PRASA letter shows how ANC administration has hamstrung parastatals

In today's Business Day, the Group CEO of the Passenger Rail Agency of South Africa (PRASA), Lucky Montana, has taken out a half-a-page advertorial, titled "Open Letter to Mr De Freitas, DA Member of Parliament". The advert is a response to a statement I issued last week alluding to the cash-flow problems that Metrorail and its parent company, PRASA, are currently experiencing.

The letter is extraordinary for two reasons: first, because it is unusual for parastatals themselves to respond directly to public criticism against them and, second, because it is more unusual still, for them to do so timeously. In this regard, the DA welcomes PRASA's response.

However, read in its entirety, the letter is alarming, as sets out in some detail the massive financial burden facing this particular parastatal. Indeed, it is a fairly ingenuous piece of political communication because what Mr Motana has managed to achieve, under the guise of a response to the Democratic Alliance, is a methodical and quite powerful plea to the Minister of Transport for more money. In other words, in an ostensible attack on the DA, Mr Motana has said out in no uncertain terms the very real and fundamental funding crisis facing PRASA now and in the future.

It would be most interesting to hear the Minister's response to the letter and the inherent, desperate plea it contains.

Among other things, Montana explains that through no fault of PRASA, but as a result of sustained under-funding PRASA has found themselves in dire financial straits. He lists, amongst other grounds, the following reasons for PRASA's financial impasse:

·         "For over five (5) years, no approval was granted for Metrorail to increase fares. This simply means that Metrorail services have become un-economical."

·         A Due-Diligence Report on Shosholoza Meyl has revealed that PRASA would require about R1.4-billion per annum to run its business effectively. However, only R450-million per annum is provided to PRASA to run this service.

·          The increase in electricity prices will cost PRASA between R210-million and R340-million against a budget of R248-million.

·          "...costly, outdated and inefficient conditions of employment."

All of this is hedged against a series of assurances that PRASA itself is doing its best with what it has. What Mr Montana is saying, in a nutshell, is that, despite every effort on the part of himself and his organisation to streamline their systems and properly spend their money, the fundamental nature of the problem (years of poor funding) means they are operating on the red line every day and that situation is not something PRASA itself can control. The ball, so to speak, is in the hands of the Executive.

I believe the advert to be deeply significant and a frank and open admission that the ANC government has generated and fostered a situation in which many of our key public institutions simply cannot continue to survive. It is an indictment of the way in which the ANC administration has approached our infrastructure. PRASA joins, Eskom, the RTMC, Denel, the SABC, Sentech, the Land Bank, the Post Office, SAA and various other critical state institutions that are severely financially compromised, as a result of neglect and poor planning and fruitless and wasteful expenditure.

It is also an indictment of the ANC's much vaunted ‘Developmental State' as it constitutes yet further evidence that our parastatals - the vanguard of the Developmental State - are deeply compromised and fundamentally broken on several different levels. In part, cadre deployment and the championing of political affiliation over merit and expertise, is responsible for this problem; in part, poor planning and bad resource management. But, one way or the other, unless the ANC government comes to properly embrace the private sector, these institutions are destined to continue to swallow public money indefinitely and to fail to deliver the basic services they were set up to provide.

The DA will be submitting a series of parliamentary questions to the Minister of Transport, on each of the major financial constraints set out in the Mr Montana's advertorial, to ask what the Minister is doing to address them.

Statement issued by Manny de Freitas, MP, Democratic Alliance deputy shadow minister of transport, February 9 2010

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