Reported speech or second conditional?

It's an excerpt from the BBC's article:

"He said he was proposing a one-year transitional period where Egypt would be run by a three-member presidential council as it prepared for elections."

Are the underlined verbs expressed here in the past tense because they are transformed from the ones: 'will be' and 'prepares' uttered in direct speech, or do they form the second conditional type of the sentence? Or, may it be on a sort of cline?

Thanks.