PORTFOLIO COMMITTEE ON TRANSPORT ANNUAL REPORT 2015 The South African National Roads Agency SOC Ltd 15 October 2015 #2202039

CONTENTS Network Strategic Objectives Corporate Performance and Financial Information Future Investments Challenges Loss of Opportunity Discussion Points

NATIONAL ROAD NETWORK (km) Description Non Toll Agency Toll BOT Total Dual Carriageway 714 623 476 1 813 4-Lane Undivided 10 300 272 582 2-Lane Single 17 535 990 531 19 056 18 259 1 913 1 279 21 451 % of SANRAL Network 85% 9% 6% Total RSA Road Network Estimated to be 750,000 km

STRATEGIC OBJECTIVES SANRAL’s Strategic Objectives: Manage the national road network effectively and efficiently Provide safe roads Carry out Government’s targeted programmes Co-operative working relationships with all spheres of Government and the SADC member countries Maintain good governance practice Maintain financial sustainability Pursue research, innovation and best practice Safeguard SANRAL’s reputation Pursue and maintain environmental sustainability and best practice

NON-TOLL BUDGET (Rand ‘000) Description Budget 2014/15 Budget 2015/16 Budget 2016/11 Budget 2017/18 Treasury Allocations 11 916 947 12 542 488 13 490 485 14 146 662 Adhoc Maintenance 112 533 204 503 115 705 79 240 Routine Maintenance 835 588 1 001 666 933 031 920 797 Periodic Maintenance 2 040 300 2 249 117 752 910 360 541 Special Maintenance 471 841 813 799 1 158 046 1 256 492 Strengthening 3 515 873 2 267 537 2 613 979 3 488 789 Improvements 2 541 411 2 816 492 3 396 123 4 217 714 New Facilities 1 583 667 2 502 731 3 501 553 2 714 100 Land Acquisition 15 000 Community Development Projects 383 616 358 141 277 483 124 191

TOLL BUDGET (Rand ‘000) Description Budget 2014/15 Budget 2015/16 Total Income 4 102 102 4 044 865 5 518 491 6 197 085 Adhoc Maintenance 2 198 16 566 17 986 27 420 Routine Operations 1 754 362 1 947 029 1 843 655 1 642 766 Periodic Maintenance 207 075 225 068 365 912 143 179 Special Maintenance 930 111 266 31 850 40 000 Strengthening 190 329 334 252 367 904 215 407 Improvements 879 134 802 581 1 388 102 7 621 848 New Facilities 558 822 1 156 649 1 695 649 1 416 829 Finance Charges 3 315 000 3 401 000 4 047 000 4 647 000

FINANCIAL YEAR 2014/15: Corporate Financial and Performance Information

2015 Audit Report Unqualified Audit Report Emphasis of Matter: (Paragraphs 7 – 10) Going concern – alleviated due to the announcement of the new dispensation on GFIP e-tolls Uncertainty about the collection of the alternative tariff due to SANRAL from GFIP e-toll violators (violations since 3 Dec 2013: R6.1 billion) Restatement of the 2014 Financial Statements due to errors: Late submission of Taking Over Certificates (TOCs) as a result of technical disputes between contractors and SANRAL being settled after the end of the contracting period, i.e. in the next financial year(s). Financial liabilities were not separated between short term and long term portions due to recording error.

2015 Audit Report cont’d PROCUREMENT Audit Report: Paragraphs 23 - 26: Lack of attention to detail Refresher courses in Supply Chain Management will be instituted Diligence in housekeeping being emphasised

2015 Audit Report cont’d Investigation by the Public Protector (Paragraph 31): - SANRAL requested/invited the Public Protector to investigate GFIP e-toll tender award in May 2012 - Public Protector acknowledged receipt of relevant documents and confirmed to, quote “revert to you in due course should a need arise” unquote. - No further action by the Public Protector’s Office GFIP e-toll tender documents were provided to third parties and published on the website.

2015 Audit Report cont’d Procurement Irregular expenditure RRM projects (Paragraph 27) From 2000 to 2013 - Contract awarded based on statistically determined lowest acceptable (benchmark) price, not ‘lowest price’ as inferred by PPPFA -To protect SMMEs from exploitation and providing unsustainable low prices Raised as concern for the first time in 2013 Since 2014 SANRAL awards to lowest price (at face value) as benchmark price award was considered irregular Explained to Portfolio Committee on 15 October 2014 This audit comment expected for another year or two because of existing contracts (3 to 5 years) New PPPFA definition being considered for ‘lowest acceptable price’ – statistically determined!! 2015 Audit Report cont’d

CONTRACTS AWARDED 2014/15 Type of Contract Number Rands ‘000 Non-toll Network 182 11 100 554 Toll Network 41 3 373 751 TOTAL VALUE 223 14 474 305 2013/14 175 8 915 725 2012/13 255 11 620 255

NON-TOLL: OPERATING EXPENDITURE 2014/15 Description Number of projects Length (km) Cost R’000 Routine Maintenance 108 18 283 1 569 687 Periodic Maintenance 89 659 1 657 913 Special Maintenance 30 192 424 793 Total 227 19 134 3 652 393 2013/14 17 873 3 901 131 2012/13 139 20 597 3 682 152

NON-TOLL: CAPITAL EXPENDITURE 2014/15 Description Number of projects Length (km) Cost R’000 Strengthening 55 377 2 949 335 Improvements 79 310 2 280 239 New Facilities 61 262 1 503 691 Total 195 949 6 733 265 2013/14 205 778 6 085 435 2012/13 106 2 715 5 913 262

TOLL: OPERATING EXPENDITURE 2014/15 Description Number of projects Length (km) Cost R’000 Toll Operations and RRM 63 1 832 1 828 432 Periodic Maintenance 8 66 166 304 Special Maintenance* 5 3 215 Total 76 1 898 1 997 951 2013/14 1 857 1 938 924 2012/13 62 1 979 1 463 665 * - Refurbish anchors

TOLL: CAPITAL EXPENDITURE 2014/15 Description Number of projects Length (km) Cost R’000 Strengthening* 6 7 134 Improvements 18 27 179 606 New Facilities 25 280 642 Total 49 54 467 382 2013/14 42 10 1 153 724 2012/13 45 571 1 822 515 * - Traffic control centre upgrades

SOCIO-ECONOMIC DEVELOPMENT ON SANRAL PROJECTS FOR 2014/15

BEE: PROJECT CONTRIBUTION COMMITMENT 2014/15 Total R’million CAPEX RRM Total value of Contracts awarded 12 150 10 884 1 266 Value of work to HD Ownership 4 275 4 137 138 Value of work to SMME’s (black owned) 1 984 1 074 910 Empowerment % 2014/15 52% 48% 83%

NON-TOLL AND SANRAL TOLL Empowerment Expenditure: Value of Work Performed 2014/15 Type of Road SMME Utilisation Total R’000 SMME utilisation: Non-Black Enterprise SMME utilisation Black Enterprise Number R’000 Non-toll roads 697 886 533 583 1 584 337 2 470 870 Toll roads 235 278 967 182 196 434 475 401 Total 932 1 165 500 765 1 780 771 2 946 271

WOMEN OWNED COMPANIES Ownership Number Companies with ≥ 50% women owners (other than listed companies) 307 Total value of contracts awarded R1.06 billion Companies fully owned by women 172

BUSINESS/ENTERPRENUERIAL OPPORTUNITIES 40% women owned and managed SMMEs Training is done at NQF level 3 Business owner receives management, technical, OHS, tendering skills, financial, administrative, industrial relations and HR 24 month Construction Education & Training Authority (CETA) accredited qualification Enables owners to register with Construction Industry Development Board “SMMEs need big business for the experience that they can get. Our employees gain more experience on bigger projects. Also big business provides us with access to equipment which we would otherwise not be able to afford to complete the job.” Martha Mhlauli, owner of Women’s Pride Civils (working on Sannaspos rehabilitation)

TRAINING PROVIDED : 2014/15 Road Type Male Female Total Total Rand Value Non-Toll 2 021 1189 3 210 7 048 606 Toll 349 505 854 1 600 499 TOTAL 2 370 1 694 4 064 8 649 105

NON-TOLL JOB CREATION 2014/15 Type of Project Person Hours Average Equivalent Full-time Jobs (2000 person hours per annum) Total R’000 Male (‘000) Fem-ale Total Non-toll Projects 22 776 5 172 27 948 13 974 1 383 201 Toll projects 6 699 4 993 11 692 5 846 698 196 Sub-total 29 475 10 165 39 640 19 820 2 081 397

ROAD SAFETY EDUCATION Date Number of sites Number of schools Number of teachers attending workshops Number of teachers receiving material Number of learners receiving material Grades 1–9 8 73 165 583 41 232 Grades 10–12 43 253 453 863 111 961 TOTAL 51 326 608 1 446 153 193

ROAD SAFETY AWARENESS

SANRAL STAFF DEMOGRAPHICS March 2015 Total: 295 employees

SANRAL GENDER DISTRIBUTION 2015 Total: 295 employees

SCHOLARSHIPS 2014/15

EXTERNAL BURSARIES 2014/15

INTERNSHIPS 2014/15

SKILLS DEVELOPMENT OPPORTUNITIES

TRANSFORMATION: Support for Tertiary Institutions Chair in Pavement Engineering: University of Stellenbosch Chair in Transport Planning: University of Cape Town NMMU ICT weekly sessions Grade 10 – 12 learners Exposure & school visits to ICT lab 1603 learners and educators University of Witwatersrand WTTP Grade 10-12 2014/15 – 50 learners University of the Free State ICT weekly sessions 387 Grade 10-12 Science education students 16 Family Math & Science learners (11 495), educators (233) student educators (546) parents 4547 from the Free State, Northern Cape and Eastern Cape University of the Free State – The SANRAL Chair in Maths and Science

SUMMARY: CORPORATE PERFORMANCE Strategic Objective Total Targets Targets Achieved Reason for Non-achievement of Target Manage national roads 9 8 Water licence received late Provide safe roads 1 Government’s targeted programmes Fewer toll projects awarded than estimated Co-operative working relationships 2 Botswana project: Difficult ground conditions For details please refer to Annual Report Page 88

SUMMARY: CORPORATE PERFORMANCE cont’d Strategic Objective Total Targets Targets Achieved Reason for Non-achievement of target Governance 2 Achieve Financial Sustainability 3 Pursue Research, Innovation & Best Practice Slowdown in research programme Delay in finalising research scope with institution concerned Safeguard SANRAL’s Reputation For details please refer to Annual Report Page 88

FUTURE INVESTMENTS (3 year MTEF Planned Expenditure) PROVINCE AMOUNT Eastern Cape R 12.8 Billion Free State R 6.9 Billion Gauteng R 5.5 Billion Kwa-zulu Natal R 15.8 Billion Limpopo Province R 5.1 Billion Mpumalanga R 5.6 Billion North West Province R 4.7 Billion Northern Cape R 1.2 Billion Western Cape Total R 62.3 Billion

SANRAL CONDITION SURVEY VEHICLES Various condition parameters collected using SANRAL Road Survey Vehicles: Roughness – how bumpy is the road – speed, wear, etc Rut Depth – water pond on surface - safety Macro Texture – assist vehicle tyre to drain water – safety, noise Cracking – how much water will get in - deterioration Deflection – remaining structural life of pavement Alignment (DGPS) – Speed, Fuel Consumption, etc ROW Video – Road Signs, Section Measurements, etc Surveys at between 75 to 100 km/h 2D/3D Surface Images

BORROWING CAPACITY Initial R6 billion guaranteed funding (SZ bonds) R0.63 billion N1 loan – separate guarantee R0.52 billion ECA loan - separate guarantee R28 billion guaranteed funding (HWAY bonds & other) R15 billion – non guaranteed funding (NRA bonds) Total Borrowing capacity = R50.24 billion

CREDIT RATINGS Moody’s Global Scale Issuer Ratings: Long-Term: Baa3 Short-Term: P-3 Negative Outlook National Scale Issuer Ratings: Long-Term: A3.za Short-Term: P-2.za

CHALLENGES Resistance to ‘user-pay’ principle as espoused in the NDP No alternative financing option offered Delays in project related approvals from water affairs etc. Insufficient high-level planning and co-ordination between inter-modal transport and the three spheres of Government

LOSS OF OPPORTUNITY N2 Wild Coast Project N1-N2 Winelands Project N3 De Beers Pass

Thank You FRAUD HOTLINE: 0800 204 558 Website: www.sanral.co.za 11/8/2017 Thank You FRAUD HOTLINE: 0800 204 558 Website: www.sanral.co.za Nazir Alli Inge Mulder Alice Mathew SANRAL 012 8448000