T Mhlahlo: Black Business Summit

22 November 2007

Eastern Cape 2010 Transport Plan and Economic benefits for Business

It is indeed a great privilege for me to get an opportunity to inform the
business community about our transport plan as the province in preparation for
the 2010 Federation of International Football Association (Fifa) World Cup.
Government has identified transport and roads infrastructure as critical areas
of intervention in order to present our people and visitors with a successful
tournament.

In the recent past, the Eastern Cape Department of Roads and Transport has
embarked in a process of engaging various stakeholders, including our host city
(Nelson Mandela Bay), our base camps (Buffalo City and King Sabata Dalindyebo
Municipalities) and other transport sector institutions, to ensure that the
required state of readiness of our transport system is achieved.

This exercise did enjoy the support of local businesses and as government,
we are committed to ensure that as we prepare for the tournament, we create a
dynamic and balanced distribution of economic spin-offs with a particular focus
on the Small, Medium and Micro Enterprises (SMMEs).

Our approach seeks to create productive employment for our people and
empower the historically oppressed. The fundamental principle is to ensure that
after the tournament, we remain with a thriving private sector and active
involvement by all sectors of civil society, which in combination will lead to
sustainable economic growth.

In the main, our 2010 Transport Plan seeks to:

* ensure that the World Cup is utilised as a vehicle to contribute to
achieving the development goals
* ensure the fulfilment of the government guarantees made to Fifa and
compliance with the relevant specifications and regulations (quality
control).

From our side as the department, we have budgeted an amount of R3,4 billion
over the 2008/09 and 2009/10 financial years for 2010 related projects.

Programme director, as the province of the Eastern Cape we are convinced
that we are on track in preparing for this tournament.

Public transport

There has been a growing fear about our limited capacity as the country to
provide reliable public transport system during 2010.

We have been working closely with the Nelson Mandela Bay Metro in developing
and implementing its Bus Rapid Transit. We are still committed to work with
Algoa Bus Company and local bus owners in an effort to emerge with an efficient
public transport system in this host city.

Our main intention is to ensure that by January 2008, we start the
implementation of the Provincial 2010 Public Transport Operational Plan, which
links air, road, rail, maritime, taxi and bus operations.

We have already started with the recapitalisation of the fleet of Mayibuye
Transport Corporation at a cost of R5 million per annum over the Medium Term
Expenditure Framework (MTEF).

We have made inroads in the former Transkei region and before the end of the
financial year, we will start the distribution of brand new buses for Africa's
Best 350 Ltd, which is a 100 percent black owned company established by small
bus operators. The Department has allocated R43 million and the rest of the
money will come from a consortium of financiers.

Taxi recapitalisation:

The province of the Eastern Cape is leading in the country in the
implementation of the Taxi Recapitalisation Project. Since December 2006, a
total of 2 457 vehicles have been brought to the Provincial Scrapping Centre in
Zwelitsha, of which 2 363 vehicles have been scrapped and more than R120
million has been paid out to operators, who received their incentive of R50 000
00 per operator.

Airports:

Two weeks ago, Bhisho Airport runway was re-opened for aircraft landing,
following a six weeks upgrade and flights from Port Alfred-based 43 Air School
have already started landing.

The upgrade included the installation of the new Instrument Landing System
(ILS), which we purchased from the United States at a cost of R7 million. This
formed part of the R100 million upgrade of the airport, which is in line with
the Blue Skyway Aviation Strategy launched by the department in October 2006 in
an effort to maximise the potential of the Bhisho and Mthatha airports and
bring new life to the rural airstrips within the province.

As we speak, the airport upgrade is 80 percent complete and we expect to
finish this process in March 2008, as it has been identified for receiving
international flights during the World Cup.

Forty three Air School will be expanding its advanced training programme to
the Bhisho Airport as soon as the contractor finishes the building of the
student pilots' residence. Mthatha Airport will also undergo an upgrade as soon
as we get the required R35 million. The airport's traffic volumes have now
increased from 23 percent to 30 percent. Various airlines have been knocking on
our doors with an intention to operate on routes such as Mthatha to
Johannesburg, Mthatha to Durban and Mthatha-Bhisho-Port Elizabeth route.

Back to rail:

Last week, we completed the testing and commissioning on the Kei Rail Line
between East London and Mthatha, and we have submitted a report to the Rail
Safety Regulator. We are convinced that before the end of the year, we will
have an operational line running a rail passenger service. We have leased 20
coaches from Shosholoza Meyl to operate the service. Sheltham Grindrod Group
has provided two 33 Class 200 General Motors Diesel locomotives with 2 000
horse power each.

The department is currently concluding the acquisition of further additional
33 Class Diesel Locomotives for refurbishment to the latest technology
available internationally. This line will link our base camps (Buffalo City and
King Sabata Dalindyebo). We intend to link our rail renewal strategy with
tourism development, because our railway lines pass the most scenic parts of
our province.

Kei Rail will support tourism projects such as the Nelson Mandela Cultural
Precinct, Nelson Mandela Cultural Corridor, Tsitsa Falls Nature Reserve,
Greater Kei Holiday and Cultural Village Development. Between 2008 and 2010,
there is a variety of opportunities on this line and we will embark on a public
private partnership process to ensure compliance with all treasury guidelines
on including the private sector on freight operations.

These would include:

* operational company to mostly provide marketing of the service and grow
the rail operations
* provision of Wagons and Locomotives for the service
* maintenance of the Fleet of Locomotives and Wagons.

Passenger service opportunities will include:

* supply of train sets for the service
* maintenance of these trains
* property development and investment on the station environment
* training through the Rail Academy at Walter Sisulu University.

On Infrastructure Construction and Maintenance, we will have:

* maintenance contracts
* renewal contracts
* refurbishment of stations.

We have allocated R10 million for the upgrading of the Narrow Gauge line
from Port Elizabeth to Avontuur, as we intend to commence the operations in
2008 and promote tourism. We are investigating the possibility of introducing a
train tourism service further up the Langkloof and in Somerset East and
Graaf-Reinnet. We are currently developing a Rail Tourism Plan, which will
assist in the provision of entertainment for soccer fans in 2010.

Maritime transformation

We are further developing a 2010 Provincial Freight Transport Plan to build
the capacity of our seas and grow the tourism industry. We have already donated
boats worth more than R500 000 to the Port St Johns Municipality to improve the
area's emergency capacity and we intend to invest more money on other parts of
the Wild Coast region to improve safety and security in that internationally
renowned tourist destination.

With the assistance of the Provincial Freight Logistics Forum, we further
want to have a Maritime Passenger Transport Strategy, which will enable people
to commute between Durban, Port St Johns, East London and Port Elizabeth to
watch the matches in 2010.

Roads infrastructure

We are currently spending R1,97 billion per annum on our routine road
maintenance on 42 000 kilometre of provincial roads. One of the main strategic
priorities in our infrastructure investment strategy is to make our coastal
route available as a natural resource.

More attention will be given to the coastal road between East London and
Port Elizabeth (R72), which runs through the Ncanarha interchange on the N2 to
the Nahoon interchange on the N2 in East London.

This is a vital arterial road that supports both industry (East London and
Coega IDZs) and tourism, and is also important for the 2010 Fifa World Cup.

This road is similar in length to the N2 through Grahamstown, but is
favoured by truckers due to the fact that it has fewer gradients. Traffic
volumes on the R72 have increased significantly over the past three years.

We are currently weighing various options to ensure that the R72 is
trafficable. These options are highlighted in the feasibility study undertaken
by the department through South African National Roads Agency Limited (SANRAL)
possibility of tolling certain strategic routes, including R72. The study
includes economic, funding, traffic and operational viability. This option has
a potential to improve the economic landscape of the entire coastal route.

In conclusion, I would like to once more express my sincere gratitude for
this opportunity, hoping that we will continue to work together and share the
necessary information in the interest of development and a successful World
Cup.

I thank you.

Issued by: Department of Safety, Liaison, Roads and Transport, Eastern Cape
Provincial Government
22 November 2007