The passenger rail entity expects to make a R1.7 billion loss in the current financial year
The Passenger Rail Agency of South Africa will need about R6 billion from taxpayers to stay afloat over the next five to six years and run its operations, said Prasa chief executive Hishaam Emeran.
The need for funding comes as the state-owned company faces nearly R1.7 billion in expected losses in the 2023-24 financial year, mainly because the entity will spend more than R1.1 billion on security. Its assets have been vandalised, stolen and damaged.
The figures were presented on Tuesday by Emeran, who told parliament’s transport portfolio committee that the parastatal had lost about 96.1% of its passengers. It is expecting to ferry 19.3 million people in the current fiscal year, down from about 500 million during its 2014-15 peak.
Emeran said Prasa, in the 2022-23 financial year, had revitalised 18 of its 40 national train lines, the infrastructure of which was looted and vandalised from 2020, grinding the country’s passenger rail services to a halt.
He said the agency expected to have all 40 of its corridors back online in the 2024-25 financial year, and would work with Transnet, the parastatal responsible for freight rail transportation, in reviving the country’s rail infrastructure.
Prasa expected to ferry more than 35 million passengers, with an expected fare revenue generation of roughly R228.5 million, in the 2025-26 financial year.
Emeran acknowledged that the numbers were “fairly low”, saying Prasa had to still bring back its corridors and roll out the signalling programmes before reaching its peak numbers.
“But once we have those high frequency services in place, these numbers should be increasing quite significantly,” he said, adding that a shortfall of nearly R1.7 billion was expected.
Prasa’s forecast was that security costs would peak at nearly R1.3 billion in 2025-26 and, with the entity’s strained fare collection caused by lower passenger volumes and expected operational budget of roughly R12 billion in the same financial year, the fiscus would have to cover the shortfall in operational costs.
These costs include an expected R5.3 billion in existing personnel costs and the funding of vacancies by 2025-26, which would have to be supported “by the fiscus”, Emeran explained.
“With this recovery programme, and the passenger numbers not where it should be — as we recover the corridors and roll out the signalling, our other source of revenue being passenger fares is not at a level where it should be. And this recovery programme, over the next five or so years, is where this operational funding support is required,” he said.
“Most of it is required upfront in this financial year because that is where the greatest part of the recovery of the corridors is taking place.
“But, in essence, over this approximately five to six years, you’re looking at between R5 billion to R6 billion of operational funding support … to enable Prasa to fully recover [to] be able to transport the high passenger volumes, and to protect its assets going forward.”
Emeran stressed that the current executive management would strive to fix Prasa’s financial management, moving from a disclaimer in the auditor general’s audit opinion in the 2022-23 reporting period, to a qualified audit in the current year, and a clean audit in 2024-25.
“That is the plan that we have put on the table, and the team is putting in the effort to achieve that,” Emeran said.