PRASA PRESENTATION TO PORTFOLIO COMMITTEE ON TRANSPORT

GROUP CEO – LUCKY MONTANA10 OCTOBER 2012

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CONTENT

INTRODUCTIONBCKGROUNDCHALLENGES FACING RAILWAYSSTRATEGIC OBJECTIVESPERFOMANCE IN 2011/12PROGRESS ON OTHER KEY STRATEGIC PROGRAMMESROLLING STOCK FLEET RENEWAL PROGRAMMEFINANCIALS 2011/2012KEY CHALLENGES CONCLUSION

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INTRODUCTION

Financial Year 11/12 significant & historic for passenger railwaysCommencement of Fleet Renewal ProgrammeCommencement of National Signaling Upgrade Programme

South African Railways – both Freight and Passenger have entered new cycle of investment, renewal ,capacity expansion, technology upgrades to support the country’s long term growth

PRASA’s three principal tasks at heart of strategy:1. Modernisation 2. Short –Term visible improvements in quality of train services3. Securing PRASA’s financial sustainability

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BACKROUND

PRASA established to house the assets, finances, personnel and

operations of the former SARCC, its subsidiary, Intersite,

Metrorail, Shosholoza Meyl and Autopax - Owns, Manages,

Operates, Maintains Assets under its control.

End fragmentation in passenger services

Invest and Revitalise rail passenger transport

PRASA established to be the leading provider of Integrated

Public Transport Solutions

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CHALLENGES FACING PASSENGER RAIL

Railway infrastructure and technology has reached the end of its design lifespan

Poor levels of reliability and predictability

High costs of maintenance

Failure to contribute to an efficient transport system

Inability to support economic development

Limited access to socio-economic opportunities for rural and urban poor

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STRATEGIC OBJECTIVES

Deliver on Legal Mandate of PRASA

Position Rail as the Preferred Mode of Transport in High-

Volume Corridors

Double Market Share of Rail by 2017

Facilitate Access for the Rural and Urban Poor

Ensure Financial Sustainability of PRASA

Modernize Passenger Rail Systems

Contribute to Integrated Public Transport Solutions in South

Africa

Integration within the SADC Region

PERFORMANCE IN 2011/12

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HIGHLIGHTS FOR THE YEAR

Going concern issue, as previously indicated through technical insolvency position was addressed in the short-term through the prior period correction of R2,7 billion on amortisation of Capital Subsidy.

Improvement of 96,4% on prior year’s shortfall of R795,6 million to R28,9million in current year, mainly due to fair valuation of investment property;

PRASA had committed and spent R4.328 billion of an allocated Capital Budget of R6.1bn – 70% spending. However, the overall budget had been committed by 31 March 2012 for Multi-Year Capital Projects such as Signaling Modernization Projects in Cape Town, Gauteng and Durban.

Delivery of 510 coaches against a target of 450; The Accelerated Rolling Stock Programme has created

2205 Jobs

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HIGHLIGHTS FOR THE YEAR

Passenger numbers in Metrorail 18,6% below target but showed 9,5% annual improvement;

Fatalities declined 7% resulting in a decline in the Fatality rate per million passengers of 16,1%;

Crime incidents against passenger declined by 22 incidents or 4% with a resultant decrease in the Crime index 100 000 passengers of 12,2%;

Autopax passenger numbers increased by 25% from 2.7 million to 4.5 million

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HIGHLIGHTS FOR THE YEAR

Investment initiatives in new capacity and modernizing rail Recapitalization of the fleet commenced following

approval by Cabinet of detailed feasibility study. 7225 new coaches for Metrorail to be acquired.

•Funding commitment and Affordability Limit of R40 billion was set by Minister of Finance in February 2012;

Programme to introduce modern, electronic interlocking systems commenced.

Gauteng Phase 1 commenced.

Phase 1 for KZN and Western Cape tender approved and have entered implementation phase.

Implemented Capacity-Enhancement and Infrastructure Upgrade Projects:

Improving Safety - Platform Corrections

Before

After

The step here was 650mm. A standard step in a building is 170mm. The standard step for commuter trains is 190 mm - 230 mm.

View of completed platform

Station Modernisation- Rebranding & Wayfinding Signage

Station Upgrades and Modernisation

Cape Town Station

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HIGHLIGHTS FOR THE YEAR

•

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LOWLIGHTS FOR THE YEAR Irregular expenditure – R25.676 million mainly due to

lapsed contracts at Autopax Wasteful expenditure – R5 million due to late payment

interest charges Shosholoza Meyl challenges -

Severe impact on PRASA’s operational cash flow with R1,1billion over 24 months – a PRASA cross-subsidy

Revenues and subsidy do not cover minimum operational expenditure shown as R1,4billion p.a. by due diligence of 2008.

Passengers declined 7,5%.

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LOWLIGHTS FOR THE YEAR Property Portfolio still not delivering value, with income

being 48,8% below budget, with the Non-timely Approval of Section 54 PFMA request to DOT being one of the major contributing factors;

Quality of Service in PRASA Rail Poor demand due to slow economic recovery,

industry capacity constraints, crime and vandalism of key assets such as signal cables

Poor levels of reliability of aged infrastructure

Operational Inefficiencies and outdated methods

Two accidents in April and May of 2011 resulted in increased injury rate of 59%.

TIMING OF PROCUREMENT PROCESS OF EQUITY PARTNERS

• The Bidders, as part of their bid responses will be expected to indicate the percentage of equity for the BEE Partners

• The process to procure the Equity Partners will commence in October 2012, the anticipated timetable is indicated below

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STAGE KEY DATES AND ACTIVITIES

Release of B-BBEE Procurement Documents 17 October 2012

Clarification process 18 October to 7 December

Proposal Submission Date 14 December 2012

Evaluation and Selection Completed 31 January 2013

Interface between Preferred Bidder and Equity Partners From February 2013 to Financial Close

PROGRESS ON KEY INFRASTRUCTURE PROJECTS

Upgrading the signalling system of PRASA key strategic priorityOnly 23 of the 163 (14%) of the signalling installations have not reached the

end of their design lives PRASA is replacing all existing signalling interlocking, which consists mainly

of obsolete mechanical and electro-mechanical systems, with electronic interlockings as the technology of choice.

Gauteng Phase 1 currently underwayBoard has approved Kwazulu – Natal and Western CapeGauteng Phase under evaluationThe signalling programme is one of the key priorities of PRASA over the

period ahead. In the next three years, the project has been allocated an amount of R2.4 billion, including telecommunication, with R768 million in 2012/13, R814 million in 2013/14 and R855 million in 2014/15.

SIGNALLING PROGRAMME

Bridge City a new town centre being created 17 kilometres from the Durban city centre, bridging the communities of Phoenix and Inanda, Ntuzuma and KwaMashu (INK) and linking them into the urban system

PRASA constructing a 3.2km rail extension - the rail service will be complemented by an integrated bus and taxi interchange located adjacent to the railway station

The overall developments in the area include a regional hospital, retail, residential, magistrate’s court and other commercial facilities. PRASA will spend approximately R700 million for the construction of the rail line.• Phase 1 – Station Box (100% complete)• Phase 2 - Construction of the new station building (100% complete)• Phase 3 – Construction of the new rail link.

BRIDGE CITY

Bridge City Rail Link with new Bridge City Station

Progress on Key Strategic Projects

BRIDGE CITY

BRIDGE CITY

Greenview Capacity Enhancement Project

• Mamelodi is one of PRASA’s Priority “A” corridors in terms of demand and rail activity.

• Daily passengers on corridor = 91 000. Peak hours passengers = 38 000.

• Section from Eerste Fabrieke towards east has most passenger demand.

• Rail line from Eerste Fabrieke is currently only a single line, causing a 30 minute delay for turn-around of trains.

• The communities stopped trains in 2009 as communities of Greenview and Pienaarspoort have no access to rail services.

• Greenview doubling and additional station capacity will provide for 50% increase in passengers over medium to long term(39 000 passengers 58 000 passengers per day.

• Doubling of the line with new signaling and additional rolling stock will increase capacity with 100% (Currently 114 trains per day on the section).

Mamelodi Extension with new Greenview station, doubling of lines and upgraded Pienaarspoort and Mamelodi stations

Progress on Key Infratructure Projects

Background

THE PROJECT ENTAILS THE DOUBLING OF EXISTING RAILWAY LINE FROM EERSTE

FABRIEKE TO GREENVIEW, INCLUDING EARTHWORKS, TRACKWORK,

SUBSTRUCTURE, ALTERATIONS TO ROAD-OVER-RAIL BRIDGE, SIGNALLING

AND ELECTRIFICATION, AND UPGRADING OF MAMELODI GARDENS AND

PIENAARSPOORT STATIONS AND CONSTRUCTION OF A NEW STATION AT

GREENVIEW

Mamelodi Rail Expansion

Mamelodi Gardens Station

• Existing Stations to be upgraded• Package 1 includes the lengthening of the station

platform

Greenview Station

• Doubling of the Tracks and Station Infrastructure is 65% complete.

• Package 1 includes the passenger platform foundations, building foundation piling and column stubs

• New Station to be constructed in Greenview and upgrading of two other stations

Modern Architectural Design

Mamelodi Gardens Station

Pienaarspoort Station

Greenview Station

Contract Packages

Contract Package 1 :

Earthworks, Station Platform, Piling at Platforms, Bridgework and Culverts:

o Package 1a: OHTEo Package 1b: Perwayo Package 1c: Signallingo Package 1d: Telecommunications

Contract Packages

• Contract Package 2Mamelodi Gardens Station Building above platform level

• Contract Package 3 Greenview Station Building above platform level

• Contract Package 4 Pienaarspoort Station

• Contract Package 5a Infrastructure Changes required at Pienaarspoort Station.

• Contract Package 5b Elimination of level crossing.

Project Overall Progress

• Contract Package 1Doubling of the Line (Physical progress 80%) • Contract Package 2Mamelodi Gardens Station Building above platform level (Contract has been awarded to Bila Civil Contractor)

• Contract Package 3Greenview Station Building above platform level (Problems with Preferred Contractor alternate contractor to

be in place mid March 2012)

• Contract Package 4Pienaarspoort Station (Planning to call tenders for construction by end March 2012)

• Contract Package 5Bridge at Pienaarspoort for elimination of level crossing and Track work (Planning to call tender for

infrastructure changes by August 2012. Bridge to be built by National Roads Authority)

Key Issues (Challenges)

• Formalisation of Agreement between PRASA and CoT for the use of CoT land.

• Relocation of the informal settlement at Greenview.

• Approval of Station Drawings and Authority to start construction.

• Pienaarspoort Level Crossing Closure.

• Access Roads and Intermodal Facilities to be provided by CoT (Re-planning of new Township north of Greenview)

The Rolling Stock Fleet Renewal Programme contributing to Government’s Industrial Policy Action

Plan (IPAP2) –strengthening Local Manufacturing & Production, Skills Development and Job Creation

Forecast Commuter Rail Volumes & Market Engagement Indicate:

New Fleet requirement 7224 procurement at ~ 360 coaches per year for two x 10 year contracts

Creating~65 000 direct and indirect jobs

Total R123.5bn over the 20 year period

Long term procurement will allow local capability to evolve to above 65% of the value of a coach produced locally

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The Programmatic procurement will result in:

TECHNOLOGY AND CAPACITY

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Rolling stock technology and capacity

Platform Electric Multiple Units (EMUs)

■ Cape Gauge

■ 3 kV DC traction

■ 12 car units

■ To be made up of proven standard components and designs

Capacity 2 503 passengers per train set loading 5 pax/m2

12% higher capacity than existing rolling stock

Estimated overall cost 3 600 vehicles (1st batch) (10 years)

5 712 vehicles (16 years)

7 224 vehicles (includes estimated growth) = R123.5 bn (20 years)

EMU NUMBERS

Demonstration Corridors A-corridors B-corridors C-corridors

New corridors: Short-term

New-corridors: Medium to Long

Term (estimates)

Vehicles 2 400 1 404 912 768 228 1 512

% Pax on critical link 50% 23% 11% 8% 8%

0%

10%

20%

30%

40%

50%

60%

-

500

1 000

1 500

2 000

2 500

3 000

Veh

icle

s

Vehicle Requirement per Corridor Category (including spares)

5 712 vehicles

7 224 vehicles

ROLLOUT OF THE NEW FLEET

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-

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034N

um

be

r

8M Salvaged 5M Salvaged 10M 5M 5M GO 5M GO C2 10M 10M GO 10M GO C2 New RS

Rollout of 360 vehicles per annum

INFRASTRUCTURE INTERVENTIONS

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Infrastructure• Infrastructure intervention envisaged

at an estimated cost of R13.5 bn (excl new corridors):– Intervention needed to permit

operation of new rolling stock– Intervention needed to obtain

optimal use of new rolling stock

Depots• New depots required at all sites:

– Gauteng R1.5 bn– Cape Town R1.5 bn– Durban R1.0 bn– East London: R0.3 bn– Port Elizabeth R0.3 bn

8157

29001775

6810

1000

2000

3000

4000

5000

6000

7000

8000

9000

Demonstration Corridors

New corridors: Short-term

A-corridors B-corridors

Rm

MAIN FEATURES OF PROCUREMENT• Contract structure

Contract with design, build, and defined maintenance responsibilities for the RSM

• Period of rolling stock roll-outStretch the period of rolling stock roll-out to approximately 20 years, with the initial batch enduring over 10 years (2015 to 2025). Subsequent procurement could take the form of a second batch over 10 years, or several subsequent batches over shorter periods, depending on the state of readiness of new lines that are currently in planning stages

• FlexibilityProcurement framework to be designed as flexible as possible to provide PRASA optimum protection in procurement, given complexity of project

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STRATEGIC GOALS

Modern Trains

South AfricanFactory

Economic Development

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INDUSTRIAL REGENERATION

This is much more than a train supply contract – this Project will regenerate

South Africa’s rolling stock manufacturing industry & supply chain

INDUSTRIAL REGENERATION

RFP Issued Closed on 30 Sept 20127 Bids Submitted: China North Railways

China South Railways Bombadier Dudula Rail (ABB & Satdler), Gibela Rail (Alstom) CSR/WictraEvaluation of the Bids UnderwayPreferred and Reserve Bidders to be announced End of Nov 2012 Financial Close by June 2013

Economic Development and BBBEE

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ECONOMIC DEVELOPMENT APPROACH

• The PRASA approach to Economic Development ("ED“) is informed by, inter alia, the following:– Opportunity presented by long term investment in the Rolling Stock Fleet

Renewal Programme– Opportunity presented by structuring new project companies and/or

entities to be created for implementing the Programme– Government objectives and policy framework for B-BBEE (various policy

documents and papers)– Legislative requirements and guidelines such as the Broad-Based Black

Economic Empowerment Act, 2003 ("B-BBEE Act") and the Preferential Procurement Policy Framework Act, 2000 ("PPPFA") in relation to procurement.

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JOB CREATION AND B-BBEE ELEMENTS FOR THE PROGRAMME

• The Job Creation and B-BBEE elements for the Programme were developed taking into account the:– policy and regulatory framework, which includes the:

• Constitution• PPPFA• B-BBEE Act and B-BBEE Codes

– socio-economic conditions in South Africa, which include:• high unemployment rate• lack of education• lack of skills

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OBJECTIVES IN THE PROGRAMME FOCUSING ON BLACK PEOPLE

• PRASA has developed outputs for ED, informed by regulatory framework and socio-economic conditions in South Africa

• Outputs developed for ED are as follows:– sustainable job creation for black people, the youth, women and South

Africans– Increased black equity– the empowerment of a broader base of people to contribute towards the

economy– the involvement of women in a meaningful manner– skills development for black people - engineers, artisans, technicians and

technologists, etc.– subcontracting to black owned enterprises– development of small, medium and micro enterprises

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JOB CREATION AND B-BBEE ELEMENTS FOR THE PROGRAMME FOCUSED ON BLACK PEOPLE

• Job Creation, which focuses on jobs for South Africans, Black South Africans and Skilled Black People

• Ownership, which focuses on shareholding in the Project Company by Equity Partners (Black People, Black Women and Broad-Based Ownership Schemes

• Management Control, which focuses on the involvement of Black People and Black Women in top and senior management

• Employment Equity, which focuses on the involvement which focuses on the involvement of people with disabilities, Black People and Black Women in top and senior management

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KEY FEATURES OF ECONOMIC DEVELOPMENT

• Local Factory in South Africa constructed and operational by July 2016 (3 years after financial close)

• Minimum 40% local content by year 3 of delivery

• Minimum of 65% Local Content by value of trains to be sourced locally no later than 2021/22

• Development of rail related skills and transfer of skills generally to South Africans

• Subcontracting with entities owned by black people, small entities and entities owned by women

• Development of small enterprises and communities50

SEPARATE PROCESS ON EQUITY PARTNERS

• PRASA intends to have significant ownership by black people, black enterprises and broad-based ownership schemes in the Programme

• The separate procurement process has been undertaken to enable PRASA to structure the participation of the Equity Partners to ensure that such participation:– empowers a broader base of people– benefits the employees to be involved– serves to revitalize the rail industry– introduce new participants in the rail sector

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ATTRIBUTES OF THE EQUITY PARTNERS TO BE PROCURED

• The Equity Partners will be comprised of the following shareholding by:– by black enterprises, who are:

• investor enterprises, comprised of black people, black women and people with disabilities

• actively involved in the rail sector, comprised of black people, black women and people with disabilities

– employee trusts, comprised of:• a trust for the employees of the Project Company• a trust for PRASA employees

– an educational trust, focused on the development of skills in the rail sector, which will include skills such as those of engineers, technologists, technicians, and artisans 52

30% SHAREHOLDING OF EQUITY PARTNERS

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Equity Partner Breakdown in Percentage (out of 100%)

Breakdown in actual figure (of 30% shareholding)

Active Black Enterprises

33% 10%

Investor Black Enterprises

24% 7%

Employee Trust 33% 10%

Educational Trust 10% 3%

Total 100% 30%

FUNDING ARRANGEMENTS FOR THE PROGRAMME

• In order to facilitate the involvement of Black People in the Programme, PRASA has engaged the National Empowerment ("NEF") and the Industrial Development Corporation ("IDC") about the possibility of funding the suppliers in the Programme to enable the achievement of PRASA objectives in the Programme

• The products have been provided as part of the procurement documents for the Programme:– the Procurement Finance product from the NEF, which is for tenders and contracts

(and other NEF products), which requires that the applicants be more than 50% owned by Black People

– Gro-e-Scheme from the IDC, which is targeted at start-up entities, for buildings, machinery and working capital

• It is anticipated that the availability of funding will go a long way in assisting Black People to participate in the Programme

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WAREHOUSING

• The NEF has been brought into the process to hold the shares while the procurement process of Equity Partners is underway

• NEF has facilitator status, any shareholding held by them is recognised as follows:– 100% Black owned– 40% women owned– 10% owned by designated groups (broad-based black ownership schemes)

• In the event that the procurement process the Equity Partners being concluded prior to Financial Close, it may not be necessary for have NEF as the initial holder of the shares in the Project Company, subject to any applicable funding structure

• Create a revolving facility amounting to R200m for equity portion

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WAREHOUSING (CONT.)

• The period it will take before the NEF transfers the shares the Equity Partners in the event that the NEF warehouses the shares has not yet been decided and it will depend on factors including, the time it takes to finalise the Equity Partners and registration of any trusts

• PRASA will however, ensure that the shares are transferred to the Equity Partners such that there is sufficient time in the remainder of the contract to enable them to make a meaningful contribution to the project and derive commercial benefit from it

• The NEF will become a shareholder during the warehousing period and will be entitled to all rights of a Shareholder in the Project Company

• NEF will provide an equity contribution, commensurate with its shareholding in the Project Company

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FINANCIALS 2011/2012

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ABRIDGED GROUP INCOME STATEMENT 2012

RM 2012 2011 %Revenue 2 675 2 427 10.2%Government subsidy 3 339 3 155 5.8%Sundry Income 277 290 -4.3%Total Expenditure ( 7 083) ( 6 675) 6.1%Fair valuation of investment properties 774 234 230.2%Net finance (cost)/income 122 ( 70) 274.3%Net depr, loss, impairment & subs amort ( 133) ( 157) 15.3%Loss for the year ( 29) ( 796) 96.4%Fair valuation on investment property increased by R540 million.

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GROUP SUBSIDY AND FARE REVENUE

2009 2010%

Movement 2011%

Movement 2012%

Movement

CAPITAL SUBSIDY 2 368 4 297 81% 5 610 31% 6 135 9%

OPERATIONAL SUBSIDY 3 050 3 186 4% 3 155 -1% 3 339 6%

FARE REVENUE 1 341 2 159 61% 2 117 -2% 2 342 11%-

-

-

Increase in Capital Subsidy is in line with strategy on modernisation of public transport. However, the operational subsidy is below the levels required to sustain the envisaged growth strategy. Subsidy even went down by 1% from 2010 to 2011 year.

Furthermore, the constrained growth in fare revenue is not sufficient to sustain the business operating activities, hence the reliance on operational subsidy.

When calculated in real terms with respect to 2010 operational subsidy, and using an average inflation rate of 5%, the cumulative deficit on operational subsidy under funding is about R400 million.

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PRASA RAIL SUBSIDY VS. REVENUE

RM YEAR SUBSIDY

% of Total

FARE REVENUE

% of Total OTHER

% of Total TOTAL

2010 2 574 64 1 345 33 108 3 4 027 2011 2 014 53 1 628 43 154 4 3 796 2012 2 516 56 1 701 38 247 6 4 464

-

--- A deficit budget of R503 million was approved in 2012.

In 2010 a separate once off subsidy of R450million was received for MLPS.

No subsidy has been allocated to MLPS since 2010.Metrorail has been subsidising MLPS operations.

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MLPS PASSENGER TRIPS

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METRORAIL PASSENGER TRIPS

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KEY RATIOS

Liquidity ratios: 2012 2011 %

Current ratio 1.45 0.83 75.9%

Quick ratio 1.37 0.78 76.1%

Cash ratio 1.31 0.67 95.8%

_

_ Cash and cost containment strategy adopted by PRASA.

This improvement in working capital ratios is mainly due to the following:

Timing difference on capital subsidy spending.

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ASSET BASE

Property, Plant and Equipment (inc intangible and other) RM 2012 2011

Net book value - opening 17 804 15 980

Additions 3 476 2 957

Fair valuation 774 234Depreciation/derecognitions/impairment ( 1 569) ( 1 367)

Net book value - closing 20 485 17 804 % Movement 15.1%

---

--

Under spending on capital project for the year due to the following:

Assets grew by 15.1% further strengthening the Group Balance Sheet.

Procurement and contract conclusion processes on large and complex multi year projects, which took longer than anticipated. Deliverables by suppliers often not according to planned schedule. The spending on Capex expected to rump up during the current financial year.

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CHANGES IN FINANCIAL POSITION

RM 2012 2011 %

Property, plant and equipment 20 485 17 804 15.1%Other non-current assets 32 38 -15.8%Trade and other receivables 175 355 -50.7%Inventories 216 146 47.9%Cash and cash equivalents 3 571 2 126 68.0%Loans and borrowings ( 213) ( 417) -48.9%Other non-current liabilities ( 272) ( 285) -4.6%Capital subsidy and grants ( 18 780) ( 14 071) 33.5%Trade and other payables ( 2 488) ( 2 986) -16.7%Other short term payables ( 238) ( 194) 22.7%

Net equity 2 488 2 516 -1.1%Balance sheet is stable and technically solvent. The Group will continue to explore opportunities of improving the balance sheet and maximising asset utilisation.

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IRREGULAR EXPENDITURE

R'000Irregular expenditureNon- compliance with SCM Policies

3 737

Non- compliance with SCM Policies

2 479

Non- compliance to CIDB

6 000

Elapsed contracts continued month to month at Autopax 13 152

Acting allowance paid more than 3 months without proper authorisation

308

25 676 Fruitless and wasteful expenditureInterest on late payments of creditors accounts

5 000

Metrorail Gauteng. Contract of R6m awarded to supplier with grade 4EP, who is rated at doing work of less than R4m.

Employees who have been in acting positions for more than the allowed period of 3 months per the Remuneration policy and philosophy.

Goods or services were procured on a recurring basis during the period under review without going to tender.

Corporate: Interest in supplier not declared by employee . The employee's brother is involved in company, employee had no participation in decision making process of awarding the contract.

Three quotes not obtained for purchases of goods and services.

1. Lack of funding of Long-Distance Train Service – adding huge financial burden on PRASA- main contributor to R600 Million loss - PRASA urged to shut it down

SMEYL transferred from Transnet to PRASA in 2009 – Due Dilligence confirmed a funding requirement of R1.4 billion per annum

2. Property Portfolio – unlocking its value critical – Section 54 PFMA approvals critical – financing development leases and buying back leases critical – bringing in development partners critical

3. Striking the right balance between Operational Funding and Capital allocations – critical to capitalise the costs associated with infrastructure upgrade and modernization

4. Going-Concern issue fully addressed – however Cash remains a major, immediate challenge -

KEY CHALLENGES

1. Next 12 Months critical – • Appointment of a Rolling Stock Contractor Critical• Signing Contract

2. Job Creation, Skills Development and unlocking devlopmentment through the Infrastructure Modernisation Programme

3. All these testimony of PRASA’s intense modernisation to create a new modern commuter rail system by 2014/15.

CONCLUSION