The Passenger Rail Agency of SA (Prasa) recorded damages in excess of R1.2bn over the last two years due to metal infrastructure theft, as the state battles to curb rampant stealing of copper cables, which threatens to cripple some parastatals.
The struggling rail agency, which had revenue of almost R2bn in the form of fares and rental income in the previous financial year ending March 2021, is one of many state-owned entities (SOEs) that have been hard hit by huge illegal trade in scrap metal.
Freight rail operator Transnet, partially state-owned telecom operator Telkom and power utility Eskom estimate that thieves and vandals cost them a total of R7bn a year, with the knock-on damage to the broader economy amounting to about R187bn annually.
The theft is said to be driven by surging global demand for copper scrap largely due to tight supplies and low inventories, pushing prices to record highs. Much of the stolen metal is smuggled overseas, with syndicates often easily avoiding detection.
Transport minister Fikile Mbalula said in a written reply to a question from the IFP published in parliament this week that Prasa together with law enforcement agencies is currently running multiple investigations into scrap metal theft in a bid to close down on syndicates.
“To date there have already been 1,500 arrests due to these operations, with many receiving lengthy prison sentences. Damages over the period, from the beginning of the Covid-19 lockdown in March 2020 to date, is in excess of R1.2bn,” Mbalula said.
President Cyril Ramaphosa said in his state of the nation address that the state would take decisive steps, through improved law enforcement and by considering further measures to address the sale or export of scrap metal.
According to the Budget Review tabled in parliament in February, making it mandatory for all metal traders to get licences and prevent them from dealing in cash — so that there is a paper trail — could be a key step in combating theft and illegal trade in cables.
The government is also set to introduce rules to make it mandatory for traders to conduct due diligence on their customers and track the origins of their products.
In Prasa’s annual report recently tabled in parliament, auditor-general Tsakani Maluleke highlighted that the agency — which is responsible for delivering rail services, a key ingredient to boost productivity and stimulate economic growth — is under constant threat from a security perspective, with the pillaging and destruction of the rail infrastructure continuing largely unabated.
“Not only are trains continuously being vandalised, the rail network infrastructure has also been under consistent attack, stripped of copper cables, railway tracks, signalling equipment and overhead electricity cables, and its facilities across the country continue to be vandalised,” Maluleke said. This contributed to the declining fare revenue amounts, poor financial performance and allowed for the vandalism to continue, she said.
Maluleke issued a disclaimer on the parastatal’s financial statements for a third consecutive year, indicating that the company’s accounts could not be relied on.
With Bloomberg
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.