Unions welcome decision to place Prasa under administration

Economists believe the transport minister had no option but to take action.
Prasa employs more than 16 000 people and the relevant unions are keen to help keep it going. Image: Shutterstock

Trade unions have welcomed the decision by Transport Minister Fikile Mbalula to dissolve the board of the ailing Passenger Rail Agency of South Africa (Prasa) and place it under administration with immediate effect.

Economists said Mbalula did not have any other option but to take action to address the serious issues confronting Prasa, which provides employment to 16 350 people.

Prasa has in recent years received a series of qualified audit opinions from the Auditor-General for governance failures and irregular and fruitless and wasteful expenditure; it had a number of different boards that failed to resolve the issues facing it; it was the subject of adverse findings by the Public Protector; and had a number of issues referred to the Hawks for investigation.

Read: Prasa’s financial management out of control
And: Judge delivers scathing judgment against Prasa

Bongisizwe Mpondo, who has served on the boards of many public entities, including South African Express and South African Airways (SAA), has been appointed administrator of Prasa with immediate effect.

Mbalula said on Monday that Mpondo will run Prasa’s affairs as a board of control, as envisaged in the Prasa founding law, and as an accounting authority in terms of the Public Finance Management Act (PFMA). 

“This intervention will continue for 12 months, after which a permanent board will be appointed to run the affairs of Prasa,” he said.

Mbalula said he has no doubt Mpondo has the right credentials to tackle the challenge of turning Prasa around, address its operational deficiencies and take on the intractable challenges confronting its divisions and subsidiaries.

He said his department will in the coming days be concluding a service-level agreement, that will outline in detail the terms of reference for Mpondo’s engagement.

Mbalula’s announcement came shortly after President Cyril Ramaphosa said in his regular newsletter that despite the current challenges facing state-owned enterprises (SOEs), none of them is lost and he is ready to make tough decisions over their future.

Read: Ramaphosa vows ‘drastic’ steps to save state companies

It follows SAA being placed in voluntary business rescue last week.

Ramaphosa said business rescue is not the preferred option for fixing SOEs, nor will it necessarily be advisable in other circumstances.

“But the resolve we have shown in putting SAA into business rescue cuts across all key SOEs. Whether it is Transnet or Eskom, Denel or Prasa, we are taking all necessary measures to turn them around,” he said.

Zanele Sabela, media officer for the SA Transport and Allied Workers Union (Satawu), said the union welcomes Mbalula’s move because there is a crisis at Prasa.

January meeting

Sabela said the minister indicated that there will be a meeting between the unions and the administrator in January and that Satawu is looking forward to it, so it can provide meaningful input into what happens next at Prasa.

She said Satawu is ultimately concerned about its members’ job security, which is the reason the union is insistent that it has a seat at the table at the January meeting.

Steve Harris, general secretary of the United National Transport Union (Untu), said its leadership has assured Mbalula and Mpondo that it will be “available 24/7” to assist in finding solutions and identifying critical areas to help the SOE to provide safe working conditions for its members, ensure commuters get a reliable service and prevent a situation where Prasa will have to close its doors.

Harris said it is critical that Prasa employees are paid at the end of this month and to implement immediate measures to ensure employees are safe at work.

He added that Untu realises that Mbalula had no alternative but to implement drastic measures.

Harris commended Mbalula for his bold actions and indicated that Untu will support and contribute to the efforts made to ensure the 14 000 jobs provided by Prasa are not affected.

Economist Mike Schüssler said it is about time the government took action because Prasa has lost 80% of the passengers it had ten years ago.

Poorest of the poor affected

“It’s a nightmare because the poorest of the poor use trains because it’s a cheap form of transport. The cost to them is huge if they have to use another form of transport. 

“The trains don’t work anymore, they are unreliable and then you have the crime on those trains. It’s concerning that the people who have to make use of trains have been left so long in the dark.

“I think some of the previous management should go to jail for treason because they damaged vital infrastructure of this country,” said Schüssler.

Dr Azar Jammine, chief economist at Econometrix, said the decision to place Prasa under administration shows that all the SOEs are collapsing.

Jammine said Ramaphosa did not have any option but to take action, although it will obviously cause friction in the ruling party.

He said Prasa had to either be placed in business rescue, liquidation or bankruptcy.

“The trouble with bankruptcy, from my understanding, is that the government has to immediately pay off all the creditors, whereas with business rescue they can negotiate with them on a payment plan.

“I’m wondering if, for the Ramaphosa faction in government, it’s the way to go because it also means that in this way they overcome the power of the unions,” he said. “If the unions go on strike, it will be the collapse of their organisation.”

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The ANC should be placed under administration !!! probably by the IMF !

They appoint someone who’s claim to fame is having been on the boards of numerous SOE’s.

How stupid. These have all been found to be corrupt and useless.

Our mans website does not even work. It seems his companies biggest achievement so far is being “locally” owned. WOW level 1!!! Great achievement I must say. When you click on “Meet the team” he is the only team member.

All that is happening now is there will be no governance and oversight so don’t hold your breath that anything will change.

Hahaa. These people are a bunch of ……..s. ( fill in something nice please. )

“Bongisizwe Mpondo, who has served on the boards of many public entities, including South African Express and South African Airways (SAA), has been appointed administrator of Prasa with immediate effect.”

I don’t know Mr Mpondo, but I don’t think he has the skills that is needed…afterall SAA shouldn’t exactly be a highlight on anyone’s CV.

to me terms and actions like: “put under administration”, ” put it in business rescue” and the most often used term “forensic audit” just became cheap terms mostly used by incompetent politicians and labour union leaders (who in the 1st place do not know what the hell they are talking about) to calm down or upset their listeners / employees / employers – depending who they address. This counts for entities from eskom right through to the smallest municipality that is just messed up – financially and otherwise.

just show me 1 entity where any one,or all of these actions, had been taken and the specific entity is back on the track and running like a well oiled machine.

As long as the incompetent government and unions are at all involved in management of such an entity, chances on success is as good as nothing

“Trade unions have welcomed the decision by Transport Minister Fikile Mbalula to dissolve the board”

Does this mean that there are no board members that can add any value in a transition period?

The blind sure seem to be leading the blind! An individual can be placed under administration, whilst a company is placed under business rescue!!! Someone is again pulling the wool over our eyes!!! One can’t expect any better from a “kortbroek” Minister who has been the Minister of sport, then the Minister of police, and now the! Minister of Transport!! Mbalula and his advisors sure seem to have IQ’s running at room temperature which in turn is extremely disadvantageous for the country at large. One could infer that state capture is alive and well!

End of comments.

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