Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698930328552.pdf (South Africa)
Friday, 21 October 2022] No 165—2022] FOURTH SESSION, SIXTH PARLIAMENT 1 PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA _____________________ ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS _____________________ FRIDAY, 21 OCTOBER 2022 _____________________ TABLE OF CONTENTS COMMITTEE REPORTS National Assembly 1.
Water and Sanitation ........................................................................................................ 2 Transport......................................................................................................................... 29 2.

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Mineral Resources and Energy ..................................................................................... 172 4.
Mineral Resources and Energy ..................................................................................... 226 5.

Mineral Resources and Energy ..................................................................................... 243 COMMITTEE REPORTS National Assembly 2 1.
BUDGETARY REVIEW AND RECOMMENDATION REPORT (BRRR) OF THE PORTFOLIO COMMITTEE ON WATER AND SANITATION ON THE ANNUAL REPORTS AND FINANCIAL STATEMENTS OF THE DEPARTMENT OF WATER AND SANITATION AND ITS ENTITIES FOR THE 2021/22 FINANCIAL YEAR, DATED 18 OCTOBER 2022 The Portfolio Committee on Water and Sanitation (hereinafter the Portfolio Committee), having considered briefings by the Auditor General of South Africa and the Department of Planning, Monitoring and Evaluation on 11 October 2022, the Department of Water and Sanitation (hereinafter the Department) on the 11 October 2022 and its entities, namely: the Trans-Caledon Tunnel Authority (TCTA) and the Water Research Commission (WRC) and the Catchment Management Agencies on 13 October 2022 for the 2021/22 financial year, reports as follows: 1.
INTRODUCTION 1.1 Mandate of the Portfolio Committee on Water and Sanitation The Constitution of the Republic of South Africa, 1996, empowers the National Assembly, through its Portfolio Committees, to ensure that executive organs of the state to the national sphere of government are accountable to it.

It further empowers the National Assembly to maintain oversight of the national executive within a particular sector, which is water and sanitation.
Parliament's mission governs the work of the Portfolio Committee and vision, the rules of Parliament and constitutional obligations as they refer to the protection of the environment, specifically water resources, through the entire water value chain.
The Portfolio Committee's mandate is premised on the five constitutional mandates of Parliament: processing legislation, conducting oversight, ensuring public participation, processing international agreements and facilitating cooperative governance within the Intergovernmental Relations Framework.

3 1.2 Purpose of the Budgetary Review and Recommendation Report The Money Bills Amendment Procedure and Related Matters Act (No.
9 of 2009) (the Money Bills Act) sets out the process that allows Parliament, through its committees, to make recommendations to the Minister of Finance to amend the budget of a national Department.
In October of each year, portfolio committees must compile the Budgetary Review and Recommendation Reports (BRRRs) that assess service delivery performance given the available resources, evaluate the effective and efficient use and forward allocation of resources, and make recommendations on the forward use of resources.

2.
2.

Mandate, Legislation and National Imperatives underpinning the work of the Department For the 2021/22 financial year, the Department of Water and Sanitation undertook many activities to deliver on its mandate and legislative obligations of ensuring water security for basic needs and economic development and ensuring delivery of water and sanitation services for all South Africans.
Legislative compliance guiding the work of the Department includes the National Water Act, Water Services Act, Water Research Commission, and the Constitution enshrined in the Bill of Rights, sections 10, 24 (a), 27(1)(b) and section 27(2)1.

The Public Finance Management Act and National Treasury Regulations define compliance and adherence to financial prescripts.

The country's National Development Plan and the Medium-Term Strategic Framework determine the Department's activities.
The National Water and Sanitation Master Plan, launched in November 2019, forms the bedrock of the water and sanitation developmental agenda in line with the African Union's Vision 2063 and the United Nations Sustainable Development Goals, Goal Number 6, impacting the delivery of water and sanitation.
1 Section 10 – everyone has inherent dignity and the right to have their dignity respected and protected; section 24(a) – everyone has a right to an environment that is not harmful to their health or well-being; section 27(1)(b) – everyone has the right to have access to sufficient water and section 27(2) – the state to take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of everyone’s right of access to sufficient water and dignified sanitation.
2.1 Overview of the work of the Department of Water and Sanitation in the 2021/22 Financial Year 4 The Foreword by the Minister, Statements by the Deputy-Ministers and Report of the Accounting Officer captured in the Annual Report 21/22 Year – Vote 41: Department of Water and Sanitation captures the centrality of water resources management and water services provision in South Africa within a complex and challenging water scarce semi-arid country.
Low rainfall, low dam levels, limited underground aquifers, water scarcity and significant water transfers from neighbouring countries have resulted in the Department of Water and Sanitation (the Department) working to resolve tough trade-offs of demand and supply between agriculture, key industrial activities such as mining and power generation, increased population, and impacts of climatic variations such as drought and climate change.
An important consideration for the Department in the year under review centred on the provision, management, operations and maintenance of bulk water and sanitation infrastructure and water service provision within concurrent competencies between national and local government institutions.
The roles and responsibilities of institutions at different spheres of government within the entire water value chain raise some complexities in the water sector in that the reporting structure is challenging and requires more cooperation between different spheres.
Managing challenges and finding a blend of solutions requires strong institutional structures, with systematic programmes and plans that have both the financial and non-financial capabilities to evaluate achievements and non-achievements across the water value chain.

Institutional structures to support the work of the Department in attaining its mandate and legislative obligations include the Trans-Caledon Tunnel Authority, the Water Research Commission, Water Boards and Catchment Management Agencies.
The Department delineated three programmes, Administration, Water Resources Management, and Water Services Management, to underpin its work.

In summary, although the Department of Water and Sanitation received an unqualified audit outcome, it encountered several challenges in financial management, such as awaiting approval for condonations, irregular expenditure (Main Account – R9.3 billion and Water Trading Entity – R8.1 billion), and under-expenditure (R2.5 billion).
The main reasons for the under- expenditure related to infrastructure procurement, whereby similar processes for procuring Goods and Services were used within the infrastructure and construction units and deemed inappropriate.

5 The Portfolio Committee commends the Department of Water and Sanitation on attaining several achievements under its new administration.
For the 2021/22 financial year, the department was transparent on the historical challenges of irregular expenditure inherited from the previous administration through its quarterly reporting sessions to the Portfolio Committee.

It provided measures to rectify and mitigate future transgressions.
The current challenges faced in respect of irregular expenditure, debt collection and critical work that needed to be done to ensure due process followed in the finalisation of cases, improving debt collection strategies and reducing debtors’ days were the standing agenda items as part of the quarterly briefings by the Department.
However, the Director-General stressed that the Department has developed and is currently implementing a turnaround and Financial Recovery Plan to address the following: timeous submission of annual financial statements to the Auditor-General South Africa and National Treasury as per the requirements of the Public Finance Management Act, timely submission of the Annual Report to Parliament, enhanced performance and consequence management systems, strategic leadership, institutional stabilisation, capacity and training, sustainable service delivery, infrastructure maintenance and development, improved financial management systems and implementation of new organisational structure.
3.

Audit and evaluation of the work of the Department of Water and Sanitation by the Auditor-General South Africa and the Department of Planning, Monitoring and Evaluation 3.1 Auditor-General South Africa The mission and vision of the Auditor-General South Africa are derived from the constitutional mandate, which views the institution as the supreme audit institution of South Africa.

The institution was established by section 188 of the Constitution of the Republic of South Africa.
The foundation of its work is to strengthen the country’s democracy by overseeing and holding the Executive accountable by auditing, reporting, and ensuring good governance and accounting in the financial management to ensure public resources are being used for the benefit of the country’s citizens.

6 The importance of water resources management and water provision in a developmental country cannot be overemphasised within the water sector.
Compliance with the prescripts of the Constitution and ensuring attainment of Goal 6 of the Sustainable Development Goals, in providing citizens’ access to basic services such as water and sanitation, with the state taking reasonable measures to attain this is a fundamental prerequisite across the entire water value chain in South Africa.
The audit outcomes of the four (4) entities, the Main Account and Water Trading Entity of the Department of Water and Sanitation, Trans-Caledon Tunnel Authority, and Water Research Commission between 2017/18 and 2021/22, show an incremental improvement.
The 2017/18 audit produced two qualified audits with findings for the Department of Water and Sanitation and the Water Trading Entity, one unqualified audit with findings for the Trans-Caledon Tunnel Authority and a clean audit for the Water Research Commission.
In the 2021/22 financial year, three entities, the Water Trading Entity, the Department of Water and Sanitation, and the Trans-Caledon Tunnel Authority, received an unqualified audit with findings and a clean audit for the Water Research Commission.
The overall significant findings and outcomes of the Water Trading Entity, the Department and TCTA related to issues of compliance with legislation, irregular expenditure, the non- attainment of predetermined targets in the annual performance plan and actual achievements, specifically in the areas of maintenance of infrastructure and non-compliance to updating the asset management plan as required by the Government Asset Management Act of 2018.
The resultant impact of not optimally maintaining infrastructure systematically could shorten the lifespan and increase new infrastructure costs.

In this regard, the Auditor-General recommended that the Department relooks at the asset management plan to ensure infrastructure assets are appropriate management with an indication of the financial resourcing of the plan, which must be monitored and tracked.
An overview of the audit outcomes for the Main Account, the Water Trading Entity, the Trans-Caledon Tunnel Authority and the Water Research Commission reflected the following: • Main Account 7 The Department was qualified on training and development costs and the related payables for the 2020/21 financial year.

It did not adequately reconcile the invoices from a supplier by the implementing agent with supporting evidence of learners trained in the War on Leaks Programme.
In the 2021/22 financial year, the department cleared this qualification by reconciling the invoices received from the supplier.

Through this process, management identified a possible overpayment with the department and the implementing agent currently engaging the supplier to recoup monies.
Material corrections to the financial statement continue to be reported as a material non- compliance matter with internal controls that need to be strengthened to prevent material errors in the accounting system for various disclosure items.

In addition, non-compliance with supply-chain management legislation resulted in material irregularities in expenditure for the year under review.
Delays in the investigation of irregular expenditure and allegations against officials resulted in delays in implementing consequence management.

During the year under review, the department incurred irregular expenditure amounting to R9.3 billion on the Main Account.
On consequence management, the material non-compliance issues related to ongoing investigations, sanctions/recommendations not implemented for completed forensic investigations and failure to properly deal with allegations reported in the prior year.

• Water Trading Entity The Water Trading Entity received an unqualified audit outcome with findings in compliance with legislation due to the lack of improvements in the overall control environment and ineffective monitoring of audit action plans.
Controls around compliance with laws and regulations should be strengthened.

Reviews of the financial statements should be enhanced to ensure they are free from material misstatements.

The accounting officer ensures that documentation supporting the Lesotho Highlands Water Project is rectified.

The entity incurred irregular expenditure amounting to R8.1 billion.
On consequence management, the material non-compliance issues related to ongoing investigations, sanctions/recommendation not implemented for completed forensic investigations and failure to properly deal with allegations reported in the prior year.
8 o Performance audit on the Department of Water and Sanitation An assessment of Programme 3 – Water Services Management showed that the department set targets greater than those required by the Medium-Term Strategic Framework for the number of bulk water supply projects implemented but fell short of the target by 61 per cent.

The Department also did not achieve the set targets for the number of dam rehabilitation projects and new dams constructed.
The root causes for the non-achievement of these indicators relate to inadequate project management, inadequate supervision of contractors resulting in the late identification of poor performance of contractors and protracted supply chain management processes.

For the number of bucket sanitation systems eradicated in formal areas, the department set the target of 23 019 over two (2) years (2019/20 and 2020/21), which is above the targets set by the Medium-Term Strategic Framework.
The department achieved only 6 per cent of the set target.

Of concern was that the department did not set any targets for the programme for the 2021/22 financial year.

One key indicator in the MTSF not included in the annual performance plan was eradicating the bucket sanitation system.

In the year under review, the department allocated R292.6 million from the Regional Bulk Infrastructure Grant (RBIG) in Free State and Northern Cape, but only R48.9 million was spent.
• Trans-Caledon Tunnel Authority The Trans-Caledon Tunnel Authority received an unqualified audit outcome with findings on compliance.

Controls on compliance with laws and regulations should be strengthened, audit action plans should be effectively monitored to prevent repeat findings, and financial statements should be appropriately reviewed to ensure they are free from material misstatements before audit submissions.
The entity incurred irregular expenditure amounting to R32.9 million, an increase of 94 per cent compared to the prior year.

Fruitless and wasteful expenditure amounting to R194 million.

On consequence management, the material non-compliance issues related to ongoing investigations, sanctions/recommendations not implemented for completed forensic investigations and failure to properly deal with allegations reported in the prior year.
9 o Performance audit on the Trans-Caledon Tunnel Authority On Objective 2: Operate and maintain designated projects to meet departmental requirements/specifications, two targets were not achieved, resulting in 28.5 per cent non- achievement.

These relate to the tender documents to prepare for the tunnel outage of Phase 2 of the Lesotho Highlands Water Project, which was to be finalised in the 2021/22 financial year.
Another area highlighted is related to the operation and maintenance of acid mine drainage by TCTA in the eastern, central and western basins.

Due to the failure of motor pumps, no operations took place in the eastern basin from 2 February 2022.

• Water Research Commission The Water Research Commission remained unqualified with no findings on compliance.
The Auditor-General noted a strong internal control environment over the recording and reporting of financial and performance information and disciplined adherence to applicable legislation that assisted the entity in achieving a clean audit.

The entity incurred irregular expenditure of R12.2 million, an increase of 100 per cent compared to the prior year.

This is related to performance bonuses and salary increases not approved by delegations of authority as required by s56 of the PFMA.
3.1.3 Critical service delivery on assessing the management of infrastructure, water quality and water losses For the water sector in the 2021/22 financial year, the Auditor-General identified specific focus areas in the water space, such as management and maintenance of critical infrastructure, water quality and water losses.
This approach was intended to analyse the extent and impact of achievements and challenges found within the focus areas, which either enhance or limit critical service delivery of water and sanitation to citizens.

On infrastructure management, the Auditor-General found that between 2015 to 2022, a marginal decrease of 4 per cent in backlogs of access to basic water supply was attained.
Other weaknesses relayed to delays in the completion of infrastructure projects, maintenance of 10 infrastructure, no updating of the asset management plan since 2018 in contravention of the Government Immovable Asset Management Act of 2007, and no indicator identified to measure the progress made to correct backlogs in maintenance.
The findings on water quality revealed that although the department developed a water services improvement plan to assist water services authorities, the plan did not address the root causes identified in the Blue and Green Drop reports.

Water monitoring reports by the department revealed significant avoidable water losses within the jurisdictions of water services authorities.
3.2 Department of Planning, Monitoring and Evaluation The Department of Planning, Monitoring and Evaluation, located its monitoring and evaluation of the work of the Department of Water and Sanitation and its Entities within the high-level objectives underpinning the National Development Plan and the outcomes approach highlighted in the Medium-Term Strategic Framework, 2019 – 2024.
The National Development Plan envisages a South Africa that recognises the importance of secure and equitable access to water and sanitation as catalysts for socio-economic development, which requires the prioritisation of investments in basic water and sanitation infrastructure.
• Performance of identified outcome indicators Based on the performance of the six (6) Outcome Indicators, the Department fulfilled its obligations in the following areas: • Outcome 1: the protection and restoration of ecological infrastructure, which has ensured the implementation of interventions to protect water resources and ensure pollution control and rehabilitation.
• Outcome 4: water and sanitation services are managed effectively by developing strategies and support for water and sanitation services institutions and developing new infrastructure.

• Outcome 5: the enhanced regulation of the water and sanitation sector.
• Performance against outcomes in the Medium-Term Strategic Framework The performance against the 2019/2024 Outcomes highlighted in the Medium-Term Expenditure Framework for the period 1 April 2021 to 31 March 2022; the following findings were captured and reflected.

In respect of Access to improved basic services, the following was highlighted in Table 1 below: 11 100% of Water Services 100% assessed.
Authorities receive acceptable scores on functional assessment in the Municipal Strategic Self- Assessment (MuSSA).

76% (109 of the 144) municipalities completed their functional assessments.

100% of five-year Municipal Priority 18% of the MPAPs developed.

Action Plans (MPAP) developed and 98 are required to develop the implemented annually in the WSAs in plan based on the MuSSA priority districts report.
90% access to adequate sanitation Sanitation Situational Analysis Report The draft National Sanitation and hygiene.

– 2 implementation reports per annum Integration Plan was developed, on National Sanitation Integrated Plan.

but no implementation plans were submitted.

100% of wastewater treatment 56 bulk water supply and sanitation 16 completed.

works are operational and projects completed.

functional.
functional.

963 wastewater treatment works 995 wastewater treatment assessed for Green Drop Regulatory works assessed.

requirements compliance alternating every 2 years with the Blue Drop Assessments.

460 wastewater systems 260 non-compliant wastewater systems monitored.

monitored.

Amended Regulatory Framework Draft National Water Amendment Bill National Water Amendment on Water Ownership and submitted to Cabinet for approval for Bill submitted to the Office of Governance public consultation.
the State Law Advisor for preliminary certification.

• Achievements and constraints in the water and sanitation sector The critical achievements noted by the Department of Planning, Monitoring and Evaluation related to the use of the Infrastructure Fund to improve the work of Programme 3 and the relaunch of the Green and Blue Drop reports.
Although water and sanitation infrastructure development by the Department of Water and Sanitation was commended, DPME maintained that infrastructure dilapidation, as seen in the recent floods in Kwazulu-Natal, should be used as a basis for improving preventative maintenance and refurbishment of critical bulk water and sanitation infrastructure in the country.
12 One of the significant constraints in the water and sanitation in South Africa, according to the DPME, relates to the dysfunctionality of water boards with weak governance, municipal debt, and inefficiencies in financial management, which result in ineffective operations and poor maintenance of water quality infrastructure.

4.
Overview of the work of the Department of Water and Sanitation 4.1 Financial and non-financial performance of the Department (Main Account and Water Trading Entity) A high-level summary of the financial and non-financial performance of the Department of Water and Sanitation for the year under review in Table 1 below reflects that the final appropriation amounted to R17.7 billion, with Administration allocated R1.9 billion, Water Resource Management – R3.6 billion, Water Services Management – R12.1 billion.
The actual expenditure for each of the Programmes – Administration with R1.7 billion, Water Resource Management with R3.4 billion, and Water Services Management at R9.9 billion.

This translates to a percentage spend of 88, 97, 82 of the three programmes with a total of 89 per cent.

The department underspent the budget by R2.5 million, which includes R244 million for Programme 1, R117 for Programme 2 and R2.1 million for Programme 3.
The Department requested to roll over the qualifying 2021/22 unspent funds of R381 million to the 2022/23 financial year.

This would allow for the completion of various identifiable, committed, contracted and accrued projects and activities which began in the previous financial year under the Water Resources Management programme.
Table 1: Expenditure trends and targets attained for the 2021/22 financial year Programme Final appropriation Actual expenditure Employee cost Goods and services Transfers Capital assets Administration 1 960 017 1 716 499 791 547 822 099 31 734 61 068 Total appropriation percentage 11% % expenditure Achieved targets Source: Presentation by the Auditor-General, 11 October 2022 1 742 236 1 473 158 9 414 311 2 573 410 100% 82% 89% 71% 66% Water Resources Management Water Services Management Total As mentioned earlier, irregular expenditure and debt owed by municipalities formed the basis of engagements and report-back sessions to the Portfolio Committee during the quarterly reporting sessions of the financial and non-financial performance of the Department.
The tracking and monitoring of progress on the finalisation of matters related to irregular expenditure and debt collection within the Main Account, Water Trading Entity and Trans- Caledon Tunnel Authority is an important oversight objective of the Portfolio Committee.

Irregular expenditure of R9.3 billion on the Main Account and R8.1 billion on the Water Trading Entity, with under-expenditure amounting to approximately R2.5 billion in the financial year under review.
In terms of achievements of annual targets as reported in the Annual Performance Report (all indicators) for the year under review, the Department of Water and Sanitation achieved 66 per cent, with 34 per cent not achieved, the TCTA achieved 75 per cent, with 25 per cent not achieved and a 100 per cent achievement of the Water Research Commission.

4.1.1 MAIN ACCOUNT The Department spent R15.2 billion of its final appropriation of R17.7 billion for the year under review.
Programme 1: Administration underspent an amount of R243.5 million or 12 per cent, which was mainly due under: • Compensation of employees: the reduced rate of filling vacancies remains within the medium-term expenditure framework budget limits, and filling funded critical posts is being expedited.

The accelerated recruitment plan and organisational structure alignment initiatives are being implemented.
• Goods and Services: the savings realised on amounts budgeted for accommodation, consultants (projects), information technology-related services and reduced international travelling due to government-enforced COVID-19 lockdown restrictions.

14 The performance information related to Programme 1: Administration reflected an achievement of 67 per cent of planned targets, with an overachievement on filling of vacancy posts for engineers and scientists by filling 854 vacancies.
Other targets that were achieved included: 91 safety and security assessments for facilities and installations conducted, 99 information technology systems, implementation of 93 per cent of the financial recovery plan and reduced debtors’ days to 105 days.

Targets on SMME procurement was 26 per cent on qualifying small enterprises and 27 targeted procurement spent on exempted micro enterprises.
On Programme 2: Water Resource Management, the Department underspent R116.7 million primarily due to the following: • Compensation of employees: the reduced rate of filling vacancies to remain within the medium-term expenditure framework budget limits, and the filling of all funded critical posts expedited.
• Goods and services: there are various planned projects/activities, namely, the appointment of a Professional Service Provider to design a National Digitised Water and Sanitation Monitoring System, the appointment of a PSP for the national water balance perspectives for South Africa, the development of the National Water Resource Strategy and term contract for the development of the disaster management level two (2) plan, which are at various procurement stages.
• Payments of capital assets: the under-spending is mainly attributable to delayed spending on office furniture, equipment and desktops/laptops at various procurement stages.

The performance information related to Programme 2: Water Resource Management reflected: An achievement of 63 per cent of its planned target.
The key achievements incorporate the update of the National Water and Sanitation Master Plan, climate change risk and vulnerability assessment completed for Phongola-Mzimkhulu, Berg-Olifants and Breede-Gouritz water management areas, implementation plan for the Thukela water resources classes and resources quality objectives, the completion of the Conceptual Framework for the Sanitation Integrated Plan, Annual Performance Plans and quarterly reports for 2 CMAs, TCTA and WRC evaluated and Draft Bill for establishing National Water Resources Infrastructure Agency developed.
These are some of the major targets that were met for this programme.

The Department failed to achieve the following: the draft regulations for water allocation, the development of the independent economic regulator and the regulated time for finalisation of water use authorisations.
15 On Programme 3: Water Services Management, the Department underspent R2.171 billion mainly due to the following: • Compensation of employees: the reduced rate of filling vacancies to remain within the medium-term expenditure framework budget limits, filling all funded critical posts is being expedited.
• Goods and services: the integrated Vaal River System pollution remediation intervention project has not proceeded as quickly as intended (operational expenditure related to labour, purification, security, transportation and management of bio-solids, operations and maintenance of infrastructure and consumables) in Emfuleni Local Municipality.

The project is currently being accelerated.


The department has approached the National Treasury requesting an R104.5 million unspent budget to be rolled over to the 2022/23 financial year.

• Payments of capital assets: the under-spending is mainly attributable to the unresolved disputed invoices, community-related challenges and contractual disputes, outstanding work certification and verification at year-end.
The performance information related to Programme 3: Water Services Management show that the programme achieved 72 per cent of its planned targets.
The department managed to collect water balances for 8 large water supply systems; conducted the National Report on Municipal Strategic Self Assessments (MuSSA) within the Water Services Authorities, metros and secondary cities, developed the National Municipal Integrated Priority Action Plan report, developed the Draft National Sanitation Integrated Plan and the Draft National Faecal Sludge Management Strategy for on-site sanitation.
In addition, the department developed the 2022/23 bulk water tariffs, evaluated and monitored 459 water supply systems for compliance against the regulatory requirements, evaluated shareholder compacts/business plans for 9 (nine) water boards, drafted due diligence reports for two (2) regional water utilities (Magalies and Amatola), 831 jobs created through RBIG projects.
The programme failed to meet the target of developing the Draft Water Services Amendment Bill and finalising the Water Conservation and Water Demand Strategies Frameworks.

4.1.2 WATER TRADING ENTITY (WTE) 16 The Water Trading Entity is divided into the Water Resources Management Unit and the Infrastructure Branch.
The Water Resources Management Unit deals with water resource management functions, primarily to address the use, conservation, and allocation of water resources in a manner that is sustainable and equitable for the benefit of the people that reside in the relevant management areas.

The Infrastructure Branch deals with the development of new infrastructure as well as operations and maintenance of existing infrastructure with operations under integrated systems and bulk water schemes.
4.1.2.1 Operational expenditure As shown in Figure 1 below, the financial statement of performance of the Water Trading Entity reflects an operating surplus of R7.2 billion for the period ended 31 March 2022.

The operating surplus increased from R5.2 billion in the 2020/21 financial year to R7.2 billion in the 2021/22 financial year.

The expenditure reflects a reduction of R670 million when compared to the prior year.
As reflected in Figure 1 above, the total expenditure decreased by 9 per cent during the period under review.

This amounts to R10.4 billion in the 2021/22 financial year compared to R9.7 billion in the 2021/22 financial year, which is attributed to the reversal impairment of assets under construction amounting to R530 million.
Other important considerations in the operational performance of the Water Trading Entity comprise the following: 17 • The operating expenditure for the 2021/22 financial year amounted to R3.9 billion.

Employee costs decreased by 5 per cent, with depreciation, amortisation and impairment decreasing by 62 per cent from R2.2 billion in the 2020/21 financial year to R1.3 billion in the 2021/22 financial year.
• Liquidity status: the current ratio of the entity has increased from 3:75:1 in the 2020/21 financial year to 5:19:1 in the 2021/22 financial year, which indicates that the entity has sufficient liquid assets to meet its short-term financial obligations.

• The entity has a positive cash flow amounting to R6.7 billion, attributed to increased augmentation allocation and revenue collection.
• The revenue for the Water Trading Entity for the year under review reflected an increase of 8.7 per cent of the revenue from water sales compared to the prior year due to improved project allocation.

The augmentation allocation during this period amounted to R2.063 billion, and other revenue amounted to R1.3 billion.

• By the end of the financial year under review, the cash and cash equivalent reflected a favourable balance of R2.1 billion.
The entity has implemented measures to follow up on the recoverable debts and implement cash flow management strategies while complying with the 30-day payment period as prescribed in the Public Finance Management Act.

• The debtors’ day analysis shows less improvement from 247 days in 2020/21 to 308 days in 2021/22 due to non-payment by various municipalities.

Steps have been taken to recover the outstanding debt.
The debtor’s collection days indicate that the entity has cash tied on the outstanding accounts.

5.

OVERVIEW OF THE WORK OF SUPPORTING ENTITIES WITHIN THE DEPARTMENT OF WATER AND SANITATION 5.1 Trans-Caledon Tunnel Authority The Trans-Caledon Tunnel Authority (TCTA) was established in 1986 to finance and build the Delivery Tunnel North of the Lesotho Highlands Water Project.
In 1994, a directive was received to fulfil the financial obligations of the Government of South Africa, in terms of the Treaty on the Lesotho Highlands Water Project, on the water transfer components in Lesotho.

18 Trans-Caledon Tunnel Authority received an unqualified audit outcome with findings for the 2021/22 financial year.

The findings related to irregular expenditure of R839 million for the year under review, and fruitless and wasteful expenditure of R194.8 thousand.
For the year under review, TCTA devised three (3) broad pre-determined objectives, as follows: Outcome 1: implement capital projects in accordance with the timelines agreed with DWS, Outcome 2: operate and maintain designated projects to meet DWS requirements and Outcome 3: raise funding for implementation of infrastructure and manage debt within the approved borrowing time.

Seventy-seven (77) per cent of the predetermined objectives were achieved.
5.2 Water Research Commission (WRC) The Water Research Commission operates and accounts for its activities in accordance with the Public Finance Management Act and is listed as a schedule 3A public entity.

The primary function of the WRC is to promote coordination, cooperation and communication in water research and development, establish water research needs and priorities, promote the effective transfer of information and technology, and enhance knowledge and capacity building within the water sector.
The WRC had a total income (including levy and leverage) of R417.4 million during 2021/22.

Levies made up 67 per cent of the WRC’s income.

The WRC achieved an unqualified audit in 2021/22.

Several performance highlights for 2021/22 included the conclusion of several research projects, such as the launch of a micro-hydropower to provide electricity for the rural community of Kwa-Madiba in the Oliver Tambo District Municipality.
In terms of targets achieved, 110 Research and Development Innovation projects were initiated, with 113 finalised in the year under review.

5.3 Catchment Management Agencies (CMAs) Catchment management agencies are established in terms of section 80 of the National Water Act and are responsible for managing water resources within the defined catchment areas.

The CMAs ensure water resource management at a regional or catchment level with the involvement of the local communities.
19 5.3.1 Breede-Gouritz Catchment Management Agency The Breede-Gouritz Catchment Management Agency manages water resources in the diverse climatic area of the Breede-Gouritz Water Management Area.

The strategic objectives of Breede-Gouritz for the year under review included water resource planning, water use management, institutional and stakeholder relations, water allocation reform, water resource protection, strategic support, and management and governance.
The achievements for the financial year under review included efficiency in water use application processing within the regulated timeframe, which supports the social and economic benefit of their stakeholders, implementing the river rehabilitation projects, removal of alien vegetation in the river riparian areas, installation of rainwater storage tanks at various communities to provide localised catchments.
The total operating expenditure for the agency increased from R70.836 million to R78.501 million in the financial year under review.

The increase is attributed to the increase in operational expenses and employee-related costs.

The augmentation allocation from the Department of Water and Sanitation amounted to R40.6 million, an increase of R1.9 million compared to the prior year.
The revenue from the catchment management charge reflects an increase of 9 per cent (49.02 million) compared to the prior year (45.032 million), which is attributed to increasing the catchment management charges and the agency ensuring efficiency in its billing.

The debtors’ collection days reflect an increase of 424 days in 2021/22 compared to 390 in the previous year.

The increase in the number of days is due to the decrease in collecting revenue from significant customers who owe the agency.
The agency received a qualified audit opinion with findings.

The basis of qualification related to the agency’s failure to prove the existence of water users and uncorrected material misstatements.

5.3.2 Inkomati-Usuthu Catchment Management Agency 20 The Inkomati-Usuthu Catchment Management Agency (BGCMA) is a water management institution in the Inkomati-Usuthu Water Management Area (WMA) in Mpumalanga Province.
In the year under review, the Agency achieved 89 per cent of its predetermined performance outcomes, with 66 per cent overachieved, 22 per cent achieved and 11 per cent not achieved.

The agency attained financial results which defined its operations as a going concern, with a solvent balance sheet with a net surplus of R4.9 million.

In the financial year, the agency managed its working capital, which safeguarded its ability to meet its short-and long-term liabilities.
In relation to financial performance against financial sustainability, the agency successfully implemented responsive cost containment strategies while improving already defined revenue streams.

Consequently, these initiatives aided a 16 per cent increase in revenue and market related 8 per cent in overall expenditure.

The agency obtained an unqualified audit opinion.


The challenges identified by the agency relate to low debt recovery levels, funding constraints due to non-paying and slow-paying users, limitations of the pricing strategy, which limit full cost recovery of costs, pollution of resources and non-finalisation of the verification and validation process due to ongoing litigation.

6.
OBSERVATIONS AND RECOMMENDATIONS The following observations with concomitant recommendations were devised by Members of the Portfolio Committee in response to deliberations of presentations: 6.1 Irregular expenditure and under-expenditure The tracking and monitoring of progress on the finalisation of matters related to irregular expenditure and debt collection within the Main Account, Water Trading Entity and Trans- Caledon Tunnel Authority (TCTA) is an important oversight objective of the Portfolio Committee.
21 While the Members of the Portfolio Committee welcomed the improved progress in the audit outcomes of the Main Account and Water Trading Entity and TCTA, the irregular expenditure of R9.3 billion on the Main Account and R8.1 billion on the Water Trading Entity, was viewed as a concern.

Furthermore, the R2.5 billion in under-expenditure across the department’s programmes negate departmental attempts to improve good governance and improved financial management.
The under-expenditure has a direct link to the non-completion of critical bulk infrastructure projects to ensure access to water and sanitation services.

6.1.1 The Department and TCTA should provide a progress report with concrete timeframes on action plans to address the above matters.

6.2 Bulk infrastructure development The under-spending of the Regional Bulk Infrastructure Grant and Water Services Infrastructure Grant was noted as a serious concern by the Members of the Portfolio Committee.
The importance of addressing the construction, maintenance and operations of bulk water and sanitation infrastructure at the national and local spheres of government was emphasised.

Members of the Portfolio Committee maintained that it was important for the Department to monitor the ongoing contractual disputes, lapsing of contracts, which impacted the progress of projects and delays in the commencement of construction activities that need to be seriously addressed.
This is related to delays on the Vaal River System Remediation Programme, uMzimvubu Dam, and other major wastewater and water projects.

6.1.1 The Department should provide the timeframes of the recovery plan to facilitate progress on incomplete projects.
6.3 Condonation of irregular expenditure and finalisation of investigations on irregular expenditure Although the Members of the Portfolio Committee accepted the responses of the Department in respect of the condonation of irregular expenditure, such as recouping funds and instigating disciplinary measures, including charges of fraud and corruption by transgressing officials, Members maintained this long-standing matter be resolved.
6.3.1 The Department should, on a quarterly basis, provide a progress report on recouping funds and work on finalising the disciplinary cases, with information on National Treasury’s processes.

22 6.4 Weaknesses in procurement policies and supply chain management systems and non-adherence to policy The Portfolio Committee welcomed the assurance by the Department that it is implementing a procurement strategy anchored on a financial recovery plan.
The plan aims to improve the overall financial environment, including improving the audit opinion within the portfolio.

The plan also includes implementing the Infrastructure Procurement Strategy to improve procurement within the department and its implementing agents to fast-track implementation at the project level and increase efficiency.
However, concerns were raised on the department’s non-adherence to its policy in respect of bid evaluation not undertaken in accordance with the advertised evaluation criteria, and change of scope of work after the bid was awarded without approval by the delegated official.
6.4.1 The Department should brief the Portfolio Committee on implementing its procurement strategy plans and strengthen its adherence to policy so that Members can effectively track progress on work undertaken to strengthen its financial recovery plan.
6.5 Key recommendations highlighted by the Auditor-General and the Department of Planning, Monitoring and Evaluation Members of the Portfolio Committee noted the following key recommendations to the accounting officers by the Auditor-General and the Department of Planning, Monitoring and Evaluation.
They stressed the importance of the Department addressing these matters: • Auditor-General • Detailed action plans to be devised to address challenges affecting implementing key projects, and managing infrastructure projects at the Water Trading Entity.

23 • Management of water quality risks and water losses at Water Services Authorities should be developed and implemented.
• Timeous monitoring and oversight over the proper implementation of action plans to address both internal and external audit findings to avoid repeat findings.

• Continuous monitoring of compliance with legal and regulatory provisions to avoid non- compliance findings.

• Ensure financial statements are appropriately reviewed in line with the accounting reporting framework requirement.
• Continue focusing on consequence management to complete all investigations and cases of irregular, fruitless, and wasteful expenditure.

• Expedite negotiations with the government of Lesotho on royalties related to the Lesotho Highlands Water Project.
• Department of Planning, Monitoring and Evaluation The DPME recommended the following for consideration: • • • • • To ensure critical infrastructure investments in the water sector with an allocated capital expenditure budget appropriately spent on identified projects within the planned project timelines across the three spheres of government.

The department to establish mechanisms to address the backlog on the maintenance and refurbishment of critical infrastructure across the board.
The Department, in collaboration with the Department of Cooperative Governance and Traditional Affairs and MISA supports the urgent need for municipalities to attend to water leaks.

To fast-track the implementation of the National Water and Sanitation Master Plan to address water security in the country in respect of water investment planning, maintenance of water infrastructure and water quality management.

To support the efficiencies of water boards.


6.4.1 The Department of Water and Sanitation should provide a progress report, with timeframes, on strategies to implement the recommendations of the Auditor-General.
6.5 Strategies to deal with audit outcomes 24 The Portfolio Committee appreciated the emphasis by the department to devise strategies to deal with audit outcomes, which comprise the following: • Implementing a turnaround and financial recovery plan which incorporates stabilisation of the Department (leadership, ethics and organisational culture, staff training and development), improvement of systems of internal controls, and preventative measures against fraud and corruption.
• Trend analysis of improper expenditure to ensure a decline in irregular, fruitless and wasteful expenditure.

• Improved planning and implementation of infrastructure procurement strategy.

• Measures are taken to eliminate irregular, fruitless and wasteful expenditure to be supported by preventative control measures.

• The implementation of an exit strategy on irregular contracts to ensure the current incidents of irregular expenditure from the prior year are terminated.
• Completion of an integrated water sector value chain support and intervention measures to improve water service delivery.

6.5.1 The Department should, on a quarterly basis, provide a systematic approach to the outcomes and targets achieved in implementing strategies to deal with audit outcomes.
6.6 Establishment of Regional Utilities and additional Catchment Management Agencies The Department noted the concerns that Members of the Portfolio Committee raised on the institutional realignment by rationalising water boards to regional utilities as options to unlock the expansion of services and provide progress reports.

6.6.1 The Portfolio Committee recommended that the Department fast-track water boards realignment to regional utilities and provide a progress report.
6.7 Eradication of the Bucket System in Formal Settlements The Portfolio Committee noted the shift in numbers with regard to the bucket eradication programme, but was concerned at the delay in completion of the remaining eradication of buckets in the Free State and Northern Cape.

Of concern to the committee is the project's escalating costs due to procurement delays; and site challenges related to the inaccessibility of constructing toilets in certain areas, due to difficult geological terrains.
25 6.7.1 The Portfolio Committee resolved that a non-negotiable timeframe, with a ring- fenced budget for this programme, should be prioritised.

6.8 Verification and Validation of existing lawful water use The purpose of the verification and validation is to verify all existing lawful use, determine the status of water use and water registrations, and determine the legality of new water uses.
However, Members of the Portfolio Committee raised concerns about the discrepancies in the validation and verification system, in relation to the skewed water use allocation.

Members maintained that this must be continuously monitored as equity and efficiency challenges within the water use authorisations for acquiring water licences by small-impact users, mainly black farmers, are notably impacted.
6.8.1 The Department should fast-track the verification and validation of existing lawful water use in all water management areas to ensure a speedy water allocation reform to address the water needs of the historically excluded and vulnerable groups.

The Department should provide quarterly progress reports on water allocation reform across all water management areas.
6.9 Dysfunctional wastewater treatment works and water supply works leading to pollution Members of the Portfolio Committee reiterated their previous instruction to the Department and Entities that the deteriorating state of municipal wastewater and sewage treatment management in South Africa contributes significantly to pollution problems and exacerbates environmental and health problems.
6.9.1 The Portfolio Committee recommends that the Minister, through the Department and Entities, work together with all three spheres of government, and optimally, using the parameters of the District Development Model, work out short, medium and long- term solutions to facilitate the progress of this major crisis.
26 6.10 Mechanisms in place to mitigate the challenges of trade debtors and non-payment to the Water Trading Entity Members of the Portfolio Committee noted that the Department must devise control measures and plans to address long-standing challenges of trade debtors and non-payment.
6.10.1 The Portfolio Committee recommended that the Department present its action plans and control measures to recover monies owed to the Department and its Entities, and provide more details on the progress made by the Multidisciplinary Revenue Committee comprising the National Treasury, the South African Local Government Association, Department of Cooperative Governance and Traditional Affairs and municipalities, as part of an intergovernmental relations initiatives to address debt collection.
6.11.1 Departmental contribution to job creation Members of the Portfolio Committee maintained that the country's high unemployment rate necessitated the Department's need to contribute to creating jobs within the water and sanitation sector.
6.11.1.1 The Portfolio Committee recommended that a progress report be submitted highlighting the initiatives undertaken to ensure increased job creation in the water and sanitation sector across the water value chain, specifically in communities where projects are being implemented.

6.12 Rollover of unspent funds 27 Members of the Portfolio Committee raised a question on the rollover of unspent funds and its impact on projects.
6.12.1 The Portfolio Committee recommended that the Department provide progress reports on financial recovery and turnaround strategies as part of departmental quarterly briefings, with input on rollovers as a critical component.
6.13 The effectiveness of the ‘polluter pays principle’ in respect of compliance with water and environmental laws The penalties meted out against polluters are within the scope of the necessary pieces of legislation, which defines the ‘polluter pays principle’ on compliance issues.

Penalties meted out against polluters, and remediation of polluted areas require serious engagement with all relevant stakeholders in terms of conviction and the impact it has on the lives of affected citizens.
6.13.1 The Portfolio Committee recommended that a written response be submitted on the number of transgressions of pollution of water sources, the action taken and the remedial and corrective action, and outcomes thereof for the 2020/21 to 2021/22 financial years.

6.14 Transformation of irrigation boards to water user associations The 1998 National Water Act pushed for a radical water resources management reform in South Africa.
With regard to irrigation boards at the local level, which used to be managed by large-scale farmers, the Act moves toward transforming these into Water User Associations.

The purpose of this change in the Act is expected to incorporate all users in the defined areas of jurisdiction, whether they have a formal water entitlement or not.
The transformation enables better participation of historically disadvantaged individuals in managing water resources, and provides a basis for improving the local integrated management of water resources.

However, the slow progress in transforming irrigation boards into water user associations was noted as a major concern by Members of the Portfolio Committee.

28 6.14.1 The Department should provide a written submission progress in transforming irrigation boards to water user associations.
6.15 Protection of ecological infrastructure, such as wetlands, to ensure the sustainability of built infrastructure South Africa has invested significant funds in developing built bulk water and sanitation infrastructure across the water value chain, such as dams, reservoirs, wastewater works, wastewater treatment plants, etc., but lacking is the concomitant support and investment in strengthening ecological infrastructure to lengthen the lifespan of existing built infrastructure.
Degraded ecological infrastructure can lead to reduced capacity and lifespan of dams, and increased costs of flooding, whereas well-maintained ecological infrastructure, can buffer human settlements and built infrastructure against the extreme events associated with climate change and play a crucial and cost-effective role in disaster risk reduction.
6.15.1 The Departments of Environmental Affairs and Water and Sanitation should provide further information on approaches and strategies to strengthen ecological infrastructure in the country as part of mitigating against impacts of climate change.

Report to be considered.

2.


BUDGETARY REVIEW AND RECOMMENDATION REPORT (BRRR) OF THE PORTFOLIO COMMITTEE ON TRANSPORT, DATED 18 OCTOBER 2022 29 The Portfolio Committee on Transport (“the Committee”), having considered the performance and submission to National Treasury (NT) for the medium-term period of the Department of Transport (“the Department”) and its entities, reports as follows: 1.
INTRODUCTION The period under review took place against the backdrop of the second phase of the implementation of the National Development Plan (NDP) (2019-2024).

As part of its contribution to the NDP, the transport sector had to identify interventions aimed at accelerating service delivery, increasing sector job opportunities, rural development and skills development.

Key priorities in this regard included investments in public transport, maintenance of roads and rail investments.
These had a direct bearing on the Government’s drive to respond to the challenges of poverty, unemployment and inequality.

Due to the continued impact of the 2020/21 COVID-19 lockdown measures on the performance of the Department and its entities throughout the year under review, as well as its impact on the reporting and audit finalisation timeframes for the year under review, this report will be based on those Annual Reports that were tabled before 13 October 2022.
There were early indications from the Auditor-General of South Africa (AGSA) that there are delays in finalising the audits of the Road Accident Fund (RAF) and Passenger Rail Agency of South Africa (PRASA), however, at the time of the drafting of this report the only outstanding audit findings are those of the RAF.
On 13 October 2022, the Minister submitted a letter requesting the further extension for the late tabling of the RAF Annual Report until the judicial review of the dispute with the AGSA is finalised.

The AGSA indicated that the audits of all the transport entities were finalised at the time of reporting to the Committee, but that the outcome of the RAF audit will only be released once the Annual Report is tabled by the entity.
At the time of the drafting of this report, the AGSA did indicate that they had finalised the audit of the Road Traffic Infringement Agency (RTIA) and the Driving License Card Account (DLCA), however, the Annual Reports of the entities were not tabled before Parliament at the time of finalising this 30 report.

Should they submit their Annual Reports following this report, the Committee will consider a supplementary report.
COVID-19 interventions during the 2020/21 financial year aimed at curbing/mitigating the spread of the pandemic through the world and the country restricted movement of all transport operations (including road, rail, maritime and aviation), restricted administration programmes responsible for the filling of vacancies, restricted access to vehicle and driver licencing services and road accident claim services, restricted maintenance and/or repair of road and/or rail infrastructure and restricted the roll-out of labour intensive infrastructure projects – to mention but a few areas of impact.
This continued to have a significant impact on the revenue generation and operations of a number of the entities under the Department, as is evident from the audit outcomes and the financial statements per the Annual Reports received to date.
Despite dealing with the residual impact of COVID-19 on the transport portfolio, the portfolio was also impacted in various levels by the July 2021 Civil Unrests, the flood damage in various provinces in January 2022 and April 2022 resulting in massive infrastructure damage, as well as the ongoing conflict between Russia and Ukraine, the most recent conflict applicable to the financial year under review having started in February 2022.
1.1 Mandate of the Committee The prime mandate of the Committee is governed by the Constitution of the Republic of South Africa, 1996 (“the Constitution”), in respect of its legislative and oversight responsibilities as public representatives.

It is required to consider legislation referred to it and consider all matters referred to it in terms of the Constitution, the Rules of the National Assembly (NA) or resolutions of the House.
It is also required to respond to matters referred to it by Government within its mandate.

In addition, the Committee is entrusted with considering the budgets, Strategic Plans, Annual Performance Plans (APPs) and the Annual Reports of the Department and entities that fall within the transport portfolio.

1.2 Purpose of the Budgetary Review and Recommendation Report 31 Section 77(3) of the Constitution stipulates that an Act of Parliament must provide for a procedure to amend Money Bills before Parliament.
This constitutional provision gave effect to the Money Bills Amendment Procedure and Related Matters Act (No.

9 of 2009).

The Act gives Parliament powers to amend Money Bills and other legislative proposals submitted by the Executive whenever the Executive deems it necessary to do so.

The Act therefore makes it obligatory for Parliament to assess the Department’s budgetary needs and shortfalls against the Department’s operational efficiency and performance.
This review seeks to establish whether the Department and its entities have achieved their aims and objectives, as set out in their Strategic Plans, as well as whether they continue to fulfil their constitutional mandates within the year under review.
As this is the third BRRR done by the 6th Parliament Committee, reference will be made to the key achievements made, as well as challenges encountered during the 2018/19, 2019/20, 2020/21 and 2021/22 financial years, as reported in the Department’s and entities’ 2018/19, 2019/20, 2020/21 and 2021/22 Annual Reports and APPs.
1.3 Methodology The Committee engaged with the AGSA on its audit findings of the Department and its entities, as well as engaged with the Department and, due to time constraints, selected entities on 11, 12 and 13 October 2022 on their performance and audit outcomes for the period under review.
The Committee selected to meet with the Air Traffic and Navigation Services (ATNS), Airports Company of South Africa (ACSA), South African Civil Aviation Authority (SACAA), South African National Roads Agency Limited (SANRAL), Road Traffic Management Agency (RTMC), South African Maritime Safety Authority (SAMSA) and PRASA due to time constraints and since these entities tabled their reports in time for consideration during the BRRR process.
At the time of considering this report, the RTIA, RAF, and DLCA had not tabled their Annual Reports yet.

The Committee voiced its dissatisfaction with the lack of reasons provided for the failure to table the RTIA and DLCA Annual Reports – it was the third consecutive year that RTIA and second consecutive year that RAF did not table their reports in time for the BRRR process.
32 The following entities were not programmed or called to meet with the Committee specifically, however, their Annual Reports and/or financial statements were tabled on time and their audit was part of the Department’s audit: 1.

South African Search and Rescue Organisation (SASAR), including the National Sea Rescue Institute (NSRI); 2.

Railway Safety Regulator (RSR); 3.

Ports Regulator of South Africa (PRSA); and 4.

Cross-Border Road Transport Agency (C-BRTA).


The BRRR details the analysis of the 2018/19, 2019/20, 2020/21 and 2021/22 Annual Reports and financial statements, strategic objectives, budget allocation and financial performance and the recommendations made by the Committee.
The BRRR is based on information accessed through: • The 2021 State of the Nation Address (SONA); • The Department’s Strategic Plan and APPs for 2021/22; • The Department’s Annual Report and Financial Statement for 2018/19, 2019/20, 2020/21 and 2021/22; • The Strategic Plans and the APPs/Corporate Plans of the entities that fall under the Department, as well as their nnual reports and financial statements for 2018/19, 2019/20, 2020/21 and 2021/22; • Quarterly reports of the Department; • The report of the AGSA on the audit outcomes of the Department and its entities; • National Treasury Section 32 Reports; • The NDP; and • Oversight visits by the Committee during the period under review.
2.

MANDATE OF THE DEPARTMENT OF TRANSPORT 33 The Department is mandated with maximising the contribution of transport to the economic and social development goals of society providing safe, reliable, effective and efficient fully integrated transport systems that best meet the needs of passenger and freight users.
To attain this objective, the Department is entrusted with the provision of transport infrastructure and services in a manner that is efficient and affordable to consumers and the economy, while ensuring safety and security in all transport modes.
The Department strives to be “the heartbeat of South Africa’s economic growth and social development”.2 Its core values are:3 • Maintaining fairness and equity in all its operations; • Striving for quality and affordable transport for all; • Stimulating innovation in the transport sector; • Ensuring transparency, accountability and monitoring of all operations; and • Ensuring sustainability, financial affordability, accessibility, as well as the upholding of the Batho Pele principles.
In an endeavour to discharge its mandate effectively and efficiently, the Department is structured as follows:4 • Programme 1: Administration; • Programme 2: Integrated Transport Planning; • Programme 3: Rail Transport; • Programme 4: Road Transport; • Programme 5: Civil Aviation Transport; • Programme 6: Maritime Transport; and • Programme 7: Public Transport.
The Department’s organisational structure was approved in September 2011, and it was implemented from November 2011.5 The structure comprises four transport modes (rail, road, 2 Department of Transport (2022a), p. 50.

3 Ibid.

4 Department of Transport (2022b), p. 66.

5 Department of Transport (2022b), p. 67. civil aviation and maritime transport), as well as integrated transport planning and public transport.
Support functions, particularly in the Office of the Director-General (DG), Office of the Chief Operations Officer (COO) and the Office of the Chief Financial Officer (CFO) fall under the Administration programme.

34 2.1 Strategic overview 2021/22 2.1.1 Strategic priorities of Government To execute its mandate, the Department is guided by Government’s commitments as set out in, inter alia, the NDP 2030, the Medium-Term Strategic Framework (MTSF) 2019-2024, as well as the SONA policy directives.
The Department contributes to the realisation of the vision of improved social and economic development articulated in the NDP.

Transport infrastructure and services support economic growth and development by connecting people and goods to markets.

The development and maintenance of an efficient and competitive transport system is a key objective of the NDP.
To this effect, the Department, in partnership with the sector public entities, provincial and local government, focuses on improving mobility and access to social and economic activities.6 In addition, the Department gives impetus to priority 1 (economic transformation and job creation) and priority 4 (spatial integration, human settlements and local government) of Government’s 2019-2024 MTSF.
The table below shows a schematic illustration of the alignment between MTSF pillars, apex priorities of the 6th Administration and the strategic focus areas of the Department.

Table 1: Alignment between MTSF Pillars, Apex Priorities and Strategic Focus of the Department 6 Department of Transport (2021a), p. 24.

MTSF Pillars Apex Priorities Department’s Strategic Focus Areas 1.
Achieving a more • Priority 1: A capable, • Improved efficiency and capable State ethical and effectiveness of support developmental State services 35 • Priority 7: A better • Building a maritime Africa and world nation, elevating the oceans economy • Environmental protection – Recovering and maintaining healthy natural environment 2.
Driving a strong and • Priority 2: Economic • Infrastructure build that inclusive economy transformation and job stimulates economic creation growth and job creation • Building a maritime nation, elevating the oceans economy • Accelerating transformation towards greater economic participation 3.
Building and • Priority 3: Education, • Improved efficiency and strengthening skills and health effectiveness of support capabilities of South services Africans • Priority 5: Spatial • Public transport that integration, human enables social settlements and local emancipation and an government economy that works MTSF Pillars Apex Priorities Department’s Strategic 36 Focus Areas • Priority 6: Social • Safety (and security) as cohesion and community an enabler of service safety delivery (Source: Department of Transport (2021) As far as the 2021 SONA is concerned, it accentuated the following strategic objectives that had a bearing on the transport sector:7 • Constructing and rehabilitating N1, N2 and N3 highways; • Supporting a massive increase in local production; and • Using Operation Vulindlela to bring about reforms in the transport sector.
Over the medium-term, the Department plans to give effect to these guiding policies by focusing on:8 • Building and maintaining national and provincial road networks; • Providing passenger rail infrastructure and services; and • Facilitating the provision of integrated public transport networks.
Of significance to the Minister and the Department are the following key outcomes: Outcome Sub-Outcome Outcome 4: Decent Sub-Outcome 1: Productive investment is effectively employment through inclusive crowded in through the infrastructure build programme economic growth • Ensure monitoring of off-takes by end users on the infrastructure programme Outcome 6 – An efficient, Sub-Outcome 1: Regulation, funding and investment competitive and responsive improved economic infrastructure • Establish a Single Transport Economic Regulator (STER) 7 Ramaphosa (2021).
8 Department of Transport (2021a), p.89.

37 • Develop a Private Sector Participation (PSP) Framework for ports and freight rail, removing barriers to entry for private investment and operations within the context of Cabinet-approved policy and with an analysis of the implication of tariffs Sub-Outcome 3: Maintenance, strategic expansion, operational efficiency, capacity and competitiveness of our logistics and transport infrastructure ensured.
• Improve national transport planning to develop long-term plans for transport that synchronise with spatial planning and align infrastructure investment activities of provincial and local government and clearly communicate the State’s transport vision to the private sector • Ensure development and approval of the Integrated Transport Plan • Develop and implement approved plan and improve market share of containers on rail vs road, to ensure that we move road freight to rail • Improve and preserve national, provincial and local road infrastructure • Strengthen road traffic management • Improve public transport • Strengthen institutional arrangements for public transport Sub-Outcome 6: Coordination, planning, integration and monitoring implementation of strategic infrastructure projects (SIPs) in the National Infrastructure Plan.
• SIP 1: Unlocking the Northern Mineral Belt • SIP 3: South Eastern Node and Corridor Development 38 • SIP 4: Unlocking economic opportunities in the North West Province • SIP 7: Integrated Urban Space and Public Transport Programme Outcome 7 – Comprehensive Sub-Outcome 5: Increased access to quality infrastructure Rural Development and Land and functional services, particularly in education, healthcare Reform and public transport in rural areas • Improve transport infrastructure and public transport in rural areas • Access Road Development Plan for improving rural road infrastructure implemented • District municipalities implementing the Integrated Public Transport Network Strategy Outcome 10 – Protect and Sub-Outcome 2: An effective climate change mitigation and enhance our environmental adaptation response assets and natural resources • Develop strategic policy and regulatory frameworks and programmes to promote a low carbon economy • Green Transport Strategy and Implementation Plan formulated and completed (Table 2: Ministers’ Delivery Agreement with the President of the Republic of South Africa – information obtained from the Annual Performance Plan 2019/20 p. 2 – 3.
The Annual Reports of the Department for 2019/20, 2020/21 and 2021/22 did not contain this agreement as was done in the past.

On page 21 of the 2021/22 Annual Report, the Deputy Minister does merely refer to the Minister’s Performance Agreement he signed with the President being the basis for the strategic focus areas guiding the Department’s performance.)
2.1.2 Strategic Outcomes and Oriented Goals of the Department During the period under review, the Department discharged its responsibilities with a view to attaining the following strategic objectives:9 • Safety as an enabler of service delivery; 9 Department of Transport (2022a), pp.

73-97.
39 • Public transport that enables social emancipation and an economy that works; • Infrastructure build that stimulates economic growth and job creation; • Building a maritime nation, elevating the oceans economy; • Accelerating transformation towards greater economic participation; • Innovation that advances efficiencies and supports a continuous improvement model; • Environmental Protection – Recovering and maintaining a healthy natural environment; and • Governance – Greater efficiency, effectiveness and accountability.
In the 2021/22 financial year, the Department aimed to perform its work in line with the following Priority Focus Areas and Performance Outcomes: • Department Priority Focus Area 1: SAFETY as an Enabler of Service Delivery o Sub-Programme: Safer Transport Systems  Road Transport Safety • Improved transport safety and security  Rail Transport Safety • Improved transport safety and security  Civil Aviation Safety • Improved transport safety and security  Maritime Transport Safety • Improved transport safety and security  Public Transport Safety • • Improved transport safety and security Improved public transport safety10 • Department Priority Focus Area 2: PUBLIC TRANSPORT that Enables Social Emancipation and an Economy that Works o Sub-Programme: Public Transport  National Taxi Lekgotla Resolutions Implementation • Improved accessibility, quality and reliability of public transport  Integrated Public Transport Networks (IPTNs) • Improved accessibility, quality and reliability of public transport 10 This outcome is new in 2021/22.
 Rural and Scholar Transport • Improved accessibility, quality and reliability of public transport  Rail Transport • Improved accessibility, quality and reliability of public transport 40 • Department Priority Focus Area 3: INFRASTRUCTURE Build that Stimulates Economic Growth and Job Creation o Sub-Programme: Competitive and Accessible Markets  Road Transport • Increased access to affordable and reliable transport systems • Decent Jobs sustained and created  Rail Transport • Increased access to affordable and reliable transport systems • Decent Jobs sustained and created  Civil Aviation • Decent jobs sustained and created • Department Priority Focus Area 4: Building a MARITIME Nation, Elevating the Oceans Economy o Sub-Programme: Competitive and Accessible Markets  Increased access to affordable and reliable transport systems • Department Priority Focus Area 5: Accelerating TRANSFORMATION towards Greater Economic Participation o Sub-Programme: Competitive and Accessible Markets  Increased access to affordable and reliable transport systems • Department Priority Focus Area 6: INNOVATION that Advances Efficiencies and Supports a Continuous Improvement Model o Sub-Programme: Innovation  Improved competitiveness through adoption of new technology • Department Priority Focus Area 7: ENVIRONMENTAL PROTECTION – Recovering and Maintaining a Healthy Natural Environment o Sub-Programme: Reduction in Greenhouse Gas Emission and Pollution  Emission of Greenhouse Gases reduced  Pollution incidents reduced 41 •
 Department Priority Focus Area 8: Governance – Greater Efficiency, Effectiveness and Accountability o Sub-Programme: Skills Development  Improved sector skills and capacity o Sub-Programme: Functional, efficient and integrated government  Improved governance and strengthened control environment 2.1.3 Challenges experienced in 2021/22 as reported by the Department The outbreak of the COVID-19 pandemic resulted in restrictions that led to the closure of Driving Licence Testing Centres (DLTCs), Registering Authorities (RAs) and Vehicle Testing Centres (VTCs), particularly during Alert Levels 5 and 4, between 26 March 2020 and 31 May 2020.11 These institutions gradually opened from 1 June 2020 depending on their readiness in terms of COVID-19 regulations.
Due to the impact of COVID-19 on service delivery, in terms of limited staff and demand for services, major backlogs were incurred, especially with regard to the renewal of driving licences.12 In addition to this, there was a breakdown of the card production machine during the 2021/22 financial year which further added to the already COVID-19 impact on the backlog.

This then necessitated extensions of validity period of driving licences, in a way to allow the backlog to be cleared.
The vacancy rate in the Department remained a challenge.

During the period under review, a total of sixty-one (61) vacant positions were filled, against a target of fifty (50).13 However, the anticipated decline in the vacancy rate did not materialise due to a high turnover rate and unfunded positions.

The turnover rate was impacted by, amongst other things, the number of deaths of employees, resignations, external transfers and retirements14.

The Department has 11 Department of Transport (2021b), p. 50.
12 Ibid.

13 Department of Transport (2022a), p. 99.

14 Ibid.
14 Ibid.

undertaken to “continue prioritising filling of vacant position to ensure attainment of a 10% or lower rate as prescribed by the State”.15 42 The following were reported in the annual report as challenges experienced by the Department during the year under review, per the Report of the Accounting Officer:16 2.1.3.1 Programme 1: Administration All Information and Communications Technology (ICT) governance structures were reconstituted and met regularly during the period under review.
Audit findings raised by the Office of the Auditor-General of South Africa (AGSA) on ICT governance were fully addressed.

In terms of ICT service delivery matters, improvements are being effected and still work in progress.

Internal controls were monitored in financial and supply chain management (SCM), and in stakeholder coordination and compliance.

Irregular and unauthorised expenditure have been put in check with the Department not incurring any for the financial year.
However, there are a few cases of potential irregular expenditure that are being assessed for verity.

Nine cases of fruitless and wasteful expenditure, mainly as a result of no-shows related to travel, were recorded during the period under review.

One (1) case was written off and eight (8) were transferred to debt.

Vacancy rate in the Department remains a challenge.

A total of sixty-one (61) vacant positions were filled, against a target of fifty (50) for the financial year.
However, the anticipated decline in the vacancy rate did not materialise due to a high turnover rate and unfunded positions.

The turnover rate was impacted by, amongst others, number of deaths of employees, resignations, external transfers and retirements.

The Department will continue prioritising filling of vacant position to ensure attainment of a 10% or lower rate as prescribed by the state.
Revenue losses and regulatory restrictions experienced by the sector, as a result of the COVID- 19 pandemic, impacted heavily on achievement of critical milestones in sector capital 15 Ibid.

16 Department of Transport (2021/22 Annual Report), p26 - 31. infrastructure programmes.

State-Owned Entities (SOEs) impacted include the Passenger Rail Agency of South Africa (PRASA), ACSA, SANRAL and ATNS.
43 2.1.3.2 Programme 2: Integrated Transport Planning The freight to rail agenda is being addressed through the development of the approved Road Freight Strategy and its implementation plan.

A migration plan, which assesses infrastructure readiness, condition and determination of commodities and quantities that could be carried by the rail sector, was also developed.

The establishment of the Transport Economic Regulator (TER) remains a critical target of the Department within the medium-term.
The Economic Regulation of Transport (ERT) Bill is currently being processed in Parliament, and it is anticipated that the Bill will be approved in the new financial year (2022/23).

To ensure an adequate regulatory environment for the implementation of autonomous vehicle technology (AVT) in the country, a legislative gap analysis on the regulation of autonomous vehicles was conducted and a recommendation report has been developed.
This report will guide the required amendment of legislation that will be prioritised within the medium-term.

In the 2021/22 financial year, green procurement guidelines were developed to advance the sector target of reducing Greenhouse Gas emission within the medium-term.

2.1.3.3 Programme 3: Rail Transport As part of ensuring a rail transport sector that is safe and secure, the Rail Safety Bill is currently being processed in Parliament.
Once approved, the Act will guide the implementation of interventions to ensure rail commuters, including rail infrastructure are safeguarded accordingly.

On 23 March 2022, Cabinet approved the White Paper on National Rail Policy that takes a holistic view on the development of the rail system.

This Policy introduces radical structural reforms in the sector and also intends to place rail on a sound footing to play a meaningful role as a backbone of a seamlessly integrated transport value chain.
One of the highlights of the Policy relates to enabling investments in the rail network with specific attention to the exploitation of rail's genetic technologies to achieve renaissance in the following market spaces: heavy haul, heavy intermodal, which includes double-stacked containers, contemporary urban and regional rapid transit, as well as higher-speeds of 160 to 200km/h and high speeds up to 300 km/h.
44 The draft of the High-Speed Rail Corridor Framework was developed during the period under review.

The Framework is due for submission to Cabinet in the 2022/23 financial year.

The Rolling Stock Fleet Renewal Programme has produced thirty-nine (39) new train sets during the 2021/22 financial year.

Thirty-three (33) of the sets have been provisionally accepted while six (6) await fitment of parts before testing.
The total number of train sets produced since the inception of the programme is eighty-five (85).

To date, five (5) priority corridors have been recovered and services have resumed.

Four corridors are currently closed for repairs and will be returned to service within the new financial year.

In KwaZulu-Natal, two corridors (Umlazi-Durban and KwaMashu-Durban), which were impacted by the recent floods, are undergoing infrastructure clean up with a view to resuming services within the financial year.
2.1.3.4 Programme 4: Road Transport Implementation of the National Road Safety Strategy was monitored nationally and in nine provinces.

Regulatory law enforcement interventions were commissioned to improve road safety and reduce road crashes and fatalities.

Reduction of road crash fatalities amounted to 20.02 in the 2021/22 financial year.

In November 2021, the DLCA experienced a machine breakdown due to flooding of the adjacent building, which caused an electrical surge.
As at 20 January 2022, when the DLCA resumed production, the backlog in the production of driving licence cards that resulted from the machine breakdown was 639 000.

As at 11 April 2022, a total of 628 000 cards had been produced, leaving a balance of 11 000 cards from baseline backlog recorded in January 2021.

The accumulated backlog to the date of reporting was 593 000.

The DLCA is operating day and night shifts to address this backlog and to ensure that all road users have valid driving licenses.
45 National and provincial road networks were rehabilitated and maintained during the period under review.

On the national front, the entire 22 266 km of the SANRAL network was exposed to routine maintenance.

In line with the Provincial Road Maintenance Programme, the provincial road network was exposed to rehabilitation, maintenance, re-surfacing, resealing, blacktop patching, blading and re-gravelling during the period under review.
Over 310 239 job opportunities were reported, with some opportunities being for women, youth and persons with disabilities.

Compliance with the user-pay principle remained optimal, except on the SANRAL network impacted by e-tolling, i.e.

Gauteng Freeway Improvement Project (GFIP).

This section constitutes a small fraction of the SANRAL network.
A decision on the GFIP tariff and funding structure is eminent within the current financial year, primarily to bring certainty to SANRAL’s ability to continue operating as a going concern and also to the user-pay principle as a policy of government.

2.1.3.5 Programme 5: Civil Aviation In the 2020/21 financial year, the South African Civil Aviation Authority (SACAA) initiated the process to review RPAS regulations.
The target is to ensure that the review process is concluded within the medium-term and that the regulatory framework for RPAS is optimised.

Over the medium-term, the Department, in collaboration with SACAA, will optimise the implementation of the Aviation Safety Strategy to ensure that the fatal accidents in general aviation are reduced.
2.1.3.6 Programme 6: Maritime Transport In June 2021, President Ramaphosa announced the decision to corporatise the Transnet National Ports Authority (TNPA) as an independent subsidiary of Transnet.

Following this pronouncement, an interim Board was appointed, and relevant processes given effect to enable the establishment of the TNPA as an independent subsidiary.
The finalisation of this process with the appointment of a permanent Board will give full effect to the provisions of the National Ports Act of 2005.

46 Implementation of Operation Phakisa 3-Foot Plan was also monitored during the period under review.

A draft business case for the establishment of a National Shipping Company was developed as targeted.

During the period under review, the draft National Maritime Security Strategy was developed.
2.1.3.7 Programme 7: Public Transport The implementation of Integrated Public Transport Networks (IPTNs) in various cities has not been without problems.

Capacity challenges in some of the cities have given rise to complications that have either delayed or stalled progress.

During the 2021/22 financial year, a total of (7) cities are operational and are working towards expanding current services.

Operating cities carry a combined average weekday passenger trips of 117 305.
These cities include the City of Cape Town, George, Ekurhuleni, Johannesburg, Tshwane, Nelson Mandela Bay and Polokwane.

Rustenburg, Mangaung and eThekwini are working towards the launch of new services.

eThekwini is currently experiencing challenges due to unsuccessful negotiations with taxi operators on the affected routes.
As part of the implementation of the National Taxi Lekgotla resolutions, the Department has also initiated the establishment of a Panel of Eminent Persons to lead discussions regarding unity and leadership within the taxi industry with a view to finding a lasting solution to the ongoing leadership dispute and bring stability.

The key deliverable of this Panel of Eminent Persons would be to find a lasting solution to the ongoing divide that plagues the industry and bring about unity and stability.
Members of the Panel were appointed within the period under review.

47 Regarding implementation of the Revised Taxi Recapitalisation Programme, the number of vehicles scrapped was negatively affected due to slow uptake by the industry.

A marketing drive to sensitise the public about taxi scrapping was delayed in different provinces due to the COVID-19 pandemic.

A total of 2 234 old taxi vehicles (OTVs) were scrapped during the period under review.
To ensure that uptake by the industry is improved, and that more OTVs are scrapped, the Department and TRSA will communicate directly with Taxi Associations and qualifying individual operators to get them to bring their old taxis for scrapping.
The Shova Kalula (Ride Easy) bicycle project is a national bicycle programme initiated by the Department as a pilot project in 2001, with the purpose of promoting and maximizing the use of bicycle as a low-cost mobility solution to poor communities, particularly in the rural areas.

The project provides for distribution of bicycles to learners from poor households who walk more than 3 kilometres to their educational resource centres.
During the period under review, a total of 11 349 bicycles were distributed across all nine (9) provinces.

To ensure sector compliance with the implementation of the National Strategic Plan (NSP) on Gender Based Violence and Femicide (GBVF), the Department, in collaboration with the South African National Taxi Council (SANTACO), provides an annual operational funding of R26 million, increased annually, to support some taxi industry programmes.
Amongst the programmes supported by SANTACO, are campaigns to educate drivers on GBVF and to empower them in the job market.

The taxi industry has also partnered with the Department of Women, Youth and Persons with Disabilities and Sonke Gender Justice to educate their members on GBVF matters.

A Memorandum of Understanding (MoU) was signed in December 2021 to formalise this initiative and to set out the programme of action.
2.1.3.8 Key policy developments and legislative changes During the year under review, the Department indicated the following key policy developments and legislative challenges:17 • The decision to corporatise the TNPA as an independent subsidiary of Transnet was announced by President Ramaphosa in June 2021.

Following this pronouncement, an interim Board was appointed, and relevant processes given effect to enable the 17 Department of Transport (2021/22 Annual Report) p. 72.
48 establishment of the TNPA as an independent subsidiary.

The finalisation of this process with the appointment of a permanent Board will give full effect to the provisions of the National Ports Act of 2005.
• To address regulatory and capacity gaps that relate to South Africa’s need for an efficient and cost-effective transport system, in order to raise economic growth and meet its social goals, the Department is in the process of finalising the Economic Regulation of Transport (ERT) Act, which will affect the establishment of a Transport Economic Regulator (TER).
• National Road Traffic Amendment Bill is currently serving before the Portfolio Committee of Parliament and finalising the A-list of the Bill for adoption and approval.

The Bill seek to reduce the blood alcohol limit to zero with the result that no one on the road should be operating a motor vehicle whilst under the influence of alcohol and drugs.
• The Railway Safety Bill seeks to improve the regulatory framework regulating safety in the Republic of South Africa in order to improve safety for passenger and freight.

The Bill was processed through Cabinet and introduced to Parliament in March 2021.

• The White Paper on National Rail Policy was approved by Cabinet in March 2022.

The implementation of the Nation Policy will drive reduction in the cost of freight services at national level through the encouragement of modal shift from road to rail.
It will also drive passenger mobility through higher levels of service and quality of service with increased intermodal connectivity.
2.1.3.8.1 Institutional Policies and Strategies over the five-year planning period a) National White Paper on Transport Policy, 1996 The vision of the White Paper on National Transport policy is to provide safe, reliable, effective, efficient, and fully integrated transport operations and infrastructure which will best meet the needs of freight and passenger customers at improving levels of service and cost in a fashion which supports Government strategies for economic and social development whilst being economically and environmentally sustainable.
b) White Paper on National Policy on Airports and Airspace Management, 1997 This is a national policy response on airports and airspace management as a result of far- reaching changes which have occurred in South Africa, in general, and in civil aviation, in particular.

This policy is currently under review to address recent developments and resultant policy gaps.
49 c) National Commercial Ports Policy, 2002 The aim of this policy is to ensure an internationally competitive port system informed by the knowledge that efficient ports are known to be catalysts for increased trade, and thus provide a comparative advantage for international trade.
Thus, this policy aims to ensure affordable, internationally competitive, efficient and safe port services based on the application of commercial rules in a transparent and competitive environment applied consistently across the transport system.

The importance of this policy is further highlighted by the fact that globalisation pressures make it essential that nations integrate their transport systems into the global logistics network.
Ports are naturally being incorporated into this changing system and have to adjust to the new challenges and environment.

d) Taxi Recapitalisation Policy, 2009 The Taxi Recapitalisation Policy (TRP) is an intervention by Government to bring about safe, effective, reliable, affordable and accessible taxi operations by introducing New Taxi Vehicles designed to undertake public transport functions in the taxi industry.
A revised fiscal framework also accounts for substantial revenue losses emanating from the economic shock of COVID-19 pandemic and the subsequent lockdown.

The lockdown significantly delayed planned programmes, projects and expenditure in the sector.
As a result, the Department, Provinces and Municipalities, in their revised budget applications, would have to show delayed milestones and targets, the impact on their operational revenue and how they intend to mitigate the risk towards desired recovery and achievement of medium- to long-term outcomes.
The revision exercise thus focused, amongst others, on downscaling and/or reducing performance targets, particularly where programmes were impacted by budget cuts; and also, on prioritising interventions critical in mitigating the impact of the COVID-19 pandemic, thus 50 saving lives of the South Africans, where necessary.
In revising performance targets, the NDP, the seven (7) apex priorities of the 6th Administration and the MTSF 2019 – 2024 remained the authoritative documents from which the exercise took guidance.

For the remainder of the current Medium Term Expenditure Framework (MTEF), baseline allocations would be used to provide for the rapidly changing economic conditions and enable spending on the COVID-19 response.

This proposed modification would then be in categories.
• Category 1 will see suspension of funds and reallocation, where applicable.

In this regard and as stated, the baselines of allocations to sector Departments will be reduced.

• Category 2 will see reprioritisation of funds within the budget votes.

To this effect, funds will be shifted across programmes and/or budget items and reprioritised to where there are needs.
As stated, COVID-19 had a negative impact on the plans and operations of the Department and sector entities, particularly for the 2020/21 financial year.

The effects of the impact of the pandemic would then have to be mitigated for the medium-term through revision of the Strategic Plan and medium-term targets.
2.1.3.8.2 Legislative challenges The Department had 8 Bills that were processed during the year under review or still currently before Parliament and they are listed as follows: 1) Civil Aviation Amendment Bill, 2018 [B44-2018] (introduced 14 November 2018, Bill processed and passed by the National Assembly on 11 May 2021 – National Council of Provinces passed the Bill on 14 December 2021 – on 31 March 2022 the Bill was signed by the President and enacted as Act (No.
22 of 2021); 2) Economic Regulation of Transport Bill, 2020 [B1-2020] (introduced 31 January 2020 and currently in the NCOP process); 3) Transport Appeal Tribunal Amendment Bill, 2020 [B8-2020] (introduced 29 May 2020 and still before the Committee); 4) National Road Traffic Amendment Bill, 2020 [B7-2020] (introduced 29 May 2020 and currently in the NCOP process); 51 5) Railway Safety Bill, 2021 [B7-2021] (introduced 19 March 2021 and still before the Committee); 6) National Land Transport Amendment Bill, 2016 [B7-2016] (introduced 15 April 2016 and referred back to Parliament by the Presidency on 9 September 2021 to address the reservations about the Bill’s constitutionality – under consideration by the NA); 7) Marine Pollution (Prevention of Pollution from Ships) Amendment Bill [B5-2022] (introduced 31 January 2022 and still before the Committee); 8) Marine Oil Pollution (Preparedness, Response and Cooperation) Bill [B10-2022] (introduced 10 March 2022 and still before the Committee).
2.1.4 Achievements highlighted and significant events and/or projects for the year 2021/22 as reported by the Department The following is a summary of the reported notable progress, milestones and achievements by the Department during the year under review:18 • In pursuit of the transport sector’s desired outcome of an affordable, safe, universally accessible and reliable public transport, seven (7) cities (Johannesburg, Tshwane, Ekurhuleni, Cape Town, George, Polokwane and Nelson Mandela Bay) operated IPTNs and carried a combined 117 305 average passenger trips.19 • The Annual Report on the PRASA Rail Modernisation Programme was developed.20 • The Analysis Report on jobs created through PRASA Infrastructure programmes was developed.21 • The Annual Report on PRASA rail operations was developed.22 • The Annual Report on the implementation of programmes addressing the violence against women, youth and persons with disabilities in the rail transport sector was developed.23 18 Department of Transport (2021/22 Annual Report), p. 98 - 193.
19 Department of Transport (2022a), p. 179.

20 Department of Transport (2022a), p. 106.

21 Department of Transport (2022a), p. 108.

22 Department of Transport (2022a), p. 109.

23 Department of Transport (2022a), p. 110.
• The National Household Travel Survey (NHTS) reports were produced for all the 52 provinces.24 • The Draft Regional Integration Strategy was developed.25 • The Freight Migration Plan (Road to Rail) was developed.26 • The High Speed Rail (HSR) Corridor Framework was approved for submission to Cabinet.27 • The Annual Monitoring Report on the implementation of the National Road Safety Strategy was developed.28 • The Draft Road Infrastructure Funding Policy was developed.29 • The existing Public Transport Funding Model was reviewed.30 • The framework for the taxi industry ownership of the Taxi Scrapping Entity was developed.31 • The Annual Monitoring Report on Public Transport Operations was monitored in provinces.32 3.
OVERVIEW AND ASSESSMENT OF FINANCIAL PERFORMANCE 3.1 2018/19 Table 3: Appropriation Statement for 2018/19 Programme 2018/19 2017/18 R’000 Final Actual Over/Under Final Actual Over/Under Approp.

Expenditure Expenditure Approp.

Expenditure Expenditure R’000 R’000 R’000 R’000 R’000 R’000 Programme 1: 434 094 379 809 54 285 415 254 407 466 7 788 Administration 24 Department of Transport (2022a), p. 129.

25 Department of Transport (2022a), p. 130.

26 Department of Transport (2022a), p. 131.


27 Department of Transport (2022a), p. 137.

28 Department of Transport (2022a), p. 143.

29 Department of Transport (2022a), p. 150.

30 Department of Transport (2022a), p. 187.

31 Department of Transport (2022a), p. 188.

32 Ibid.

Programme 2018/19 2017/18 R’000 Final Actual Over/Under Final Actual Over/Under Approp.

Expenditure Expenditure Approp.
Expenditure Expenditure R’000 R’000 Programme 2: 89 982 71 375 R’000 18 607 R’000 R’000 83 075 76 360 R’000 6 715 53 Integrated Transport Planning Programme 3: 15 887 279 15 873 693 13 586 19 333 199 14 515 158 4 818 041 Rail Transport Programme 4: 30 098 760 30 067 108 31 652 27 138 175 27 118 369 19 806 Road Transport Programme 5: 182 253 167 718 14 535 171 165 166 149 5 016 Civil Aviation Transport Programme 6: 129 126 123 993 5 133 128 417 109 327 19 090 Maritime Transport Programme 7: 13 009 800 12 509 758 500 042 12 525 895 12 277 572 248 823 Public Transport Direct charge 10 200 2 976 7 224 10 000 5 559 4 441 against Revenue Fund Total 59 841 494 59 196 430 645 064 59 805 180 54 675 960 5 129 220 (Source: Department of Transport Annual Report for 2018/19 (2019b).
For the 2018/19 financial year, the Department had received a budget of R59.8 billion and of this amount, it spent R59.2 billion by the end of the financial year, that is 98.9% of the available budget, up from R54.7 billion (or 91.4%) of the R59.8 billion it had spent by the same time in 2017/18.

The Department underspent a total amount of R645.1 million, translating into an under-expenditure of 1.1%.

The biggest under-expenditure was in the Public Transport programme.
Of the R13 billion that had been allocated to this programme, the Department had spent R12.5 billion (or 96.2%) by the end of the reporting period, indicating an under-expenditure of R500 million (or 3.8%).
The Compensation of Employees (CoE) was underspent in all programmes due to posts that could not be filled.33 54 3.2 2019/20 Table 4: Appropriation Statement for 2019/20 Programme 2019/20 2018/19 Final Actual Over/Under Final Actual Over/Under Appropriation Expenditure Expenditure Appropriation Expenditure Expenditure R’000 R’000 R’000 R’000 R’000 R’000 Programme 1: 419 337 412 741 6 596 434 094 379 809 54 285 Administration Programme 2: 152 936 139 950 12 986 89 982 71 375 18 607 Integrated Transport Planning Programme 3: 16 560 839 16 560 238 601 15 887 279 15 873 693 13 586 Rail Transport Programme 4: 33 295 501 33 285 865 9 636 30 098 760 30 067 108 31 652 Road Transport Programme 5: 224 345 178 820 45 525 182 253 167 718 14 535 Civil Aviation Transport Programme 6: 135 250 132 879 2 371 129 126 123 993 5 133 Maritime Transport Programme 7: 13 416 923 13 178 118 238 805 13 009 800 12 509 758 500 042 Public Transport Direct charge 10 424 2 614 7 810 10 200 2 976 7 224 against Revenue Fund 33 Department of Transport (2019b), p. 35.
Programme 2019/20 2018/19 Final Actual Over/Under Final Actual Over/Under Appropriation Expenditure Expenditure Appropriation Expenditure Expenditure R’000 R’000 R’000 R’000 R’000 R’000 Total 64 215 555 63 891 225 324 330 59 841 494 59 196 430 645 064 (Source: Department of Transport, (2020).
55 For 2019/20, the Department had received a budget of R64.2 billion and of this amount, it spent R63.9 billion by the end of the financial year, that is 99.5% of the available budget, up from R59.2 billion (or 98.9%) of the R59.8 billion it had spent by the same time in 2018/19.

The Department underspent a total amount of R324.3 million, translating into an under- expenditure of 0.5%.

The biggest under-expenditure was in the Public Transport programme.
Of the R13.4 billion that had been allocated to this programme, the Department had spent R13.2 billion (or 98.2%) by the end of the reporting period, indicating an under-expenditure of R238.8 million (or 1.8%).

The Compensation of Employees was underspent in all programmes due to posts that could not be filled.34 3.3 2020/21 Table 5: Appropriation Statement for 2020/21 Programme 2020/21 2019/20 Final Actual Over/Under Final Actual Over/Under Approp.

Expenditure Expenditure Approp.


Expenditure Expenditure R’000 R’000 R’000 R’000 R’000 R’000 Programme 1: 469 780 384 336 85 444 419 337 412 741 6 596 Administration Programme 2: 90 071 57 614 32 457 152 936 139 950 12 986 Integrated Transport Planning Programme 3: Rail 9 599 405 9 584 302 15 103 16 560 839 16 560 238 601 Transport 34 Department of Transport (2020), p. 31.

Programme 2020/21 56 2019/20 Final Actual Over/Under Final Actual Over/Under Approp.

Expenditure Expenditure Approp.
Expenditure Expenditure R’000 R’000 R’000 R’000 R’000 R’000 Programme 4: Road 31 472 160 31 459 985 12 175 33 295 501 33 285 865 9 636 Transport Programme 5: Civil 2 670 849 2 642 208 28 641 224 345 178 820 45 525 Aviation Transport Programme 6: 144 618 135 776 8 842 135 250 132 879 2 371 Maritime Transport Programme 7: Public 12 907 852 12 809 594 98 258 13 416 923 13 178 118 238 805 Transport Direct charge 10 997 - 10 997 10 424 2 614 7 810 Total 57 365 732 57 073 815 291 917 64 215 555 63 891 225 324 330 (Source: Department of Transport, (2021b) For 2020/21, the Department had received a budget of R57.4 billion and of this amount, it spent R57.1 billion by the end of the financial year, that is 99.5% of the available budget.
The expenditure pattern of the Department remains the same as in the previous financial year, when it had spent the same percentage (i.e.

99.5%) of the R64.2 billion allocated to it.

The Department underspent a total amount of R291.9 million, translating into an under- expenditure of 0.5%.

In terms of Rand value, the biggest under-expenditure was in the Public Transport programme.
Of the R12.9 billion that had been allocated to this programme, the Department had underspent R98.2 million (or 0.8%) of its allocation.

Given the size of this programme’s overall budget, the smallest proportion would suggest significant amounts in monetary value.

However, the Integrated Rail Transport Planning programme was the worst performing in terms of proportional expenditure, as it underspent 36% of its budget.
This is a significant decline from the previous year when its managed to spent 91.5% of its budget.

In contrast, the Civil Aviation Transport programme’s expenditure improved in 2020/21.

In 2019/20, its expenditure was 79.7%.

However, expenditure reached 98.9%.
Compensation of Employees was underspent across all programmes, bar the Maritime Transport programme, “due to posts that could not be filled”.35 Goods and Services underspent in most programmes owing to the effects of the COVID-19 pandemic.36 57 3.4 2021/22 Table 6: Appropriation Statement for 2021/22 Programme 2021/22 Final Appropria tion R’000 Actual Expenditure Over/Under Expenditure R’000 R’000 Final Appropria tion R’000 2020/21 Actual Expenditure Over/Under Expenditure R’000 R’000 1: 2: Programme Administration Programme Integrated Transport Planning Programme 3: Rail Transport Programme 4: Road Transport Programme 5: Civil Aviation Transport 6: Programme Maritime Transport Programme 7: Public Transport Direct charge against the National Revenue Fund Total - 10 997 65 437 140 64 906 649 530 491 57 365 732 57 073 815 291 917 (Source: Department of Transport (2022a) For 2021/22, the Department had received a budget of R65.4 billion and of this amount, it spent R64.9 billion by the end of the financial year, that is 99.2% of the available budget.
The expenditure pattern of the Department slightly decreases from the previous financial year, when it had spent R57.1 billion (i.e.

99.5%) of the R57.4 billion allocated to it.

35 Department of Transport (2021), p. 32.

36 Ibid.

58 The Department underspent a total amount of R530.5 million, translating into an under- expenditure of 0.8%.

In terms of Rand value, the biggest under-expenditure was in the Public Transport programme.
Of the R13.1 billion that had been allocated to this programme, the Department had underspent R243.8 million (or 1.9%) of its allocation.

Given the size of this programme’s overall budget, the smallest proportion would suggest significant amounts in monetary value.

However, the Integrated Transport Planning programme was the worst performing in terms of proportional expenditure, as it underspent 22.4% of its budget.
Notwithstanding this, the programme’s expenditure slightly went up compared to the previous financial year when it had managed to spend 64% of its budget.

The Department underspent on the CoE due to vacant posts that could not be filled in the 2021/22 financial year.37 The Annual Performance Plan target of the Department was to fill 50 posts for the period under review.
However, the Department averred that a total of 61 posts had been filled as at the end of the 2021/22 financial year.38 In addition, it stated that most of the posts that had been filled during the financial year were through internal promotions and this included the recorded resignations, retirements and transfers outside the Department which contributed to the underspending on COE.

Goods and Services were underspent across programmes due to non-spending on a number of projects.
The Department reported that the procurement plan had been reviewed and revised to improve the spending on projects.
However, due to delayed procurement, other projects could not be finalised by the end of the financial year “and those projects will be deferred to the coming financial year” (2022/23).39 Other projects were reportedly “done in house and were performed as targeted”.40 3.4.1 Programme 1: Administration By the end of 2021/22, the Administration programme had spent R439.6 million (or 84.2%) of the R521.9 million that had been allocated to it, translating into an under-expenditure of 37 Department of Transport (2022a), p. 300.
38 Ibid.

39 Ibid.

40 Ibid.

59 R82.4 million (or 15.8%).

This was mainly on CoE, and on Goods and Services projects such as:41 • Automation tools for internal audit; • Slow spending on the document management solution; and • Termination of the TRAC project at the University of Stellenbosch, as well as other projects.
The Department reported that what further contributed to the underspending on Goods and Services was the training and development due to less training, travel and subsistence owing to less travelling and venues and facilities as most gatherings were conducted virtually.
The underspending on Transfers and Subsidies was attributed to less intake of students in the universities on bursaries to non-employee and on machinery and equipment as the bid for the procurement of bulk laptops had been approved and a service provider appointed.

However, there was a delay in the delivery “due to global laptop shortages”.42 The project on hardware refresh and switches had been delayed and “will be deferred to the coming financial year”43.
A total amount of R403 million had been shifted from Goods and Services to fund the excess expenditure for the payment of vehicle licence, payment for leave gratuities, as well as for debt written off.44 3.4.2 Programme 2: Integrated transport planning The budget allocation for the Integrated Transport Planning programme stood at R83.4 million and of this amount, the programme had spent R64.7 million (or 77.6%) by the end of the reporting period, translating into an under-expenditure of R18.7 million (or 22.4%).
The under-expenditure was on CoE and on Goods and Services as internal capacity had been utilised for other projects.

However, the following projects, namely, Autonomous Vehicles Regulations, Regional Corridor Strategy and Freight Transport Model “will be deferred to the 41 Department of Transport (2022a), p. 296.

42 Ibid.

43 Ibid.

44 Ibid.


coming financial year”.45 A total amount of R6.8 million was shifted from Goods and Services in this programme to cover the excess expenditure on Programme 5: Civil Aviation.46 60 3.4.3 Programme 3: Rail transport For the 2021/22 financial year, the budget for the Rail Transport programme sat at R16 796 420 billion and of this amount, the programme had spent R16 768 179 billion (or 99.8%) by the end of the period under review.
The programme underspent R28.2 million (or 0.2%) mainly on Goods and Services projects such as the appointment of a Housing Development Agency (HDA) on behalf of the Passenger Rail Agency of South Africa (PRASA) in the City of Cape Town.47 In terms of the implementation plan, the Department committed itself to entering into a Service Level Agreement (SLA) with the HDA as an implementing agent.
This was intended to attend to the establishment of temporary residential areas and the resettlement of households residing in the PRASA railway reserves.

However, there was a delay in the signing of the SLA.48 Other contributing factors to the underspending included projects such as the establishment of the Rail Economic Regulator and the National Rail Bill which was still at consultation stages, as well as other operational costs.49 The Department reported that it had shifted a total amount of R37 000.
00 from Goods and Services to fund leave gratuities under Households, and R13 000.

00 was shifted within the programme to fund debt written off.50 A total amount of R9.9 million was shifted from Goods and Services in this programme to cover the excess expenditure on Programme 5: Civil Aviation.51 3.4.4 Programme 4: Road transport 45 Department of Transport (2022a), p. 297.

46 Ibid.

47 Department of Transport (2022a), p. 297.

48 Ibid.

49 Ibid.

50 Ibid.

51 Ibid.


61 Of the R34.2 billion that had been allocated to the Road Transport programme for 2021/22, it spent R34.1 billion (or 99.7%).

The programme underspent by R98.3 million (or 0.3%) mainly due to the non-payment of the Road Traffic Infringement Agency (RTIA) for the Administration of Adjudication of Road Traffic Offences (AARTO) roll-out as a result of the court judgement to allow for other processes to unfold.
The Department maintained that these funds would be declared as “savings”.52 Other contributing factors were Goods and Services projects such as the Programme Development for S’hamba Sonke, Development of the Road Disaster Management Plan, Road Asset Management “which shall be deferred to the coming financial”, year as well as other projects.53 Funds amounting to R605 000.
00 were shifted within the programme to cover the excess expenditure under Households for the payment of leave gratuities, as well as for debt written off.54 3.4.5 Programme 5: Civil aviation transport By the end of 2021/22, the Civil Aviation Transport programme had spent R546 million (or 96.8%) against R564.3 million that had been allocated to it during the reporting period, indicating an under-expenditure of R18.3 million (or 3.2%).
The programme recorded regression on spending during the period under review, down from 98.9% in 2020/21 when it had spent R2.6 billion against R2.7 billion that had been allocated to it during that reporting period.

The underspending in the Civil Aviation Transport programme was mainly on CoE and Goods and Services due to less than anticipated spending on the Watch Keeping Services project, delays in projects such as the National Aviation Transformation Strategy, Correction Factor: 52 Ibid.

53 Ibid.
53 Ibid.

54 Ibid.

Airports Company South Africa (ACSA) and the Air Traffic Navigation Services (ATNS), as well as other projects.55 62 Other contributing factors included less spending on the Travel and Subsistence due to less travelling and other operational items.

The programme realised a saving on foreign membership fees, as well as non-profit institutions.
A total amount of R31.9 million was shifted from Goods and Services within the programme to fund excess expenditure incurred under building and other fixed structure owing to the payment of the court judgement for the refurbishment of Mthatha Airport, R120 000.00 to households and R2 000.00 for debt written off.56 A total amount of R68 million was shifted from various programmes to fund the excess expenditure due to court judgement against the Department in favour of Ndorum Joint venture for the refurbishment of Mthatha Airport in this programme.57 3.4.6 Programme 6: Maritime transport For the 2021/22 financial year, the Maritime Transport programme had received R148.2 million and of this amount, it spent R115.6 million (or 78%), indicating an under-expenditure of R32.6 million (or approximately 22%).
It is worth noting that there has been consistent regression on the expenditure in this programme in the previous financial years.

For example, in 2020/21, it spent R135.8 million (or 93.9%) of the R144.6 million that had been allocated to it, indicating an under-expenditure of R8.8 million (or 6.1%).
In 2019/20, the Maritime Transport programme had been allocated R135.3 million, and by the end of the financial year, it had spent R132.9 million (or 98.2%), translating into an under-expenditure of R2.4 million (or 1.8%).
The programme underspent by R32.6 million mainly on Goods and Services as a result of less than anticipated expenditure to the Oil Pollution Prevention project.58 The Department asserted that internal capacity was utilised for projects such as the Review of the Merchant Shipping, 55 Department of Transport (2022a), p. 298.

56 Ibid.

57 Ibid.

58 Department of Transport (2022a), p. 298. as well as the development of Maritime Transport policy and legislation.
The programme also underspent on the following projects:59 63 • Feasibility Study on Tug Boat Services; and • Automated vessel clearance.

The Department reported that the Marine Court of Enquiry “will be deferred to the coming financial year”, including the International Maritime Organization (IMO) World Maritime parallel event which had been suspended as a result of the COVID-19 pandemic.
A total amount of R7 million was shifted from Goods and Services in this programme to cover the excess expenditure on Programme 5: Civil Aviation.

3.4.7 Programme 7: Public transport By the end of the period under review, the Public Transport programme had spent R12.8 billion (or 98.1%) of the R13.1 billion that had been allocated to it, translating into an under- expenditure of R243.8 million (or 1.9%).
The programme’s expenditure slightly regressed from the previous financial year when it had spent 99.2% of its budget allocation.

The Public Transport programme’s under-expenditure was mainly on Transfers and Subsidies owing to less intake on the taxi recapitalisation which is demand driven.

The taxi scrapping project is a demand-driven process, wherein qualifying taxi operators decide when and how they will deliver their old taxi vehicles for scrapping.
Some of the identified vehicles were precluded due to the lack of valid operating licences.60 The branch is proposing that a “cut-off” date be proclaimed in order to force the taxi operators to deliver their qualifying old taxis for scrapping.61 Other contributing factors included the underspending on Goods and Services projects such as: • The Public Transport Grant Monitoring; 59 Ibid.

60 Department of Transport (2022a), p. 299.

61 Ibid.
61 Ibid.

• Public Transport Safety Plan; • Implementation of the integrated public transport networks (IPTNs) in district municipalities; and • National Land Transport Information Systems (NLTIS) upgrade, as well as other projects.

64 At the time of the reporting, the Department maintained that the branch had since recommenced with the procurement process for the Public Transport Grant Monitoring project.
However, it had been suspended due to the National Treasury directive to suspend advertisements of tenders following the Constitutional Court ruling on the Preferential Procurement Regulations.62 A total amount of R583 000.00 was shifted from Goods and Services within the programme to fund leave gratuities under Households and debt written off.63 An amount of R44 million was also shifted from Goods and Services in this programme to fund excess expenditure on Programme 5: Civil Aviation.64 3.5 Virements/ Roll Overs 2021/22 Table 7: Virements65 e m m a r g o r P 0 0 0 ’ R i t a s n e p m o C Administration Integrated Transport Planning Rail Transport Road Transport f o n o - - - - d n a s d o o G s e e y o l p m E s e c i v r e S (404) (7 017) (10 037) (605) d n a t s e r e t n I n o t n e R d n a L - - - - 348 (226) - 208 24 579 18 - - - - - l a i c n a n i F r o f s t e s s A l a t o T (226) (6 793) (9 982) s e r u t c u r t S s t n e m y a P 56 17 13 26 62 Ibid.
63 Ibid.

64 Ibid.

65 Department of Transport (2022a), pp.

34-35.
Civil Aviation Transport Maritime Transport Public Transport Total - - - - (31 927) 61 414 120 (7 004) (44 623) - - - 580 - - - 65 38 410 23 68 040 - - 4 3 (7 000) (44 040) (101 617) 61 414 1 651 38 410 142 (Source: Department of Transport (2022a) As previously stated, savings and under-expenditure on Goods and Services were shifted across programmes to cover over expenditure in Programme 5: Civil Aviation to fund the excess expenditure due to court judgement against the Department, in favour of Ndorum Joint venture for the refurbishment of Mthatha Airport in this programme.
A total amount of R101.6 million was shifted from Goods and Services across programmes as follows:66 • R61.4 million to fund interest and rent on land as a result of the long process of the court proceedings in the matter of Ndorum Joint venture for the refurbishment of Mthatha Airport; • R1.7 million to fund Transfers for payment of vehicle licences under provinces and municipalities, as well as transfers to Households for resignations and retirements that could not be anticipated; • R38.4 million to fund building and other fixed structures for funds paid as a result of the court judgment against the Department in favour of Ndorum Joint venture for the refurbishment of Mthatha Airport; and • R142 000.00 to fund debts written off on travel and subsistence due to no-shows, as well as for excess on vehicle damages.
Rollovers were requested as detailed in the table below:67 Table 8: Rollovers Programme R’000 66 Department of Transport (2022a), p. 35.

67 Ibid.

Programme 1: Administration Payment for capital assets: Procurement of bulk laptops to refresh its information technology (IT) hardware assets that have reached their five-year life span or more.
Programme 3: Rail Transport Appointment of a HDA on behalf of the PRASA in the City of Cape Town, to attend to the establishment of temporary residential areas and the resettlement of households residing in the PRASA railway reserves.
Total (Source: Department of Transport (2022a) 66 7 080 20 695 27 775 3.6 Unauthorised, fruitless and wasteful and irregular expenditure 2021/22 3.6.1 Unauthorised expenditure The cost of the electronic National Traffic Information system (eNaTIS) maintenance and operations resulted in unauthorised expenditure of R1.3 billion, which was incurred in 2013/14, 2014/15 and 2016/17.68 Unauthorised expenditure of R980.375 was incurred in 2018/19 as expenditure that had been incurred, but not in accordance with the vote of the programme: Road Transport.
The RTMC took over the eNaTIS with effect from 5 April 2017.

Disciplinary processes commenced pertaining to the unauthorised expenditure that had not been in accordance with the vote of the programme: Road Transport.
The National Treasury wrote a letter to the Standing Committee on Appropriations on the 15 November 2019, to review the unauthorised expenditure for all departments.69 At the time of reporting, the Department contended that no decision had been taken in this regard.70 In addition, it averred 68 Department of Transport (2022a), p. 36.

69 Ibid.

70 Ibid.

that the National Treasury would follow up on the matter.
The Department reported that it had not incurred unauthorised expenditure during the period under review.71 67 3.6.2 Fruitless and wasteful expenditure The Department had forty-seven (47) cases of fruitless and wasteful expenditure, to the tune of R68 561.34 for the 2020/21 financial year.
These consisted, amongst others, of:72 • Two (2) cases amounting to R1 986 to correct the prior error; • Nine (9) cases amounting to R18 896.22 that were added in the 2021/22 financial year; • One (1) case that was written off amounting to R3 132; and • Twenty-four (24) cases that were transferred to debt amounting to R39 347.55.

By the end of the 2021/22 financial year, the department had twenty-nine (29) cases amounting to R42 992.01.
3.6.3 Irregular expenditure The Department had twenty-three (23) cases of irregular expenditure, amounting to R119.3 million, remaining at the beginning of the 2020/21 financial year.
Of these cases:73 • Disciplinary process had started on two (2) cases; • The National Treasury had been requested to condone three (3) cases; • Five (5) cases were awaiting investigation report; • The Accounting Officer had approved recommendations for two (2) cases that involved non-employees; • Four (4) cases were still waiting submissions to the Bid Adjudication Committee (BAC); • Confirmation of disciplinary steps, disciplinary and recovery processes must be started on five (5) cases; and • Two (2) cases had been condoned.
71 Ibid.

72 Ibid.

73 Ibid.
This left a total of twenty-one (21) cases of irregular expenditure, to the tune of R118.3 million, by the end of 2021/22.74 68 3.6.4 Measures put in place to prevent and/or detect irregular expenditure The table below indicates the measures that were indicated in the Annual Report as having been put in place to prevent and/or detect irregular expenditure.75 It was noted that, for the Transport portfolio, irregular expenditure increased from R1.6 million to R1.8 million, and fruitless and wasteful expenditure increased from R 117 million to R 291 million over the past year.
PRASA, ACSA and SANRAL remained the largest contributors to irregular expenditure.

Most of the entities need to implement preventative controls to monitor compliance with legislation especially relating to SCM.

Non-compliance with SCM prescripts is the biggest contributor when it comes to irregular expenditure.

An assessment was done of irregular expenditure where non-compliance with section 217 of the Constitution was identified.
The results indicated that in 84% of the instances, the process had not been transparent and competitive.

Eleven percent (11%) was not equitable and 11% was not fair.

The risk exists that the non-compliance can result in Material Irregularities and the accounting officer/authorities therefore needs to deal with these matters properly with a zero tolerance approach.
The Committee notes the changes in the measures from those which were taken from the previous Annual Reports of the Department that were identical to the measures put in place in the Annual Reports for 2014/15, 2016/17, 2017/18 and 2018/19.

The Committee urges the Department to carefully and closely measure whether the implementation of these measures will result in a reduction in irregular expenditure.
For the entire portfolio, the concern remains valid given that the transport portfolio still incurred irregular expenditure in the current period under review, which would indicate that the previous measures were either insufficient or ineffective or that the Department had not implemented these measures appropriately throughout the transport portfolio.

This concern was shared by the AGSA for the transport 74 Ibid.
75 Department of Transport (2021/22 Annual Report), p. 42. portfolio in their presentation to the Committee and the proposal that the Committee should continue to do oversight on the implementation of these measures.
69 Table 9: Measures put in place to prevent and/or detect irregular expenditure 2017/18, 2018/19, 2019/20, 2020/21 and 2021/22 2017/18 Annual 2018/19 Annual 2019/20 Annual 2020/21 Annual 2021/22 Annual Report Report Report Report Report Measures listed in Measures listed in Measures listed Measures listed Measures listed in the 2017/18 report the 2018/19 in the 2019/20 in the 2020/21 the 2021/22 that were put in report that were report that were report that were report that were place to prevent put in place to put in place to put in place to put in place to and/or detect prevent and/or prevent and/or prevent and/or prevent and/or irregular detect irregular detect irregular detect irregular detect irregular expenditure are as expenditure are as expenditure are expenditure are expenditure are as follows: follows: as follows: as follows: follows: •Where appropriate, cases •Where o Where o Where • Compliance appropriate, cases appropriate, appropriate, cases checking of all of irregular of irregular cases of irregular of irregular requests to be expenditure are referred to the Department’s legal services to determine whether expenditure are expenditure are expenditure are routed to BAC referred to the referred to the referred to the and/or Department’s Department’s Department’s Accounting legal services to legal services to legal services to Officer regarding determine determine determine procurement, any whether any whether any whether any including official can be held liable for the irregular expenditure;
 •Cases of irregular expenditure are referred to the Department’s official can be official can be official can be variations and held liable for the held liable for the held liable for the deviations; irregular irregular irregular expenditure; expenditure; expenditure; • Revised and optimized •Cases irregular of o Cases of o Cases of procurement irregular irregular delegations; expenditure are expenditure are expenditure are referred to the referred to the referred to the • Continuous review of SCM 70
 Directorate: Department’s Department’s Department’s Circulars, Investigations and Directorate: Directorate: Directorate: Policies, Forensics for Investigations Investigations Investigations Delegations and investigation and Forensics for and Forensics for and Forensics for Processes to align when an investigation investigation investigation with new investigation is when an when an when an directives issued required; •Relevant investigation is investigation is investigation is by National required; required; required; Treasury; managers are •Relevant • Relevant • Relevant • Regular issuing requested to take managers are managers are managers are of Contract disciplinary steps requested to take requested to requested to Management against officials disciplinary steps take take Register to all who make or against officials disciplinary disciplinary officials; permits irregular who make or steps against steps against • Extensive expenditure; permits irregular officials who officials who engagement expenditure; make or make or during •The BAC will not consider •The BAC will condoning not consider irregular condoning expenditure until irregular a legal opinion has expenditure until been obtained a legal opinion permits irregular permits irregular Procurement Planning with all expenditure; expenditure; branches; • The BAC • National will not Treasury is consider approached condoning for condoning • Implementation of detailed checklists within the various SCM where applicable has been obtained irregular of irregular processes; and disciplinary where applicable steps were and disciplinary considered; steps were considered; •The contract management •The contract system monitors management all payments system monitors expenditure expenditure until a legal and is only opinion has approached been obtained where once a legal opinion has been obtained applicable where and applicable, disciplinary and disciplinary • Continuous support and engagement with end-users and budget
 controllers; • Guidelines on bid processes issued; 71 against orders that all payments steps were steps were • Segregation of are placed, and against orders that considered; considered; duties will detect are placed, and • The Logis approvals for of payments that will detect exceed the payments contract value; exceed that the contract value; •The contract • The Logis system monitors all payments management •The contract against system will detect management orders that any payments that system will detect are placed, are approved for any payments that and will processing for are approved for detect which no order processing for payments was placed; which no order that exceed system various processes, monitors all at different payments thresholds; against orders • Development of that are process flow placed, and documents and will detect SOP’s to manage payments that SCM processes; exceed the contract value; • The Logis • Continuous engagement with Internal Audit, internal Control •Payments for all was placed; the contract system will and Risk procurements •Payments for all value; must be processed procurements • The Logis via SCM so that must be processed any irregular via SCM so that system will detect any procurement can any irregular payments be detected before procurement can that are payment; be detected before approved for •To prevent the payment; occurrence of not •To prevent the completing the occurrence of not internal order and completing the processing for which no order was placed; requisition forms, internal order and • Payments for the SCM requisition forms, all component does the SCM not make any component does approval not make any documents or approval procurements must be processed via SCM so that detect any payments that are approved for processing for which no order was placed; • Payments for all procurements must be processed via SCM so that any irregular procurement can be detected Management to identify possible risks in view of implementing
 steps to prevent irregular expenditure.
• Where appropriate, cases of irregular expenditure are referred to the department’s legal services to determine whether any official can be 72 letters of documents acceptance letters or of any irregular before held liable for the procurement payment; irregular available until the acceptance can be • To prevent the expenditure.
internal order and available until the detected occurrence of • Cases of requisition forms internal order and before not irregular are completed; requisition forms payment; completing expenditure are and are completed; • To prevent the internal referred to the •Initiatives to train and the order and department’s all officials who •Initiatives to occurrence requisition Directorate: are involved in the train all officials of not forms, the Investigations and approval of who are involved completing SCM Forensics for procurement in the approval of the internal component investigation matters will procurement order and does not make when continue.
matters will requisition any approval investigation an is continue.

forms, the documents or required.

SCM letters of • Relevant component acceptance does not available until make any the internal approval order and documents requisition or letters of forms are acceptance completed; available until the internal order and requisition forms are completed; and • Sundry payments that could managers are requested to take disciplinary steps against officials who make or permits irregular expenditure.
• National Treasury is approached for condoning of irregular expenditure and is only approached once a legal opinion has been obtained where have originated via SCM are checked to confirm the procurement process that was followed.

73 applicable, and disciplinary steps were considered.

• The Logis system monitors all payments against orders that are placed, and will detect payments exceed that the contract value.
• The Logis system will detect any payments that are approved for processing for which no order was placed.

• Payments for all procurements must be processed via Supply Chain Management so that any irregular procurement can be detected before payment.
• To prevent the occurrence of not completing the internal order and requisition forms, 74 the Supply Chain Management component does not make any approval documents letters acceptance or of available until the internal order and requisition forms are completed.

4.
4.

OVERVIEW AND ASSESSMENT OF PROGRAMME PERFORMANCE 4.1 Summary of performance Table 10: Overall Annual Performance Targets Total targets set Targets achieved Targets partially achieved Targets not achieved Success rate Total budget spent (Source: Department of Transport (2022a).
73 59/73 7/73 7/73 80.8% R64.9 billion (or 99.2%) The Committee is still concerned because the performance of the Department when considering the achievement of these targets did not translate into improved service delivery nor was the Department able to meet 100% of the performance targets which it set itself for the year under review.
During the period under review, the Department had set itself seventy-three (73) annual performance targets and of these, it achieved 59, translating into an achievement rate of 75 80.8%.76 It spent R64.9 billion (or 99.2%) of the R65.4 billion that had been allocated to it in 2021/22.

The Department partially achieved seven (7) annual performance targets, and it did not achieve another seven (7).

This indicated an under-achievement rate of 19.2%.
In 2020/21, its achievement rate stood at 87.8%, However, it should be borne in mind that in the previous financial year (2020/21, the Department had set itself fewer (total 49) annual performance targets and of these, it achieved 43.77 4.2 Programme performance 4.2.1 Programme 1: Administration Table 11: Programme 1: Administration: Annual Performance Targets Total targets set Targets achieved Targets partially achieved Success rate Total budget spent 22 18/22 4/22 81.8% R439.6 million(or 84.2%) (Source: Department of Transport (2022a) The Department had set itself twenty-two (22) annual performance targets under the Administration programme, and of these, it achieved eighteen (18), indicating a success rate of 81.8%.78 It spent R439.6 million (or 84.2%) that had been allocated to it in the Administration programme during the period under review.
The three (3) annual performance targets that the Department partially achieved in the programme were the following:79 1.

100% responses to parliamentary questions 76 Department of Transport (2022a), pp.

100-153.

77 Department of Transport (2021b), pp.

79-162.

78 Department of Transport (2022a), pp.

100-119.

79 Ibid.
76 While the Annual Report on the status of responses to parliamentary questions had been developed as targeted, the report for the period from February 2021 to December 2021 indicated the following:80 • One hundred and seven (107) questions, comprising ninety-seven (97) written and ten (10) oral, were received from the National Assembly (NA), and of these:81 o One hundred and four (104) questions were responded to; o Three (3) questions were not answered; o 97% response rate to NA questions; • Forty-seven (47) questions were received from the National Council of Provinces (NCOP); and of these: o Forty-six (46) questions were responded to; o One (1) question was not responded to; o 98% response rate to the NCOP questions.
2.

Analysis Report on jobs created through PRASA Infrastructure Programmes During the reporting period, the Department had set itself a target of creating 10 000 jobs through the PRASA Infrastructure programmes.

However, by the end of the period under review, the report indicated that:82 • A total of 1 154 jobs had been created through the Rolling Stock Renewal Programme.

This consisted of 414 women, 809 youth and 16 persons with disabilities.
• Additional jobs were also recorded through the signalling programme in Gauteng and Western Cape.

• Adherence to COVID-19 restriction protocols resulted in PRASA contracting 370 platform marshals.

3.

Analysis Report on PRASA Rail Operations In the 2021/22 financial year, the Department had set itself a target of having an Analysis Report on PRASA Rail Operations developed, and part of this target was to have 69 million passenger rail trips made.
While the Department had developed the Analysis Report on 80 Department of Transport (2022a), p. 101.

81 Ibid.

82 Department of Transport (2022a), p. 108.

PRASA Rail Operations by the end of the reporting period, only 16.7 million passenger rail trips had been made.83 The Department attributed its inability to attain the number of rail trips that it had set itself to have been made during the reporting period to repair works on some corridors owing to “theft and vandalism of rail infrastructure”.84 77 4.
100% compliance to 30-day payment requirement The Annual Report on steps taken to ensure compliance to the 30-day payment requirement had been developed, as targeted.
However, the report indicated that thirty-three (33) invoices had not been paid within 30 days as prescribed during the period under review.85 Providing the reasons for deviating from the set target, the Department contended that:86 • Five (5) invoices were processed late due to the Travel with Flair (TWF) payments that had been prioritised and staff who had been on leave during the festive period (December 2021 and January 2022); and • Sixteen (16) invoices had been paid late due to the requirement for Supply Chain Management (SCM) officials to isolate.
4.2.2 Programme 2: Integrated transport planning Table 12: Programme 2: Integrated Transport Planning: Annual Performance Targets Total targets set Targets achieved Targets not achieved Targets partially achieved Success rate Total budget spent 7 5/7 1/7 1/7 71.4% R64.7 million(or 77.6%) (Source: Department of Transport (2022a) During the period under review, the Department had set itself seven (7) annual performance targets under the Integrated Transport programme, and it achieved five (5) of them, indicating 83 Department of Transport (2022a), p. 109.
84 Ibid.

85 Department of Transport (2022a), p. 118.

86 Ibid.

a success rate of 71.4%.

The programme’s performance regressed from that of the previous financial year.
In 2020/21, it had set itself five (5) annual performance targets, and it achieved four (4) of them by the end of that financial year, indicating a success rate of 80%.87 78 The one (1) annual performance target the Department could not achieve in this programme was the following:88 • Draft Regulations for Autonomous Vehicle Technology developed The Department attributed its inability to meet the set annual performance target to “prolonged stakeholder consultations”.89 The one (1) annual performance target that the Department partially achieved in this Integrated Transport Planning programme was the following:90 • Economic Regulation of Transport (ERT) Bill approved by Parliament The ERT Bill is still being processed in Parliament.
The annual performance target was partially achieved owing to the “prolonged parliamentary deliberations than was initially anticipated due to the complex nature of the Bill”.91 4.2.3 Programme 3: Rail transport Table 13: Programme 3: Rail Transport: Annual Performance Targets Total targets set Targets achieved Targets not achieved Success rate Total budget spent 5 4/5 1/5 80% R16 768 179 billion (or 99.8%) (Source: Department of Transport (2022a) 87 Department of Transport (2021b).
88 Department of Transport (2022a), p. 128.

89 Ibid.

90 Department of Transport (2022a), p. 129.

91 Ibid.

79 Of the five (5) annual performance targets that the Department had set itself under the Rail Transport programme, it achieved four (4) and it did not attain one (1) annual performance target.92 The Department’s performance regressed in this programme, compared to its performance in 2020/21.
In that financial year, the Department had set itself nine (9) annual performance targets under the Rail Transport programme, and it achieved all of them (or 100%).
The one (1) annual performance the Department could not achieve in the Rail Transport programme was the following:93 • National Rail Bill approved for submission to Cabinet The Department reported that the National Rail Bill was not approved for submission to Cabinet because “the progression of the National Rail Bill was dependent on approval of the White Paper on National Rail Policy by Cabinet”.94 In addition, the Department contended that “in the 2022/23 financial year, the Bill will be prioritised towards approval and assentment into law”.95 The Department spent R16 178 179 billion (or 99.8%) of the R16 768 179 billion that had been located to it in the Rail Transport programme.
4.2.4 Programme 4: Road transport Table 14: Programme 4: Road Transport: Annual Performance Targets Total targets set Targets achieved Targets not achieved Success rate Total budget spent 10 7/10 3/10 70% R34.1 billion (or 99.7%) (Source: Department of Transport (2022a) 92 Department of Transport (2022a), pp.

136-138.

93 Department of Transport (2022a), p. 136.

94 Ibid.

95 Department of Transport (2022a), p. 138.


80 During the reporting period, the Department had set itself ten (10) annual performance targets under the Road Transport programme, and of these, it achieved seven (7), translating into a success rate of 70%.
The annual performance targets that the Department could not attain during the period under review in the programme were the following:96 • Draft National Anti-Fraud and Corruption Strategy for the Road Traffic Environment approved for submission to Cabinet The Deported reported that the National Anti-Corruption Strategy (NACS) could not be submitted to Cabinet because “a resolution was adopted to align the NACS for the Road Traffic Environment with the Cabinet-approved NACS that was published in November 2020”.97 • Analysis Report on the South African National Roads Agency Limited (SANRAL) Road Maintenance Programme The reason provided by the Department for its inability to achieve this annual performance target was the “perceived imminent audit risk”.98 • Analysis Report on jobs created through the SANRAL Road Maintenance Programme Similarly, the reason furnished by the Department for its inability achieve the annual performance target was “the “perceived imminent audit risk”.99 4.2.5 Programme 5: Civil aviation transport Table 15: Programme 5: Civil Aviation Transport: Annual Performance Targets Total targets set Targets achieved Targets partially achieved Targets not achieved Success rate 4 2/4 1/4 1 50% 96 Department of Transport (2022a), pp.
149-151.

97 Department of Transport (2022a), p. 149 98 Department of Transport (2022a), p. 151.

99 Department of Transport (2022a), p. 152.
Total budget spent R546 million (96.8%) (Source: Department of Transport (2022a) 81 Under the Civil Aviation Transport programme, the Department had set itself four (4) annual performance targets, and it achieved two (or 50%) of them, while one (1) was partially achieved and another one (1) was not achieved.100 The annual performance that the Department partially attained in the programme was the following:101 • Analysis Report on jobs created through ACSA Infrastructure Programme o 18 405 jobs While the Analysis Report on jobs created through ACSA Infrastructure Programme had been developed, job opportunities supported were 2 027 lower than the target of 18 405 jobs.
The Department attributed its inability to meet this annual performance target to “under-expenditure of [capital expenditure] CAPEX”.102 The annual performance target that the Department could not achieve in the programme was the following:103 • Draft South African Maritime and Aeronautical Search and Rescue Amendment Bill approved for submission to Cabinet At the time of reporting, the Department asserted that “amendment process could not proceed due to recommendations of the [Office of the State Law Adviser] OSLA […] that the nature and extent of proposed amendments were such that a new Bill be drafted that repeals the principal Act”.
The Department reported that “the process to redraft the Bill has been initiated” and that it “will be prioritised in 2022/23 financial year”.104 The Department spent R546 million (or 96.8%) of the R564.3 million that had been allocated to it in the Civil Aviation Transport programme.

100 Department of Transport (2022a), pp.

160-163.

101 Department of Transport (2022a), p. 160.

102 Ibid.

103 Department of Transport (2022a), pp.

162-163.

104 Department of Transport (2022a), p. 164.
82 4.2.6 Programme 6: Maritime transport Table 16: Programme 6: Maritime Transport: Annual Performance Targets Total targets set Targets achieved Targets not achieved Success rate Total budget spent 10 9/10 1/10 90% R115.6 million (or 78%) (Source: Department of Transport (2022a) During the period under review, the Department had set itself ten (10) annual performance targets under the Maritime Transport programme, and it achieved nine (9).105 This translated into a success rate of 90%.
The Department spent R115.6 million (or 78%) against the R148.2 million that had been allocated to it in the programme during the period under review.
The annual performance target that the Department could not achieve in the Maritime Transport programme was the following:106 • Merchant Shipping Bill approved for submission to Cabinet The Department reported that “the Bill [could] not [be] processed through the ESIEID107 Cluster” owing to “prolonged State Law Adviser processes”.108 In addition, it asserted that “following prolonged engagements with the Office of the State Law Adviser (OSLA), the Bill subsequently concluded the SEIAS process and progressed to the ESIED Cluster”.
Furthermore, the Department undertook that “in the 2022/23 financial year, the Bill will be processed through the ICTS109 Cluster before submission to Cabinet”.110 4.2.7 Programme 7: Public transport 105 Department of Transport (2021b), pp.

147-149.

106 Department of Transport (2022a), p. 170.

107 ESIEID - Economic, Sectors, Investment, Employment and Infrastructure Development.

108 Department of Transport (2022a), p. 170.

109 ICTS - International Cooperation, Trade and Security Cluster.
110 Department of Transport (2022a), p. 176.
83 Table 17: Programme 7: Public Transport: Annual Performance Targets Total targets set Targets achieved Targets partially achieved Success rate Total budget spent 15 14/15 1/15 93.3 R12.8 billion (or 98.1%) (Source: Department of Transport (2022a) The Department had set itself fifteen (15) annual performance targets under the Public Transport programme in 2021/22, and it achieved fourteen (14) by the end of the financial year, indicating a success rate of 93.3%.111 The Department spent R12.8 billion (or 98.1%) of the R13.1 billion that had been allocated to the Public Transport programme.
The annual performance target that was partially achieved by the Department in the programme was the following:112 • Projected scrapping of 3 500 old taxi vehicles A total of 2 234 old taxi vehicles were scrapped during the period under review.113 The Department maintained that the “target is demand driven and dependant on uptake by the taxi industry”.114 5.

HUMAN RESOURCE MANAGEMENT During the year under review, the Department had 876 posts on the approved establishment and of these, 663 had been filled.
The vacancy rate stood at 24.3%.115 111 Department of Transport (2022a), pp.

184-193.

112 Ibid.

113 Department of Transport (2022a), p. 189.

114 Ibid.

115 Department of Transport (2022a), p. 243.

The highest vacancy rate was in the Civil Aviation Transport programme that stood at 31.9%.

The Maritime Transport programme came second, with the vacancy rate of 31.1%.
In the third place, was the Administration programme whose vacancy rate stood at 29.7%.116 84 As at 31 March 2002, the Employment Equity status of the Department was as follows:117 • African males (40.9%); • African females (53.9%); • White males (1.2%); • White females (1.8%); • • Indian males (0.4%); Indian females (0.8%); • Coloured males (0.7%); and • Coloured females (0.7%).

6.
6.

SUMMARY OF 2021 REPORTING REQUESTS During the 2021 BRRR, the Committee requested additional matters for the Department to report on.

On page 222 of the annual report, the Department refers in general to the 2021 BRRR of the Committee.

Unlike in 2020, the Department did not list these reporting requests in its Annual Report for the year under review.

The Department also did not indicate how it responded to these requests in the Annual Report.
The Committee noted that in the course of engagements throughout the year, the Department did address some of these issues.

The Committee is of the view that the Department and its entities must comply with the additional reporting requests contained in its BRRR, and that the failure to do so will not be accepted.
A number of these requests are repeated in this year’s additional reporting requests due to repeat findings by the AGSA, as well as the failure of the Department and its entities to ensure that all of these were reported on and resolved within the set timeframes.

Table 18: Additional Reporting Requests from the 2021 BRRR by the Committee 116 Ibid.

117 Department of Transport (2022a), p. 236.


Reporting matter Action required Timeframe The Department should submit an Written plan from the 15 January 2022 improved Action Plan to address the Department.

85 findings of the AGSA for it and its entities, as well as the implementation of the recommendations made by the Committee in this report.
The Department should submit a Monthly progress written Monthly starting with comprehensive briefing on steps it will briefings from the first report due on 15 be taking to assist in stabilising its Department.

January 2022 entities (including filling of vacancies, conclusion and evaluation of shareholder agreements, improving the efficiency of the shareholder representatives on the boards, closely monitoring the implementation of projects and budget expenditure, etc.).
The Department should submit a Monthly progress written Monthly starting with comprehensive briefing on progress briefings from the first report due on 15 made on the filling of Board vacancies Department.

January 2022 in entities, as well as the filling of all critical posts within the Department and its entities.

The Department should submit a Written briefing from the 15 January 2022 comprehensive briefing on Department.
implementation of the RTRP, to justify the continuation of the programme, to indicate how it will assist with delivering on the outcomes of the Taxi Lekgotla and with specific reference as well to the progress under the programme for purposes implementation of of the recommendations from the Public Protector’s Report on illegal Quantum Van conversions.

The Department should submit Written plan from the Quarterly reports 86 quarterly reports on investigations Department.
underway in the Department and all the entities, with additional emphasis on the finalisation of investigations to resolve the AGSA SCM compliance concerns, lack of consequence management and resolution of past incurred irregular expenditure findings.

within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on pending litigation, Department.
as well as settlements reached and judgments for and against the Department and all the entities.

within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on human resource Department.

management (retentions, secondments, transfers, retirements, training and skills transfers, resignations and dismissals), as well as report on progress in disciplinary matters (including suspensions) in the Department and all the entities.
within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on the achievement of Department.

job creation targets in the Department and all the entities.

within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on the achievement of Department.

within 30 days of the transformation targets in the Department and all the entities.
87 adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on the progress Department.

towards prevention of irregular, fruitless and wasteful expenditure for the Department and all the entities.

within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on the Shova Kalula Department.

project.
project.

within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports within 30 days of the adoption of this report by the NA quarterly reports on the progress of Department.

projects linked with the following grants: PTOG PRMG PTNG RRAMS Coal Haulage Grant Disaster Management Grant The Department should submit Written plan from the Quarterly reports quarterly reports on progress regarding Department.
the Moloto Corridor Project with emphasis on the Road works’ progress and any future discussions on revisiting the feasibility of the Rail Programmes.

within 30 days of the adoption of this report by the NA The Department should submit a Written briefing from the 15 January 2022 comprehensive briefing on the progress Department.

made to address and/or implement recommendations emanating from Committee Oversight Reports during the year.
The Department should submit a Written report from the 15 January 2022 progress report on the finalisation of Department.

the Public Transport Safety Plan.

The Department should submit Written plans from the Quarterly reports quarterly reports on strategies to Department and: within 30 days of the 88 adoption of this report by the NA.
address the financial health status of: C-BRTA RAF PRSA SANRAL PRASA SACAA ACSA ATNS C-BRTA RAF PRSA SANRAL PRASA SACAA ACSA ATNS The Department, together with the C- Written plan from the Quarterly reports BRTA should submit quarterly Department.

progress reports on progress regarding: The implementation of the 1996 SADC Protocol on Transport, Communications and Meteorology; The resolution of the impasse regarding the cross-border movements on the RSA/Kingdom of Lesotho route.
within 30 days of the adoption of this report by the NA The Department, in conjunction with Written briefing from the 15 January 2022 PRASA should submit a Department.

comprehensive briefing on the Werksmans contract from conclusion of the contract in 2015 to the current status of work performed by the firm and include the total expenditure to date relating to the contract in question, as well as the progress on resolving the matters raised in the report.
The Department, together with Written briefing from the 15 January 2022 PRASA, should submit a Department.
89 comprehensive briefing on: - the new Board interventions plan it intends to implement, as well as how this will address the shortages of train sets currently online and how they intend to increase ridership; - The plan in place to ensure that PRASA complies with all RSR directives; - The plan in place to phase out manual authorisation or how they will ensure that the use of manual authorisation will not lead to another train collision or derailment; - The plan to address the concerns raised regarding the asset register, as well as the safety and security on the assets, infrastructure, staff and passengers; The Department, together with the Written plan from the 15 January 2022 DLCA, must submit a comprehensive Department.
plan on how the concerns regarding the card production machine is being addressed, as well as a report on the progress made to finalise and roll-out the proposed new card standards.

The Department, together with Written report from the 15 January 2022 SANRAL, must submit a report on the Department.
agreements entered into and deliverables in relation to the transfer of road maintenance and further 90 planned construction in relation to the Moloto Road Corridor with each of the relevant affected provinces and SANRAL.

The Department, together with Written plan from the 15 January 2022 SANRAL, must submit a Department.

comprehensive plan on managing the fiscal constraints placed on the entity due to the e-tolling GFIP concerns raised.
The Department, together with Written progress report from 15 January 2022 SACAA, must submit a report on the the Department.

progress on the investigation into the aircraft crash involving the Calibration Aircraft of the entity, as well as submit the final report on this crash investigation once it is finalised.

7.

OBSERVATIONS 7.1 Tabling and Reasons for delays or non-tabling of Annual Reports The RTIA, RAF and DLCA did not submit their Annual Reports in time for consideration by the Committee.
The AGSA indicated that the audits of all entities had been finalised, the DLCA did not table their Annual Report in time, the RTIA did not table their Annual Rreport due to a dispute with the audit outcome and the RAF Annual Report was not tabled due to a judicial review that was still pending finalisation.

The AGSA presented their audit reports for all entities and the Department, except for the RAF.
The Minister, 13 October 2022, tabled the following reasons for the delay in tabling the RAF Annual Report: - RAF 91 o The RAF has experienced unforeseen challenges in the finalisation of the 2021/22 audited financial statements and annual report.

This is mainly due to a dispute process on the 2020/21 annual financial statements which resulted in a judicial review against the AGSA.
The outcome of the judicial review will have an impact on the 2021/22 annual financial statements and annual report which has invariably led to both the RAF and AGSA needing additional time to finalise the 2021/22 audit.

o It is against this background that I humbly request your office to grant a further extension for the tabling of the RAFs 2021/22 annual report.
The Committee noted that the AGSA indicated that the audit of RTIA had been finalised, however, the annual financial statements were not tabled in time for this report due to a dispute of the audit outcome.

At the time of compiling this report, the Minister had not tableed the reasons for the failure to table the DLCA and RTIA Annual Reports.
The Committee voiced its dissatisfaction with the lack of reasons provided for the failure to table the RTIA and DLCA Annual Reports – it was the third consecutive year that RTIA and second consecutive year that RAF did not table their reports in time for the BRRR process.

The continued dispute between the RAF and the AGSA is noted and the Committee hopes that the outcome of this dispute will be expedited since this has led to the entity not tabling their Annual Reports for two consecutive years.
The Committee noted with concern, through the presentation by the AGSA, that once more there is non-tabling linked to a dispute of the RTIA audit outcomes.

The RAF, RTIA and DLCA 2021/22 Annual reports remained outstanding at the time of the adoption of this report by the Committee.
7.2 Opinions expressed by the AGSA: Audit Outcomes for the Transport Portfolio 7.2.1 Summary of AGSA findings for the Department specifically The overall outcomes in the transport portfolio has slightly improved when compared to the prior year.

During the period under review, the Department received an unqualified audit opinion with findings.
The AGSA made the following findings specific to the Department: 118 92 7.2.1.1 Consequence Management The AGSA was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against some of the officials who had incurred irregular expenditure, as required by section 38(1)(h)(iii) of the Public Finance Management Act (PFMA) (No.1 of 1999).
This was due to proper and complete records that had not been maintained as evidence to support the investigations into irregular expenditure.

This related to five cases from thirteen (13) cases that were identified in the prior year that had not been adequately addressed.119 7.2.1.2 Internal Control Deficiencies Although management had made progress in addressing consequence management cases, there were five cases which were still not adequately addressed.
Management did not adequately review and monitor compliance with applicable laws and regulations to ensure that non- compliance with consequence management legislation was promptly identified and addressed.120 7.2.1.3 Investigations The Special Investigations Unit (SIU) conducted an investigation into the procurement of personal protective equipment (PPE) to the taxi industry in response to the outbreak of the COVID-19 global pandemic in respect of the National State of Disaster, as declared by Government Notice No.
313 of 15 March 2020.

The investigation spans primarily the period from 1 January to 23 July 2020.

At the date of the AGSA’s report, the SIU had finalised the investigation and concluded that the allegations of impropriety and maladministration were 118 Department of Transport (2022a), pp.

266-270.

119 Department of Transport (2022a), p. 269.

120 Department of Transport (2022a), p. 270. valid.
The AGSA reported that the Department was awaiting the outcome of the review application from the SIU.121 93 7.2.2 AGSA findings for the entire Transport portfolio The Committee noted the following views expressed by the AGSA regarding the audit outcomes of the Transport portfolio: 7.2.2.1 Overview The overall outcomes in the portfolio have slightly improved when compared to the prior year with most of the auditees receiving an unqualified audit opinion with no findings.
This may change once the audit outcome of RAF is submitted.

The portfolio has six audits (C-BRTA, DLCA (although the Annual Report has not been tabled yet), SACAA, RSR, PRSA and RTMC) that have achieved an unqualified audit opinion with no findings (clean).

This is a slight improvement from the prior year due to RTMC improving from unqualified with findings to a clean audit report.

Five auditees (The Department, SAMSA, SANRAL, ATNS and ACSA) received unqualified audit opinions with findings.
Although the Annual Report has not been tabled yet, the AGSA indicated that one entity, RTIA, received a qualified audit opinion with findings.

One auditee, PRASA, received a disclaimer audit opinion with findings.

One auditee in the portfolio, RAF, is still outstanding.
The factors that contribute to clean audit outcomes are: • Leaderships oversight that is entrenched in the organisation; • The constant monitoring that takes place at all levels; • Internal audits effectively execute their mandate with the thorough follow-up of audit action plans and monitoring the implementation of actions to address prior year audit findings; 121 Ibid.
• The Boards, through the audit committees, monitor the implementation of the action plans to address prior year audit findings; and • Leadership culture that is committed to taking action to address any findings identified supported by adequately resourced and skilled staff.

94 These entities have effective governance structures that ensure that actions are taken to address audit findings and are supported by adequately resourced officials.
Going forward, the focus of these entities should be on maintaining clean administration and achieving strategic objectives and service delivery mandates to ensure effective and efficient delivery of services to the citizens.

The big entities in the portfolio should replicate these best practices to achieve clean administration for the portfolio as a whole.
All the entities with clean audit outcomes achieved their key indicators, except for DLCA which did not achieve on the indicator relating to the number of days taken to produce driving license cards.

This was because of the breakdown of the card production machine due to flood damage, as well as the fact that the machine has long exceeded its useful life cycle.
The AGSA indicated the following regarding PRASA: • The overall audit outcome of PRASA remained disclaimed with material findings on compliance with laws and regulations.

The financial statements were disclaimed because of material misstatements relating to property, plant and equipment (assets), commitments, prior period error disclosures, fruitless and wasteful expenditure and irregular expenditure.
PRASA managed to resolve three areas that formed the basis of disclaimer in the prior year, namely capital subsidy and grants, statement of comparisons of budgets and actual and the risk management disclosure note.

This is indicative of the commitment of leadership to turn around the audit outcome.
Capacity constraints, instability in key positions, inadequate reviews, as well as the late implementation of the audit action plans are some of the factors contributing to the repeat disclaimer areas not having been fully addressed in the current year.

The Committee urges the Board and management to continue to prioritise the disclaimer areas and develop and monitor action plans to ensure that there is an improvement in the audit outcomes of the entity going forward.
95 • PRASA is commended for producing an annual performance report (APR) with no material findings on the usefulness and reliability of key performance indicators and targets.

However, the entity has not achieved on key performance indicators and targets that relate to its core mandate.

The Committee recommends that specific focus be given to implementing interventions that will enable the entity to achieve on its core mandate and ensure that there is service delivery to the citizens.
• Similar to the previous year, material findings relating to non-compliance with legislation were noted in the areas of annual financial statements, expenditure management, procurement and contract management, as well as consequence management.

In the current financial year, the number of findings on procurement and contract management decreased significantly in as far as PPPFA evaluation, CIDB and local content compliance is concerned.
The sustainability thereof should, however, be considered in light of the level of procurement in 2021/22 which were significantly lower than in previous years.

Intervention is still required to ensure that all goods, works or services are procured through a procurement process which is fair, equitable, transparent and competitive, as required by section 51(1)(a)(iii) of the PFMA.

• PRASA should implement a comprehensive turnaround plan to ensure improved audit outcomes and service delivery.
This should include creating stability at executive management level, fully capacitating critical units, effective and efficient procurement and fast tracking depot and infrastructure modernisation.

Although PRASA has multiple action plans, these need to be consolidated into a comprehensive turnaround plan.

On governance/stability, the AGSA indicated the following: • The instability at board/executive management level over the years had a negative impact on governance in the portfolio.
This contributed to service delivery challenges in some entities and the portfolio’s inability to sufficiently implement audit action plans to address controls deficiencies, resulting in the portfolio not improving the audit outcomes.

The AGSA has noted positive progress in the filling of vacancies at Board level and executive management, as well as DDG positions at the Department.

This will go a long way towards enhancing governance, accountability and oversight in the portfolio.
The executive authority should prioritise the appointment of the new DG at the Department, as well as the filling of the CEO vacancies at SAMSA and SANRAL.

The organisational structure for RTIA should also be approved urgently so that the agency can fill key management positions.

At PRASA, the executive management should be stabilized and key position such Group CEO, Group CFO, Group CPO, Group Chief Audit Executive, currently filled in an acting capacity, should be permanently filled.
96 On expenditure management, the AGSA indicated the following: • Irregular expenditure increased from R1.6 million to R1.8 million, and fruitless and wasteful expenditure increased from R117 million to R291 million over the past year.

PRASA, ACSA and SANRAL remained the largest contributors to irregular expenditure.

Most of the entities need to implement preventative controls to monitor compliance with legislation, especially relating to SCM.
Non-compliance with SCM prescripts is the biggest contributor when it comes to irregular expenditure.

An assessment was done of irregular expenditure where non-compliance with section 217 of the Constitution was identified.

The results indicated that in 84% of the instances, the process had not been transparent and competitive; 11% was not equitable and 11% was not fair.
The risk exists that the non-compliance can result in Material Irregularities and the accounting officer/authorities therefore needs to deal with these matters properly with a zero tolerance approach.

On the quality of submitted financial statements and annual performance reports, the AGSA indicated the following: • Eight auditees (Department, RTMC, DLCA, PRSA, SACAA, RSR, C-BRTA, and ACSA) submitted financial statements free of material misstatements.
This is an improvement from the prior year when only five auditees (C-BRTA, RSR, SACAA, PRSA and DLCA) managed to submit financial statements that are free of material misstatements.

This can be attributed to improved review and oversight controls.

Three entities (SAMSA, SANRAL and ATNS) had to correct material misstatements identified through the audit process achieve an unqualified opinion.

PRASA, again did not submit financial statements by the legislated date similar to the prior year.
The financial statements were submitted on 30 June 2022 due to late finalisation of asset verification process.

These financial statements contained material misstatements which PRASA could not all correct resulting in a disclaimed opinion.

The key root causes for the errors and/or misstatements in the financial statements are the lack of a proper understanding of the requirements of accounting frameworks and inadequate review by finance management, internal audit and the Audit and Risk Committee.
The accounting officer/authorities should implement disciplined financial reporting structures based on solid accounting and financial management knowledge and enhance review processes of the financial statements to ensure that quality financial statements are submitted for audit.
97 On the financial sustainability/going concern, the AGSA indicated the following: • The financial health of the revenue-generating entities in the portfolio was mostly affected by the impact of COVID-19, however, these entities (ACSA, C-BRTA, SACAA) are expected to recover from the impact of COVID-19 as restrictions have been lifted and the local and global economy return to normal.
A material uncertainty may exist regarding the going concern at RTIA due to the High Court judgement relating to the AARTO Act as disclosed in the Annual Financial Statements.

The agency applied to appeal the judgement.

The Department and the accounting authority should continue to monitor this matter and should assess the impact on the going concern of the agency.
On SANRAL, the AGSA indicated the following: • SANRAL is experiencing liquidity challenges on the toll segment due to motorists resistance to pay e-toll and the impact thereof in generating revenue and its ability to raise funding on the toll segment.
In the current year, the liquidity challenges were exacerbated by the maturing debt within 12 months which SANRAL may not be able to fully service due to the reduction in the borrowing limit and current restrictions on the issue of new bonds or the refinancing of existing bonds.

Over the years, government has used non-toll funds to toll segment in order to manage the liquidity risk, which has a negative impact on the delivery of the road infrastructure mandate as envisioned in the MTSF and NDP.
In the long-term, this will put pressure on the country's fiscal position as the government will need to find funding for these un-earmarked projects.

The Department and SANRAL are recommended to continue engaging the National Treasury and Cabinet to find a sustainable solution.

This includes a permanent solution for the GFIP matter.
On compliance with laws and regulations, the AGSA indicated the following: 98 • The most non-compliance areas were expenditure management, consequence management and material misstatements identified in the financial statements submitted for auditing.

Action plans to address audit findings are developed, but not effectively implemented and not adequately monitored.

Most findings raised are recurring findings.

The portfolio should implement consequence management for continuous non-compliance.
On information technology, the AGSA indicated the following: • The public sector has experienced some cyberattacks which poses a significant cyber security risk which could have an impact on business continuity.

Such attacks were experienced at SAMSA in the prior year and lately at RAF.

The rapid changes in the information technology environment and increase dependence on remote access to key systems makes the portfolio vulnerable to cyber security threats.
The portfolio still struggles with internal controls in the IT governance controls, specifically around network security management, user access management, programme change management.

Action plans should be developed and implemented to improve information technology controls, together with the necessary system enhancements and patches to effectively address the shortcomings identified with regards to the network security.
The dynamics of the discipline requires constant optimisation of security management to mitigate the risk of cyber security vulnerability and threats.

The accounting officer/authorities should also prioritise the filling of critical ITC positions, i.e.

CIOs.
CIOs.

On Material Irregularities (MIs), the AGSA indicated the following: • The Material Irregularity (MI) process is implemented at selected auditees audited by the AGSA that represent a significant portion of the expenditure budget and the irregular expenditure of national, provincial and local government, including state- owned entities.

The selection is also focused on auditees that are key contributors to Government priorities.
• Nine MIs were identified at PRASA in 2018/19 and two potential material irregularity that were identified at SANRAL in 2020/21.

Remedial action was issued to PRASA relating to unfair procurement processes for the purchase of locomotives.

This material irregularity has been resolved as adequate actions were implemented to address the remedial action.
The AGSA will continue to follow up on further actions to be taken, 99 should such be considered deficient in future, the AGSA reserves the right to re-instate this material irregularity.

The actions taken by PRASA to address the other MIs are currently assessed as appropriate and the AGSA is following up on the progress made on the investigation and disciplinary actions.

The potential MIs that were identified at SANRAL have been resolved.
• For 2021/22, ACSA, RAF, SANRAL and PRASA were selected for MI implementation in the transport portfolio.

• For 2022/23, the Department, SAMSA and RTIA will be phased in for MI implementation.

On the KwaZulu-Natal flood relief effort, the AGSA indicated the following: • Generally, the reconstruction of transport infrastructure takes longer to complete due to a number of successive activities that have to be completed before actual reconstructive work can commence.
These include visual assessments of the extent of damage, scope determination (which requires geotechnical assessments in many instances), as well as the compilation of comprehensive infrastructure recovery plans.

Some work has already been completed, such as the restoration of PRASA’s Reunion station in KwaZulu-Natal, as well as the embankment between Reunion and Merebank resultantly PRASA was able to extend the service between Durban and Merebank to Isipingo effective 25 July 2022.
Additionally, PRASA’s internal teams have performed clean-up work that became necessary after the floods caused severe mud slides.

Similarly, at SANRAL, immediate interventions to restore mobility have been undertaken.

These include, amongst others, make safe measures clearing of debris, deviation and traffic accommodation.

Furthermore, mobility has been restored on the N2 and N3 highway with some restrictions in sections with major failures.
Notwithstanding these activities, the Committee noted that the progress in the implementation of the flood relief for transport (SANRAL and PRASA) is slow when compared to the implementation plan.

This is mainly as a result of delays encountered in the approval for budget reprioritisation requests and the related changes in implementation plans.
The accounting authority of these entities are recommended to closely monitor the implementation plan to ensure timeous restoration of the infrastructure at the right quality and in a cost effective manner.

The accounting officer of the Department and executive authority are recommended to continue exercising oversight to ensure adherence to the implementation plan.
100 7.2.2.2 Key Messages on Service Delivery and Sector Performance Although the majority of entities are achieving their KPIs, PRASA and SANRAL which utilise the majority of the budget are currently behind in their progress on achieving the outcomes for vision 2024.

The KPIs that were not achieved relate mainly to job creation, major road and rail infrastructure projects.
PRASA’s performance is the lowest at 81% non-achievement and this relate to the key KPIs such as the targeted passenger numbers for Metrorail, full electrical train services, number of Western Cape interlockings commissioned etc.

The key KPIs not achieved by SANRAL relate to network resurfaced, road strengthened, Improved and New (CAPEX) km, number of SMMEs working for SANRAL etc.
The non-achievement is mainly as a result of delays in procurement processes and instability at executive level, especially at PRASA.

With the exception of DLCA, all entities with clean audits have achieved their key KPIs.

DLCA did not achieve its target on timeous production and delivery of license cards due to a breakdown of the production machine from November 2021 to January 2022.
The procurement of a new production machine was dependent on the approval and finalisation of the specifications for the new driving licence card design.

The latter was only finalised after year- end.

The oversight and monitoring indicators would in most cases be achieved, but it does not necessarily result in the required corrective action needed to address negative outcomes/non- achievement of performance indicators and service delivery objectives at the Department and its entities.
In some instances, resource capacity and inadequate skills compromised the quality of monitoring and oversight at programme level.

On service delivery objectives, the AGSA indicated that transport is a fundamental role player in the economic recovery plan and is an enabler of service delivery and infrastructure build, that grows the economy.

The MTSF priority outcomes for the transport sector were set out to achieve the goals as per chapter 4 of the NDP.
The transport sector contributes to the realisation of the vision of improved social and economic development as articulated in the NDP, and priority 1 (economic transformation and job creation) and priority 5 (Spatial Integration, Human Settlements and Local Government) of government’s 2019-2024 MTSF.

These 101 priorities are incorporated in the strategic and Annual Performance Plans of the Department and its entities.
On the performance against MTSF targets and annual performance, the AGSA indicated that generally, they noted that the strategic plans and APPs are aligned with government priorities as contained in the MTSF and NDP.

This will assist government in the implementation of its own plans.

The Department should focus on the implementation of its own plans and exercise effective oversight and monitoring of the delivery of the key indicators by the respective entities.
An assessment was done to evaluate the transport sector’s progress to achieve the 5- year strategic outcomes in relation to the MTSF priorities (priority 2 and 5) to which the transport sector is aligned to.

The assessment did not include all targets in the MTSF, but has factored in only those key to delivering road and rail infrastructure and targets which impact the lived experiences of citizens significantly.
Based on the assessment, SANRAL and PRASA, that receive more than 60% of the budget, are behind on the achievement of MTSF targets.

Amongst others, this relates to road maintenance, passenger trips, delivery of new trains, job creation targets.

Although the majority of the entities are achieving their KPIs, PRASA, DLCA and SANRAL did not achieve all their key performance indicators in the current year relating to their mandates.
The KPIs not achieved relate mainly to the production and delivery of driving licences, as well as major road and rail infrastructure projects.

With the exception of DLCA, all entities with clean audits have achieved their key KPIs.

Both SACAA and RSR have critical responsibility of securing the safety of citizen’s lives.

The Committee noted that both entities did achieve their key indicators.
This was achieved through setting quality standards combined with rigorous monitoring and enforcement action, when necessary.

The non-achievement of infrastructure targets is mainly attributable to project management challenges, reprioritisation due to flood relief initiatives in affected areas, procurement delays and community unrest relating to the community participation in the infrastructure projects.
Instability in leadership also contributed to the non-achievement of targets related to the key indicators at PRASA.

The non-achievement of key indicators at SANRAL and PRASA resulted in significant capital underspending.

R 18.2 billion at SANRAL and R 6.5 billion at PRASA for the current year.
In respect of the Provincial Road Maintenance Grant (PRMG), the developed transversal indicators were not formally implemented during the 2021/22 financial year due to the reprioritisation of the key performance indicators as a result of the COVID-19 pandemic based on a transport sector resolution at the Sector Forum meeting on 17 September 2020.

102 The transversal indicators ensure that there is uniformity in planning and reporting towards the achievement of government and/or sector priorities.
The Department needs to coordinate the development and implementation of standardised/customised indicators in consultation with all stakeholders that reflect key deliverables.

The Department continued to monitor compliance with the Division of Revenue Act (DORA) framework on the PRMG for both physical and social indicators.

Where provinces did not perform, their funds were re-allocated to other provinces.
This was the case at Gauteng, Free State and KwaZulu-Natal where a sum of R 144.6 million was re-allocated to Mpumalanga, Northern Cape, North West and Western Cape.

Northern Cape, Eastern Cape and Free State, did not allocate sufficient funds for road infrastructure and appear to be heavily dependent on the PRMG, due to the provincial treasuries not matching the grant allocation as required.
There are other competing provincial priorities requiring funding that are currently funded by equitable share instead of matching the equitable share for road maintenance in the province.

The under-funding from equitable share for Road maintenance presents a service delivery risk as this has a detrimental impact on service delivery, since the Department cannot address the maintenance backlog timeously.
The Department, as transferring entity, should ensure alignment of monitoring processes to the responsibilities and conditions as articulated in the DORA.

The Department should enhance the internal monitoring mechanisms to ensure strict adherence to the grant conditions, and that any control deficiencies around compliance monitoring are addressed expediently.
On infrastructure, the AGSA indicated that R41.8 billion had been allocated to the transport capital budget for 2021/22 of which 84.4% represents transfers to PRASA, SANRAL and PRMG.

The AGSA executed procedures in line with the DORA conditions and oversight functions exercised by the Department.

Below are the key infrastructure observations.


103 Generally, the AGSA noted that SANRAL construct quality road networks and this can mainly be attributed to the implementation of international best practice and the conformity with the International Federation of Consulting Engineers (FIDIC) conditions.

The AGSA also noted that there are certain projects that were completed without significant delays, for example, the Winburg Interchange to Winburg Station and the Moloto Road upgrade.
Although good project management measures had been put in place by SANRAL, there were instances of project delays and escalation of costs.

This related mainly to the projects that were terminated before completion, namely, the Mtentu bridge and R23 projects.
The escalation of costs is mainly due to instances where SANRAL did not commission valuation and/or assessment of the works onsite to make a determination of the work and cost required to complete the project prior to the appointment of the replacement or new contractor.

This resulted in SANRAL incurring additional cost on some of the delayed projects.

SANRAL needs to find a strategy to minimize the impact of delays on the implementation of the planned targets.
They need to develop an action plan to urgently address the non-performance, delayed projects.

This should include, among others, fast tracking of procurement, continuous engagement with community and other stakeholders causing disruptions etc.

PRASA has entered into a contract with Gibela as part of the Rolling Stock Renewal Programme to deliver 600 new trains by 2030.

By June 2022, PRASA had received 105 trains to the value of R 9.8 billion.
These trains are currently vastly under-utilized and stock piled due to PRASA’s inability to bring the new trains into operation.

The under-utilization is due to the lack of infrastructure development.

The urgent completion of the rail infrastructure is therefore critical for deployment of trains and ultimate service delivery.

PRASA should ensure that the rail infrastructure development is aligned to the production of new trains to ensure optimal utilisation of the new fleet.
PRASA has not been able to verify the Economic Development (ED) Obligations in the Gibela contract.

The ED obligations and targets form a significant part of Gibela’s deliverables in terms of the agreements.

The obligations are measured in employee numbers (indicators such as B-BBEE and training), percentage of localisation and rand value spending on items such as skills development and ED contributions in the rail sector when compared to the total contract value.
As a result, contractual remedies (penalties) available per the contract in the event of non-performance by Gibela could not be determined and, if necessary, enforced.

This is mainly due to capacity constraints within the project management team responsible for this project.

PRASA should therefore prioritise the capacitation of the project management division to ensure that there is adequate monitoring and ED obligations are adhered to.

104 PRASA’s infrastructure is also targeted by vandalism and theft.
Crime related incidents at PRASA reached an all-time high in November 2019 in the wake of the cancellation of irregular security contracts without appropriate alternate measures in place.

High levels of incidents continued during the COVID-19 lockdown during the first half of 2020, however, measures put in place by PRASA since then have resulted in a marked decrease in reported asset related crimes.

Vandalism and theft continue to have a negative impact on service delivery at PRASA.
PRASA should continue to collaborate with Transnet and the law enforcement agencies on security management to mitigate the vandalism of the rail infrastructure.

On PRMG, the AGSA identified project management, cost management and grant utilisation related findings at various provinces.

For example, a cost management finding was raised for an overpayment of R13.1 million made to the contractor in the Eastern Cape.
In the North West, the PRMG grant was not used for PRMG projects, but was instead used for upgrade and construction of new assets.

Five projects were put on hold due to the termination of contractors and related legal action, mainly due to ineffective contract management for poor performance by the contractors which took a long time to resolve.

This resulted in losses and escalated costs (Free State).
Two projects in the Northern Cape (the rehabilitation of road near Douglas and the upgrade to surfaced road near Magobing) were finalised late and this was due to community unrest relating to employment opportunities.

On the impact on service delivery, the AGSA indicated the following: • Quality of the infrastructure and impact on economy o Significant underspending of capital budgets has a negative impact on the delivery of infrastructure, ultimately affecting service delivery.
o The timeous delivery of infrastructure projects has a positive impact on the economy as the cost of transport will be lower and will also stimulate the economy through the creation of jobs.

• Impact on the citizens o Delayed projects and poor road infrastructure prevent seamless mobility to educational facilities and workplaces and prevents timely access to health, home 105 affairs and policing services.
This will further fast track the degrading of road infrastructure which contributes to accidents and road fatalities, as well as negatively impacting on the RAF.
o The inability of PRASA to provide adequate, reliable, and consistently safe rail commuter services, as well as long haul passenger rail and bus services has a detrimental effect on the citizens of South Africa, as well as the economy at large:   Increased transport costs for citizens as they take more expensive alternative forms of transport resulting in less expendable income for other necessities.
It is time consuming for workers to get to work as rail travel, especially over longer distances and during peak travelling hours, is quicker than travelling by road.

 Negative impact on people being able to easily and affordably access work opportunities where those are present.
7.2.2.3 Root Causes, Recommendations and Commitments Overall root causes of significant findings: • The following are root causes for the lack of improved audit outcomes and non- achievement of service delivery objectives o Audit outcomes  Ineffective action plans and inadequate monitoring by the accounting officers/authorities.

   Inadequate consequence management for SCM transgressions.

Instability at leadership within some of the entities.
Inadequate financial management discipline over daily and monthly control activities, for example, performance and review of reconciliations, reviews of financial statements, etc.

o Infrastructure and service delivery infrastructure  The quality of monitoring and oversight of grant management (PRMG) are in some instances compromised by capacity and skills challenges.
106  The underspending on capital expenditure and non-achievement of targets is largely due to delays in the procurement processes, impact of COVID-19 restrictions, court challenges in some of the awards etc.

 Disruptions by local communities, business forums or contractors filing for business rescue, disputes with contractors and work stoppages contributes to the delay in finalising the projects.
 Inadequate capacity in the project management units affects timeous delivery and monitoring of the infrastructure projects.

Key recommendations to, and commitments by, accounting officers and authorities:  Develop and implement action plans that are root cause focused and are assessed for effectiveness in addressing the findings.

These action plans should include, among other the findings, rating of the findings root causes, allocated responsibilities and indicate completion timelines.
The implementation of the action plans must be reviewed by internal audit and reported to the audit committee on a regular basis.

 Implement disciplined financial reporting structures based on solid accounting and financial management knowledge.

This should include finance and SCM divisions that are fully capacitated with required skills and competencies, implementation of financial management discipline such as monthly reconciliations, segregation of duties and reviews etc.
 Monitor performance and consequence management, especially around SCM.

There should be a culture of high performance and adherence to ethical standards.

Where poor performance and transgressions with SCM prescripts are identified, appropriate actions should be taken in line with the internal policies and procedures.
 Accounting officers/authorities must continue to do their work through audit committees to ensure management implement and enhance processes of review of the financial statements and performance information.

 The internal audit functions and Audit and Risk Committees should enhance their independent review of the financial statements and annual performance report.

Any deficiencies identified should be corrected by management before submission to the next level.
 Accounting officers/authorities should strengthen their oversight by ensuring that executive management are held accountable for poor performance and transgressions of the law.

107  Develop, implement and monitor integrated action plans to address non-achievement of key indicators and monitoring of the progress towards the achievement of MTSF targets.

 Capacitate the SCM and project management units to ensure timeous and quality delivery of infrastructure projects.
 Strengthen the oversight function at the Department to ensure achievement of key performance indicators by the entities and provincial departments.

 Develop and implement proper procurement plan which takes into account the risk and mitigation of procurement delays and the impact thereof on delivery of infrastructure projects.
 In compliance with the relevant laws and regulations, develop a strategy to involve the local community in key projects and continuous engagement with the relevant stakeholders to create awareness of the process to be followed to minimize the disruptions.

 In relation to PRASA: o PRASA should implement a comprehensive turnaround plan to ensure improved audit outcomes and service delivery.
This should include creating stability at executive management level, fully capacitating critical units, effective and efficient procurement and fast tracking depot and infrastructure modernisation.

Although PRASA has multiple action plans, these need to be consolidated into a comprehensive turnaround plan.
o The infrastructure modernization programme should be urgently fast tracked to ensure effective deployment and utilisation of the new trains which will ultimately have a positive impact on service delivery.

o PRASA should facilitate the project management team to ensure the effective management of the Gibela contract, including monitoring and enforcement of penalties, where applicable.
o The Board should finalise a lasting solution on the financial sustainability of Autopax through engagement with stakeholders such as the Department and National Treasury.

o PRASA should finalise the investigation into the possible ghost employees and implement corrective actions.
7.2.2.4 Recommendations, commitments by executive authority 108  Committed to reprioritize resources to establish a Project Management Unit that will serve as an engineering and project management knowledge repository to assist Provinces and Municipalities in giving traction to projects funded through conditional grants.
 Strengthening of the Shareholder Compact with each of the entities and put measures in place to achieve the targets of eliminating fruitless and wasteful expenditure and reducing irregular expenditure by 75% by 2024.

 Restoring normalcy at the RTIA following investigations that unearthed fraudulent practices and attending to the finalisation of the RTIA organisational structure.

 The final determination on the funding of the GFIP to be made soon.
 Working with Provinces and municipalities, improving efficiencies at Driving Licence Testing Centres (DLTCs) will be driven by a new service delivery mode.

 The rollout of the Integrated Public Transport Networks (IPTNs) will be equally strengthened by the establishment of an oversight mechanism under the leadership of the Minister and the political principals of the relevant Cities implementing IPTNs.

This will ensure accountability for the implementation of the IPTNs at political level.
 Follow up with the accounting officer and the Boards to ensure that action plans to address audit findings are developed and implemented timeously.

 Follow up with the accounting officers and the accounting authorities to ensure that executive management positions are filled with appropriately skilled and experienced personnel.

 Ensure that the culture of consequence management should be enforced in the portfolio.
 Continue to pay attention to PRASA and SANRAL to ensure that these entities timeously deliver on key infrastructure projects.

7.2.2.5 Reflections on Implementation of Recommendations Action plans to address audit findings are developed, but not effectively implemented and not adequately monitored.

Findings raised are, in most instances, recurring findings.

The AGSA noted positive progress on the filling of vacancies at Board level and executive management, as well as DDG positions at the Department.
This will go a long way towards enhancing governance, accountability and oversight in the portfolio.

109 There was an increase in the incurrence of irregular expenditure from R1.6 million to R1.8 , but a decrease in fruitless and wasteful expenditure from R291 million to R117 million over the past year.

The incurrence of irregular expenditure remains a challenge in the portfolio and this is due to inadequate consequence management for SCM transgressions.
7.2.2.6 Recommendations to the Portfolio Committee  The big entities in the portfolio replicate the best practices to achieve clean audit.

For entities where clean audit was achieved, this should be maintained and focus should shift to achieving strategic objectives and service delivery mandates.

 Accounting officers/authorities strengthen their oversight by ensuring that executive management are held accountable for poor performance and transgressions of the law.
 Accounting officers/authorities develop and implement action plans that are root cause focused and are assessed for effectiveness in addressing the findings.

 The executive authority continues to pay attention to PRASA and SANRAL to ensure that these entities timeously deliver on key infrastructure projects.

 The progress towards achievement of the MTSF targets is monitored and corrective actions are put in place where the portfolio is behind.
7.2.2.7 Irregular, Unauthorised, Fruitless and Wasteful Expenditure  Irregular expenditure o Total irregular expenditure identified was R1.8 million.

The largest amount of R1.2 million was incurred by PRASA.

o The lack of adequate compliance monitoring and enforcement, together with the lack of consequence management, were identified as the transversal root causes for incurring irregular expenditure at the biggest contributors (PRASA, SANRAL, ACSA, RTMC and SAMSA.
There is also a slow response by management in addressing prior year control deficiencies and implementing auditors’ recommendations.

o Irregular expenditure under assessment amounts to R87.5 million.

110  Fruitless and wasteful expenditure o Total fruitless and wasteful expenditure identified was R291 million.

The largest amount being R279 million incurred by PRASA.

The top contributors were PRASA, ACSA and ATNS.


o At PRASA, the fruitless and wasteful expenditure mainly related to R190 million for work in-progress costs written off due to lack of capitalisation documents and R86 million pertaining to interests and penalties.

o At ACSA, the fruitless and wasteful expenditure of R4 million was due to interests on late payments.

 Irregular expenditure over two years o Top contributors to irregular expenditure not dealt with constitute 95% of R3 962 million.
o SANRAL, SAMSA, ACSA and DLCA were the main contributors to irregular expenditure that has not been dealt with (R3 962 million) or were condoned (R203 million).

o In most instances, the auditee is awaiting the conclusion of investigations/determination assessments.
7.3 Committee Observations following the engagement with the AGSA The AGSA indicated that the transport portfolio had shown a slight improvement in performance and this was evident in the improved audit outcomes of the RTMC to unqualified opinion with no findings.

The C-BRTA receiving its seventh unqualified opinion with no findings, the DLCA with its third consecutive year of an unqualified opinion with no findings and SACAA with its ninth unqualified opinion with no findings in the past ten years.
The Department, for the sixth year, received an unqualified opinion with findings, which also contained a number of repeat findings; although RTIA did not submit their Annual Report in time for the BRRR process, the AGSA indicated that their audit outcome for the second consecutive year was a qualified opinion with findings; despite the fact that the audit was finalised of RAF the outcome could not be released until the Annual Report was tabled, the continued dispute from the previous financial year remains unresolved and may impact the overall performance of the portfolio once the audit outcome is released and the Annual Reports for the past 2 years are tabled.
111 The Department and its entities received the following findings: • Unqualified audit with no material findings (also referred to as a Clean Audit) – C-BRTA, DLCA (did not table in time, despite audit findings having been presented by the AGSA), SACAA, RSR, RTMC and PRSA; • Unqualified with findings – the Department, SAMSA, ACSA, SANRAL and ATNS; • Qualified with findings – RTIA (did not table in time, despite audit findings having been presented by the AGSA); • Disclaimer with findings – PRASA; • Failure to submit and findings still outstanding – RAF.
The Committee was pleased to note that the C-BRTA had continued to retain its unqualified audits with no material findings (clean audit), despite the challenges it faces.

The most significant of the challenges that remain is the one around the unsustainable funding regime of the entity, border crossing backlogs, COVID-19 lockdown restrictions on travel and that the impasse on the issuance of passenger permits for the RSA/Lesotho route remains unresolved.
The Committee welcomed the improved audit findings from unqualified with material findings, to unqualified with no material findings (clean audit) from RTMC.

Although it has not yet submitted the Annual Report, the Committee noted the stagnation in audit outcome of the RTIA of qualified with findings.

The Committee expressed concern over the failure to submit Annual Reports from RAF, RTIA and the DLCA in time for the current BRRR process.
The Committee further expressed concern that PRASA has received a disclaimer with findings for three years in a row and that the entity was also part of the top contributors to irregular, fruitless and wasteful expenditure for the year under review and was also one of the worst performing entities in terms of meeting their predetermined targets.
112 Although the achievement of prerequisite performance targets is to be applauded, the Committee was of the view that there remained insufficient linkages between the meeting of targets and an actual or tangible improvement in service delivery standards to all transport stakeholders.

It was also important to note that the AGSA still did not audit the same number of outcomes per auditee, as in the years preceding the 2019/20 financial year.
For this reason, the Committee continues to urge that the Department and its entities move towards the development of key performance targets that would have tangible and measurable results that show actual and/or improved service delivery to all transport stakeholders.

This was also an aspect raised by the AGSA in its presentation to the Committee.
It was noted that SANRAL received its 19th unqualified audit opinion with emphasis of matter – this may require a new approach to the plans they put in place to adequately address the audit findings, greater emphasis on consequence management and compliance with SCM prescripts and an urgent need to finalise the GFIP funding model concerns.
SACAA is commended for once again being an entity of the Department that managed to achieve all of its performance targets for the financial year under review (achieved for eight years in a row).

RSR met 94% of their targets – this is a regression from the achievement of all targets in the previous year.
For the sixth consecutive year, the Committee notes a failure by the Department to ensure that all of its entities table their Annual Reports on time and that the Committee was once more unable to engage and perform its oversight function fully over three entities that had failed to table within the BRRR process.
Although the Annual Reports of these entities could not be engaged on, the Committee noted the comments by the AGSA on the audit outcomes of RTIA and the DLCA, and noted the reasons provided by the AGSA and the Minister on the delays in the finalisation and tabling of the RAF Annual Report.
Although the Committee received the SASAR/NSRI Annual Report, these are not generally audited as separate entities or regarded as entities of the Department as their expenditure and funding is regarded as a line item under the Department’s budget that is audited as part of the Department’s Annual Financial Statements.
113 Once more, the top areas of material non-compliance remain the failure to prevent unauthorised, irregular and fruitless and wasteful expenditure, lack of consequence management, non-compliance with legislation and regulations when it comes to procurement and contract management, as well as material misstatements to financial statements submitted for audit.
The key root causes identified by the AGSA were instability of leadership within some of the entities, that management had not implemented adequate review and monitoring controls over the preparation of financial statements, management had not implemented adequate controls to prevent non-compliance with procurement legislation and management had not been effective in developing and monitoring the implementation of action plans to address audit findings.
From the presentations and engagements, the Committee noted those areas where improvements were evident, however, concluded that the Department and its entities had not been able to clear repeat findings through implementing all recommendations and corrective measures proposed by the AGSA and those that the Committee has made since the start of the current term.
The Department must focus more attention on ensuring that action plans are implemented to address prior year audit findings and that sustainable solutions are implemented to prevent a recurrence of findings in the area of compliance with key applicable legislation and financial reporting.
Vacancies and instability of management at the Department, as well as its entities persist and continue to pose significant challenges regarding operations and the creation of a control environment to ensure that basic financial, performance reporting and compliance with laws and regulations are enforced.
There is also a need to implement consequence management, especially around SCM and greater implementation of disciplined financial reporting structures based on solid accounting and financial management knowledge.
The Committee was pleased to note that during the year under review, the Department reported122 that it made use of 1 individual consultant (reduced from 17 in the previous year) over 1 projects (reduced from 9 in the previous year), for a total of 1 095 working days (reduced from 4 640 in the previous year) at a total cost of R4.3 million (reduced from R33.8 million in the previous year).
The Department lists the project in which this consultant was used, as well 122 Department Annual Report 2021/22 p 263. as the contract cost of this.

What the Department failed to report on was whether these agreements included the requirement to ensure that skills transfer to Department or entity staff were delivered during the contract with the consultant.
114 The accountability for Government spending at State-Owned Entities (SOEs) continues to be an area receiving attention in the public, as Government funds and guarantees are being used to sustain some of the SOEs.

The audit outcomes of SOEs continued to regress – most often as a result of inadequate controls, monitoring and oversight.

Instability at Board and executive level played a role in the outcomes of SOEs, and the Department and its entities were not spared this.
The level of oversight by the Department over the entities reporting to it remained a concern for the Committee throughout all budget reviews over the past eight years and the Committee cannot stress this enough - the oversight branch within the Department must improve its work towards achieving a greater level of oversight over its entities.
The Committee noted during the 2019 BRRR that the AGSA was making use of its extended mandate to seek to address the issues raised for PRASA during the 2018/19 financial year.

PRASA was selected for implementation in the 2018/19 year and nine (9) material irregularities were raised.

For 2021/22, ACSA, RAF, SANRAL and PRASA were selected for MI implementation in the transport portfolio.

For 2022/23, the Department, SAMSA and RTIA will be phased in for MI implementation.
During its presentation to the Committee in this year’s BRRR engagements, the AGSA reported the following progress:  Unfair procurement process for the purchase of locomotives (Resolved) o On 15 September 2021, AGSA notified the accounting authority of the remedial action to address the material irregularity, which had to be implemented by 15 December 2021.

PRASA responded on 2 February 2022.

AGSA concluded, at the time, that appropriate actions were being taken to address the material irregularity.
Given that these actions were still in progress, AGSA requested a status update report by 13 July 2022.

This was submitted by the accounting authority on 18 July 2022.

AGSA considered the representations made and the substantiating documents provided and have concluded that appropriate actions have been taken to address the material irregularity.

AGSA will, however, 115 continue to monitor the actions and the impact thereof during subsequent annual audits.
 Competitive bidding process not followed in the appointment of general overhaul and upgrade contractors (Appropriate actions being taken – implementation being monitored) o The accounting authority requested an investigation by the SIU into the matter, which was approved by the President on 13 August 2019 [proclamation R51 of 2019 (GG 42670 dated 30 August 2019)].

This investigation is still in progress.


 Unfair procurement process followed in the appointment of the signalling contractor (Appropriate actions being taken – implementation being monitored) o The SIU investigation (through secondment agreement) established that the key role players who participated in the procurement process have either been dismissed or have resigned from PRASA and therefore no internal consequence management can be implemented against them.
Notwithstanding this, PRASA committed it would still report the matter to the South African Police Service accordingly.

AGSA will follow up on the implementation of the planned action during the next audit.

 Competitive bidding process not followed in the award relating to the provision of bus services in the Western Cape (Appropriate actions being taken – implementation being monitored) o The investigation was performed by the SIU through a secondment agreement.
The investigation confirmed the non-compliance and PRASA has implemented the recommended cancellation of the contract.

Furthermore, one employee has been charged in relation to this matter and remains on suspension pending the conclusion of disciplinary proceedings.

AGSA will follow up on the finalisation of the disciplinary steps during its next audit.
 Competitive bidding process not followed in the award relating to the provision of surveillance services (drones) (Appropriate actions being taken – implementation being monitored) o The investigation was performed by the SIU through a secondment agreement.

The investigation confirmed the non-compliance and identified officials that were responsible for the breakdown of internal controls and consequently the non-compliance.
The recommendation of the investigation report to take disciplinary action against the responsible officials is in progress, with one 116 employee on suspension pending the finalisation of disciplinary proceedings and the remaining two officials still to be charged.

AGSA will follow up on the finalisation of the disciplinary steps during the next audit.
 Uncompetitive process followed in the awards relating to the repair, supply and delivery of signalling equipment on the basis of an “emergency” deviation (Appropriate actions being taken – implementation being monitored) o The investigation was performed by the SIU through a secondment agreement.

The investigation confirmed the non-compliance and identified officials that were responsible.
Disciplinary action against the four implicated officials has resulted in one official resigning prior to the conclusion of the disciplinary process, one official having been acquitted and one official dismissed.

The remaining official is still under suspension pending the conclusion of the disciplinary proceedings.

AGSA will follow up on finalisation of the disciplinary steps during the next audit.
 Unfair award for the control of vegetation (Appropriate actions being taken – implementation being monitored) o The investigation was performed by the SIU through a secondment agreement.

The investigation confirmed the non-compliance and identified officials that were responsible for the breakdown of internal controls and consequently the non-compliance.

The recommendation of the investigation report to take disciplinary action against the responsible officials is in progress.
In this regard, two officials were acquitted, three received final written warnings and one is still undergoing disciplinary proceedings.

AGSA will follow up on the finalisation of the disciplinary steps during the next audit.
 Uncompetitive process followed in the award relating to the repair and replacement of signalling equipment on the basis of an “emergency” deviation (Appropriate actions being taken – implementation being monitored) o The investigation was performed by the SIU through a secondment agreement.

The investigation confirmed the non-compliance and identified officials that were responsible.
Disciplinary action against the three implicated officials has resulted in one official resigning prior to the conclusion of the disciplinary process and one official having been dismissed.

The remaining official is still under suspension pending the conclusion of the disciplinary proceedings.

117 AGSA will follow up on finalisation of the disciplinary steps during the next audit.
 Competitive bidding process not followed in the award relating to the provision of security services (Appropriate actions being taken – implementation being monitored) o The investigation was performed by the SIU through a secondment agreement.

The investigation confirmed the non-compliance and identified officials that were responsible for the breakdown of internal controls and consequently the non-compliance.
The recommendation of the investigation report to take disciplinary action against the responsible officials is in progress, with one employee on suspension pending the finalisation of disciplinary proceedings and the remaining two officials still to be charged.

AGSA will follow up on the finalisation of the disciplinary steps during the next audit.
The AGSA recommended that adequate in-year monitoring on the material irregularities is needed and there must be consideration of whether the accounting authority has taken the appropriate action.

Although the Committee welcomes the efforts by the AGSA to seek to resolve these material irregularities within the entities’ reported annual financial statements, it has not seen expression of the efforts from the last three year’s intervention.
It cannot be stressed enough that the strategic targets and key performance areas set by the Department, its entities and implementers or recipients of all grants allocated under the Transport Vote must be linked to actual tangible service delivery to the citizens of the country.
The Committee, in its oversight over the Department, has continued to request the Minister to ensure that proper monitoring and oversight is performed over all grant allocation projects in order to see to it that the actual performance targets achieved through transfers translate into actual service delivery on the ground and value for money.
This is especially evident based on the feedback from the AGSA regarding the PRMG fund use and the need for the Department to enhance the internal monitoring mechanisms to ensure strict adherence to the grant conditions, and that any control deficiencies around compliance monitoring are addressed expediently.
The irregular expenditure does not necessarily represent wastage or means that fraud was committed – this needs to be confirmed through investigations to be conducted by the 118 accounting officer (also referred to as the CEO) or accounting authority (Board) – but losses could already have arisen or may still arise if follow-up investigations are not concluded timeously or initiated.
It is difficult to remedy SCM inefficiencies when a thorough investigation has not been completed to assist in identifying the weaknesses and inefficiencies in the system.

The track record of auditees in dealing with irregular expenditure and ensuring that there is accountability or that investigations are finalised timeously remains poor.
The irregular expenditure still occurs and it can be attributed overall to continued weaknesses in the SCM directorates in the application of SCM policy and National Treasury Regulations in this regard.

The most common findings for the past eight years related to deviations from the prescribed procurement processes.
More frustrating is that the Committee and its predecessors recommended the need for the Department and its entities to ensure further and continued training of SCM staff – the Department has slightly altered its list of interventions to remedy SCM inefficiencies and prevent irregular expenditure, as those listed in the past five years were clearly insufficient since there were once more findings of irregular expenditure per the audit outcome for the transport portfolio.
The Committee remains resolute that there is a need for the entire transport portfolio to strengthen its SCM staff through training and equipping them sufficiently, as well as implementing SCM Policy reviews to strengthen the internal SCM compliance further.

The entities must comply with all of their SCM policy requirements and tender requirements, since the failure to do this resulted in findings against entities such as SANRAL.
There is also a need to ensure that uncertainty in interpretation of terms linked to SCM and B-BBEE compliance is resolved between the AGSA and the entities to prevent future audit outcome delays or adverse findings due to differences in interpretation.

The Committee continues to impress upon the Department and its entities that all investigations must be finalised within a reasonable timeframe, and that all contraventions of legislation and regulations must be acted upon through disciplinary action.
In instances where employees may have resigned, the Committee persists in its view that the Department and its entities must not stop there, but should continue with steps to retrieve losses from those employees and, where appropriate, follow the procedures laid out in the PFMA for possible criminal prosecution.

119 The Preferential Procurement Regulations make provision for the promotion of local production and content.

These regulations are aimed at supporting socio-economic transformation.
The Committee, during engagements, continues to impress the need upon the Department and its entities to achieve transformation targets within the establishments themselves, as well as in their respective industries.
The Committee also continues to highlight the need for the Department, as well as its entities, to adhere to the Preferential Procurement Regulations throughout their engagements, as well as working towards the achievement of increased local content and radical economic transformation in their respective fields of operation.
7.4 Committee Observations with specific reference to entities The following extracts show concerns noted from the Annual Reports and observations that were made: 7.4.1 ACSA The overall audit outcome of ACSA has remained stagnant compared to the prior years.

The entity received a financially unqualified audit opinion with material findings.

ACSA still remains one of the largest contributors to irregular expenditure.
The Committee noted that the entity had shown some progress in expenditure management as it had implemented detective controls to both identify and disclose unauthorised, irregular and fruitless and wasteful expenditure in its financial statements.

The COVID-19 pandemic and the lockdown restrictions instituted by Government continues to pose sustainability and going concern risks for the auditees in the portfolio.
The revenue generation of a self-sustaining entities such as ACSA remains severely disrupted.

The entity still received a finding linked to compliance with legislation as it was still unable to prevent irregular expenditure.

The audit report indicated that effective and appropriate steps had not been taken to prevent irregular expenditure of R44 million, as disclosed in note G.13 to the annual financial statements, as required by section 51(1)(b)(ii) of the PFMA.
The 120 majority of the irregular expenditure disclosed in the financial statements was caused by non- compliance with the SCM prescripts or legislation that led to irregular expenditure.

Ineffective processes to monitor compliance with legislation resulting in the recurrence of irregular expenditure.
The fruitless and wasteful expenditure identified in the year relates to the following reported incidents: (a) Interest on SARS re-assessments (R53 thousand) and late VAT payment (R242 thousand); (b) Interest and penalties on late payments to suppliers R2.6 million; (c) R989 thousand paid for goods not received.

The Committee noted that the entity had still been unable to take effective and appropriate steps to prevent irregular and fruitless and wasteful expenditure.
The accounting officer should capacitate the entity with skilled staff who are well-versed in SCM processes and legislative prescripts, as well as implement enhanced preventative controls to ensure these types of expenditure are not incurred going forward.
In terms of the AGSA extended mandate to deal with material irregularities, it was noted that the entity had been selected for this process by the AGSA during the year under review, however, there were no material irregularities communicated on the entity to date.

Due to the impact of COVID-19 on travel, as well as civil unrest in July 2021 in the year under review, the ACSA recovery was, however, uneven with domestic and regional traffic recovering to 58% and 36% of pre-pandemic levels respectively.
In contrast, international traffic, hampered by the impact of travel restrictions and Omicron variant in the third quarter of the financial year, only recovered to 29% pre-pandemic levels.

The financial position of the company remains solid with a strong asset base and low levels of debt.

Capital expenditure programme was limited to maintenance and refurbishment as part of the Recover and Sustain Strategy.
The cost-reduction initiatives introduced in the previous financial year continued to minimise operating costs.

These included headcount rationalisation through VSP and ER programme.

Rental reprieves for commercial partners who were also negatively affected by COVID-19.

Non-aeronautical revenue performed better than the last financial year by 57.1% to R2.1 billion (FY2020/21 R1.3 billion).
The improvement takes into account rental revenue reprieves of R591 million (FY2020/21 R1.4 billion) granted to tenants to offset the negative impact of the COVID-19 pandemic.

Operating costs increased by 3.9% to R2.02 billion (FY2020/21: R1.95 billion).

The cost reduction initiatives introduced in the two previous financial years have assisted to minimise operating cost for the group.

121 The Committee noted the core strategies and plans had to be reviewed and adjusted in response to the pandemic.
ACSA continued to implement the Recover and Sustain Strategy; Finalised the Growth Strategy with focus on Passenger Mobilisation, Aerotropolis Cargo, Global, Ground Handling and Fuel Strategies.
The Committee noted the management action plans to address the audit concerns in the SCM of the entity, however, expresses a word of caution that the entity must ensure that its re- building of capacity and skills lost during the year under revue due to resignations and staff reduction initiatives must not lose sight of the fact that the entity has struggled with SCM compliance for consecutive years and this must be remedied in order to improve future audit outcomes and eliminate irregular, fruitless and wasteful expenditure by the entity.
The entity will need to report back to the Committee on the deployment of the new parking management system, ongoing projects to upgrade the operating systems and airport upgrades and/or expansion projects, review of its security policies and processes and progress made on the action plans to address the audit outcomes.

7.4.2 SACAA The entity had achieved a 100% of its targets and the Committee was pleased that the entity had achieved another unqualified audit with no findings.
Over and above achieving an unqualified audit outcome in the 2021/22 financial year-end audit by AGSA, the SACAA recorded zero irregular, wasteful and fruitless expenditure during the reporting period.

All undisputed invoices received by the Finance Division were paid within thirty (30) days as required.

The SACAA continued to implement various cost-containment initiatives and to exercise financial prudence in the last financial year.
This has led the entity to remain financially viable during the period under review; and thus being able to continue to deliver on its mandate, which is crucial to the aviation industry.

The notable increase in the passenger numbers, in combination with the continued financial support from the Shareholder, contributed to an improvement in the Regulator’s coffers over the reporting period.

122 The SACAA started the 2021/22 financial year with cash reserves sufficient to survive.
Strict cost-containment measures directed at discretionary expenditure items were still maintained and will be maintained until traditional revenue levels return.

Only critical vacant positions were filled and significant savings against budget were realised in terms of travel, training and public relations expenditures.

The SACAA reported a net operating surplus of R112 million for the year ending 31 March 2022 compared to a budgeted break-even position.
South Africa has been preparing for an ICAO Universal Security Programme Continuous Monitoring Approach for some time now.

This is because South Africa was last audited by ICAO on aviation security in 2011.

During the reporting period, South Africa received notification from ICAO regarding the country’s scheduling for this important audit for the 2022 cycle.

This confirmation came at an opportune time for the Regulator, because several preparations were well under way.
The financial year under review marked the 100% implementation of the USAP-CMA Preparedness Plan.

The work done involved loading and verifying evidence on SharePoint, conducting an assessment at three (3) of the bigger airports to review airport level documentation, as well as conducting the monitoring of airport level operations.

It is commendable that the country still reflects a salutary zero fatal accident rate in the scheduled airline sector, as it has for over 30 years.
However, amidst the challenges posed by the COVID-19 pandemic, in the year under review, the country witnessed a 70% increase in accidents and a 73% increase in serious incidents in the general aviation space.

Having said that, it should also be noted that the number of fatal accidents recorded in 2021/22 decreased by 25% when compared to the same period for 2020/21, and the number of fatalities resulting from fatal accidents decreased by 26% when compared to the same period in 2020/21.
In view of the increase in accidents and serious incidents in the last financial year, the Minister of Transport’s directive to reduce the accident rate by 50% in the next 5 years, is still an imperative that is more crucial than ever.

To achieve this target, the SACAA is continuing to implement a five-year General Aviation Safety Strategy (GASS), which involves multi-stakeholders.
Solutions for decreasing aviation accidents include the analysis of the causal factors highlighted in the accident investigation reports conducted by the Accident and Incident Investigation Division (AIID).

123 On 23 January 2022, the final report of the Ethiopian Aircraft Accident Investigation Bureau (AAIB) that looked at the aircraft accident of the SACAA’s calibration aircraft that occurred on 23 January 2020 was released, as required by Annex 13 of the Chicago Convention.
The SACAA as the Regulator, joined by the Operator and two of the deceased families submitted an appeal to the Minister of Transport, requesting that he reopen this investigation to allow the parties to submit comments and evidence to new findings which were not included in the report consulted by the AAIB in August 2021.

At the time of writing this report, the SACAA was yet to be invited to make representations on the report.
The SACAA received a letter from the United States’ Federal Aviation Administration (FAA) to the effect that the latter intended to conduct a safety assessment pursuant to article 6 of the Air Transport Agreement signed between South Africa and the United States of America.

The assessment would verify South Africa’s compliance with ICAO Standards and Recommended Practices.
Several engagements took place between the SACAA and the FAA in this regard and the FAA assessment took place between 15 and 19 November 2021.

On the last day of the audit, the FAA team provided the SACAA team with verbal feedback of what needed to be addressed.

Subsequently, on 14 March 2022, the SACAA received the final written report.
Attached to the report was a communication from the FAA suggesting a follow-up visit to the SACAA in order to follow up on the implementation of the Corrective Action Plans in relation to the concerns raised.

The agreed date for the said follow-up was planned for the next financial year from 11 - 14 July 2022.

In the reporting period, the SACAA had implemented year one of the Transformation Plan, which was planned to be rolled out over a three-year period.
This plan includes the implementation of a women empowerment programme, a trainee programme, implementation of enterprise development, as well as the socio-economic development programme.

The SACAA is a self-funded public entity that relies on a combination of revenue streams to fulfil its mandate and run its business operations.
The revenue streams comprise mainly the passenger safety charge (PSC), user fees, fuel levy, as well as a fee from the Department for the investigation of aircraft accidents and incidents.123 Additional financial support of R277.5 million (2021: R155.5 million) was received from the Department for the 2021/22 financial 123 South African Civil Aviation Authority (2021/22 Annual Report), p. 51. year, as a result of the financial impact on the SACAA’s lower passenger numbers that was caused by the pandemic.
The total passenger numbers for the 2021/22 period amounted to 11 079 364, compared to the estimated number of 8 584 162.

This is 29.1% higher than budgeted, and 133% higher than the same period last year, but still 50.2% lower than pre-COVID (2019) levels.

Passenger numbers increased as the impact of COVID-19 receded.
124 The Committee remained concerned about a spike in reported incidents in the current financial year and requested that SACAA ensure that all incident investigations are finalised and that the required remedial measures are put in place.

The Committee remains of the view that SACAA should ensure that it procures a new or lease a South African owned calibration aircraft urgently to ensure the continued operations at airports across the country.
7.4.3 PRSA The PRSA retained its audit outcome of an unqualified audit with no findings.

The port community was affected by the cyber-attack on Transnet SOC Ltd and disruptions due to the looting that took place in Durban, KwaZulu-Natal in July 2021.

Added to these were the reported machinery breakdowns at key container terminals and adverse weather conditions that affected port operations.

Overall, 2021/22 saw continued domestic supply chain pressures, limited cargo handling and port operating capacity.
The cyber-attack also led to delays in the publishing of the National Ports Authority (“the NPA”/ “the Authority”) Audited Financial Statements.
Thus, the Regulator had to condone the late submission of the NPAs 2022/23 – 2024/24 tariff application by two weeks a decision that not only acknowledged the problems faced by the Authority but also balanced any concession with the need to ensure that port users benefit from a decision communication timeously in December 2021 rather than at the beginning of the new financial year.
This context and prevailing environment characterised factors that were brought to bear on the Regulator’s decision for the application, in addition to complying with the tariff methodology, tariff strategy and submissions by ports users and stakeholders.
As reported last year, the Regulator members continue to find appropriate regulatory response to poor productivity and efficiencies in port and marine operations – especially in the face of significant under expenditure on CAPEX which penalises port users from a cost and lost capacity and therefore opportunity perspective; as well as the extent and rate of transformation driven by the Authority in the port system.
125 Against an applied 9.4 % tariff adjustment (R14.7bn) by the Authority, an average tariff adjustment of 4.8% was approved and R14.8bn for FY 2022/23 achieved through the use of the Excessive Tariff Increase Margin Credit (ETIMC).

In line with section 42 of the National Ports Act (No.
12 of 2005) (“the Act”), the Ports Regulator is funded mainly through allocations from the fiscus; interest earned on investments and fees paid by port users and affected parties in lodging an appeal or complaint against the National Ports Authority (“the Authority”).

The Regulator received a modest baseline allocation of R 40 996 in 2021/22 with indicative allocations of R42 995, R42 564 and R44 476 (in millions) for the Medium-Term Expenditure Framework (MTEF).
The Committee remains of the view that there is a need for the country to have tariff pricing that would put the country on a more equal competitive footing with worldwide port tariffs.

The Committee also noted the continued dependence of the Regulator on the finalisation of the ERT Bill which has been delayed for a number of years, but which is currently before the NCOP.

7.4.4 C-BRTA The C-BRTA continues with its exemplar audit outcome of an unqualified audit with no findings.
However, the most significant of the challenges that remain is one around the unsustainable funding regime, given that permit revenue is the single source of income for the Agency.

The Agency further facilitated the resuscitation of the Joint National Ministerial Task Team of the Mountain Kingdom of Lesotho and the Republic of South Africa towards the resolution of the passenger impasse in the RSA/Lesotho corridor.
Work is ongoing to conclude a road transport bilateral agreement between the two countries in order to introduce regulated competition in respect of cross-border passenger road transport and reduce operational constraint for cross border road transport as whole.

126 The current challenge faced by the Board is the lack of technical expertise in relation to the passenger cross border road transport experts as per requirement in Section 5 of the C-BRT Act.
Further to that, the position of the Chairperson remains vacant which directly impacts on the proper composition of the Board and the Regulatory Committee as stipulated in Section 5 and 13 of the C-BRT Act respectively.

The Board is however confident that the positions will be filled in the short term as an advertisement by the Ministry of Transport was placed as at end of the financial year.
The C-BRTA is a self-funding entity with permit tariff fees levied to South African cross- border operators being its primary source of income.

The unprecedented impact of COVID-19 on cross-border operations required the Agency to exercise prudent financial and cash flow management measures to mitigate significant financial risk linked to a single income source, whilst adequately responding to the COVID-19 pandemic and ensuring that the Agency remains a going concern and executes its legislative mandate.
In the year under review, the Agency increased permit tariffs in line with the Consumer Price Index (CPI).

To ensure business continuity, the Agency monitored the spending patterns and applied scenario plans to make assumptions on the future in light of operating under an uncertain environment.

The Agency recorded R 199.9 million in permit revenue, which was 12% above the permit revenue of R178.9 million recorded for the previous financial year.
Compliance fees and penalties and fines amounting to R13.5 million (2021: R11.8 million) and R44.0 million (2021: R16.9 million) respectively were also recorded.

The Agency operated with an acting Chief Executive Officer for the duration of the financial year as the substantive Chief Executive Officer was undergoing a disciplinary process until his contract came to an end.
Additionally, the recruitment of two positions at an executive committee level were finalised during the year with one resuming duties in the financial year under review.

Officials were appointed to fulfil the roles in acting capacities to enhance delivery.

As is evident in the C-BRTA, the Committee continues to insist that the Minister ensure all board vacancies are filled urgently, which in turn should allow the Boards to ensure that all management vacancies are filled within the entities.
127 The Committee noted that the Agency continues to seek a lasting solution to the RSA/Lesotho impasse.

The Committee noted that the Agency’s financial sustainability remains a key challenge, as the Agency funds its operations through one primary stream being revenue generated from issuance of permits to South African operators.
7.4.5 RAF It was noted that RAF and the AGSA were in a dispute related to the 2020/21 and 2021/22 audit and that the 2021/22 audit was therefore not finalised at the time of completing this report.

During its oversight throughout the year, the Committee observed that RAF continues to experience financial challenges, which, in turn, increase the backlog in finalising claims received.

The financial health status of the entity remains a risk to the fiscus and intervention is required.
The claims process continues to be regarded as cumbersome and that it still takes far too long to finalise claims and pay awards out to victims or claimants.

The RAF and the Department must consider alternative funding models and consider all options that could assist the Fund to decrease its claims liability, instead of trying to achieve this by amending its accounting practice.
It was also noted that there are allegations of notices being issued to retrench hundreds of workers 7.4.6 RSR The Committee noted that during the reporting period, the RSR retained its unqualified audit with no findings, but that the entity regressed in only achieving 94% of its targets compared to the previous year when it achieved 100% of its annual performance targets.
128 The RSR spent a total amount of R35.2 million of which 95% equates to R33.3 million on B- BBEE compliant suppliers, 36,4% which equates to R12.1 million was spent on women-owned companies, while 7,51% of which equates to R2.5 million was spent on youth-owned companies.

Out of the total 272 companies utilised, 170 (63%) were Exempt Micro Enterprises, 46 (17%) were Qualifying Small Enterprises and the remaining 56 (21%) were large companies.
Furthermore, the organisation is slowly making headway with recruitment plans.

Over the past year, crucial vacancies were filled, some of which had been vacant for prolonged periods.

The Committee noted the State of Safety Report highlights the reduced rail service in 2021- 2022 and how that resulted in less operational occurrences and less security related incidents since 2020/21.

Although this is an improvement in human-related safety performance, it must be viewed in context of the low traffic volume.
The report further unpacks the 6% reduction in security-related incidents between the 2020/21 and 2021/22 reporting periods.

The rail policing arm identified unused buildings, no or lack of security personnel, encroachment of the railway reserves, and security not clearly identified as part of the main generators of railway-related criminal activities.

Malicious damage recorded in 2021/22 is 10% lower compared to the 2020/21 reporting period.
Furthermore, operational occurrences decreased by 10% when compared to the 2020/21 reporting period.

These gains are indicative of some improvement, however, RSR must work harder at ensure compliance to safety management tools within the operator space.

The Committee was of the view that the vacancies at the entity should continue to be filled.

7.4.7 SANRAL The entity maintained its unqualified audit outcome with findings.
SANRAL still remains one of the largest contributors to irregular expenditure for the transport portfolio; in total they incurred R487 million in irregular expenditure due to non-compliance with prescribed procurement prescripts.

Included is R415.101 million for non-compliance with tender pre-qualification criteria on a single tender.

The tenderer was evaluated further and should have been disqualified for not submitting bank rating/confirmation letter.
129 SANRAL recognised revenue of R14.805 billion, including government grants, in the 2021/22 financial year.

Overall, across the non-toll and toll portfolios, government grants constitute the largest source of revenue for SANRAL, followed by toll fees collected from road users.

In addition, SANRAL received finance income of R1.788 billion and other income of R1.985 billion, bringing total income to R18.578 billion.
Other income comprises non-cash income from the previously deferred income, rental income from property management and implementation fees on non-SANRAL projects.

Total capital expenditure on construction-related projects on non-toll roads amounted to R4.485 billion in 2021/22, while special and periodic maintenance projects amounted to R1.392 billion.
The routine maintenance projects in operation on the SANRAL non-toll road network amounted to a total expenditure of R2.385 billion in the 2021/22 financial year.

The increase was due to improvements made in tender awards and the relaxation of COVID-19 lockdown restrictions.

Delays on procurement processes have been improved.

Total toll revenue realised on these routes during 2021/22 was R4.522 billion, representing an increase of 22% from the previous year.
The tariff adjustment for the year was restricted to a CPI-related rate of 3.39%.

The decline in revenue in 2021 was mainly due to decreased traffic volumes on these roads as a result of the travel/mobility restrictions during the national lockdown (level 2 to 5).

When traffic volumes returned to normal (pre-COVID-19) projections, the 2022 toll revenue increased significantly.

Included in the toll revenue are cash sales from all the conventional toll plazas, amounting to R3.953 billion.
The GFIP showed an increase of 25.6% in revenue to R569 million.

This project is SANRAL’s only toll route that receives government assistance.

This grant is intended to offset the discounts on tariffs instituted in response to public opposition to tolling on Gauteng freeways and to compensate for the loss of income while a decision on its future from the Presidency is pending.

In 2022, this grant amounted to R3.740 billion (including VAT).
The Minister of Transport, as SANRAL’s sole shareholder, approved a transfer to the Toll Portfolio account from the non-toll government grant to reduce the expected shortfall on GFIP revenue collection.

The compliance collection rate remains very low at about 17%.

All other conventional toll roads operated by SANRAL realised an increase in revenue of 21.4%, which was attributable to increased traffic volumes and tariff adjustments.
130 Total capital expenditure on construction-related projects on SANRAL toll roads amounted to R426 million in 2021/22.

Routine maintenance contracts in operation on SANRAL-managed toll roads amounted to a total expenditure of R2.287 billion in the 2021/22 financial year.

During the 2021/22 financial year, SANRAL raised R3.737 billion (nominal) on the capital markets by tapping existing bonds.

The finance cost on borrowings amounted to R4.342 billion, of which R25 million was capitalised.
The entity also had not complied with SCM requirements during the year under review.

As far as the AGSA’s expanded mandate to deal with material irregularities linked to the entity, material irregularities have been identified during the previous audit of SANRAL and the accounting authority was notified of this, as required by materiality irregularity regulation 3(2).

The AGSA indicated that the identified irregularities had been resolved.
For the current year under review, SANRAL was once more selected for MI implementation.

The Committee noted that the contract of the CEO came to an end by 30 November 2021 and that a new CEO had not yet been appointed.

The Committee indicated that it was imperative for the Minister and the Board to ensure that the vacancy be filled, as soon as possible.
The Committee remains concerned that the issue which continues to place financial pressure on SANRAL is the continued difficulty to collect fees from road users who choose not to pay the GFIP e-toll fees.

The matter is still before Cabinet, and SANRAL still awaits direction in this regard.

The Agency continues to experience financial pressure on the toll portfolio in its entirety due to the sustained under-collection of the GFIP e-toll fees.
The Committee noted in its engagements with the Department that the undertaken GFIP/e-toll discussions were still not finalised despite past indications that a pronouncement on proposals was due by the end of October 2019.

The Committee noted that the AGSA was still concerned regarding the financial health of the entity, citing the collection of debt and the inability to collect monies owed resulted in a high impairment of receivables (i.e.

E-toll fees) for SANRAL.


This is an indication of challenges in the collection of outstanding debt as they become due, which exposes the entity to liquidity risk.

In the absence of the finalisation on the GFIP/e-toll matter from the Ministry and Cabinet, the entity should continue to hold engagements with relevant stakeholders to find either interim or permanent solutions.

131 7.4.8 PRASA The Committee noted that PRASA had once more been given a disclaimed opinion with findings.
Out of all the entities in the portfolio, PRASA performed the worst in its audit outcome, in its lack of meeting its annual performance targets (it only met 19% of its annual targets) resulting in significant underspending of R6.5 billion for the current year, it that it was the top contributor to irregular expenditure totalling R1 161 million, and in being the top contributor to fruitless and wasteful expenditure totalling R279 million.
With regard to the AGSA’s expanded mandate on addressing material irregularities, it was indicated the in the 2018/19 financial year, nine material irregularities had been raised and reported on in respect of PRASA.

Of the old MIs identified, only the one linked to the unfair procurement process for the purchasing of locomotives was resolved.

The AGSA continues engaging with the accounting authority and executive authority to ensure that appropriate action is being taken.
For the remaining material irregularities, the accounting authority had committed to investigating and the AGSA was assessing the action taken up to date.

For the year under review, the entity was once more selected for MI implementation.

The Committee further noted that the entity had a slight increase in group revenue, however the entity still had a significant operating loss and reduced cash flow.

The total capital budget per PRASA’s Corporate Plan for the financial year 2021/22 was R18.4 billion.
PRASA had a total expenditure of R6.5 billion or 35% of the capital budget at the end of March 2021.

CRES recorded expenditure amounting to R85 million (6% of the R1.4 billion budget).

PRASA Technical recorded expenditure amounting to R1 billion (14% of the R7.6 billion budget) and PRASA Corporate recorded expenditure of about R5.3 billion (58% of the allocated budget).

Several projects did not achieve significant spending such as ICT and Protection Services projects.
Most spending was on the rolling stock fleet renewal programme, whose budget allocation was R4.83 billion, and R4.38 billion or 91% of the allocated budget was spent.

The rolling stock is one of the focus areas on PRASA’s current rail system to ensure sustainability of its operations during the period of modernisation, whilst also revitalising the infrastructure.
132 The Committee remains concerned that the entity has not been able to improve on ensuring the safety and security of the company assets, infrastructure and passengers.

This is evident from the various media reports and Committee oversight during the year under review.

It is furthermore concerned regarding the slow progress by the entity in bringing key corridors back online.
The modernisation project is not only delayed by the vandalism experienced during COVID- 19 lockdown in the previous reporting year, but also due to the underspending on capital projects, such as the delays in finalising depots that will allow for the storage of the new train sets.

The Committee is concerned that there remains instability in key management positions at the entity, such the Group CEO.

These vacancies must be filled as soon as possible.
7.4.9 ATNS For the period under review, the entity once again achieved an unqualified audit opinion with findings.

Capital expenditure for 2021/22 was R186 million against a target of R182 million.

This is largely due to delays in the execution of ATNS Capex projects.

Capital commitments for the entity amounted to R375m at the end of the financial year.

The entity expects to enter into further new commitments amounting to R69m in the 2022/23 FY.
ATNS has secured a loan facility of R500million with the Development Bank of Southern Africa (DBSA) to fund part of its capex.

Loan to be exhausted in 2023/24 due to entity’s financial position impacted by Covid-19.

Shortfall required to fund additional capex requirement as the shortfall cannot be funded through own reserves given the continued weakening of the entity’s financial position.

At present, around 84% of ATNS’s revenue is facilitated through our regulated business.
During the reporting period, their non-regulated business contributed approximately 16% to the total turnover of the company.

With a decrease in tariff-generating movements due to COVID-19-induced global travel restrictions, in FY2020/21, they saw a 67% decline in this revenue from our previous financial year.

This trend was reversed during the current reporting period, with an 86% increase in revenue compared to 2020/2021.
133 During FY2021/22, operating costs increased to R 1 235 million (FY2020/21: R1 168 million) mainly due to an increase in staff-related costs following our section 189 Labour Relations Act process, with employees offered voluntary severance packages and early retirement pay-outs.

During the year under review, our capital expenditure increased to R186 million (FY2020/21: R155 million) largely due to the implementation of navigational and surveillance projects.
ATNS’s liquidity ratio decreased to 2.3:1 (FY2020/21: 3.3:1) given depleted cash reserves.

This notwithstanding, the ratio is still above the norm of 2:1 with our gearing at 3.9% (FY2020/21: 3.3%).

As a regulated entity, ATNS measures our return of capital employed (ROCE) in line with the approach document issued by the Economic Regulating Committee.

The ROCE is -11% (regulated ROCE: -29%).


The ROCE is a measure of the extent to which a company utilises its resources efficiently to generate profits, while the regulated ROCE is based on the Economic Regulating Committee formula.

Cash generated from operations improved by 60% to -R228 million (FY2020/21: -R567 million), as a result of improved debt collections.

The company’s cash reserves continued to deteriorate in the reporting year to R408 million (FY2020/21: R830 million).
This is mainly attributable to lower than expected air traffic movements, given ongoing and prolonged travel restrictions during the year under review.

During the reporting period, air traffic movements continued to be impacted by the COVID-19 pandemic.

The company’s financial and business performance continues to be underpinned by tough market conditions for the global air travel sector.
Across geographic regions, both large and small airlines grounded much of their fleet, which led to downsizing and related corporate restructuring plans.

In parallel, given negative economic growth for the year and reduced disposable income, limited discretionary consumer spending continued to hamper both international inbound tourism and domestic travel, despite the easing of lockdown measures in the second half of the year under review.
134 Although ATNS is not audited by the AGSA, the AGSA indicated from the independent auditor’s outcome there was a regression in the quality of financial statements as the entity still had to correct material misstatements identified through the audit process on its financial statements to achieve an unqualified opinion.

Another area of non-compliance indicated in the audit was that the entity failed to prevent irregular, fruitless and wasteful expenditure.
7.4.10 RTIA The Committee noted that the entity had not submitted its annual report in time, however, the AGSA indicated that the audit had been finalised and the entity had again received a qualified audit with findings.

The notes hereunder are taken from the AGSA general presentation to the Committee.

The organisational structure for RTIA should also be approved urgently so that the agency can fill key management positions.

For 2022/23, RTIA will be phased in for MI implementation.
RTIA remained stagnant on a qualified opinion with repeat qualifications on irregular expenditure and AARTO assets and liabilities.

The first qualification item related to the completeness of irregular expenditure opening balance that could not be confirmed.

This finding is a repeat finding of which management was required to have done investigation to ensure irregular expenditure disclosed in the financial statements is complete.
The report from management and the external service provider were only provided to auditors late in July 2022 and based on the review of this report it was concluded that it did not properly/ effectively address the root causes raised in the previous year.
The second qualification item was due to material misstatements identified during the audit of the adjustments that were made by management to AARTO assets, these adjustments were relating to opening balances that equal to the closing balance and there was no restatements on the previous years closing balance.

This was due to lack of adequate reviews to ensure that financial statements are free from material misstatements.
The organisational structure for RTIA should also be approved urgently so that the agency can fill key management positions.

135 A material uncertainty may exist regarding the going concern at RTIA due to the High Court judgement relating to the AARTO Act as disclosed in the AFS.

The agency applied to appeal the judgement The department and the accounting authority should continue to monitor this matter and should assess the impact on the going concern of the agency.
RTIA achieved 53% of their annual targets.

Restoring normalcy at the Road Traffic Infringement Agency following investigations that unearthed fraudulent practices and attending to the finalisation of the RTIA organisational structure.

RTIA received a qualified opinion as management did not adequately address the prior year qualification items to improve the audit outcomes.

RTIA was qualified on the completeness of Irregular Expenditure.

This is a repeat qualification from 2020/21.


The entity incurred R0.2 million in fruitless and wasteful expenditure.

The accounting authority needs to ensure that the root cause of irregular expenditure is addressed in the following year.

The internal controls around the SCM unit need to improve and need to be capacitated with the employees that have the requisite skills to stabilise the unit.
The adverse court judgment regarding the AARTO Act124, along with the failure by the entity to table its annual report and financials on time for a second consecutive year, as well as the concerns raised by the AGSA do not bode well for the future national roll-out of AARTO by an entity that seems to be regressing.

124 On 13 January 2022 the Gauteng Division, Pretoria declared the AARTO Act and the AARTO Amendment Act unconstitutional and invalid.
The judgement if confirmed by the Constitutional Court will not only have a detrimental effect on the implementation and roll-out of AARTO but will also result in significant consequences for the entire road traffic regulation regime throughout the spheres of government.

136 7.4.11 RTMC The Committee noted that the entity had improved their audit outcome to that of unqualified audit opinion with no findings.
It further noted the improvement in reducing the vacancy rate at the entity from 26% in the previous year to 6% at the end of the year under review.

A year-on-year expenditure comparison reflects an increase compared to the previous year, R1.43 billion was spent compared to R1.18 billion in the 2020/21 financial year.

There was over spending of 8% due to non-cash items e.g.

depreciation and provisions.


109% of the budget for Cost of Employees was spent in comparison to the previous year, wherein 96% of the budget was utilised.

114% of the budget for goods and services was spent in comparison to the previous year, where 120% was utilised.
95% of the capital budget was spent due to acquisition of computer equipment for the Natis hardware refresh and Computerised Learner License Testing, delay in the finalisation of the acquisition of land contributed to the non-spending of 5%.

Revenue collected by the Corporation was 7% below the adjusted budgeted amount (2020/21 exceeded budget by 5%).

Initial budget was R1.4 billion which was later adjusted to R1.3 billion.
Actual collection amounts to R1.2 billion resulting in under-collection of R90 million.

Under collection can be attributed to the delay in the implementation of the online registration service as well the slow revenue generation, because of technical glitches, by Section 56 revenue project.

The Committee noted the contributions by the entity in relieving the backlog of driving licence card renewals by opening two driving licence testing centres.
The feedback regarding the quality of service provided at these facilities was noted and welcomed.

7.4.12 DLCA The DLCA retained an unqualified audit opinion with no findings.

The Committee noted that the entity had not submitted its annual report in time, however, the AGSA indicated that the audit had been finalised.

The notes hereunder are taken from the AGSA general presentation to the Committee.
137 All the entities with clean audit outcomes achieved their key indicators, except for DLCA which did not achieve on the indicator relating to the number of days taken to produce driving license cards This was because of the breakdown of the card production machine due to flood damage as well as the fact that the machine has long exceeded its useful life cycle.

The Committee was pleased to hear that the DLCA was one of eight auditees that submitted financial statements free of material misstatements.
The Committee noted that The Minister of Transport has pronounced the transfer of DLCA to RTMC as part of rationalization process of the roads entities and therefore DLCA was no longer required to go ahead with the proposed updated organizational structure.

The Committee further noted that the DLCA was one of the top contributors to irregular expenditure that was not dealt with, amounting to R302 million.
The Committee remains concerned regarding the age of the current card production machine and the need to request exemptions or deviations from NT related to obtaining the raw material used in the card production process and maintenance of the production machine.
The Committee was further concerned about how slow progress has been in finalising the new driving licence card design planned for introduction in 2021/22, while the entity presented that the specifications had only been approved during the 2021/22 year.

The backlog in renewal applications exacerbated due to COVID-19 lockdown restrictions, online booking failures in Gauteng and delays in processing the cards also remains a concern as the extended deadline for expired licence applications is drawing near.
7.4.13 SAMSA For the first time in four years, the entity tabled its report in time for consideration as part of the BRRR.

The SAMSA obtained an unqualified audit opinion with findings for a second year.

138 In terms of reducing irregular expenditure, the Board was instrumental in the condonation of irregular expenditure by National Treasury for the 2014 and 2015 periods amounting to R70 million.

Irregular Expenditure for 2016 has been submitted to National Treasury for condonation of R29.4 million.
When it relates to SAMSA’s going concern status, the ramifications of the COVID-19 pandemic two years later, are still being felt in SAMSA as persistent financial constraints due to the continued impact on trade volumes in and out of South African waters.

The entity was able to achieve an overall corporate performance of 62% against its set strategic outputs for the period under review.

This is a significant decline from the 87% achieved in the 2020/2021 financial year.
This huge decline in performance is attributed to the key strategic challenges encountered by the entity such as financial constraints to fund key strategic and mandate objectives, slow growth of the South Africa Ship Registry due to the slow progress in resolving shipping taxation, customs and excise issues.
These challenges coupled with the, outdated and slow ratification of legislation and processing of the convention, protocols, bills and subsidiary instruments negatively affected the entity’s performance.

SAMSA reported a net surplus of R34.6 million for the 2021/2022 financial year.

This surplus is attributed to the robust cost containment strategy adopted by the entity.

In addition, the entity successfully implemented the approved 6% tariff increase during the period under review.
Notwithstanding the improved financial performance SAMSA remains vulnerable to the weakened trading environment due to the declining vessel traffic visiting our ports.

This has a potential to negatively affect the SAMSA levies revenue which is highly dependent on the vessels visiting our ports.

There were repeat findings in non-compliance with procurement and contract management, quality of financial statements and prevention of irregular, unauthorised, and fruitless and wasteful expenditure at SAMSA.
Non-compliance with effecting consequence management was a new finding at SAMSA.

The Committee noted the reduction in fruitless and wasteful expenditure as well as the reduction in irregular expenditure, however the entity should improve its efforts to limit irregular expenditure.

The entity may have reduced the irregular expenditure, however, they were still part of the top five contributors to irregular expenditure in the portfolio, amounting to R29 million.
SAMSA also failed to deal with past irregular expenditure amounting to R535 million.

139 The entity should tighten its Information Technology systems to prevent further cyber attacks.

It was noted that the entity was selected for the 2022/23 financial year to be phased in for MI implementation.

The board of SAMSA will need to focus on filling the key vacancies at executive management level to support the timely implementation of actions to address key deficiencies in internal control.
The shortage of surveyors was specifically concerning as this resulted in Port State Control inspections being well below accepted levels which impacts direct users charge revenue.

8.
RECOMMENDATIONS 8.1 Recommendations from the Combined Strategic Plan, Annual Performance Plan and Budget Vote Report 2022 8.1.1 The Committee recommended that the Minister, through the Department, should ensure: 8.1.1.1 The Department must provide the Committee with quarterly updates on the filling of board vacancies so that board memberships are filled well in time to have functioning boards in order to prevent a recurrence of the Annual Report delays as well as to ensure effective and efficient control over and fiduciary duty fulfilment in all entities of the Department.
8.1.1.2 The Department should give a quarterly update on the filling of vacancies in senior positions within the Department and its entities.

140 8.1.1.3 The Department should do its best to submit all planned legislation to Parliament by no later than the last quarter of year three (3) or at the latest by the first quarter of year four (4) of their Strategic Plans.
8.1.1.4 The Department should provide a full report on all PTOG contracts in place and how far the various departments are in advertising new tenders for these routes.
Furthermore, the report should indicate the dates of conclusion of these contracts, how many times these contracts have been extended and the periods of the extension, court orders against termination of these contracts and whether PTOG bus subsidies have been paid based on the number of passengers transported over a number of kilometres per operation route.

The report should be submitted to the Committee within 30 days, after the adoption of this report by the House.
8.1.1.5 The Department should provide quarterly reports on the implementation of the following grants: PRMG, RRAMS, MIG, Expanded Public Works Programme Integrated Grant for Municipalities and PTNG.
These reports must indicate the past 5 year budget allocation for these grants to each province and municipality benefitting from these, what projects have benefitted from these grants in the past 5 years, what projects are projected to benefit from these grants in the next 5 years, status of projects (planning phase/in progress/completion dates), if grant allocations were suspended give reasons for the suspensions and possible grounds or conditions for re-admission.
8.1.1.6 The Department should provide quarterly updates on whether there was any uptake by the taxi industry of the Covid-19 relief fund for the industry, and if not, how these funds have been reprioritised.

8.1.1.7 The Department and the DLCA must provide quarterly reports on progress with narrowing the backlog of driver licence card production as well as progress on the Cabinet process towards the new card format.
8.1.1.8 The Department and PRASA must provide quarterly reports on progress with bringing the full passenger rail service back online as well as the progress with new train roll- out and depot finalisation to store these trains safely.

This report must also contain information on the appointment and roll-out of the security plans to prevent vandalism of, theft of and encroachment onto PRASA infrastructure and rail reserves.
8.1.1.9 The Department must provide a quarterly road maintenance report on the national, provincial and municipal road maintenance work and expenditure, this must also include: the road number and location, the responsible sphere, the assessed condition of the road (good/fair/poor), information on when the last maintenance was of the road and what work was done and the cost/expenditure on this work, future planned maintenance projects with budget allocations.
141 8.1.1.10 The Department and ACSA must provide a report, within 30 days of adoption of this report by the House, on the airport infrastructure expansion projects, which must also include information on the extent of expansion/upgrade projects, which airports will be expanded or upgraded, timeframes and target delivery dates, budget estimates for the expansions and projected impact on airport operations during the project implementation.
8.1.1.11 The Department must provide quarterly reports on the various municipal, provincial and national projects with the specific focus on pothole repairs.
This report should also include the available platforms or methods for reporting potholes to the responsible sphere, the quarterly expenditure on pothole specific repairs, any PPP or community partnerships in place for ensuring pothole repairs as well as the legal or departmental expenditure by each sphere on claims against the sphere for vehicle damage or personal injury claims due to potholes.
8.1.1.12 The Department and SANRAL must provide quarterly reports on the Moloto Road and other Moloto Corridor projects and progress on the road infrastructure projects, public transport provision along the corridor and expenditure on these for each quarter.
8.2 Recommendations made by the AGSA for the Budgetary Review and Recommendation Report for the 2021/22 financial year The role of the AGSA is to reflect on the audit work performed to assist the Committee in its oversight role of assessing the performance of the entities taking into consideration the objective of the Committee to produce a BRRR.
142 The AGSA, similarly to last year, recommends the following to the Department and its entities:  Develop and implement action plans that is root cause focused and is assessed for effectiveness in addressing the findings.

These action plans should include amongst other the findings, rating of the findings root causes, allocated responsibilities and indicate completion timelines.
The implementation of the action plans must be reviewed by internal audit and reported to the audit committee on a regular basis.

 Implement disciplined financial reporting structures based on solid accounting and financial management knowledge.

This should include finance and SCM divisions that are fully capacitated with required skills and competencies, implementation of financial management discipline such as monthly reconciliations, segregation of duties and reviews etc.
 Monitor performance and consequence management especially around supply chain management.

There should be a culture of high performance and adherence to ethical standards.

Where poor performance and transgressions with SCM prescripts are identified appropriate actions should be taken in line with the internal policies and procedures.
 Accounting officers/authorities must continue to do their work through audit committees to ensure management implement and enhance processes of review of the financial statements and performance information.

 The internal audit functions and Audit and Risk Committees should enhance their independent review of the financial statements and annual performance report.

Any deficiencies identified should be corrected by management before submission to the next level.
 Accounting officers/authorities should strengthen their oversight by ensuring that executive management are held accountable for poor performance and transgressions of the law.

 Develop, implement and monitor integrated action plans to address non-achievement of key indicators and monitoring of the progress towards the achievement of MTSF targets.

143  Capacitate the SCM and project management units to ensure timeous and quality delivery of infrastructure projects.
 Strengthen the oversight function at the department to ensure achievement of key performance indicators by the entities and provincial departments.

 Develop and implement proper procurement plan which takes into account the risk and mitigation of procurement delays and the impact thereof on delivery of infrastructure projects.
 In compliance with the relevant laws and regulations, develop a strategy to involve the local community in key projects and continuous engagement with the relevant stakeholders to create awareness of the process to be followed to minimize the disruptions.

 In relation to PRASA: o PRASA should implement a comprehensive turnaround plan to ensure improved audit outcomes and service delivery.
This should include creating stability at executive management level, fully capacitating critical units, effective and efficient procurement and fast tracking depot and infrastructure modernisation.

Although PRASA has multiple actions plans, these need to be consolidated into a comprehensive turnaround plan.
o The infrastructure modernization programme should be urgently fast tracked to ensure effective deployment and utilisation of the new trains which will ultimately have a positive impact on service delivery.

o PRASA should facilitate the project management team to ensure the effective management of the Gibela contract, including monitoring and enforcement of penalties where applicable.
o The board should finalise a lasting solution on the financial sustainability of Autopax through engagement with stakeholder such as the Department of Transport and National Treasury.

o PRASA should finalise the investigation on the possible ghost employees and implement corrective actions.
The AGSA recommends that the Committee monitor and do regular follow ups with the executive authority and accounting officer/authority to ensure that: 144  The big entities in the portfolio replicate the best practices to achieve clean audit.

For entities where clean audit was achieved this should be maintained and focus should shift to achieving strategic objectives and service delivery mandates.
 Accounting officers/authorities strengthen their oversight by ensuring that executive management are held accountable for poor performance and transgressions of the law.

 Accounting officers/authorities develop and implement action plans that are root cause focused and are assessed for effectiveness in addressing the findings.

 The executive authority continues to pay attention to PRASA and SANRAL to ensure that these entities timeously delivery on key infrastructure projects.
 The progress towards achievement of the MTSF targets is monitored and corrective actions are put in place where the portfolio is behind.
8.3 The Committee recommendations for the 2021/22 financial year Budgetary Review and Recommendation Report The Committee recommends that the Minister, through the Department, ensure the following: 8.3.1 Recommendations specific to the Department and of General Application to entities 8.3.1.1 Due to the observation that the Department indicated the same measures to address AGSA findings as it had in previous years, the Committee implores the Minister to ensure that stronger measures are put in place to address the audit findings effectively and that they are implemented in a manner that will ensure that the Department improves its audit outcome for the 2020/21 financial year.
In relation to this recommendation, it is imperative that the Department strengthen its oversight over the entities and report to the Committee, on a quarterly basis, on progress made to remedy all matters raised by the AGSA; 8.3.1.2 The advertising and filling of Board, CEO, as well as senior management vacancies, as indicated in the paragraphs above, should be prioritised in the Department and the affected entities.
In order to achieve the SONA 2018 commitment made by Government to changing the way Boards of SOEs are appointed, the positions filled should be with people who have the relevant expertise, experience and integrity to serve in these vital positions.

This will allow the Department, as well as the entities to operate and report effectively, and do so within the parameters of applicable legislation.
The Department, with its entities, must report to the 145 Committee, by the end of January 2022, and thereafter on a quarterly basis, on current efforts underway to finalise the filling of posts and ensure that it presents an implementable strategy to address future vacancies.
The Department should also provide the Committee with an updated report, by the end of January 2022, on the status of current Board vacancies; 8.3.1.3 The Department must implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself.
The Department should ensure that the targets set in their Strategic Plans and APPs going forward adhere to Specific, Measurable, Achievable, Realistic and Timely (SMART) principles and ensure that sufficient records are available to prove that those targets have been met.
Management in the Department should ensure that it is possible to validate the processes and systems that produce the indicator to enable them to produce the required evidence (through improved record- keeping) supporting their reported performance.

Conversely, it should adhere to the requirements of the Framework for Managing Programme Performance Information to ensure that all indicators are well defined and verifiable, and that all targets are specific and measurable i.e.
the nature and required level of performance is clearly specified and measurable.

The Committee also requested that the Department and its entities move towards the development of key performance targets that would have tangible and measurable results that show actual and/or improved service delivery to all transport stakeholders; 8.3.1.4 Effective steps should be implemented in the transport portfolio to prevent irregular, fruitless and wasteful expenditure.
Some of these highlighted by the Committee are: 8.3.1.4.1 Officials who caused the Department or its entities to incur irregular, fruitless and wasteful expenditure should be subjected to disciplinary procedures and, where applicable, implement the appropriate measures provided for in terms of sections 81 to 86 of the PFMA.
Section 81(1) stipulates that: “an accounting officer for a department or a constitution institution commits an act of financial misconduct if that accounting officer wilfully or negligently- (a) fails to comply with a requirement of section 38, 39, 40, 41 or 42 or (b) makes or permits an unauthorised expenditure, an irregular expenditure or a fruitless and wasteful expenditure”.
In addition, section 81(2) states that: “an official of a department, a trading entity or a constitutional institution to whom a power or duty is assigned in terms of section 44 commits an act of financial misconduct if that official wilfully or negligently fails to exercise that power or perform that duty”.
146 For its part, section 86(1) of the PFMA states that: “an accounting officer is guilty of an offence and liable on conviction to a fine, or to imprisonment for a period not exceeding five years, if that accounting officer wilfully or in a grossly negligent way fails to comply with a provision of section 38, 39 or 40”.
In addition, section 86(2) of the PFMA maintains that: “an accounting authority is guilty of an offence and liable on conviction to a fine, or to imprisonment for a period not exceeding five years, if that accounting authority wilfully or in a grossly negligent way fails to comply with a provision of section 50, 51 or 55”.
Finally, section 86(3) of the PFMA stipulates that: “any person, other than a person mentioned in section 66(2) or (3), who purports to borrow money or to issue a guarantee, indemnity or security for or on behalf of a department, public entity or constitutional institution, or who enters into any other contract which purports to bind a department, public entity or constitutional institution to any future financial commitment, is guilty of an offence and liable on conviction to a fine or imprisonment for a period not exceeding five years”.
The Act also includes provisions for criminal prosecution in cases of gross financial misconduct; 8.3.1.4.2 The Department and its entities must at all times ensure that proper record-keeping is implemented for information supporting compliance and procurement processes and implement consequence management for staff members who fail to comply with applicable legislation in this regard; 8.3.1.4.3 Having noted that the Department had a Loss Control Committee/Division to deal with and ensure the rooting out of irregular expenditure, the Department must present quarterly reports on the progress made by this Committee/Division to ensure that the Department and its entities do not incur irregular, fruitless and wasteful expenditure going forward; 8.3.1.5 The Committee requests the following with regard to compliance with the provisions of the PFMA: 8.3.1.5.1 The Department should capacitate its Finance and SCM directorates/departments/branches with appropriately skilled and competent personnel to prepare credible financial statements; 8.3.1.5.2 The executive authorities, accounting authorities, accounting officers and senior management should ensure that information used to prepare financial statements is accurate and reliable; and 147 8.3.1.5.3 The Department must ensure that all officials responsible for reporting in terms of the PFMA are reskilled by ensuring they receive training on compliance with the PFMA, ensure that these staff members undergo refresher courses on the applicable NT Regulations that are implemented from time to time, and receive training on compliance with the King Report on Corporate Governance IV; 8.3.1.6 Control processes should be adhered to in the SCM processes.
Some of these highlighted by the Committee are: 8.3.1.6.1 The Department should identify and address the inefficiencies in the SCM process in the Department, and assist its entities to do the same where needed.
There should be a review of SCM policies and the implementation of consequences for poor performance and failure to comply with applicable legislation; 8.3.1.6.2 Members of the relevant bid evaluation committee and the CFO should satisfy themselves that all service providers that are recommended for award have all the required documentation in terms of legislation.

The list of recommended bidders should be accompanied by a signed checklist confirming the completeness of required documents.
The contract specifications should not differ from the advertised call for bids; 8.3.1.6.3 Management should properly plan the acquisition of goods and services and exercise sufficient oversight and monitoring of controls to ensure that compliance with SCM policies are achieved; 8.3.1.6.4 Recurring non-compliance should be investigated and appropriate action taken against transgressors; 8.3.1.6.5 Furthermore, management should ensure that their own policies and procedures are reviewed and aligned to the Framework for Managing Performance Information and the PFMA, to ensure that performance reporting requirements are properly processed by the Department; 8.3.1.7 The Department should report back to the Committee on a quarterly basis regarding the projects to which grant funds are allocated and transferred to.
This report must cover its monitoring, tracking and engagement with its provincial and municipal counterparts on the implementation of the PRMG, PTNG, DORA and other applicable grants to ensure that money is used for its intended purpose, to ensure that there is value for money spent and to prevent a future need for roll-overs; 148 8.3.1.8 The Department should ensure that the budget allocation for projects is strengthened and realistic in order to reduce the high amounts of funds being transferred under Virements (such as targets and budget set for the Revised Taxi Recapitalisation programme); 8.3.1.9 The Department should develop an alternative investment attraction plan in order to make better use of Public-Private Partnerships and the promotion of Private Sector Participation in the funding options for various infrastructure projects, such as Rail Projects, the Moloto Corridor Project and other major infrastructure projects planned by the Department; 8.3.1.10 The Committee takes a dim view of the non-compliance and the lack of tabling of Annual Reports in terms of the sections 8 and 65 of the PFMA.
The outstanding Annual Reports that are yet to be tabled before this Committee are of a serious concern.

The Committee was of the opinion that the reasons provided for the late tabling of these reports were insufficient and did not assist in allowing the Committee to adequately assist or propose recommendations to resolve the concerns causing the failure to table on time.
The Department must ensure, and assist well in time where it is able to, that all Annual Reports are submitted within the legislated timeframes for the audit by the AGSA, as well as tabling in time before Parliament.

The outstanding reports should be presented to the Committee as soon as they are tabled and referred to the Committee.
The Committee would work towards submitting a supplementary report on the late received Annual Reports, should they be tabled in time to do so; 8.3.1.11 The Department must ensure that the PRASA Board is given the required assistance to ensure that the entity’s performance is drastically improved and that initiatives are implemented towards improving safe rail operations and deliver quarterly reports on the above to the Committee; 8.3.1.12 The Department must address the issues once again raised regarding the financial health for ACSA, C-BRTA, SACAA and SANRAL in as far as their finances may be additionally affected by the impacts of COVID-19 lockdown restrictions on operations going forward, as well as the continued concerns regarding the finances of RAF, SANRAL, PRASA and its subsidiaries and ensure that a comprehensive plan is submitted to the Committee by the end of January 2023.
This must be followed up by quarterly reports on the financial health of all of its entities; 8.3.1.13 In light of the cost-containment instructions by National Treasury to Departments and entities to limit the use of consultants, the Department should indicate to the Committee what measures it has put in place to ensure compliance with this instruction and provide the Committee with a detailed report, by the end of January 2023, on all projects in which consultants were used (Departmental projects, projects linked to Grants such as the IPTN 149 projects), as well as whether there were skills transfers that accompanied the use of consultants as is required by the National Treasury instructions.
The Department must also provide a report, by the end of January 2023, on any consequence management that has been or is planned to be implemented against officials that may have approved the use of consultants without compliance with the National Treasury instructions; 8.3.1.14 In line with the commitment made by President Ramaphosa in his 2021 SONA pertaining to the construction and the rehabilitation of the N1, N2 and N3 highways, the Department should provide the Committee with the progress in this regard, including the timeframes for the completion of the work that ought to have been conducted on the highways.
8.3.1.15 The Department should provide the Committee with the detailed report on the Revised Taxi Recapitalisation Programme, and the report should specify the timeframes within which the programme will be rolled out.

8.3.1.16 The 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals (SDGs) provides a framework for international community towards the achievement of disability-inclusive development.
The Department should therefore ensure that all its programmes respond to, inter alia, universal accessible transport.

8.3.1.17 The Department should ensure that the ATNS is provided with the required funding for the virtualisation of the air traffic services, as well as the upgrading of navigation equipment.
8.3.2 Entity Specific Recommendations The Committee recommends that the Minister, through the Department, ensure the following is done with specific reference to the following entities: 8.3.2.1 ACSA 8.3.2.1.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 150 8.3.2.1.2 The entity must ensure that it improves on its Financial Statements preparation; 8.3.2.1.3 Given the impact that has been felt on the entity’s international investment projects due to airline failures, as well as the COVID-19 travel restrictions, the entity must present plans to the Committee on how it will off-set these investment losses; 8.3.2.1.4 The entity should provide quarterly updates to the Committee on its plans going forward to limit the loss of revenue, as well as its plans to expand facilitates and runways at airports; 8.3.2.2 ATNS 8.3.2.2.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets had been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.3.2.2.2 The entity must ensure that it improves its Financial Statements preparation, as well as putting sufficient measures in place to plan for revenue losses due to COVID-19 travel restrictions; 8.3.2.3 C-BRTA 8.3.2.3.1 The C-BRTA must, on a quarterly basis, report to the Committee regarding the steps taken in resolving the impasse regarding the cross-border movements on the RSA/Kingdom of Lesotho route; 8.3.2.3.2 The C-BRTA should report to the Committee, by the end of January 20232 and on a quarterly basis thereafter, regarding the continued engagements on the implementation of the 1996 SADC Protocol on Transport, Communications and Meteorology; 8.3.2.3.3 The entity should cooperate with the Department to develop funding plans to ensure the financial sustainability of the entity.
Should the funding model and legislative impediments regarding regulation by the C-BRTA not be corrected, the entity will also face liquidity concerns; 8.3.2.3.4 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings 151 of the AGSA; 8.3.2.4 DLCA 8.3.2.4.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets had been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.3.2.4.2 The entity must submit quarterly reports to the Committee on progress made regarding the application for approval to move to a new card format and the acquisition/procurement of a new card manufacturing machine.
Should there be a failure to obtain these approvals, the entity must immediately inform the Committee of steps taken to limit service disruptions to card applicants in the event that the current machine is no longer serviced and if it becomes inoperable; 8.3.2.5 PRASA 8.3.2.5.1 General 8.3.2.5.1.1 The entity should cooperate with the Department to develop funding plans to ensure the financial sustainability of the entity and its subsidiaries (especially Autopax given its dire financial position).
Should the funding model and legislative impediments regarding regulation by the PRASA not be corrected, the entity will also face liquidity concerns; 8.3.2.5.1.2 The below-than-acceptable performance requires special interventions and a rescue plan that will ensure that, in the next financial year, PRASA, focuses on the following: 8.3.2.5.1.2.1 Arresting the current decline in business performance; 8.3.2.5.1.2.2 Focusing on reliability, availability, predictability of the service that is safe and secure and improves customer service satisfaction; 8.3.2.5.1.2.3 Fixing a misaligned and fragmented organisational structure and drive efficiencies and effectiveness in the deployment of resources; 152 8.3.2.5.1.2.4 Bringing organisational stability and strict governance; and 8.3.2.5.1.2.5 Fast tracking the modernisation programme to improve passenger rail travel experience and ensuring that the infrastructure is suitable and depots are available to receive the new trains from Gibela; 8.3.2.5.1.3 That PRASA improves its current services and safety through the rollout of the current turnaround strategy.
The Department must deliver quarterly reports on the above to the Committee; 8.3.2.5.1.4 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.3.2.5.1.5 PRASA should put more effort into ensuring the provision of a more focussed and efficient Mainline Passenger Service (MLPS) with a view to responding to the increasing rate of urbanisation, as well as regional mobility requirements.
The entity, through the Minister, must provide adequate reasons to the Committee, by 15 December 2021, as to why the annual report of the entity and its subsidiaries were not tabled within the extended deadline.

In the next reporting period, the entity must ensure that it adopts its annual report in order for the Minister to table it timeously.
The entity, through the Minister, must ensure that the annual report for 2020/21 is tabled urgently; 8.3.2.5.2 Intersite 8.3.2.5.2.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.3.2.5.2.2 The entity must work with the Department to finalise its consolidation with PRASA Cres; 8.3.2.5.3 Autopax 153 8.3.2.5.3.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.3.2.5.3.2 The entity must ensure that it works with PRASA and the Department to find a viable solution to improve its finances; 8.3.2.6 PRSA 8.3.2.6.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.3.2.6.2 The entity should cooperate with the Department to develop funding plans to ensure the financial sustainability of the entity.
Should the funding model and legislative impediments regarding regulation by the PRSA not be corrected, the entity will also face liquidity concerns; 8.3.2.6.3 The entity must ensure that it improves its Financial Statements preparation; 8.3.2.7 RAF 8.3.2.7.1 The entity should cooperate with the Department to develop funding plans to ensure the financial sustainability of the entity and should provide the Committee with quarterly updates on strategies to improve the financial health status and reduction of instances where the liabilities exceed total assets of the RAF, as there was uncertainty as to whether the entity would be able to fund their future obligations.
Updates should also be provided on the notable concerns regarding liquidity remaining for RAF; 8.3.2.7.2 The RAF should be supported by the Department and stakeholders in discharging its mandate of efficiently and effectively providing compulsory social insurance cover for to all users of South African roads; rehabilitate and compensate people injured owing to the negligent driving of motor vehicles; 8.3.2.7.3 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met.
The entity must also 154 implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.3.2.7.4 The entity, through the Minister, must provide adequate reasons to the Committee, by 15 December 2021, as to why the annual report of the entity was not tabled within the extended deadline.
In the next reporting period, the entity must ensure that it adopts its annual report in order for the Minister to table it timeously.

The entity, through the Minister, must ensure that the annual report for 2020/21 is tabled urgently; 8.3.2.8 RSR 8.3.2.8.1 The entity should co-operate with the Department to develop funding plans to ensure the financial sustainability of the entity.
Should the funding model and legislative impediments regarding regulation by the RSR not be corrected, the entity will also face liquidity concerns; 8.3.2.9 RTIA 8.3.2.9.1 The entity should co-operate with the Department to develop funding plans to ensure the financial sustainability of the entity.
Should the funding model and legislative impediments regarding regulation by RTIA not be corrected, the entity will also face liquidity concerns; 8.3.2.9.2 The entity should ensure that the required measures are in place to ensure its record keeping is improved sufficiently to prevent a future tabling delay as was experienced during this audit process; 8.3.2.9.3 The entity must urgently address the findings that led to its qualified audit as identified by the AGSA; 8.3.2.9.4 The entity, through the Minister, must provide adequate reasons to the Committee, by 15 December 2022, as to why the annual report of the entity was not tabled within the extended deadline.
In the next reporting period, the entity must ensure that it adopts its annual report in order for the Minister to table it timeously.

The entity, through the Minister, must ensure that the annual report for 2021/22 is tabled urgently; 8.3.2.10 RTMC 155 8.3.2.10.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.3.2.10.2 The entity must ensure that it improves its Financial Statements preparation; 8.3.2.11 SACAA 8.3.2.11.1 The entity must ensure that it works with the Department on improving its funding model to address the revenue generation impact experienced due to the COVID-19 lockdown restrictions on the aviation industry; 8.3.2.11.2 The entity should, on a quarterly basis, report back to the Committee on the progress to procure a new or lease a South African owned calibration aircraft to ensure the continued operations at airports across the country; 8.3.2.12 SAMSA 8.3.2.12.1 The entity should ensure that adequate review processes are in place to detect material misstatements prior to the submission of its financial statements to the AGSA.
; 8.3.2.13 SANRAL 8.3.2.13.1 The entity should co-operate with the Department to develop funding plans to ensure the financial sustainability of the entity and should provide the Committee with quarterly updates on strategies to improve the financial health status and reduction of instances where the liabilities exceed total assets of SANRAL as there was uncertainty as to whether the entity would be able to fund their future obligations.
Updates should also be provided on the notable concerns regarding liquidity remaining for SANRAL; 8.3.2.13.2 With regard to SANRAL, the Ministry must urgently seek to achieve finality regarding the GFIP funding model; 8.3.2.13.3 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.3.2.13.4 The entity must ensure that it improves on its Financial Statements preparation; 156 8.3.3 Committee recommendations applicable to all entities As the following recommendations have general application to all entities of the Department and for the sake of limiting repetition, the Committee recommends that the Minister, through the Department, should ensure the following: 8.3.3.1 When vacancies in entities arise in critical posts (CEO, CFO, COO, Chief Procurement Officer (CPO)), those appointments should be expedited so that consequence management can be implemented against officials who incur or permit irregular expenditure, as well as fruitless and wasteful expenditure; 8.3.3.2 The Committee requests the following with regard to compliance with the provisions of the PFMA: 8.3.3.2.1 The entities should capacitate their Finance and SCM directorates/departments/branches with appropriately skilled and competent personnel to prepare credible financial statements; 8.3.3.2.2 The executive authorities, accounting authorities, accounting officers and senior management should ensure that information used to prepare financial statements are accurate and reliable; and 8.3.3.2.3 The entities must ensure that all officials responsible for reporting in terms of the PFMA are reskilled by ensuring they receive training on compliance with the PFMA, ensure that these staff members undergo refresher courses on the applicable NT Regulations that are implemented from time to time, and receive training on compliance with the King Report on Corporate Governance IV; 8.3.3.3 Control processes should be adhered to in the SCM processes.
Some of these highlighted by the Committee are: 8.3.3.3.1 The entities should identify and address the inefficiencies in the SCM process in the entity.

There should be consequences for poor performance and failure to comply with applicable legislation; 157 8.3.3.3.2 Members of the relevant Board/bid evaluation committee and the chairperson should satisfy themselves that all service providers that are recommended for award have all the required documentation in terms of legislation.
The list of recommended bidders should be accompanied by a signed checklist confirming the completeness of required documents; 8.3.3.3.3 Management should properly plan the acquisition of goods and services and exercise sufficient oversight and monitoring of controls to ensure that compliance with SCM policy is achieved; 8.3.3.3.4 Recurring non-compliance should be investigated and appropriate action taken against transgressors; 8.3.3.3.5 Furthermore, management should ensure its own policies and procedures are reviewed and aligned to the Framework for Managing Performance Information and the PFMA, to ensure that performance reporting requirements are properly processed by the entity; 8.3.3.4 The entities must each submit a comprehensive action plan to address any and all of the AGSA’s findings and recommendations to the Committee by the end of January 2022, followed by quarterly progress reports; 8.3.4 Committee recommendations to the Minister of Finance The Committee recommends that the Minister of Finance, through NT, should ensure the following: 8.3.4.1 Assist the Department and its entities, along with the AGSA, to obtain a definitive interpretation or definition of SCM terminology and issues raised with B-BBEE compliance requirements in order to prevent future disputes during the audit process linked to these terms; 8.3.4.2 Assist the Department with finalising new feasibility studies linked to a possible future Moloto Rail Corridor and other High Speed Rail corridors; 8.3.5 Committee recommendations to the Minister in the Presidency 158 The Committee repeats its recommendation from the 2020 BRRR and recommends that the Minister in the Presidency, should ensure the following: 8.3.5.1 Assist the Department and SANRAL in urgently processing the decision on the future funding model for the GFIP as this is still not yet finalised and the continued delays in the finalisation of the GFIP matter has continued and continues to negatively affected the financial sustainability of SANRAL; 9.
SUMMARY OF REPORTING REQUESTS The Committee requested additional matters for the Department to report on: Table 19: 2022 Summary of Reporting Requests Reporting matter Action required Timeframe The Department should submit an Written plan from the 15 January 2023 improved Action Plan to address the Department.

findings of the AGSA for it and its entities, as well as the implementation of the recommendations made by the Committee in this report.
The Department should submit a Monthly progress written Monthly starting with comprehensive briefing on steps it will briefings from the first report due on 15 be taking to assist in stabilising its Department.

January 2023 entities (including filling of vacancies, conclusion and evaluation of shareholder agreements, improving the efficiency of the shareholder representatives on the boards, closely monitoring the implementation of projects and budget expenditure, etc.).
The Department should submit a Monthly progress written Monthly starting with comprehensive briefing on progress briefings from the first report due on 15 made on the filling of Board vacancies Department.

January 2023 159 in entities, as well as the filling of all critical posts within the Department and its entities.

The Department should submit a Written briefing from the 15 January 2023 comprehensive briefing on Department.
implementation of the RTRP, to justify the continuation of the programme, to indicate how it will assist with delivering on the outcomes of the Taxi Lekgotla and with specific reference as well to the progress under the programme for purposes implementation of of the recommendations from the Public Protector’s Report on illegal Quantum Van conversions.

The Department should submit Written plan from the Quarterly reports quarterly reports on investigations Department.
underway in the Department and all the entities, with additional emphasis on the finalisation of investigations to resolve the AGSA SCM compliance concerns, lack of consequence management and resolution of past incurred irregular expenditure findings.

within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on pending litigation, Department.
as well as settlements reached and judgments for and against the Department and all the entities.

within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports 160 quarterly reports on human resource Department.
management (retentions, secondments, transfers, retirements, training and skills transfers, resignations and dismissals), as well as report on progress in disciplinary matters (including suspensions) in the Department and all the entities.

within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on the achievement of Department.

job creation targets in the Department and all the entities.
within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on the achievement of Department.

transformation targets in the Department and all the entities.

within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on the progress Department.
towards prevention of irregular, fruitless and wasteful expenditure for the Department and all the entities.

within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on the Shova Kalula Department.

project.

within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on the progress of Department.
projects linked with the following grants: PTOG PRMG PTNG within 30 days of the adoption of this report by the NA 161 RRAMS Coal Haulage Grant Disaster Management Grant The Department should submit Written plan from the Quarterly reports quarterly reports on progress regarding Department.

the Moloto Corridor Project with emphasis on the Road works’ progress and any future discussions on revisiting the feasibility of the Rail Programmes.
within 30 days of the adoption of this report by the NA The Department should submit a Written briefing from the 15 January 2023 comprehensive briefing on the progress Department.

made to address and/or implement recommendations emanating from Committee Oversight Reports during the year.

The Department should submit a Written report from the 15 January 2023 progress report on the finalisation of Department.

the Public Transport Safety Plan.


The Department should submit Written plans from the Quarterly reports quarterly reports on strategies to Department of Transport and: within 30 days of the adoption of this report by the NA.

address the financial health status of: C-BRTA RAF PRSA SANRAL PRASA SACAA ACSA ATNS C-BRTA RAF PRSA SANRAL PRASA SACAA ACSA ATNS The Department, together with the C- Written plan from the Quarterly reports BRTA should submit quarterly Department.
within 30 days of the progress reports on progress regarding: The implementation of the 1996 SADC Protocol on Transport, Communications and Meteorology; The resolution of the impasse regarding the cross-border movements on the RSA/Kingdom of Lesotho route.

162 adoption of this report by the NA The Department, in conjunction with Written briefing from the 15 January 2023 PRASA should submit a Department.
comprehensive briefing on the Werksmans contract from conclusion of the contract in 2015 to the current status of work performed by the firm and include the total expenditure to date relating to the contract in question, as well as the progress on resolving the matters raised in the report.

The Department, together with PRASA Written briefing from the 15 January 2023 should submit a comprehensive Department.
briefing on: - the new Board interventions plan it intends to implement, as well as how this will address the shortages of train sets currently online and how they intend to increase ridership; - The plan in place to ensure that PRASA complies with all RSR directives; - The plan in place to phase out manual authorisation or how they will ensure that the use of manual authorisation will not lead to another train collision or derailment; 163 - The plan to address the concerns raised regarding the asset register as well as the safety and security on the assets, infrastructure, staff and passengers; The Department, together with the Written plan from the 15 January 2023 DLCA must submit a comprehensive Department.
plan on how the concerns regarding the card production machine is being addressed as well as a report on the progress made to finalise and roll-out the proposed new card standards.

The Department, together with Written report from the 15 January 2023 SANRAL must submit a report on the Department.
agreements entered into and deliverables in relation to the transfer of road maintenance and further planned construction in relation to the Moloto Road Corridor with each of the relevant affected provinces and SANRAL.

The Department, together with Written plan from the 15 January 2023 SANRAL must submit a Department.

comprehensive plan on managing the fiscal constraints placed on the entity due to the e-tolling GFIP concerns raised.
The Department, together with Written progress report from 15 January 2023 SACAA must submit a report on the the Department.

progress into the investigation of the aircraft crash involving the Calibration Aircraft of the entity as well as submit the final report on this crash investigation once it is finalised.

10.
10.

CONCLUSION 164 The Committee would, through its oversight and engagements with the Department and its entities, ensure that the AGSA’s recommendations are implemented by the Department and its entities.

The Committee would further insist on receiving regular feedback from the Department on key issues impacting entities as identified through the oversight process performed by the Committee, as well as the Department’s own internal oversight directorate over the entities.

11.
11.

APPRECIATION The Committee would like to acknowledge the Minister, the Deputy Minister, the Department officials, as well as Board Members and officials of the entities for presentations made and engagements on their annual reports and annual financial statements.

The Committee applauds the achievements by the C-BRTA, DLCA, SACAA, RSR, RTMC and PRSA in receiving Unqualified Audit opinions with no material findings.
The Committee would also like to extend a note of appreciation to its support staff during the year under review and in the compilation and capturing of the Committee reports.

The Economic Freedom Fighters (EFF) abstained from the adoption of the report.

The Democratic Alliance (DA) rejected the report.

Report to be considered.
Attached – Annexure A: List of abbreviations/acronyms 165 ANNEXURE A: LIST OF ABBREVIATIONS/ACRONYMS Abbreviation/Acronym Meaning 166 AARTO ACSA AFCAC AGM AGSA APP ARDP ATNS AU AVT BAC BARSA B-BBEE BTE BRRR BRT CARCOM C-BRTA C-BRTRF CEO CFO CIDB CNG COO COTO COVID-19 CPO Administrative Adjudication of Road Traffic Offences Airports Company South Africa African Civil Aviation Commission Annual General Meeting Auditor-General of South Africa Annual Performance Plan (Draft) Access Road Development Plan Air Traffic Navigation Services African Union Autonomous Vehicle Technology Bid Adjudication Committee Board of Airlines Representatives of South Africa Broad-Based Black Economic Empowerment Bureau for Transport Economists Budget Review and Recommendations Report Bus Rapid Transport Civil Aviation Regulations Committee Cross-Border Road Transport Agency Cross-Border Road Transport Regulators Forum Chief Executive Officer Chief Financial Officer Construction Industry Development Board Compressed Natural Gas Chief Operational Officer Committee of Transport Officials The Coronavirus Disease 2019 Chief Procurement Office DBSA DG DGEC DDG DGOs DLCA DLTC DORA DPE DPME DPSA ENaTIS ERT ESEID EXCO FMPPI FOSAD GFIP GHG GDP GDYC GTS HRD HSR IA ICAD ICAO 167 Development Bank of Southern Africa Director-General Directors-General of the Economic Cluster Deputy-Director General Dangerous Goods Operators Driving Licence Card Account Driving Licence Testing Centres Division of Revenue Act Department of Public Enterprises Department
 of Planning, Monitoring and Evaluation Department of Public Service and Administration Electronic National Traffic Information System Economic Regulation of Transport Economic Sectors, Employment and Infrastructure Development Executive Committee Framework for Managing Programme Performance Information Forum of South African Directors-General Gauteng Freeway Improvement Project Greenhouse Gas Gross Domestic Product Gender, Disability, Youth and Children Green Transport Strategy Human-Resource Development
 High Speed Rail Issuing Authority International Civil Aviation Day International Civil Aviation Organisation ICT IMO IPAP IPTNs IPTTP IRERC IT KPI LDV 168 Information and Communications Technology International Maritime Organisation Industrial Policy Action Plan Integrated Public Transport Networks Integrated Public Transport Turnaround Plan Interim Rail Economic Regulatory Capacity Information Technology Key Performance Indicator Light Delivery Vehicle LGBTQIA+ Lesbian, Gay, Bisexual, Transgender, Queer or Questioning, Intersex, Asexual or Ally and Two- LPG MCA MECs Spirited Liquefied Petroleum Gas Multi-Criteria Assessment Members of the Executive Council MEOSAR Medium Earth Orbit Search and Rescue MI MLPS MoAs MOU MTEF MTP MTSF MTT M&E NA NADP NAFCS Material Irregularity Long Distance (Main Line) Passenger Service Memoranda of Agreements Memorandum of Understanding Medium-Term Expenditure Framework Comprehensive Maritime Transport Policy Medium-Term Strategic Framework (2014-19) Ministerial Task Team Monitoring and Evaluation National Assembly National Airports Development Plan National Anti-Fraud and Corruption Strategy NATMAP 2050 National Transport Master Plan 2050 NCAP NCCRS NCOP NDP NEDLAC NGP NHTS NICRO NIP NQF NRSS NRTA NSRI NT 169 National Civil Aviation Policy National Climate Change Response Strategy National Council of Provinces National Development Plan National Economic Development and Labour Council New Growth Path National Household Travel Survey South African National Institute for Crime Prevention and the Reintegration of Offenders National Infrastructure Plan National Qualifications Framework National Road Safety Strategy National Road Traffic Act National Sea Rescue Institute National Treasury PEPFRA Ports Economic Participation Framework PFMA PICC PMDS PPP PPPFA PRASA PRSA PRMG PSC PSP PTNG PTOG RAs Public Finance Management Act Presidential Infrastructure Coordinating Commission Performance Management and Development System Public-Private
 Partnership Preferential Procurement Policy Framework Act Passenger Rail Agency of South Africa Ports Regulator of South Africa Provincial Roads Maintenance Grant Passenger Safety Charge Private Sector Participation Public Transport Network Grant Public Transport Operations Grant Registering Authorities RAF RFS ROCE RPAS RRAMS RSA RSR RTIA RTMC RTRP SAAF SAATM SABC SABOA SACAA SADC SAMSA SANRAL SAPS SARS SASAR SCM SEIAs SIP SMART SMME SMS SmS SMSR 170 Road Accident Fund Road Freight Strategy Return on Capital Employed Remotely Piloted Aircraft Rural Road Asset Management System Grant Republic of South Africa Railway Safety Regulator Road Traffic Infringements Agency Road Traffic Management Corporation Revised Taxi Recapitalisation Programme South African Air Force Single African Air Transport Market South African Broadcasting Corporation Southern African Bus Operations Association South Africa Civil Aviation Authority Southern African Development Community South African Maritime Safety Authority South African National Roads Agency Limited South African Police Services South African Revenue Service South African Search and Rescue Organisation Supply Chain Management Socio Economic Impact Assessment System Strategic Infrastructure Programme Specific, Measurable, Achievable, Realistic and Timely Small, medium and micro enterprises Senior Management Service Safety Management System Safety Management System Report SOEs SONA SSP STER TAT TETA TFR TNPA ToR TRP TV TVET UN VTC WHO WITS YD 171 State-owned Enterprises State of the Nation Address S’hamba Sonke Programme Single Transport Economic Regulator Transport Appeals Tribunal Transport Education and Training Authority Transnet Freight Rail Transnet National Ports Authority Terms of Reference Taxi Recapitalisation Programme Television Technical Vocational Educational and Training United Nations Vehicle Testing Centres World Health Organisation University of Witwatersrand Yamoussoukro Decision 3.
BUDGETARY REVIEW AND RECOMMENDATIONS REPORT OF THE PORTFOLIO COMMITTEE ON MINERAL RESOURCES AND ENERGY DATED 20 OCTOBER 2022 172 The Portfolio Committee on Mineral Resources and Energy, having considered the performance and submission to National Treasury for the Medium Term period of the Department of Mineral Resources and Energy, reports as follows: 1.
INTRODUCTION The Money Bills Procedures and Related Matters Amendment Act (Act 9 of 2009) sets out the process that allows Parliament to make recommendations to the Minister of Finance to amend the budget of a national department.
In October of each year, Portfolio Committees must compile Budgetary Review and Recommendation Reports (BRRR) that assess service delivery performance given available resources; evaluate the effective and efficient use and forward allocation of resources; and may make recommendations on forward use of resources.
The BRRR are also source documents for the Standing/Select Committees on Appropriations/Finance when they make recommendations to the Houses of Parliament on the Medium-Term Budget Policy Statement (MTBPS).

The comprehensive review and analysis of the previous financial year’s performance, as well as performance to date, form part of this process.

1.1.
1.1.

Mandate of the Portfolio Committee on Mineral Resources and Energy In terms of the Constitution of the Republic of South Africa, 1996 (the Constitution), Portfolio Committees have a mandate to legislate, conduct oversight over the Executive and facilitate public participation.

The Portfolio Committee on Mineral Resources and Energy mandate is governed by Parliament’s mission and vision statements, the rules of Parliament and its Constitutional obligations.
The mission of the Portfolio Committee is to contribute to the realisation of a developmental state and ensure effective service delivery through discharging its responsibility as a Portfolio Committee of Parliament.

Its vision includes enhancing and developing the capacity of 173 Committee Members in the exercise of effective oversight over the Executive Authority.

One of the Committee’s core objectives is to oversee, scrutinise and influence the action of the Executive and its agencies.
This implies holding the Executive and related entities accountable through oversight of objectives of its programmes, scrutinising its budget and expenditure (annually), and recommending through Parliament actions it should take in order to attain its strategic goals and contribute to service delivery.
The committee, in undertaking the process of compiling this report, considered the following source documents and engagements: • Annual Report briefings, in terms of Section 65 of the Public Finance Management Act, No.
1 of 1999, which requires that Ministers table the annual reports and financial statements for the Department and public entities to Parliament - briefings on 11 and 13 October2022 • Briefing by the Auditor-General of South Africa (AGSA) on the audit outcomes of the Department of Mineral Resources and Energy and the entities reporting to it – briefing on 11 October 2022.

1.2.
1.2.

The Mandate of the Department of Mineral Resources and Energy and its entities This section provides a synopsis of the mandate of the Department and its eleven entities.

The overarching purpose of the Department of Mineral Resources and Energy (DMRE) is to ensure that diverse resources are available in sustainable quantities and at affordable prices for the growth of the South African economy.
In line with the National Development Plan (NDP), the Department contributes to the fight against poverty, unemployment, and inequity while taking into account environmental concerns and obligations.

The Department’s vision is to be a leader in the transformation of South Africa through economic growth and sustainable development in the mining and energy sectors.
Its mission to regulate, transform and promote the minerals and energy sectors, providing sustainable and affordable energy for growth and development, and ensuring that all South Africans derive sustainable benefit from the country’s mineral wealth The Department execute its mandate through the following entities: 174 1.2.1 Council for Mineral Technology Research (MINTEK) Established in terms of the Mineral Technology Act, Act No.
30 of 1989, MINTEK, also a Science Council, is mandated to provide research, development and technology that foster the development of businesses in the mineral and mineral products industries.

1.2.2 Mine Health and Safety Council (MHSC) Established in terms of section 42(1) of the Mine Health and Safety Act, Act No.

29 of 1996, MHSC provides a research and advisory function to the Minister in terms of mine health and safety, as well as promoting a culture of health and safety in the mining industry.
1.2.3 State Diamond Trader (SDT) The mandate of the State Diamond Trader is to buy and sell rough diamonds and to promote equitable access to and beneficiation of the country’s diamond resources.

The entity aims to grow South Africa’s diamond cutting and polishing industry by enabling and increasing participation of Historically Disadvantaged South Africans (HDSAs) in the diamond beneficiation industry.
The entity is eligible to purchase up to 10% of the run-of-mine (ROM) production from all diamond producers in South Africa.

It sells to registered customers through an application and approval process.

The State Diamond Trader is a Schedule 3B entity in terms of the PFMA, as amended.

1.2.4 South African Diamond and Precious Metals Regulator (SADPMR) Established in terms of the Diamond Act, 1986, as amended, and the Precious Metals Act, Act No.
37 of 2005, the SADPMR ensures competitiveness, sustainable development and job creation in the diamond and precious metals industry, transformation, equitable access to resources for local beneficiation and ensures industry compliance with legislation.

1.2.5 Council for Geoscience (CGS) Established in terms of the Geoscience Act, Act No.
100 of 1993, CGS gathers, compiles, develops, and publishes world-class geoscience data, knowledge and products, and renders geo-science related services to the South African public and industry.

175 1.2.6 National Nuclear Regulator (NNR) The purpose of the NNR, as outlined in section 5 of the National Nuclear Regulator Act 1999 is to essentially provide for the protection of persons, property and the environment against nuclear damage through the establishment of safety standards and regulatory practices.
1.2.7 National Radioactive Waste Disposal Institute (NRWDI) The key strategic thrust of NRWDI is to execute its legislative mandate with regard to the long- term management and disposal of radioactive waste in a technically sound, socially acceptable, environmentally responsible and economically feasible manner, which is an apex priority for Government and the Department to ensure that no undue burden is placed on current and future generations due to the country’s past, present and future involvement in nuclear science and technology applications.
1.2.8 South African National Energy Development Institute (SANEDI) SANEDI’s functions, as outlined in section 7(2) of the National Energy Act, are to: - direct, monitor and conduct applied energy research and development, demonstration and deployment as well as undertake specific measures to promote Energy Efficiency (EE) throughout the economy; and - establish a nationally focused energy research, development and innovation sector and undertake EE measures with a strong relevance for South Africa.
1.2.9 South African Nuclear Energy Corporation (Necsa) NECSA’s functions, as outlined in section 13 of the National Energy Act, are to: - undertake and promote research on nuclear energy, radiation sciences and technology; - process source, special nuclear and restricted material including uranium enrichment; and - collaborate with other entities.
176 1.2.10 The Central Energy Fund (CEF) Group of Companies (SOC) Ltd CEF (SOC) Ltd is involved in the search for appropriate energy solutions to meet the future energy needs of South Africa, the Southern African Development Community and the sub- Saharan African region, including oil, gas, electrical power, solar energy, low smoke fuels, biomass, wind and renewable energy sources.

CEF also manages the operation and development of the oil and gas assets of the South African Government.
1.2.11 National Energy Regulator of South Africa (NERSA) The purpose of NERSA, as effectively outlined in section 4 of the National Energy Regulator Act, 2004 (Act No.

40 of 2004), is to regulate the electricity, piped-gas and petroleum pipeline industries within the Republic of South Africa in terms of the Electricity Regulation Act, 2006 (Act No.

4 of 2006), the Gas Act, 2001 (Act No.

48 of 2001) and the Petroleum Pipelines Act, 2003 (Act No.

60 of 2003).

1.3.
60 of 2003).

1.3.

Purpose of the BRR Report Section 77(3) of the Constitution stipulates that an Act of Parliament must provide for a procedure to amend money bills before Parliament.

This constitutional provision gave birth to the Money Bills Amendment Procedure and Related Matters Act, No.

9 of 2009 (the Act), which sets out the process that allows Parliament to make recommendations to the Minister of Finance to amend the budget of a national department.
Section 5 of the Act, states that the National Assembly (NA), through its Committees, must annually assess the performance of each national department with reference to the following: • The medium term estimates of expenditure of each national department, its strategic priorities and measurable objectives, as tabled in the NA with the national budget; • Prevailing strategic plans; 177 • The expenditure report relating to such department published by the National Treasury in terms of section 32 reports of the Public Finance Management Act, No 1 of 1999 (PFMA), as amended in 2009; • The financial statements and annual report of such department; • The report of the Committee on Public Accounts relating to the department; and • Any other information requested by or presented to a House or Parliament.
Committees must submit the BRRR annually to the NA.

The BRRR assesses the effectiveness and efficiency of a department’s use and forward allocation of available resources and may include recommendation on the use of resources in the medium term.

Committees must submit the BRRR after the adoption of the budget and before the adoption of the reports on the Medium Term Budget Policy Statement (MTBPS) by the respective Houses in November of each year.
The Act therefore makes it obligatory for Parliament to assess the Department’s budgetary needs and shortfalls vis-à-vis the Department’s operational efficiency and performance.

This is done taking into consideration the fact that the Department has oversight responsibilities over eleven entities.

1.4.
1.4.

Method followed by the Committee in writing the BRR Report The Committee has scrutinized and interrogated all available documents as outlined in Section 5 of the Money Bills Amendment Procedure and Related Matters Act.

The Committee has assessed the performance of the Department in the 2021/22 financial year.
The Portfolio Committee on Mineral Resources and Energy (PCMRE) held a meeting on the 2021/22 Annual Report of the Department and its entities on 11 and 13 October 2022, respectively, which was addressed by the Senior Leadership of the DMRE.

The office of the Auditor General of South Africa (AGSA) gave input during the BRRR process.

2.

OVERVIEW OF THE PERFORMANCE OF THE DMRE, 2021/22 This section analyses the overall performance of the Department for the 2021/22 financial year.
2.1 OVERALL FINANCIAL PERFORMANCE OF THE DEPARTMENT 178 For the 2021/22 financial year, the Department had an allocated total budget of R9.2 billion 125.

By the end of the year under review, the Department had spent R8.9 billion or 96 percent of the total allocated budget 126.

In the previous financial year, the Department spent R7.1 billion, or 95 percent of the allocated R7.5 billion127.

A large portion of the Department’s budget is for transfers and subsidies.
As a result, about 79 percent of the R8.9 billion spent in the 2021/22 financial year was under the Transfers and subsidies economic classification and was transferred to implementing agents, mainly for the implementation of electrification projects, and to public entities for the entities’ operational expenditure 128.
Table 1 below depicts the budget allocated and expenditure of the DMRE or Vote 34 for the 2021/22 financial year: Table 1: Overall Budget for the Department for 2021/22 Financial Year Programme Final Actual Spending Variance Appropriation R’000 661,812 537,462 R’000 562,544 526,858 % 85% 98% R’000 99,268 10,604 Administration Minerals & Petroleum Regulation Mining, Minerals & 792,832 768,722 97% 24,110 Energy Policy Development Mine Health & Safety 233,117 205,351 88 .1% 27,766 Inspectorate Mineral & Energy 5,881,640 5,716,621 97,2% 165,019 Resources Programmes & Projects 125 Department of Mineral Resources and Energy, (2021) 126 Ibid 127 Department of Miner Resources and Energy, (2020) 128 Department of Miner Resources and Energy, (2021) Nuclear Energy 1,134,601 1,123,441 99% 11,160 179 Regulation & Management Total 9,241,464 8,903,537 96,3% 337,927 Source: Department of Mineral Resources and Energy, (2021) In terms of budget performance, underspending has improved, albeit insignificant when compared to the previous financial year.
The underspending of R337.9 million is explained below, as contained in the Annual Report.

2.1.

Programme 1: Administration The Programme spent 85 percent of its allocated budget of R661.81 million for the 2021/22 financial year.
The programme incurred an under-expenditure of R99.27 million mainly on the goods and services economic classification due to lower payment arrangements made with the Department of Public Works and Infrastructure (DPWI) pending the resolution of a dispute lodged by the Department in relation to the Head Office (Matimba) office accommodation lease and delays in finalising procurement processes on Information Communication Technology (ICT) services for software licenses, maintenance / support, and upgrade of systems.
Savings were also achieved on several items, significantly on travel and subsistence due to the reduced number of official trips attributable to the impact of the COVID-19 pandemic.

Spending on compensation of employees and machinery and equipment were also lower than anticipated owing to unfilled funded vacancies as well as delayed delivery of procured office equipment (laptops) and email servers.

2.2.
2.2.

Programme 2: Minerals and Petroleum Regulation The Programme spent 98.03 percent of its R537.46 million budget for the 2021/22 financial year, resulting in a budget underspending of R10.60 million.
The underspending was mainly on goods and services, consultancy item, due to delays in appointing service providers to design and develop a monitoring, evaluation, and reporting system for transformation in the Petroleum and Liquid Fuels sector, and compliance to the Broad- Based Black Economic Empowerment (BBBEE) policy framework and late receipt of invoices for the Sampling and Testing of Petroleum Products project.
A transfer to African Petroleum Producers Association (APPO) for international membership fees was not transferred as planned due to the late receipt of the invoice from the multinational organisation.

Underspending was also recorded in compensation of employees due to unfilled vacant positions.

180 2.3.

Programme 3: Mining, Minerals and Energy Policy Development The Programme spent 96.96 percent of its R792.83 million budget for the 2021/22 financial year.
The underspending of R24.11 million was mainly on goods and services under the consultancy item due to delays in finalising procurement processes for the provision and distribution of mining related on-line statistical journals and the design and construction of the exhibition stand for the South African pavilion at the 2022 Mining Indaba conference.
Savings were also achieved from several items such as travel and subsistence, venues and facilities and operating payments due to less official trips than projected because of the impact of the pandemic as well as delayed conferences and public consultations which were only hosted during the last month of the financial year.

Expenditure on compensation of employees was also lower than anticipated due to vacant posts that were not filled during the financial year.
Notwithstanding the underspending of R24.11 million, the Programme reflected an overspending of R7.79 million under the transfer payments classification due to an international membership fee paid to the African Diamond Producers Association (ADPA) and funded under the goods and services classification but classified as transfer payments in terms of the SCOA classification.

2.4.
2.4.

Programme 4: Mine Health and Safety Inspectorate The Programme spent 88.09 percent of its allocated budget of R233.12 million for the 2021/22 financial year, resulting in a budget underspending of R27.77 million.
The underspending was mainly on compensation of employees attributable to vacancies that were not filled and savings from items such as legal services and contractors attributable to lower number of enquiries into mine accidents / disasters than anticipated and office consumables / supplies due to remote working.

181 2.5.

Programme 5: Mineral and Energy Resources Programmes and Projects The Programme spent 97.19 percent of its R5.88 billion budget for the 2021/22 financial year.
The budget underspending of R165.02 million was mainly on transfers and subsidies with an underspending of R269.83 million due to a post year-end adjustment, reclassifying expenditure on non-grid electrification projects from the transfers and subsidies category to the goods and services category in compliance to Treasury Classification Circular of 2018.
As a result, the transfers and subsidies classification was underspent while a budget overspending was recorded under the goods and service classification as the matching budget adjustment could not be processed.
Notwithstanding the impact of this post year-end adjustment, anticipated expenditure on consultancy / agency outsourced services was lower than anticipated attributable to a number of delayed projects, namely, the development of an Electrification Master Plan project which was delayed by the procurement process which took longer than anticipated, Energy Efficiency and Demand Side Management (EEDSM) Monitoring and verification and Non-Grid Electrification oversight, monitoring, and verification projects.
Significant savings were achieved on travel and subsistence item due to a lower number of official trips than planned.

The full implementation of the 2021/22 off-grid electrification connections plan was not achieved due to late commencement of some projects and delayed submission of invoices by other service providers resulting in a budget underspending under the non-grid electrification programme.

2.6.
2.6.

Programme 6: Nuclear Energy Regulation and Management The Programme spent 99.02 percent of its R1.13 billion budget for the 2021/22 financial year resulting in a budget underspending of R11.16 million mainly on goods and services under the consultancy item due to projects which were not implemented as planned owing to the delayed finalisation of Terms of Reference (ToRs).

Savings were realised on international membership fees due to favourable exchange rates.

3.
3.

NON-FINANCIAL PERFORMANCE OF THE DEPARTMENT 182 As indicated in the preceding section, the Department has six programme areas.

Each programme has sub-programmes within it.

The financial performance of the programmes had been discussed in the previous section, thus, this section contrasts what the Department had planned to achieve (non-financial outcomes) against what it has actually achieved.
Table 2: Overall Performance of the Department for 2021/22 Financial year Programme Total Targets Achieved Targets Not Achieved Targets 3 2 8 3 5 2 Administration 14 Minerals & Petroleum 12 11 (79%) 10 (83%) Regulation Mining, Mineral & Energy 29 21 (72%) Policy Development Mine Health & Safety 6 3 (50%) Inspectorate Programme & Projects 13 8 (62%) Management Nuclear Energy Total 7 81 Source: Department of Mineral Resources and Energy Annual Report, (2021/22) 5 (71%) 58 (72%) 23 (28%) As can be seen in Table 2 above, the Department had set itself 81 performance targets for the 2021/22 financial year.
Of the total performance targets, the Department achieved 58 or 72 percent, and fell short by 23 or 28 percent.

The Committee should note that the Department spent 96% of its allocated budget whilst it only achieved 72% of its performance targets for the year under review.

There should be a correlation between the budget spent and the targets achieved.

When compared to the previous financial year, there is significance improvement in the performance of the Department.
Whilst this achievement is below the National Treasury benchmark of 80 percent for the National Departments, it is however commendable.

In the previous financial year, the Department had set itself 70 targets, and it achieved 43 or 61 percent.

183 As depicted in the table above, all programmes achieved over 50 percent in their target performance, with the exception of Programme 5: Mine Health and Safety Inspectorate which achieved 50 percent of its performance targets.
Explanations of the targets that were not achieved is provided below, per programme.

The Administration Programme achieved 79 percent of its planned targets, a regression when compared to the 92 percent achieved in the previous financial year.

The targets not achieved in this programme during the year under review included the following: • The Department had planned to eliminate 100 percent of Wasteful and fruitless expenditure compared to previous financial year.
However, the department recorded wasteful and fruitless expenditure.

It cited that this had occurred due to unavoidable expenditure incurred.

• It had also planned a 100 percent reduction of irregular expenditure compared to prior year.

Irregular expenditure was incurred and the Department states that this was due to non-compliance to Supply Chain Management (SCM) processes.

• The Department did not meet its target of having 100 percent approved invoices from service providers paid within 30 days.
According to the Department this happened because its Branches (programmes) did not comply with the set timelines of three (3) days to return invoices for payment procedures.

The Programme 2: Minerals and Petroleum Regulation Programme achieved 83 percent of its set targets, a significant improvement from its dismal performance in the previous financial year, an achievement of 29 percent.
It was must be noted from the onset that, the Auditor General of South Africa (AGSA) questioned most of the targets reported as achieved in this programme.

This issue will be discussed under the AGSA in section 4 below.

184 The targets not achieved during the year under review included the fact that of the planned 500 mining economics inspections, 401 inspections were conducted.
The Department cited that the reason for the deviance is that the programme had two vacant positions in Gauteng and North West provinces.

However, both positions have since been filed.

Another target that was not achieved relates to the Petroleum Retail Site compliance inspections.

Of the 1 500 planned inspections, 1 317 were achieved.
The Department states that reasons for non-achievement of the target was due to COVID-19 pandemic travel restrictions in quarter 1 and quarter 2 and the July unrest in Durban.

Moreover, another reason cited was the vacant inspector positions in KwaZulu Natal (KZN) and the Western Cape (WC).

Programme 3: Mining, Mineral and Energy Policy Development Programme achieved 72 percent of its planned performance targets.

This is an improvement from 67 percent achieved in the previous financial year.
The eight (8) targets not achieved are as follows: • The Department had planned to table the Mine Health and Safety Bill in Parliament.

According to the Department, the reason for the deviance was that the public consultations conducted in 2013 were required to be redone due to lapse of time and changes in the operating environment.

Subsequently, the Department committed that it would submit the Bill to Cabinet during the first quarter of 2022/23 financial year for approval in Parliament.
• The Draft National Petroleum Company Bill which was meant to be developed and submitted to Cabinet for approval was not approved as envisaged.

The Department cites that there was a delay in finalising the proposed archetype for the merger that would house the National Petroleum Company Bill which has to be approved by Cabinet first.

• The Department had committed to have the Beneficiation Master Plan approved by Cabinet.
The Master Plan was not approved because of the delays in the stakeholder consultation due to lack of consensus regarding pillars of the framework.

The submission of the Master Plan was then deferred to the first quarter of 2022/23.

• The National Nuclear Regulator Amendment Bill was meant to be submitted to Cabinet for tabling in Parliament for promulgation.

This did not happen because of the delays in the stakeholder consultation due to lack of consensus regarding 185 nuclear security matters.
This target was moved to the first quarter of 2022/23 financial year.

• Similar to the above, the Radioactive Waste Management Fund Bill was due to be submitted to Cabinet for tabling in Parliament for promulgation.

The Departments states that Ministerial Cluster recommended that the bill should be redrafted.

The redrafted Bill was approved for publishing for public comments by Cabinet in March 2022.

• The Department had committed to submit the Gas Master Plan to Cabinet.
According to the Department, there was a delay due to a request from the stakeholders to afford more time to comment on Draft Gas Master Plan.

• The National Energy Regulator Amendment (NERA) Bill was due for submission to Cabinet, however this did not happen because allocated resources were reprioritised to focus on the Electricity Pricing Policy.

• Of the eight (8) planned quality mineral publications, four (4) were produced.
The Department cites the non-subscriptions for South African Mining Industry (SAMI), ME Bulletin research articles and other research publications as reasons for the deviation.

Programme 4: Mine Health and Safety Inspectorate Programme achieved 50 percent of its planned performance targets, a regression from the 67 percent achieved in the previous financial year.

The targets that were not achieved were as follows: • The Department had planned for a 10 percent reduction in occupational fatalities.
The Department achieved 5 percent.

There were 68 fatalities from April 2021 to March 2022 compared to 59 fatalities in the same period of the previous financial year.

The reason cited for the deviation is the depletion of ore reserves leading to mining of high risk, ultra-deep and unsafe working places which led to multiple fatalities in one accident.

• The Department had committed to reduce occupational injuries by 5 percent.

However, the Department deviated from the target by 13 percent.
There were 2 127 injuries from April 2021 to March 2022 compared to 1 802 injuries in the same period of the previous financial year.

The reason cited for the deviation is the same as on the occupational fatalities.

• The 10 percent planned reduction in occupational diseases was not achieved, instead a deviation from the target by 7 percent was recorded.
During April 2021- March 2022, a total of 1 403 occupational diseases were reported compared to 1 197 cases reported during the same period in the previous year.

186 Programme 5: Mineral and Energy Resources Programmes and Projects achieved 62 percent of the planned performance targets, an improvement from 45 percent achieved in the previous financial year.
Key targets not achieved are follows: • The target of procuring 6 800 megawatts (MW) from renewable energy of additional power generation capacity in line with the 11 813 MW section 34 Ministerial determination did not materialise.

According to the Department, the reason for the deviation is that the issuing of Request for Proposals (RFP) for Bid Window 6 was delayed due to additional due diligence requirement and approval of bid documents by the designated buyer.
Moreover, RFP for bid window 7 was delayed to allow for completion of Bid Window 6 processes.

• The issuing of the RFP for 3 000 MW from gas did not happen as planned.

The Department cites that it was decided that the issuing of the RFP for gas to power would only follow once the process to develop the gas infrastructure at Coega was finalised.

• The issuing of the RFP for 1 500 MW from coal was also not achieved.
Given the current trend on investments in fossil fuels, the Department opted to undertake market review on investment appetite on coal fired power generation prior to issuing the RFP.

• Issuing of the RFP for 513 MW from storage was not done as planned.

The Department states that RFP was delayed to allow for completion of Bid Window 6 processes.

• The Renewable Energy Sector Master Plan Report was not processed, signed off and approved as planned.
Instead, the Department states that Report was still under review and consideration by the steering committee consisting of the Department and social partners.

Programme 6: Nuclear Energy Programme achieved 71 percent of the planned targets, a regression from 83 percent in the previous financial year.

The two targets not achieved were as follows: 187 • The Department had planned to complete and submit feasibility study on Multi-Purpose Reactor (MPR) for gateway review.
According to the Department, the Gateway Review of the Pre-Feasibility Study was completed in September 2021 and the first draft for Feasibility study will be completed by end of 2022/23 financial year.

• The Feasibility Report for the establishment of the Centralised Interim Storage Facility (CISF) was not submitted to Cabinet for approval as planned.
The reasons for the deviation as cited by the Department are the challenges experienced during the feasibility phase due to the National Radioactive Waste Disposal Institute’s (NRWDI) resource constraints.

4.

AUDITOR-GENERAL’S REPORT ON THE DMRE AND ITS ENTITIES 4.1.
Overview The overall outcomes in the portfolio have improved when looking at the four years of the administration, with half of the auditees receiving unqualified audit opinions with no findings on compliance with key legislation and predetermined objectives (clean audit).

CGS, NERSA), NNR, NRWDI, SANEDI and SDT have achieved an unqualified audit opinion with no findings (clean) in the current audit cycle, this is a significant improvement.
The CEF Group, Mintek and the MHSC have received financially unqualified audit opinions with findings on compliance with legislation for the past four years due to failure to provide credible annual financial statements for audit purposes, that are subsequently adjusted from the audit process.
The prevalent instances of non-compliance were found in the areas of material misstatements identified in the financial statements submitted for auditing; expenditure management; consequence management and revenue management.

The NECSA Group’s audit outcome has remained unchanged in the four years of administration, as it has received a disclaimer audit opinion with findings on the annual financial statements and material findings on performance information and compliance with laws and regulations.
The disclaimer also includes a limitation of scope on going concern as a result of the unreliability of the information on which the entity’s forecasts are made.

According to the AGSA, the stagnation is as a result of slow responses by management and failure to implement some of the audit recommendations.

188 In most instances, findings raised were reported to be be reoccurring, an indication that audit action plans and a culture of accountability were not exercised effectively.
4.2.Details of the Audit Outcomes As presented by the AGSA, seventy-five percent (75%) of the portfolio had no material findings on performance information.

The AGSA commended the SDT, SADPMR, CGS, SDT, Mintek, NRWDI and SANEDI for submitting performance reports without material errors.

Material findings were identified at the DMRE, CEF, MHSC, NECSA, NERSA and NNR.

The MHSC, NERSA and the NNR subsequently corrected their performance reports through the audit process.
4.2.1 Material irregularities Material irregularities identified during current year audit, included: • DMRE: Storage costs incurred on solar water heating programme o Material Irregularity (MI) notification was issued to the Accounting Officer on 29 July 2022.
The Department experienced delays in the finalising of the solar water heating programme, which resulted in the Department incurring additional storage fees as they did not take custody of the manufactured units from the suppliers as per the stipulated contractual agreements.
Material financial loss: The Department paid a total of R310 075 097, 44 as at 31 March 2022 in storage cost to the suppliers of which R110 800 660.78 was paid after 1 April 2019, that has been classified as fruitless and wasteful expenditure.

Subsequent to year end, the Department incurred R5 648 141 in additional storage costs.
Responses to the MI were due to be received on 29 August 2022 however an extension was requested and granted until 15 September 2022 and the Department submitted responses on the agreed date.

According to the AGSA, the he assessment of the responses is underway and has not been finalised by the audit team.

The AGSA highlighted the following: • Key personnel that were involved in the project of solar water heaters are no longer employed by the Department.

• The Department is still incurring storage cost.


189 4.2.2 Financial Health risk NECSA obtained a disclaimer of opinion that included modification on significant doubt in the entities ability to continue operating as a going concern in foreseeable future.

Debt collection period of the DMRE and SANEDI is high as it is over 90 days and the average collection period for the portfolio is 92 days which is high.
The impact of high debt collection period is that debt is likely to be irrecoverable and this was confirmed by high impairment of debt at the DMRE, NNR and SADPMR.

Average creditors payment period of the portfolio is 45 days which is more than the 30 days period that government is adhering to.

This has an impact on the sustainability of small and medium enterprises that conduct business with the government.
4.2.3 Irregular expenditure analysis During the year under review, auditees incurred irregular expenditure amounting to R247.7 million, which was disclosed in the financial statements.

The analysis of irregular expenditure showed that irregular expenditure decreased by 61% compared to the prior year.

The top four (4) contributors (R1,66 billion) to closing irregular expenditure constituted 95% of R1,74 billion.
These included: • CEF – R1,1 billion • DMRE – R288 million • NECSA – R222 million • Mintek – R37 million The AGSA pointed out that consequence management remains a challenge as there is still lack of investigations in some of the entities (DMRE, CEF, AEMFC and Mintek) leading to inadequate disciplinary actions being taken against staff who has caused irregular expenditure.
4.2.4 Fruitless and Wasteful expenditure Significant improvement were noted in the annual fruitless and wasteful expenditure (FEW) for the portfolio.

From the first year of administration to the current year, FWE has decreased by 96% as compared to the prior year, annual FWE incurred has decreased significantly by 90%.

190 The main contributors to the fruitless and wasteful expenditure included: DMRE (R3,9 million) and CEF (R1,2 million).
4.2.5 Overall root causes of significant findings in portfolio • Management did not implement adequate review and monitoring controls over the preparation of the annual financial statements.

• Internal audit did not provide sufficient time to review the Annual Financial Statements (AFS) before they were submitted for audit purposes • As stated above, in most instances, findings raised were reoccurring, indicating that audit action plans and a culture of accountability were not exercised effectively.

5.
5.

ENTITIES REPORTING TO THE DEPARTMENT As stated above, eleven (11) State-Owned Entities (SOEs) contribute to and implement the objectives of the Department.

This section provides a brief summary of the DMRE entities.

5.1 National Energy Regulator of South Africa (NERSA) 5.1.1 Non-Financial Performance As stated above, NERSA received a clean audit.

The Regulator achieved 90% of its annual performance targets.
This signifies an overall increase of 1% in the performance when compared to the overall performance in 2020/21.

The above achievement was broken down as follows: • Regulation of the electricity industry: 84%.

This signifies a 9% decrease in the performance when compared to 2020/21, where 93% of the planned targets were met.

• Regulation of the piped-gas industry: 100%.

This signifies an 8% increase in performance when compared to 2020/21, where 92% of the planned targets were met.
• Regulation of the petroleum pipelines industry: 100%.

This signifies a 12% increase in performance when compared to 2020/21, where 88% of the planned targets were met.

• Transversal regulatory: 75%.

This performance is at the same level when compared to 2020/21, where 75% of the planned targets were also met.

• Organisational: 88%.

This signifies an increase of 8% in performance when compared to 2020/21, where 80% of the planned targets were met.
191 According to NERSA, the overall improvement in this reporting period was due to the fact that all the measures that were put in place in 2020, to deal with the impact of the restrictions due to the COVID-19 pandemic, had been implemented successfully.

This enabled NERSA to continue with it day to day and regulatory activities as normal as possible.
The decrease in the performance in electricity regulation was due external factors, such as timely submission of applications and reports from licensees or dependencies on other key roles players for progressing with key targets.
Table 3: Overall Performance against planned outputs and targets REGULATED INDUSTRIES AND OTHER PLANNED ANNUAL TARGETS ANNUAL TARGETS MET REASONS FOR ANNUAL TARGETS NOT MET External Dependencies Internal factors FOCUS AREAS 2020/21 2021/22 2020/21 2021/22 2020/21 2021/22 2020/21 2021/22 Electricity 28 31 Piped-Gas 24 19 Petroleum Pipelines 17 13 Transversal Regulatory 4 4 Organisational 15 16 TOTAL 88 83 Source: Presentation to the PCMRE on 11 October 2022 26 26 1 5 1 0 (93%) (84%) (4%) (16%) (4%) (0%) 22 19 1 0 0 0 (92%) (100%) (8%) (0%) (0%) (0%) 15 13 2 0 0 0 (88%) (100%) (12%) (0%) (0%) (0%) 3 3 0 0 1 1 (75%) (75%) (0%) (0%) (25%) (25%) 12 14 2 0 1 2 (80%) (88%) (13%) (0%) (7%) (13%) 78 75/83 7 5 3 3 (89%) 90% (8%) (6%) (3%) (4%) 5.1.2 Financial Performance 1.
Revenue Performance 192 a) Volumes reported for the year ending 31 March 2022 in all three regulated energy industries came in above estimates, as economic activity picked up with the easing of lockdown and travel restrictions: • Electricity volumes were 4.7% above Budget • Piped-gas volumes were 3.4% above Budget and • Petroleum pipelines were at 6.9% above Budget.

b) The improvement in volumes contributed to an over recovery in revenue from levies and license fees by 3.1%.

2.
2.

Operating Expenditure a) Operating expenditure for the year ending 31 March 2022 was 30% lower than the budgeted expenditure due to the continued remote working and online engagements throughout the year which resulted in a significant reduction in travel and meeting costs.

3.

Operating Deficit a) NERSA reported a deficit of R 3.25 million against a budgeted deficit of R 49.2 million.

The budgeted deficit is funded from accumulated surpluses from previous financial years.
This enables the reduction of the funding requirement for NERSA when determining the levy rates and license fee NERSA reported that it was in a stable financial position as at 31 March 2022, with a positive net asset value of R290 million.

This was mainly due to cash reserves of R208 million included in current assets and a significant portion of it is placed with the Corporation for Public Deposits at the SARB.
5.2 National Nuclear Regulator (NNR) 193 5.2.1 Non-Financial Performance The NNR operating environment was stable as the country’s economy was in the recovery process from COVID – 19 strain.

The core business such as inspections and site visits to regulated facilities were conducted as planned.

The Regulator was also able to process the reviews and assessments of various applications and change requests from operators as per the annual performance plan.
The public engagement sessions for the Nuclear Installation Site License (NISL) project in Thyspunt were successfully concluded during 2021/22.

The NNR continued to work on a hybrid system to manage the spread of COVID-19 disease i.e., 3 days in the office and 2 days work from home.

The Regulator continued with the payment of suppliers and vendors below 10 days.
SA National Accreditation System (SANAS) reviewed the laboratory quality manuals as part of the accreditation assessment for the Gamma Spectrometry: Water Matrices.The NNR planned 199 inspections across the 3 programmes and 204 inspections were conducted.

Additional 166 reviews and assessments were undertaken; this can be attributed to improvements in turnaround times.

The development of the compliance assurance programme process was reviewed to ensure alignment.
The NNR developed the Indoor Radon Regulatory Framework which contains practical approaches for South Africa to effectively control the indoor radon with the aim to reduce public exposure.

The framework will be finalised in 2022- 23 financial year.
To ensure an effective Long Term Oversight (LTO) oversight, NNR employees were trained on various areas such as  Regulatory frameworks applicable to the LTO  U.S. National Nuclear Commission renewal standard and practices  Eskom documentation applicable to the LTO  Technical assessment guides A Centre for Nuclear Safety and Security (CNSS) Sustainability Strategy was developed to crystalize the sustainability objectives and to incorporate pilot projects and proposals that are aligned to the mandate of the CNSS.
The Cape Town office Construction project plan was revised to mitigate the delays experienced in the prior year to make way for the construction of the site office in 2022-23.

194 5.2.2 Financial Performance The NNR’s cash balances for the year increased to R142 million due reserves build up the provide for Cape Town office construction.
R28 million of receivables were impaired in line with the accounting policy but efforts to collect continues where there are prospects for success and legally permissible.

With regards to current liabilities, the spike in provisions was related performance incentives in line with the policy, the pay-out was however implemented at R20 million as approved by Board with due consideration to other priorities such as construction of Cape Town office which is underway.
The financial liability represents the liability on Centurion office outstanding liability at year end.

The other financial liability the reduce to Nil during the year under review relates to the Bond for Centurion Head Quarter building the was subsequently settled in June 2022.

The rest of liabilities are stable and provided for where applicable.

The NNR’s revenue has been growing at a modest rate over the Medium Term Expenditure Framework (MTEF) period.
The 2021/22 financial year total revenue of R291 million is equivalent to 3.5% increase compared to R281 million reported in the previous financial year.
Authorisation fees declined by 1.3% from the previous year mainly due to reduction in number of licensees and lower annual increase for the year under review as approved by the Minister Compensation of employees increase by about 16% from the previous financial year, 12% of this is performance incentive paid while the remaining 4% is the marginal increase of salaries through cost of living adjustments and additional positions filled.
Expenditure on goods and services increased by about 13% as the operations gain momentum from COVID-19 constrains.

With regards to Audit outcomes, NNR receive unqualified audit opinion with no findings.

5.3.National Radioactive Waste Disposal Institute (NRWDI) 5.3.1.

Non-financial performance For the period under review, the NRWDI achieved ninety percent (90%), i.e.

9 of 10 of its targets.
195 Table 4: Annual Performance report (actual performance against targets) PROGRAMME 1 OUTPUT PLANNED TARGET ACTUAL TARGET REASON INDICATORS 2021/2022 FOR VARIANCE Percentage 100% implementation 100% implementation of None implementation of 5 - of year 2 plan of year 2 plan of finance year finance strategic finance strategic plan strategic plan plan Percentage 80% implementation of 86% implementation of None implementation of 5- year 2 plan of human year 2 plan of human year human capital capital strategic plan capital strategic plan strategic plan Unqualified audit report Unqualified audit Unqualified audit report None report for 2021/22 for 2021/22 Annual Performance Report (actual performance against targets): PROGRAMME 2 OUTPUT INDICATORS PLANNED ACTUAL TARGET REASON FOR TARGET 2021/2022 VARIANCE Percentage compliance rate 80% compliance Target Not Achieved The SHEQ audit for annual SHEQ audit for rate for annual disposal facilities on SHEQ audit for Vaalputs site disposal facilities on Vaalputs site could not be conducted by accredited provider due to COVID19 pandemic.
Number of Public Safety 4 Public Safety • Physical None Information Forum (PSIF) Information meetings were meetings held with Forum (PSIF) not held due to communities surrounding meetings held the COVID-19 196 Vaalputs with communities surrounding Vaalputs pandemic.

• As an alternative, digital platforms were used to share the information.
Percentage acceptance rate 100% acceptance 100% None for the disposal of waste rate for the packages received from disposal of waste waste generators for packages disposal received from waste generators for disposal Annual Performance Report (actual performance against targets: PROGRAMME 3 OUTPUT PLANNED ACTUAL TARGET REASON FOR INDICATORS TARGET 2021/2022 VARIANCE Percentage of CISF 40% of CISF 75% of 40% of the The Gateway Review project plan project plan CISF project plan needs to take place prior to implemented implemented implemented the Feasibility Report being finalised.
Annual Performance Report (actual performance against targets): PROGRAMME 4 OUTPUT PLANNED ACTUAL TARGET REASON FOR INDICATORS TARGET 2021/2022 VARIANCE 197 Percentage 80% of the annual 80% of the annual project None implementation of the project plan for plan for implementation of Radiation Protection implementation of the the Radiation Protection Program for Vaalputs Radiation Protection Program executed.

Program executed.
Program executed.

Percentage 80% of the annual 80% of the annual project None implementation of a project plan for plan for implementation of a Quality Management implementation of a ISO 9001 compliant Quality System for NRWDI ISO 9001 compliant Management System that is ISO 9001 Quality Management executed.

compliant System executed.


Percentage 80% of the annual 80% of the annual project None implementation of an project plan for plan for implementation of a ISO compliant SHE implementation of a ISO SHE Management Management System ISO SHE Management System executed for NRWDI System executed Source: Presentation to PCMRE on 13 October 2022 5.3.2.

Financial performance of the NRWDI NRWDI received a clean audit for the 2021-2022 financial year.
The financial statements presented fairly, in all material respects, the financial position, financial performance and cash flows of NRWDI, as at 31 March 2022, and the financial statements were free of any misstatements.

There were no findings on the finance and procurement matters.

There were no findings on the usefulness and reliability of the reported performance information.
There were no findings on compliance with the specific matters in key legislation set out in the general notice issued in terms of the Public Audit Act.

NRWDI’s approved budget was R50 891 000 for the 2021/22 financial year.

The budget comprised R49 166 000 from voted funds and R1 725 000 for other income (i.e.

interest received).

198 The actual revenue recognised for the 2021/22 financial year was R50 456 609.
The actual revenue comprises of the government grant of R49 166 000 and other income/interest received of R1 299 609.

The budget for expenditure was R50 891 000 and the actual expenditure for the year was R47 178 042, made up as follows as depicted graphically: • The savings on expenditure was largely due to saving in personnel costs due to vacant positions (approx.

R3,7 million).

5.4.

South African National Energy Development Institute (SANEDI) 5.4.1.
Non-Financial Performance With regard to achieving its performance targets the SANEDI stated that they have achieved a ninety-seven percent (97%), and that these have consistently been achieved in the past 2 years.

5.4.2 Financial Performance The SANEDI received an unqualified audit outcome from the AGSA.

Table 5: Statement of financial Position 199 Source: SANEDI presentation to PCMRE on 13 October 2022 Cash and cash equivalents comprises mainly cash from ring fenced funds.
Surpluses funds approved by National treasury for projects in 2022.

Eighty-seven percent (87%) of SANEDI’s income is from government grants.

5.5.

Council for Mineral Technology Research (Mintek) 5.5.1.

Non-Financial Performance Mintek has achieved 63% performance for 2021/22 financial year against the target of 65% in learning and growth perspective.

In the employment statistics, Mintek reported the overall gender percentage being 55 males and 45% being females.
Mintek currently has 15 SET staff members pursuing doctorate degrees in engineering and science as part of SET Postgraduate Qualification Enhancement Programme.

The topics undertaken by these candidates are along with Mintek’s core research focus areas and are aimed at strengthening and develop new divisional competencies.

5.5.2 Financial Information 200 Mintek has received Unqualified Audit opinion from AGSA.

The total income for 2021/22 financial years increased by 9 % from R553 to R600 million.
The commercial activities increased by 22% from R255.4 to R331.3m.

The state grant increased by 6.4 % from R244.9 to R260.7.

Cash locked up in working capital is a continuous focus area for Mintek.

The current ratio declined further to 1.6:1.

The ratio indicate that ManTech’s short term obligations were adequately covered by current assets.

Mintek is making visible progress to fully align with the role as research and technology organisation, as well as an industry-focused research institution.
Mintek continue to redirect their effort in order to promote mineral technology and to foster the establishment and expansion of industries in the field of minerals.

Visible progress towards establishing partnerships and collaborations, both locally and internationally, to help maximise their multi- disciplinary expertise, accelerate innovative, develop technological solutions, transfer and commercialise technologies.
The new strategy continues to deliver results where there has been an improvement in the SET staff number, experience and qualification profile.

Mintek is building capacity in business development and commercialisation as well as communication.

Overall, Mintek performed well, showing improvements in RDI outputs, financial performance and improvement in staff profile, which is an indication of Mintek’s quest towards sustainability in line with the objective of the Mintek’s 2030 strategy.
5.6 Mine Health and Safety Council (MHSC) 5.6.1 Non-Financial Performance 5.6.2 Financial Performance Reporting on the Financial performance as at 31 March 2022, MHSC said irregular expenditure decreased from R22 million in Financial Year 2019/20 to R2.6 million in the 2021/22 financial year.

During the year under review, 81% revenue was collected against a target of 70%.

MHSC received unqualified with finding audit outcomes during 2021/22 financial year.
5.7 State Diamond Trader (SDT) 5.7.1 Non-Financial Performance As stated above, the SDT mandate is to buy and sell rough diamonds for local beneficiation, promote equitable access to and beneficiation of the country’s diamond Resources, Address distortion created by excluding previously disadvantaged groups from economic participation (transform diamond industry), Purchase up to 10 of the run of mine from South African producers, sell to registered customers through an application and approved process.
201 The mandate of the entity is implemented through 5 outcomes and in terms of the Annual Performance Plan the entity had 17 strategic targets.

Of the 17 targets, the entity achieved 15, resulting in 2 targets not being met.

The entity failed to achieve Outcome Indicator 3: Collaboration in promoting and investing in research and innovation for sustainable development of the diamond beneficiation industry.

The Trader was not able to add producers to its compliance list.
It states that Further engagement with the Shareholder and the SADPMR to be pursued regarding noncompliant producers.

Outcome Indicator 5: To provide strategic financial support and management to ensure sustainability of the entity was also not achieved.

The SDT states that it was not able to obtain credit facilities during the financial period as the Business Plan was approved in January 2022 and that the re-application process for the credit facility was only submitted in March 2022.
5.7.2 Financial Performance In terms of its budget, the SDT was able to exceed its budgeted purchases by R654 million by purchasing rough diamonds to the value of R 1, 352 billion.

The entity exceeded sales by R719,9 million by achieving a sales value of R1,443 billion and achieving a gross margin of R84,6 million.

The audit outcomes for the SDT have improved from an unqualified with findings on compliance and performance information to an unqualified with no findings audit opinion.
The Trader attributes this improvement to continued efforts by the entity in maintaining sound control environment and financial discipline.

5.8 Council for Geoscience (CGS) 5.8.1 Non-Financial Performance 202 The CGS has achieved a clean audit for the financial year 2021/2022.

This is a second clean audit for the CGS with no audit qualifications over the past 20 years.

Controls are constantly being reviewed for enhancement to maintain the clean audit status.
Moreover, through the effective implementation of the strategic programmes, an overall performance of 86.4% was realized by the organization.

The CGS conducted the External Quality Assurance Review in line with the International Standards for professional Practice for Internal Auditing and it has received an overall opinion that the internal audit activity, “generally conforms to the Standards and Code of Ethics”.
The Geoscience Technical Programme of the CGS focused on accelerated economic recovery projects that included the on-going detailed geoscience mapping at a scale of 1:50 000 and key projects focusing on the critical minerals of the future including base and precious metals (for example, nickel, cobalt, chromium and gold), rare-earth elements and coal.
The onshore map coverage has increased to 10.7%from below 5% since implementation of the Integrated and Multidisciplinary Geoscience Mapping Programme (IMMP).

- The CGS officially launched its survey boat known as the R/V (Research Vessel) Nkosi.

The boat was acquired to augment the CGS’s marine geoscience programme which aims to map the South African continental shelf (offshore) in the highest resolution based on modern technology, at various depth scales.
- The marine geoscience programme in 2021/22 has mapped the outer parts of 1:50 000 sheet 3318CD between Melkbosstrand and Llandudno in the Western Cape Province.

The high-resolution data collected will contribute towards the improvement of offshore geoscience map coverage which is currently at 0.05%.

- The CGS reported on the publishing of the one-of-a-kind Orange River Pegmatite Prospectivity Map.

This area is a known source of lithium and rare earths in the Northern Cape Province.
This map will contribute significantly to the much-needed intervention for the battery industry and renewable energy.

- The Karoo Deep Drilling Programme has, by end of October 2021, completed the drilling of the KDD-01 ultra-deep vertical stratigraphic borehole down to the depth of 2 978 m. The borehole intersected the carbonaceous shales of the Ecca Group earmarked for shale gas potential.

203 - A suite of gas measurements was undertaken on these shales in an effort to model the gas potential.
A comprehensive report detailing the findings from the drilling and the rest of the baseline study is currently being concluded.

- In addition: the two shallow boreholes drilled and donated by the CGS to the Beaufort West Municipality in February 2018 continue to provide water to the Municipality.

To date, the municipality has extracted and distributed well over 835million litres of water, which is equivalent to 10% of the municipality’s monthly capacity.
- In support of integrated district development planning and infrastructure development, the CGS has developed the first 1:10 000-scale development suitability map around Giyani.

This map will be presented to the relevant authorities to aid in infrastructure development and land use.

- The CGS implemented various infrastructure and land use thematic projects in support of the MTSF priorities 5 (spatial integration, human settlements and local government) and 6 (social cohesion and safe communities).
These programmes further seek to enhance the deployment of the recently adopted One Plan District Development Model approach.

- In these efforts, the CGS has also produced a crushed aggregate potential map of southern KwaZulu-Natal which indicate most prospective areas for aggregate exploitation.

In addition, several microzonation models have been produced which serve as a basis for evaluating site-specific risk analysis that is essential for the safety of critical infrastructure.
- As an implementing agency for the Carbon Capture, Utilisation and Storage Project for South Africa, the CGS in the year under review secured a state-owned piece of land in the Mpumalanga Province for the proposed pilot plant.

The site selection was supported by a Basic Assessment Report and detailed structure, seismic and subsurface geological characterisation.
Samples collected from existing boreholes were also analysed for their mineralogical, petrological, geochemical, and importantly, their reservoir properties.

- The Exploration Strategy for the Mining Industry of South Africa and its Implementation Plan 2022 was published in April 2022 by the Minister of Mineral Resources and Energy.
These policy documents seek to attract investment through a 204 reinvigorated mining exploration strategy encouraging mineral exploration, clean technology, processing and mining supply and services sectors.

- In further support of the exploration activities in South Africa as well as the ERRP, the Department of Mineral Resources and Energy has allocated additional funds to the tune of R500 million to the CGS to support the proposed exploration work.
The funds will be transferred to the CGS in two tranches, R200 million during the financial year 2023/24 and R300 million in the financial year 2024/25.
- To support one of the strategic initiatives outlined in the Exploration Strategy for the Mining Industry of South Africa, the CGS has launched for the first time a geoscience data portal, which has been developed to ensure that access to geoscience data and information records published by the CGS in the form of maps, documents and databases are made available to stakeholders and clients.

5.8.2 Financial Performance The Government grant consists of the baseline grant funding for the MTEF.
Baseline grant funding of R484.5m has been allocated for Geological mapping for exploration of mining over the MTEF.

Additional baseline allocations of R813.4m have been allocated for the geoscience activities over the MTEF.

Technical adjustments were implemented on the MTEF projects where funding for the Rehabilitation of derelict and ownerless mines and the Water Ingress Solutions was moved to commercial revenue to align to the DMRE’s budget classification.
CGS secured the Development of Carbon Capture Storage Project with the World Bank.

A capital renewal plan is developed annually to address the infrastructure requirements.

In 2020, additional funding was spent in respect of lab infrastructure and implementation of an ERP system.

The aging research infrastructure of the CGS is of great concern to the organisation and attention is given to the replacement of infrastructure.
A steady balance sheet position has been maintained over the last 12 years and total assets have increased by an average of 7% over the period.

The current ratio is at 1.2:1.0 as at 31 March 2022.

The CGS is in good financial standing over the next MTEF.

This means that the CGS will meet its current financial obligations as they 205 become due.
Budget Implications over the MTEF • Additional baseline allocations to the amount of R813m (R200min2023/24; R300m in 2024/25 and R313 in 2025/26) have been made available to the CGS over the 2023 MTEF period.

• The additional allocations are to be used for the geoscience activities which includes the on shore and off shore map coverage in support of the National Exploration Strategy.
• This means that the implementation of economic recovery on shore and off shore mapping projects in the CGS will be accelerated to augment contribution towards the South African Economic Reconstruction and Recovery Plan.

Current challenges with CGS Funding and Model: • The CGS mandate is long term in nature and needs more sustainable funding that covers a period longer than an MTEF cycle.
This observation was one of the factors that lead to the conception of the Integrated and Multidisciplinary Geoscience Mapping Program (IMMP), which has a time-span longer than ten years.

• The IMMP requires funding to the amount of R20 billion rand for the first ten years.

This program received support and was allocated funding to the amount of R386m in the 2019 MTEF that was discontinued from the 2021/2022 financial year.

The baseline has been adjusted upward with R463m over the MTEF period.
• An additional baseline allocation has been made available to the amount of R813m over the MTEF period to meet the requested additional R300m per annum adjustment.

Further support is requested for this allocation to be sustained.

Long Term Financial Sustainability Strategies 206 • The CGS has to grow its Collaborative revenue in terms both its product offerings and value of collaborative projects pipeline, to augment the Government grant allocations.
• Competitive advantage should be created by exploiting the data accumulated over a period longer than a century, through latest technologies to add value and generate new products and services.

• Produce quality value propositions in order to exploit merging collaborative revenue opportunities to grow its pipeline.
An example is that in the Reinsurance and Insurance Industry, the Engineering and Geohazards Business Unit collects information that could be used to assess geotechnical risks in developing products for geohazard risk to infrastructure (roads, buildings, power stations, etc.)

at a fee.

5.9 South African Diamond and Precious Metals Regulator (SADPMR) 5.9.1.

Non-financial performance The SADPMR achieved and overall performance of 88 percent of its targets, i.e.
42 of 48 performance targets were achieved, where two (2) performance targets were not achieved due to the High Court Judgement (High Court Judgment set aside the applicability of the Mining Charter to licenses issued under the Diamonds Act and Precious Metals Act).

The long outstanding lease agreement negotiation process was ultimately finalized between the SADPMR and the GIDZ.

The SADPMR was involved in a number of litigation cases, all of which were ultimately finalized.
As a result, the SADPMR remained a litigation free entity.

5.9.2.

Financial performance The table below shows the Annual Financial Statements of the SADPMR.
Table 7: Annual Financial Statements Financial Year 2022 R 000 2021 R 000 Estimated Revenue 110 463 132 651 207 Transfer Payment Sale of services Total Actual Revenue 62 027 60 691 122 718 76 054 42 279 118 333 Total expenditure 111 006 104 408 Surplus 11 712 13 925 Source: Presentation the PCMRE on 11 October 2022 The approved revenue budget for 2021/2022 was R111.7 million.

This was adjusted by R1.3m resulting in final adjusted budget of R110.4.
The actual expenditure for the year under review was R111 million compared to a budget of R110.4 million.

The expenditure trends were as follows: Compensation of employees: R80.3 million; other operating expenditure: R26.4 million; and non-cash expenditure: R4.3 million.

The actual expenditure against the budget is high mainly due to a labour matter regarding former employees taking longer than expected as well as the office relocation costs funded from reserves.
In 2021/2022 the SADPMR reported a surplus of R11.7 million as compared to R13.2 million in the 2020/2021 financial year.

The total revenue recognised was R122.7 million and the Grants/Transfer revenue amounted to R62 million.

The in-house revenue generated was R60.7 million compared to the budget of R47 million.

The increase in revenue generated from sale of services results from increase in the dollar per carat value.
The decrease in Revenue from non-exchange transactions compared to the previous financial period is due to the additional R14m funding allocated in the 2020/2021 financial year for the move to the GIDZ.

The levying of penalties was also discontinued, the revenue in this regard was derecognised in the period under review and retrospectively.

The entity received an Unqualified Audit Opinion with findings for the financial year under review.
5.10 South African Nuclear Energy Corporation (NECSA) 5.10.1 Non-financial performance of the NECSA 208 The Board is operating at full capacity and has approved a strategy and organisational structure that is now fully capacitated at the top (Full Exco as at end July 2022).

NECSA are pleased with improvements in governance, financial performance and stability.

These are being cemented by the new strategy with accountable leadership.
The NECSA stated that they are confident that despite negative audit outcome, and according to the Board, NECSA is well on its way to a clean audit with the right support and stable leadership.

The Board continues to give support to the executives while exercising the necessary oversight.

Support of the Shareholder and guidance have been important factors in the improvements that we see.

The current energy crisis facing the world cannot go unnoticed.
At home, we know the negative impacts of power shortages.

Capacitating and ensuring that nuclear technology plays its role in industrialising and decarbonizing our economy has become rather urgent.

NECSA is gearing itself to play its part in nuclear power generation, especially SMRs.

The 2021/22 financial year was a year of transition where NECSA moved from old strategy and corporate plan (different set of KPAs) to a new strategy for growth.
The new strategy comprises five pillars supported by 15 KPAs – a reduction from 26 the previous year.

Table 8: Detail of performance on predetermined objectives 1.

Commercial programme Nuclear medicine and industrial isotopes Fluorochemicals Nuclear and Industrial Manufacturing 2.

Growth Initiatives 3.

Infrastructure Programme Growth Initiatives Stage 1 D&D Multi-purpose Reactor (MPR) Pelindaba Masterplan 4.
Research Capability, Support Services and Compliance Compliance to SHEQ, License and other regulatory requirements Human Resource Management OVERALL Source: NECSA presentation to PCMRE on 13 October 2022 5.10.2 Financial performance of the NECSA 209 KPIs % Achieved 13 5 6 2 5 4 1 2 1 1 4 2 2 24 54% 80% 33% 50% 60% 75% 0% 50% 100% 0% 100% 100% 100% 63% The downward trend in financial performance is being arrested with a marked improvement seen from financial year (FY) 2020/21 to FY 2021/22.
The total profit/loss for the year under review at (R23.2m) versus projections of (-R155m) gives confidence that financial performance is turning.

The positive trajectory is fully supported by the current approved strategy and corporate plan and calls for focus on more and diversified revenue streams.
The picture will see Necsa reducing its reliance on the fiscus and playing its rightful role in contributing towards the achievement of the country’s socio-economic goals in support of the National Development Plan.

The Group shows a turnaround evidenced in the net profit before adjustments at +R54m eroded by accounting adjustments.

Overall improvement at Group level with a comprehensive loss of –R23m versus a budget of –R155m.
Key issues to note: • The audit report shows a reduction in material findings.

• No supply chain issues • NECSA’s Audit Recovery Plan has begun • Irregular expenditure and fruitless and Wasteful expenditure is on a downward trend 210 over three years.

5.11 Central Energy Fund (CEF) 5.11.1 Non-Financial Performance The CEF Group strategic response had identified four key focus areas or pillars to the CEF Group strategic and Corporate Plan for the 2020/21-2024/25 planning horizon.

Key strategic pillars: 1.


Stabilising the CEF Group and improve long term commercial sustainability and strategic relevance 2.

Drive growth and increase Market Share through diversification of Income streams & product portfolio 3.

Development of key Energy Infrastructure programs in support of economic development & growth 4.

Group Consolidation to exploit synergies and improve scale for strategic relevance turning around struggling entities.
This process supported the development of the Group Key Objectives that would underpin the Group Score Card and overall alignment within the Group Key objectives 1.

Consolidation & Turnaround 2.

Commercial sustainability 3.

Strategy & Long-Term Growth 4.

Operational Efficiency 5.
Human Capital & Organisational Alignment Key results 211 • 5% market share • R4B return by 2025 • ROA OF 12% by 2025 • 75% Brand Reputation Score • Integrated National Oil Company (SANPC) • R2.7B income from new business • Creation of a High-Performance Culture • Strategic acquisitions • Downstream presence The CEF highlighted that during Q3 and Q4 of the period under review, there were a number of events that had significant impact on the delivery against pre-determined objectives.
Table: Performance of the CEF’s subsidiaries Subsidiary Highlights Low lights African Exploration Mining & Financing Corporation (AEMFC) • Revenue generated R696 million • Coal quality challenges • Net profit R127 million • Poor business culture and no consequence • Profit in sale he sale in the disposal of the management associates, Mzimkhulu R107 million • High headcount, high • Trade Earnings R20 million • Cash on hand R331.5 million cost, low volumes (tons), inefficiency • Security challenges • Positive ratios (Current ratio is at 3.58, total assets R1.1 billion, net asset value R530 million) • No.
of people employed: 373 • Improvement in the Audit Opinion from Qualification to Unqualified with findings • No fatalities 212 CEF SOC • Approval of additional 10% of investment in • Decrease in Investment ACWA Redstone project • Merger of PetroSA, SFF and iGas at an advanced stage, the validation exercise for the income due to lower interest rate during 2022 financial year.
preferred merger archetype was concluded • Continued operating and the entity has been registered as a legal losses due to low entity (SA NPC).

• Acquisition of SAPREF at an advanced stage.
• Improved loss from previous financial year • Received a dividend of R173m from iGas recovery of the head office operational costs iGas • Acquisition of additional 15% shareholding in • Economic impact post ROMPCO successful • R301.25 million dividend received from ROMPCO Covid-19 due to increasing of gas prices • Impact of Russia and Ukraine conflict • ROMPCO fully capacitated at Management & • Terms of Reference for • Specialist Levels to Terminate the Sasol MSA.
However, ROMPCO insurance remains with Sasol as it is cheaper Transaction Advisors for Ngqura-Coega LNG Terminal completed by not • Term Sheet signed with ENH for 2 MGJ/a issued to market due to Gas Trading Joint Venture JDA internal challenges 213  Sasol termination of Gas Pipeline Network sale.

 Resources constraints Petroleum • PASA operationalized its new executive • There are sustained Agency South structure – COO, Manager Comm.
& legal challenges against Africa (PASA) Stakeholder Management • The geological modelling of the central Karoo was advanced and the sweet spot for shale gas is now well defined • PASA participated in the Upstream Petroleum Resource Development Bill discussions as well as the draft Oil and Gas Tax Regime issued by National Treasury.

the development of the oil and gas industry, upstream and downstream.
• The regulated fees of PASA were not revised to support the Long- term financial sustainability of the • Cabinet supported the DMRE in their strategy regulator to request the PICC to designate Block 11B/12B as a Strategic Integrated Project (SIP).
• Entity met its corporate objectives for 2020/2021 except for one which relates to the automation of business processes PetroSA • Good progress made on turnaround initiatives • Company continues to • Drilling campaign in Ghana progressed well • Maintained limited open credit terms with suppliers • Dividends received from PetroSA Ghana report operating losses.
• Ability to source petroleum products was extremely • All operations remained fatality-free with an challenging in the last overall HSEQ Index of 3.25. quarter of FY21/22.

214 • No production from GTL refinery.

• Imported condensate not secured due to depressed margins.

• Liquidity issues impacting Mossel Bay imports.
Delays in implementation of infrastructure projects SFF • SFF concluded the acquisition of the BP • The delay of the Montague Gardens Terminal (50% stake) Section 51 application • SFF concluded the acquisition of the Avedia LPG Storage facility (awaiting outcome of the Tribunal) by National Treasury delayed the implementation of the technical work • Concluded the Pre-Feasibility Study for the programme in South development of the South Sudan Oil Pipeline Sudan.
and Refinery • Loss of anchor tenant, • Vitol withdrawal of counter appeal confirmed Astron Energy • The negotiations and legal process to recover 300kbbl still ongoing that all 10 million barrels strategic stock belongs to SFF • 63% of new recruits were Female • 6 CSI projects were implemented • Announcement made by Ministers to subsidize the fuel levy for 2 months • Unqualified audit opinion (only two findings) Equalisation Fund • The surplus for the year amounted to R992.9 million compared to a deficit (EQF) of R544.8 million.
215 • Total revenue from non-exchange transactions amounted to R4.7 billion compared to a prior year amount of R142 million and Levies payments of R3.7 billion was incurred compared to the prior year of R720 million.

The variance is due to a slate levy implemented in the price structures of petrol and diesel Key Challenges • The IP Tracer Dye Levy collected continues to be insufficient to pay for the IP Tracer Dye claims.
5.11.2 Financial Performance Table 10: CEF Group Income Statement by Business Segment as the 31st March 2022 Profit/(loss) for the year by business segment Figures in Rand thousand Revenue Cost of sales Gross profit Gross profit/(loss) margin Other operating income Other operating gains/(losses) Other operating expenses Operating profit (loss) Operating profit (loss) margin Investment Income Income from equity accounted investments Finance costs Profit (loss) before taxation Taxation Profit (loss) for the year Group PetroSA AEMFC SFF iGas CEF 13,891,250 12,159,103 696,240 909,232 18,225 (11,558,081) (11,046,821) (509,634) 2,333,169 1,112,282 186,606 909,232 - 18,225 48 - 48 17% 751,317 9% 27% 574,931 28,283 100% 110,531 0% 100% 100% 21,261 124,504 124,504 100% 19,896 - 0% Renewable Energy OPC PASA Intercompany transactions (3,187,633) (103,147) -1% 593,496 451,985 (614,447) 327,887 (265,330) 62,557 -2,109,761 (163,695) (463,497) (63,925) (454,851) (422,548) 51,194 556,266 (63,925) (415,365) -3% 7% 61% 0% -2279% (1,647) (1,599) -3331% (752) (752) 0% (151,279) (6,879) -6% 180,497 8,719 203,976 58,446 415,142 - 1,525 19,177 127,100 429,075 (572,027) (22,042) (23,305) (9) (100,081) (16,654) (696) (814,078) 164,971 736,937 423,587 (100,304) (18,253) 773 11,602 (202,012) (37,840) (15,232) (10,245) (1,016,090) 127,131 736,937 408,355 (110,549) (18,253) 773 11,602 (77,349) (16,102) (1,626) (17,728) 110% (3,585) - 221,774 200,461 -1245% (293,986) (104,190) 120,367 (77,348) (1) Source: CEF presentation to PCMRE on 13
 October 2022 PetroSA’s net loss is attributed to high fixed cost of maintaining the GTL refinery that has stopped operating as it is still under care and maintenance.
PetroSA losses were reduced by 216 CEF SOC’s financial support of R189.9 million in the 2021/22 finial year.

Included in the CEF SOC loss of R 110.5 million is impairment of the PetroSA loan, the CCE loan and impairment of trade receivables with subsidiaries totaling to R199 million, excluding this impairment the entity would have made a profit of R88.7 million.
The net loss recorded under Renewable Energy is attributed to interest expense on the intercompany loan from CEF SOC to CEF Carbon for ACWA and the storage costs for the CCE equipment.

The Group has reported a net profit of R63 million compared to the net profit of R540 million reported in the prior period.

The decrease in profits is mainly due to the decrease in impairment reversals from the 1.4billion reported in prior year to R375m in the current year.
This was however countered by the following:  Favourable revenue performance mainly attributable to our purchased petroleum products trading unit at PetroSA and the coal mining businesses at AEMFC.

 Impairment reversals due to the increase in the oil price and the decrease in the R/US$ exchange rate  Cost containment and cash preservation initiatives implemented during the year particularly at PetroSA through the tripartite war room.
The Group reported total assets of R29.3 billion which is a 1% increase from the R29.0 billion reported in the prior year.

The increase is mainly due to the ACWA loan advanced during the year and interest earned on funds invested.

As at 31 March 2022 the Group was liquid and solvent, however this is threatened by the PetroSA rehabilitation provision valued at R13 billion which is currently under funded by R9.6 billion at year end.

In terms of the National Environmental Management Act, 1998 (Act No.
107 of 1998) (NEMA) as amended, PetroSA is required to have the rehabilitation liability fully funded by February 2024.

CEF Group recorded Net Asset Value of R10.4 billion at the end of March 2022.

The Group’s cash balance increased by 3% from R13.7 billion in the prior year to R14.1 billion in the current year, mainly due to cash generated from operations.
In the financial year under review the Group generated a total of R 1.5 billion from operating activities compared to the R4.3 billion utilized in the prior year (mainly repayment of Traders).

This was made up of cash generated from the core operations of R822 million, interest income of R577 million and dividends received from associates of R321 million, which was reduced by the finance costs paid of R80.3 million and tax paid of R 175 million.
The capital investment mainly relates to the investment in ACWA Redstone of R459 million, which was countered by the proceeds of R111 million from the sale of uMzimkhulu Mining PetroSA fully paid its RBL facility (R328 217 million) 6.

OBSERVATIONS 6.1.

Auditor-General of SA 1.

The Committee welcomed the improved performance of the entities of the Department, as six (6) of the entities obtained clean audits.

2.
2.

It was noted with concern that NECSA has been receiving disclaimer audit outcomes since the 2018/19 financial year.

However, the Committee also appreciated the fact that there is significant improvement on findings of the AGSA on NECSA compared to the prior years, an indication that the entity is working hard to move out of the bad situation it finds itself in.

Material findings decreased from over 100 in the previous financial year, to 14 in the 2021/22 financial year.

3.
3.

It was noted with concern that the Department did not submit its Draft Annual 4.

Performance Plans for the 2021/22 financial year to the AGSA for the review before it was finalised.

Had it been submitted, some of the findings could have been prevented, especially on the setting and measurement of performance targets.

5.
5.

The Committee noted with concern the recurring findings on the Department by the AGSA relating to poor debt collection and interests not charged on debt, as well as delays in creditors payments.

6.2 The Department of Mineral Resources and Energy (DMRE) 1.

The Committee welcomed the improved performance of the Department, having achieved 72% of its planned targets compared to the 67% achieved in the previous 218 financial year.
However, the Committee was concerned that there was no correlation between the targets achieved versus the budget spent.

The Department spent 96% of the allocated budget for the 2021/22 financial year.

2.

The commitment by the Department that an off the shelf Cadastral System procurement would be done within the current financial was noted.

The Department indicated that, the rollout of the system would be dictated by the service provider.

3.
3.

The Committee noted with concern the increase in occupational injuries, fatalities and diseases.

4.

The Committee was concerned by the pieces of legislation and policies that have been under development for a long time, to a point some requiring to be started afresh due to changes in the sector.

5.

It was observed with concern that, amid the energy crises, Request for Proposals (RFP) for 3 000 MW from gas, 1 500 MW from coal, 513 MW from storage targets were not achieved.
However, the commitment by the Minister that all RFPs would be done during the 2022/23 financial was noted.

6.

Members pointed out that the review of the Integrated Resources Plan (IRP2019), which has become outdated, needed to be addressed.

7.

The consistent fruitless and wasteful expenditure reported under the National Solar Water Programme was noted as a serious concern by the Committee.
It was reported that the Department is awaiting Forensic Investigation outcomes, conducted by the KPMG in this regard.

8.

Whilst it was regarded as ambitious by some Members, the assurance by the Minister that the Brulpadda/Luiperd development in Block 11B/12B would deliver its first gas by 2024/2025, and feed to PetroSA, was noted.

9.

An observation and a concern that was raised in the previous BRRR process was reiterated.
A concern was that, the time allocated to the Committee/s was not sufficient to do justice in the BRRR process.

For instance, the Committee, in a period of two days, had to listen to the briefings of 11 entities and the Department.

10.

Members noted that the AGSA findings were miscommunicated or misunderstood by entities.

11.

Members further observed that the DMRE does not communicate effectively with entities.

219 6.3 Entities reporting to the Department 1.


Across the eleven entities, the upscaling or commercialization of projects was noted as a challenge, e.g.

a number of SANEDI’s projects can be commercialised.

2.

Another challenge noted by the Committee was that the capabilities of the state owned entities within the energy and mineral resources portfolio is not fully utilised by the Government.
For an example, the African Exploration Mining and Finance Corporation (AEMFC) has a contract to supply coal to Eskom, however, their contract is limited, whereas the entity is able to supply much more coal to Eskom.

3.

Efforts by NERSA to streamline its application processes for the smaller IPP projects (less than 100 MW) was noted.

NERSA indicated that it had streamlined the processes from 90 to 30 days.
It was noted that, sometimes delays are not necessarily because of NERSA but are caused by incomplete information submitted by the applicants.

4.

The amount of money spent by NERSA on litigation charges was noted as a concern.

However, more concerning was the Government entities taking each other to court.

NERSA explained that the National Energy Regulator Act provides for the applicant challenge the Regulators’ decision, and that there was no alternative dispute mechanism provided for in the Act.
During the 2021/22 financial year, the Regulator spent about R16.8 million litigation charges, this compares to R21 million spent on litigations in the previous financial year, 2020/21.

5.

The Committee congratulated the SDT and the SADPMR for having relocated to the Gauteng Industrial Development Zone (GIDZ) precinct.

6.

The Committee noted with concern the two (2) crucial resignations at the SDT.

The Chief Financial Officer (CFO), and the Chief Executive Officer (CEO) were reported to have resigned.
7.

The continuous plea for intervention by the SAPDMR was noted.

The plea was that there should be VAT exemption on imports for the industry, to free up the much needed 220 cash.

The intention of VAT exemption on imports is to promote local trade through producers in Africa.

8.

The challenge experienced by the SAPDMR as a result of the High Court ruling that set aside part 4 of the Mining Charter pertaining to down-stream mineral beneficiation and effective transformation goals was noted.

9.
9.

The Committee noted with concern that, of all the CEF subsidiaries, the AEMFC obtained an unqualified audit in the 2021/22 financial due to uncorrected misstatements on commitments.

10.

The Committee was concerned about the reported allegations of coal procurement licences which were submitted and subsequently withdrawn.

11.

It was noted with concern that CEF repeatedly failed to submit its Shareholder Compact.

12.
12.

The continued slow pace on the merger of the three (SFF, IGAS an PetroSA) entities was noted as a concern.

CEF indicated that Phase 1 of the merger process has been completed, Phase 2 has not started, which would entail transitional processes.

13.

The Committee noted and appreciated the support the CEF Group had provided to PetroSA, when the subsidiary was not able to pay salaries.

14.

Moreover, CEF was commended for the strategic direction it took on PetroSA.

15.
15.

The Committee was informed that the PetroSA CEO had left the company, ‘at a cost’.

16.

Whilst the disclaimer audit outcome obtained by NECSA, the significant improvement on material findings was welcomed.

However, the reliability of the financial forecast of the NECSA was questioned by some Members and the AGSA.

17.

The Committee was concerned by the fact that NECSA had given prohibited awards to the employees, families and associates.

18.
18.

The Committee welcomed the good work of CGS, including the entities’ involvement on the issue of flood disasters in the country.

221 19.

Regarding the NNR, the Committee noted that the entity’s CEO had resigned to become a Vice Chancellor of North West University, which might have a negative effect on the leadership and management of the entity.

20.

Members observed the difference in average salaries at the NNR, between the administration officials versus the technical staff.

21.
21.

Members pointed out that the NNR’s performance bonuses were out of line with what should be the norm.

22.

The Committee noted with concern the allegations made that the working conditions at NRWDI are reportedly toxic.

It was also noted that the Department was looking into these allegations.

23.

Members highlighted the importance of a State Owned Mining Company, which would expand the scope and mandate of the AEMFC that would not only deal with coal, but would also include other minerals.

24.
24.

Members observed the different responses by the CEF and the AEMFC, regarding retrenchments.

25.

Members observed that the rehabilitation and/or closure of derelict and ownerless mines remains a challenge.

26.

Members observed that the delay in finalising the Centralised Interim Storage Facility (CISF) was attributed to NRWDI’s resources constraints.

Members further pointed out that building of the waste repository remains a challenge.

7.
7.

RECOMMENDATIONS It is recommended that the Minister of Mineral Resources and Energy should: 1.

Continuously monitor and ensure that the NECSA further improve on its current performance.

2.

Ensure that the DMRE submit its draft Annual Performance Plan timeously to the AGSA on an annual basis.

222 3.

In consultation with the DMRE and its entities develop processes and procedures to address and minimize the number of days relating to debt collection as well as creditor payments.

4.
4.

Expedite the implementation of the Electrification Master Plan as the pace in which the electrification of households carried out through Eskom and municipalities is likely to miss the grid and non-grid additional connections set for 2024.

5.

Implement and strengthen the Mine Communities and Stakeholder Engagement Unit as outlined in the DMRE Strategic Plan 2020-2025 to improve communication, consultations, and collaborations between mines, communities, and other government institutions.

6.
6.

Attract investments in clean coal technologies, including Carbon Capture, Utilisation and Storage (CCUS) to improve coal’s sustainability as a primary energy source whilst at the same time addressing issues between Eskom, Independent Power Producer Office (IPPO), and NERSA that causes delays in finalising renewable energy programmes already procured.

7.
7.

Work closely with National Treasury (NT) to ensure that financially struggling State Owned Entities are allowed to utilise the services rendered by other state entities without subjecting such services to competitive bidding processes.

8.

Encourage the National Treasury (NT) and the AGSA to provide training to State Owned Entities with a number of instances of non-compliance with the PFMA and other related regulatory legislation.

9.
9.

Address the vacancy rate of 9,7 percent, by filling the 157 vacant posts.

10.

Finalise the Mineral Beneficiation Masterplan as transformation and mineral beneficiation in the mining sector are not at expected levels.

11.

Address the capacitation of the Revenue Collection Unit within the Department, as well the challenges related to the Information Communication Technology (ICT) system in order to strengthen and improve debt collection and creditor payments.

12.
12.

Continuously monitor and ensure that the new off the shelf Cadastral System procurement is implemented within the 2022/23 financial year.

223 13.

Address the continuous fruitless and wasteful expenditure reported under the National Solar Water Programme.

Furthermore, on a regular basis update the Committee on the National Solar Water Heater Programme, including on the investigation being conducted by the KPMG, before the end of the 1st term of the 2023/24 financial year.

14.
14.

With National Treasury (NT), present a cost-benefit analysis on the Solar Water Heater Programme, in order to ascertain if there is value for money regarding the programme 15.

Collaborate with Departments of Cooperative Governance and Traditional Affairs, Human Settlements and the South African Local Government Association, respectively, in order to achieve buy-in of the solar water heater programme.

16.
16.

Update the Committee on the Independent Power Producers Procurement Programmes, including delays with regard to Bid Window 6 and 7.

17.

Address and develop mechanisms across the eleven entities in upscaling or commercialization of projects.

18.

Prioritize the filling of the Chief Financial Officer (CFO) and the Chief Executive Officer (CEO) posts at the State Diamond Trader (SDT).

19.
19.

In consultation with the Minister of Finance address the SADPMR’s plea for VAT exemption on imports for the industry.

20.

Ensure that the Board of NRWDI make a written submission to the Committee explaining how its handling the allegations of unpleasant working conditions.

21.

Ensure that the AEMFC make a written submission to the Committee explaining the allegations of the mining licence submissions and subsequent withdrawals.

22.
22.

Provide a report of CEF and the AEMFC, relating to allegations made in respect of retrenchments and appointments, which have not been approved.

23.

The DMRE should explore the option of ensuring that the AEMFC is the primary coal supplier to Eskom.

24.

Ensure that entities that are having the necessary capacity to provide certain services (such as coal to Eskom) are prioritised when work becomes available.

224 25.
224 25.

Improve the working relations and collaboration between the AGSA and the DMRE, DMRE and its entities, as well as between entities and other departments and entities.

26.

Ensure that the AEMFC collaborate with the CGS, Mintek and other relevant stakeholders to prioritize and ensure that all new discovered mineral deposits are explored, mined and processed by the state.

27.

Provide a comprehensive report on all entities, whom recorded, irregular, fruitless and wasteful expenditure.
On consequence management undertaken, the Minister should also include reports on recouping money and initiating criminal cases against those found to have defrauded the State in one way or the other.

28.

Explore legislative and policy amendments that will prevent State departments and/or entities taking each other to court as opposed to resolving all conflict as the State.

29.

Enable Mintek to be in a position to pilot some of the projects they believe will be of commercial value.

30.
30.

Address the self-sustainability of Mintek relating to funding and reviewing of legislation.

31.

Provide a comprehensive report, by both the DMRE and Mintek on a workable strategy outlining how they intend to handle the closure and rehabilitation of abandoned and derelict mines as a matter of urgency.

32.
32.

Ensure that NRWDI provides a comprehensive report on how they plan to fund the decommissioning and disposal of radioactive waste materials from Koeberg Nuclear Power Plant, considering the delays in finalising the Radioactive Waste Disposal Fund Bill.

33.

Ensure that the DMRE, with the NRWDI provide a report on how they plan to address challenges – e.g.

budget constraints, amongst others – with regard to the Centralised Interim Storage Facility, including the repository.

7.
7.

APPRECIATION 225 The Committee would like to thank the Minister of Mineral Resources and Energy, Mr S.G Mantashe, and the staff of the Department as well as the Board Members and Management of all the entities, for their cooperation and transparency during this process.

The Chairperson wishes to thank all Members of the Committee for their active participation during the process of engagement and deliberations and their constructive recommendations reflected in this report.
The Committee also wishes to thank its support staff, in particular the Committee Secretaries, Ms A Boss, Mr A Kotze, the Content Advisor for Energy, Mr S Maboda, the Committee Assistant, Ms V Makubalo and the Executive Secretary to the Chairperson, Ms N Baleni, for their professional support and conscientious commitment and dedication to their work.

Report to be considered.

4.


REPORT OF THE PORTFOLIO COMMITTEE ON MINERAL RESOURCES AND ENERGY ON THE OVERSIGHT VISIT TO WESTERN CAPE, NORTH WEST AND GAUTENG PROVINCES, 226 DATED 20 OCTOBER 2022 1.
INTRODUCTION The Portfolio Committee on Mineral Resources and Energy (hereinafter, “PCMRE” or “the Committee”) undertook an oversight visit from 19 to 22 April 2022 to the Eskom’s Koeberg Nuclear Power Plant, Cape Town, Greater Kwa-Nonqaba Development Forum and PetroSA in Mossel Bay, the South African Nuclear Energy Corporation (NECSA), North West, and the Council for Geoscience and Mintek to take the Committee through the Acid Mine Drainage projects.
This report provides a detailed synopsis of the Committee oversight visits, as specified above.

2.

COMPOSITION OF DELEGATION 2.1 Members of Parliament Name of Member Hon.

S Luzipo Hon.

MG Mahlaule Hon.

VT Malinga Hon.

M Wolmarans Hon.

K Mileham Hon J Lorimer Hon.

V Zungula Hon.
P Madokwe Hon T Langa Prof. CT Msimang Political Party African National Congress (ANC) African National Congress (ANC) African National Congress (ANC) African National Congress (ANC) Democratic Alliance (DA) Democratic Alliance African Transformation Movement (ATM) Economic Freedom Fighters (EFF) Economic Freedom Fighters (EFF) Inkatha Freedom Party (IFP 227 2.2 Parliamentary Staff Name Ms. A Boss Mr. S Maboda Ms. V Makubalo Designation Committee Secretary Acting Content Advisor Committee Assistant 3.
REPORT ON THE SITES VISITED BY THE COMMITTEEE This section of the report provides a synopsis of the oversight visits.

3.1 Visit to the Eskom’s Koeberg Nuclear Power Station The Koeberg Nuclear Power Station is the only nuclear power plant in Africa.

It has two nuclear reactors, often referred to as Unit 1 and Unit 2.

The two units have a generation capacity of just over 1 800 megawatts (MW).

The two nuclear reactors generate 5 percent of the country’s electricity.
Unit 1 produced its first power in April 1984, and it reaches its lifespan in 2024.

In addition, Unit 2 produced its first power in 1985, and is reaching its lifespan in 2025.

In the Integrated Resource Plan 2019 (IRP2019), Government has committed to extending the lifespan of the Koeberg Nuclear Power Station by another 20 years – to 2045.

The visit to the Koeberg Nuclear Power Station was threefold.
Firstly, it was about getting a briefing from the National Union of Mineworkers (NUM) on its grievances with Eskom.

Secondly, it was about touring the facility.

Finally, the visit was about receiving a briefing on the state of the country’s electricity generation capacity.

It is important to note that this was a joint oversight visit with the Portfolio Committee on Public Enterprise (PCPE).

The Chief Executive Officer (CEO) of Eskom, Mr. De Ruyter welcomed the Committee.
In his opening remarks, he provided a historical overview of the electricity generation challenges that South Africa is confronted with.

Coincidentally, at the time of his briefing, stage 4 loadshedding had been announced.

The CEO stated that the White Paper on Energy of 1998 had warned that electricity demand would outstrip supply post-2007 and that new generation capacity needed to be built in order to meet the future electricity demand.
The policy direction provided for in the White Paper was never implemented – such as that no new capacity was added.

228 The above had resulted in poor maintenance of the electricity generation fleet.

According to the CEO, poor maintenance was not a deliberate negligence, but there was no room to manoeuvre due to constrained generation capacity.
Moreover, the delays in the implementation of the Independent Power Producer (IPP) procurement programmes, the exposure to State Capture, the damage of Unit 4 at Medupi Coal Power Station, and Industrial Action at Eskom had exacerbated electricity generation constraints.

All the above factors have led to where the country is today – implementation of loadshedding as a last resort to avoid a total blackout.
The CEO stated that some of the solutions to the electricity generation crises was to fast- track the existing IPP projects, so that capacity from them is brought online.

Moreover, the National Energy Regulator of South Africa (NERSA) should simplify its requirements for less than 100 megawatts (MW) projects/plants.

The extension of Koeberg Nuclear Power Station would assist.

Municipalities should pay debt owed to Eskom – this would assist in offsetting the utilities liquidity challenges.
Lastly, the CEO reiterated that the current process of Unbundling Eskom will assist in bringing about efficiencies in the utility.

3.1.1 BRIEFING BY THE NUM The NUM was also afforded an opportunity to present the grievances it had regarding Eskom to the Committees.
Mr. Mvovo, Eskom Western Cape (Full Time Shop Steward), presented the following key issues NUM had with Eskom regarding the Koeberg Nuclear Power Station: Exodus of Nuclear Plant Operators: NUM indicated that it had raised its concerns with Eskom Management regarding a number of licenced nuclear operators who were leaving the company.
The NUM alleges that the Management of Eskom never took this matter seriously, as they responded too late, arguing that at some point, the power plant only had one (1) nuclear operator.

229 Steam Generator Replacement (SGR): NUM believes that the Koeberg Nuclear Power Station is at the grave risk of forced shutdown, arguing that production is being prioritised over nuclear safety.
The latter concern is on the basis that three (3) steam generators for Unit 2 of the power station, which were meant to be replaced this year, had been deferred to August 2023.

Eskom had cited the risk of loadshedding if the generators were to be replaced during the winter months.

On the contrary, NUM was of the view that the issue was not the risk of loadshedding, but lies with the contractor (Framatome) that is failing to meet the deadlines it had committed to.
Similarly, three (3) generators for Unit 1 were due for replacement from October 2022.

The NUM was worried that, the 3 generators had not yet arrived in South Africa.

This created uncertainty regarding meeting the deadline.

Suspicious Framatome Contract: According to the Union, the contractor (Framatome) for the SGR was appointed under suspicious circumstances, it was the only one who could meet the timeframe.
The Union reported that the Chief Operating Officer (COO), Mr. Obenholzer, took the project away from the Koeberg team to Rotek, then gave it to ERI project management and Wilson Baily Holmes (WBHO).

The project was close to completion.

The Outage for Unit 2 started on 17 January 2022.

The outage was going well, when the contractor suddenly saw problems.

The CEO of Framatome came to site but had no interest in fixing the challenges.

The SGR team was then told that the project would be two months late.
This was already 55 days into the 155-day outage of the unit.

The union objected to why the contractor was dictating terms to Eskom.

The Union submitted a grievance to management regarding this, it has not been resolved to date.

The Union stated that the COO and the Chief Nuclear Officer (CNO) had a meeting with the Framatome CEO, while the SGR team was the last to learn of this meeting.

Management put pressure on Eskom to pay Framatome, but the employees did not agree to the payment of the company.
Eskom was blamed for deferral of the project when in fact it was not Eskom but Framatome who was responsible for the deferment.

The union called for an in-depth investigation into this matter.

3.1.2 Tour - Nuclear Plant Facilities 230 During the tour of the nuclear plant facilities, the delegate from Parliament was informed that, the cost for replacing Unit 1 and Unit 2 generators is R5 billion – this includes manufacturing and installation of the 6 generators.
During the viewing, the Committees were interested in why South Africa could not manufacture the steam generators locally.

It was reported that these units are manufactured and installed by Framatome, a French company, because South Africa does not have this capacity.

In some instances, the installation is done by Framatome, supported by sub-contracted local companies.
More details on the issues raised during the tour are summarised below: • Once a steam generator is received, it takes a few weeks to finalise receipt inspection.

To manufacture steam generators for a nuclear power plant, one needs to be registered with the National Nuclear Regulator (NNR).

There are no South African companies which are registered to do this.

• When a steam generator arrives, it takes 3 months to prepare the unit as there was an elbow that needed to be welded to the SG.
Once this is done, it is assigned to the unit and cannot be interchanged between units.

• Framatome has the unit made in China, while the forging is done in Japan.

The SG comes in 9 sections from Japan and welded by the Chinese.

As stated above, the contract for the SGR is R5 billion for the manufacture, design and installation for all 6 SGs.

The whole project will be delivered for R5 billion.

• Eskom has maintenance contracts with Framatome, for maintenance and support.
South Africa does not have capability for nuclear plant/steam generators as there are no other nuclear plants in the country.

The contract with Framatome has a skills development set-aside.

• Local companies are involved in the SGR project.

The SGR is still in the timeframe for August, waiting on arrival of the SG.

It takes approximately 55-60 days to replace a steam generator.

Each unit will get 3 new steam generators.

The lifespan of the steam generators is 30-35 years, designed for 40 years.
• The SG usually run longer than 40 years with good maintenance, however every 10 years’ assessments are done on the nuclear power plant to see if the life span can be extended.

If the SG is not replaced by 2024, there is a risk of the unit being shut down.

There is a risk that the SG for Unit 2 will not be replaced by next year (i.e.

2023).
2023).

After the tour of the site, the delegation returned to a meeting venue, wherein it was going to receive Eskom responses pertaining to the NUM grievances, as well as a presentation from Eskom on energy sustainability.

However, due to time constraints, the Committees resolved that the presentation, and the discussion on NUM submission be differed to a date to be determined by the two Committees.
231 On 30 August 2022, there was a joint follow up meeting to afford Eskom an opportunity to respond to the allegations made by the NUM.

Eskom opted not to respond to the allegations, citing the issues raised by NUM were labour related and should be dealt within the recognised channels within Eskom.

The Committees rejected the assertion of Eskom and defended the right of the Union to raise any matter which is in the interest of the public with Parliament.
A decision was taken for Eskom to submit a written submission, which was presented in a subsequent meeting of the 27th of September 2022.
3.2 Visit to Greater KwaNonqaba Development Forum and PetroSA, Mossel Bay On 7 February 2022, the Greater KwaNonqaba Development Forum (KDF), representing the Greater Mossel Bay Non-Governmental Organisations (NGO’s), Not for Profit Organisations (NPOs), Churches, and Small, Medium and Micro Enterprises (SMME’s) wrote a petition to the Speaker of the National Assembly, Ms. N Mapisa-Nqakula, requesting that the Committee visit the Community of KwaNonqaba in order to talk about challenges that are facing PetroSA, and the impact thereof on the host communities.
For the fairness and completeness of the purpose of the oversight visit, the Committee invited the Executive Management of PetroSA to respond to the issues raised in the petition.

The Committee was welcomed by the Executive Mayor of Mossel Bay Local Municipality, Mr. Dirk Kotzé.

According to Mr. Kotze, PetroSA plays an important role in Mossel Bay, citing that if PetroSA fails, the Municipality would lose R90 million per year.
The Municipality is managing the desalination plant, in partnership with PetroSA.

The contract has come to an end, to the tune of half a million worth of investment.

With the financial challenges that PetroSA is confronted with, the Municipality is concerned that PetroSA is unlikely to renew the contract.

232 After the welcoming, the Chairperson of the KDF, Mr. Swartbooi, presented the concerns of the host communities.
In the main, the KDF is concerned about the fact that whilst PetroSA is in Mossel Bay, the communities of Mossel Bay do not benefit from it.

They had involved the Government in this matter, the Office of the Presidency, during the previous Administration.

According to the KDF, a Presidential Report was submitted to PetroSA for implementation, but the implementation never happened.

Mr. Swartbooi stated that stakeholder engagement by PetroSA is poor to non-existent.
Mr. Swartbooi, in his submission, also emphasised a need for the PetroSA Head Office to be moved from Parow to Mossel Bay, and that the company in its recruitment process prioritises people who are from Mossel Bay.

During the discussions, some Members of the Committee raised concerns about the latter stance of Mr. Swaartbooi, arguing that PetroSA is a National Company, and it is not a company for Mossel Bay.
Mr. Swartbooi explained that, he fully understood the point raised, and acknowledged that some of the issues that he raised were out of frustration.

PetroSA, responded to the submission of the KDF and acknowledged that it was not aware of some of the issues raised by the KDF.

The Central Energy Fund (CEF) Board Chairperson, Ms Noah, assured the KDF and the Committee that Government is committed to ensuring that PetroSA is not shutdown.
Mr. Manne, PetroSA Acting Vice President: Manufacturing presented some of PetroSA key interventions to sustain the company, now and into the future.

The key interventions that Mr. Manne presented were grouped into three areas of intervention, namely, Upstream, Midstream-Refinery, and Downstream.

Upstream: The two key components or focus areas in this regard concern negotiations with Total and how to use the remaining Tail gas.
It was reported that technical negotiations with Total were at an advanced stage.

Total had a deadline to apply for a production licence by the end of September 2022.

Therefore, PetroSA hoped to sign a supplier agreement with Total by the end of June 2022.

Regarding the tail gas, the company is working on gas to power, the aim is to use the remaining tail gas to generate around 150 MW of gas to power using the four turbines and export that power to the grid.
PetroSA is looking at commissioning this work in 2024, and make revenue for the company.

The working team with Eskom restarted.

Pre-Feasibility level study had been completed.

PetroSA is in the process of initiating Grid Access Study.

The Renewal of Production Rights is also in progress.

233 Midstream-Refinery: Looking at gas importation as a back-up to Total.

Both options, Total and Gas importation can technically be implemented by 2026.
Preceding the commissioning of the refinery, would require 18 months to do refurbishment.

Prior to this, the refinery would be mothballed, to ensure assert does not deteriorate further.

According to Mr. Manne, this process is progressing well and that shutdown has been postponed and will be implemented approximately 18 months ahead of start-up of units.

Downstream: According to PetroSA, downstream is a key income generator in the short- term.
There are two areas of focus the company is looking at, firstly to capacitate this part of the business and import skills that it does not have.

Secondly, improve logistics capacity in Mossel Bay.

Currently, PetroSA supplies petrol and diesel.

It is looking at broadening its product portfolio, such as investing in liquefied petroleum gas (LPG), amongst others.
PetroSA is limited because of the location of the single point mooring (SPM) in terms of the size of vessels and imports it can bring to Mossel Bay – this has a knock-on effect on competitiveness.

Thus, the company is looking at moving the SPM into a deeper location, such as 2 kilometres offshore, in order to be able to bring bigger vessels.

The company is also looking at increasing reliability of the SPM.
During the discussions, the Board Chairperson of CEF, together with some Committee Members, acknowledged the issues that the KDF had raised regarding PetroSA, but the main issue at hand was that PetroSA was in financial crisis.

Thus, saving it as a priority would thus assist in addressing some of the community issues raised by the KDF.
As a way forward on this matter, it was agreed that the CEO of PetroSA, the Mossel Bay Local Municipality Mayor and Municipal Manager and Community, through KDF and others, meet on 4 May 2022 to address the issues that had been brought forth by the KDF.

Subsequently, a report on a way forward, emanating from the abovementioned meeting, has to be sent to the Committee by the end of June 2022.

3.3 Visit to NECSA 234 The Committee visited the South African Nuclear Energy Corporation (NECSA).
Of particular interest for the Committee was the NECSA’s restructuring and repurposing of the company and its subsidiaries.

Prior to the site visits, the Committee was welcomed by the Acting Board Chairperson of NECSA, Dr. Magau.

The Chairperson of the Board had apologised as he was overseas at the time of the Committee’s visit.

The CEO of NECSA, Mr. Tyabashe, delivered the presentation which focused on the entity’s turnaround strategy.
Governance at NECSA has been a challenge for many years, and this has resulted in the entity failing to submit its Annual Reports to Parliament, or consistently obtaining disclaimers on the audit outcomes.

From the presentation and introductory remarks of the Acting Board Chairperson, it was clear that addressing governance was key to turning the company around.

The NECSA Board was appointed at the beginning of 2020, and subsequently, the CEO, Mr. Tyabashe was appointed at the beginning of 2021.
The CEO was tasked with repositioning and rationalising the organisation further improving governance, performance and financial sustainability.

The CEO has, in turn, led the strategic review of NECSA Group, culminating in a Board-approved strategy, Corporate Plan and Shareholder Compact.

For a long time, NECSA had numerous vacant posts at the executive management level.
The CEO, as part of strengthening governance, as well executing the turnaround strategy, appointed the executive management team to lead the implementation of the strategy.

Thus, ten executive appointments were made, with only two posts vacant, namely for Power and Industry (P&I) and Integrated Assurance (IA).

According to the CEO, the recruitment process for the two posts was underway.
The rationalisation and restructuring of NECSA Group is well underway, with the capacity to deliver on the NECSA mandate in an integrated manner, while achieving growth.

The entity has been running on a loss for the past three years, with negative financial forecast into the future.

However, the new strategy of the entity predicts profitability from the 2025/26 financial year, and indications from the CEO presentation were that this could be achieved much earlier than predicted.
The following were highlighted of some of the flagship projects that would lead the organisation to become financially sustainable: Table 1: NECSA Key Projects Identified to Realise the Profitability Objective Flagship Strategic Capital Projects from Technology Pipeline Infrastructure Subsidiaries (short-to-medium Projects (medium-to- Projects term) long term) include Multi-Purpose Radiopharmaceutical Facility Plasma-based Waste to Reactor (MPR) Capacity Expansion (to increase Energy Technologies 235 radiopharmaceuticals market share) PBMR transfer and NTP Cell 11 Replacement Lithium Ion Battery expression of interest (redundancy to ensure continued Electrolyte (LiPF6) radio-chemicals business) Uranium Recovery Hydrofluoric Acid Plant Mining Shroud Detection Ketlaphela Fluorine Plant Cisplatin Diagnostic Pelchem Turnaround Pelindaba Masterplan Source: NECSA (2022) The Committee was pleased with the report of NECSA on its plans to turn the company around.
It argued that, the picture painted, was more positive than when the entity reported to the Committee for the first time in 2019.

In 2019, there was even a breakdown between organised labour and the entity – the relationship has since improved, as confirmed by the National Education, Health and Allied Workers’ Union (NEHAWU) representative.

Moreover, the restructuring and repurposing of the company will not involve any section 189 considerations.
A concern was raised that the financial forecast seemed unrealistic, however, NECSA assured the Committee that the forecast is not unrealistic, citing that the “proof of the pudding is in the eating”, meaning that the leadership must be given a space to prove that it can turn NECSA around.

3.4 Visit to Council for Geoscience and Mintek The Committee visited the Council for Geoscience and Mintek in order to see the work that the two entities have been doing on the Acid Mine Drainage (AMD).
The Committee was taken to an Acid Mine Drainage project that the CGS was involved in.

Thereafter, the Committee went to Mintek, where a joint meeting was held with CGS and Mintek.

Both Mintek and CGS presented their work on the AMD.

236 Acid Mine Drainage is the flow, or seepage, of polluted water from old mining areas.

Depending on the area, the water may contain toxic heavy metals and radioactive particles.

These are dangerous for people's health, as well as plants and animals.
At times, the AMD is simply defined as ‘mine impacted water’.

In South Africa, ADM is experienced in the Witwatersrand Basin and Mpumalanga Coalfields.

The CGS, in its presentation, stated that gold mines are far below the water level, thus miners continuously had to pump the water.

When the mines close, the pumping stops, resulting in the water being discharged to the environment.
In 2010, the South African Government appointed an Inter-Ministerial Committee (IMC) to investigate the major problem of acid mine drainage and recommend possible solutions.

The team of experts was appointed to assist in researching and implementing some of the possible solutions that had been identified.
The team of experts was drawn from the CGS, Mintek, Council for Scientific and Industrial Research (CSIR), Department of Water and Sanitation (DWS), Department of Mineral Resources and Energy (DMRE) and Water Research Commission.

From an academic perspective, advisors were drawn from the Wits University, University of Free State, University of Fort Hare, and Tshwane University of Technology.

The CGS was appointed by the IMC to coordinate the whole project.
The IMC consisted of the DMRE, DWS, National Treasury, Department of Science, Innovation and Technology, and the Presidency.

Report of the IMC was released in December 2010 and the following recommendations were made: 1.

Decant prevention and management: It was recommended that water levels in the Western Basins be held at or below the relevant Environmental Critical Levels (ECLs) 129 by the pumping of water.
This meant that water that was already at the surface in the Western Basin had to be pumped to lower levels.

129 The environmental critical level is defined as the highest water level within the mine void where no AMD flows out of the mine workings into the surrounding groundwater or surface water systems.

237 2.

Ingress Control: reduction of the rate of flooding and the eventual decant volume: It was acknowledged that pumping and treating water in the future would be costly.
It was therefore seen as necessary to reduce the volume to water to be pumped and treated.

Thus, ingress control was a recommended solution.

It was indicated at the time that ingress control would be achieved by preventing the recharge of the shallow ground water above the mine void by the canalisation of surface streams, the sealing of surface cracks, and mine openings, etc.

3.
3.

Water Quality Management: It was admitted that even if the above measures are implemented, ADM would still be produced and require a treatment to a quality that is fit for a predetermined use, or for discharge to surface streams.

Various treatment options and technologies, including active and passive in situ treatment technologies were identified.
It is against this background that the Committee visited Mintek and CGS to report on the work the two entities had done on the ADM. Below is a summary of the work that the entities have done in response to the IMC recommendations.

Dr Thakane Ntholi, Manager: Water and Environment, apart from showing the Committee the practical projects CGS had been involved in, presented the work the Council had done on ADM to date.

The Council had started conducting research on ADM, as early as 2002.
Since 2012, the entity had received an amount of R248 million from Government, in support of the ADM work.

The work done included research, practical implementation and monitoring.

About 40 scientists are reported to have been involved in the ADM work.
The CGS work had focussed on Ingress Control (Committee was taken to a practical project), Development of an acid mine drainage hotspot map, Exploration of various mine water treatment technologies (In situ and passive), Proposal of a comprehensive water management strategy for the Witwatersrand, and Development of regional closure strategies.
As stated above, the Committee was taken through to some of the practical projects CGS had done, in Ekurhuleni, Modderbee (Cracks 1 and 2,) and Van Ryan Canal, Johannesburg.

It is important to note that the Committee only visited Modderbee Cracks 1 and 2 projects.

Table 2 below provides a summary of the CGS work on ADM and the impact thereof.
238 Table 2: CGS Water Ingress Control Projects and Benefits Project Year Ingress Volume Construction Annual Water Completed Prevented Costs (once of) Management (ML/day) Cost Savings Modderbee 1 2016/17 >0,5 R500 000 >R2 137 208,53 Van Ryn 2018/19 14 R11 000 000 >R59 841 838,70 Canal Modderbee 2 2019/20 4,8 R1000 000 R20 517 201,84 Source: CGS, (2022) As stated above, Mintek also does technological research on ADM, therefore it also presented its work on the ADM. Dr. du Preez, Ndlovu and Sikhwivhilu provided an overview of the work that Mintek has been doing on AMD.
Mintek has been involved in the water research programme, whereby it researched technologies that can be used to treat mine impacted water (ADM).

To this effect, demonstration technologies have been developed such as SAVMIN demonstration plant at Sibanye-Stillwater in Randfontein.

The SAVMIN technology treats coal and gold mining impacted water.

Other technologies include Ultra Filtration Membrane Technology which removes suspended solids, viruses and bacteria from water and wastewater.
Mintek also highlighted some of the support that it requires in executing its work.

These included: 1.

Support for scale up and commercialisation of its technologies: Mintek contends that it receives government funding for developing a technology.

Put differently, the funding does not allow Mintek to develop a technology from the laboratory to the market (commercialisation).
There was a proposal that if Government funds a pilot programme, for instance in the case of ADM, it must fund up to the level of project – such commercialisation.

It was stated that Mintek receives about R250 million in Government grants.

This is not sufficient to scale up the projects.

2.

Legislative support and directives: According to Mintek, even for a demonstration plant one has to go through the legislative process of obtaining permits and licences.
The authorisation process is lengthy, a bit of flexibility at the demonstration phase, through the form of ministerial directives, instead of the legislative process would assist.

239 4.

COMMITTEE OBSERVATIONS This section provides a synopsis of the key issues observed by the Committee, particularly emanating from the presentations, discussions, and the walkabouts in various sites.
4.1.1 Koeberg Nuclear Power Station • The Committees noted with concern the reported delays and alleged corruption regarding the steam generator replacement project at Koeberg nuclear power station.

• The Committees observed with concern the allegations by the Union that the contractor, Framatome, responsible for the replacement of the steam generator had not delivered on its contractual obligation however it continued to be paid.
• It also noted the allegations that Managers that were responsible for the steam generator project were suspended to protect the French based company.

• Members raised a concern regarding the Koeberg Nuclear Power Station safety issues and the likelihood of its license being renewed.

4.1.2 KwaNonqaba Development Forum and the PetroSA • The Committee was pleased with the proposed interventions presented by the PetroSA, to turn the company around.
240 • The Committee noted that the KwaNonqaba Development Forum and the PetroSA had reached an agreement on how to resolve the issues raised by the Forum.

• The Committee noted the impact of the closure of the PetroSA refinery on the Mosselbay local community.

• Members raised a concern regarding the lack of frequent and constant communication by PetroSA with the municipality and community.
4.1.3 NECSA, CGS and MINTEK • The Committee was pleased with the progress reported by the NECSA Executive on the restructuring and the repurposing of the Company.

• Members raised concern regarding delays with the replacement of the Safari reactor with the Multi-Purpose Reactor (MPR), which might have a negative impact on the delivery of products.
• The Committee raised concern regarding the lack of coordination between state- owned entities, eg Pelindaba and PetroSA, who requires specialised equipment for the up keep and maintenance of the GTL plant.

• The Committee was pleased with NECSA’s flagship projects, however, concerning though was the fact that, to date, an offtake agreement between Ketlaphela Pharmaceuticals, the Department of Health and National Treasury had still not been signed.
• The Committee was pleased with the Pelindaba Master Plan.

• The Committee welcomed the fact that in the restructuring and repurposing of NECSA, there will be no section 189 considerations.

• The Committee observed with concern, the poor state of the NECSA facilities infrastructure, with fence falling off, in some instances.
241 • The Committee was impressed by the technological innovations capabilities of Mintek, NECSA and CGS, although it also noted the challenges of scaling up and commercialising the technologies.

• The Committee noted with concern safety issues when the employees are on sites, to either conduct research or do practical projects.

There are instances where workers are reported to have been held hostage or beaten up while on duty in mining areas.
• Whilst the Committee appreciated the improved collaborations between the entities of the DMRE, it noted that more work could be done to enhance and strengthen the collaborations.

• The Committee noted the impact on electricity supply of the delays in bringing online additional capacity from the IPPs.

• It also noted the legislative challenges experienced regarding requirements for the applications to NERSA for projects less than 100 MW.

5.
5.

COMMITTEE RECOMMENDATIONS The Portfolio Committee, having conducted the oversight visit, recommend that: • By the end of June 2022, PetroSA submit Preliminary Report to the Committee on its engagements with the KwaNonqaba Development Forum and the Mossel Bay Municipality.

[NB: This Report has been received].

• A Joint follow-up oversight visit to Koeberg power station for an in-depth investigation on the serious allegations of corruption at the plant be conducted.
• NECSA to send a summary report of the work it does with Eskom on the Koeberg Nuclear Power Station.

• NECSA to consider doing and submitting to the Committee a visual presentation of the waste to energy technology.

• The Minister of Mineral Resources and Energy, in collaboration with other relevant Ministers ensure that the Offtake agreement regarding Ketlaphela Pharmaceutical is signed, as a matter of urgency.
• The National Energy Regulator of South Africa should ensure that it simplifies the requirements for projects less than 100 MW.

242 • The Department to prioritise the safety of the employees when conducting research and doing practical projects in mining sites.

• The Department should ensure proper coordination between the different spheres of Government when projects are being handed over by the implementers.
• The Minister of Mineral Resources and Energy continue to improve, strengthen and enhance collaborations between the entities of the Department that are doing similar work.

Report to be considered.

243 [The following report, replaces the Report of the Portfolio Committee on Mineral Resources and Energy, which was published on page 3 of the Announcements, Tablings and Committee Reports, dated 23 September 2022] 5.
REPORT OF THE PORTFOLIO COMMITTEE ON MINERAL RESOURCES AND ENERGY ON THE OVERSIGHT VISIT TO JAGERSFONTEIN, FREE STATE PROVINCE, DATED 23 SEPTEMBER 2022 1.

INTRODUCTION The Portfolio Committee on Mineral Resources and Energy (hereafter, “the Committee”) undertook an oversight visit on 16 September 2022 to the Free State Province, in Jagersfontein.

The Jagersfontein town is located in Kopanong Local Municipality, within the District of Xhariep in the Free State province.
On 11 September 2022, a tailings dam in the Jagersfontein mining area in Free State burst, causing a mudslide and flooding in several areas in the town of Jagersfontein.

Tailings are the waste products from mining – mining waste.

Depending on the type of mining, tailings can be liquid, solid or a bit of both.

Many substances found in tailings are lethal, others are radioactive.

Tailings dams are constructed to contain and store tailings of mines.
The tailings dam burst occurred in an old mine, previously owned by De Beers and deproclaimed as a mine in 1972.

Post 1972, what was left was the tailings which remained stored in the tailings dam.

A number of transactions occurred on the tailings dumps.

These transactions occurred outside the control of the Department of Mineral Resources and Energy (henceforth “the DMRE”).
This is because in 2007, the former owners of the Jagersfontein Diamond Mine had taken the DMRE to court, arguing that the Mineral and Petroleum Resources Development Act (MPRDA) of 2002 did not empower the DMRE to regulate tailings.

244 The court ruled in favour of De Beers, as it held that tailings dumps were movables and thus ownership belonged to those who removed the minerals as they had occurred naturally in or on the earth.
Furthermore, the MPRDA could not control tailings dumps created before the act came into effect.

Moreover, according to the High Court of South Africa, when the mine was deproclaimed as a mine in 1972, De Beers had full knowledge of the fact that the tailings dumps contained diamondiferous material which could, when economic circumstances were conducive again, be the subject of further mining operations.

It is against this background that the Committee conducted an urgent visit to Jagersfontein.
In as much as the fact that the Court had ruled that the tailings dam could not be regulated by the MPRDA, or the mine had been deproclaimed, the fact that the tragedy occurred in an old mine, and as a result of mining related activities, warranted the attention of Parliament through this Committee, amongst others.

This report provides a detailed synopsis of the Committees oversight visit.

2.

COMPOSITION OF DELEGATION 2.1 Members of Parliament Name of Member Hon.

S Luzipo Hon.

MG Mahlaule Hon.


H Bilankulu Hon.

S Kula Hon.

VT Malinga Hon.

M Wolmarans Hon.

T Langa Political Party African National Congress (ANC) African National Congress (ANC) African National Congress (ANC) African National Congress (ANC) African National Congress (ANC) African National Congress (ANC) Economic Freedom Fighters (EFF) Hon.
Prof Msimang Inkatha Freedom Party (IFP) 245 2.2 Parliamentary Staff Name Ms. A Boss Mr. S Maboda Ms. V Makubalo Ms. S Govender Designation Committee Secretary Content Advisor Committee Assistant Communications 3.

REPORT ON THE OVERSIGHT VISIT During the oversight visit, the Committee was briefed by the Kopanong Local Municipality and the DMRE.

The Committee also had engagements with the affected communities, including organised labour.
A summary of the abovementioned briefing and engagements is discussed below.

3.1 Kopanong Local Municipality and the DMRE The Xhariep District Mayor, Councillor Irene Mehlomakhulu welcomed the delegation from Parliament.
The Mayor of Kopanong Local Municipality, Councillor, Xolani Tseletsele, informed the Committee about the devastating mudslide incident that occurred on 11 September 2022 in the town of Jagersfontein, as a result of a tailing dam infrastructure failure which had a devastating impact on the already vulnerable community.
The Mayor reminded the Committee about the tragedy, explaining that it happened on 11 September 2022 in the early hours of the morning, when the Jagersfontein Development Mine tailing dam wall infrastructure failed, resulting in a sludge flooding in the areas of Jagersfontein, a small town situated about 110km south of Bloemfontein in Free State Province.

He stated that the town covers an area of 45 square kilometres and has a population of around 5 729.
According to the Mayor, two Jagersfontein townships mainly affected by the tragedy and left destitute were the Ipopeng and Charleville townships.

The impact of the incident is visible as one enters the Jagersfontein area.

246 The Mayor informed the Committee that the townships were full of mudslides as early as 6h20 in the morning.

Emergency Medical Services (EMS) and the South African Police Service (SAPS) were called to the site.

The community was alerted to evacuate the area.


Unfortunately, some of the houses located at the first two streets of the townships were swept away.

Sadly, it was reported that one (1) fatality was recorded and the body was recovered by the SAPS Search and Rescue Team on 12 September 2022.This body was confirmed to be of a 70-year-old man from Itumeleng location.

There was one (1) person recorded missing, a 50-year-old lady, from Charlesville township.
In terms of household impact, the Mayor reported that fifteen (15) houses were fully demolished in Charlesville township.

About 399 people were affected and the owners of the tailings dam arranged accommodation and food for the affected families as follows: Sandstone Estate (186), President Hotel (53), and those with relatives (160).

The total number of learners relocated to Bloemfontein was seventy-seven (77).
Moreover, the Mayor reported that other forms of support had been provided to the victims, for instance, the office of the Premier provided Aid that included 200 food parcels, 200 dignity packs and blankets, the Mayor of Letsemeng Local Municipality provided 300 hygiene packages.

Furthermore, various Non-Governmental Organisations (NGOs) were onsite to provide support.

The Mayor indicated that the details on the NGOs providing donations still required verification.
The Jagersfontein Development, owner of the tailings dam, offered an amount of R20 million for immediate needs of the affected communities, excluding restoration of the area.

In terms of health impact, it was reported that seventy-four (74) people were admitted at Diamante hospital for observation and were discharged, two (2) were still admitted at Diamante, one pregnant lady and one male with a fracture.
Five (5) were admitted at Albert Nzula, one (1) at Bloemfontein Pelonomi hospital, one (1) admitted at Medi Clinic, one (1) girl who fell that was taken to hospital and released again last night (15 September 2022), was again admitted by Dr Lion at National Hospital.

The doctor wanted her to spend the night for observations as she had pains after she had been discharged.
247 In terms of infrastructure damage, the main Eskom substation was directly in the path of the mudslide, the substation was totally submerged in the sludge resulting in electricity failure in the affected area.

The Wastewater Treatment Works (WWTW) Sanitation plant was totally covered by sludge, as a result water was contaminated.

The ablution was severely affected by the impact of the sludge blocking the sewer system, resulting in a backflow of human waste.
The Jagersfontein water treatment plant electrical infrastructure was affected, however electricity was being restored.

The R702 and R704 provincial roads were inundated and inaccessible.

The Mayor stated that this incident is a serious challenge for the municipality.

He stated that the municipality was unable to manage the magnitude of the incident.
To make things worse, there was not enough dedicated disaster management focal persons at District Level, no disaster management centre (cannot coordinate disasters), no fire services (search and rescue), no disaster management budget (unable to mitigate).

He further stated that due to the magnitude of the incident and the ongoing assessment from the provincial sector departments, and aid agencies, the cost implication could not be determined.
During the discussions, the Mayor conceded that the disaster occurred as result of negligence, emphasising that it was man-made.

Signals were there that the damn would burst at some point.

He said the dam had always been leaking, something the employees of the company confirmed as well to the Committee.

However, the company ignored the signals.

The Mayor alleged that the facility is run by a criminal syndicate, whose interest is on making profit at all cost.
In agreement with the general observation by the Committee Members that the Jagersfontein town is barren, as though it was not a mining town, the Mayor stated that the company has no social responsibility plan in place.

The only thing that is in place is the Community Trust, but the community trust is led by the same owners, thus the community is not really benefitting.
The Trust funds the students from the areas to do hospitality courses in a college that is allegedly owned by the same company owners/directors.

The Mayor concluded that the circulation of money is amongst the owners/directors of the company, not to the benefit of the community.

The Mayor also confirmed a query from the Committee regarding a Class Action that was initiated by unidentified people against the Jagersfontein Developments.
The Mayor indicated that he was aware of this, however, he did not have sufficient information to divulge on this on 248 that day.

3.2.

The DMRE The DMRE briefed the Committee, emphasising that, as a result of the 2007 Court judgement, the Department had no jurisdiction on the Jagersfontein Diamond Mine or the tailings dam “processing facility”.
De Beers, was the holder of the Old Order Prospecting Right, it had until April 2005 to convert the Old Order Right, in line with the MPRDA which came into effect in 2004.

De Beers failed or declined to convert the Older Order Right.

The Old Older Right lapsed in terms of the transitional requirements as espoused in the MPRDA.

Consequently, Ataqua Mining applied for a prospecting right for the tailings dam, which was granted by the Department in 2006.
Immediately, De Beers took the Department to the Court, arguing that the tailings belonged to them, and therefore the Department had no authority in granting the rights to Ataqua Mining.

As explained earlier, the Court ruled in favour of De Beers, maintaining that the tailings dams are a property of De Beers, and that tailings were not regulated under the MPRDA.
According to the Department, this implied that only the Department of Water and Sanitation had jurisdiction through the issuing of the water licence, as well as the Department of Labour and Employment which accounts for employee employer relations.

The Department agreed that, ideally, it should have appealed the above court judgement, however, noted that it is too late to appeal at this stage.

It is important to note that tailings dams were regulated under the Minerals Act No.
50 of 1991, thus one could argue that there was short sight when the MPRDA was being developed.

The Department stated that, efforts had been made to amend the MPRDA to include the regulation of tailings.

However, the process remained incomplete.

The Mineral Resources and Development Amendment Bill was passed by the National Assembly (NA) for transmission into the National Council of Provinces (NCOP) for concurrence on 12 March 2014.
On 26 March 2014, the Bill was passed by the NCOP and sent to the President for assent.

On 18 January 2015, the Bill was returned to Parliament by former President, Mr. Jacob Zuma for reconsideration.

249 On 01 November 2016, the Bill was passed by NA for transmission into the NCOP.

Due to the end of the Fifth Parliamentary Administration Term, the Bill lapsed.

Therefore, the regulation of tailings dams remains unaddressed.
3.3 Engagement with the Community and Organised Labour Following the above briefings, the Committee met with the affected communities, the employees working for the Jagersfontein Development.

Below is a synopsis of the discussions of the two engagements.

The engagements were held at Mayibuye Hall, Jagersfontein.

The Speaker of the Xhariep District Municipality, Mr. Jerry Moitse facilitated these engagements.
3.3.1 Community Engagement Over 20 community members shared their lived experiences of the tragedy which had occurred on 11 September 2022.

Communities expressed that the incident left them with psychological and emotional trauma.

A young man explained how he lost his mother, watching her being swept away by the mudslide, as he was overpowered by the mudslide whilst trying to rescue her.

The community members said that the shock and trauma from the incident exacerbated existing health problems.
They said that Jagersfontein would never be the same again, even after it has been restored.

Moreover, they were worried that the big machines are being used to clean up the area, whilst other people are still missing.

The community members pleaded for a need for counselling.

The mudslide did not wipe away just the houses, it wiped away things that people treasured.

Subsistence farming was affected as well, as the mudslide swept through where people had farms.
Photo 1: Community Meeting 250 3.3.2 Organised Labour At the same community engagement, the organised labour was present and was requested to share its lived experiences of the incident, including the working relations between themselves and the employer.

The workers explained that there are over 150 people working in the tailings dam.

Most of the workers started to work for the company between 2010 and 2011.
They described the working conditions as appalling, they do not receive any normal benefits that employees are supposed to receive.

They stated that they are subjected to racism in the company.

The workers further submitted that the management of the tailings dam (processing facility) was aware of the leakages of the dam way before this disaster.
A gentleman who works in these processing facilities, Mr. Phoofolo, stated that four hours before the dam burst, management was informed on this disaster that was waiting to happen.

However, management ignored this and casually responded that such a thing would never happen.

Had management responded on this, communities would have been warned and be evacuated on time.
251 It was stated by the workers that, in 2021, the Department of Water and Sanitation (DWS) ordered the owners of the facility to close it due to non-compliance, such as water levels that were too high.

After six months the decision was reversed and the dam was declared safe.

On what basis it was declared safe is not clear.

Other issues of non-compliance by the company included wanting to dump tailings generated into an old mine pit, which the Jagersfontein community regard as a heritage.
Dumping into the pit would have also resulted in underground water pollution.

Given the fact that inspections were not done properly, it is likely that this practice would have continued illegally.

This brings one to a point raised by the workers that, mining is happening illegally adjacent to the tailings dam.

They were adamant that, the holes made had nothing to do with the dams, but the actual mining of the diamonds.
If this is true, then it would equate to illegal mining, as a mining right would be a requirement for such an activity.

Mr. Phoofolo also confirmed that, no routine inspections were conducted in the facilities.

He recalled that in 2017, Mr. Pule Nyaqela, DMRE Inspector, was on the site to do inspections.

While on the site, he was called by the former Director General (DG) of the Department, Mr. Mokoena to leave the site.
This could be due to the fact that the DMRE argues that it has no jurisdiction in this matter.

Furthermore, workers are confused as to who the owner of the tailings dam is.

They argue that there are too many people involved.

3.4 Sites visit The Committee was taken on a site visit, to get a sense of how it all started and the actual impact thereof.

It was explained that, in front of where the dam burst, there was an existing natural water dam.
The existence of the natural dam possibly made this worse, it could have increased the pressure of the mudslide.

Pictures below show the devastating effects of the disaster of 11 September 2022.

252 4.

COMMITTEE OBSERVATIONS This section provides a synopsis of the key issues observed by the Committee, particularly emanating from the presentations, discussions, and the walkabouts in Jagersfontein.
• The Committee was saddened by the amount of damage caused by the incident, which seemingly was caused by negligence.

• It was noted with concern that the Department of Water and Sanitation declared the dam safe, and ordered it to be reopened, and few months later the disaster occurs, and that with no explanation on why it was closed.
• The Committee observed with concern that the Department of Mineral Resources and Energy did not appeal the 2007 judgement which prohibited it from regulating tailing dams.

• The Committee noted that the court ruling in favour of De Beers left doubt on status of legislation in respect of tailings dams.

At the same time triggered the importance of the DMRE to bring in legislation to Parliament that would accommodate tailing dams.
• The Committee observed that the company did not have good relations with the Community, the Municipality, and Labour (including recognition of rights of workers).

253 • The Committee was concerned that there was no Disaster Management Centre, which the community had requested 10 years ago.

• The Committee welcomed the support provided by the various NGOs to the affected communities, and the critical role played by the Mine Rescue Services.
• The R20 million contribution by the Jagersfontein Development for immediate relief was noted with concern.

• The Committee welcomed the pledge made by the Minerals Council South Africa to raise a Jagersfontein Relief Fund to the tune of R50 million.

• The Committee observed that, the communities had emotional and psychological trauma as a result of the incident.

However, the Committee was concerned that six days after the incident, counselling and psychological support had not been provided.
• Linked to the above, the Committee noted with concern that the Department of Social Development did not immediately visit the area to provide counselling services to the affected communities.

• The Committee observed the need for other committees, relevant to the occurrence that they pay a special visit to the area • The Committee noted a Class Action that was being considered by the community and other interested parties.
NB: Subsequent to the visit, the Committee learnt that one of the employees who spoke about the employer during engagements with the Committee, had been charged for divulging company information.

5.

COMMITTEE RECOMMENDATIONS The Portfolio Committees, having conducted the oversight visit, recommend that: • The Department of Mineral Resources and Energy urgently reviews the MPRDA in order to include the regulation of tailings dam/mine dumps.
• A full investigation of the cause of the incident, including investigations on the Directors of the company be conducted.

• The Department of Water and Sanitation to explain and make available the compliance report that it supposedly issued when it declared the dam safe in 2021.

254 • The following Departments amongst others engage with the Jagersfontein Community: Environment, Forestry and Fisheries, Health, Social Development, Employment and Labour and Home Affairs.
• The company (owners of the tailing dam) should take full responsibility in ensuring the restoration of the area.

• The Committee, within six months’ time, do a follow up visit, to assess progress on reconstruction.

• A broader investigation by the Department of Water and Sanitation, in collaboration with other relevant departments/entities, on the status of tailing dams in South Africa should be conducted, and report findings to the National Assembly as a matter of urgency.
• The Department of Social Development, should ensure that it provides urgent psychological support to the affected communities.

• Government should conduct an investigation on the impact of the incident beyond Jagersfontein.

• The DMRE to conduct investigation on possible illegal mining happening around the processing facility.

• A joint meeting be held with Mintek and the Council for Geoscience to brief the Committee/s on the problems of tailings dam generally.
• The Department of Water and Sanitation should account on the closure and the reopening of the dam.

• Informed by the court judgement, the DMRE table a legislation to Parliament that would address tailings dam.

• The Committee or Parliament must do everything possible to protect those who give evidence to it, in order for it to execute its mandate effectively.

Report to be considered.