Declaration of Intent 2009-2012

Declaration of Intent 2009-2012THE SOUTH AFRICAN NATIONAL ROADS AGENCY LIMITED

25º 44’ 55” S; 28º 14’ 25” E

1343 SANRAL declaration5.indd Sec1:31343 SANRAL declaration5.indd Sec1:3 9/22/09 12:26 PM9/22/09 12:26 PM

Declaration of Intent 2009-201201

Ditsela Place1204 Park StreetHatfi eld, Petoria

P.O. Box 415Pretoria, 0001South Africa

Tel: +27 (0) 12 426 6000Fax: +27 (0) 12 326 2117

38 Ida StreetMenlo ParkPretoria

Tel: +27 (0) 12 426 6200Fax: +27 (0) 12 348 1680

58 Van Eck PlaceMkondeniPietermaritzburg

Tel: +27 (0) 33 392 8100Fax: +27 (0) 33 348 6284

NRA HouseSouthern Life Gardens72 Avenue, Newton ParkPort Elizabeth

Tel: +27 (0) 41 398 3200Fax: +27 (0) 41 398 3211

Parc du CapBuilding 5Corner Mispel Street/Willie van Schoor AvenueBellville

Tel: +27 (0) 21 957 4600Fax: +27 (0) 21 946 1630

Toll-free Phone No.: 0800 204 558Toll-free Fax No.: 0800 00 77 88E-mail Address: [email protected] Address: Tip-Offs Anonymous®

Freepost DN 298 Umhlanga Rocks 4320

Head Offi ce

Northern Region

Eastern Region

Southern Region

Western Region

Tip-Offs Anonymous Hotline


Declaration of Intent 2009-2012 02

website: www.nra.co.za

registration number: 1998/009584/06


The South African National Roads Agency Limited (SANRAL) is an independent, statutory company registered in terms of the Companies Act. The South African government is the sole shareholder and owner of SANRAL.

SANRAL’s mandate is to fi nance, improve, manage and maintain the national road network – both toll and non-toll roads. As of end-2008, SANRAL oversaw a network of 16 170 km of roads throughout South Africa.

About SANRAL

“It is your attitude,

Declaration of Intent 2009-201203


not your aptitude that determines your altitude.”Zig Ziglar

Excellence Proactiveness Participativeness IntegrityCare

Core Values EP²IC

VISION, MISSION AND VALUES

Vision To be recognised as a world leader in the provision of a superior

primary road network in southern Africa.

Mission As the custodian of a public good, we are committed to the

advancement of the Southern African community through:

• A highly motivated and professional team • State-of-the-art technology • Profi cient service providers • Promoting the ‘user pays’ principle

Declaration of Intent 2009-2012 04


Contents

Message From The Chairman 5

Section 1 Overview About Sanral 8 Funding The Road Network 11 Other Financial Matters 14

Section 2 Our Core Business The National Road Network 15

Section 3 Financing The Network Funding Requirements For Non-Toll Network 20 Funding Requirements For Toll Network 22

Section 4 Managing The Road Network Pavement Age 35 Asset Preservation 35 Road Safety Management 39 Law Enforcement And Overloading 41 Freeway Management 42 Maintenance 44

Section 5 Socioeconomic Development & Environmental Management Socioeconomic Development 45 Environmental Management 47

Section 6 Corporate Management Organisational Structure 48 Human Resources 49

Section 7 Performance Goals Engineering Goals 50 Socioeconomic Goals 54 Environmental Goals 56 Corporate Goals 57 Research And Development 58 Education 60 Social Sciences Research 61

Section 8 Performance Measurement Performance Measurement Framework 62 Performance Indicators 62 Corporate Indicators 65

Section 9 Looking Beyond 2010 67

Apenndix Policy Of The South African National Roads Agency In Respect 83 Of Unsolicited Proposals

Contents05


Acronyms

“As for the future, your task is not to foresee it, but to enable it.”

Antoine de Saint-Exupery

BBBEE Broad-based Black Economic Empowerment

BOT Build-operate-transfer

CCTV Closed-circuit television

CSIR Council for Scientifi c and Industrial Research

DMTN Domestic medium-term note

EIA Environmental impact assessment

ITS Intelligent transport systems

LSR Loan supportable by revenue

MTEF Medium-term expenditure framework

NEPA New Partnership for Africa’s Development

OCI Overall condition index

ORT Open road tolling

PFMA Public Finance Management Act

PPP Public-private partnership

RDP Reconstruction and Development Programme

RTMC Road Traffi c Management Corporation

RTMS Road transport management system

SAMDM South African Mechanistic-Empirical Design Method

SANRAL South African National Roads Agency Limited

TCC Traffi c control centre

Acronyms 06


Message from the Chairman

Message from the Chairman07


A look ahead This Declaration of Intent covers the period 2009/10 to 2011/12. It refl ects on the accomplishments

of the South African National Roads Agency over the past decade, while keeping our eyes fi xed on the future.

Our main focus is unchanged: to help create a stable road infrastructure for the safe, reliable and sustainable movement of people and goods in a growing economy. Without such transport infrastructure, no modern economy can survive.

South Africa’s contemporary travel needs are complex, and our future requirements will be even more demanding. To respond to these challenges requires long-term integrated planning, as well as cutting-edge technology. Over the next three years, SANRAL plans to accelerate its rollout of state-of-the-art technology and services. These include intelligent transport systems (ITS) as part of the Gauteng Freeway Improvement Project, and open road tolling (ORT) schemes, which will contribute to greater effi ciency and safety on our roads, and improve the experience of the driving public.

Strategic vision Our strategic vision focuses on the provision of a national road network of 20 000 km. The network

under SANRAL’s jurisdiction has grown from about 7 200 km in 1998 to 16 170 km at the end of 2008. Over the next three years we will continue to expand the network, while working to curb the rapid deterioration of existing roads as a result of traffi c growth and overloading.

We are committed to an expanded vision of socioeconomic development that includes safe, clean, affordable and reliable transport to help bring about a better life for all.

Divina natura dedit agros, ars humana aedifi cavit urbes’(‘Divine nature gave us fi elds, human skill built our cities.)

Marcus Terentius Varro Reatinus (116 - 27 BC)

Message from the Chairman 08


Financing models SANRAL is a pioneer in developing alternative sources of fi nance for road infrastructure, reducing

dependence on tax-based revenues. In keeping with this innovative approach, we have initiated a domestic medium-term note (DMTN) bond programme to fund toll roads. The fi rst phase of this programme is not secured by a government guarantee; instead, it is fi nanced on the strength of our own balance sheet, with the backing of a strong credit rating from Moody’s Investors Service. The fi rst issue was launched in July 2008, with bonds being generally 50 percent over-subscribed, indicating strong investor confi dence in SANRAL. Subsequent issues continued this trend. This instrument will be used prudently to fi nance future roads. Due to the international fi nancial crisis and the higher cost of borrowing, the National Treasury has recommended that the next phase of the DMTN programme carry an explicit government guarantee.

Public-private partnerships (PPPs) have proven to be a valuable tool in providing South Africa with new infrastructure. Over the past 10 years SANRAL has successfully completed three PPPs and will continue to use this tool to ensure that our road infrastructure benefi ts from substantial private-sector investment and reinvestment. One of the most exciting PPPs projected over the next three years is the N1-N2 Winelands project, which will relieve congestion and enhance mobility on key national roads running through the Western Cape. We also hope that the Wild Coast Toll Road comes to fruition.

Growing the economy and developing human capital SANRAL is a major contributor to job creation, poverty reduction and community development.

Over the past decade, we have employed numerous people in road-building projects, supported by contractual obligations imposed on contractors to ensure SMME development. These efforts will be intensifi ed over the next three years to help strengthen our economy and assist communities to become economically independent. To strengthen the development of human capital, SANRAL will provide scholarships at both pre-matric and university levels. Through continued investment in safety education, we will lower the incidence of traffi c accidents, helping to save the lives of fellow South Africans.

Environmental management

SANRAL is mindful that, while road infrastructure contributes to increased mobility and socioeconomic development, the construction of roads also affects our natural environment. Over the past decade SANRAL has excelled in environmental management, but we will continue to face the diffi cult tradeoffs between economic and social benefi ts on the one hand, and environmental protection on the other. In the coming years SANRAL will strengthen and re-affi rm its working relationships with the now new Departments of Agriculture, Forestry and Fisheries; Energy; Mining; Tourism; and Water and Environmental Affairs. Research to attain the best possible balance between development, prosperity and the environment will continue.

Message from the Chairman09


The next three years will see SANRAL capitalising on these achievements and further reaping the benefi ts thereof.

Our fully integrated culture of cooperative governance is an important lever in protecting the long-term operational integrity of the road network and ensuring that it increasingly serves our communities, supports the economy and facilitates growth and development.

Finally, I would like to thank the former Minister of Transport, Jeff Radebe, my SANRAL colleagues and their counterparts in the industry for helping us to make a difference. We welcome the new Minister and Deputy Minister of Transport, Sbusiso Ndebele and Jeremy Cronin. To our road users and communities throughout South Africa, thank you for your support. We reaffi rm our commitment to provide you with the services you have come to expect of us.

Lot Ndlovu Chairman

Major achievements

SANRAL’s major achievements over the past decade include:

The development of four internationally recognised projects – the N4 Platinum Toll Highway, the N4 Maputo Development Corridor, the N3 Toll Road project and the landmark Nelson Mandela Bridge in Newtown, Johannesburg.

Excelling in engineering and developmental goals, corporate governance, ethical processes,

and care and concern for staff.

Recognition as one of the world’s leading road authorities by our peers in organisations such as the World Road Federation.

Several awards, including – Recognition as one of the top 50 Best Employers in South Africa for 2008/09 The Greening the Future Award for our environmental commitment in 2008 The Best Borrower Award from the Bond Exchange of South Africa, in recognition of our

commitment to fi nancial transparency.

Message from the Chairman 10


OverviewSection 111

Section 1Overview


12Overview Section 1

This Declaration of Intent outlines the practical implementation of SANRAL’s vision to create a stable road network that supports socioeconomic development in South Africa. Over the next three years, we aim to consolidate the projected 20 000 km national road network, and secure the condition of national routes of strategic and economic importance.

This document builds on the strategic vision of SANRAL outlined in our long-term vision, Horizon 2010, which was published in 2002, as well as two previous declarations of intent covering the past six years.

This report presents key objectives and projects tobe delivered over the next three financial years. Readers should note that delivery

of non-toll roads described in the declaration is based on the projected allocations from the National Treasury. Any adjustment of these allocations, or any major shift in current economic conditions in an already volatile global environment, is likely to have an impact on the projections. This document should therefore be regarded as a work in progress. In addition, delivery of the toll-road programme remains subject to public acceptance of such projects, which is determined through the Intention to Declare a Toll Road process, SANRAL’s ability to raise fi nance on the capital markets and political support for the “user-pays” principle.

This declaration will be updated each year through the annual budget submitted to Parliament,

the funds received from National Treasury and as circumstances may dictate.

During the period covered by this report, government’s capital investment programme, which includes projects associated with the 2010 FIFA World Cup, is accelerating the provision of infrastructure. While growth of fi xed-investment is crucial, SANRAL is also taking steps to ensure that quantity is matched by quality. Engineering and technological innovation will support excellence in the national road network. In particular, SANRAL’s rollout of intelligent transport systems (ITS) will improve long-term management of this national resource, making our roads safer and more effi cient.

A three-year projection

About SANRAL In line with its commitment to transform the public sector, government established SANRAL in

April 1998 by an act of Parliament. The SANRAL is an independent statutory company operating as a custodian of a public good (the proclaimed national road network) and operating at arm’s length from government. Its sole shareholder is the Minister of Transport. SANRAL’s purpose is to maintain and develop South Africa’s expanding national road network (currently some 16 170 km) and to manage assets with an estimated replacement value of more than R186 billion.

Since the advent of democracy, government has sought to realign public expenditure and the fi nancing of public services to redress the imbalances of the past. Recognising the scope of demands on the fi scus and the advantage of constructive engagement with the private sector, SANRAL has sought alternative sources of fi nance for road infrastructure and opportunities to reduce its dependence on tax-based revenues.

SANRAL is made up of a highly motivated and passionate team of professionals operating out of its Tshwane corporate offi ce and four regional offi ces located in Pretoria, Cape Town, Pietermaritzburg and Port Elizabeth.

As the custodian of the national road network, SANRAL plays a crucial role in meeting South Africa’s infrastructure requirements. Government is working to bring fi xed investment to the level of 25 percent of gross domestic product.


Taking the global economic crisis into account, the challenge over the medium term will lie in effi cient provision of affordable and accessible road infrastructure to support economic growth and reduce poverty. During the period of this Declaration of Intent, SANRAL will aspire, notwithstanding the current economic environment, to continue its programmes and retain its positive year-on-year growth. During the fi nancial year 2007/08, our year-on-year growth in infrastructure expenditure grew by 28.8 percent.

Infrastructure development cannot succeed without social development and economic growth taking place at the same time. SANRAL supports a range of education initiatives and training institutions to build the supply of vital skills in the economy.

We consider trustworthiness the most important criterion because even though an institution has all the criteria,…if it is not trustworthy, it cannot perform as we expect it to.

Strategic tasks and objectives

Nampeya, MalawiVoices from the Poor

g

SANRAL’s principal tasks are to:

• Strategically plan, design, construct,

operate, rehabilitate and maintain South Africa’s national roads to support socioeconomic development

• Generate revenue from the development

and management of its assets • Undertake research and development to

enhance the quality of life of all South African citizens, with particular emphasis on their social and economic well-being

• Advise the Minister of Transport on matters

relating to South Africa’s roads • Finance, plan, construct, provide, operate

and maintain roads in neighbouring countries on the request of the Minister of Transport and those countries.

SANRAL objectives:

• Manage the national road network

effectively

• Provide safe roads

• Carry out Government’s targeted programmes

• Co-operative working relationships with relevant Departments, Provinces, Local Authorities and SADC member countries

• Achieve and maintain good governance

practice

• Transformation

• Achieve fi nancial sustainability • Pursue research, innovation and best

practice

OverviewSection 113


14Section 1Overview

Corporate governance, risk management and ethics

SANRAL ful ly subscr ibes t o t h e g o v e r n a n c e principles of transparency, soc ia l responsib i l i ty and accountability as embodied w i t h i n t h e P ro t o c o l o n Corporate Governance in the Public Sector and the King II Code of Corporate Governance. Over the next three years, SANRAL will also adhere to the King III Code of Corporate Governance.

With core objectives such as the management of the nation’s primary road network, ensuring value for money and maintaining f inancial market confidence, SANRAL’s Board and staff unflinchingly embrace effective and ethical governance principles.

T h e B o a rd i s u l t i m a te ly responsible and accountable to the shareholder for SANRAL’s performance and for corporate g ove r n a n ce . T h e a n n u a l per formance agreement , signed between the Minister of Transport and the Board spells out the principles, p e r f o r m a n c e i n d i c a t o r s and target based on which SANRAL’s performance is measured. The Board and its committees have affirmedtheir commitment to these t e r m s o f r e f e r e n c e i n t h e e x e c u t i o n o f t h e i r responsibilities.

The management of strategic and operational r isk is a priority, and the Board has accepted responsibility for

risk management within the organisation. SANRAL has developed a risk register, a product of the continuous evaluation of current risks and the identification of new ones. A l l employees are encouraged to be alert to risk exposure in their area of work and to express their concerns relating to the strategic and operational risks faced by the company. Ult imately , r isk is every employee’s responsibility.

SANRAL’s zero to lerance for unethical behaviour is reinforced by a code of good conduct applied within the organisation.

Policy and Legislation Fundamental considerations underlying SANRAL’s strategic planning are support for the aims and

objectives of the Reconstruction and Development Programme (RDP), the New Partnership for Africa’s Development (NEPAD) and Broad-based Black Economic Empowerment (BBBEE). In addition, SANRAL takes pride in its efforts to be compliant with the requirements of all legislation affecting its business, including the South African National Roads Agency Limited and National Roads Act (1998) (the SANRAL Act), the Companies Act (2009), the Promotion of Administrative Justice Amendment Act (2002), the Preferential Procurement Policy Framework Act (2000), the Public Finance Management Act (1999) (PFMA), Treasury regulations and the Employment Equity Act (1998).

SANRAL will seek amendments in certain areas of current legislation, particularly those relating to electronic tolling. These amendments would support electronic tolling systems to enable the free fl ow of traffi c on some of South Africa’s busiest roads.

From time to time, SANRAL also develops memoranda or service-level agreements with government departments and authorities to ensure synergies in areas such as law enforcement, overload control, emergency services, incident management and utilities.


Preventing fraud and corruption

SANRAL is keenly aware of the dangers of fraudulent and corrupt activities in its fi eld of operation. SANRAL has implemented a fraud and corruption policy with the objective of protecting its revenue, assets and reputation. We have zero tolerance for fraud and corruption, and aim to communicate this message to business and the public at large.

To help in this endeavour, SANRAL subscribes to a fraud hotline service operated by Tip-Offs Anonymous©, an independent service provider. This service is available to anyone, within the organisation or outside, to anonymously report suspected wrongdoing.

International affi liations SANRAL is an active board member of the World Road Association (also known as PIARC), the

International Bridge, Tunnel and Turnpike Association, and the Association of Southern African National Roads Agencies. Our participation in the latter is of particular importance as this association, established in March 2001 in line with the SADC Protocol on Transport, Communications and Meteorology, affords SADC member states the opportunity to improve intra-regional road transport effi ciency and lower transport costs.

Funding the road network

SANRAL’s business consists of two separate operations: toll roads and non-toll roads. The SANRAL Act stipulates a distinct separation in the funding of these operations:

• Non-toll roads are funded by government allocations, and are not allowed to borrow or be cross- subsidised from toll roads income and vice versa.

• Toll operations can be divided into two types – those operated and funded by SANRAL itself, and toll roads that are concessioned to private parties under PPPs.

Bond programme At its founding in 1998, SANRAL effectively took over the total debt of R4.2 billion from the South

African Roads Board. This debt consisted mainly of notes issued on the Bond Exchange of South Africa, supported by a government guarantee of R6 billion. The bonds initially traded at very wide spreads to government, resulting in high borrowing costs. By employing an active cash and funding management profi le, SANRAL reduced funding costs by narrowing of the spread to government to less than 20 basis points as well as lengthening the maturity of the debt to match its long-term assets. To this effect, a 2025 maturity bond was issued in 2003 with a coupon rate of 9 percent. The Bonds are SZ18 (R157) and SZ25 (R186), with respective maturity dates of 2015 and 2025.

The weighted average borrowing cost was reduced over a period of fi ve years from 13.6 percent to 9 percent in 2008.

In July 2008, SANRAL launched its DMTN programme to fi nance toll-road construction. This instrument provides SANRAL with the fl exibility to raise fi nance on a continuous basis and underpins certainty in the construction programme. The bond programme is supported by credit ratings issued by Moody’s Investors Service in 2008. At the outset, the bonds were generally 50 percent oversubscribed, securing fi nance to begin construction on the Gauteng Freeway Improvement Project (GFIP).

OverviewSection 115


16Section 1Overview

Road Section Approximate distance

N1 Kroonstad to Three Sisters 671 km

N5 Winburg to Harrismith 224 km

N8 Kimberley to Bloemfontein 150 km

N8 Bloemfontein to Maseru 136 km

N12 Johannesburg to Three Sisters 901 km

N2 Richards Bay to Ermelo 436 km

N11 Ladysmith to Middelburg 349 km

N12 Edenvale to Daveyton 27 km

N2 Tsitsikama Toll Road 54 km

N3 Marianhill extension 86 km

R72 East London to Alexandria 232 km

R33 Piet Retief to N4 Belfast 172 km

N4 Belfast to N11 104 km

N1 Nylstroon - Lephalale 166 km

R33 from N4 Nelspruit to Polokwane 524 km

N1 Huguenot second Tunnel 5 km

Gauteng Freeway Improvement Project phase 2 223 km

R300 Cape Town Ring Road 68 km

R512/PWV3/Magalies extension 9 km

N1/N2 WinelandsToll Road 175 km

N2 Wildcoast Toll Road 540 km

Table 1 Roads to be funded under ‘user-pays’ principle

National Treasury allocations The sole funding source for the non-toll national roads is the annual allocation received from the

national budget, appropriated by Parliament through the National Treasury. These allocations must support expansion of the network, upgrading of existing roads and asset preservation.

Available funding for the national road network is decided in the context of other pressing demands on the fi scus. SANRAL recognises this as an ongoing risk, given that South Africa’s road infrastructure requires substantial investment – and frequent reinvestment – if we are to enhance our global competitiveness and accelerate economic growth.

More than half of South Africa’s non-toll road network is older than its design life (see Figure 14 on page 41. It is imperative that, for the sake of economic growth and social development, the National Treasury allocates the required funds for the expanded national network.

In the face of these challenges, SANRAL has adopted the “user-pays” principle, which allows us to preserve and provide infrastructure sooner than traditional tax-based revenues would allow. This mechanism enables SANRAL to maintain a high-quality road network while contributing to improved road safety and generally shorter travelling distances, resulting in substantial savings on vehicle running costs. The roads that are under consideration to be funded under this mechanism are presented in Table 1.


Gauteng Freeway Improvement Project The extent of the Gauteng Freeway Improvement Project – SANRAL’s largest existing project by value,

funded mainly through the DMTN programme – is shown below.

Figure 1a Gauteng Freeway Improvement Project

OverviewSection 117

Figure 1b Gauteng Freeway Improvement Project Position of Toll Points


18Section 1Overview

Public-private partnerships

SANRAL has fi rmly established the effi cacy of PPPs in the maintenance, upgrading and expansion of the national network. In a PPP, infrastructure is funded by the private sector through concession contracts. The concessionaire is required to fund, design, build, operate and maintain the road for the duration of the concession period. In turn, the private party receives the toll revenue collected. At the end of the concession period (generally 30 years), the asset reverts to SANRAL free of charge in the specifi ed condition. SANRAL has entered into concession agreements on three of its roads.

SANRAL will continue to pursue this form of funding to ensure the continued fl ow of people and goods on South Africa’s economic arteries.

Three PPPs are currently in the development phase: The N2 Wild Coast Toll Road The N1/N2 Winelands Toll Road The R300 Cape Town Ring Road

Other fi nancial matters

Assets At inception, SANRAL inherited a balance sheet from the South African Roads Board that posed certain

drawbacks. The road and land assets were taken over at a nominal value of R30 million, which had no relation to market value or to historic cost. As a result, since inception, SANRAL’s balance sheet has shown a technically insolvent position.

Furthermore, in accordance with its founding legislation, SANRAL took full ownership of all properties affected by the declared national roads. The valuation of these properties, however, poses a signifi cant challenge because their uniqueness (the declared road reserve) is not found in valuation practice or case law in South Africa. Over the period ahead, SANRAL will develop a methodology meeting international valuation practice standards that are acceptable to the Auditor General and in accordance with International Financial Reporting Standards. This methodology, which may be the fi rst of its kind in South Africa, could set a benchmark for other state-owned enterprises.

Audit reports and accounting policy In 2007, with the approval of the National Treasury, SANRAL adopted International Financial Reporting

Standards to support its international and national investor base.

Internal audit SANRAL has outsourced its internal audit function to ensure a professional service capable of supporting

highly technical and continuous changes in our business. In line with supply chain management regulations, this function is rotated every three years.

Credit ratings SANRAL has historically sought to reduce its dependence on the government guarantee, using the

strength of its balance sheet and other instruments to fi nance the toll-road programme. To support this effort, SANRAL sought an issuer rating from an international rating agency. In 2007, Moody’s awarded SANRAL a national scale issuer rating of Aa2.za (unguaranteed long term) and P-1.za (unguaranteed short term). These ratings will allow SANRAL to continue its bond programme to fund the toll roads. This rating has been reviewed and reconfi rmed by Moody’s.


Section 2Our Core Business: The National Road Network

Our Core Business: The National Road Network Section 219


20Our Core Business: The National Road Network Section 2

The main business of SANRAL is developing, maintaining and managing the network and traffi c on the national road network, as shown in Figure 2 below.

Figure 2 Core functions

Protect - Overload ControlPeriodic MaintenanceStrengthening

Add LengthAdd CapacityManage Utilisation

DEVELOPMENT

NewOther

South African roads are broadly classifi ed according to the authorities primarily responsible for their provision and operation:

• National roads provide mobility of national importance and support economic growth. These roads are usually associated with long travelling distances at high speed, with limited access and minimum interference to the free fl ow of traffi c.

• Provincial roads support regional access and mobility. These roads usually form links between towns not situated along national roads.

• Municipal roads provide mobility and access in urban areas.

• Rural roads provide mobility and access to remote communities and areas, including between and within villages.

Over the past 10 years, SANRAL has incorporated certain provincial roads identifi ed to be of long-term strategic importance into the national network. The total length of strategic network amounts to about 20 000 km of road, of which just over 16 170 km consists of proclaimed national roads. SANRAL and the provinces are working together on the remaining roads still to be incorporated, and it is envisaged that during the period of this Declaration of Intent, nearly all of the 20 000 km network will be under SANRAL jurisdiction.

ME

EnvironmentSocioeconomic development

ResourcesPolicy/Standards

Manage network and traffi c

MAINTAIN


“It’s not our strong economy that gave us our good roads,

Advantages of a comprehensive road network

To help reduce marginalisation and provide more widely accessible economic benefi ts to the population, a sound balance is required between social and economic interests in road provision. In the past, road authorities differentiated between social and economic roads. This led to various ineffi ciencies and the compartmentalisation of responsibilities, blocking the development of an integrated road network responsive to national needs.

The national network is run on the basis that regardless of the location of a road, or its current or envisaged future standard, its function in the country’s broader social and economic context is the prevailing criteria determining operation and management functions.

In following this philosophy, SANRAL worked with the Department of Transport on the Road Infrastructure Strategic Framework for South Africa. This framework guides planning and provision of infrastructure, and clarifi es the classifi cation of roads. The primary objective of the framework is the development of a road infrastructure in line with government policy promoting social development and economic growth, taking into consideration the socioeconomic environment, institutional issues, funding constraints and road user needs. Over the next three years, SANRAL will continue to support the department’s implementation of this framework, which is expected to include:

• Review and re-declaration of the separate elements of the total road network based on a revised

classifi cation approach • Assignment of separate elements of the revised network to the appropriate institutional

authorities to ensure that the system operates as an integrated whole • Review and restructuring of the institutional arrangements for road planning and delivery at

provincial and municipal level • Revision of the funding arrangements for roads, including a review of toll-road policies and

strategies, and recommendations for charging appropriate levies to freight hauliers, with funds dedicated to road preservation

• Development of a skills process to ensure that adequate road engineering expertise is available in the country.



22Section 2Our Core Business: The National Road Network

it’s our good roads that gave us our strong economy”

SANRAL, which is responsible for the network of primary roads, should be tasked with delivering the road infrastructure linking major economic, spatial and social programmes and developments on a national scale. Other road entities should take the process a step further, ensuring that locally important spatial developments are linked to both the primary road network and to the local spatial development network.

SANRAL will continue to promote the concept that each roads authority should see its role in terms of needs that require fulfi lment, rather than in terms of the class of road that it should manage. In so doing, roads authorities will strengthen their position to bring private-sector investment into the construction and maintenance of roads.

Developing the national road network To expand, upgrade and maintain a comprehensive road network, SANRAL requires a sound and

appropriate funding strategy that can close the funding gap between demand and National Treasury allocations for the non-toll national road network. Without such a strategy, the road network will deteriorate, with substantial fi nancial and economic implications for South Africa.

J F Kennedy


Province Road Length (estimate)

Western Cape National Route 2 sections 2, 3 and 4 from Palmiet River to Swellendam

150 km

Eastern Cape N9 between Eastern Cape border and Middelburg 30 km

R61 known as the N9 between Eastern Cape border to Trunk Road

137 km

Trunk road 49/1 also known as the R61 between the intersections with the N9 and N10

88 km

Trunk road 49/1-2 also known as the R61 between the intersections with the N10 and N6

145 km

Trunk road 18/1 +R61 – intersection with N6 to Umtata 220 km

Various portions of the R61 forming part of the N2 Wild Coast Toll Project

120 km

Free State N5 Harrismith and Winburg 220 km

N6 Bloemfontein to Smithfi eld 134 km

N8 Bloemfontein to Maseru 140 km

R30 Bloemfontein to Virginia 134 km

Thabong Link Road 11 km

R34 between Odendaalsrus and Kroonstad 74 km

P4/1 linking with P36/1 47 km

Gauteng P154 Pretoria to Mpumalanga border 130 km

KwaZulu-Natal MR 439 180 km

P678 between Pongola river and Mpumalanga border, N2 Intersection to Swaziland border and P30 between N3 and N11

93 km

Total for 2003/04 2 053km

Tables 2 through 6 below list the roads already been incorporated into the proclaimed national road network. Table 7 provides a list of future roads to be incorporated.

Table 2 Roads incorporated in 2003/04





Limpopo(1430 km)

Routes R521 from Polokwane to Intersection with R523, North of Vivo then on R523 up to intersection with N1 at Masekwaspoort

178 km

R37 from Burgersfort to Polokwane 142 km

R40, R526, R71 and R36 from Marite at Mpumalanga border to intersection with N1 at Bandolierskop

266 km

R71 from Polokwane to Tzaneen 89 km

R81 from Polokwane to Giyani 149 km

N11 from Mpumalanga border to RSA/Botswana border (Martin’s Drift)

276 km

R510 from North West border to Monte Christo 235 km

R572 between Stockpoort to Tom Burke 95 km

Mpumalanga N17 - Gauteng border to Ermelo 130 km

Total for 2004/05 1 560 km


Northern Cape(2617 km)

N7 - Western Cape border to Garies 36 km

N8 - Kimberley to Groblershoop 285 km

N10 - Western Cape border to Namibia border 664 km

N12 - Western Cape border to North West border 497 km

N14 - Springbok to North West border 635 km

N18 - (R49) N12 to North West border 55 km

R27 – Western Cape border to Keimoes 445 km

North West(1032 km)

R572 between Stockpoort to Tom Burke 95 km

N12 - Northern Cape border to Gauteng border 341 km

N14 - Northern Cape border to Gauteng border 431 km

N18 (R49) - Northern Cape border to Botswana border 260 km

Mpumalanga(788 km)

N2 - KwaZulu-Natal border to Ermelo 165 km

N11- Middelburg to Limpopo border 126 km

N17 – Ermelo to Swaziland border 123 km

R23 – Heidelberg to Volksrust 181 km

R37 – Nelspruit to Limpopo border 157 km

R40 – Barberton to Nelspruit 36 km

Western Cape(401 km)

N7 – Melkbos turnoff to Northern Cape border 401 km

Total for 2005/06 4 838 km





Gauteng(41 km)

N17 - Springs to Gauteng border 41 km

Mpumalanga(637 km)

R33 – KwaZulu-Natal border – Belfast (N4) 219 km

R35 – Amersfoort - Middelburg 154 km

R38 – Bethal – Barberton (R40) 198 km

R40 – Nelspruit (N4) - Hazyview 66 km

Total for 2006/07 678 km


Gauteng(44 km)

R21 – N12 I/C to N1 I/C 44km

Total for 2008/09 44 km







Gauteng(143 km)

N12 – Gauteng/North West border to N1 38 km

N14 –Gauteng/North West border to N1

North West(235 Km)

R510 - Limpopo border to Rustenburg 72 km

R49 – Mafi keng – Kopfontein border Post 163 km

KwaZulu-Natal(688 km)

R 33 –Dundee to Paulpietersburg 116 km

R34 – Vryheid to Empangeni 201 km

R66 – Pongola to Gingindlovu 70 km

R69 – Vryheid to Pongola 108 km

R602 – Ladysmith to Dundee 47 km

R56 – Staffords Post to Pietermaritzburg 146 km

Western Cape(511 Km)

N9 – George to Eastern Cape border 148 km

N12 – George to Beaufort West 207 km

R27 – Van Rhynsdorp to Northern Cape border 40 km

R60 – Swellendam to Worcester 74 km

R61 – Beaufort West to Eastern Cape border 42 km

Free State(468 km)

R26 – Rouxville to Villiers 468 km

Total for future years 2 045 km

Table 7 Roads still to be incorporated


Section 3Financing the Network

Financing the NetworkSection327


Financing the Network Section 3 28

“….this is an emphasis that cannot continue for too long, because the curve that describes the decay of inadequately maintained economic assets becomes

dangerously steep if relative neglect persists beyond a few years.”

Minister of Finance, Trevor Manuel, 1999

Strengthening

Periodic Maintenance

Routine Maintenance

Cost Centres

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Funding requirements for non-toll network

The fi nancing requirement over the period ahead must take into account several interconnected pressures:

• Meeting South Africa’s pressing social and economic requirements will be even more challenging in the diffi cult economic climate expected over the medium term. This requires innovative solutions on the part of SANRAL, and in this regard the National Treasury’s input has been of great value.

• Although progress has been made through “smart engineering” of road maintenance, this on its own cannot alleviate the growing backlog.

• The incorporation of provincial roads – many in very poor condition – into the declared national road network exacerbates the backlog in road maintenance and strengthening.

• The rising number of vehicles on South African roads, and growth in traffi c along major arteries, puts greater pressure on the network. In Gauteng alone, the number of vehicles per kilometre of road reached 58 in 2008, up from 41 in March 2000. In many instances, congestion can only be relieved by upgrading roads.

There is a substantial difference between funds required for the national road network and funds made available. For example, during 2008/09, SANRAL received an allocation of R4.2 billion against a basic need of R6.7 billion. Figure 3 shows the gap between requested and actual budget allocations over the current medium-term expenditure framework (MTEF) period.

Figure 3 Requested versus actual allocations over the MTEF


R 6 500

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YEAR

2009 Rands

Source: www.sabita.co.za

R 5 682

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R 3 225

R 5 682

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R 3 225

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Another trend affecting SANRAL’s costs concerns daily traffi c trends, as shown in Figure 5.Over the past decade the network length carrying fewer than 5 000 vehicles per day has increased by 112 percent, from 5 906 km to 12 508 km. This is partly the result of the roads being incorporated into the national network. Maintenance on these roads is totally reliant on national budget allocations.

Figure 5 Average annual daily traffi c trend

Compounding the challenge of inadequate funding, the cost of bitumen – which accounts for between 10 percent and 60 percent of road maintenance costs – has risen dramatically, as shown in Figure 4. The bitumen price is largely determined by crude oil prices and exchange rate variations. Between the launch of SANRAL on 1 April 1998 and 1 April 2008, the price of bitumen (in 2008 Rands) more than quadrupled, from R1 010/ton to R4 220/ton. While a period of lower oil prices since the end of 2008 has provided some relief, the volatility of the price trend is expected to continue.

Figure 4 Bitumen price trend (in 2009 Rands)

Financing the NetworkSection 329



Funding requirements for toll network

As noted earlier, toll operations are funded by raising money in the capital markets and through structured loans. This document sets out the future borrowing requirements for SANRAL’s toll portfolio, both to obtain approval from the National Treasury for the increase in the total borrowing, and to demonstrate the importance of a government guarantee for reducing borrowing costs.

The National Treasury has been instrumental in assisting SANRAL with its efforts to raise capital, and it has approved the increase in the borrowing limit with a further R31.91 billion. Furthermore the National Treasury have fully guaranteed these borrowings, with certain limits for fi nancial years. These limits were determined by SANRAL and are based on future cash fl ows. All borrowings are repaid by the toll fees collected from users in accordance with the “user-pay” principle that SANRAL has employed since 1998. Consequently, the cost of borrowing has an impact on the road-user costs. The initial toll tariff is generally determined in the range of 80 percent of the user benefi t provided by the toll route. These tariffs are adjusted annually by CPI, approved by the Minister of Transport and gazetted.

The volatility of construction, maintenenance and operations costs has led SANRAL to examine other toll-tariff structures. The SANRAL is considering shifting from a user-benefi t model to a cost-plus model. The user-benefi t model is based on savings in distance, vehicle operating costs and time, for which a percentage in the range of 80 percent is used to determine tariffs – with the result that benefi ts to the road user exceed the value of the tariff. The cost-plus model is based on the actual cost of providing the toll road, a margin of which is used to determine the tariff. The appropriate structure will be adopted to maximize the benefi ts to the road users.

Growth in infrastructure requirements SANRAL is conducting several large projects on the country’s major economic arteries to support

accelerated growth.

The largest of these projects is the Gauteng Freeway Improvement Project, launched by the Minister of Transport in October 2008. The fi rst phase of this project covers 185 km of road at an estimated cost of R22 billion. This initial phase, concentrating on the existing freeways around Johannesburg, Pretoria and OR Tambo International Airport, will be largely complete by May 2010, with tolling scheduled to start in March 2011.

The second phase, covering 300 km of road, is scheduled to start in 2012 at an estimated cost of R24 billion (2008 Rand). The project includes the supply, installation and operation of open road electronic toll collection systems and related infrastructure.

Other signifi cant toll projects under way include:

• The N17, Springs to Ermelo • The N1 Polokwane Ring Road • The N2 Tsitsikamma Extension • The R30, Bloemfontein to Kroonstad, via Welkom • The Dube Trade Port. • The N4 Nelspruit Ring Road.

The rest of the toll network also requires continuous maintenance.


GFIP Phase 1; Existing Sanral Funded Toll Roads (incl. Polokwane bypass and N2 Tsitsikamma Ext); N 17; R30; PWV 3/N4; N3 PMB to DBN;

DUBE Trade Port; 2nd HUGUENOT Tunnel

Projected cumulative debt level at 4% P.A. real interest rate

Loan supportable by revenue

To assess the feasibility and affordability of a toll project – and to ensure that its debt can be supported by toll income throughout the life of the route, including future capital expenditure – SANRAL applies a methodology known as “loan supportable by revenue” (LSR). In essence, LSR determines the net present value of future cash fl ows.

LSR assessments are calculated and adjusted for all projects twice annually to evaluate performance and ensure that the portfolio still has a positive LSR value – and whether remedial actions are required. The LSR assessments are audited by the Auditor General annually to ensure that each route’s carrying amount (book value) is recorded at the lower of historical cost or recoverable amount. The recoverable amount is the greater of an assets fair value less cost to sell and value in use (LSR value).

Borrowing requirements

SANRAL’s updated borrowing requirements are shown in the graph below.

Figure 6 Long-term borrowing requirements

Total Existing plus new(excl. GFIP)

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It should be noted that no toll levies are charged on a new toll road until initial construction is completed. As a result, during construction, SANRAL will borrow funds without receiving any income, resulting in the J-curve effect as depicted in Figure 6. Once tolling commences, it takes a certain amount of time before income reverses the curve.

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The graph shows that the total funding level will reach an estimated R55 billion by 2016. This includes all the projects listed in Table 8 below.

Table 8 Major projects (cost and completion)

Toll project Initial capital costs (in 2008 Rand) (rounded)

Estimated completion date

Gauteng Freeway Improvement Project – Phase 1

R21.7 billion 2011/12

N3 Durban to Pietermaritzburg Upgrade R 1.7 billion 2013/14

N17 Springs to Ermelo R 1.9 billion 2011/12

R30 Bloemfontein to Welkom R 1.1 billion 2012/13

N2 Tsitsikamma Toll Road Extension R192 million 2009/10

N2 Dube Trade Port R232 million 2010/11

R512/PWV3/Magalies Extension R166 million 2010/11

N1 Huguenot Tunnel – second tunnel only R810 million 2014/15

TOTAL R27.8 billion 2009/10 – 2014/15

Current liabilities

Figure 7 shows SANRAL’s current liabilities as at 30 September 2008.

Figure 7 Current liabilities

This includes the three auctions of the DMTN during 2008, as well as a private placement done in August. The book build was very successful. The auctions were generally 50 percent oversubscribed. The private placement of the value of R750 million was at 5 basis points better than the initial issue.


Table 9 Unsecured bonds issued, 30 June 2009

Bond Coupon Maturity Coupon dates Issue amount (Rmillion)

Type

NRA013 4.25 31 October 2013 30 April 31 October

1 559 CPI

NRA014 11.25 30 April 2014 30 April31 October

140 Fixed

NRA018 12.25 30 November 2018 31 May 30 November

2 551 Fixed

NRA022 12.25 31 October 2022 30 April 31 October

2 200 Fixed

NRA023 5 31 May 2023 31 May 30 November

515 CPI

NRA028 12.25 30 November 2028 31 May 30 November

2 671 Fixed

The outstanding nominal amount on the original SZ bonds, under the R6 billion guarantee, is as follows:

Table 10 Secured bonds issued, 30 June 2009

These nominal amounts exclude bonds in the market-making portfolio with a nominal value of R258.8 million (net short position) and money market loans of R200 million.

The structured loan on the N1 North has an amount of R1.1 billion outstanding. This loan is separately guaranteed by government and does not form part of the R6 billion guarantee.

Cost of guarantee The differential between the secured and unsecured cost of borrowing was the main motivator

for National Treasury to grant SANRAL a guarantee for all future borrowing. This would result in a reduction in the cost to the users of toll roads

Bond Coupon Maturity Interest type Spread to gov’t

Nominal issued todate (R million)

SZ 16 11.25% 30-09-2010 Fixed 45 72.2

SZ 18 12.5% 30-09-2015 Fixed 55 1 781.5

SZ 25 9.0% 30-09-2025 Fixed 57 3 709.8

Total 5 563.5




Effect of fi nancing While SANRAL proposes to extend its road network to about 20 000 km, the existing toll roads still

need to be maintained and upgraded as traffi c increases. In addition, the debt on these roads has to be serviced in the face of rising costs.

The following illustrations make clear the need to extend the toll road programme. Without such roads, the national network will deteriorate sharply.

Figure 8 Forecast and conditions without new toll roads

Figure 9 Forecast and conditions with new toll roads

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R6 000m/year fi scus funding for 13050km - No new toll roads

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A toll road is funded by those opting to pay for its use, and therefore does not result in double taxation. Motorists generally have the choice of using a toll facility or an alternative tax-supported route.

The benefi ts of toll fi nancing include the following:

• Savings, convenience, regular maintenance and lower vehicle operating costs

• Less congestion and enhanced mobility

• Transport capacity is increased earlier than would otherwise be possible

• A dedicated revenue stream funds operations, maintenance and improvements

• The attractiveness of road-based public transport is enhanced due to lower vehicle operating costs, possible reduced toll fees and shorter travel times.

Unsolicited bids

In 1999, SANRAL developed an innovative policy on unsolicited proposals (See Appendix X) for dealing with initiatives identifi ed by the private sector. The policy aims to encourage the private sector to propose self-funding road infrastructure projects, within SANRAL’s strategic framework, for consideration. Several attractive projects have been proposed under this policy, including the following, which are at various stages of development:

• The N1/N2 Winelands Toll Road (171 km)

• The N2 Wild Coast Toll Road (540 km)

• The R300 Cape Town Ring Road (68 km)

In PPPs of this nature, SANRAL shares the costs associated with design and development work with the proponents of the unsolicited bids. All other costs, including initial construction and fi nancial costs, are carried by the successful tenderer. These projects will be procured on a build-operate-transfer (BOT) basis, as successfully implemented on the N4 Maputo Development Corridor, the N3 Toll Road and the N4 Platinum Highway.

In the case of the Gauteng Freeway Improvement Project (GFIP), a toll tariff structure substantially below the 80 percent of the user benefi t was found to be adequate to fund the project. This unique relationship between the required toll tariffs and the user benefi t has made it possible to apply a cost-plus model for the determination of the toll tariffs of this major project. The cost-plus model is based on the actual cost of providing and operating the toll road. Even with a substantial increase in overall project costs, the required higher toll tariff structure to fund the project cost was found to still be substantially below 80 percent of the user benefi t. Recent market research did, however, show that fewer than 400 000 road users undertake more than 80% of the trips on the GFIP road network and that the issue of affordability of tolls by frequent users would have to be carefully considered in determining the actual toll tariffs and discount structures to be implemented.



Project Forecast 2009/10 (R billion)

Forecast 2010/11 (R billion)

Forecast 2011/12 (R billion)

Totals up to 2012 (R billion)

Location Output

UNSOLICITED BIDS

N1-N2 Winelands Toll Highway

0.423 1.735 1.881 4.039 Western Cape 175 km

R300 Cape Town Ring Road

- 0.229 0.940 1.169 Western Cape 94 km

N2 Wild Coast - 1.450 1.853 3.303 Eastern Cape 560 km

SANRAL-INITIATED PPPs

N4 Maputo Development Corridor

0. 279 0. 274 0.293 0.846 Mpumalanga 563 km

N3 Toll Road 0. 463 0.483 0.516 1.462 Free State and KZN

429 km

N4 Platinum Toll Road

0.160 0. 244 0.261 0.665 GT & NW 382 km

Totals per year 1.325 4 .415 5.744 11.484 2203km

Table 11 below provides the actual investment to date as well as the anticipated investments that will be made by the private sector over the next few years.

Table 11 PPP investment by private sector



Capital formation Capital formation – the increase of the capital (physical) stock or its value – is an important

source of economic growth. Capital is “formed” when savings are used for investment.

Government has set a goal to increase gross fi xed capital formation (investment) to 25 percent of gross domestic product (GDP). Concession contracts, or PPPs, can play an important role in increasing capital formation by drawing in private investment. SANRAL’s DMTN programme offers a further vehicle for such investment in public infrastructure. Public-sector investment is also crucial for capital formation. For example, SANRAL’s non-toll road expenditure helps to reverse the pattern of underinvestment in infrastructure, helping the economy to grow.

SANRAL is ideally positioned to contribute to capital formation in two ways: fi rst, by drawing in private-sector investment through the DMTN programme and PPPs, and second, by investing in the non-toll road network.

PPPs can also help to increase human capital and available resources. Large civil engineering projects have already stretched the country’s limited skills, equipment and materials. By increasing the interest of international companies in South Africa, PPPs can help to bring in skills and capacity. Innovative contractual arrangements can hasten the development of skills, allowing South Africa to boost the skills of its citizens.

Expenditure split

To maximise effi ciency and effectiveness, SANRAL uses an expenditure split of its required funding. Based on the assumption that the required funding as set out in Figure 3 above is received from the National Treasury, the expenditure split for the next three fi nancial years will be as shown in the following three fi gures:

Figure 10 Medium-term non-toll road expenditure split

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Figure 11 Medium-term toll road capex projection

Figure 12 Medium-term toll road expenditure split

During the currency of this Declaration of Intent SANRAL will continuously update Table 1 Studies will be undertaken and/or updated as appropriate, to establish the feasibility of the application of the ‘user-pay’ principle for the roads shown in Table 1. This in turn, will inform us as to new construction projects that require funding from the capital and money markets. The fi gures shown above will be adjusted accordingly.

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Improvements New FacilitiesStrengthening



Section 4Managing the Road Network

Managing the Road NetworkSection 439


Managing the Road Network Section 4 40

Non-Toll Roads Agency Toll Roads BOT Toll Roads

The 16 170 km of national roads under SANRAL’s jurisdiction consist of toll and non-toll roads. Toll roads are funded through the “user pays” principle and non-toll roads are funded by the national budget. The challenge faced by SANRAL in relation to non-toll roads is that while road use continually increases, road funding in real terms declines.

The current level of funding by the National Treasury cannot fi nance the needs of the entire network. As Figure 13 shows, since the inception of SANRAL, the road network under its jurisdiction has more than doubled, and is expected to reach a total of 20 000 km by 2012. The fi scus is already under tremendous pressure from vast and competing demands, and over the medium term revenue collection is expected to deteriorate in line with a weaker global environment. Moreover, the roads incorporated from the provinces are in a generally poor condition, which means that SANRAL must fi rst tend to the strengthening of pavements, rather than expand the network.

Figure 13 National road network, 1972-2009

Friends, Comrades and fellow South Africans. I greet you all in the name of peace, democracy and freedom for all. I stand here before you not as

a prophet but as a humble servant of you, the people.

Nelson Mandela

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Pavement age

The typical structural design life of a fl exible road pavement is 20 years, assuming that all required maintenance is performed according to schedule. Regular maintenance work is covered by operating expenditure. At the end of a pavement’s structural life, work is required to strengthen the pavement, restoring or improving its structural integrity. This is covered by capital expenditure. The pavement age of roads under SANRAL jurisdiction is shown in Figure 14.

Figure 14 Pavement age trend

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Deliver the best value for every Rand spent

The following should be noted:

• Since 1998, the length of road network older than its original 20-year design life has more than doubled, from 3 500km to 7 200km.

• More than 62 percent of the national road network exceeds its 20-year design life. This extension has been made possible through the use of preventative maintenance, resurfacing a road every eight to 10 years. However, this strategy has come under severe pressure given tight budgets.

• To halt this negative trend, major capex investments are required to support structural strengthening of pavements. However, such capex is not possible at current funding levels, because more than 65 percent of the budget is used to keep the ageing road network safe for daily use.

Asset preservation

Given the nature of its mandate, SANRAL takes a long-term view of infra¬structure performance and cost. Asset management affects virtually every aspect of our business, including planning, engineering, fi nance, programming, construction, maintenance and information systems.

SANRAL’s asset management goals are to:

• Build, preserve, manage and operate the road network under our jurisdiction more effectively, with improved asset performance

• Deliver the best value for every Rand spent

• Enhance our credibility with and accountability to various legislative bodies.



The illustrations below show how asset management works within SANRAL.

Figure 15 Road asset management system

The benefi ts of asset management include:

• Lower long-term costs for infrastructure operations and maintenance

• Improved service and performance to our customers

• Improved cost-effectiveness and use of available resources

• A focus on performance and outcomes

• Improved accountability for decisions and expenditure

• Lower costs for road users.

SANRAL will continue to enhance its asset management procedures during the period covered by this Declaration of Intent.

Location reference inventory condition

traffi c

Financial data geospatial data

Planning data network polocies works standards

Model default data model calibration

Investment study results

Asset reports • tabular • distance charts • time charts • summary graphs • maps

Policy studies

Network strategies

Research studies

Works programs

Project evaluations

Asset performance feedback

InvestmentAnalysis reports • summary • detail • graphical• map based

Performance reports • asset state• fi nancial • user impact• value for money

Customer queries

Decision Support Tools

Reporting Tools

Investment Studies

Road Asset Data

Works Programming

Strategic analysis Policy research

Project Evaluation

Network Performance

Analysis

Dat

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‘Preservation fi rst’ Road performance depends on the timing, scope and method of maintenance. Roads deteriorate over

time due to traffi c and environmental infl uences (e.g. weather, ultra-violet radiation, overloading). For these reasons, roads have to be maintained throughout their design life. The timing of maintenance is crucial, and if not optimally performed, the consequences can be disastrous.

• Ideal maintenance: If maintenance is performed as and when required based on technical assessments of the road, there will be no visible signs of distress. The typical cost of maintenance at this stage is 1 unit of currency per kilometre.

• Maintenance delayed three years: If maintenance is not performed when required, and the road is allowed to deteriorate for three years, visible signs of distress will probably emerge. The typical cost of maintenance at this stage is now six units of currency per kilometre for the same road. In other words, it will be six times more expensive to maintain this road now than it would have been three years earlier. With limited budgets, this also implies that for every 1 km of poor road that needs to be maintained at this level, 6 km of good road cannot be maintained, resulting in these good roads further deteriorating and higher future costs.

• Maintenance delayed eight years: If maintenance is not performed when required, and the road is allowed to deteriorate for up to eight years, the levels of distress will affect the road user severely. The typical cost of maintenance at this stage is now 18 units of currency per kilometre. To repair this road will now be 18 times more expensive compared to eight years ago when the maintenance was actually required. This implies that for every 1 km of very poor road that needs to be maintained at this level, 18 km of good road cannot be maintained.

Figure 16 Consequences of maintenance delays – SANRAL costs

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Figure 17 Consequences of maintenance delays – road user costs

The economic costs of delayed maintenance are ultimately borne primarily by road users. When a road is allowed to deteriorate from good to very poor condition, each R1 not spent on maintenance (a false saving) increases vehicle-operating costs exponentially, as shown in Figure 17 above.

In other words, cutting back on road maintenance increases the cost of road transport and raises the net costs to the economy as a whole. Postponing maintenance in the face of tight budgets will result in a signifi cant fi nancial penalty.With these considerations in mind, SANRAL has adopted

an asset preservation policy in line with the ideal maintenance scenario. This policy, also known as “preservation fi rst”, seeks to preserve existing assets at the lowest lifecycle cost before creating new assets. SANRAL will continue with this policy.

Slope management

As part of its holistic approach to road asset management, SANRAL has developed and put in place an ongoing three-stage national slope management system:

• In the fi rst (inventory) stage, all slopes and embankments higher than fi ve metres, and all laterally supported anchored/piled walls along the entire national road network, are identifi ed and logged for geotechnical rating. This phase is expected to be completed on the existing network during 2009 but will continue to cover new routes incorporated into the national network. Similar arrangements have been made with SANRAL’s three concessionaires to ensure a seamless approach to risk management along the entire national road network.

• In the second (analysis) stage, information will be assessed for existing or potential instability. An updated risk profi le and monitoring/stabilisation strategy will be compiled for each high risk location.

• The third ongoing stage consists of procedures for visual monitoring and regular reporting from routine road maintenance route managers and contractors. These procedures have been put in place to report geotechnical incidents, facilitating reassessment of risk ratings, additional monitoring or remedial measures.

Slope management contributes to effective management and maintenance of all geotechnical issues, and the avoidance of sudden road failures.

Toll Class 1

Toll Class 2

Toll Class 3

Toll Class 4

R 20

R 18

R 16

R 14

R 12

R 10

R 8

R 6

R 4

R 2

R 0

0 2 4 6 8 10 12 14 16

International roughness index (m/km) Based on HD M-4

very poor condition

poor condition

goodcondition

Ro

ad

use

r co

st (

R/k

m)



Road safety management

Over the past several years, SANRAL has adopted a more sophisticated approach to road safety management. Our primary vision is to achieve a sustainable and safe national road network for all road users, primarily through engineering, but also through partnerships with education and enforcement authorities and stakeholders.

With this vision in mind, SANRAL has adopted the road safety management system that allows safety considerations to direct decisions on construction, maintenance, operation and management of the road network. SANRAL supports an integrated approach known as the “three E’s” of road safety: engineering, education and enforcement.

Although SANRAL is primarily involved with the engineering element of this approach, the road safety management system as summarised in Figure 18, helps to integrate education and enforcement efforts.

Figure 18 Road safety management system

SANRAL ROAD SAFETY VISIONTo achieve a sustainable safe national road network for all our road users,

primarily through engineering, and through partnerships with education and enforcement authorities and stakeholders

MISSION / OBJECTIVES

IDENTIFICATION OF KEY ROAD SAFETY CHALLENGES

OPERATIONAL PLANNING

Regional operational plans

SAFETY PERFORMANCE INDICATORS

Regional and national safety performance indicators

al operationa

al safety per

Effective and effi cient road safety engineering

Road safety engineering focus group

Development of IMS and traffi c law enforcement partnerships

Road safety partnerships focus group

Development of road safety education & training partnerships

Third-party claims focus group

TACTICAL PLANNING

ST

RA

TE

GY

MEA

NS

OF

DEL

IVER

YC

ON

TR

OL

RE

VIE

W



Road transport management system

The Department of Transport encourages self-regulation by private companies involved in road transport. Overloading, the use of unroadworthy trucks and the exploitation of exhausted or unwell drivers are safety risks.

The road transport management system (RTMS) is guided by a steering committee that consists of

members delegated by several private companies, the Department of Transport, SANRAL, and the Council for Scientifi c and Industrial Research (CSIR). A Section 21 company has been established to receive membership fees, and to employ a few people to undertake policy and developmental work.

Pedestrian safety

South Africa’s pedestrian fatality rate is extremely high. There is often a genuine need for pedestrians to travel along or across our busy roads; the challenge is to ensure effective and appropriate measures to separate pedestrians and other forms of non-motorised transport from vehicular traffi c.

In planning and design, SANRAL makes provision for interventions such as traffi c calming, safe stopping areas for public transport, and pedestrian bridges. We also engage communities adjacent to national roads to fi nd solutions to pedestrian needs.

Our road safety education programme was developed with the approval of the Department of Education,

and is being implemented in partnership with the Road Traffi c Management Corporation and the relevant provincial governments. The programme material consists of a multimedia programme, the Streetwise series (in English, Afrikaans and Zulu) and an educator’s manual. SANRAL also uses the Supa Strikas soccer team comic strip, which it co-sponsors, to promote pedestrian safety. The comic strip reaches more than 500 000 young readers.

Over the next three years SANRAL will continue supporting partnerships with government and the private sector in road safety education and awareness programmes.

Law enforcement and overloading

SANRAL has neither the legislative power nor the constitutional duty to directly engage in law enforcement activities. We are, however, able to contract with traffi c law enforcement agencies at provincial and local level to obtain specifi c services.

Over the past several years, SANRAL has invested in seven traffi c control centres (TCCs) in KwaZulu-Natal, the Free State, Gauteng, Mpumalanga and Limpopo. We have also employed new technology to combat overloading. During

2007, SANRAL launched the Donkerhoek TCC, housing technologically advanced equipment and a vehicle testing facility, to conduct basic roadworthiness checks on tyres, brakes and so on. This TCC has also introduced an electronic tagging system, which is the fi rst of its kind in South Africa. The tagging system allows for overloaded vehicles to be directed to the TCC without the physical presence of a traffi c offi cer.

Weigh-in-motion technology measures the weight of heavy

vehicles while moving and provides overload alerts. Such vehicles are diverted onto static scales at the TCCs. Currently 20 static scales and 12 satellite stations equipped with portable electronic equipment are available.

SANRAL has also pioneered a three-way partnership system for operating TCCs: SANRAL provides the infrastructure, provincial authorities provide the legal enforcement, and private companies manage the operations and administration through a contract.



The Road Traffi c Management Corporation (RTMC) has expressed interest in supporting the RTMS, and negotiations are under way to further develop the system.

The aim of the RTMS is to set out responsibilities and actions that each member of the supply chain should carry out to reduce overloading, the operation of unroadworthy trucks and the exploitation of drivers. Those companies that properly implement the procedures and demonstrate a history of compliance will be accredited and be allowed to display an emblem that confi rms their status as compliant businesses. Consignors and consignees are further encouraged to only employ accredited hauliers, or at least provide some form of competitive advantage when awarding contracts to hauliers.

SANRAL will remain supportive of the RTMS and efforts to strengthen self-regulation.

Freeway management

Incident management systems SANRAL’s incident management system, supported by central coordination centres, embraces

interaction between emergency services and law enforcement agencies on all declared national routes.

SANRAL and the Transport Education Training Authority jointly developed a training module for incident management response that was recently approved by the South African Qualifi cations Authority. SANRAL has been working in close collaboration with emergency services to enhance communication and accident response times according to specifi c regional requirements. SANRAL also participates in the incident management technical subcommittee of the RTMC. This will support enhanced incident management not only on national roads, but also on provincial and local authority roads.

SANRAL will continue to assist with the development of incident management training for emergency services, the South African Police Service and others role players.

Intelligent transportation systems

To obtain optimal use of existing road space, SANRAL has increased the use of technology on the road network. These innovative solutions are known as intelligent transportation systems (ITS). SANRAL launched its fi rst ITS project in Gauteng in September 2006. This project is now fully operational.

The aim of ITS is to reduce recurrent congestion, with its accompanying impact on the environment; to improve road safety; to keep motorists informed of travel conditions; and to respond rapidly to road incidents. The ITS project has now been extended to a further 190 km of the freeway network in Gauteng and has been implemented along sections of the N1, N3, N4, N12 and N17. During the currency of this declaration, ITS will be rolled out in KwaZulu-Natal and the Western Cape.

ITS employs closed-circuit television (CCTV) cameras, enhanced communications, traffi c detection and

traffi c information devices. The system is monitored continuously at a network management centre.

To communicate with the travelling public, variable message signs have been placed at strategic positions on the network to infl uence travel patterns and inform road users of real-time and projected traffi c conditions due to accidents, scheduled road works, weather advisories and special events. In addition, electronic “tactical warning signs” have been strategically positioned to warn drivers of potential traffi c hazards, improving safety and reducing the risk of incidents.



Electronic toll collection

SANRAL aims to extend the use of electronic toll collection on all national toll roads. This system uses an electronic transponder, or tag, to identify customers. It allows for increased throughput at toll plazas (when operating under “boom down” mode) without provision of additional toll lanes.

A central clearing and account management system is being developed to facilitate the interoperable use of a single tag on all toll roads that implement electronic collection.

The Gauteng Freeway Improvement Project will also use the electronic toll collection methodology, but with an ORT confi guration. ORT employs specialised gantries over the road and roadside equipment, enabling toll collection at designated points at freeway speeds.

Traffi c monitoring

Traffi c monitoring is essential on the national road network, allowing SANRAL to:

The network of traffi c data collection stations has been substantially increased. SANRAL currently has a network of 835 traffi c monitoring stations, of which 440 are monitored in rotation every one to three years depending on local conditions, and 395 stations monitored continuously. Over the next three years, a signifi cant number of new traffi c data collection stations will have to be installed to serve the growing national road network.

SANRAL’s traffi c monitoring requirements, which will be developed over the next three years to take into account the advances in technology, place stringent obligations on service providers to be diligent in maintaining accuracy, and to provide quality data on which decisions are made involving billions of Rands.

Predict the future performance and deterioration of road pavements

Ensure that budgets for road maintenance, repair, rehabilitation and improvement refl ect the best use of funds

Determine the engineering interventions required to overcome congestion, road safety and environmental problems

Perform toll-project feasibility studies and calculate loan service repayment schedules to determine the ability of a toll route to meet its commitments

Supply law enforcement and road safety campaigns with planning and operational data.



Maintenance

Routine maintenance

Routine road maintenance consists of those activities that are conducted on a regular basis to ensure that the road is functioning properly. As such, routine maintenance is sometimes referred to as proactive and/or reactive maintenance. The entire national road network will continue to be covered by routine maintenance contracts. These contracts will also continue to be used for the development and promotion of SMMEs.

Periodic maintenance

In contrast to routine maintenance, periodic maintenance treatments are ideally applied on pavements prior to their manifestation of distress. Such treatment is intended to prolong the life of a pavement by restoring (or maintaining) desirable properties while such measures are still cost-effective. Periodic maintenance can delay future deterioration, or correct existing distress. It therefore can be classifi ed as preventative or corrective (reduce deterioration progress or correct existing deterioration).

Special maintenance

As with routine maintenance, special maintenance can be classifi ed as reactive work occasioned by unforeseen circumstances, such as fl ash fl oods or crash damage.

Strengthening

Strengthening typically includes maintenance treatments such as the addition of thick surfacing, the removal of part of the existing pavement’s layers, and the addition of layers to restore or improve structural integrity. Such measures are normally applied at the end of a pavement’s structural life.

Improvement Improvement relates to work to enhance the quality of service on roads with adequate remaining

pavement structural life. Such work is normally applied on routes experiencing unforeseen traffi c growth, and may cover improvements to the quality of service on existing roads, such as relief of traffi c congestion.



Section 5Socioeconomic Development and Environmental Management

Socioeconomic Development & Environmental ManagementSection 551


SANRAL is driven by the values of our Constitution. We support efforts to eliminate South Africa’s legacy of inequality, to open up economic opportunity for all the people of our country, and to protect and conserve our nation’s rich environment. We embrace the idea advanced in the Freedom Charter that the people shall share in the country’s wealth.

Our view of transformation supports the values of human dignity, equality and freedom. This means supporting processes that empower South Africans; that result in the creation of new markets and investments; and above all that lead to the development of productive assets among our people. Transformation must be people-driven and be able to open up meaningful opportunities

that will change the lives of all South Africans, especially the poor. The transformation of small entrepreneurs, from job seekers to job creators, ultimately contributes to the eradication of poverty and creating an egalitarian society. This approach to transformation applies not only to our external programmes, but also to the way we run our business.

Socioeconomic development

SANRAL supports a people-driven view of transformation. Our goal is to empower communities, and to create new markets, new investments and new drivers of economic demand while developing productive assets among our people – including those intangible assets associated with education and knowledge. To this end, SANRAL promotes a range of initiatives to transform our economy.

Procurement policy

Our procurement policy promotes Broad-based Black Economic Empowerment (BBBEE), supporting targeted training for historically disadvantaged South Africans to become economically independent and stimulating growth of SMMEs. In pursuing its mandate, SANRAL enhances the provision of basic services, builds capacity, acts as a catalyst for development in other growth areas, creates employment, develops small and medium enterprises, alleviates poverty and elevates the status of women.

Recognising the opportunities to develop entrepreneurs through routine road maintenance projects, SANRAL revisited its contract model to produce the following outcomes:

• The main contractor operates as a management contractor

• Low entry barriers for small contractors are maintained

• There is no exploitation of small contractors

• 80 percent of the work is to be executed by small contractors, of which 90 percent is to be executed by black-owned fi rms

• Skills development and mentoring.

Socioeconomic Development & Environmental Management Section 5 52


“Poverty of a life lies not merely in the impoverished

The procurement process for the appointment of small contractors is conducted through a tender process that begins with public advertisement. Each project includes targets to employ local labour and women. Project liaison committees made up of SANRAL representatives, the consulting engineer, the main contractor and members of the local community are established to oversee operation of these projects and promote active community involvement.

On plant-intensive contracts, SANRAL sets targets to maximise employment and to form joint ventures with small and medium-sized businesses. Minimum targets are set at 4 to 6 percent labour maximisation (based on the value of the contract) and 8 to12 percent SMME utilisation, of which 90 percent must be black entrepreneurs.

Developing human capital To support continued growth in the construction sector, South Africa needs an adequate supply of

skilled people across a range of disciplines.

SANRAL’s internship programme builds partnerships with tertiary institutions, the engineering sector and the construction industry to meet South Africa’s current and future skill requirements. This includes partnerships to sponsor and promote the development of science and mathematics skills necessary to enter the engineering profession, boosting the future number of technically qualifi ed graduates.



54Section 5Socioeconomic Development and Environmental Management

state which the person actually lives, but also in the lack of real opportunities.”

Amartya Sen

The Chair in Pavement Engineering at the University of Stellenbosch

Courses in the use of the internationally acclaimed Highway Development and Management Tools

4 (HDM-4) software in conjunction with the University of Pretoria

Research in road-related matters at the CSIR

Maths and science excellence programmes and partnerships with the private sector at high school

and tertiary level

Scholarships to grade 11 and 12 learners in maths and science, and the continued support through

bursaries for both undergraduate and post-graduate students, to promote careers in civil, transport

and IT engineering

Management and vocational training during project design and construction

Research in transport-related gender issues to promote equal opportunity.

Road safety education

Over the next three years we will enhance human capital by supporting programmes such as:


Community development programme In 2008, SANRAL spent R18.2 million on community development and R9.9 million on SMME training.

Our community development programmes created 256 481 hours of work for men, women and youth.

SANRAL believes that its work should provide tangible benefi ts to communities – whether in the form of a safe road surface on a busy highway, or a bridge in a remote community to provide access to schools and clinics. Our community development programme focuses on infrastructure projects that promote integrated transport and socioeconomic development in rural and urban areas.

We work to ensure that these projects are done in a way that complements national, provincial and regional growth and development strategies. At project level, the criteria include pedestrian confl ict points (known as hazardous locations), and access roads to improve quality of transport and community mobility.

The initial prioritisation of projects is done according to a point evaluation system, taking into account human development, and the road safety and socioeconomic needs of the different locations. Further consultation with communities, and local and provincial government, determines project scope and priorities.

Institutional arrangements and support are put in place to ensure that funds, capacity and skills are available to maintain the infrastructure. On completion the infrastructure is handed over to the authority under whose jurisdiction it resides.


In a few decades, the relationship between the


56Section 5Socioeconomic Development and Environmental Management

Environmental management

SANRAL’s environmental philosophy is: To maintain, improve and expand the national road network in an environmentally responsible way To be a compassionate corporate citizen in pursuit of sustainable development To provide a systematic approach to the continual improvement of environmental management.

Environmental management plans

SANRAL has incorporated environmental management into all its activities, from project design to construction and operations. We employ the following tools:

• A generic environmental management plan (EMP) forms part of the contractual obligations of contractors and relevant parties. It ensures that proper controls are in place to address environmental impacts during road maintenance, rehabilitation and upgrade, and to set out the methods by which the environmental controls are to be implemented.

• Basic assessments and environmental impact assessments (EIAs), the results of which are site-specifi c environmental management plans.

• SANRAL intends to implement an environmental management system based on the ISO 14001 Environmental System Standard.

environment, resources and confl ict may seem almost as obvious as the connection we see today between

human rights, democracy and peace. Wangari Maathai -Kenya


Section 6Corporate Management

Corporate ManagementSection 657


58Corporate Management Section 6

SANRAL’s fl at matrix organisational design emphasises the importance of the collective and maximises cooperation and mentoring between colleagues with a range of skills and experience. This non-hierarchal approach inculcates a culture of collegiate mentorship, individual responsibility and empowerment. This in turn provides the opportunity for succession planning and ample fl exibility in responding to policy adjustments or macroeconomic shifts. It encourages open dialogue, a sense of achievement, respect as well as providing an opportunity for growth and excellence.

In the realm of ideas everything depends on enthusiasm... in the real world all rests on perseverance.

Johann Wolfgang von Goethe

Organisational structure

SANRAL consists of a highly motivated, professional and passionate team of people operating out of a corporate offi ce in Tshwane (Pretoria) and four regional offi ces in Pretoria, Cape Town, Pietermaritzburg and Port Elizabeth.

We proceed from the principle that each person is of equal worth and contributes to the company to the best of their abilities. All staff members have a defi ned role that adds value to the organisation. Our work is organised in the following clusters:

• Planning and design

• Construction and maintenance

• Road safety

• Toll roads

• Community development

• Statutory control

• Corporate services

• Finance

• Risk


Figure 19 SANRAL organisational structure

The cluster system is aimed at the consolidation and dissemination of knowledge throughout the organisation. In addition, the cluster system aims to secure alignment and consistency in regional project management approaches and methodologies across the various disciplines. SANRAL believes that this system has ensured that quality decisions are made, contributing to a strong overall performance.

Figure 20 SANRAL’s cluster structure

Legend

NR – Northern region

WR – Western region

ER – Eastern region

SR – Southern region

CS – Corporate services

ES – Engineering services

FS – Financial services

FA – Financial administration

DC – Design and construction

OM – Operational management

Corporate ManagementSection 659

Planning& Design Cluster

(Road Geometry, Drainage, Structures, Material/Pavements, Geotechnical, Traffic

& Transportation, Management

Systems, Signage, Overload Control,

Quality Management,Research &

Development, Environmental, OHS)

Construction & Maintenance

Cluster

(RRM, Construction, Contract

Documentation/Supply Chain Management,

Monitoring/Quality Management)

Road Safety Cluster

(IMS, Road Safety

Strategy)

Toll Cluster

(CTROM, PPPs, ITS & ETC)

Community Development

Cluster

(Regional Development

Plans, Monitoring Development

Objectives, Evaluation & Impact

Assessments, Training)

Statutory Control Cluster

(Survey &

Declaration, Land Administration,

StatutoryControl)

Corporate Services Cluster

(Human Resources, Marketing & Corporate

Communications, Library, Registry, IT

Committee)

Finance Cluster

(Statutory Financial Management, Management Accounting,

Supply Chain Management)

Finance & Administration

Design & ConstructionOperations & Maintenance

Regional Managers

Chief Financial Offi cer

Company Secretory & Risk Offi cer

Corporate Services Executive

Engineering Executive

Board

Chief Executive Offi cer

Reg

iona

l O

ffi ce

s

Risk Cluster (Corporate Governance, Tip Offs, EWRM, Forensic Investigations, OHS)

Head Offi ce

Board Strategic Planning

Tactical Planning

Operational M

anagement


Corporate Management Section 6 60

A bursary scheme encouraging employees at all levels to develop their potential and

increase their value to SANRAL.

Succession, talent and leadership management planning. SANRAL maintains a

partnership with the Gordon Institute of Business Science (GIBS) at the University

of Pretoria to develop middle- and senior-management programmes, advanced

technical skills and project management courses.

Training and development activities in the areas of engineering, fi nancial

management, employee relations, human resources management tools,

environmental assessment, information and communication technology training,

community development and motivational skills.

A comprehensive wellness programme is available to all employees.

Human resources

SANRAL’s human resource policies are driven by the understanding that, as a good corporate citizen,

it pursues the goals of fair labour practices in recognition of the rights of staff and compliance with all applicable laws and regulations. The objective is the application of all procedures in the workplace with consistency and fairness in order to sustain a contented and motivated work force.

SANRAL’s investments in our team include the following:


Section 7Performance Goals

Performance GoalsSection 761


62Performance Goals Section 7

Fear melts when you take action towards a goal you really want.

Robert G Allen

This section describes SANRAL’s goals to 2011/12.

Engineering goals

Incorporation of provincial roads

The primary road network under SANRAL jurisdiction grew from about 7 200 km in 1998 to 16 170 km in 2008. Over the next three years, another 4 000 km of provincial roads will be incorporated into the strategic network, increasing the primary national network to about 20 000 km.

Public-private partnerships

The PPP programme will continue. We anticipate that three projects that have been in development phase – the N2 Wild Coast Toll Road, the N1/N2 Winelands Toll Road, and the R300 Cape Town Ring Toll Road – will be put out to tender.

Toll roads SANRAL is currently developing the following toll-road projects:

• Gauteng Freeway Improvement Project – Phases 1 and 2

• N3 Durban to Pietermaritzburg Upgrade

• N17 Springs to Ermelo

• R30 Bloemfontein to Welkom

• N2 Tsitsikamma Toll Road Extension

• N2 Dube Trade Port

• N4 Nelspruit Ring Road

Of particular importance is the Gauteng Freeway Improvement Project, which aims to reduce traffi c congestion and will see the rollout of South Africa’s fi rst ORT system. Tolling is expected to begin in the early part of 2011. This project will not only serve the needs of the travelling public, but will highlight South Africa’s place among world leaders in the provision of road infrastructure.

It is anticipated that these seven projects, with a combined value of approximately R27 billion, will be funded by money and capital market loans, specifi cally through DMTN programmes.


Intelligent transportation systems ITS will grow over the next three years and will be further developed through the Gauteng Freeway

Improvement Project, which will include an electronic toll-payment facility using electronic vehicle identifi cation.

A traffi c information website has already been developed to complement the ITS in Gauteng; eventually this website will cover the entire road network, with the next priorities being Durban and Cape Town. This website will include:

• Real-time traffi c fl ow information • Expected travel times between different points on the network • Road closure information • Real-time video images • Travel advisory information for route planning

Pre-trip and en-route traffi c information will also be available via radio reports, text messages and e-mail.

ITS projects to be initiated over the next three years are shown in the fi gures below.

Figure 21 ITS in Gauteng



64Section 7Performance Goals

Figure 22 ITS in Western Cape

Figure 23 ITS in KwaZulu-Natal


Traffi c monitoring

Additional traffi c counting stations will have to be installed to ensure that the entire network is covered and suffi cient data collected. Figure 24 below shows the routes on which additional traffi c counting stations will be placed over the next three years.

Figure 24 Traffi c counting stations to be installed

Incident management systems

SANRAL will continue to establish incident management systems throughout the primary road network. This process includes:

• The development of new protocols, and/or the modifi cation of existing protocols • Improvement of traffi c operations and safety, using changes in road environment and

measures to infl uence driver behaviour • Improvement of traffi c sign and road marking visibility • Training programmes, especially for young drivers and traffi c offenders.

Assisting law enforcement / overload control

To expand and strengthen traffi c control centres over the next three years, SANRAL will: • Extend coverage to eliminate escape routes by overloaded vehicles • Intensify partnerships with the private sector to ensure an effi cient and cost-effective

deterrent to overloading • Investigate legislative amendments to combat overloading • Consider technological enhancements to improve overload control • Cost TCC infrastructure and operations as a whole across the network, rather than costing

individual centres as standalone items • Strengthen our cooperative agreements with law-enforcement authorities • Complete TCCs at Polokwane and Mokopane in 2009 (with planning for TCCs in additional

years under way).




The fi gure below shows the existing and proposed weighbridges to be completed during the period of this report.

Figure 25 Existing and proposed weighbridges

Socioeconomic goals

SANRAL’s socioeconomic goals were outlined in its vision statement (1998) and further challenged by the United Nations Millennium Development Goals (2002).

3

SANRAL’s community development programme emphasises creating access and mobility in rural areas.

This programme will continue, striving to meet the following objectives:

• Poverty relief in areas in which we work • Human development, including skills transfer and training • Job creation and community participation • Having a positive impact on rural communities • Having a positive impact on households in which women are the breadwinners • Long-term sustainability • Development of SMMEs.

3The Millennium Development Goals are, in summary: 1) Eradicating extreme poverty and hunger; 2) Achieving universal primary education; 3) Promoting gender equality and empowering women; 4) Reducing child mortality; 5) Improving maternal health; 6) Combating HIV/AIDS, malaria and other diseases; 7) Ensuring environmental sustainability; and 8) Building a global partnership for development.


Community development SANRAL sees community development as a comprehensive strategy that addresses

physical needs as well as human dignity, self-suffi ciency and the need to participate. Our community empowerment projects are directed to reduce poverty, vulnerability and economic marginalisation. To determine where to invest in community development, we use an impact assessment tool based on demographic and geographic analysis.

Development impact assessment can be used to assess both project outcomes and the impact of projects on people’s lives. The tool is designed to cover capacity building, opportunities for the disadvantaged, job creation, skills development, rural development, economic empowerment and upgrading of the social and physical environment. The key elements of the empowerment impact assessment process are shown below.

Figure 28 Development impact assessment

Pedestrian and non-motorised transport facilities

As part of our community development programme, SANRAL works to enhance accessibility to and safety of pedestrian and non-motorised transport facilities.

Our work over the next three years will focus on:

• The control and reduction of pedestrian accidents and the reduction of traffi c congestion in towns • The construction of pedestrian/bicycle paths to safely accommodate non-motorised modes of

transport away from the national road, providing mobility to learners travelling long distances to school

• Speed-reduction mechanisms, such as proper signage to improve safety in areas affected by through-roads

• Pedestrian bridges that contribute to the safe passage of people and goods • Bridges over rivers that will provide safe access to schools, clinics, shops and places of work.

Stakeholder inclusion

Maximisation of local resources-

job creation/income retention

Access to opportunities

economic independence

Training and development-

intellectual capital development DEVELOPMENT

IMPACT ASSESMENT

Labour-enhanced methods




Public transport

Where appropriate, SANRAL will contribute to the development of public transport, including permanent jobs for the management of such facilities and the formalisation of facilities for informal traders. The construction of parallel collector-distributor roads will provide a remedy for and formalise access control on roads. Lay-bys for taxis and buses will create safe drop-off and pick-up points. Rest areas for long-distance travellers and drivers are identifi ed according to need and traffi c volumes.

Human development

SANRAL will focus on the creation of short-term employment opportunities for local residents and enhanced opportunities for local women and black-owned contractors and subcontractors. Skills development will also receive attention, with local residents being trained in road construction techniques.

Social and entrepreneurial development

SANRAL will continue to support targeted procurement, contributing to economic growth in our country. We will continue our training programmes for historically disadvantaged individuals to become economically active, as well as all other programmes aimed at stimulating growth of SMMEs. In so doing, we will continue to enhance the provision of basic services and act as catalysts for development in potential growth areas.

Environmental goals

SANRAL’s challenge lies in balancing environmental rights and obligations on the one hand, and the welfare of South Africans on the other. We will continue to adopt a consultative and transparent approach in these matters. Some of the key environmental management issues for the next three years are set out below.

Agreements with regulatory authorities

• In 2007, SANRAL reached a working agreement with the then-Department of Environmental Affairs and Tourism relating to various road projects in the context of environmental legislation. The agreement provides a framework under which SANRAL operates to satisfy the department’s requirements. While the working agreement covers most of the items affected by signifi cant changes in the EIA legislation over the past two years, SANRAL will continue to engage with the new Department of Water and Environmental Affairs should the need for another working agreement arise.

• In view of the amendments to the Mineral and Petroleum Resources Development Act (2002), SANRAL formalised a memorandum of understanding (MOU) with the former Department of Minerals and Energy in 2009. This provides the legislative framework and cooperative governance requirements between SANRAL and the department, reports SANRAL’s requirements of natural road building materials (rock, sand and gravel) for the construction and maintenance of national roads, and confi rms adequate fi nancial provision by SANRAL for the rehabilitation of land disturbed by mining activities. The memorandum serves as a guideline and covers special provisions and conditions related to rehabilitation of land disturbed by mining.


• In conjunction with the former Department of Water Affairs and Forestry, SANRAL has drafted a policy for the control of veld fi res in our road reserves in line with the National Veld and Forest Fire Act (1998). The policy outlines SANRAL’s responsibility towards the act, the most suitable location for fi re breaks, the extent of SANRAL’s participation with regard to fi re protection associations, procedures to be followed during the burning of fi re breaks, assistance to be provided to adjacent land owners and the procedure for obtaining permission for burning on SANRAL property. It is intended to fi nalise the policy for inclusion in routine road maintenance contracts.

Other matters

• Amendments to the generic EMP. The current EMP will be updated to apply to all SANRAL activities, and to ensure both environmental compliance and good practice. The update will also ensure that the EMP is compatible with the amendments to the National Environmental Management Act (1998) and its detailed regulations, which cover such matters as the use of spoil areas and borrow pits, the defi nition of the environmental offi cer, the auditing checklist, penalty clauses and so on.

• Routine Road Maintenance Guideline. This manual has been compiled to support various aspects of road management, including environmental best practice. The guideline provides recommendations and directives regarding invasive plant species, protected plants, pruning, grass cutting and burning. This manual will be supplemented by SANRAL’s Road Reserve Vegetation Management Guideline.

• Road Reserve Vegetation Management Guideline. Terms of reference for this document have been prepared. A horticulturalist will do the preparatory research. The document will be used to develop protocols for vegetation conservation within the road reserve, and removal/modifi cation from the reserve where required. The guideline will also cover procedures for combating soil erosion and the spread of invasive vegetation. Site-specifi c local legal requirements will be addressed to conform to unique regional characteristics.

• Generic EMP for routine road maintenance. A generic EMP for SANRAL routine road maintenance projects is being developed. The aim of the EMP is to ensure that proper environmental management controls are in place.

Corporate goals

Developing human capital

SANRAL’s human capital programme targets poverty alleviation, gender equality and the empowerment of women, and support for the goals of BBBEE. These objectives are fully entrenched in SANRAL’s management and procurement policies.




Internal communication, reward, recognition, performance management policies, career enhancement and skills development have been identifi ed as critical areas that will be enhanced over the next several years. Our strategic and operational plans will set out targets in the areas of skills and competency development, career-pathing, employment equity, leadership development, organisational development and mentorships.

Corporate identity development SANRAL’s marketing and communications team works to inform, educate and communicate with

government, the industry and the public.

During the period of this declaration, SANRAL’s marketing and communications strategy will work to:

• Establish awareness of SANRAL as a respected household brand

• Create awareness of SANRAL’s role and vision for the future

• Challenge the way people think about roads and how they are funded

• Introduce the concept of ORT to get national buy-in

• Change consumer perceptions and behaviour around tolling

• Introduce a number of projects to the public at large.

Information technology

The introduction of technologies capable of interfacing with different management systems has been accomplished and will be refi ned over the next three years. Business processes have been enhanced with the installation of the enterprise resource planning solutions system.

The following modules will be further developed:

• The pavement management system

• The bridge management system

• The toll management system

• The traffi c management system

• The land information system

• The maintenance management system

• The incident management system.

These modules will be integrated within the web-based integrated transport information system, which uses geographic information system technology to enhance both accuracy and user-friendliness. SANRAL’s service providers will, over the next three years, fully integrate the use and expansion of data within the system. Information technology will also be enhanced to support ORT on the Gauteng Freeway Improvement Project in the latter period covered by this report.


Research and development

Road infrastructure research programme

The road infrastructure research programme aims to improve effi ciency in road design and delivery. Over the period ahead, attention will be devoted to economically favourable road techniques, including the development of performance-related design systems and improved building materials to meet specifi c targets. Due attention will be given to social and environmental needs, traffi c management and cooperation with law enforcement, as well as asset preservation and skills/technology transfer through structured training and education programmes.

SANRAL will ensure that sustainable long-term research funding is available through our own funds and through partnerships with other road authorities and the industry. An advisory committee on road infrastructure research has been established to provide strategic direction and input on the best use of limited research funding, and to provide for enhanced communication between industry participants.

SANRAL will continue to fund various research projects, including:

• Accelerated pavement testing (rigid and fl exible pavements) • Updating and revision of technical methods for highways and technical recommendations for highway documentation • Improving hot mix asphalt design guidelines • Cost-effective ways to upgrade gravel roads • Large tri-axle testing • Pedestrian safety management • Suitable replacement of tar products • Ultra-thin concrete pavements.

Performance certifi cation of road construction materials

Agrément South Africa has been in existence for 40 years with a mandate to develop performance criteria for proprietary and innovative construction products where there are no relevant standards. Until recently, no products related to road infrastructure had been certifi ed. However, the relatively recent introduction of review to assess risk exposure in the event of non-conformance, and procurement of these products in a fair and transparent manner.




SANRAL fully supports this initiative. We are represented on the board of Agrément SA and on various technical committees. SANRAL has also been active in initiating and driving the process towards certifi cation of road infrastructure products.

SANRAL’s commitment to follow the certifi cation route has already realised signifi cant benefi ts within the industry, including:

• Enthusiasm to develop innovative, cost-effective, fi t-for-purpose products • Commitment to quality in both product manufacture and application stages • Voluntary offers of extended performance warranties, in some instance four to fi ve times

longer than the traditional 12 months.

Concrete pavement research

SANRAL previously reported its intention to construct and test experimental technologies originally developed for industrial fl oor repairs. This resulted in ultra-thin continuously reinforced concrete pavements, also known as ultra-thin heavy reinforced high-performance concrete, being investigated for use as a road-strengthening measure.

SANRAL tested various sections of 50 mm ultra-thin pavements on top of natural gravel. In addition, cement-treated natural materials were built and subjected to extensive evaluation under accelerated pavement testing, using a heavy vehicle simulator. The results were evaluated and the design refi ned in laboratory testing. This refi ned design, adjusted for South African conditions, will provide a minimum pavement life of 50 million E80s (equivalent to 80kN standard axles). This is signifi cant for a number of reasons:

• It will provide considerable cost savings in material, with the use of only 50 mm of concrete compared to the normal thickness of 200-250 mm

• This product can be overlaid on existing surfaces with a minimum of preparation work, meaning that it is superior for pavement strengthening and repair

• After application the road surface will be open to traffi c within 48 hours • The material provides a safe road surface under all conditions.

It is anticipated that over the period ahead, the use of these ultra-thin concrete pavements will be implemented widely on the road network.


Revision of pavement design methods For more than a decade, the South African Mechanistic-Empirical Design Method (SAMDM)

and the associated guideline documents (principally the TRH4 Guideline for the Design of Rural and Interurban Roads) have formed the backbone of pavement design in South Africa. The methodology and knowledge embodied in the TRH4 and SAMDM are widely acknowledged as being fairly modern and successful.

Over the past few years, however, problems emerged related to SAMDM’s age, accuracy, application and interpretation. For the past several years, the Pavement Design Task Group, which brings together representatives from SANRAL and other road authorities, universities, the CSIR and consulting engineers, has been working on a research and development process to eliminate problems in the current design method, and to update methods in use to the most modern standards. The task group has completed its briefi ng and inception reports and is now researching and developing new software, manuals and training material.

Technology transfer Over the next three years SANRAL will make individual contributions to academic institutions

in programmes that promote science and maths excellence. In addition, SANRAL is currently negotiating with various multinational corporations to further excellence in science and maths education. These sponsorships will enable and encourage learners to enter into careers in science, engineering and technology. In particular, the programme focuses on providing equipment, syllabus content, vocational guidance, and other relevant material to communities where resources are limited. Agreements with the University of the Free State, the Nelson Mandela Metropolitan University and the University of Pretoria will be implemented, beginning in 2009.

Education

Scholarships

In 2008, SANRAL launched a scholarship programme for learners in Grade 11 and 12 studying mathematics and science. The aim is to support pupils in the sciences with a bias towards civil, electronic or transportation engineering. This successful scholarship programme, which began in Gauteng and the Western Cape, will be rolled out throughout the country.

Bursaries

SANRAL’s bursary programme is a tangible contribution to closing South Africa’s skills gap, particularly in the engineering fi elds. During 2008 SANRAL allocated 15 bursaries to students working towards qualifi cations in our core business areas. As of 2009, 13 of the bursary holders who have been successful in their studies will receive further assistance. SANRAL expects to grant 22 additional bursaries for the 2009 academic year, with a further 10 percent growth in the bursary programme over the next three years.




This contribution to extending the national skills set includes SANRAL’s own staff. During 2008, SANRAL allocated 29 bursaries to employees who were studying part-time. In 2009, 32 employees will be assisted. The number of staff bursaries is expected to reach 35 in 2011/12.

Higher education

SANRAL will continue to sponsor the Chair in Pavement Engineering at the University of Stellenbosch. The aim of this sponsorship is to promote the development of human capital and capacity building in South Africa by empowering students and practitioners through high-quality education, training and research, and through partnerships with recognised international institutions in the fi eld of pavement engineering.

Road safety education programme In South Africa, more than 40 percent of road deaths are sustained by pedestrians. SANRAL’s road safety

education programme provides holistic solutions, embracing enforcement, engineering, education and social approaches. Interventions include community involvement, such as assistance to children walking to school, physical improvement of pedestrian routes, and enforcement measures known to be effective for prevention of pedestrian crashes, such as speed enforcement. The project also provides training for offi cials, youths and community groups. These initiatives are supported by a multimedia education programme and partnerships with provincial and local government, as well as the private sector.

Social sciences research

HIV/AIDS education and training in the construction industry The purpose of the research is to investigate the current practice in HIV/AIDS education and training

on SANRAL projects, using international benchmarks and encouraging best practice to improve such programmes. The evaluation report will present key fi ndings and recommendations, and will be made available for comment to the SANRAL executive, the Road Safety and Community Development Focus Group, participating contractors and other industry partners. The report is expected to be completed by 2011/12.

Gender, transport and HIV/AIDS research Anecdotal evidence suggests that many girls are sexually exploited when using public taxis, especially

when travelling to school. SANRAL will support a proposed study entitled “Taxi queens: gender, transport, violence and HIV/AIDS.” This preliminary investigation is to be piloted in the Western and Southern Cape. The purpose of this study is to inform transport policy and interventions. Its recommendations should help to reduce substance abuse, teenage pregnancy and HIV infection, with an expectation that this would increase the number of teenage girls who are able to complete high school.


Section 8Performance Measurement

Performance MeasurementSection 875


76Performance Measurement Section 8

The price of success is hard work, dedication to the job at hand, and the determination that whether we win or lose,

we have applied the best of ourselves to the task at hand.

Vince Lombardi

PHASE 2Resource Operational

INPUTS

Budget• Funding

Primary Road Network

Public Sector• Government Goals• Procurement• Legislation• Appropriations

Private Sector• Investment

Products & Services• Toll/Non-toll• Road performance• Asset preservation• Access & Mobility

Management• Corporate• Network

OUTCOMES

• Incorporation of provincial roads• PPP Programme• SANRAL toll roads• ITS• IMS• Assisting law enforcement

• Community-based development• Social & Entrepreneurial development• Educational initiatives

Environment

• Developing human capital• Corporate education• ITS• Research & Development• Technology transfer

IN

DI

CA

TO

RS

nt

Resource Operational

OU

PHASE 1 Resource

Management

Infl uences • Public participation• Communities• BEE

Resource EnhancementAdjustments

• Planning • Strategy • Policy• Funding • Portfolio prioritisation

ReviewPHASE 3

Resource Building

DRIVERS

Engineering• Pavement• Operational

Socio-Economic

Environment

Corporate

Performance measurement framework

To assess progress on the performance goals presented in Section 7, SANRAL has a comprehensive performance management framework. The framework will be used liberally to guide SANRAL in advancement of it’s performance.

Figure 26 SANRAL’s performance management framework


Performance indicators SANRAL’s performance indicators assess the performance of the primary road network and

its contribution to socioeconomic development. The core indicators, such as those related to engineering, are directly under SANRAL’s control. Progress in other areas, such as road safety, involves a range of other players and is dependent on external factors. During the currency of this Decleration SANRAL will adjust the indicators in accordance with National Treasuary’s Framework for Managing Programme Performance Information to ensure that we deliver our mandate to the well being and development of the nation

Engineering

In the area of engineering, SANRAL will continue to use the indicators listed below. A clear distinction needs to be made, however, between indicators pertaining to toll roads and those related to non-toll roads. While the same indicator may be used in both categories, targets may differ because toll roads are deemed to be self-funding, whereas non-toll roads depend on National Treasury allocations.

The engineering indicators are as follows:

Indicator Goal Target

Private-sector investment index

To attract private-sector investment to stimulate economic growth

30% of total expenditure to be funded by the private sector

Smooth travel exposure Monitor whether roads provide acceptable travel conditions

95% of travel on less than 4.2 m/km roughness (longitudinal road surface undulations)

Low rut exposure Monitor whether roads provide acceptable travel conditions

95% of travel on less than 20 mm rut depth (surface depressions that can hold water and cause vehicles to aquaplane)

High texture exposure Monitor whether roads provide acceptable travel conditions

95% of travel on higher than 0.4 mm texture (the visual coarseness of the road surface that affects surface friction at speeds above 60km/hr in wet conditions)

Bridge condition exposure

Monitor whether bridges provide acceptable travel conditions

90% of travel over or under bridges with overall condition index higher than 80 (OCI is a weighted defects index measuring bridge maintenance needs)

Intelligent transport system (ITS)

Improve road safety and incident management

Reduce delays and associated costs by 12%Increase throughput by 5%



78Section 8Performance Measurement


ITS Rollout of comprehensive ITS programme, including closed-circuit TV cameras, variable message signs, inductive loops and electronic vehicle identifi cation

100% rollout on high-traffi c roads on Gauteng freeways (N1, N3, N12, N17)Start of rollout in KwaZulu-Natal and Western CapeInstall an additional 144 CCTV camerasInstall additional 41 variable message signsRollout of electronic vehicle identifi cation readersIntroduce non-intrusive and semi-intrusive traffi c detection sensors to predict expected travel times and assist in automated incident detection

Incorporation of provincial roads

Incorporate identifi ed provincial roads into national network

100% by 2012, depending on approvals by provincial premiers

Expenditure effi ciency index

Monitor SANRAL effi ciency Less than 7.5% of total expenditure to be spent on overheads

Special development programme budget

Budget 30% variance on budget for community development projects

Pavement design methods

Develop R&D process to eliminate problems in current design method; improve and update method to modern standards

90% by 2011

Electronic toll collection Implement ORT on GFIP phase 1

100% by 2011

BBBEE Work contracted out for labour-maximising operations

60% of total spend of work to be contracted to black SMMEs on routine road maintenance projects; 25% for more complex jobs


Scholarships

The performance indicators for the SANRAL scholarships are as follows.

Road safety education programme

The indicators for the Road Safety Education programme are:

• To reduce the crash involvement risk(s) at selected hazardous locations • To inform pedestrians (particularly scholars) who use roads on a daily basis of the risks and

how to make use of the safety interventions provided (infrastructure, community volunteers, enforcement assistance)

• To involve government role players (road safety offi cers, community development offi cers, law enforcement offi cers) directly in road safety management

• To encourage local and provincial authorities to contribute to non-infrastructure solutions (e.g. law enforcement, volunteer cross-guards) by providing training and incentives for community involvement, and conducting strategic planning

• To involve nongovernmental organisations in interventions at pedestrian hot spots • To encourage national, provincial and local businesses to invest in road safety through

strategic and well-managed sponsorships • To work with educators to integrate road safety into their curriculum, and to implement

the RTMC’s national multimedia road safety education programme in conjunction with SANRAL’s safety education products.


Successful selection of learners

Qualifying pass rate of all learners above 70%

Rollout in Gauteng and Western Cape

Rollout in rest of South Africa

2009

2010

Enrolment and bursaries for Grade 12 learners (scholarship programme) in civil, electronic and transportation engineering

Qualifying pass rate of all learners above 70%

Convert successful scholars to bursary holders

2010

Positive feedback from evaluation by educational experts

Programme evaluation by independent educational experts

2011



80Section 8Performance Measurement

The model provides measures that are meaningful from both an organisational perspective (i.e. measures that refl ect the way in which value is created) and an investment perspective (by highlighting the kinds of skills SANRAL needs for its long-term objectives).

Corporate indicators

No matter how well planned a business strategy, it will almost certainly fail without skilled people to execute the plan. SANRAL has adopted the Accenture Human Capital Development Framework – an analytical measurement and planning tool that enables an organisation to identify and measure the human capital factors that affect organisational performance.

Figure 27 Human capital development framework

BUSINESS RESULTS

HUMAN CAPITAL CAPABILITIES

HUMAN CAPITAL PROCESS

Productivity

Workers performance

Employment engagement

Workplace adaptability

Talent management

Human capital effi ciency

Quality Innovation Stakeholders

KEY PERFORMANCE DRIVERS

Competency management

Reward and recognition

Career development

Employment relations

Performance appraisal

Human capital strategy

Succession planning

Learning management

Workforce planning

Change management

Recruiting

Knowledge management

Workplace design

Human capital infrastructure


Section 9Looking Beyond 2010

Looking Beyond 2010Section 981


82Looking Beyond 2010 Section 9

I found that when you start thinking and saying what you really want then your mind automatically shifts and pulls you in that direction.

And sometimes it can be that simple, just a little twist in vocabulary that illustrates your attitude and philosophy.

Jim Rohn

This Declaration of Intent presents SANRAL’s plan to fulfi l its mandate and meet the needs of all South Africans. It is to some degree based on programmes outlined in Horizon 2010, which was published in 2002. With 2010 fast approaching, and this report extending to 20011/12, SANRAL has already begun planning for the next ten years.

Over the next three years, we anticipate publishing a new document that highlights our vision for the coming decade, and securing the future and sustainability of our national road network, which forms the economic backbone of South Africa.


Policy Of The South African National Roads Agency In Respect Of Unsolicited Proposals

Policy of The South African National Roads Agency in Respect of Unsolicited ProposalsAppendix 183

1. THE CLIENT

For the purposes of this document, the client is the South African National Roads Agency Ltd, hereinafter referred to as the “Agency”, or its successor in title.

2. INTRODUCTION

The Agency, in support of the Minister of Transport’s aim to stimulate innovation and to create new opportunities for the private sector, is keen to receive proposals for road transport infrastructure development. This policy guideline is a revision of the policy dated September 1997, issued by the predecessor of the Agency, namely the South African Roads Board. It has been drafted in order to provide the private sector with a framework within which Unsolicited Proposals (“the Proposals”) should be prepared. It also explains how Proposals will be dealt with by the Agency,and lays down procedures which will be followed in order to stimulate a competitive environment, ensure transparency, and offer the public protection from the possibility of monopolistic practices and exploitation.


May 1999

Policy of The South African National Roads Agency in Respect of Unsolicited Proposals Appendix 1 84

In general, Proposals should refl ect a conformance with governmental aims, be in the public interest, avoid the creation of monopolistic practices, not seek to place onerous conditions upon government, for example no explicit government guarantees will be issued, and refl ect environmental, social and economic sustainability. In this respect, the White Paper on Transport and the Reconstruction and Development Programme may further assist sponsors with the preparation of their Proposals.

3. PROCEDURE

3.1 Preliminary Note Annexure A contains a diagrammatic presentation of the procedure that will be followed in dealing

with Unsolicited Proposals.

No obligation shall rest on the Agency to accept any Proposal. For the avoidance of doubt, the Agency shall not be responsible for any costs which a party may incur in preparing and submitting a Proposal, and such costs will not be considered by the Agency in negotiating the costs as provided for in Section 3.4.The Agency may enter into an Agreement with the Proponent as Scheme Developer subsequent to the submission of the Proposal. Cost apportionment, thereafter, shall be as provided for in Section 3.4 of this document.

In the event of a Proposal being rejected, aborted or abandoned by the Agency, or having being withdrawn, aborted or abandoned by the Proponent, neither the Proponent nor the Agency may claim from the other party damages or loss of earnings or loss of profi t, or any other compensation whatsoever, other than as may have been provided for in the Agreement between the Agency and the Proponent for Scheme Development, such amount to be agreed upon as set out in Section 3.4 of this document.



3.2 Contents of an Unsolicited Proposal In order to qualify as an Unsolicited Proposal, the Proposal must contain, inter alia, the following:

• a clear description of the scope of the Proposal together with a key plan to elucidate the description

• present traffi c fi gures as well as traffi c growth predictions

• proposed road cross sections and a programme of cross sectional development motivated by means of predicted traffi c patterns

• road pavement proposals and pavement improvements with a programme motivated by means predicted traffi c patterns

• any other safety and capacity enhancing features proposed

• proposed residual life of pavement at the end of the concession period

• cost estimate of suffi cient accuracy to illustrate the fi nancial viability of the project. This must also identify whether the Agency is expected to contribute fi nancially

• tolling Strategy

• minimum design standards and performance criteria

• a list of the parties making the Proposal and their partners, if any, as well as details of their capabilities and relevant experience in the fi eld of the Proposal

• a list of all conditions precedent which are part of the Proposal, or which remain to be overcome, and which will be required to be fulfi lled prior to the implementation of the project



3.3 Evaluation of Proposal

The Agency will consider the Proposal in terms of, inter alia, the Agency’s business and strategic planning.

If the Agency is interested in developing the Proposal, the Agency will: • inform the Proponent of any scope changes the Agency may require or propose for

consideration by the Proponent

• inform the Proponent of all Matters to be Resolved which the Agency may have identifi ed and which need to be addressed during the Development Phase of the Proposal

3.4 Appointment of Scheme Developer, and Development Agreement

If the Proponent: accepts the scope changes required by the Agency, or accommodates the proposals put forward by the Agency for the Proponent’s consideration and also undertakes to address the Matters to be Resolved raised, the Agency will;

• award the Proponent the status of Scheme Developer, which will enable it to formally approach other Authorities and perform duties required to address the various issues raised

• publicly announce an acknowledgement of the Proposal and the award of Scheme Developer Status to the Proponent

At this stage a Scheme Development Agreement (the “Agreement”) between the Agency and the Scheme Developer will be drawn up to, inter alia, address;

• the rights and obligations of the two parties fl owing from the Agreement



• the time at which the Agency may accept liability for the whole of or part of the costs incurred by the Proponent with regard to the Proposal (”the agreed costs”). The time for acceptance of the liability of the agreed costs will be agreed upon between the parties and may be at any time between the stage of award of Scheme Developer Status and the stage where Tender Documentation has been compiled. The acceptance by the agency of this liability will be determined by the nature of the Proposal. It is recorded that this acceptance is to be agreed upon and the Agency is under no obligation to accept this liability

• the budget amount for the development of the postulated scheme up to the stage where Tenders are invited. This amount will be provided for in the Tender Documentation as a provisional amount, payable by the successful Tenderer to the Scheme Developer, in the event of the Scheme Developer not submitting the most attractive tender. Should the project be aborted by the Agency after Agency Acceptance, the Agency will reimburse the Scheme Developer for its costs incurred up to the date as agreed upon, such date not being earlier than the date of appointment of Scheme Developer, to an amount not exceeding this budget amount

• the limit of the liability of the Proponent to the Agency in respect of the costs incurred by the Agency in procuring third party advice with respect to the Proposal, in the event of the Proponent withdrawing their bid in the period subsequent to their having been awarded Scheme Developer status, but prior to calling for tenders for the project

3.5 Addressing of Matters to be Resolved identifi ed by the Agency, and Scheme Development

As part of the Agreement, the Scheme Developer and the Agency shall agree on a time period within which the Matters to be Resolved and any required scope changes must be addressed.

The Scheme Developer shall then liase with the relevant stakeholders and/or role players and take any actions that may be necessary to resolve the identifi ed Matters to be Resolved and to bring about the required scope changes. If successful, the Scheme Developer should optimise the Proposal and present the Agency with the optimised Proposal as well as evidence (where applicable) of solutions to the Matters to be Resolved

Once the Agency’s Matters to be Resolved have been satisfactorily addressed and the scope changes have been satisfactorily affected, the Agency will allow the Scheme Developer, in conjunction with the Agency (and other Authorities, if applicable) to further develop the Proposal in accordance with the Agreement, including, but not limited to;

• technical aspects

• plaza positions

• the Environmental Impact Assessment (including public participation, and socio-economic aspects) up to and including the Environmental Management Plan

It must be noted that this is an integrated process and it might not be possible to address all

Matters to be Resolved without taking at least some, if not all of the other actions listed above.

•• t s

•• p

•••• t



3.6 Scheme Acceptance

Once the Proposal has been developed to the point where, at the sole discretion of the Agency, it satisfi es the terms of the Agreement, it will be accepted by the Agency in writing.

3.7 Tender Documentation

Upon successful completion of the above Development phase and the acceptance of the Proposal by the Agency, the Scheme Developer will be required to compile tender documentation under Agency supervision, after agreeing with the Agency on;

• the format of the documents

• projected time frames

• information to be included in, or excluded from the documents

3.8 Calling for Tenders and the Tender Process

The Scheme Developer may now bid along with all other interested parties for the project. From this point onward the normal bid evaluation and award process, as for any Agency initiated project, will be followed.

The two most advantageous Tenders will be selected by the Agency, from whom Best and Final Offers will

be invited. Should the Scheme Developer ‘s Tender not be among these, he will, however, be afforded the opportunity to also submit a Best and Final Offer, which will be evaluated along with those of the Selected Tenderers. It is recorded, however, that at no stage will the Agency disclose any information with respect to any of the other Tenders submitted to the Scheme Developer. From these will then be selected the Preferred Tenderer with whom the Agency will then enter into negotiations. This selection will be at the sole discretion of the Agency and the Agency will be under no obligation to select any Preferred Tenderer.

4. SIMULTANEOUS PROPOSALS

In cases where more than one Proposal is received for the same, or a similar project at the same location, before the Agency has awarded Scheme Developer Status to the fi rst Proponent, the following shall apply:

• if the projects are materially the same, a fi rst come fi rst serve approach will be adopted by the Agency, and the second Proposal will be returned to its Proponent

••• tt h

••• pp

••• ii n



• if two or more projects, at one location, having common elements, but being substantially different in other respects, are submitted, the Agency will decide at its sole discretion which of the projects is the most desirable, and return the other(s) to its/their Proponent(s)

5. THIRD PARTY ADVICE AND APPRAISAL

The Agency reserves the right to submit Proposals, at any stage during the process, to third party advisors for appraisal and advice.

Appropriate undertakings for the confi dential handling of the Proposals will be obtained from advisors before any documentation is handed to them.

The cost of obtaining such third party advice will be for the account of the Agency. However, should the Proponent withdraw the Proposal subsequent to their having been awarded Scheme Developer status, but prior to tenders having being called for the project, the Proponent shall be liable for the costs incurred by the Agency in respect of obtaining third party advice. The limit of this liability shall be as agreed in the Agreement.

6. SUBMISSION OF BIDS

Four copies of the Proposal should be delivered by hand to;

The Chief Executive Offi cer The South African National Roads Agency Limited Ditsela Place 1204 Park Street Hatfi eld Pretoria

The Agency will record the date and time it receives Proposals.

Please note: 1. In the evaluation process the emphasis will be on value for money and the affordability of the Project.

2. Schedule A contains a fl ow diagram describing the above procedure and should be read as forming part of this document.



Receive Unsolicited Proposal

Identifi es Concerns

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Agency considers if interested

Scheme Developer addresses concerns, then develops scheme

Scheme Developer compiles documentation under Agency supervision

Agency answers questions

Agency evaluates

Agency evaluates

Negotiations

Scheme developed in conjunction with Agency & other Authorities:

• Set plaza position• Environmental up to EMP• Public participation• Economic/social. etc.

• Format• Information provided

Scheme Developer submits BAFO with other(s)

Announce ProposalGive Proponent Scheme

Developer Status

Prepare Tender Documents

Invite Tenders

Tender Close

Selected

Preferred Tenderer

Financial Close

Agency Accepts


ISBN: 978-0-620-44690-7www.nra.co.za

Corporate Services, SANRAL, Pretoria. Tel: +27 (0) 12 426 6000 Fax: +27 (0) 12 362 [email protected]

Nitrogen Advertising and DesignTel: +27 (0) 11 463 9735www.nitrogen.co.za

Hein Van Gerve

Produced By Design & ProductionEditor
