Eskom Conversion Bill: Approval of NCOP amendments

Meeting report

PUBLIC ENTERPRISE PORTFOLIO COMMITTEE
25 June 2001
ESKOM CONVERSION BILL: APPROVAL OF NCOP AMENDMENTS

Chairperson: Mr ST Belot

Documents handed out:
Eskom Conversion Bill [B16B - 2001]
NCOP Amendments to Eskom Conversion Bill [B16B-2001] (see Appendix)

SUMMARY
The Portfolio Committee met to consider the amendments made by the Select Committee. All the amendments were accepted by the Committee and where questions arose the issues raised were thrashed out extensively.

The Committee postponed the meeting on corporate governance, which would have included a South African Airways submission and discussion on the Public Protector's report, until after the Parliamentary recess.

MINUTES
Postponement of meeting to consider Corporate Governance Report
The scheduled meeting to consider the Corporate Governance Report will clash with the last sitting of the House on 27 May. Consequently the Committee decided to postpone this meeting until they return from recess.

The Chair noted that the previous week's meeting with South African Airways had been cancelled as SAA had requested a postponement.

Mr Msomi said what was not quite clear is how the Public Protector's findings on Mr P Maduna's utterances impacts on this issue. Would the Public Protector's report be separate from the SAA submission or would they be combined when coming before the Portfolio Committee? He hoped that the meeting would be inclusive of both so that they do not have to cover these two issues piecemeal.

In response, the Chair asked the Department to communicate with SAA that they address corporate governance in their presentation.

Eskom Conversion Bill: NCOP Amendments
Adv Mbangeni (State Law Adviser) took the Committee through the NCOP amendments to the Bill. He pointed out a new amendment: Subclause 6(4) would now read: The Minister must enter into a Shareholder compact with Eskom Holdings Limited because Eskom has been converted into a Eskom Holdings Limited, not just Eskom.

Mr Msomi was concerned that Subclause 6(4) would create controversy.

Mr L Montana (Director: Parliamentary Services) said that was unlikely to create controversy and that the memorandum and articles of association captures Mr Msomi's concerns. He said the shareholder compact was a mandate which moves beyond what the Companies Act provided.

Mr Heine (DP) agreed that this would not give rise to any problems.

The clause was agreed to by the Committee.

Adv Mbangeni informed the Committee that the Department proposed that Point 3 in the Memorandum on the Objects of the Eskom Conversion Bill be deleted because they were having a problem with Cosatu on that point and as such, the Department proposed that it be deleted.

However Mr Montana pointed out that this was not a new matter and it has nothing to do with Cosatu. He said when they introduced the Bill in the National Assembly, they had indicated that Point 3 did not belong there. However it was not captured in the process of the discussion with the National Assembly and was carried through as is into the NCOP.

He said this paragraph commits Government to a particular path of unbundling but "these issues have not been resolved". The NCOP was requested to remove this paragraph and the Select Committee agreed. The Department wanted to ensure that the Portfolio Committee endorses the same position.

In answer to the Chair asking if this deletion changes the essence and the intention of the Bill, Adv Mbangeni answered that it does not. Mr Montana added that it does not if it is removed. However if it remains there, it commits Government to a particular path. The Bill is not intended to state how Eskom would be structured.

In reply to Mr Msomi's request for further clarity, Mr Montana said Point 2 is leveling the playing field between Transnet and Telkom through incorporation. Point 3 is not dealing with incorporation but is committing Government to unbundling through the stock exchange which is an issue that has not been resolved.

Mr Heine asked why the NCOP has not taken it out of its version of the Bill?

The Chair said the NCOP report indicated that Point 3 was discussed and the final Bill would reflect the change. Mr S Fenyane (Chairperson of the Select Committee) confirmed this.

The Committee agreed to the deletion of paragraph 3.

The Chair proceeded to read the report which accepted the amendments to the Eskom Conversion Bill, which was moved and seconded.

The meeting adjourned,

Appendix:
AMENDMENTS PROPOSED BY THE SELECT COMMITTEE TO THE ESKOM CONVERSION BILL

CLAUSE 1
1 on page 2, in line 14 after 'agreement" to insert "to be".

CLAUSE 5
1. On page 3, in line 11, to delete "." to insert "; and"

2. On page 3, in line 1 2, to omit "The", to substitute "the"

3. On page 3, in line 15, to omit "."to substitute ";"

4. On page 3, in line 1 6, to omit "No", to substitute "no"

5. On page 3, in line 17, to omit "."to substitute "; and"

6. On page 3, in line 1 8, to omit "The" to substitute "the"

CLAUSE 6
1. On page 3, in line 25, before "articles "to insert "memorandum and the"

2. On page 3, after line 27, to insert new subclause:
"(4) The Minister must enter into a Shareholder compact with Eskom.".

3. On page 3, in line 29, to omit "may" to insert "must"

CLAUSE 8
1. On page 4, in line 6, after "Act," to insert "a majority of"

CLAUSE 11
1. On page 4, in line 40, after "relevant" to omit "register", and replace "Registrar".