18 November 1998
Mr John Edwards, Chairman of the South African Rail Commuter Corporation, Intersite Chairman and Managing Director of the South African Rail Commuter Corporation Mr Wynand Burger, Intersite Managing Director Mr Jack Prentice, Ladies and gentlemen
It is an honour for me to be the guest speaker at this relaunch of Intersite Property Management Services in KwaZulu-Natal.
At the outset let me congratulate Intersite on the relaunch of its KwaZulu-Natal operation. Over the past six years, Intersite has proved that it is a worthy custodian of state property. It came of age through the management and development of the R2.6 billion portfolio owned by the South African Rail Commuter Corporation.
Among its most notable achievements it's the Umngeni Business Park industrial development and the station upgrade projects on the KwaMashu and Umlazi lines. With this track record, Intersite is well positioned to expand its client base and offer its expertise to other government departments.
In addition to Intersite's expertise and astute management of state property, it has proved to be socially responsible in all its projects. Community consultation, job creation and economic empowerment opportunities for previously disenfranchised people are essential elements of our government's development programmes. We commend Intersite for ensuring that these principles form an integral part of the projects they manage.
In our country, with its large discrepancies in wealth and access to resources, it is essential for the private sector to play an active role with government in the development of the economy and the country.
But for a partnership between business and government to work, it must be on a win-win basis for both parties as charity is not a long-term and sustainable solution to the infrastructure needs and problems of our country. This partnership is crucial if we are to find a solution to problems that face our the public transport system.
Prior to 1994, public transport, like all other areas of state activity, was geared to serve the needs of a minority elite and many of the policies and programmes were ideologically driven without regard for the fundamentals of economic viability and sustainability.
The rail commuter network, an asset worth billions, was neglected in favour of the interests of the driver of the private vehicle. The legacy of the apartheid era was under-investment and dilapidated and badly maintained infrastructure.
The challenge for the Department of Transport, and indeed this government, has been to undo the legacy of the past and to align the planning and provision of transport in terms of the needs of all the citizens of this country: that is to transform this system into a customer driven transport system that is sustainable and integrates the different modes in order to cut travelling time to a minimum.
On one level we had to restructure working operations to put the contractual obligations on an accountable and commercial footing. But on another level we also had to improve the service in terms of what the customer experienced directly (from the facilities on the stations to the quality of the seats in the trains) to encourage commuters to use the rail network.
This of course had to be done within our budget constraints. And this is where Intersite, the property arm of the SARCC, has played a significant role. Intersite has unlocked the potential value in the property portfolio of the SARCC, while financially contributing to government and having a positive impact on the lives of the many thousands of South Africans who walks through our stations daily.
Intersite has turned the property portfolio's latent value into and income-generating tool through utilising the property assets not earmarked for future rail expansion and integrating them into the economic mainstream through commercial development.
This has contributed some R400 million to the income stream of the SARCC, which in turn has played a role in reducing the subsidy requirement on an annual basis. The majority of these commercial developments, totalling almost R800-million, were completed on a leasehold basis thus avoiding the temptation of short-term gains while ensuring long-term recurring income for government in years to come as well as increasing the asset value of the portfolio.
While Intersite has proved itself through the management and development of rail property, a huge challenge lies ahead. The deal with the South African National Roads Agency will see Intersite managing the agency's portfolio worth some R135 billion and developing its surplus land holdings. The acquisition of this portfolio has opened a doorway for large-scale job creation and revenue generation.
Having spent seven years building and perfecting systems and procedures, and cultivating networks of contacts, it makes sense for Intersite's expertise in the public asset management and development sector to be extended to other government projects.
Valuable pieces of land with huge potential for development can be found along major roads in KwaZulu-Natal. The challenge lies in identifying projects which can convert these areas into development nodes provide facilities for local communities as well as people who travel on these roads.
The KwaZulu-Natal Department of Transport encourages roadside development not only because of its ideal location to attract road users but also for its contribution to road safety. This province unfortunately does not have sufficient roadside facilities - truck-inns, service stations, motels and rest areas - for travellers to take breaks on long journeys. We therefore find high levels of driver fatigue on our roads which results in loss of concentration and consequently, freak road crashes.
But with roadside development now high on the agenda, we believe rest areas for travellers will be more common. This will also contribute to achieving our objectives of integrated land use and transport planning, thereby contributing more effectively to growth and the subsequent job and business creation.
We are confident that Intersite will meet this challenge and at the same time fulfill its vision to become the preferred public sector agency for the management of state property portfolios.
I wish Intersite well in its venture and with its relaunch, we look forward to continued performance excellence on the road ahead.
I thank you.