Mbalula puts Prasa under administration and dissolves its interim board

Prasa has been placed under administration. Picture: GALLO IMAGES/RAPPORT/DEON RAATH.
Prasa has been placed under administration. Picture: GALLO IMAGES/RAPPORT/DEON RAATH.

Transport minister Fikile Mbalula has dissolved the interim board of the embattled Passenger Rail Agency of SA (Prasa) and placed the company under administration.

Speaking at a media briefing in Braamfontein on Monday, Mbalula introduced Bongisizwe Mpondo, who has worked on various boards, including those of SAA and SA Express, as Prasa’s administrator.

The crisis at Prasa is the latest in the spiral of debt in which the government is caught as failing and broke state entities and municipalities default on payments to one another.

Trains are the biggest mode of transport available to commuters in the urban areas of Gauteng, the Western Cape and KwaZulu-Natal, and according to Prasa, it transports more than 2.5-million people every day.

Mbalula pulled no punches when he described the deteriorating state of the state-owned entity.

“Prasa is an important institution that plays a major role in SA’s public transport value chain and its impact on the economy cannot be overemphasised enough ... During our first 100 days in office, we spent a lot of time tackling pressing challenges that constrained service delivery,” he said.

“While taking strides in advancing social emancipation, it is precisely these fault lines that prompted us to establish the Prasa war room ... The continued decline of the quality of service Prasa provides to the public requires urgency in the interventions we put in place.”

Mbalula tracked back to the 2015/2016 financial year in explaining his decision.

That year, the auditor-general’s office flagged serious governance breaches, and irregular expenditure exceeded R14bn. In the years following, that figure increased to R23.4bn and Prasa lost thousands of staff.

“Over the last few weeks, we have conducted a review on the performance of the board ... Based on this report and other considerations, we concluded that Prasa has deep-rooted challenges that require decisive interventions,” Mbalula said.  

“There is no doubt that the board is responsible for the systems of internal control ... Since the interim board’s appointment, the affairs of the entity have not improved, but have regressed.

“Having considered all these issues ... I have arrived at the conclusion that a more incisive intervention that enables quick turnaround times is more urgent than the appointment of a permanent board.” 

Mbalula previously criticised Prasa's loss of billions of rand in its controversial procurement of locomotives — which turned out to be not usable on the SA rail network — in a deal that was marred by serious allegations of corruption and mismanagement.

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