Prasa owes suppliers R796m - minister

Cape Town – The Passenger Rail Agency of South Africa (Prasa) has outstanding creditor payments amounting to R796m of which almost 40% is overdue by more than 180 days. 

In response to a question posed by the DA’s Manny de Freitas, Prasa admitted that it had a “cash flow” problem, which makes it difficult for the state-owned enterprise to pay service providers on time. 

“The contributory factors of the cash flow challenges include the tough economic climate, the unfunded mandate of Shosholoza Meyl, operational challenges such as the many coaches out of service, train burnings, major service disruptions, fare evasion and vandalism of infrastructure,” said Transport Minister Dipuo Peters. 

Prasa previously said the Shosholoza Meyl service is in disarray because of inadequate funding and a drop in passenger numbers by almost 50%. 

READ: Prasa acting CEO: We have a Montana problem

In 2013, Prasa purchased 70 locomotives for Shosholoza Meyl from a Spanish company through an empowerment group Swifambo Rail Leasing. The contract has been a controversial one, however, as the locomotives were too tall for South Africa’s railway lines and unsafe to use. 

Prasa has submitted a court bid to have the contract set aside, as well as to recover the R2.5bn already paid to Swifambo for the locomotives. 

In a separate question, also from De Freitas, Peters was asked to elaborate on the details of the investigation of Prasa’s contracts by Werksmans Attorneys. 

Peters said the legal firm was asked to investigate the irregular expenditure transactions identified by the Auditor General in his report of the 2014/2015 financial year as well as transactions that were related to irregular ones that were above R10m. All contracts between 2012 and 2015 are, therefore, under scrutiny. 

She couldn’t provide details of the scope of the investigation, but said more details will be made known in October 2016. 

Altogether R 97.2m was allocated towards the investigation, including the services of a team of advocates and attorneys with experience in forensic investigations and litigation, forensic chartered accountants, auditors and forensic IT specialists.

Peters earlier came under fire for allegedly trying to halt the investigation into Prasa, due to escalating costs. But Prasa chairperson Popo Molefe later told Parliamen that, although the costs of the forensic investigation were high, Prasa simply had to find the money to see it concluded.

READ: Why Peters stopped the Prasa probe 

“[The investigation] is massive and it involves R14bn,” he said. “We have uncovered irregular confinements of some 120 instances of which 40 relate to civil litigation taking place,” he said. 

“The law requires us as the accounting authority to have this investigation done. It’s our responsibility in terms of management of resources and the financial loss of a state entity,” he said at the time.

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