The Passenger Rail Agency of South Africa (Prasa), incorporating the South African Rail Commuter Corporation, Metrorail, Shosholoza Meyl, Intersite and Autopax, was launched in March 2009. Then chair Sfiso Buthelezi proudly proclaimed that transport is the heartbeat of the economy. But over the ensuing decade Prasa sucked up all the oxygen, and left a toxic sludge.
In a nutshell, in the year to the end of March 2019 Prasa:
Incurred a deficit in revenue of R1.7 billion (2018: R1.4 billion surplus). However, without the government grant of R3.7 billion (2018: R4.7 billion), the deficit would have been R5.4 billion (2018: R3.3 billion deficit);
The AG issued a disclaimer of opinion on the 2019 annual financial statements. That means no reliance can be placed on the financial statements. The shame of it.
A disclaimer of opinion is worse than the qualified opinion issued on the 2018 annual report.
Recently Transport Minister Fikile Mbalula announced that he has dissolved the interim board, and has placed Prasa under administration.
AG report to Parliament
The AG had 79 findings, including the following:
Prasa did not keep proper records, did not keep sufficient or appropriate audit evidence, did not follow required accounting conventions, and did not maintain complete governance records (minutes of meetings of the board, its sub-committees and executive committee). The AG also raised material findings on the reliability of the reported performance information.
There were numerous material irregularities, including the locomotive saga (R2.5 billion has gone down the drain, and the locomotives are not fit for purpose), and the appointment of overhaul and upgrade contractors resulted in Prasa overpaying for the work.
The AG has made recommendations, and will follow up on them
The AG will be following up on various investigations and the implementation of planned actions (disciplinary steps, financial recovery, and civil and criminal cases arising from the outcome of the investigation) during the next audit.
The processes followed in appointing suppliers to provide bus services in the Western Cape, surveillance services (drones), security services, emergency repairs to signalling equipment, and the control of vegetation.
Various other investigations are under way:
Allegations of maladministration relating to financial mismanagement, conflict of interest, and procurement and appointment irregularities.
Is Prasa financially solvent?
Its plant, property and equipment is valued at R42.6 billion, and this represents 54.3% of its total assets. However, the AG could not verify this value. This places a large question mark over whether the financial assets exceed the liabilities.
In the years 2008 to 2019, Prasa included in its revenue some R39 billion of government grants and subsidies.
Citing “material inconsistencies”, the AG was not able to confirm the unspent capital subsidy and grants figure of R44.8 billion (2018: R40.1 billion).
With no consequence management and no financial control, Prasa has proved to be the ultimate gravy train.