Prasa performance gets worse as it achieves just 17.5% of its targets

03 February 2021 - 17:31
Prasa can't account for its assets, its infrastructure is in a state of disrepair and its ability to generate money is diminishing, parliament heard on Wednesday. File photo.
Prasa can't account for its assets, its infrastructure is in a state of disrepair and its ability to generate money is diminishing, parliament heard on Wednesday. File photo.
Image: MARIANNE SCHWANKHART

The auditor-general's office has called for urgent intervention to save the country's struggling rail agency.

The Passenger Rail Agency of SA (Prasa) achieved only 17.5% of its planned targets for the 2019/20 financial year — its lowest achievement over the past eight years, according to the auditor-general. It got a disclaimer audit opinion for the same period.

The company cannot account for its assets, its infrastructure is in a state of disrepair and its ability to generate money is diminishing. Passenger numbers are declining, and those responsible for governance failures have gone unpunished.

These are some of the findings the auditor-general presented to parliament's public accounts watchdog Scopa.

Details of Prasa's poor performance were laid bare by the auditor-general on Wednesday.
Details of Prasa's poor performance were laid bare by the auditor-general on Wednesday.
Image: Nolo Moima / Arena Holdings

Prasa was working with a budget of about R20bn in the year under review. About R8.4bn came government subsidies from the transport department for operations, and R8.1bn for capital expenditure.

The Prasa group generated revenue of R1bn in the form of fares. It also generated operating lease rental income of R726m, other income of R274m and interest received of R1.5bn.

The auditor-general (AG) complained that the agency does not comply with the accepted terms of the financial reporting framework.

“Prasa is always giving us financial statements that are not credible, or financial statements that are not prepared in terms of the financial reporting framework,” said the AG's Polani Sokombela.

Prasa is one of the entities that are ranked high in terms irregular expenditure. In the financial year under review, this is sitting at a reported R28.6bn which is shockingly high, according to the AG. In the previous financial year (2018/19), the figure was R27.2bn.

Irregular, fruitless and wasteful expenditure at the rail agency.
Irregular, fruitless and wasteful expenditure at the rail agency.
Image: Nolo Moima / Arena Holdings

The auditor-general said no investigations were carried out for any instances of irregular expenditure reported in the 2018/19 financial year, and no evidence was provided for the link between the action taken against employees and the reported irregular expenditure for the financial year before that.

“There are a litany of challenges that we experienced,” said Sokombela. Among them is that the company has “very poor” discipline when it comes to financial management. Prasa doesn't have systems to ensure all irregular, fruitless and wasteful expenditure is recorded in the books, MPs heard.

“The issue of lack of compliance monitoring and enforcement of compliance is an issue that is a culture at Prasa, where non-compliance is just happening,” said Sokombela.

The AG was unhappy with Prasa's property plant and equipment, which is the infrastructure the agency uses to execute its mandate in terms of the rail infrastructure that it has.

“There were cases where we could not be provided with sufficient, appropriate evidence to substantiate the assets that Prasa has on its balance sheet. The issue of credible fixed asset register is a big issue. They don't have a credible fixed asset register to manage their assets,” the AG found.

As a result of all these challenges, passenger numbers are declining, which mean Prasa is struggling to generate revenue.

Metrorail had only 132.7 million passengers in 2019/20, compared to a target of 246.3 million, while the Mainline Passenger Service attracted 205,884 passengers as opposed to the 463,000 they were targeting.

Metrorail achieved R563.9m in revenue vs an unrealised revenue target of just under R1.07bn, and the Mainline Passenger Service raised R66.9m vs R140.8m.

There needs to be a very serious intervention into this entity,” said Sokombela.

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