Memorandum of Understanding

Between

Nelson Mandela Bay Metropolitan Municipality

and

Nelson Mandela Bay Public Transport Forum

Memorandum of Understanding Between Nelson Mandela Bay Metropolitan Municipality (Hereinafter referred to as the NMBM)

Nelson Mandela Bay Public Transport Forum (Hereinafter referred to as the Forum)

Whereas the Nelson Mandela Bay Municipality (NMBM) is desirous of implementing an integrated Public Transport System (IPTS) in the Nelson Mandela Bay area. And whereas the NMBM intends implementing said IPTS by means of Negotiated Contracts with the existing public transport operators in the area as provided for by Section 41 of the National Land Transport Act. And whereas the NMBM and the Taxi Forum, which represents the entire taxi industry in the Nelson Mandela Bay Municipal area, have conducted extensive discussions and negotiations regarding inter alia the full integration of the latter in the IPTS. And whereas the discussions and negotiations between the two parties are ongoing, the parties have agreed that a memorandum of understanding should be prepared at this stage so as to document the progress made to date. Now therefore the parties record the following:

1

Definitions

1.1

Compensation payments - Refers to the Forum's position for compensation to be paid to the existing taxi operators in the NMBM area that cede or transfer ownership of their vehicles to the primary cooperatives.

1.2

Forum - Refers to the Nelson Mandela Bay Public Transport Forum, who warrants that it has been authorised by all taxi associations as appear in paragraph 2 hereunder, to enter into this Memorandum of Understanding and to thereafter bind the said taxi associations, and therefore the entire taxi industry within Nelson Mandela Bay area, in negotiated contracts with the NMBM.

1.3

IPTS - Refers to the Integrated Public Transport System, a scheduled public transport service that the Nelson Mandela Bay Municipality

intends to implement and which is explained in detail in the operational plan. 1.4

Negotiated Contract - Refers to Section 41(4) of the National Land Transport Act which provides for contracting authorities to conclude negotiated contracts with public transport operators in the area.

1.5

NL7A - Refers to the National Land Transport Act No. 5 of 2009

1.6

NWIBM - Refers to the Nelson Mandela Bay Municipality.

1.7

Operational Plan - Refers So the operational plan for the IPTS, the latest draft of which is dated 21 December 2009,

1.8

Primary Co-operatives - Refers to the co-operatives thai are intended to provide a portion of the public transport service for (he IPTS as contained in the Negotiated Contracts to be concluded beiween the parties.

1.9

Profit guarantee - Refers to the commitment made by the Government of the Republic of South Africa that operators participating in the IPTS would not suffer a loss of legitimate profits and jobs.

1.10

Secondary Co-operative - Refers to Laph'urnilanga Transport Services Secondary Cooperative s co-operative that will have as its members the 5 Primary Co-operatives and will provide shared services to the latter.

1.11

Transitional Period - Refers to the 3-5 year period proposed by the Forum necessary for the formalisation and transformation of the existing taxi industry in the Nelson Mandela Bay area.

2

Structure for the provision of the public transport service

2.1

The taxi industry in the Nelson Mandela Municipality has organised itself into the following 5 Primary Co-operatives;

Co-operative

Tax) Association Uncedo Service Association

Uncede Transport Service Primary Co-operative

Geographical Area Taxi Zwide; Kwazakrtele; New Brighton; KwaDwesi; KwaMagxata; Motherwell; Kamve!ihle:to CBD; Korsten; Uitenhage; Summerstrand; Greertacres; Mouni Pleasant; Lorraine and long distance.

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Co-operative

Taxi Association

Geographical Area

Ubunye Ngamandia Transport Service Primary Co-operative

Port Elizabeth & District Zwide; Kwazakhele; New Brighton; Tsxi Association KwaDwesi; KwaMagxaki; Motherweli; Kamvelihle; Walmer to CBD; Koreten; Uilenhage, Summerstranb; Greenacres; Mount Pleasant; Lorraine and long distance.

Tinarha Transport Service Primary

Uitenhage & District Taxi KwaNoiuihle; Kabah-Langa to Association CBD; Korsten; KwaZakhele; Kiritwood; Addo and long distance. Uncedo Service Taxi Association

Co-operative

UJtenhage Taxi Association Northern Areas Transport Service Primary

Algoa Taxi Association Northern Areas Association

Bethelsdorp; Shaudervilte; Cleary Park; Booysens Park; to CBD; Taxi Korsten; Greenacres and long distance.

Co-operative Taxi Korsten to Newton Park; Mangold Park; Kabega Part; Sherwood; Theescombe; Kragga Kamma; Eastern Cape Long Wttteklip; St Albans and long Distance Taxi Association distance. Norwich Long Distance Taxi Association

Western Suburbs Association New Transport Service Primary Co-operative

2.2

The membership of the aforementioned Primary Co-operatives will consist of the members of the taxi associations as set out in the table above.

2.3

A Secondary Co-operative has been established and has as its members the 5 Primary Co-operatives.

3

Negotiated Contracts

3.1

The Secondary Cooperative will, with its professional skills, negotiate, on behalf of the primary cooperatives with NMBM the terms and conditions of the negotiated contracts, so as to ensure consistency , between Ihe separate contracts.

3.2

The NMBM will, subject to agreement being reached, conclude a Negotiated Contract with each and every Primary Co-operative for the

provision of public transport services in the relevant geographical areas of the primary co-operative 3.3

The Negotiated Contracts will address the details of the public transport service to be provided by the relevant Primary Co-operative (e.g. routes; frequency of services to be provided; schedule; penalties for non-performance etc).

3.4

In terms of the Negotiated Contracts, each of the Primary Cooperatives will be remunerated on a per kilometre basis, rather than on a per passenger basis.

3.5

The Negotiated Contracts wll! remain in force, as contemplated in Section 41(3) of the NLTA. It is the responsibility of the NMBM to ensure the continuance of the services negotiated in this Negotiated Contract, which will be in strict compliance with Section 42 of the NLTA.

4

Transitional period

4.1

A Transitional Period will be required by the Primary and Secondary Co-operatives within which to transform the existing taxi industry and to position it for complete involvement in the IPTS envisaged by the NMBM.

• 4.2

The Transitional Period may comprise the first 3-5 years or less of the Negotiated Contract period.

4.3

An integrated service will however stilt be provided during this Transitional Period (i.e. a scheduled public transport service with ail vehicles carrying the same branding).

4.4

The Forum / the 5 Primary Co-operatives and the Secondary Cooperative have produced detailed summaries of the start-up costs required by each of the Co-operatives. These summaries have been submitted to the NMBM for consideration In line with the requirement for funding, (see annex. A & B)

4.5

It is specifically recorded that in the view of the Forum, no progress can be made on the matters described in this MOU unless and until, as a minimum, the start-up costs of the secondary cooperative are made available.

4.6

The NMBM will, immediately after finalisation of the negotiations on the Start-up Costs contract, and after having satisfied itself that the cooperatives have the required capacity to manage the funds transfer funds to the other parties of the Start-up Costs contract.

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Fleet composition To enable the Primary Cooperatives to render their respective services as envisaged, the members of the taxi associations, as set out in clause 2 above will, where possible, transfer ownership of the said vehicles to the corresponding Primary Cooperatives, If transfer of ownership is not possible, the members will cede the right of use of the said vehicles to the Primary Cooperatives. The members of the taxi associations as set out in clause 2 above currently own about 3 200 taxi vehicles. All of these will be transferred to the relevant primary cooperative eilher by cession or transfer of ownership and will be covered by the government guarantee of 'no loss of profits' described in 9.2 below. During the course of the Transitional Period and thereafter the Primary and/or Secondary Co-operatives will endeavour to transform their fleet so as to grow the Co-operatives and improve operational efficiency and profitability, and to comply with the provisions of the Negotiated Contract. In accordance with the Operational Plan for the IPTS the Primary Cooperatives will be required to provide the relevant number and type of vehicles. The 25 new buses recently procured by the NMBM will initially remain the property of the NMBM, who will make these vehicles available for use by the Primary Co-Operatives following the conclusion of the Negotiated Contract. Detailed relevant legal and other matters pertaining the transfer of ownership of the vehicles to the cooperatives is ongoing between the NMBM and the Secondary Cooperative. The NMBM fully supports the Cooperatives operating the 25 buses during the 2010 FIFA World Cup. It is however recorded that the 2010 FIFA World Cup Operations must comply with: 5.6.1 The Host City Contract 5.6.2 Section 60 and 61 of the NLTA 5.6.3 Section 84 of the Municipal Systems Act The Transport Operational Plan for the 2010 FIFA World Cup must therefore be dealt with separately to this Memorandum of Understanding, as it will not form part of the Negotiated Contract.

Operational plan and business plan for the IPTS A draft Operational Plan {21 December 2009) for the entire IPTS, including the portion to be provided by the Primary Co-operatives has

6.2

The Operational Plan referred to above deals inter alia With travel demand in the area; the route network; modal interchanges; the contract areas; fare management; vehicle fleet; vehicle tracking and control and the like.

6.3

A draft Business Plan will be developed from the Operational Plan referred to above so as to determine inter alia the cost of operating the Primary Co-operatives and io determine the amounl required from Government.

7

Duties and responsibilities of the co-operatives

7.1

Each of the Primary Co-operatives will be responsible for complying with the provisions of the Negotiated Contract envisaged to be concluded between itself and the NMBM (i.e. each co-operative will be responsible for ensuring that it provides its portion of the public transport service required by the NMBM).

7.2

It is envisaged that a GPS / ITS vehicle tracking system will be procured by the NMBM, and will be available for utilisation by each of the Primary Co-operatives for purposes of managing its fleet in accordance with the prescripts of the Negotiated Contract.

7.3

The Primary Co-operatives will also be responsibie for ensuring that the vehicles utilised for purposes of providing the contracted service 3re suitable. The suitability of vehicles for use in the IPTS will be described in the Negotiated Contract.

7.4

The Co-operatives will be required to fulfil the statutory duties and responsibilities applicable to juristic persons in terms of South African Law (e.g. Co-operatives Act; Labour Relations Act; Basic Conditions of Employment Act; Taxi Industry Sectoral Determination etc).

7.5

The Co-operatives will be responsible for paying its suppliers, service providers and employees.

7.6

The Secondary Co-operative will inter alia provide shared services to the 5 Primary Co-operatives.

7.7

The Forum, the Primary Co-operatives and the Secondary Cooperative undertake to comply with the legislation and regulations of ihe Republic of South Africa, including any and all provincial and municipal by-laws, policies and procedures as may be applicable.

8

Role and function of the NMBM

8.1

The NMBM will provide, in a democratic and transparent manner, the infrastructure for the IPTS and, together with the full consultations of all the key transport providers and relevant community interests, be responsible for the overall planning and administration of the system (e.g. routes; frequencies; vehicle specifications etc).

8.2

The NMBM will conclude a Negotiated Contract with each of the 5 Primary Co-operatives referred to above, as well as other public transport operators in the area, such as the Atgoa Bus Company. Such contract shall be in place by 31 July 2010.

8.3

The NMBM will be responsible for the fulfilment of its duties and responsibilities as contained in the Negotiated Contract.

8.4

The NMBM will be responsible for the fare management system of the IPTS, as well as making payment to the Co-operalives, and any other duties as per the Negotiated Contract.

6.5

The NMBM undertakes to comply with the legislation and regulations of the Republic of Soulh Africa, including any and all provincial and municipal by-laws, policies and procedures as may be applicable.

0

Guarantee of no loss of legitimate profits and jobs

9.1

The NMBM will comply with the position of the National Government on profit guarantees and guarantees against job losses, having due regard to all National Legislation and specifically Section 47 (4) of the NLTA.

9.2

The Forum has proposed that government must guarantee Compensation Payments to the owners of the minibus taxis that are ceded to or where ownership is transferred to the Primary Cooperatives. The Forum has with the support of the NMBM proposed an amount of R8, 000 per month per vehicle for the duration of the Negotiated Contract.

9.3

The Nelson Mandela Bay Public Transport Steering Committee will present to the National Department of Transport and the National Treasury their position for Compensation referred to in clause 9,2, together with other relevant motivation of its position on other matters, and wil! require an early opportunity to do so in order to progress the matters contained in this MQU.

9.4

The NMBM undertakes to, within the framework of Governing Legislation, assist and support the Forum to achieve this extremely important objective.

9.5

The NMBM undertakes to ensure (hat any component of the value chain of the IPTS is examined for possibilities of growing the cooperatives

9.6

The NMBM shat! ensure that a! least a minimum of 40% of any tendered work directly related to the IPTS is examined for possibility of participation by the transport cooperatives. No decision on such tenders will be taken without consulting (he Taxi Forum or the secondary cooperative.

10

Commitment

10.1

The parties to [his MOU acknowledge lhal negoliafions and contracts wrth DoT and Nations! Treasury on key transformative issues such as Profit Guarantees and guarantees against iogs of jobs directly affect the viability of the IPTS.

10.2

The parties to this MOU are committed to working togelher, united, to secure, as soon as possible, the co-operation of the relevant national government ministries on all outstanding matters.

10.3

The parties to this MOU acknowledge that this document is a reflection of the work done (o date, as well as a commitment from all parties involved to negotiate the speedy implement of the IPTS.

Thus do™ .nd .ten*. „ the presence of the undersigned witnesses.

Thus done " ) e=»

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and signed at JS?.,t. .^r. .1?.