Prasa rolls out new train service amid turnaround plans
The Passenger Rail Agency of SA (Prasa) says it expects to finalise a turnaround strategy by July and will approach independent experts in the interim on its plans to reduce costs and improve services.
Speaking on the sidelines of the launch of Prasa’s new passenger train service in Pretoria on Tuesday, acting CEO Lindikhaya Zide said the recent downgrades of SA’s sovereign credit ratings by S&P Global Ratings and Fitch might affect the state-owned entity.
Prasa expected to proceed with a multibillion-rand modernisation and recapitalisation programme as it envisaged that it would reduce operational expenditure, Zide said.
Prasa is undergoing a R173bn modernisation programme, which it has used as the core of a proposed turnaround plan that aims to address years of financial losses, declining fare revenue and poor service.
The agency posted a R312m loss in 2015-16, a decrease from R1bn the previous year, and has endured years of management and board turmoil and high levels of irregular expenditure.
The new trains for the Pretoria rail service will replace 40-year-old rolling stock.
The agency has largely completed its turnaround strategy, which includes a revised supply chain management process, but has yet to roll it out.
"We would have to manage issues of efficiencies. Investing in these technologies is costly, but it lowers your [operational expenditure]," said Zide.
He said the agency was contemplating an independent analysis of the cost of introducing these technologies and operational savings, as well as right-sising the business.
In Parliament, members of the portfolio committee on transport doubted Prasa’s ability to realise its turnaround strategy.
Prasa general manager of corporate services, Tiro Holele told the committee the agency had committed to reduce its costs by R1.285bn and projected a revenue increase of R555m in the next financial year.
In its draft expenditure figures, Prasa has to reduce employee costs by R579m, energy costs by R210m, security costs by R184m and haulage costs by R53m in 2017-18.
It aims to increase maintenance costs 48% or R221m for 2017-18.
Portfolio committee chairwoman Dikeledi Magadzi told the Prasa delegation the agency needed to provide a clear way forward on the status of the board and the Werksmans investigation into supply chain management irregularities.
ANC MP Goodwill Radebe urged Prasa to settle its labour disputes after a group of dismissed employees disrupted committee proceedings.