State-Owned Enterprises Quarterly Report and Capital Expenditure: Department briefing

PUBLIC ENTERPRISES PORTFOLIO COMMITTEE
16 August 2006
STATE-OWNED ENTERPRISES QUARTERLY REPORT AND CAPITAL EXPENDITURE: DEPARTMENT BRIEFING

Chairperson: Mr Y Carrim (ANC)

Documents handed out:
Quarterly Report 1 April- 30 June 2006 (PowerPoint Presentation)
Capex Update (PowerPoint Presentation)

SUMMARY
The Department of Public Enterprise presented a Quarterly Report on the position of state-owned enterprises and an update of their capital expenditure. The Committee raised questions about monitoring performance at state-owned enterprises and the disposal of state property, but due to time constraints could not ask additional questions. It was agreed that the outstanding questions would be dealt with at a future meeting.

MINUTES

Ms Portia Molefe (Director General, Department of Public Enterprises (DPE)) introduced her delegation as:

Litha Mcwabeni – Deputy Director-General (DDG): Corporate Strategy and Structure
James Theledi - DDG: Analysis and Risk Management
Sandra Coetzee - DDG: Legal, Governance and Transaction
Tebogo Phuti - DDG: Special Projects
Rashida Issel - Chief Operating Officer
Kathrine Venier - Head: Joint Project Facility
Sandy Hutchings - Chief Financial Officer
Reneva Fourie - Head: Parliamentary Services Unit
Gaynor Kast - Ministerial Liaison Officer
Metse Ralephenya - Strategy Unit


DPE Presentation on the Quarterly Report
Ms Molefe presented the Quarterly Report reflecting on progress on staff establishment, spending trends, key programme outputs and general achievements. The presentation covered in detail the overview of performance; DPE statistics for posts vacant and filled, expenditure review, programmes to support the services of the Department and the joint project facility to enhance the value of an industry or leverage the assets and capabilities of the State owned enterprises (SOEs). She concluded that as the Department was satisfied with the overall performance, they hoped to continue to ensure a more integrated approach to monitor SOEs’ performance within the Department.

DPE Presentation on Capital Expenditure update
Mr Theledi presented the capital expenditure (capex) update covering progress on Eskom’s building programme and Supplier Development (SD); Human Resources capacity building targets; the history of household electrification indicating that annual funding of R1.39 billion had led to 230 000 household connections (however to achieve the overall target, annual funding should be R3 billion and 500 000 households should be connected. According to the Department of Minerals and Energy, reaching those targets would create 10 000 jobs per annum).

Transnet core business included the five-year investment plan incorporating Rail, Ports and Pipeline with a total of R64.5 billion. The major investments intended to sustain and expand operations included export lines, port infrastructure and terminals, general freight business as well as the pipeline from Durban to Johannesburg to create additional capacity. An agreement was entered into between Transnet and Hatch/Mot MacDonald/Goba (International Project management consultants with local representation.) Progress to date includes spending of R2 billion of the R3.1 billion budget. Most of the projects have also commenced. The Department had plans in place to accelerate implementation over remaining months.

Mr Theledi mentioned that there had been considerable progress on the Saldanha Port/Rail line, Cape Town Container terminal, Durban Pier, Durban Harbour entrance widening and Port of Ngqura. Specific focus was on implementing action plans to address projects behind schedule. Major risks in roll out of investment plan include delays in Economic Investment and Employment Cluster approvals, claims and other legal challenges as well as delivery of imported equipment. Current projections indicated that Transnet was committed to roll out the five-year plan. The core business was confident that the approved budget for 2006/07 would be largely achieved while resources were allocated to ensure implementation of planned projects. (Please see attached documentation for specific figures).

Discussion

The Chairperson thanked the Department for an informative presentation, indicating that he hoped that there would be a follow up on the issues the Department presented.

He was concerned that the Department made references to an existing template and he had no knowledge about it. The Chairperson also commented on the availability of reports to the Committee. He said that reports were not made available as expected.

The Parliamentary Liaison Officer confirmed that she forwarded the report to the Chair two weeks ago. She added that she would resend it to ensure that the Committee received a copy as well. Ms Molefe said that the Department would follow up on the question of reports. She informed the Committee that the Minister of Public Enterprises was going to make a presentation on the progress made by the Department.

The Chairperson asked if there was no possibility of inviting the Joint Budget Committee to assist the Committee in clarifying some of the questions and concerns.

Mr P Hendrickse (ANC) asked how the Department monitored the responsibility and role performed by Eskom.

Ms Molefe said that there was a literal “smell and feel” test that alerted the Department when something did not smell and feel good; that would then call for monitoring and investigation.

Mr C Wang (ANC) asked how the Department conveyed the information on property disposal to the general public.

Ms Molefe responded that there was a road show planned to inform members of the public. The Department also hoped to make a public announcement soon.

Ms Molefe said that there would be a presentation on the Economic Investment and Employment cluster to various entities. The main focus would be on administration and how to fast track the process and providing feedback on some interesting findings over the past few months. The presentations would also provide a better sense of SOE issues.

The meeting was adjourned.