Department 2005/06 Annual Report: briefing

PUBLIC ENTERPRISES PORTFOLIO COMMITTEE
11 October 2006
DEPARTMENT 2005/06 ANNUAL REPORT: BRIEFING

Chairperson: Mr Y Carrim (ANC)

Documents handed out:
Presentation to Portfolio Committee on Public Enterprises
Department of Public Enterprises Annual Report 2005/2006 (available at www.dpe.gov.za)
Department of Public Enterprises Annual Report 2005/2006: presentation

SUMMARY
The Department of Public Enterprises briefed the Committee on its annual report for the period 2005/2006. The briefing focused on the Department’s handling of State Owned Enterprises and how they planned to restructure them to attain profitability.

Members asked about irregular expenditure, the Richtersveld court case, departmental debtors, HIV in the workplace, job evaluation and the viability of the national call center.

MINUTES

Presentation by the Department of Public Enterprises (DPE)

The Director General, Ms P Molefe, stating that the Department would brief the Committee on issues that arose last year and what progress had been made.

An ANC Member interjected that despite the annual report allegedly being available prior to the constituency period she had only received her copy that morning.

Mr C Wang (ANC) noted the same problem, but said that he had downloaded the document from the DPE website.

Ms Molefe apologised for this and assured the Committee that she would take personal responsibility for ensuring that every Member of the Committee received their copies at the appropriate time.

The Chairperson interrupted Ms Molefe to indicate that this was the responsibility of the service officers and Committee secretary and that she cannot be held responsible.

Ms Molefe stated that the presentation was very similar to the annual report that had been distributed. She told the Committee that due to the ongoing court case against Alexkor the Department was not able to sign all the State-owned Enterprises (SOEs) shareholder compacts – a separate briefing on the compacts will be given once the issue is resolved. The DPE has started a three-year recapitalisation programme for SOEs – as the SOEs cannot ask for more money it is necessary to ensure their profitability. The DPE meets the chairs of the SOEs every quarter and the Chief Executive Officers every five to six weeks.

Ms Molefe elaborated on the internal structural adjustments that the DPE was and still is undergoing. The Department is constantly being aligned and refined – leading to a highly skilled workforce. She mentioned the creation of a properly functioning registry. Ms Molefe stated that during the Koeberg crisis; Eskom, the Ministry and Department stayed in close contact using the crisis communications strategy.

The DPE aimed to get most of the SOEs to focus on their core business and the disposal of non-core assets. She mentioned that DENEL was doing well in terms of its strategy despite still making a loss.

Ms R Issel (Chief Operations Officer) stated that all reports had been submitted and that the annual report had been finished on time. Human Resources have looked at recruiting with the aim of employing only top caliber individuals. She said that the DPE is the first state department to have an electronic file plan.

Ms Molefe noted that training is needed to enhance the competency of Personal Assistants in the Department.

Mr J Theledi (Deputy Director General: Analysis and Risk Management) noted that they promised a five-year SOE review and has been doing so for two years. He stated that the Risk Management Framework (RMF) concept document had been finalised and he hoped that the better RMF of SOEs like Eskom would flow into the other SOEs.

Ms Molefe noted that DENEL had been given R2 billion but was subject to monthly reports, as was South African Airways (SAA).

Ms S Coetzee (Deputy Director General: Legal, Governance and Secretariat (LGS)) said that the past year had been one of consolidation of skills and definition of service. As a consequence LGS was a cross-cutting service. LGS coordinates the development of shareholder compacts. She stated that LGS saw 2005 and 2006 as a period of development.

Ms Coetzee stated that the residual legal parts of Corporate Finance and Transactions remained with LGS. She said that the DPE did not want to execute transactions, but provide an oversight role on transactions that allowed SOEs to focus on their core business.

Ms Molefe elaborated on the Corporate Strategy and Structure (CSS). She noted that the problem with Eskom in the Western Cape specifically was due to the lack of investment in the industry during the past ten years. She highlighted the role that Independent Power Producers will play in the future; up to 30 percent of power production will be handled by them. The role of the Pebble Bed Modular Reactor (PBMR) was discussed and it was stated that it is vital for the diversification of energy sources. In terms of CSS, Denel is seeking global partnerships to allow penetration into the global defense market. Transnet will provide a report on areas that can be privatised.

Ms K Venier (Joint Project Facility (JPF) Coordinator) stated that the JPF had been established in May 2005 with contributions from SOEs. The JPF issued guidelines to the SOEs about the disposal of non-core assets.

Ms S Hutchings (Chief Financial Officer) went through the annual financial statements.

Discussion
Mr H Bekker (IFP) congratulated the Department on the production of their financial statements, but questioned the irregular expenditure noted therein.

Ms Coetzee replied that the irregularities harked back to 2004.

Mr N Hendricks (UIF) asked what the DPE intended to do about the Richtersveld court case as well as the projected turnaround time for SAA.

Ms Molefe replied that SAA was currently at a stage were the DPE was taking effective transfer from Transnet and that they needed SAA to start reporting directly to them. SAA has provided the DPE with a full service strategy. Once the corporate plan is submitted the DPE will be able to gauge turnaround time.

Ms Coetzee replied that a memorandum of understanding was signed with the Richtersveld community on 5 October 2006 – it has not been confirmed by the court however.

Mr C Gololo (ANC) questioned the DPE’s approach to HIV in the workplace and asked if he could assist with the placing of individuals with disabilities in the DPE.

Ms Molefe stated that a programme was initiated by Eskom in which it aims to train disabled individuals at the University of the North. HIV will be looked at in terms of the Risk Management Frameworks of the SOEs.

Mr P Hendrickse (ANC) asked how much the warrants issued against debtors totaled and who the debtors were.

Ms Coetzee replied that 98 percent of debtors were former employees and that the amount was negligible.

Mr C Wang (ANC) wanted to know how job evaluation was done and how often the DPE’s website was updated. He also questioned how much money had been spent on the call centre pilot project and whether it was actually viable.

Ms Molefe replied that job evaluation was done in terms of pay grades and that there were structures in place to determine whether the job is graded at too low a level. She stated that the call centre project is viable and that it is suffering from Afro-pessimism; Didata had evaluated the centre and found it to be acceptable.

The Chairman thanked the DPE delegation but commented that the wording of the annual report was a bit vague.

The meeting was adjourned.