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The Democratic Alliance (DA) notes with concern that the Passenger Rail Agency of South Africa (PRASA) posted a loss of R1.2 billion in the 2009/10 financial year as indicated in their annual report tabled today. The Auditor-General has consequently classified PRASA as a going concern - an indication that the entity could possibly face liquidation in the near future.

While the DA acknowledges that the losses incurred by PRASA are as a result of under-funding, we believe that the solution will not simply be an increase in the monetary allocation from National Treasury but the consideration of innovative funding alternatives. A feasible solution that needs to be seriously examined is the diversification of PRASA's ownership through public-private partnerships.

It is imperative that alternative solutions to PRASA's financial woes are sought in not only bringing PRASA's financial status from the red, but also tackling Metrorail's R5.1 billion rolling stock backlog. Those affected by the under-resourcing of PRASA are train commuters who have been subjected to train delays, cancellations and unsafe coaches.

The DA will be writing to the Minister of Transport presenting the proposal that PRASA's ownership should devolve through a public-private partnership deal whereby certain state-owned assets and operations, such as Shosholoza Meyl and Metrorail are be transferred to the private sector. PRASA could retain ownership of the physical components of the rail network (track, land lease, bridges, tunnels, signaling and communications) and furthermore be responsible for:

• Covering maintenance costs;
• Safety;
• Funding capital investment from borrowings, retained earnings, third parties and state subsidies; and
• Negotiating access agreements giving freight companies, private passenger companies, public private ventures or Local Government the right to run trains on the track, in exchange for access levies.

Similar proposals are being considered by PRASA's counterpart in rail freight, Transnet, who indicated yesterday that given its large capital needs, they would be conductiong a study on the role to be played by the private sector in their business. A similar study needs to be seriously considered by PRASA.