Minister of Public Enterprises Budget Speech & responses by ANC and DA

Minister of Public Enterprises, Ms. Lynne Brown gave her Budget Vote Speech on 26 April 2016.

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Honourable Chairperson,
Honourable Ministers and Deputy Ministers [Deputy Minister Bulelani Magwanishe],
Chairperson of the Portfolio Committee,
Honorable Members,
The Director-General of the Department,
Chairpersons and Board Members of State-Owned Companies,
Chief Executives and Senior Managers of State-Owned Companies,
Distinguished guests who are present here today
Ladies and Gentlemen
 
South Africa continues to experience the effects of a global economic and fiscal crisis since 2008. Despite, being affected by the crisis, the state owned companies within my portfolio have joint assets of around R908 billion and their capital expenditure assisted avert a deeper and protracted global economic crisis and fiscal decline.
 
Our mandate is to ensure that these assets deliver value for all South Africans. Given their strong asset base, State Owned Companies will be in a better position to go into the capital markets on the strength of their balance sheet with the support of the shareholder in order to fund their investment programs.
 
Capital investment through state owned companies have assisted in cushioning the country by playing a critical counter cyclical role in the SA economy. These companies are contributors to job creation, infrastructure development and industrialization.
 
We must maintain the ownership of these State Owned Companies given their size and contribution to our economy.  This will be done with private sector participation.  They are key and strategic assets that we need to keep intact and continue to grow in order to guarantee the future of our children and create viable, sustainable and dependable future employers to reverse the current economic cycle.
 
Active shareholding and participation in our domestic economy is still dominated by race and class.  The majority of our citizens still experience high levels of stubborn household poverty, indebtedness and inequality.  We cannot continue to ignore this reality.  Josef Stieglitz, the Nobel Laureate for Economics tells us in his book, The Great Divide "why we should care about the large increase in inequality".  It is not only a matter of values and morality but also of economics, the nature of our society and our sense of national identity.
 
Going forward, growing our productive sectors and supporting re-industrialisation is critical for moving the economy to a different trajectory. State Owned Companies exist because they are critical to ensure that we accelerate the development of our economy and getting more of our citizens to benefit from the fruits of our democracy.
 
We cannot continue with more of our people being excluded from participating in the economy. The capital programs of SOCs will allow us to deepen localization of strategic industries creating opportunities for enterprise development and critical and scarce skills development.
 
State Owned Companies Reform
We recognize that the achievement of the National Development Plan’s objectives of improving the social and economic condition of the citizens, in part, is dependent on State Owned Companies’ abilities to effectively and efficiently provide the necessary infrastructure and related services.
 
In turn, Government as the shareholder expects that the SOCs will deliver on their mandate and reduce their reliance on the fiscus.
 
There have been strides in exploring an appropriate shareholder model. We have drawn lessons from countries that have similar challenges, but also acknowledge the uniqueness of the South African environment. This is an evolving process and engagements with various stakeholders are ongoing.
 
Powering the South African economy
In the last year, South Africa experienced a serious electricity supply constraint, which resulted in Eskom implementing load shedding. Some of the analysts and prophets of doom had predicted that South Africa was going to experience a complete blackout. I must say, this undermined our efforts to position South Africa as a preferred destination for Foreign Direct Investment.
 
If there is one thing that the energy challenge brought was a mushrooming of energy experts who have now gone undercover since their prophecies have not come true. Some of the debates happened in this house and influenced perceptions which sought to cast doubt on this government.
 
I am comfortable with the progress that Eskom has made in ensuring security of supply through sound maintenance program. I commend the team at Eskom for doing sterling a job of stabilizing the company.
 
For the longest of time South Africans have had their lights on and load shedding has become a distant memory. Eskom has been able to reduce the diesel usage from R800 million to R40 million since October 2015. 
In fact Eskom has been able to build up sufficient capacity to be able to support the region at times.
 
The new build programme has improved the generation capacity and created space for Eskom to do the maintenance of the existing plants. In addition to Medupi Unit 6 that is already providing power to the grid, Eskom has now delivered Ingula units 4 and 3. In the next year, Eskom will deliver the remainder of Ingula. Over the next five years Eskom will spend R340 billion in Capex, ensuring completion of the build and transmission strengthening.
 
With all its challenges, Eskom still connected 190 000 households to the grid in the last year. While having electricity may have become normal for some people, for households that only received electricity only this year, this is a life changing and empowering moment. In the gallery chair I have Mr. & Mrs. Mbebe from Ngoliloe village in Matatiele whose house received electricity for the first time on the 01 March 2016.
 
Municipal debt
I have been having discussions with provinces in an effort to come up with sustainable solutions for municipal debt. These engagements are bearing fruit.
 
I am well aware of the need to keep a downward pressure on Eskom’s costs, particularly coal, to ensure that electricity remains affordable in an increasingly competitive environment.
 
Eskom primarily sources 51% of its coal from four major key suppliers at a cost of R23 billion of Eskom's total cost of coal of R45 billion. Eskom is a 60% off taker of coal in SA and should therefore be in a position to command better prices but contrary to that, Eskom coal costs have been growing above inflation levels.
 
It is important to mention that Eskom has been making the capital investment for the establishment of these cost plus mines. These arrangements are being reviewed to find the most optimal and cost efficient structure for the consumer.
 
I would also like to acknowledge the twenty women from Eskom in the gallery. This afternoon I will be launching a book on the journey of transformation for women in the last twenty years. We have indeed made progress.
 
Strengthening the freight logistics system
Transnet has spent about R124 billion on its Market Demand Strategy in the upgrading and building of rail and port infrastructure, acquisition of new locomotives and wagons for the train system as well as cranes for the port system.   
 
I would also like to put into perspective, the perception of high port costs in South Africa. According to the World Bank Report on doing business and trading across countries, South African port charges contribute a mere 15,6% of total transport chain charges as compared to the international average of 27.7%.
The weak performance of the productive sectors of the economy has had a major impact on the realization of the rail volume growth targets. Transnet has introduced various interventions for customers in mining, steel and container sectors in order to assist to keep them operational and save jobs. Transnet has given price reductions amounting to more than R2 billion in the last calendar year.
 
They have furthermore taken less than inflation price increases in other areas in order to keep businesses afloat and to encourage the Road to Rail migration initiative. Lots of focus went into improving the on time departure and on time arrival of trains to the mining sector, as well as the efficiencies of cargo in transit and port offloading facilities. The company will be exploring alternative markets to reduce its exposure to the mining industry
 
Transnet is making good progress in the implementation of Operation Phakisa initiatives that will create the environment for GDP and job creation through the Oceans Economy. Transnet is in the process of resuscitating the existing ship repair facilities at South African Ports in order to serve the market in a safe and efficient manner. Transnet has committed a minimum of R1.6 billion towards the upgrade of existing ship repair facilities. Branch lines are currently a relatively underutilized part of the country’s transport infrastructure and it is expected that their revitalization could unlock potential both regionally and nationally.
 
South African Express
SA Express has been experiencing financial difficulties, which are also tied to its business and operating model. The general challenges in the global and local airline industry also contribute significantly to the position of the state owned airlines. It is therefore imperative that together with National Treasury, we accelerate on the optimisation of the airlines portfolio.
 
Re-industrialisation of the South African economy
Our growth story will not change if we do not address the challenges that are faced by our productive sectors of the economy, in particular manufacturing. We need to enhance the design and manufacturing capabilities of our South African firms to ensure that they can play part in the global value chains. Transnet Engineering as well as Denel are continuously upgrading their capabilities to be able to compete in the global market. This is important for our new growth story.
 
I am proud to announce that the repositioning of Transnet Engineering to become an Original Equipment Manufacturer is largely on track. The first batch of the passenger coaches engineered and manufactured by Transnet for Botswana Railways were successfully delivered to Gaborone on 22 March 2016. The 22 coaches already delivered were engineered and manufactured to exact specification at Transnet Engineering facilities in Pretoria and Cape Town.
 
Transnet Engineering is also gearing itself for greater growth in the region and is progressing very well in developing the prototype of its African locomotive, which will also strengthen its manufacturing capabilities and develop South Africa as a locomotive manufacturing hub for Africa. 
 
In the gallery today, I would like to acknowledge 10 (ten) engineers from Transnet Engineering Research and Development who were responsible for designing and developing systems for the Africa Locomotives.
 
Denel
Denel continues to advance its capabilities in the defence and aerospace industry. In this regard, the company is working on the development of the Small African Regional Aircraft that will provide air transport solution for the African market. Furthermore, Denel is working towards the mid-life upgrade of the Rooivalk attack helicopter.
 
SAFCOL
SAFCOL has developed a strategy to add further value to its sawlog product through the upgrade to the Timbadola Sawmill in Vhembe District in Limpopo and the setting up of a new sawmill and veneer plant in Sabie, Mpumalanga. The intent is to leverage the investment to create community-based manufacturing enterprises in partnership with the provinces.

ALEXKOR
Alexkor has commenced deep sea mining operations. The venture is expected to more than double current production, which should enable greater economic development impact opportunities for the Namaqualand region. This would include realizing the local rough diamond polishing aspirations of the province.
 
We are also working with the department of Rural Development to strengthen the institutional arrangements between Alexkor and the community of Richtersveld.
 
Africa Development
Our new growth story will be inconclusive if we do not change the growth dynamics in our region. It is very clear that South Africa’s development cannot be separated from development of our neighbors. Our commitment is to ensure that we build the infrastructure that facilitates regional trade and reduce the cost of trade.

In the current financial year will have identified priority markets that will pursued, these are: (i) Tanzania, Kenya and Burundi for Transnet, (ii) DRC, Mozambique and Uganda for Eskom, (iii) Egypt for Denel, and (iv) Ghana for SA Express.
With the electrification capabilities built over the last 20 years, South Africa though Eskom and other South African companies can export these skills to the SADC region and the continent to support regional integration and development.

Provincial Engagement
Advancing the role played by the SOCs in the advancement of the South African economy will require increased cooperation between the Department and other spheres of government. In this regard, the Department has designed a programme that will enhance the cooperation between the SOCs and other spheres of government.

Conclusion  
I must commit to all South Africans that the changes we are implementing in the portfolio of the State Owned Companies will not lead to the erosion of capacity of the State to intervene in the economy. We want to see State companies being stronger to support the implementation of our economic policies and deliver on South Africa’s new growth story. 
 
I would like to thank the Deputy Minister, Director General, Portfolio Committee Members, Chairpersons and Chief Executive Officers for their continued support and counsel.
 
Chairperson I hereby table Budget Vote number nine of the Department of Public Enterprises.
Thank you
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Budget Vote Debate by Deputy Minister Bulelani Gratitude Magwanishe

Honourable Chairperson
Honourable Ministers and Deputy Ministers
Honourable Members
Director General of the Department
Leadership of our SOC
DPE colleagues
Distinguished guests
Ladies and Gentlemen

This year marks the 40th Anniversary of the Soweto uprising.

The blood of the young shed on that fateful day paved the way for the course of future generations.

From that generation, Solomon Mahlangu implored us through these words:

“My blood will nourish the tree that will bear the fruits of freedom…

“…Tell my people that I love them. They must continue the fight…"

Today, through the platform created by the SOC, under the ANC led government it is not blood nor death but innovation that young people are exposed to.

Today same age as Solomon Mahlangu was when he was hanged,

A group of 5 interns at Denel developed a Tactical Observation Ball System that can be used by soldiers for surveillance without putting their lives in danger.

Young people at Denel are at the forefront of making South Africa to rise from her ashes.

Lindokuhle Mpanza (30) and Anish Punnen (32) are software engineers at Denel Aviation, who developed

 a computerised Oryx Mission Planning System, that is used by the South African Air Force pilots on the Denel-manufactured Oryx aircraft to plan their missions and share information across locations.

Selaelo Mojela (31) and Isak Sokuwe (34) developed a Robot to Detect Landmines which minimises the risk on human lives.

It is easily monitored through its on-board camera and has a wireless route that sends information back.

Our young people are giving meaning to the hope of Solomon Mahlangu through innovation.

SARA Project

In 2015, Denel invested R467 million in research and development, for developing a new Small African Regional Aircraft called SARA.

SARA will serve regional destinations that are currently not accessible for existing passenger planes.

Preshni Govender (30), Puseletso Matlala (28), and Naadira Hassim (26) are three of our young female engineers involved in the project.

The Design Institute

We are aware that some of the great innovators do not reach post matric institutions. Transnet working with the SABS want to unearth that talent at secondary schools.

They have conceptualized a design and innovation skills development programme based on the SABS Design Institute.

The intention is to have mini design institutes in the rural provinces of our country such that anyone, especially young people, with a product idea are able to walk into the centre and emerge with a blue print, including a patent of the concept, and start commercially exploiting the idea.

Already with the design institute in Pretoria they have discovered a 16 year old, Vuyo Klaas from Monwabisi High School in De Aar, Northern Cape an asthmatic learner who was assisted to design a Master Duster that is currently at prototype stage. This duster is able to recycle the choke as it dusts.

If this product succeeds it can be a game changer in Africa, whose schools still use a blackboard and a choke.

Matlalane Ramashiane from Club view Secondary School in Phutaditjhaba, Free State who is in Grade 10 designed a concentration arm-band, it detects concentration levels of people. This also at a prototype stage.

Through the design institute we envisage building of new industries that will help to fight unemployment and grow the economy.

Chairperson, our SOC were given a target of producing 11958 technical trainees by the skills accord.

Eskom, Transnet and Denel enrolled and qualified 13405

Exceeding the target, the skills were as follows,

5 300 artisans,

3 876 technicians,

1 599 engineers

Safcol has been able to produce 65 foresters.

100 pilots were enrolled and qualified by South African Express.

Transnet and Eskom were able to employ a total 8 170 of the qualifying technical graduates.

Beyond these numbers, Transnet, in support of Operation Phakisa’s Oceans Economy has opened maritime schools in KwaZulu-Natal and in the Eastern Cape.

Moving forward, Transnet will be spending R34m in the next two years to produce 415 artisans and engineers in marine related occupations.

Eskom is planning on training (100) nuclear plant operators over the next 5 years.

Safcol has appointed the first black female plantation manager in the country, Ms Nondumiso Kheswa.

Our SOC have continued to support TVET colleges through various partnership agreements, focusing mainly on learner and lecturer support, donation of machinery and equipment, curriculum support as well as participation in TVET College Councils.

During the 2015/16 Financial Year, this support has been extended to Technical High Schools, which are feeder schools to both the TVET colleges and the State Owned Companies themselves.

Denel has provided support to 4 colleges in Gauteng to the value of R523 195 covering bursaries for engineering students, and experiential learning.

Alexkor supported 14 colleges in both Northern and Western Cape to the value of R515 611 over the past financial year.

Over the past three years, Eskom has donated machinery and equipment to support Electrical workshops to 8 TVET colleges in 8 provinces. Transnet is also doing the same.

To those who said what is the use of teaching a Bantu child maths and science where is he or she going to use it?

Through the SOC under the ANC led government they are using it.

Chairperson please allow me to acknowledge a remarkable South African whom we met during our career expo to Enhlanzeni Municipality, Mr Mpapane and Mrs Mpapane.

He is a maths teacher who has produced distinctions for the past 18 years.

He is a teacher at Nkomazi High school. He has produced no less than 10 doctors, 15 engineers and many other professionals.

We are proud of your contribution Sir.  

Eskom has devised Contractor Academy as a tool to equip emerging contractors and suppliers, especially black women and youth-owned companies, with the relevant competencies to sustain and grow their businesses.

Over the last three years, 518 contractors were trained from all nine provinces. This benefited both woman and youth contractors.

These SOC investment programmes are executed in provinces with a view to aligning with provincial programmes.

We are working with the Gauteng Provincial Government in realising the implementation of the Tshepo 500 000 over the next 5 years (2014-2019) through a set of identified projects.

On CSI our SOC have been exemplary,

Eskom is committed to developing a strong base of educated and skilled young South Africans in the fields Science, Technology, Engineering, Mathematics and Innovation for learners in grade 6-12 through its Young Scientists Expo.

In 2015, the Expo saw 12,244 learners participating from all nine provinces.

This is the programme that discovered the Umthatha born Mr Siya Xuza.

Today he represents a few of our own to have graduated from Harvard University and to have a planet named after him because of his excellent contribution to the development of renewable energy. We are working on this expo being feeder to the design institute.

Through this process we are creating new horizons for young engineers and artisans who are entering the industry.

SAFCOL brought hope to the people of Nongoma, They built a day care center, a primary school, a community hall and boreholes for both the school and the community.

All our SOC have been responsible corporate citizens.

Last year we spoke of our commitment to contribute to the transformation of the legal fraternity.

The DPE has developed and is implementing a Transformation Framework and Guidelines intending to unlock opportunities for black lawyers and black law firms for meaningful economic empowerment.

The Director General will be monitoring the process through Group CE.

As the department we have briefed black attorneys and advocates in more than 90% of our matters.

The DPE has a programme of assisting their legal interns post their internship period.

The programme entails assisting them with registration into the Practical Legal Training School. We also assist them to find firms to serve their articles of clerkship.

Ms Hlamarisa Ndaba from the Eastern Cape is here with us today, she is currently running her own law firm in Gauteng, she is one of the beneficiaries of the program

We continue to foster collaboration between the public and the private sector.

This is evidenced by the support both the private and public sector companies had on Mamellong Technical high school in Tsakane in the Ekurhuleni Metro.

Through this initiative, three of the school’s workshops are being equipped with machinery and equipment of by Hamisa Group, an Engineering & Mining company. It is one of the suppliers of Transnet.

Ms Bongile Tsotetsi the MD of the Hamisa Group, is here with us today.  We thank you and your company for the partnership.

We believe that through the creation of new industries, the

South African economic landscape is bound to change.

Our SOC have been at the forefront of supporting the programme of industrialisation.

Cde Solomon, we are continuing with the fight. Cde Hector we are continuing with the fight, to all our fallen heroes and heroines we are continuing with the fight.

We ask you to support this budget vote.

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Responses 

The ‘Guptarisation’ of Public Enterprises: Natasha Mazzone (DA) Shadow Minister of Public Enterprises

 

The Department of Public Enterprises was originally established as a catalyst for privatisation or semi privatisation of our State Owned Entities, and this very fact was explained in detail by Minister Brown in response to a question I asked her in portfolio committee.  What we have seen however is a complete change in policy and ideology from the ruling party and the very mention of the word privatisation is viewed as a swear word.  What is disturbing is that in fact we ARE seeing a form of privatisation of our SOE’s, it’s just that it is being done is a underhanded and reprehensible fashion by allowing a certain family with the surname Gupta to take control and gain tenders and contracts in all our major SOE’s.

The politicisation of state entities by deployment of cadres has become a growing trend that afflicts our State-Owned Entities (SOE) which only further serves to compound the financial pressures experienced by these sectors for self-interest.

There is growing evidence to suggest that a number of state owned entities (SOEs) have been captured by the Guptas, with the family allegedly influencing not only ministerial appointments, but also appointments within SOEs themselves.

In light of the mounting allegations of influence and interference by the family I have requested that the Portfolio Committee on Public Enterprises summon the Gupta’s according the rules of Parliament so that a process of enquiry can begin into the capture of SOEs by the Guptas.

Media reports indicated that former Chairperson of Eskom, Zola Tsotsi’s, forced resignation was allegedly orchestrated by the Guptas as a result of him “not playing the game.” This was after Tsotsi informed the Guptas that he could not grant them exclusivity over certain Eskom contracts.

The allegations by Tsotsi follow a number of similar accusations that have come to light for example:

• The claim by former Minister of Public Enterprises, Barbara Hogan, that she was placed under immense pressure to meet with Gupta-linked Indian airline Jet Airways, the airline responsible for landing the Gupta’s wedding guests at Waterkloof air force base in Pretoria.
• Hogan was replaced by Malusi Gigaba, who is known to have attended the Gupta wedding in 2013 and my colleague Hanif Hoosen has also revealed very worrying trends with Minister Gigaba and the Gupta’s in Home Affairs
• Hogan’s claim was in support of the allegations by former senior ANC MP, Vytjie Mentor, that she had been offered the position of Minister of Public Enterprises on the condition that she drop the SAA route to India and give it to Jet Airways instead.
• The allegations by former SAA Chairperson, Vuyisile Kona, that he was offered R500,000 by the Gupta family in 2012 to secure his co-operation with them.
• Eskom CEO, Brian Molefe, is also linked the Gupta family and has admitted to visiting them at Saxonwold. Gupta-owned Tegeta Exploration, recently secured lucrative contracts to supply coal to Eskom power stations.

These allegations necessitate an urgent investigation into the Guptas’ links to SOEs by the portfolio committee. The committee must:

• Immediately summon the Guptas to appear before it to answer to these allegations as per my letter to the Committee Chairperson in this regard.
• Call former Ministers of Public Enterprises, Barbara Hogan and Malusi Gigaba, to provide full details of their relationship with the Gupta family. Gigaba in particular must account for allegations of preferential treatment of the Guptas for state contracts during his tenure.
• Summon the CEOs and Chairpersons of the largest SOEs to appear before it to answer questions about their ties to the Guptas.

We cannot afford to have a private family enriching themselves from lucrative state contracts, while these entities are costing the public billions.

The ANC must take a stand against the Guptas and President Zuma to ensure that corruption on the highest level is eradicated in the interest of building an inclusive economy that benefits all South Africans – not just the connected few.

It is imperative to uncover what the full extent of the Gupta family’s influence over state-owned companies truly is. This is with a view to fully restoring the credibility and efficacy of our nation’s entities. Parliament is duty-bound to hold government accountable, as well as ensuring another cabal of ANC cronies with links to President Zuma and the Gupta family do not seize our economy.

Whilst the DA welcomes President Zuma’s recent utterances to implement the recommendations of the Presidential Review Commission (PRC) on the privatisation of State-owned Enterprises (SOE), we cannot allow any more delays in its implementation, especially when considering that it has been 3 years since the PRC report has been released. If President Zuma is serious about the privatization of SOE’s, he must announce a deadline for this process to be completed, otherwise this is another stalling tactic to subvert any real change. To this end the DA urges President Zuma to ensure that the privatisation of SOE’s is systematically implemented without delay, beginning with SOE’s that are financially malfeasant and guzzle billions of rands every year.

Denel has gone from the “wunderkind” of public enterprises to the delinquent child. The non-adherence to the law that Denel is reported to be showing is both unacceptable and demonstrates a complete disregard for process, regulation and good governance.  The situation has become so untenable that the portfolio committee of Public Enterprises has summonsed Denel to appear and explain the now infamous VR Laser deal on the 4th of May 2016.

This deal has allegedly not been approved by Minister Brown or the Minister of Finance, Pravin Gordhan, as is required by the PFMA, with the application still being reviewed and processed. The Gupta involvement was not mentioned at the announcement and the venture was concluded in the absence of Denel’s permanent Chief Executive, Chief Financial Officer and company secretary, all three of whom are on suspension. There is a strong suspicion that they were removed to clear the path for this deal. The Denel board appear to have acted outside their authority by announcing this deal prior to approval. Denel has been generating a profit over the last few years and should be stable and efficient enough to proceed with this venture without the help of short-term profit seekers.

The announcement by the African Development Bank (AfDB) of a settlement being reached with Hitachi over allegations of corruption in the awarding of the Medupi contracts by Eskom is further evidence of large-scale corruption in the tender process, no doubt involving the ANC and its investment wing, Chancellor House.

While the AfDB did not provide details of the allegations, it found that Hitachi “engaged in sanctionable practices in order to be awarded the boiler works contract.”

This follows a similar agreement in September by Hitachi to pay $19 million to settle charges brought against it by the U.S. Securities and Exchange Commission (SEC), which alleged that Hitachi had paid what it called “success fees” to the ANC’s Chancellor House for its “exertion of influence” during the Eskom tender process.

The ANC’s Chancellor House allied with Hitachi in 2005 in a deal that saw the company purchase a 25% stake in Hitachi for only R1 million. Under the agreement, Chancellor House – and by extension the ANC – would share in the profits from contracts awarded to Hitachi.

Subsequent to concluding this deal, Hitachi was awarded a R38.5 billion contract by Eskom in 2007 to construct boilers at Medupi.

In conclusion chairperson, I have absolutely no doubt that Minister Brown or her ANC sweep is going to spin some story about me being negative or try and spin the obvious state capture being allowed by President Zuma and blindly followed by the ANC…I expect nothing less from a Minister who showed such disdain for the Constitution that she voted against impeaching President Zuma. Shame, shame and more shame on you Minister Brown.

The DA will not allow the ANC to prosper at the expense of ordinary South Africans. As long as the ANC continues to put itself first, our nation will come second.

Speech by Hon Girly Namhla Nobanda during the Budget Vote on Public Enteprise (ANC)

Honourable Chairperson
Honourable Minister and Deputy Minister
Honourable Members
CEO's and Management of our State Owned Entities
Our Distinguished Guests/ Ladies and Gentlemen

Ke le dumedisa mo leineng le lentle la African National Congress!!

Ko tshimologong e re kere re le seboka sa African National Congress re atlenegisa le go ema nokeng tekanyetso kabo ya bo robongwe ya lefapha la Dikgwebo tsa Setshaba.

Modulasetilo ntetle go tsena ka gangwe mo go se re se tletseng fa.

The Department of Public Enterprises and State Owned Companies under its portfolio play a critical role in the quality of life of our people. Although South Africa, along with the rest of the world experienced economic meltdown since 2008, the SOCs within the portfolio of the Department of Public Enterprises with just under R1 trillion has assisted us to avert a deeper and protracted economic decline that would have been the case without them. The investments of these SOCs contributing almost a third of the economic growth, which assisted in cushioning the country from the economic downturn.

The house should be pleased of the progress that the Department of Public Enterprises has made in turning around the SOCs in its portfolio. We have had the annual reports of the SOCs tabled in the Portfolio committee and across the board the SOCs have presented impressive turn around in their finances.

Mong wa thipa re ja nae, re lebala mmesi!

Chairperson let me give a summary of the performance of the SOCs as per the 2014/15 annual reports:

ESKOM

Eskom has been able to resolve its energy challenges. Even when challenges arose in meeting the demand, the SOC kept its eye on the ball and kept South Africa connected and working.
In the distribution space, Eskom has ensured millions of our people who were neglected by the apartheid system have access to reliable and efficient electrical energy for their everyday needs. The effort continues with a further 335 000 connections planned at a cost of R5 billion in the medium term.

The stability of the grid was achieved proactive intervention by amongst others, the Department of Public Enterprises and Eskom, in implementing Cabinet approved 5-Point Energy Plan. Eskom as the biggest electricity utility company in the continent has not only stabilised the grid such that we can today confine load shedding, the word which not so long ago was on the tips of the tongue of South Africans.

Despite difficulties the SOC has been able to see an improvement in its finances with the revenues for 2014/15 reaching R145 billion and maintained its profitability, 160 000 households were connected by the utility, and the same rate of connections is expected to be maintained in the 2015/16 financial year. Chair, the power build programme is creating job opportunities for our people to work and learn. At Kusile 18 000 direct jobs have been created, and 3 500 technical trainees produced. The Project is on track to connect its first generation unit by November 2017.

On 26 May 2015 Medupi Unit 6 achieved full load of 800MW. At peak, 18 000 direct jobs were created and 2 500 technical trainees produced. The project has released R66 billion into the national economy through a proactive localisation and industrialisation programme informed by the DPE Competitive Supplier Development Programme (CSDP).

Some of the notable projects commissioned:

1. Commissioning of a 350km transmission in East London and Harding and Vuyani Substation in Umtata, as part of the R1.8 billion Greater East London project. The project will enable further electrification of the rural households in the former Transkei area.
2. Commissioning of the R1.6 billion, 428km Mercury-Mookodi-Ferrum transmission line, which connects Mercury Substation near Orkney, North-West to Ferrum Substation in Khathu, Northern Cape. The project will enable support of further energy intensive projects in Sishen area.

Eskom has not been left behind in the renewable power space with Sere Wind Farm reaching full commercial operation on 31 March 2015 and it continues to provide an additional 100 MW to the grid. 564 jobs were created during the construction phase with the majority of these jobs going to communities surrounding Koekenaap in Western Cape. Phuduhudu e thamo telele e betswa ke molamu o sa o lebagana!!

NATIONAL SKILLS AGENDA

Modulasetilo, The DPE and its SOCs are committed to ensuring that the infrastructure development programmes are leveraged to improve the national skills base. In this regard various skills development programmes have been conceived and are encapsulated in the National Skills Development Strategy and National Skills Accord, which are aligned to the New Growth Path and National Development Plan.

The DPE, Department of Higher Education and Training (DHET), the Economic Development Department (EDD) and the Department of Trade and Industries (DTI) are partners in the strategy and accord.

The SOC training facilities shall be exploited to increase training of technical skills in order to address the national critical skills gap. This will be informed by the following commitments:

1. Expansion of the intake of existing training facilities;
2. Creation of internship and placement opportunities within operations of the SOC;
3. Optimise existing funding and incentives to encourage increased intake;
4. Investment in the FET Colleges to improve the quality of training;

Since the signing of the National Skills Accord in 2011, DPE SOCs have over the past five years, collectively committed to enrol 11 958 trainees in various scarce and critical skills development interventions.

TRANSNET

Despite the tough operating environment that has had major impact on mining and other productive sectors of the economy, Transnet has continued to implement the Market Demand Strategy (MDS).

In this regard, Transnet has implemented its capacity expansion programme as well as ensuring that there are productivity improvements, particularly, at the sea ports to support the overall competitiveness of the South African economy.

Although Transnet had to delay some of its infrastructure expansion programme, it continues to maintain the high capital expenditure programme.

Some of the notable investments worth mentioning are:

1. General Freight Business Rolling Stock Renewal. As at September 2015, 60 Class-43 Diesels Locomotives have been delivered and put into operations. And all 95 Class-20E Electric Locomotives were delivered and put into operation.
2. In the R50 billion 1 064 Locomotives programme - with China South Rail (CSR), China North Rail (CNR), Bombadier Transport and General Electric - 153 locomotives are to be delivered in the 2015/16 financial year. The deliveries will be completed in the 2018 financial year.
3. During 2015/16 financial year Transnet commenced expansion of the Manganese Export Line 7 million tonnes per annum to 16 million tonnes per annum. The project is expected to be completed by the 2022 financial year at a cost of R26.6 billion.
4. The Coal Export Line expansion programme from 77 million tonnes per annum to 81 million tonnes per annum has commenced with finalisation of the plans and commencement of procurement. The project is expected to be completed by 2019.
5. Phase 1 of The Waterberg coal line upgrade has been completed and has created capacity of 2 million tonnes per annum. The construction work on Phase 2, which will add an additional 4 million tonnes per annum, started in the second quarter of 2015/16 financial year and will be completed by March 2016.
6. The upgrade of our ports in support of Operation Phakisa Oceans Economy is receiving priority at Transnet. Transnet National Ports Authority has allocated R2 billion over 5 years to invest in the refurbishment of the existing repair facilities, including cranes and other equipment utilised at these facilities. Over R14 billion (with partners) to develop oil and gas repair and supply base facilities at the Port of Saldanha Bay, R900 million to develop ship repair facilities at Richards Bay and R515 million to develop boat building facilities at East London.

A total of 177 construction related jobs have been created through these mentioned initiatives in the last 12 months at the various ports.

These are just some of the investments chair, Asimanga siyaqhuba!!

ALEXKOR

Alexkor increased its revenues by 49% in 2014/15 from 2013/14 from R141.3 million in 2014 to R211.2 million in 2015. The improvement in revenue performance was due to 59% increase in the carats produced to 74 387 carats.

The comprehensive income of the SOC, even with the R162 million impairment due to properties that it had to handover to Richtersveld communities as part of the land restitution, was R71.4 million, which is a 44% increase from the 2013/14.

The recommencement of land mining operations at Muisvlak has meant that 208 job opportunities have been created for the communities of Richtersveld. This took the total number of employees at Alexkor to 1 000, when the contractors employees are factored in.

In the sparsely populated region where Alexkor operates, these number are indeed a big deal and it means that there is a lot of families that can have a better life because of the SOC.

SAFCOL

Safcol revenues increased to R898 million in the 2014/15 with the profits reaching R200 million. The business is sustainable and not a drag on the state. 5 000 people are employed at the business on permanent and seasonal contracts, which means that the business in the rural provinces of Limpopo, Kwazulu-Natal and Mpumalanga has a significant economic impact.

The saw log produced by the SOC is well regarded internationally, with few international forestry companies producing clear thirty years old saw log.

SOUTH AFRICAN EXPRESS

SA Express has had challenges but through the austerity measures that it has committed to it is aiming to turn the corner and play the role of linking secondary air travel destinations in the country and regionally to the major hubs, enabling economic activity. The austerity measures aim to address certain cost items and enable the business to concentrate on core business.

The business has realised major cost savings through flight schedule and route network optimisation, revision of contracts and insourcing. The airline has been able to reduce costs significantly and the strides made in this regard are beginning to be show. SA Express has moved from a R132 million net loss in the 2014/15 financial to a net profit of R2 million as at end of February 2016.

The turnaround at SAX shows that the DPE has developed appropriate tools to return entities to profitability where when they find themselves troubled. This expertise should be made available to the rest of the SOCs in the state portfolio.

DENEL

Denel has become a giant on the world stage being rated amongst the Top 100 defence companies in the world, and the defence company on our continent with the capability to design, develop and manufacture advanced weapons systems. The reputation has been matched by the financial performance.

Revenues for the year increased by 28% to R5.8 billion with the export sales accounting for R3 billion of these revenues. The business kept its expenses under control to almost double its profits to R270 million.

The future of the business was also guaranteed by R470 million in research and development. This means that the business will keep up with the pace of technology and keep its products up to date.

Denel continues to implement projects that support the development of advanced industrial capabilities and has become a global player in defence and aerospace industry. Through vigorous pursue of export orders, which stand at over 50% of revenues, critical defence and aerospace capabilities in this country which otherwise would have been lost due to constrained local defence spend, are being maintained and modernised.

Ga ke konosetsa modulasetilo, the enormous contribution by the DPE SOCs to our economy cannot be over emphasised and their commitment towards transforming the landscape of the South African economy despite the current financial challenges must be commended. We commend the department on the results obtained by its SOCs.

Go lefapha le sechaba, ra re: "O se bone thola borethe teng ga yone gwa baba." Le sa ba bona ba bua monate, mme fela boteng jwa bone go tletse bosemorafe, tlhaolele, lenyatso, makgakga, boitimokanyi le tsotlhe tsa go tsietsa sechaba, a re ba tlhokomeleng gonne sa bone ke go re rekisa le go rekisa kgololosego e re e fitlheletseng.

Ke a leboga!!

Speech BU Hon Zukiswa Rantho during the Budget Vote on Public Enteprise (ANC)

Chairperson
Hon. Minister Lynn Brown
Hon.Deputy Minister Bulelani Magwanishe
Ministers And Deputy Ministers
Members Of Parliament
Chaiperson And Board Members
Officials From The Department And The Entities
Guest In The Gallery
Ladies And Gentlemen

Good morning

Chairperson

It is very interesting how 22 years of our democratic governance has led to some honorable members and their constituencies developing incredible amnesia regarding the abject state our country and government were in when the African National Congress came into power in 1994 What is this mysterious sickness that has wiped out their memories

The amnesia that I have referred to has led these members to absolutely forget what the socio-economic conditions were like before ,the chasm that existed before between black and white citizens of this country Instead of them helping in uplifting the the lives of poor particularly black people they invest their energy in distracting us from the task ahead of us. We will never move away from what we stand for no matter what. Our vision is clear and our mission is focused !!! We need to remind these honorable members that the African National Congress has a mission of changing the lives of our people and we will not rest until that is done Our commitments still stands and we are the only organization that put people's at the centre that is why even in our selection of ward candidates we don't impose candidates we let the people nominate their candidates Honorable detractors can you please line behind us and help moving South Africa forward. To South Africans it is this movement that brought this democracy It is us that opened the way to right of speech today these people are abusing that platform for their own interest.

Their main interest is to go back to the olden days of dictatorship when addressing the challenges of our country. The seminal manifest of the African National Congress in 1994 the Reconstruction and Development Program articulated the service delivery challenges facing our country I want to quote extensively from the document to illustrate the gravity of the situation that faced this country then: "Our history has been a bitter one dominated by colonialism, racism ,apartheid, sexism, and repressive labour practice The result is that poverty and degradation exist side by side with modern cities and a developed mining, industrial and commercial infrastructure Our income distribution is racially distorted and ranks as one of the most unequal in the world . Women are still subjected to innumerable forms of discrimination and bias, rural people and youth are marginalized A combination of lavish wealth and abject poverty characterizes our society The economy was built on systemically racial division in every sphere Rural areas were divided into underdeveloped Bantustans and well developed white owned commercial farming areas, towns and cities are divided into townships without basic infrastructure for blacks and well resources suburbs of white only Segregation in Education Health welfare transport and employment left deep scars of inequality and economic inefficiency Violence have a devastating effect on our society and the need to restore peace and a sense of community security is paramount.

In commerce and industry very large conglomerates dominated by white control large parts of the economy. Cheap labour policies and employment segregation have concentrated skills in white hands Workers are poorly equipped for the rapid changes taking place in the world economy. The result is that in every sheer of our society -economic,social,legal,moral,cultural,and environmental South Africans are confronted by serious problems ". THIS WAS JUST TO REMIND YOU WHERE WE COMING FROM AS THIS GOVERNMENT. We dint use anger in building this country but policies that focused on people only We had the right of being angry but we knew it's not going to take us anywhere Yes! The country was bankrupt running at a balance of external debt over 20 billion USD. Therefore before starting to address poverty inequality and joblessness that beset black we had to pay the external debt to international banks and multilateral institutions that had been complicit in funding the apartheid system

Let me remind you again on the under development level experienced by black people as illustrated by household survey in October 1995

Proportion of household in formal brick structures :

# White : 99%
# Indian : 99%
# Coloured : 91%
# Blacks 61%

Proportion of household that access to electricity were

# white : 99%
# Indian : 99%
# Coloured : 91%
# Blacks : 61%

Proportion of households that access to running water tap

# whites :99%
# Indians : 99%
# Coloured :72%
# Blacks :32%

Proportion of household access to sanitation

# whites : 98%
# Indians :96%
# Coloureds :64%
# Blacks : 61%

Proportion of households with telephone connection

# white : 84%
# Indians : 74%
# Coloureds : 37%
# Blacks : 13%

This picture above shows exactly what President Thabonyana Mbeki said in 1998 during a budget vote of the office of the deputy president at the time That South Africa is a country of two nations and I quote " We therefore can boldly say South Africa is a country of two nations One of these nation is white relatively prosperous regardless of gender or geographic dispersal. It has ready access to developed economy physical educational communication and other infrastructure. The second and larger nation of South Africa is black and poor with the worst affected being women in the rural areas ,the black rural in general and the disabled This nation lived under grossly underdeveloped economic,physical,educational,communication and other infrastructure"

President Mbeki was castigated by the media at the time for what he said He was piercing the veil that had been put over all of us that we now the rainbow nation.

We were not to talk about the pass and let bygones be bygones and not visit the wrongs that have been visited by our people. We can't stop talking of what happened because we are still living and we are part of that past There is still a lot of people especially black that needs to be address and there should be freedom dividend that our people has to realize in order to match and exceed the apartheid dividend that has accrued to the white people in this country
The State Owned Companies have been put at the forefront of this eradication of underdevelopment Eskom has ensured that electricity access is extended to our people including those household that are in a stone throw from the power station but could not access electricity above all employed by these stations but due to the colour of their skin were not worthy of having their households connected. Eskom is now in good hands I say so because last here there was a big crying when there was load shedding everybody worried about the economy falling down. Now load shedding is a thing of the past no one is shouting I stood at this podium last year and I said load shedding is not a crisis but a way of managing electricity generation. My head was almost chopped off because it was a black woman who knows nothing that was saying that today I can assure you South Africans that this government is hands -on in everything that affects the lives of our people. We are aware that there are people who are trying to destroy all our gains and endeavors we are making for our people We are also not surprise that these state owned companies are attacked daily by the profits of doom It is because they are bringing change in the lives of our people and are re directing the landscape of economy in our country and challenging the monopolistic arrangement of white minority capital
The department of Public Enterprise had its fair challenges as the SOC's were bloated and inefficient. These entities were had been used to ensure that the white folk were guaranteed comfortable employment now that we are taking over and the black youth seem to be doing so well this doesn't auger well too those people who used to loot.
The African National Congress had to make some difficult changes in repairing damages and fixing these companies sometimes tapping on grounds that are known to be holly
Chairperson
The state through DPE and its state owned companies have delivered in the path towards uplifting the lives of our people and so has many othe SOC's that are tasked to do so In order to paint the picture of the progress that has been achieved by the ANC led government I. Want to cite figures In the 2015 survey of Sats SA tells us 79,4% households live in brick structures nationally The proportion of house hold with electricity access is at 91% Eskom has electrified 4million households since 1991. Zange yenzeka ke le nakweliphi ilizwe Kuba sikhokhelwa ngumbutho wabantu okhathalele bonke abantu ungajonganga sini nambala. Siyaqhuba!! Asinamona !!!
In conclusion Chair I want quote the words of a wise men President Rholihlahla Mandela after the victory of the elections in 1994 I quote
"TOMORROW THE ENTIRE LEADERSHIP AND I WILL BE BACK AT OUR DESKS. WE ARE ROLLING OUR SLEEVES TO BEGIN TACKLING THE PROBLEMS OUR COUNTRY IS FACING. WE ASK YOU ALL TO JOIN US -GO BACK TO YOUR JOBS IN THE MORNING. LETS GET SOUTH AFRICA WORKING FOR WE MUST TOGETHER AND WITHOUT DELAY BEGIN TO BUILD A BETTER LIFE FOR ALL SOUTH AFRICANS . THIS MEANS CREATING JOBS BUILDING HOUSES PROVIDING EDUCATION AND BRINGING PEACE AND SECURITY FOR ALL"
The ANC has been taking heed of President Mandela after every elections and we shall be doing so again on the 04/08/2016 when our comprehensive and decisive victory in the local government elections is announced I urge the opposition and the regressive sectors of our country to leave their negative efforts and join us in making South Africa a great country The committee supports this budget vote whole heartedly

I Thank You