2018 INTEGRATED REPORT - Volume 1 Goals can only be achieved if efforts and courage are driven by purpose and direction - AWS
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2018 INTEGRATED REPORT
Vol u m e 1
Goals can only be achieved if efforts and courage
are driven by purpose and direction
Integrated Report 2017/18 The South African National Roads Agency SOC Limited Reg no: 1998/009584/30
THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED The South African National Roads Agency SOC Limited Integrated Report 2017/18 About the Integrated Report The 2018 Integrated Report of the South African National Roads Agency (SANRAL) covers the period 1 April 2017 to 31 March 2018 and describes how the agency gave effect to its statutory mandate during this period. The report is available in printed and electronic formats and is presented in two volumes: • Volume 1: Integrated Report is a narrative on major development during the year combined with key statistics that indicate value generated in various ways. • Volume 2: Annual Financial Statements contains the sections on corporate governance and delivery against key performance indicators, in addition to the financial statements. 2018 is the second year in which SANRAL has adopted the practice of integrated reporting, having previously been guided solely by the approach adopted in terms of the Public Finance Management Act (PFMA). The agency has attempted to demonstrate the varied dimensions of its work and indicate how they are strategically coherent. It has continued to comply with the reporting requirements of the PFMA while incorporating major principles of integrated reporting. This new approach is supported by the adoption of an integrated planning framework in SANRAL’s new strategy, Horizon 2030. In selecting qualitative and quantitative information for the report, the agency has been guided by Horizon 2030 and the principles of disclosure and materiality. SANRAL has attempted to provide concise but reasonably comprehensive information that enables the reader to make an assessment of the agency. 4
INTEGRATED REPORT 2018
The following criteria guided the selection of content:
Internal criteria External criteria
Company vision, mission, mandate and values, Developments in the global and national
plus published code of ethics economic and political environment that
present challenges and opportunities for the
agency
Objectives, shareholder targets, associated Regulatory changes that impact on SANRAL’s
key performance indicators (KPIs), policies, operations
processes and procedures
Expectation and feedback from stakeholders, Guidance provided by independent expert
including the shareholder, employees, suppliers, advisors
customers, communities where it operates,
regulators and environmental organisations.
Key risks affecting the agency, and guidance Factors impacting reputation.
provided by SANRAL’s management, specialist
employees and auditors about risk response.
The report presents certain data by population group and gender. This is purely in the interests
of monitoring progress in terms of transformation and not because SANRAL attaches any other
importance to such distinctions.
THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED
Table of contents
Chairperson’s Report.................................................................................................................. 8
CEO’s Report................................................................................................................................. 11
SECTION 1: COMPANY OVERVIEW.............................................................................................. 15
Our vision, mission and core values.......................................................................................... 16
Our mandate and principal tasks............................................................................................... 16
Overview of Strategy...................................................................................................................... 17
Looking ahead................................................................................................................................. 18
Our Board of Directors.................................................................................................................. 20
Our Executive Team....................................................................................................................... 21
SECTION 2: CAPITALS AND PERFORMANCE............................................................................... 23
1 Manufactured Capital........................................................................................... 24
1.1 Road development, improvement and rehabilitation
New contracts awarded
Projects completed
Major projects in progress
Toll roads under concession
1.2 Road network management and maintenance
Pavement management
Bridge management
Slope management
Routine road management
Smart road systems
Combatting vehicle overloading
1.3 Going forward: sector transformation
1.4 Windows on our world
N2 Wild Coast Road
Moloto Road
Mt Edgecombe Interchange
Cape-to-Namibia Highway
2 Funding Capital..................................................................................................... 52
2.1 Annual Income
2.2 Income trends
2.3 Annual expenditure
2.4 Profit/loss before taxation
2.5 Toll roads under concession
3 Intellectual Capital................................................................................................ 58
Innovative design and research
Automated electronic toll payment
Technical Innovation Hub
Geotechnical solutions
6
INTEGRATED REPORT 2018
4 Social and Relationship Capital............................................................................ 60
4.1 Empowerment, job creation and skills building
SMME contracts
Creating employment
Training of workers
4.2 Community development
Empowerment and job creation
Training and skills building
Concessionaires building small business and providing jobs
4.3 Road safety interventions
Safer road infrastructure
Road safety education
Effective incident response
Concession-holders road safety activities
4.4 University partnerships
4.5 Concession holders building social capital
5 Natural Capital...................................................................................................... 72
5.1 Conservation on major projects
5.2 Environmental impact assessments
5.3 Statutory developments
5.4 Concession holders’ environmental initiatives
6 Human Capital....................................................................................................... 78
6.1 Profile of employees
Employee development
Technical Excellence Academy
Scholarships and external bursaries
Internships
Employee wellness programme
7 Enabling Value Creation: Communication and Information Systems............... 84
7.1 Communication and marketing
Stakeholder engagement
Mass media campaigns
Media engagement and editorial coverage
In-house publications
Social media
7.2 Information technology
Converged data centre systems
Management of cyber security
Office 365
Governance
Focus areas 2018/19
7
THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED
Chairperson’s Report
country’s most valuable infrastructural asset.
Our approach is best reflected in our purpose
statement in Horizon 2030:
“Our purpose is to deliver a safe,
efficient, reliable and resilient
national road transport system
for the benefit of all the people
of South Africa.”
As the outgoing Chairperson of the Board, I am
exceptionally proud of the fact that we were
able to deliver such a visionary strategy as the
product of a broad process of consultation,
both within SANRAL and with external
stakeholders.
Vision 2030 confirms SANRAL’s position as a
leading road agency on the global stage and one
which is ahead of the curve in terms of planning,
engineering, construction and maintenance of a
strategic primary road network.
As a state-owned agency within a developmental
state we willingly assume our responsibilities
in terms of contributing to socio-economic
development and the building of a more
equitable and stable country.
The South African National Roads Agency Commitment to training and research
(SANRAL) reached a critical juncture during
Among SANRAL’s successes during the term
the 2017/18 financial year. Two decades
of the current Board are our contributions to
after its establishment by the first democratic
education, training, research and knowledge-
government, the agency decided to undertake
creation. During this reporting period alone, 161
a comprehensive review of its mandate, vision
students received SANRAL bursaries to pursue
and strategic objectives.
studies at tertiary institutions and 203 high
This resulted in the publication of Horizon 2030, school learners were enrolled in our scholarship
a comprehensive new strategy that will serve as programmes.
the roadmap for this vital government agency
We work closely with local universities to
over the next decade and beyond.
improve educational outcomes in critical
The decision to develop a new long-term subjects such as science, technology,
strategy reflects the dynamic nature of the engineering and mathematics. Our sponsorship
organisation. Over the years SANRAL has of chairs of higher learning at the Universities
exceeded expectations in managing South of Cape Town, Stellenbosch and the Free State
Africa’s primary road network, which is the contributes to original research in areas such
8
INTEGRATED REPORT 2018
as construction, transportation and road safety, managed primary road network can play in the
and to improved science and maths education. broader socio-economic development of the
country and we embrace government initiatives
At our SANRAL Technical Excellence Academy that will contribute to the rise of a new dawn in
we enable new graduates in engineering to South Africa.
make a successful transition from the academic
environment into professional careers. This The accelerated implementation of the National
is a programme that is already benefiting the Development Plan 2030 will be at the core of
broader construction and built environments. government initiatives over the next decade.
There can be little doubt that the quality of the
This culture of excellence has also taken root country’s primary road network will be critical to
within our own organisation where we are the success of the NDP.
making significant investments in the training
of employees through our learning and
Future financing
development strategy.
The development of Horizon 2030 offered
SANRAL an opportunity to take a critical look
Corporate governance and transformation
at our business model and, especially, our
Internal transformation is managed funding policy. It has become clear that SANRAL
through employment equity plans and skills cannot continue on the growth trajectory of the
development initiatives. We continue to attract previous two decades during which the size of
top professionals in the engineering and the network expanded without commensurate
construction environments, and ensure their funding.
progress within the ranks of the organisation
through our skills pipeline. 2017/18 was also a watershed in that SANRAL
found it necessary for the first time to transfer
During the past year we were able to make an amount of R1 667m from the non-toll
senior appointments to critical management business to the toll road portfolio. This transfer,
positions both at head office and in the SANRAL made with the concurrence of the Minister
regions from within our own ranks – a positive of Transport, was in order to reduce losses
indication that our human capital development incurred as a result of sustained non-payment
strategy is achieving results. of toll fees by users of the roads constructed
under the Gauteng Freeway Improvement
SANRAL prides itself on its commitment to
Project (GFIP). The transferred amount was in
good governance and we fully subscribe to
addition to the special grant of R406m made by
the principles of King IV report on corporate
Treasury to off-set the reduced income on GFIP.
governance. This commitment is reflected
in this Integrated Report in our reporting All other toll roads managed directly by SANRAL
on performance, identification of risks and through concessions operated smoothly
and description of systems of control and – with increased use of e-tags on these routes –
governance. and were economically viable.
To date, in all twenty years of SANRAL’s SANRAL is alert to the fact that we operate in a
existence, it has not fallen foul of the principles climate where there is widespread resistance
of good governance. to payment by users of public services such as
water and electricity and this is exacerbated
As a state-owned company we endeavour to
by the adverse economic climate. In this
move beyond the concept of good corporate
context, the financing of new roads through
citizenship. We recognise the role that a well-
9
THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED
private financing and toll collection becomes organisation, under the leadership of our CEO,
increasingly challenging. Skhumbuzo Macozoma, and its ability to ensure
SANRAL realises its new vision and strategic
Horizon 2030 recognises that National Treasury objectives.
will remain the primary source of funding the
development and maintenance of roads but As South Africa commemorates the 100th
that it will continue to be necessary to explore birthday of Nelson Rolihlahla Mandela we can
opportunities for public-private partnerships. state with considerable pride that, through
The imperative for comprehensive consultation our mandate for road development and
with communities and stakeholders ahead of management, we have contributed to the
such partnerships cannot be overstated. The economic progress of our country and its
notion of “buy in” takes on a very real meaning journey towards social justice and inclusivity.
when public infrastructure is to be funded,
wholly or partly, by user payment.
Acknowledgements
Towards the end of the financial year we
welcomed the appointment of a new Minister
Roshan Morar
of Transport, Dr Bonginkosi Blade Nzimande.
Chairperson
Within a short period SANRAL has begun to
benefit from his wisdom and energy.
It would be remiss of me if I did not
acknowledge the previous Minister of Transport,
Mr Joe Maswanganyi, for his endorsement
of the long-term strategy, Horizon 2030, and
draft Transformation Policy, both of which he
launched.
I also want to pay tribute to the leadership
and support given by the Deputy Minister of
Transport Sindisiwe Chikunga, managers at the
Department of Transport, and our partners in
provincial and local government departments
and other infrastructure-related agencies.
The term of the current Board will come to a
close during the current financial year. I have
been privileged to serve on the Board since
2011 and wish to thank my colleagues on the
Board for their devotion to the organisation
and their commitment to good corporate
governance.
I also want to pay tribute to the employees
of SANRAL, from administrative staff, through
the professional ranks to senior management.
Your loyalty and professionalism has helped to
create an organisation that is a national asset.
I have great faith in the management of the
10INTEGRATED REPORT 2018
Chief Executive Officer’s Report
over the next decade. It confirms SANRAL’s
reputation as a progressive entity within the
South African public sector and a leading
agency in the fields of engineering, construction
and road management within the global
environment.
Horizon 2030 was accompanied by the
Transformation Policy which affirms SANRAL’s
commitment to the broader developmental
objectives of the country as defined by the
National Development Plan.
It recognises our catalytic role within the
construction and engineering sectors and
explores opportunities for SANRAL to leverage
this position. We embrace the challenge to
use our procurement and tender processes
in shaping the long-term growth path of the
construction and related industries.
The transformation policy sets clear and
unambiguous targets for the participation of
black contractors, professionals and suppliers
in all projects commissioned by SANRAL. We are
intentionally exploiting to the full the provisions
of prevailing economic empowerment legislation
with the clear aim of breaking down monopolies
in the supply chains for materials, equipment,
technologies and professional services.
SANRAL starts its third decade with a fresh SANRAL went the extra mile in consulting with
vision and mandate and clearly defined strategic industry stakeholders, labour formations and
objectives. During the past year we have taken communities through a series of meetings
fundamental decisions that will determine the across all nine provinces. We welcomed
trajectory of the organisation and position the feedback we received and took care to
SANRAL as a catalyst for future economic accommodate the views of stakeholders in our
growth in the country and on the continent of final proposals.
Africa.
The year in perspective
The publication of Horizon 2030 – our new
long-term strategy – was a seminal moment At the operational level, 2017/18 was a complex
in SANRAL’s development as the state-owned year. On the one hand, the agency had a large
company responsible for managing South number of capital projects in process – a
Africa’s primary road network. total of 223 covering 848km of roadway. But
spending on capital projects was considerably
The strategy provides the organisation with a lower than in 2016/17, reflecting a slowdown in
new, shared vision and identifies the actions construction, with a high proportion of projects
that are required to meet our objectives running behind schedule.
11THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED
In addition to this, while some exciting new Milestones and highlights
construction projects were initiated during the Against this difficult background, there were
year, there was a sharp decline in the number some significant highpoints that served to
of contracts issued – from 172 in 2016/17 to 60 remind us just how important the national
in the reporting year – and there was a similar road network is in facilitating the movement of
trend in relation to design phase contracts. goods and services and connecting people to
economic opportunities.
Within the toll road portfolio, SANRAL
deliberately exercised restraint in issuing • On the N2 Wild Coast Road we started with
construction tenders because of the financing the construction of the 1.1km long bridge
difficulties referred to in the Chairperson’s across the Mtentu Gorge. On completion
Report. this will be the longest main span cantilever
bridge on the African continent. An upgraded
Factors largely beyond SANRAL’s control
N2 will significantly cut down travel time
accounted for the decline in tenders awarded
between Durban and East London and
and work undertaken on non-toll roads.
create new opportunities for growth and
The tendering process was impeded by development along the eastern seaboard.
difficulties SANRAL experienced in applying • Inland we started with major improvements
new tender requirements of National Treasury. to three intersections on the N14 between
Both parties recognise the considerable impact Olifantshoek and Kathu. This road connects
this problem has had on the construction the Northern Cape with the urban metros
industry and therefore have a mutual interest in in Gauteng and plays a vital road in the
resolving matters. lives of people who live in contiguous rural
communities.
A far more disturbing development accounts for
the slowdown of work on a number of existing • On the N2 north of Durban we are nearing
projects. It has been referred to in the media as completion of a major capital project to
“tender-jacking” – attempts by business interest upgrade the Mount Edgecombe intersection.
groups in areas close to road construction This improved stretch of road and
works to coerce principal contractors to give intersection will bring relief from congestion
them sub-contracts without any tendering for commuters travelling to the KwaZulu-Natal
processes. These demands are sometimes North Coast and further stimulate the growth
backed by threats of violence, damage to of the tourism and leisure industries in the
property and, occasionally, serious physical region.
harm to individuals on site.
• In Mpumalanga work is progressing on the
Reasons for pressing these demands may N11 near Middelburg in the Steve Tshwete
differ, from a perception of entitlement based District. This includes the reconstruction of
on a misreading of empowerment legislation the existing road and the widening of the
to plain criminal intent. SANRAL has intensified Kranspoort Pass, an infrastructure investment
its community engagement efforts in an effort of more than R415m.
to pre-empt these conflicts and supported On all contracts, from major new construction
contractors in securing police protection where projects to routine maintenance work, SANRAL
needed. ensures that primary contractors allocate
significant portions of the work to emerging
enterprises, especially those owned by black
people, women and young people.
12INTEGRATED REPORT 2018
In the 2017/18 financial year work to the value We are also deepening our road safety
of R3 087m was contracted to SMMEs for awareness campaigns in collaboration with
construction, rehabilitation and maintenance researchers and academics and in partnership
projects. Construction and maintenance with provincial education departments, schools
projects also generated the equivalent of and communities situated close to the SANRAL
15 299 full-time jobs while a total of 3 421 road network.
individuals received training and skills upgrading
through these projects. Embracing change
Our commitment to research and knowledge
Commitment to transformation creation is also evident in our partnerships with
A primary objective of our transformation universities, our endowment of research chairs
policy is to grow the share of work done by and our growing support to programmes that
black-owned enterprises beyond the statutory aim to enrich teaching and learning of science,
threshold and to expect of our primary mathematics and technology.
contractors to commit to a more focused and
inclusive empowerment and skills transfer Through our scholarship and bursary
programmes. programmes we contribute to the identification
and training of the next generation of engineers
SANRAL believes its transformation drive and professionals in the construction and
starts from within - by amending its supply built environments. At the SANRAL Technical
chain management policies to ensure inclusive Excellence Academy we enable young engineers
investment in the construction industry and to make the transition from academia to the
economy and working with stakeholders to work sphere through on-the-job training.
deliver on government’s promise to move South
Africa forward. The year under review has, indeed, been a
period of change for SANRAL. We welcomed
Our primary objectives are to grow the the appointment of Dr Bonginkosi Emmanuel
construction and engineering sectors Nzimande as the new Minister of Transport and
and attract new entrants, especially black are bidding farewell to our Chairman, Roshan
contractors who can build businesses and Morar, and members of our Board as they come
create jobs. to the end of their terms.
As a dynamic organisation which places high
Technological advancement
value on innovation and modernisation, we
SANRAL’s expertise and technical prowess embrace the changes and are looking forward
are widely recognised among our peers in the to work with new and existing stakeholders on
regional and global environments We are a our journey towards Horizon 2030.
member of the World Road Association (PIARC)
and later this year we will host the 2018 PIARC
International Seminar in Cape Town.
Similarly, we have embraced the initiatives by
the United Nations to promote road safety
through its Decade of Action programme.
SANRAL is among those road agencies that have
Skhumbuzo Macozoma
adopted the “safe systems” approach where the
Chief Executive Officer
emphasis is on engineering solutions to create
safer road environments.
13THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED 14
INTEGRATED REPORT 2018
section 1
Our vision, mission and
core values 16
Our mandate and principal tasks 16
Overview of Strategy 17
Looking ahead 18
Our Board of Directors 20
Our Executive Team 21
15THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED
COMPANY OVERVIEW
vision Mission
Ensuring our national road Our purpose is to deliver a safe, efficient, reliable
transport system delivers and resilient national road transport system for
a better South Africa for all. the benefit of all the people of South Africa.
Core values
Customer centricity: we know our customers, we deliver what matters and
make decisions with empathy.
Accountability: we promote accountability and trust through our consistent,
open, honest, and ethical actions.
Relevance: we endeavour to be relevant to local communities in which we
operate by promoting transformation and environmental sustainability.
Efficiency: we are dedicated to efficient service and strive for excellence and
customer satisfaction.
Safety: we are committed to safety and the search for innovative solutions to
reduce harm.
Principal tasks
• Plan, design, construct, operate, rehabilitate and maintain South Africa’s national roads.
• Generate revenue from the development and management of assets.
• Undertake research and development to advance knowledge in the design and
construction of roads and related fields.
• Advise the Minister of Transport on matters relating to South Africa’s roads.
16INTEGRATED REPORT 2018
Overview of Strategy Among the key focus areas of Horizon 2030
On 13 December 2016, SANRAL embarked is SANRAL’s intention to pursue an integrated
on a process of developing its long-term funding strategy comprised of fiscal allocations
strategy - also known as Horizon 2030. This from National Treasury, own revenue
strategy outlines SANRAL’s long-term vision and generation and a reaffirmation of private
perspective; acknowledges the major successes finance.
of the past 19 years; and seeks to build on
Other key strategic imperatives are:
them.
• demonstrating relevance to South Africans
The approach adopted in the development of
Horizon 2030 took into consideration all the • enhancing the community development
realities facing SANRAL as well as the strategic programme
opportunities that may arise in the next decade.
• public transport enablement
Subsequently SANRAL launched both Horizon
2030 and a Transformation Policy on 29 • transformation, both internally and in the
September 2017. These documents formed the construction sector
basis for consultative, round table, stakeholder
• exploring opportunities in Africa and beyond.
engagement sessions throughout the country.
Over the past year SANRAL embarked on a
Horizon 2030 identifies the key pillars that
process of extensive consultation with industry
support the organisation, enablers to help
associations, professional bodies, stakeholders
delivery of its mandate for the future, and
and communities in all nine provinces to explain
refines SANRAL’s vision, mission, core values
its proposals for transformation and to ensure
and strategic objectives.
alignment with these objectives.
The four pillars of delivery on SANRAL’s
SANRAL continues to strengthen the country’s
mandate are:
expertise in engineering and construction
• Roads – the delivery and maintenance of high through the accelerated development of its own
quality road infrastructure remain at the core professionals as well as strategic interventions
of SANRAL’s endeavours in education and research designed to promote
knowledge and expertise.
• Road safety – the strategy outlines a more
comprehensive approach to road safety in Through bursaries and learnerships it enables
line with global trends young people at schools and universities to
continue their studies; through partnerships
• Stakeholders – acknowledging that SANRAL with tertiary institutions it improves the quality
serves a wide spectrum of stakeholders of teaching in maths and science; and through
whose expectations must be addressed sponsorships it encourages advanced research
through research, consultation and pro-active that contributes to knowledge creation in the
communication transport and engineering industries.
• Mobility – SANRAL will facilitate stronger Through the SANRAL Technical Excellence
integration of road infrastructure into Academy in Port Elizabeth it offers a structured
transport planning and operations programme for graduate engineers to
17THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED
equip them with advanced knowledge and • Growing the pool of engineers through the
competencies. Graduates are exposed to Technical Excellence Academy
real design projects under the guidance of
mentors and they progressively assume more • Strengthening the Technical Innovation
responsibilities until they are able to work Hub by pursuing cutting-edge research and
independently. development to leverage on advancements in
technology.
Looking Ahead Horizon 2030 outlines that SANRAL will pursue
SANRAL’s long-term strategy - Horizon 2030 - an integrated funding strategy that includes
has several key strategic themes which set the fiscal allocations from National Treasury,
tone for the organisation to exploit potential own revenue generation and capital raised
opportunities: through private finance – from domestic
and international bond markets. SANRAL
• Rebuilding of public trust recognises the realities facing all organs of
state – insufficient budgets that are declining
• Ensuring greater collaboration and synergy in
in real terms; an economy under pressure; the
the area of road safety within the transport
triple challenges of poverty, unemployment
and related industries
and inequality which have also contributed to
• Developing an operating model to deliver on protests and disruptions at various project sites.
SANRAL’s long-term objectives
These realities contributed to SANRAL’s decision
• Continuing with the implementation to develop a new Transformation Policy, a
of efficient and effective road network 14-Point Plan and sub-sector strategies to
management principles, to ensure that enhance inclusivity.
SANRAL is financially sustainable and avoids a
The integrated funding strategy is a critical
fiscal cliff
component of SANRAL’s strategic objectives and
• Leveraging partnerships with both the public consists of three pillars:
and private sectors to extract value for the
The first is fiscal allocations from National
economy
Treasury. Horizon 2030 demonstrates how
• Demonstrating relevance to the public these allocations have grown since SANRAL’s
through SANRAL’s delivery programme inception in tandem with the size of the
and the enhancement of the community network. Public funding is a critical source of
development programme, resulting in revenue for SANRAL and will continue to play a
infrastructure that touches communities and definitive role in the agency’s funding envelope.
fosters ownership
The second pillar is private finance. Horizon
• Implementing sustainable transformation by 2030 makes a strong case on how valuable
ensuring that SANRAL’s projects contribute this alternative financing has been to enable
to the transformation of the industry with a SANRAL to broaden the scope of its funding
strong emphasis on the inclusion of black envelope and deliver more road infrastructure
business than if it had only been reliant on public funds.
18INTEGRATED REPORT 2018
This enabled SANRAL to implement strategic agency. The initial starting point would be to
and flagship projects, and major works which only explore opportunities where value can be
include network expansion, greenfield- and derived by all parties.
brownfield upgrades.
Generation of own revenue fits well with the
The third pillar – generation of own revenue ‘Africa and Beyond’ theme outlined in Horizon
– marks a material deviation from the past. 2030. SANRAL has amassed considerable
This entails an assessment of every potential expertise in the fields of engineering, tolling,
revenue generating opportunity within SANRAL asset management and operations. The
and developing a business development agency frequently hosts visits by other African
strategy. This is critical for the sustainability of road authorities and actively participates in
the agency and fits into government’s review of ASANRA, SADC and AU structures involved in
state-owned entities. road management and transportation issues.
There is, thus, significant potential to provide
It also presents an opportunity to manage services on a fee basis to other countries where
certain business units along commercial lines, toll projects are being actively pursued and
stabilise the agency’s financial position and engineering expertise is required.
drive an entrepreneurial culture within the
19THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED
Board of Directors
Non-executive directors
Roshan Morar Allyson Lawless Christopher Daphne
Hlabisa Mashile-Nkosi
Chairperson Pr Eng C Eng BSc (Civ
CA (SA) CFE Eng) (Natal) MSc (Lond) BTech (Civil) MDP Small Business
DIC (Imp Lond) DEng hc Pr Tech Eng MSAICE Management Diploma
(Stellenbosch) FREng
FSAICE FIStructE
Matete Matete Avril Halstead Zibusiso
Kganyago
BSc (Hons) BCom (Hons)
Transportation (Mathematics) MBA BCom Diploma in
Planning MBA MA (Advanced Advanced Property
Organisational Practice
Consulting) MSc
(Economic Policy)
Executive Director Company Secretary
Skhumbuzo Macozoma Alice Mathew
Chief Executive Officer BSc MBA FCIS
BSc (Civ Eng) MSc (Civ Eng)
20INTEGRATED REPORT 2018
Executive Management
Inge Mulder Heidi A Harper Louw
Kannemeyer
Chief Financial Officer Corporate Services
BCompt (Hons) CTA Executive Engineering Executive
CA (SA) BSoc Sci MBA Pr CHRP BEng (Civ) MEng
(SABPP) IPMSP (IPM) (Transportation) Cum
PGDip Leadership Laude Pr Eng Pr CPM
Development Cum
Laude
Regional Management
Logashri Willem Schalk Mbulelo Simon Kobus
Sewnarain van der Merwe Peterson van der Walt
Eastern Region Northern Region Southern Region Western Region
BSc (Civ Eng) Pr Eng BEng (Civ) MEng BSc (Maths and BEng (Civ) Pr Eng
Pr CPM MSAICE (Transportation) Pr Eng Applied Maths)
FAArb Pr CPM MSAICE BSc (Civ Eng) MSc
(Strategic Planning)
MBA Pr Eng MSAICE
21THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED 22
INTEGRATED REPORT 2018
section 2
Manufactured Capital 24
Funding Capital 52
Intellectual Capital 58
Social & Relationship Capital 60
Natural Capital 72
Human Capital 78
Enabling Value Creation:
Communication and
Information Systems 84
23THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED
1 Manufactured Capital
SANRAL is directly responsible for improving, • The N3 Toll Concession (RF) Proprietary
maintaining and managing 94% of South Limited (N3TC) which was granted a
Africa’s 22 214km national road network, while concession in 1999 in respect of the N3
the remaining 6% of the network is managed between Cedara in KwaZulu-Natal and
through public-private partnerships that centre Heidelberg in Gauteng.
on 30-year concessions on various national toll
routes. • Bakwena Platinum Corridor Concessionaire
(Bakwena) which has managed two routes
The national road network is not a static since 2001: the N1 between Pretoria and Bela
entity and has, in fact, expanded on an annual Bela in Limpopo, and the N4 going west from
basis as various provincial roads have been Pretoria to the Botswana border.
incorporated. It is expected to grow in the
medium-term to approximately 25 000km. 1.1 Road development, improvement
and rehabilitation
The great majority of roads under SANRAL’s
direct management – 87% of the total national During 2017/18 SANRAL undertook a total
network – are not subject to tolling, but selected of 223 projects to build new roads, improve
routes, comprising 7% of the total national road existing roads, and rehabilitate roads in a
system, are toll-routes operated by SANRAL. sub-optimal condition. These projects on non-
toll and toll roads directly under the agency’s
A common asset management system spans management involved a total of 848km of
the entire national road network. This involves roadway.
close monitoring of the condition of all roads
in order to predict their future performance Because each project is unique, a simple head-
and set priorities for major upgrading and count of projects undertaken and the length
rehabilitation. Routine maintenance is of improved or new pavement are inexact
undertaken across the entire network on a indicators of the volume and quality of work.
continual basis. However, they serve as a rough measure and
indicate that SANRAL’s output increased in
SANRAL’s roads are maintained to a very 2017/18 relative to previous years (Figure 1 -
high standard, measured against recognised see next page).
international benchmarks, and its major
construction projects reveal the extraordinary Four out of five construction projects during
design, engineering and construction skills the the year were undertaken on non-toll roads
agency is able to leverage. and, overall, strengthening and improvement
projects on existing roads comprised 52% of
The toll roads managed under concession and total capital projects. On toll routes, however,
the companies responsible for them are as projects for the construction of new facilities
follows: outnumbered those for the strengthening and
improvement of existing roads.
• Trans African Concessions (TRAC) which
is responsible for the N4 eastward from
Pretoria to Maputo in terms of a cross-border
concession made in 1997.
24INTEGRATED REPORT 2018
Capital projects and length of road beneficiated 2017/18
Non-toll roads Toll roads
Type of capital project Projects Km Projects Km
beneficiated beneficiated
Strengthening and improvement 98 282 18 20
New facilities 81 382 26 164
Total 179 664 44 184
Figure 1: Three-year trend in capital projects Olifantshoek-Kathu area of the Northern
and length of road beneficiated Cape. KPMM Roads and Earthworks is the
900 848 principal contractor on this R84m contract
800 which is due to be completed in July 2018.
700
576
600 531 The total number and value of new construction
500
contracts awarded in 2017/18 were
400
300 223
considerably lower than in the previous year.
200 119 139 In 2016/17, a total of 172 new contracts were
100
awarded with a combined value of R15.9bn. In
0
2015/16 2016/17 2017/18 addition, there were delays in the awarding of
No of projects Km under construction tenders for the design of projects. Tendering
processes were interrupted by difficulties
New contracts in interpreting new Treasury procurement
regulations.
A total of 60 new contracts were awarded
during the year. The total value of these Projects in progress
contracts was R4.9bn. They included one
mega-project and two major projects, all to be Details of major multi-year projects on non-toll
financed as non-toll roads: roads that were already in progress at the start
of 2017/18 appear on pages 27 and 28.
• Work commenced in January 2018 on the
four-lane bridge extending for 1.1km across The following projects were completed during
the Mtentu Gorge and ultimately forming part the year:
of the N2 Wild Coast Highway. The contract
worth R1 433m was awarded to the Aveng • The R24 upgrade near Rustenburg in the
Strabag Joint Venture and the project is North West was completed a month early,
scheduled for completion in May 2021. in 29 months, at a total construction cost of
R450.03m, 11.5% over the original budget.
• Tau Pele Construction began work in
August 2017 on the construction of three • The reconstruction and widening of the N11
roundabouts on the outer ring road in between Middelburg and Loskop Dam in
Kimberley, Northern Cape in order to improve Mpumalanga ran seven months over the
safety. This is a yearlong project valued at expected completion date due to additional
R115m. slope stability measures and other safety
improvements in the Kranspoort Pass. The
• Construction is underway on a contract original contract price was exceeded by
awarded in June 2017 for the improvement 17.5%.
of three intersections on the N14 in the
25THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED
• The improvement of the R570 from the N4 to Delays were experienced on a high proportion
Jeppes Reef in Mpumalanga was completed in of projects despite the efforts of project
36 months, three months later than planned. managers in SANRAL’s regional offices to work
The duration of the project was extended due with contractors to avoid or minimise delays.
to community protests, obstacles to accessing
a quarry and borrow pits, rain delays and The reasons for delays range from additional
the construction of local access roads and construction work required for slope stability
drainage. Additional costs amounted to 8.5% measures and safety reasons, to disputes that
of the original contract price. arise either in the labour relations field or with
community role-players in respect of local
• The improvement of the N7 between sub-contracting. The last factor has become
Citrusdal and Cederberg in the Western Cape a substantial risk to construction projects in
was completed 1% under the original budget several provinces and sometimes poses a
although it exceeded the planned completion serious threat to the safety of contractors.
date by five months as additional slope
stabilisation was required. SANRAL is totally committed to the participation
of local communities in road projects and
• The project to realign the N7 in order to cater has formalised this through project liaison
for the planned increase in the capacity of the committees, which are now a requirement
Clanwilliam Dam was brought in on budget for all projects. Generally local participation
about two months later than the scheduled. expedites projects, but it becomes an obstacle
when community groups misunderstand the
• The construction of a new two-lane formal processes for local participation or when
carriageway on the N1 from Trompsburg to there are divisions and competition within
Fonteintjie in the Free State was completed communities.
at a cost of R413m. It was delivered about
14 months late and about R100m over The agency is devoting more resources to
budget due to difficulties securing borrow pit managing local-level stakeholder relations with
materials and the impact of drought in the the objective of improving communication,
area. avoiding disputes and eliminating all avoidable
time extensions.
26INTEGRATED REPORT 2018
Projects on non-toll roads
Major construction and rehabilitation projects in progress 2017/18
Value of
Percent Main
Section of road work done Scope of work
complete contractor
2017/18
R61 from Baziya to 88% * R108.9m Widening Basil Read
Mthatha, EC Upgrade of intersections
New bridges, culverts &
pedestrian underpasses
R61 from All Saints 92% * R36.7m Construction of new road Aveng
to Baziya, EC Earthworks, pavement & sealing Grinaker-LTA
New bridges & culverts
R72 from Port 85% R153.8m Improved alignment Concor
Alfred to Fish River,
EC
R72 from Birah 35% R133.5m Improved alignment Trianic
River to Openshaw
Village, EC
N6 from Rouxville 33% R114.9m Rehabilitation WBHO
to Smithfield, FS Construction
N2 Mount 96% * R174.3m Upgrade of interchange to four- CMC di
Edgecombe level free-flow system Ravenna
Interchange, KZN South Africa
N3 Hammarsdale 51% * R93.4m Mass earthworks Stefanutti
Interchange, KZN Six new on- and off-ramps, Stocks
partial clover configuration
New five-lane overpass bridge
Demolition of old bridge
N5 from Harrismith 98% * R128.3m Upgrade to dual carriageway Edwin
to Industriqua, FS New interchange Construction
R573 from 33% * R69.6m Addition of shoulders KPMM-CBE JV
Siyabuswa to Rehabilitation
Marble Hall, LP
New roundabout at N11
junction
R505 from 52% * R256.3m Partial reconstruction Power
Wolmaransstad to Construction
N14, NW
N4 from 40% * R67.8m New dual carriageway Aveng-
Pampoennek to Extra climbing lanes Lubocon JV
R512, NW
Partial clover leaf interchange
Environmental rehabilitation
27THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED
R34 from Km31 to 67% R122.4m Rehabilitation and improvement Edwin
Schweitzer Reneke, Construction
NW
N11 from Hendrina 56% R103.5m Paved shoulders Power
to Hendrina Power Strengthening of existing road Construction
Station, MP
R61 from Mthatha 46% R88m New dual carriageway Haw & Inglis
to Ngqeleni, EC Upgrade of old carriageway
Six bridges
Replacement housing
N7 from Atlantis 54% R166.8m New carriageway Triamic
South to Upgrade of old carriageway Construction
Leliefontein, WC
N7 from 33% R262.8m Upgrade from single to dual Triamic
Kalbaskraal to carriageway Construction
Abbotsdale, WC
N7 from Abbotsdale 77% * R96.9m Upgrade to freeway standard Stefanutti-
to Voortrekker with access roads Stocks Power
Rd Interchange, JV
Malmesbury, WC
N7 Malmesbury 31% R93.9m Upgrade from single to dual Triamic
to Hopefield carriageway Construction
Interchange, WC
N7 at Olifants River, 87% R52.6m New bridge over river Stefanutti-
WC Stocks KZN
N12 at Olifants 82% * R37.7m Widening of two bridges Bates &
River, WC Kennedy
Manyano
N14 from 45% * R22.4m Improvement of three KPMM Roads
Olifantshoek to intersections on N14 in Kathu & Earthworks
Kathu, NC
N8/R31, N12/ 44% R37.1m Construction of three Tau Pele
R31 & R31/R357 roundabouts Construction
intersections on
outer ring road,
Kimberley, NC
* Indicates a time delay on contract with associated cost overrun
Major projects completed during 2017/18
N1 from 100% * R86.9m New two-lane carriageway and Aveng
Trompsburg to demolition of old road Grinaker-LTA
Fonteintjie, FS
N8 from 100% * R18.0m Widening, partly to dual carriage Raubex
Bloemspruit to Rehabilitation Construction
Sannaspos, FS
28INTEGRATED REPORT 2018
R24 near 100% R65.2m Upgrade from single to dual WBHO
Rustenburg, NW carriageway Construction
N11 from 100% * R49m Widening of road KPMM
Middelburg to Reconstruction Roads and
Loskop Dam, MP Earthworks
New bridges and culverts
R570 from N4 to 100% * R567.6m Improvement of road Triamic
Jeppes Reef, MP Construction
N7 from Citrusdal 100% * R1.8m Improvement of road Haw & Inglis
to Cederberg, WC
N7 at Clanwilliam, 100% * R73.5m Realignment of road at Haw & Inglis
WC (SANRAL’s Clanwilliam Dam
portion)
* Indicates a time delay on contract with associated cost overrun
Projects on toll roads managed by SANRAL
Value of
Percent Main
Section of road work done Scope of work
complete contractor
2017/18
N1 from New carriageway
Aveng
Ventersburg to 70% R174.1m Rehabilitation of existing
Grinaker-LTA
Holfontein, FS carriageway
N1 from Holfontein New dual carriageway
Hillary
Interchange to 95% * R154.3m Rehabilitation of old dual
Construction
Kroonstad, FS carriageway
N1 from Winburg New dual carriageway
WBHO
Interchange to 96% * R158.5m Rehabilitation of old
Construction
Winburg Station, FS carriageway
N1 Musina Ring 52% * R146.6m New single carriageway Basil Read
Road, LP Several bridges
N1 Polokwane 65% R195.5m Double-up existing road Basil Read
Eastern Ring Road, Four new bridges
LP
Strengthening of pavement
* Indicates a time delay on contract with associated cost overrun
Toll roads under concession new carriageway on the N4 between the M17
and the Brits Interchange in the North West.
Collectively TRAC, N3TC and Bakwena awarded The upgrade will significantly increase the
seven new construction contracts to the value capacity and safety of this road.
of R1 896m during the course of 2017/18. The
largest of these were: • A R466.8m contract awarded by TRAC for
lane additions and rehabilitation of the
• A R582.2m three-year contract awarded to N4 between Belfast and Machadodorp,
Raubex by Bakwena for the construction of a
29THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED
Mpumalanga. Work is scheduled to take between Cedara and Mooi River, KwaZulu-
three years and will be undertaken as a joint Natal.
venture by WBHO and Motheo.
Details of these and additional contracts
• A R450m two-year contract awarded by N3TC entered into during 2017/18 appear in the table
to Basil Read for the rehabilitation of the N3 below.
New construction and rehabilitation contracts on toll concessions awarded
Start and Value of Scope of work Main
Project
end date contract contractor
TRAC
N4 from
Bronkhorstspruit
Feb 2018 - Rehabilitation of existing Roadmac
to R139.3m
Feb 2019 carriageway: milling and replacing Surfacing
Bossemanskraal,
GP
N4 between
Belfast and Jan 2018 -
R466.8m Upgrading: lane additions Concor
Machadodorp, Jan 2021
MP
N3TC
N3 from
the Villiers Mar 2018 - Roadmac
R87m Rehabilitation
Interchange to Feb 2019 Surfacing
Dasville, FS
Bakwena
Addition of second carriageway.
N4 from M17 to Includes extension of structures
Mar 2018 -
Brits Interchange, R582.2m and realignment of ramps to tie in Raubex
Mar 2021
NW with new carriageway and a bridge
over the Crocodile River
N4/R511
May 2018 - Upgrading of interchange by
Interchange in R59.2m Raubex
Jan 2019 provision of west facing ramps
NW
N4 from R512 to Apr 2018 - Rehabilitation of N4 westbound Roadmac
R111.4m
Buffelspoort, NW Nov 2018 carriageway Surfacing
30INTEGRATED REPORT 2018
The total value of construction and project on the N4 between Zeerust and
rehabilitation work performed during 2017/18 Lehurutshe in the North West which was
on toll routes under concession was R1 565.9m. completed on schedule, and with a 2% saving
Details of the location and nature of relevant on the contract for the section between
projects appear in the table below (pages 31 Swartruggens and Groot Marico although this
and 32). project was delivered a month late.
Most projects on toll road concessions that • Two of the three N3TC projects were
were completed during the year were delivered completed on time (or virtually on time)
within budget and according to schedule: and on budget, but the third – for the
rehabilitation of the N3 from the Harrismith/
• The TRAC contract for upgrading and Warden Interchange, extending towards
rehabilitating the N4 between Hectorspruit Warden – ran six months over schedule
and Komatipoort in Mpumalanga came in on and 9% over the original contract amount.
time and at the original contract value. A combination of factors contributed to the
delay: non-availability of materials, additional
• An 11% saving was achieved on the Bakwena
works and adverse weather.
Ongoing construction and rehabilitation projects on toll route concessions
Percent Value of Scope of work Main
Section of road complete work in contractor
2017/18
TRAC
N4 from
Malag Hotel
Upgrading: additional lane Raubex
to Montrose 67% R179.3m
Reconstruction of existing road Construction
Waterfall
T-junction, MP
N4 from
Kromdraai /
Highveld Steel Upgrading: additional lanes Raubex
67% * R206.3m
interchange Reconstruction of existing road Construction
to OR Tambo
interchange, MP
N3TC
N3 from Cedara
to Mooi River, 25% R450m Rehabilitation Basil Read
KZN
Bakwena
N4 from Vaalkop
to Swartruggens, 45% R75.5m Reconstruction of road G4 Civils
NW
31THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED
Completed construction and rehabilitation projects on toll route concessions
Percent Value of Scope of work Main
Section of road complete work in contractor
2017/18
TRAC
N4 between
Upgrading: lane additions
Hectorspruit and 100% R80.8m Raubex
Reconstruction of existing road
Komatipoort, MP
N3TC
N3 from
Harrismith/
Warden Roadmac
100% * R127m Rehabilitation
Interchange in Surfacing
the direction of
Warden, FS
N3 from Frere
Interchange
to Colenso/
Winterton Roadmac
100% R109m Resealing
Interchange and Surfacing
onward almost
to Bergville
Interchange
N3 from Warden
Roadmac
Interchange to 100% R46m Rehabilitation
Surfacing
Wilge Plaza, FS
Bakwena
N4 between
Zeerust and
100% R83.6m Rehabilitation WBHO
Swartruggens,
NW
N4 between
Swartruggens
100% * R121.4m Rehabilitation G4 Civils
and Groot
Marico, NW
N1 between
Pumulani Toll
Murray and
Plaza and 100% R113.9m Rehabilitation
Robberts
Hammanskraal,
GP
* Indicates a time delay on contract with associated cost overrun
32INTEGRATED REPORT 2018
1.2 Road network management and • Rut depth, where standard is less than 20mm.
maintenance Depressions deeper than this can hold water
and cause vehicles to aquaplane.
The national road infrastructure is an asset
of immense value and requires active • Macro-texture, where the desired texture is
management in order to preserve it and expand higher than 0.4mm. The coarseness of the
it in response to changing road use patterns road surface affects friction and safety at
occasioned by urban growth and socio- speeds exceeding 60km/h in wet conditions.
economic development.
South Africa’s national roads scored very
SANRAL undertakes a never-ending cycle of highly in 2017/18: between 97% and 99%
surveillance of the state of national roads, of travel on these roads met the minimum
utilising both automated systems and human requirement. The figures have been stable
observation. This data, combined with over the last three years showing consistency
information on traffic flows and predictions on in road maintenance. In recent years, some
future road use, forms the basis of planning for provincial roads in sub-optimal condition have
road development, improvement, rehabilitation been added to the national network. SANRAL
and maintenance. has made a concerted effort to improve the
newly incorporated roads and this attention has
The integration of information and ensured that overall performance has remained
communication technology (ICT) systems high.
into the management of some of the busiest
freeways in the country has taken road network See map on Pavement Condition on next page.
management to another level, with real-time
information on traffic flows and incidents Percent of travel in 2017/18 on roads meeting
available to traffic control centres which activate international standards
emergency response services. The installation,
maintenance and upgrading of these ICT
systems has now become an essential part of Road roughness
road management on these urban freeways.
97%
Pavement management
SANRAL accords the highest priority to road
maintenance in order to protect road assets
Rut depth
and prevent deterioration. Maintenance
includes routine tasks such as drain clearance, 99%
grass cutting and pothole filling, as well as
periodic interventions, such as resealing and
new overlays.
The effectiveness of the agency’s maintenance Macro-texture
programme is measured against internationally 99%
used measurements:
• Road roughness, for which the desired
standard is less than 4.2m/km.
33THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED Pavement condition on national roads 2017/18 34
INTEGRATED REPORT 2018
Bridge management
In 2017/18 the national road system included
9 874 bridges and major culverts large enough
to require inspection every five to six years
by accredited inspectors of the Committee of
Transport Officials (COTO) in order to ensure
they are in good condition. The above figure
includes 927 bridges and culverts on routes
managed by concession holders.
The majority of bridges and culverts were
inspected in the period 2015 to 2017. In
addition, wherever road upgrades include
new bridges and culverts, inspectors ensure
that these structures meet the specified flood
capacity standards.
Overall, 93% of travel on national roads in
2017/18 involved bridges considered to be in
good condition. This was slightly lower than in
2016/17 when the figure was 94%.
Bridge condition exposure measurements
Description 2015/16 2016/17 2017/18
Actual Actual Actual
Percentage
of travel over
or under
bridges on
93 94 93
national
roads with
OCI higher
than 70%*
*The Overall Condition Index (OCI) threshold for
structures in good condition or better is 70%
When older roads are taken over from the
provinces the roads, bridges and culverts are
generally in a poorer condition than the rest
of the network and this negatively affects the
bridge condition exposure index.
SANRAL has begun to commission bridges that
feature integral design. This eliminates the use
of roadway joints and bearings and reduces
maintenance. The first long integral bridge – a
91m structure over the Van Zylspruit on the N1
south of Bloemfontein – has been constructed
and its performance is being closely monitored.
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