Public Enterprises Portfolio Committee's Strategic Planning Workshop: deliberation on issues raised

Meeting report

Committee’s Strategic Planning Workshop: Discussion on issues raised 
The Chairperson tabled a document tabling the Committee’s resolutions and points raised during the Strategic Planning Workshop, setting out certain points that would need to be incorporated into the Committee’s strategic plan, based on the presentations that had been made by National Treasury, Department of Trade and Industry and the discussions of Members. The findings of the Parliamentary Research Unit had also prioritised some of the international and African countries that the Committee would find it beneficial to visit to develop knowledge and share skills with regards to State Owned Enterprises (SOEs).

The Chairperson said that she would like to deal with the resolutions in turn, to give some structure to the meeting.

The Chairperson firstly raised the recommendation that the Boards of the State Owned Enterprises (SOEs) should be invited to Parliament. The Committee, according to the Rules of Parliament, had every right to call upon them to attend, and should do so via the relevant Minister. Therefore she suggested that a letter be sent to the Minister of Public Enterprises to request their participation. In addition to the sitting Members of the Board attending, the Committee should enquire into any Board vacancies, including when the vacancies would be filled, whether the equity targets would be met, and whether there was a sufficient level of expertise in Board members. She also felt that it was important that the Committee be made aware by the Minister of the expiry dates of each Board’s term of office, and that the Committee should become involved in selection of Board members.

Mr P Van Dalen (DA) and Mr S van Dyk (DA) expressed their agreement.

Ms Masilo also suggested that the “Acting” appointments should be investigated, to ensure that they did not lead to poor performance.

The Chairperson said that this did not seem, from the research she had done, to be a particular problem in the Department of Public Enterprises (DPE).

Dr G Koornhof (ANC) agreed that some Boards were failing, and must be held accountable. He suggested that the costs of bringing the whole Board to Parliament should be considered, and perhaps only those people who could best respond to the Committee’s questions should instead be identified to attend the meeting.

The Chairperson agreed that it should only be a select number of Board members, except in cases where there were problems, such as had arisen at the South African Broadcasting Corporation.

Mr Van Dalen suggested that in those cases, the Committee could travel to meet the Board.

The Chairperson concluded that the Committee should be flexible about the venue of these meetings.

She then moved to the next issue, being the possible strike of Eskom workers. She noted that because Eskom was an essential service provider, the workers at Eskom were not, constitutionally, allowed to strike. The main issue amongst the workers was their housing allowance and wage negotiations. She said that the Chief Executive Officer of Eskom said that these matters were being dealt with at the Commission for Conciliation, Mediation and Arbitration (CCMA), and an agreement had nearly been reached. However, because of the serious likelihood of a strike, it was imperative that the Committee monitor the situation and ensure that the CEO of Eskom had a plan should the strike take place.

The Chairperson noted the next issue, which concerned whether the performance agreement of Accounting Officers should be included in the Strategic Plan.
 
Mr van Dalen said that the performance evaluation must happen, and should therefore be included in the plan.


The Chairperson then moved to the issue of risk management. She thought it important to assess what policies and measures were in place in each SOE, and asked for comment from Members.

Mr van Dalen responded that it definitely must be included in the strategic plan. He gave the example of security companies using temporary staff who were not performing according to set standards.

The Chairperson noted his concern, and said that the Committee would discuss this issue in more detail.

The next issue concerned whether the SOEs were fulfilling their mandates, and whether they should be subject to performance evaluation as part of the Strategic Plan.
 
Mr van Dalen agreed that they should.

Ms J Masilo (ANC) asked what format this evaluation would take.

The Chairperson suggested that the Committee should use each SOE’s own mandate and Strategic Plan as a performance evaluation tool.
 
Dr Koornhof said that the Committee could ensure that the SOE’s Annual Report, budget and strategic plans should be aligned, and that these could be used to assess to what extent they were meeting their own targets.

Mr van Dyk requested that the Parliamentary Researcher compile a document clearly defining what Public Enterprises were, and what was expected of each State Owned public enterprise. This could also be used to evaluate each Enterprise according to formulas devised by government.

The Chairperson agreed and suggested that this list could be composed of some generic evaluation tools, and could be supplemented with some specific ones for each different SOE.

Mr van Dalen also agreed.

The Chairperson then moved to the next issue; the use of consultants in SOEs. She said that because consultants were expensive, their roles and purpose should be monitored.

Mr van Dalen stated that in some cases consultants were necessary but that there should not be overspending on them to the extent that some companies were run by consultants.
 
Dr Koornhof said that in the past National Treasury had produced a document on the use of consultants and he suggested that the Committee could use this document as a benchmark for assessment.

The Chairperson introduced the next issue, relating to aspects of trade and industry. She suggested that Transnet be brought before the Committee at some stage. She noted that the Minister of Public Enterprises was meeting with this Enterprise to discuss the jet fuel shortage happening at present.
 
Mr van Dalen agreed, and said that it was important to assess the real reasons for fuel shortages, when sites were supposed to keep a five- day reserve supply.

The Chairperson said that there should be a guarantee extracted from Transnet that this would not happen again.

Dr Koornhof agreed, and said that the Committee should include this in a Committee Report.

Mr M Mangena (AZAPO) also agreed with Transnet being asked to appear before the Committee.

The Chairperson introduced the issue of infrastructure concerns. She said that the long-term fleet plans and manufacturing of companies such as Denel must be observed. In terms of manufacturing, she said particular companies were being identified who would be monitored by the Committee.

Dr Koornhof said that rail, roads and electricity were identified as the areas that needed to be considered.

Mr Mangena said that Denel should be monitored because they were not encouraging local manufacturing.

The Chairperson suggested that in that case Eskom, and Transnet should also be considered.

Mr van Dyk also asked for inclusion of SAA in the considerations.

The Chairperson concluded the issue by saying that infrastructure must be a focus in the Committee’s Strategic Plan and plan of action.

The Chairperson then moved to the issue of human resource development.

Mr van Dalen said that the issue of temporary employees must be investigated. SOEs must make it clear why they were choosing to employ temporary workers rather than permanent workers. He said that often temporary employees did not have the same levels of commitment to the enterprise as permanent employees would have.
 
Mr Disang Mocumi, Committee Secretary, stated that the issue was the strategic management of SOEs.

The Chairperson said that it was also important that the policies of SOEs were monitored.

Mr van Dalen agreed and said that it was important that the Committee supported the President's emphasis on skills development.

The Chairperson said that the Committee must also monitor the issue of tariff setting. A new funding model was developed for Eskom specifically, and she asked whether the Committee should look at all SOEs.

Mr L Greyling (ID) said that Eskom was a peculiar case because its tariff increases did not cover the planned expansion. He suggested that this was worth investigating.

Dr Koornhof said that high administrative prices were linked to high inflation. He suggested that this be kept on the agenda of the Committee and should be interrogated on a regular basis.

Mr van Dalen agreed and said that Eskom's justifications of their tariff increases were not convincing.

Mr Mocumi said that the Committee should meet with the Portfolio Committee on Energy, as Eskom's new framework had been submitted to that Committee.

The Chairperson returned to the issue of technical infrastructure, and suggested that this must also be included in the five year plan of the Committee.

Dr Koornhof added that long term procurement strategies must be investigated.

Mr Mocumi said that he had compiled a summary of decisions made the previous day. He noted that the Committee had agreed that it should meet with other Committees on issues of shared interest.

Dr Koornhof asked for a list of relevant committees to be compiled.

The Chairperson agreed, but suggested that this list should be flexible so that any new issues that arose could also be dealt with. It was agreed that the list include the Portfolio Committees on Trade and Industry, Military Veterans and Defence, Economic Development, Energy, Transport, the Standing Committee on Public Accounts (SCOPA) and the Planning Commission.
 
Mr Mocumi noted this.

Mr Mocumi noted that the Committee had agreed that it needed to undertake oversight visits, and had suggested that it should ideally make some surprise visits to SOEs to investigate what was really happening on the ground at each.

The Chairperson said that this must be carefully thought through.

Mr Mangena said that surprise visits might not always be helpful because relevant people might not be on site that particular day.

Mr van Dalen expressed his view that the Committee should still use the technique of arriving unannounced. Even if the relevant officials were not present, the Committee Members could nonetheless tour the site and make its own observations.

The Chairperson agreed with Mr Mangena that it would be a waste of time and funds if the Committee had to make multiple visits to sites to speak to relevant people. She suggested that perhaps another alternative would be to provide the SOEs with short notice.

Dr Koornhof said that whichever way the visits were done, it was important to include regular visits to SOEs as part of the Committee’s strategic plan.
 
Mr Greyling agreed, and said that each situation should be evaluated individually to assess whether surprise visits would be effective.
 
The Chairperson noted these conclusions.

The Chairperson then raised the issue of long-term procurement planning and asked for comment.

Mr van Dalen said that it was important to encourage the use of South African products and investigate cases where imported products were being used. In all cases the use of local products should be encouraged, to encourage job creation locally. He said that when companies stated that they were using South African products, their manufacturing sites should be visited to establish whether this was correct.

The Chairperson agreed and said that a good example was the Pebble Bed Modular Reactor (PBMR).

Mr Mangena said that in some cases it was necessary to use imported products, due to a shortage in capacity. For example, in the case of fuel, South Africa gave up its capacity to produce particular fuels in order to remain on good terms with the international community. He emphasised that nuclear energy and nuclear fuels were particularly sensitive issues internationally.

Mr Greyling agreed that in some cases it was more economical to import.

The Chairperson said that whilst this may be the case, these capabilities must be developed in the long term.

Mr Greyling added that South Africa's commitment to nuclear energy must be evaluated because it may not be the best option in terms of capacity and job development.

The Chairperson said that although that might be the case, South Africa had, at Cabinet level, made a commitment to using nuclear energy.

Mr Greyling said that it was still relevant to look at how this plan would move forward, and whether it was the best economic plan.

The Chairperson suggested that this issue should be interrogated by the Committee at a later stage. She concluded that PBMR should be put on the agenda as an entire topic, and that the Committee should meet with the Department of Public Enterprises and any other relevant Committees on the issue.

The Chairperson then raised the spending of Eskom, Transnet and Infraco.

Mr van Dalen said that he would like Infraco to brief the Committee on the use of the fibre optic cables on either side of Africa.

Mr Mangena agreed that the issue of the broadband cables should be investigated, and suggested that the Committee should approach the Department of Public Enterprises to brief the Committee fully on the issues.

Mr Greyling noted that the cables were used to increase the broadband capacity and he was not concerned by their size.

The Chairperson said that Infraco should also brief the Committee.

Mr van Dyk asked that the Committee should also received a briefing by SAA. He said that he had been to the OR Tambo airport on a surprise visit, where he noted that there were serious deficits in skilled workers, workshop equipment and capacity. He said that SAA had sold a large portion of its fleet and was in fact repairing its planes outside South Africa, because this was cheaper. He suggested that the Committee should furthermore pay an oversight visit to SAA to assess these issues.

Mr Greyling suggested that Eskom must also be investigated because of its problems with coal sourcing and transport.

Mr van Dalen agreed.

The Chairperson added that it was necessary for the Committee to visit power stations.

The Committee decided that Majuba was the most important station to visit.

The Chairperson asked whether it would be useful to visit Koeberg.

Mr van Dalen said that he did not think it was necessary because this technology was outdated.

Mr Greyling disagreed, stating that it was necessary to visit Koeberg because of the issue of radioactive waste. He requested that the plans to deal with this waste should be made clear.

The Chairperson said that a visit to Koeberg was not so urgent, but that some questions could be asked of that facility in the meantime.

The Chairperson asked for comment whether the Members considered it necessary to visit the Richtersveld community.

Mr van Dalen said that it was necessary to visit the Alexandria mining community.

The Chairperson said that the Committee should meet with Alexkor and request that Alexkor also facilitate a community meeting at the same time.
 
The Chairperson then turned to the issue of oversight visits. She noted that the Committees were required to make international and African visits to learn about the State Owned Enterprise systems in other countries. The Parliamentary Researcher had compiled report suggesting that Brazil should be the focal international country.

Ms Masilo asked whether the previous Committee had made visits to other countries that it would be useful to follow up on.

Dr Koornhof suggested that it would be useful to look at upcoming states like China.

The Chairperson said that China was also proposed.

Mr van Dyk said that the latest country that the previous Committee had visited was China, and that a detailed report had been drafted. He suggested that other countries should therefore be chosen, and agreed that a South American country would be useful.

The Chairperson noted that another suggestion had been to visit South Korea.

Mr van Dalen said that France might be a useful country to visit because of its use of nuclear power.

Mr Greyling suggested that Germany had the most advanced use of alternative energy sources.
 
Mr van Dalen suggested that Holland could provide some lessons on the use of wind power.

The Chairperson said that there was also a need to select an African country, and noted that Tunisia had been proposed. When flying to Tunisia, it was necessary to stop off in France, so it would be possible to visit France, Germany and Tunisia on one trip. She said that Tunisia had been proposed.

Mr Greyling noted that Tunisia made use of solar energy.

The Chairperson then stated that the Committee would prioritise a visit to France, Germany and Tunisia in one trip, and would try to visit Brazil, Chile, Argentina and possibly Venezuela, in another.

The meeting was adjourned.