.

By July 2009 we had started a "CODESA" of the taxi industry based on structured engagement on five strategic pillars:

• Implementing the Bus Rapid Transit (BRT) system and other Integrated Public Transport Network (IPTN) projects
• Taxi subsidisation and the Taxi Recapitalisation Programme
• Legislation, licensing and regulatory issues
• Enterprise development
• Communication and stakeholder engagement.

When we met the industry at Gallagher Estate on 30 July 2009, as part of the National Working Group (NJWG), it was primarily with representatives of the cities with plans to implement the Integrated Public Transport networks. As indicated above, the NJWG had agreed to prioritise the BRT negotiations so that agreement could be reached as soon as possible. Our engagement with the taxi industry has been characterised by honesty, straight-talk and, most of all, integrity. The future we are crafting locates the taxi industry as a key player in the whole transportation value-chain.

What we are handing over

Programme director, the City of Johannesburg has signed a bus operating contract with the Bus Operating Company for a 12 year period. The value of the contract per year is approximately R184 million.

• Initially the city signed the contract with Clidet, an interim company owned by the BRT Systems Trust. The Chief Executive Officer (CEO) of the company was Jackie Huntley and the single trustee, Deon Govender.
• Clidet signed a management contact with Metrobus to manage the bus operating company.
• On 31 January 2011, the interim board of Clidet, chaired by trustee Deon Govender, passed a resolution for the transfer of shares in Clidet to the new shareholders from the taxi industry.
• The taxi industry shareholders have reserved the name of Piotrans as the new name for the company (to replace Clidet).
• The new taxi industry shareholders are organised into nine Taxi Operator Investor Companies (TOICs) and one trust.
• The TOICS have been in discussion with Fanalca, which is an experienced BRT operator, and have signed a heads of agreement with them, whereby they have committed to a management partnership in the first year.

The handover process from Clidet to the taxi industry shareholders

Over the last couple of months, there has been a hand over process from the interim company and management to the new taxi industry owners and managers. The City of Johannesburg has played a major role in facilitating and supporting this process.

This process has involved:

• TOICS appointing a ‘designated’ board of directors to oversee the hand over period.
• Training, orientation and induction of the designated board of directors and new management team.
• A due diligence process conducted by designated board of directors.
• The development of a management plans by the designated board of directors which has been approved by the City of Johannesburg Mayoral Committee.
• The sale and scrapping of 567 vehicles, the proceeds of which have been used to capitalise the company.
• Each shareholder was required to pay R54 000 from the proceeds of the scrapping or sale of his/her vehicle. Bearing in mind that some operators submitted more than one vehicle, the number of operators who will become shareholders is 316.
• A database of one employee per affected vehicle was developed. At least 200 previous taxi drivers have been employed as bus drivers and 150 affected employees have been employed in the Rea Vaya stations as station ambassadors and station marshals.
• Other affected employees are earmarked to be employed as part of the bus operating company, in cleaning and security contracts for the stations.

Taxi owners relinquishing the operating licences

No less than 66.7 percent of shareholders have relinquished their operating licenses and raised the 66.7 percent shareholding, therefore the Rea Vaya Bus Operating Company (BOC) is now majority owned and managed by former taxi industry operators. The vast majority of the shareholders raised their equity from scrapping their vehicles. This makes it the biggest single scrapping exercise undertaken in South Africa.

• The City has partnered with the Department of Transport and the Taxi Scrapping Agency so that in record time we could process the vehicles for scrapping.
• The metal and rubber from the scrapping will be recycled, thus also contributing to the city’s and nation’s commitment to a cleaner environment. We are handing over a going concern with infrastructure and infinite potential.
• Having started operating on 30 August 2009 Rea Vaya transported 300 000 passengers during the first month of operation.
• Currently approximately 700 000 passengers per month are being transported. The total passengers transported since inception is approximately 8 million.
• During the World Cup the BRT transported 307 000 fans and officials in comfort and safety.

Today the Rea Vaya BRT achieves the following:

• Passenger numbers average 30 000 per day.
• Some 1 313 trips are operated over 19 200 kilometres per day using 500 000 litres of diesel every month.
• 30 Rea Vaya stations service passengers.
• 143 Buses are registered to the bus operating company.
• All bus drivers were recruited from the taxi industry. Permanent decent jobs have been created for just about 1100 people in the Rea Vaya family.

Ladies and gentlemen, this is a massive success in anyone’s language.

Significance of the handover for public transport

This is a very important step towards institutional and service integration in the public transport industry in South Africa and one of the most significant developments in the transport industry in a long time. With the taxi industry now involved in feeders and trunk route transportation, a hierarchy of mode deployment for taxi, buses, BRT and rail can now be planned and agreed upon.

Each mode can now play its rightful role in the public transport system, and also the role it is best suited to play effectively. The taxi industry will now work with entities such as PRASA and the City of Johannesburg for shared and improved information in order to align and integrate public transport services better.

As a result of this development many other opportunities in Gauteng and other metropolitan cities of our country will open up for the further growth of our public transport network.

Commitment of our government to the taxi industry

From founding President, Isithwalandwe Nelson Mandela to Minister of Transport, Minister Mac Maharaj, the late Minister Dullah Omar and my predecessor, Minister Jeff Radebe our intervention in the taxi industry has never been about “taking bread away from the mouths of taxi operators”. Since 1994 our engagement has been about recognising that there can never be meaningful Black economic empowerment in the transport sector without the taxi industry. We have taken the best of the taxi industry and provided the necessary support from government. When government implemented the taxi recapitalisation programme, we were recognising a process started by taxi operators themselves.

Taxi operators have always recapitalised their vehicles from the old “Valiants” to the “Siyaya” and now the Quantum.

The taxi industry has always embraced and driven change and innovation in the transport sector since the 1970s. The taxi industry is a key player in our efforts towards a transformed public transport system that is safe, accessible to all its users and which facilitates greater mobility for both the rural masses and urban poor.

What next: city to city transport

As part of taking empowerment to even greater heights, the Department of Transport will work with some of its agencies like PRASA, to implement innovative empowerment models for the taxi industry. For the subsidised bus contracts that are due to go out on tender, we will cement the role of the taxi industry. It is no longer enough to provide a 10 percent to 15 percent stake in bus companies in the Free State, KwaZulu-Natal and elsewhere.

We want the taxi industry to command ownership, management of transport companies and start to own large assets. We must take this commitment to the realm of city to city transportation. As you are well aware, Autopax, a subsidiary of PRASA, acquired 570 new buses for the 2010 FIFA World Cup at a cost of R1.4 billion.

Currently Autopax’s operational requirements are in the order of 420 buses. We are also aware and supportive of the decision taken by the Board of PRASA for a market study to be undertaken to determine current and future requirements for the Autopax bus fleet, which will be completed by February 2011. The Department of Transport will facilitate by March 2011, meaningful discussions between the taxi industry and PRASA with a view to transferring excess buses and related facilities to the hands of the taxi industry by June 2011.

Our intention is that buses in excess of the operational requirements be put into a Special Purpose Vehicle (SPV) that will be owned jointly by the taxi industry and Autopax.

As in the Rea Vaya case, the taxi industry, will in the foreseeable future take full ownership, control and management of such a company with assets in excess of R174 million.

• We are mindful of the financial commitment made by PRASA and its subsidiary, Autopax. Implementation will commence once the financing and debt issues for Autopax have been resolved by the Board of PRASA and the viability of city to city routes properly determined by the relevant players.
• Another immediate opportunity for bringing the taxi industry into the subsidy system lies in the commuter rail environment. Through PRASA we have been jointly creating inter-modal facilities and holding areas at some of our key rail stations countrywide with and for the taxi industry.
• At many stations such as Denneboom, Mabopane, Tembisa, Naledi and Kwa Mashu, integration between rail and taxi has been taking place for many years and brings significant income to Metrorail.
• We want to give formal recognition to this historic interaction, with the taxi industry providing feeder and distribution services at certain peak periods and appropriately compensated for their services.
• PRASA and the taxi associations have reached an agreement to pilot such a model in four regions within the Gauteng Province: Tshwane, Johannesburg, Sedibeng and the East Rand. A formal memorandum of agreement between taxi associations and PRASA is expected to be signed within the next two weeks and implementation will commence on 1 April 2011.

Concluding remarks

As we said today we unveil a new model of Black Economic Empowerment in the transport sector. But we also address the question of our desired future integrated public transportation system. We will follow the Rea Vaya model going forward wherever possible. When we declared that we would be handing over the Rea Vaya BRT to the taxi industry in time, the whole country did not believe us. When we said we intended handing over this project to the taxi industry, the taxi industry itself did not believe us.

Well, here we are today! We say what we mean and we mean what we say! We have travelled this journey together, a bright future beckons ahead. We congratulate the City of Johannesburg, the taxi industry in its entirety and especially here in Gauteng and the new shareholders of the BRT for this milestone. We also would like to give special thanks to the President of Santaco Mr AJ Mthembu and Secretary General Mr Phillip Taaibosch, as well as other leaders in the taxi industry, for their principled leadership and integrity in their engagement with the Department of Transport. Today really confirms that together we can do more!