Deputy Minister & Department of Public Enterprises presentation of 2012 Annual Report

NCOP Public Enterprises and Communication

20 November 2012
Chairperson: Ms M Themba (ANC, Mpumalanga)
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Meeting Summary

The Department of Public Enterprises (DPE) and the Deputy Minister of Public Enterprises presented the 2011/12 Annual Report to the Committee. It was noted at the outset that the DPE had achieved a clean audit report. The six programmes were outlined, along with the organisational structure and financial statements, and the targets, and those areas in which it did not achieve the targets, were outlined. To put its work in context, the DPE stressed that in this year, economic growth remained below 2007 and 2008 levels, and was 3.1% in 2011. A countercyclical fiscal framework was adopted to support the economy. DPE had therefore tried to improve its own environment with strict shareholder oversight over the State Owned Companies (SOCs), by maximising funding options, using its strategic position to drive fixed investment (particularly in a counter cyclical manner) to unlock economic growth, and leveraging procurements to support industrialisation, skills development, transformation and job creation. All targets were met under the Administration programme. Under the Energy and Broadband Enterprise programme, a particular achievement was that Eskom had added 535 MW of generation capacity, 631 km of transmission lines and 2525 MVA of transmission capacity to the system. A R350 billion government guarantee was approved and 76% of the funding required for the build programme up to 2017 had been secured. The establishment of Infraco and investment into new networks contributed significantly in the reduction of wholesale prices. Under the Manufacturing Enterprises programme, Denel received export orders in excess of R5 billion, and was pursuing prospects of over R40 billion in the short to medium term. In this financial year, SAFCOL had launched an extensive programme to support timber framed building structures as an alternative method of construction in South Africa. In relation to Transport Enterprises, there was achievement of 1.22 million tons and 1.6 million tons per week on the iron ore and coal lines respectively. Overall efficiency had improved by 17%. Volumes increased by 7.4% as a result of capital spending and operational improvements. 95 locomotives had been procured for the general freight business to enable a reliable and predictable service. New rolling stock for the iron ore and coal lines had been acquired. A new dig-out Port in Durban would commence. On the airline side, South African Airways (SAA) had launched five additional routes. SA Express (SAX) planned to increase its capacity to Zambia, Zimbabwe and the DRC. In relation to joint projects, Eksom had leveraged commitments of over R1.2 billion in investment into new manufacturing capacity, and Transnet had entered into over contracts worth more than R14 billion, containing R5.4 billion in supplier development commitments. Skills would be developed under these programmes. In addition, the training figures for Transnet, Eskom, Denel, Broadband Infraco, SAFCOL and SAX were set out.

In relation to the financial expenses, it was noted that transfer payments to State Owned Companies had decreased, which was reflected as decreased expenditure by DPE. The DPE spent 98% of its budget. The underspending related to compensation of employees, where posts were not filled due to scarcity of specialist skills in the market, and Goods and Services, where projects were delayed by capacity constraints. National Treasury had approved rollovers for two projects, which would be completed in the 2012/13 year. Challenges in the year were stated to include the lack of a clear policy framework, particularly in relation to transport and allocations to Eskom, the continuing challenge of retaining and attracting skills, the impact of the economic conditions on the financial position of some State Owned Companies (SOCs), and the reduced funding, which meant that some projects were not implemented.

Members asked about the role of the DPE in making the SOCs more profitable, why SOCs did not drive job creation more vigorously and whether the DPE gave SOCs enough support. Members also asked why only some SOCs reported to the DPE while others did not, and whether the institutional arrangements for oversight over SOCs would be made uniform across government. They asked how the lack of a clear policy framework was a challenge to the DPE. Members asked what caused the delay in the starting of operations of the ESKOM Medupi Project. Questions were asked as to why ESKOM did not act on information that electricity was used illegally, with the help of ESKOM employees. They also asked whether the fuel contamination disaster at OR Tambo Airport happened due to mismanagement. They expressed doubts about both SAA and SAX, asked what exactly the problems were and how DPE intended to address them. The Department was asked to respond to other questions about Alexkor and Denel in writing, and was urged to take into account the issues that Members raised now, when it presented its Strategic Plan for 2013.

Meeting report

Department of Public Enterprises 2011/ 2012 Annual Report
The Chairperson acknowledged and welcomed the Deputy Minister of the Department of Public Enterprises, Mr Bulelani Magwanishe, who gave a broad overview of the topics to be covered in the presentation.

Mr Tshediso Matona, Director General, Department of Public Enterprises, then presented the 2011/12 Annual Report (AR) of the Department of Public Enterprises (DPE or the Department). He said that economic growth remained below 2007 and 2008 levels, and was 3.1% in 2011. A countercyclical fiscal framework was adopted to support the economy. Given this context, DPE had decided to focus on five areas, namely:
- to maintain the robust shareholder oversight practices within the framework of shareholder management model that the Department had adopted
- to stabilise and reposition the State Owned Companies (SOCs), particularly looking at funding options
- to recognise that SOCs were key instruments for a developmental State, in relation to driving fixed investment (particularly in a counter cyclical manner), to unlocking economic growth and leveraging procurements to support industrialisation, and in skills development; transformation and job creation.
- to gear up DPE’s shareholder oversight, to lead in driving capital investment
- to achieve enhanced coordination across Government,  engaging with policy departments to create an enabling environment for SOC developmental mandates.

He summarised the DPE’s shareholder function, and said that it had largely delivered on all the shareholder management functions, including the signing of shareholder compacts, the delivery of strategic intent statements to SOC boards, and  quarterly financial reviews. However, it had not managed to have the shareholder compact for Infraco signed, as the new board required more time to engage with both management and the Department. The 3rd Quarter Financial Review of South African Express (SAX) could also not be completed, as a result of restatement of the company’s financial statements.

Under Programme 1: Administration, the Department met all its targets.

Under Programme 2: Energy and Broadband Enterprises, he noted that Eskom added 535 MW of generation capacity, 631 km of transmission lines and 2525 MVA of transmission capacity to the system. A R350 billion government guarantee had been approved. Eskom’s domestic borrowing programme increased from R65 billion to R100 billion. 76% of the funding required for the build programme, up to 2017, had been secured.

Seven new Points of Presence had been added as well as 292 km of fibre optic cable to the network. The establishment of Infraco and investment into new networks contributed significantly in the reduction of wholesale prices.

Under Programme 4: Manufacturing Enterprises, Denel had received export orders in excess of R5 billion in 2011/12,  and was pursuing prospects of over R40 billion in the short to medium term. In 2011/12, SAFCOL launched an extensive programme to support timber framed building structures as an alternative method of construction in South Africa.

Under Programme 5: Transport Enterprises, he noted that in respect of rail transport, a new record of 1.22 million tonnes and 1.6 million tonnes per week were achieved on the iron ore and coal lines respectively. Overall efficiency had improved by 17%, compared to the previous period. Volumes increased by 7.4% as a result of capital spending and operational improvements. 95 locomotives had been procured for the general freight business to enable a reliable and predictable service. New rolling stock for the iron ore and coal lines had been acquired and the Durban International Airport site had been acquired for the construction of the new Dig out Port in Durban.

South African Airways (SAA) had launched five additional routes – Angola, Kigali, Bujumbura, Point Noir and Kontono, and had other direct links. SA Express also planned to increase capacity from King Shaka Airport to Zambia, Zimbabwe and the DRC.

Under Programme 6: Joint Project facility, Mr Matona noted that Eskom had leveraged commitments of over R1.2 billion in investment into new manufacturing capacity, with over R600 million already invested. Transnet had entered into contracts worth more than R14 billion, containing R5.4 billion in supplier development commitments. Skills development also would be enhanced  under this programme. Transnet provided training for 3 500 engineering-related learners and enrolled 854 new artisan learners. Eskom trained about 5 400 learners, of whom 4 200 were in engineering-related fields, and had enrolled 1 066 new artisans. SAA enrolled 254 learners. Denel had enrolled 229 learners at the Denel Technical Academy. In addition, Broadband Infraco, SAFCOL, and SAX had, in total, enrolled 191 learners

Mr Matona moved on to discuss the Departmental expenditure trends. He noted that the main reason for the decrease of R202.2 million in the annual appropriation, from R555.549 million in 2010/11 to R353.342 million in 2011/12, was the result of a decrease in transfer payments to State Owned Companies. The Department spent 98% of its budget, which was within 2% of its target, and had achieved a clean audit. The underspending amounted to R7.22 million. This was recorded under Current Expenditure in the Operational budget. He explained that the underspending occurred in two areas. Under Compensation of Employees, the underspending was due to  some posts not having been filled, due to scarcity of specialist skills in the market. Under Goods and Services, some projects were delayed, due to capacity constraints. However, the National Treasury had approved DPE’s request for rollovers for two projects amounting to R3.13 million, in order for them to be completed in the 2012/13 financial year. There was no substantive impact on delivery within programmes as a result of this under spending.

Mr Matona said that DPE had faced some challenges in this reporting period. The lack of a clear policy framework had affected the achievement of some key deliverables, such as the concessioning of branch lines and future allocations to Eskom as part of Integrated Resource Plan 2. DPE had faced challenges, again, in attracting and retaining skilled people, to enhance the capacity of the Department to perform its oversight function. The worsening global and domestic economic conditions had impacted negatively on the financial position of some SOCs, which may delay funding of the build programme. Finally, the limited financial resources meant some of the planned projects could not be implemented.

Discussion
Mr H Groenewald (DA, North West) congratulated the Department on its clean audit report. He referred to the fuel disaster at OR Tambo Airport, and asked whether it was the result of mismanagement.

The Deputy Minister replied that Airports Company South Africa (ACSA) did not answer to the DPE, but to the Department of Transport (DoT).

Mr Matona added that the issue of the fuel contamination was important, because it affected SAA, and the DPE was monitoring it closely.

Mr Adam Seedat, Acting Deputy Director General: Transport, DPE, added that the fuel had been contaminated at the refinery, but SAA had acted promptly. It set in place contingency plans to make sure flight schedules could go on unhindered. It had made agreements with emerging airlines to reduce fuel intake at OR Tambo, and to get fuel tankers to replenish stocks. The problem should be resolved at OR Tambo within a week-and-a-half, and the DPE was monitoring that situation.

Mr Groenewald said the main purpose of the Department was to create jobs. In 2011, government made many promises of job creation and gave people hope, but nothing came to fruition. In fact many jobs were lost during this period. He was worried about how ordinary South Africans managed to survive in this situation, because there were no opportunities for them.

Mr Matona agreed with Mr Groenewald, saying that the State Owned Companies (SOCs) had the strategic potential to drive growth investment and job creation, but the DPE had to identify which of the SOCs were best placed to do this, in order to give them the necessary leverage to develop to a level where they could become a Centre of Excellence.  Some cleaning up, consolidation and streamlining would be needed. The Department was looking forward to the Report on the SOCs, to see what it recommended in this regard.

Mr Groenewald was impressed by the Medupi project of ESKOM and felt that South Africans could be proud of it. However, he pointed out that whilst initially promises had been made that the Medupi plant would start operating in early 2013, there now seemed to be delays in the start date of operations, which were put down, amongst others, to increased prices and shortage of fuel. He wanted to know the role of DPE in this project.

Mr Samuel Mandiwana, Parliamentary Liaison Officer, DPE, replied that Eskom had to develop a business case for the Medupi Project, and had to cost it. Eskom had not built a power station for twenty years. The environment had changed. Some estimated costs were pitched too low. By 2009, all the contracts had been placed and the total amounted to around R92 billion, which was calculated at that time as the proper costing, and which had not since changed. However, there were some concerns around the management of those costs, and about the delays in delivery of programmes, which was why the Department was now conducting its own assessment. He noted that this was not only in relation to one project. More projects were in the pipeline and the DPE had to build its capacity and knowledge to understand what challenges were experienced with this build programme, and how it could improve in implementing the programmes. He added that the Build Programme had to be properly funded, and that was why Eskom had applied, under the Multi Year Price Determination (MYPD3), for more funding. A 16% increase was projected.

He noted that DPE laid down strict guidelines and was monitoring the management of those costs closely. During 2012/13, the Regulator had approved a 25% increase in electricity tariffs for the consumer. Consumer and DPE concerns led to DPE taking the decision that Eskom and DPE jointly had to look at how to manage the costs, without placing yet more pressure on consumers. Eskom then applied for a reduction in the first request for increase of tariffs, from 25% to 16%, causing R11 billion to go back to the economy. The same process was followed in handing the MYPD3 application, and Eskom’s funding needs to sustain the Build Programme were weighed up again the impact of the increases on the economy.

Mr Groenewald was worried about the vacancies, especially at the higher levels. He pointed out that without management skills, there would be no development, and the budget would not be spent. There would also not be job creation.

The Deputy Minister replied that Mr Matona had outlined that some of the vacancies were linked to the shortage of budget.  For others, the posts were funded, but remained unfilled because DPE had not managed to find the  right people with the rights skills, and did not want to appoint just anybody to these positions. It needed competent people to oversee the SOCs, which had budgets running into billions of rand. The DPE had a rigorous selection process, and was serious about its mandate.

Mr M Sibande (ANC, Mpumalanga) congratulated the DPE on achieving a clean audit report from the AG. He noted the challenge of attracting and retaining skilled people, but said that at the same time the Department was giving bursaries to students. He found this a contradiction, and could not understand why the DPE did not move into employing the people it had supported through their studies.

Mr Matona replied that the skills of students that DPE supported were not necessarily always the kinds of skills that the DPE itself would require, although they might, for instance, be very useful in the business of Eskom, over whom the DPE had oversight. The DPE needed people with shareholder oversight skills, those who could understand and monitor operational performance, financial performance and governance of the companies.

The Deputy Minister added that it was necessary to understand the context and the environment in which the DPE operated. For instance, rather than just appointing a criminal or family lawyer, DPE would have to appoint a very specialist commercial lawyer. Competition for specialist skills was very high, and because the public sector had standardised salaries, the DPE was not able to compete with the private sector. The DPE would recruit people, and train them, and just at the point when they were experienced and trained, they were extremely marketable, and would be poached away by the SOCs, who could afford to pay them three or five times what they were earning in the DPE. The professionals that DPE needed were economists, financial analysts, and commercial lawyers, all of whom were in high demand in the market.

Mr Matona hastened to add that the DPE was not dysfunctional, but was stable and dynamic. Part of the challenge of attracting and retaining talent was the way in which the DPE marketed itself to be the employer of choice for graduates. The position of Chief Director: Human Resources had recently been offered to a promising young woman, and this would be one of her prime tasks. She had to position and market the DPE as a sought-after employer. In other countries, their equivalent of this Department was not seen as just another government department, but instead it was a specialised agency staffed by highly competent people. In France, for instance, the equivalent of the DPE occupied a prestigious position in society. It was small, but properly capacitated and consisted of less than 80 high calibre individuals overseeing between 78 and 86 companies. It was the dream of most professionals in the public and private sector to work for that agency. This model had to be looked at and South Africa needed to develop its own model. The Presidential Review Commission (PRC) had to give further direction to this effect.

Mr Jacobs said it was not helpful to lament about the same issues every year, as it showed there was no progress. Last year, the Director General had said that the DPE wanted to implement a turnaround strategy and employ people to oversee the SOCs, but no money was available. He suggested that perhaps the DPE had to learn to live within its means, and make do with what it had, otherwise it would get into debt.

Mr Groenewald said he could not agree with the Director General that there was a shortage of money. He felt that there was sufficient money, but it was often misspent and mismanaged. The SOCs needed skilled people to make sure the money actually reached the areas of most need. There was a lot of fraud in some departments because of poor management, causing a loss of money and a loss of jobs.

The Deputy Minister replied that it was difficult to answer questions on corruption in other departments, and reiterated that the DPE had received a clean audit report from the AG.

Mr Sibande said the presentation also highlighted the lack of a clear policy framework as a challenge. The Select Committee needed to know exactly what the DPE required, so that the Select Committee could make recommendations.

Mr Mandiwana replied that Eskom was a long term business and so some policy decisions affected it over the long term. The current increases had to be set, taking into account what role it would play beyond the current build programme. Eskom, in the planning processes, had to project beyond the current year, but it was hard to plan clearly for future needs. If it had to build or fund projects in the future, it had to plan for that now. Those were the main challenges. Eskom also had to consider its role in the Integrated Resource Plan.

Mr Sibande asked why the signature of the Shareholder Compact was delayed to April 2012, due to the appointment of the new board of Broadband Infraco.

Mr Z Mlenzana (COPE, Eastern Cape) asked whether the board of Broadband Infraco had been appointed yet.

Ms Matsietsi Mokholo, Deputy Director General: Legal, Risk, Governance & Transactions, DPE, replied that there was confusion regarding the appointment of the board of Broadband Infraco. The DPE was not saying that there was a delay in the appointment of the board. She reminded Members that the Annual Report covered activities up to 31 March 2012. The Board of Broadband Infraco was appointed in October 2011. However, the shareholder compact could not be signed at the AGM, as this was a totally new board, and the outgoing board felt that it could not sign a compact that was essentially an agreement between shareholder and new board. The new board first wanted to familiarise itself with the content of the compact, before signing. This was the reason for the delay. The compact had subsequently been signed.

Mr Sibande asked how soon the appointment of the SAA Chief Executive Officer would be done.

Mr Sibande asked what the delay was in the SAA and SA Express 2011/12 Annual Reports being tabled in Parliament. He suspected that this was related to appointment of those in key positions.

Ms Mokholo replied that SA Express did table its report in Parliament, but it subsequently had to clear up some issues, and so the Minister had rather withdrawn the Report. SAX, with the help of the Auditor-General, was in the process of reconstructing the financial report, and the revised AR would be tabled towards the end of March 2013.

She added that in terms of the Public Finance Management Act (PFMA), all major public entities, including SAA, were required to table their financial statements by the end of September every year. However, the Annual General Meeting of SAA was held only on 15 October 2012, and this was the meeting at which the shareholder, DPE, had to consider and approve the annual financial statements. DPE had to explain the late tabling of the AR to Parliament. The Annual Report of SAA had finally been tabled on Thursday 15 November 2012. 

Mr Mlenzana asked whether the conflicts at SAA and SA Express had to do with financial management challenges, or about personalities on the board, or both. There were clearly huge challenges, and there were no signs that these were being resolved.

Mr Seedat replied that in relation to SAA, a turnaround strategy would be developed to address the problems within the organisation. However, it must be remembered that SAA had faced challenges because of the general state of the economy and the aviation industry. The high fuel price was a major problem for all airlines, including SAA.  In addition, South Africa’s geographical location meant that airlines used a lot more fuel to travel the long distances to international locations, making this uncompetitive with other countries. DPE, during monthly meetings with SAA, did identify areas that needed consideration. These included the types of aircraft used, as some were more fuel efficient than others, as well as the configuration of the aircraft on the inside, taking into account business and economy spaces and how to configure the aircraft to achieve maximum profit. Other areas were the choice of routes and the general focus of the airline.

Mr Mlenzana noted that the terminology had changed from “State Owned Enterprises” to “State Owned Companies”, but the Department’s name referred to “Public Enterprises”. He asked when this contradiction would be resolved.

Mr Magwanishe replied that although the legislation changed the names of the entities from state owned entities to state owned companies, departments and their names were established by a proclamation by the President. He noted the comment and agreed that these processes had to be aligned.

Mr Mlenzana said there was no uniformity in the institutional arrangements for oversight over SOCs. There were SOCs under the Department of Communications, about which the DPE knew nothing and over which it had no say, although SOCs like Denel reported to the DPE.

Mr Magwanishe replied that the DPE was awaiting the report of the Presidential Review Commission (PRC) on SOCs, to see what its recommendations were in relation to oversight.

Mr M Jacobs (ANC, Free State) said SOCs could be profitable and sustain themselves, if they were run efficiently. An example of an efficiently-run SOC was the SA National Roads Agency Limited (SANRAL), which had injected R2 billion of money it generated into the coffers of the Department of Transport. However, others applied for bail-outs from government. He asked if the DPE was providing sufficient strategic direction to the SOCs, to enable them to be profitable. He also drew a corollary between SABC, a SOC, and DSTV, a privately-run cable TV service. If a client did not pay the DSTV subscription, that client would immediately be shut off from viewing, whilst SABC allowed licences to go unpaid for years without doing anything to shut off services. He opined that DPE would not be said to do a good job until all the SOCs were running profitably

Mr Mandiwana replied that Eskom had made R12 billion profit, but it went back into the business to fund development.

Ms Mokholo added that the DPE, as part of its oversight function, strove to make a clear distinction between the company’s profitability, and its sustainability and the SOC’s ability to go out in the market and borrow on the strength of its balance sheet. The current situation could not be correctly interpreted as meaning that none of the SOCs were profitable. The difference between SANRAL and the Department of Transport, and DPE and its SOCs, was that the DPE did not issue dividends, so that any profit made was immediately invested back into the business of the SOC, to finance its infrastructure build programme.

Mr Jacobs still maintained that SAA, Transnet and Eskom could be profitable, if run efficiently. He had reported, on a previous occasion, the stealing of electricity in the Free State, by the public but with inside assistance from employees of Eskom and the municipality. The DPE had not followed up on this point, and the continued theft of electricity meant that Eskom was losing money, which must prevent it from becoming profitable.

Mr Mandiwana replied that this kind of theft was a general problem, not limited to Eskom, and that municipalities were also being robbed. Eskom had initiated programmes to combat the thefts, with the assistance of the DPE. However, theft of electricity was not yet recognised as a criminal offence, and one of the interventions of DPE was to engage with the relevant departments to have the legislation changed to enable prosecution of such instances.

Mr Groenewald asked whether there was any manipulation by SAA, to put smaller independent airlines out of business. SAA was supported by bailouts from government, while the other airlines did not have the same support.

Mr Groenewald said the Select Committee had paid an oversight visit to the head office of Transnet in Johannesburg, when Transnet revealed plans for building new rail lines and acquiring new equipment, in order to make rail the transport mode of choice, ahead of road transport. He asked about the role of DPE in this, and whether it gave Transnet enough support.

Mr Seedat replied that the Market-Demand Strategy of Transnet was ambitious, but DPE had assessed the corporate plans, and thought the Transnet Seven-Year Plan was achievable. DPE made sure that the shareholder compact target figures stayed on track, and were in line with the eventual Market-Demand Strategy. He reminded Members that DPE did not extract dividends from Transnet, through the shareholder compact, and so 70% of the Transnet Market-Demand Strategy project would be funded from its own balance sheet. It had a strong balance sheet and was likely to need to raise only 30% extra to fund the strategy. It would not be approaching the fiscus for funding at this stage.

The Deputy Minister added that he was not aware of complaints from Eskom or Transnet that they were not adequately supported by the Department. The support of the DPE for SOCs was robust.

Mr Seedat further stated that the DPE would play a role in facilitating finance for its SOCs if needed, and gave the example that it had provided Letters of Security to support Transnet’s application to the African Development Bank.

Ms Jackie Molisane, Deputy Director General, DPE, wanted to put the relationship between DPE and Eskom in context. She reminded Members that in 2008, Eskom was running at a loss of R10 billion. With the help of the DPE, it had received a R176 billion guarantee from government, enabling it to go out into the marketplace to get further guarantees for the build programme. This had helped it to cope with a tariff increase of 16%, instead of the initial 25% request. She said that the role of the government in supporting SOCs should not be under-estimated. Eskom currently had a funding plan until 2017, when the last build project would be constructed. DPE had the foresight to go into the international debt market, and thus far 78% of the funding plan had been secured. This showed the strategic and proactive role the Department had been able to play in ensuring that “the lights stayed on”. It would continue to ensure that programme were running as planned.

Mr Sibande said that Mr Matona had mentioned that the policies of different departments could conflict with each other, and asked if DPE held inter-departmental meetings to try to resolve such conflicts. Cabinet could be another platform for raising conflicts.

Mr Seedat replied that the DPE did facilitate communication between departments, as well as at a Ministerial level, on behalf of its SOCs, where needed. Recently, the DPE facilitated between departments and Ministers in regard to the Swazi-Rail-Link, which released greater capacity for coal transportation on the rail lines to Richards Bay.

Mr Sibande said a comprehensive audit of government land was long overdue. This would assist government to prevent incidents like one recently occurring in Lenasia, Johannesburg, where people erected houses on government land fraudulently sold to them, and the houses had to be demolished. In the past, government land used to be put under agriculture.

The Deputy Minister replied that the proper procedures had to be followed when disposing of government property or land.

Mr Sibande asked what the position was with the board of Alexkor.

Ms Mokholo said that the Alexkor Board had been appointed in September 2012. A tight deadline had been set regarding the tabling of the report.

Members also asked the following questions, which remained unanswered:

Mr Mlenzana asked what progress the Department had made on the five year assessment of SOCs.

Mr Mlenzana asked what the progress was on the development of policy for involvement in Africa.

Mr Sibande asked what caused the delay in the completion of the Alexander Bay Township, which was supposed to be completed by July 2011.

Mr Mlenzana asked what the challenges were regarding Alexkor, as objectives set out for it over the recent past period had not been achieved. It seemed that the future proposed prospects of Alexkor had not been achieved.

Mr Sibande had noticed, during oversight visits, that government owned Sheltered Employment Factories (run by the Department of Labour) had no support. He wondered why the DPE was not encouraging its SOCs to procure from these Factories. 

Mr Sibande wanted to know what progress there was in repositioning SAFCOL in the forestry industry.

The Chairperson asked that the questions that were unanswered in the meeting should be responded to, in writing, before Tuesday 27 November 2012. She asked that the business plan of Alexkor, the funding plan for Broadband Infraco, as well as the DPE’s guidelines on the remuneration of board members and executives of SOCs, must be forwarded to the Select Committee. She also asked for written responses as to why Denel did not fulfil its role in the country’s economy. 

She added that when DPE presented its 2013 Strategic Plan, in early 2013, it must be quite clear and specific about what it intended to do, and that plan must address the questions and concerns that Members raised during this meeting.

The meeting was adjourned.

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