Department of Public Enterprises Strategic Plan: briefing

LABOUR AND PUBLIC ENTERPRISES SELECT COMMITTEE
7 June 2006
DEPARTMENT OF PUBLIC ENTERPRISES STRATEGIC PLAN: BRIEFING

Chairperson: Ms P Themba (ANC, Mpumalanga)

Documents handed out:
Department of Public Enterprises Strategic Plan and Financial Overview 2006-2009

SUMMARY
The Department of Public Enterprises briefed the Committee on its Strategic Plan, which included details of its management plans for state-owned enterprises.

Discussion focused on the management and development of state-owned enterprises, and the status of various land claims made against them. Members also interrogated the Department’s human resources policy.

MINUTES

Department of Public Enterprises briefing
Ms P Molefe, Director-General of the Department of Public Enterprises (DPE), said that some good progress had been made since the last time the DPE addressed the Committee, but more could be done. The Department was trying to be less bureaucratic, but this was difficult as the time-frames in the industry were not always easy to control. The mandates for the DPE remained unchanged. The vision for the state-owned enterprises (SOEs) was for them to meet international benchmarks.

The DPE was on track with its plan for the SOEs: Metrorail had been moved out of Transnet and was focusing on the transport of freight, and the Shosalozameyl train and South African Airways (SAA) would also be separated from Transnet. Denel would only become profitable in about three to five years (it was in the process of disposing of some of its 33 properties). For Denel to become sustainable it would have to compete on the international market and not just locally. Alexkor was in deep trouble. At present a settlement was being negotiated for land claims. A decision had been made to dispose of all non-core properties, and therefore ome properties would be sold off while others would be identified as areas that could be developed further.

The DPE was presently on its way to achieving the target of 50% male and 50% female staff. The gap, however, was in the disability sector. The DPE was keen to employ those who had been genuinely discriminated against because of their disabilities. The intention was to grow the DPE line functions and employ fewer support staff. As far as shareholder management was concerned, a generic act was being planned for 2007 which would address the management of SOEs.

Discussion
The Chairperson asked if the DPE had a gender focal point to look at gender issues. She asked if the Committee could have details of the DPE's properties across all provinces. She wanted to know how people in the rural areas were being made aware of the Accelerated Shared Growth Initiative of South Africa (ASGISA).

Ms Molefe confirmed that the DPE had a gender focal point, which was treated as a core operation. If needed, the statistics for the SOEs could also be supplied. The DPE was looking at investing across the provinces. The Government Communication and Information Service (GCIS) had developed training programmes and workshops which were aimed at informing people in rural areas about GIPSA and ASGISA.

Ms N Ntwanambi (ANC, Western Cape) asked if the DPE's part in MTN would still be disposed of. She requested clarity on the sale of houses in Port Elizabeth which were owned by the DPE. She inquired whether Transnet still owned buses and whether the new train that would be travelling between Cape Town and Johannesburg was owned by Spoornet or the Department of Transport.

She also wanted to know why the Denel property was being sold to the Airports Company of South Africa (ACSA) instead of to the Johannesburg municipality for housing. What was Alexkor’s lifespan, and were there any other land claims to be settled with Alexkor? She asked whether the land claims were being managed alongside the Department of Mineral and Energy Affairs. Referring to the development of Culemborg, she asked if the DPE had made prescriptions to the Cape Town municipality about the development.

Ms Molefe replied that the MTN transaction had been suspended. In the interim, the funds had been transferred to the pension fund. The houses in the Port Elizabeth area were now the responsibility of the Eastern Cape Development Corporation. Transnet still owned the Translux and City to City buses, although it had plans to dispose of them, including the possibility that the Department of Transport would take them over.

She went on to explain that the land given to ACSA was needed to build a new runway at the Johannesburg Airport. The lifespan of Alexkor would be short if it was unable to extend its operations. Alexkor was eager to carry out new mineral explorations which would extend its lifespan if successful.

Aventura was the only other SOE that had land claims against it. In these land claims, the DPE did not have any involvement with the Department of Mineral and Energy Affairs. Transnet was not selling Culemborg to the City of Cape Town as it was planned as a joint development. The DPE was quite prescriptive about the usage of the land, and had pointed out that it wanted low-cost housing to be part of the development.

Mr N Hendricks (UIF, Western Cape) asked if the land that was being disposed of was being given away or sold for a profit. He questioned the remuneration and perks of the Chief Executive Officers (CEOs) in SOEs. He pointed out that many Karoo towns were dying because their railways had stopped operating.

Ms Molefe replied that the houses were being sold, not given away, although the aim was not to maximise profits. The DPE had a model and guidelines for the remuneration of CEOs, and was planning to examine remuneration across all levels. This was a delicate issue. Spoornet had a rail masterplan and was investigating the branchlines as well, while the Department of Transport was also investigating the opportunities available.

Mr Kolweni (ANC, North West) questioned the distribution of vacancies in the DPE as nothing was being done to create vacancies in levels seven and eight. It seemed as if the DPE was focusing on the technical level. The shareholders only seemed to be interested in profits, and therefore ordinary people were not benefiting. He pointed out that the shareholders seemed to be faceless.

Ms Molefe replied that the DPE could function with 130 people. It aimed to close some lower-level positions and open more at the higher level as it needed more technical skills. She pointed out that the racial balance had been achieved and there were openings for black people.

Mr J Sibiya (ANC, Limpopo) said that the five priorities of the DPE showed a direct link to the people. He questioned the prioritisation of human resources and capacity building: who was targeted and whether they would leave the programme enriched. Referring to the involvement of the DPE in the rest of Africa, he asked what operational code the DPE used when in foreign countries.

He pointed out that in some cases where land had been handed back to original owners, big corporations came in later and enticed the people to sell the land back for mining. He asked if the DPE had a way of preventing this. He questioned the turnover rate in the DPE, and wanted to know why people were leaving and whether there was any retention strategy. He wanted clarity on the increase in compensation of the DPE in the latest budget.

Ms Molefe said that the turnover rate in the table was not accurate. Most positions at the senior level were contract positions. The turnover figure showed the staff who had left before their contracts had expired. The DPE was not a frontline department as its main function was shareholder management. This was reflected in the DPE’s top five priorities.

The aim for SOEs was to produce low-cost products or services while remaining efficient. Each SOE would have its own set of priorities. Human resource development and capacity building were targeted at the apprenticeship programmes, which were all at the lower level. It was not possible, however, to take on more people than required due to the constraints of efficiency. The operational codes for SOEs in foreign countries were a problem and were under review. Properties that were being disposed of were circulated to other departments. The properties were not sold at market prices.

Ms Ntwanambi (ANC, Western Cape) asked if the disposal of the V & A Waterfront was an open process that allowed ordinary people to invest in it.

Ms Molefe answered that it was not feasible for ordinary people to acquire shares in the development as the dividends were small. It was, however, an open process in which companies could take part.

The meeting was adjourned.