Transnet Pension Fund Amendment Bill: adoption; Department Second Quarter Performance: briefing

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Public Enterprises

07 November 2006
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Meeting report

PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES

PUBLIC ENTERPRISES PORTFOLIO COMMITTEE
8 November 2006
TRANSNET PENSION FUND AMENDMENT BILL: ADOPTION; DEPARTMENT SECOND QUARTER PERFORMANCE: BRIEFING

Chairperson:
Mr Y Carrim (ANC)

Documents handed out:
Report of the Portfolio Committee on Pubic Enterprises on the Transnet Pension Fund Amendment Bill [B30 – 2006]
Amendments Agreed To: Transnet Pension Fund Amendment Bill
Amendments Agreed To: Transnet Pension Fund Amendment Bill (Additional Amendments)

Department of Public Enterprises Presentation of 2nd quarter performance
Department of Public Enterprises Presentation of 2nd quarter CAPEX Update

Department of Public Enterprises Quarterly Performance Report (01 July – 30 Sept 2006)
Department of Public Enterprises Presentation of 2nd quarter performance report 2006/07: Part1, Part2, Part3 & Part4

SUMMARY
The Committee unanimously adopted the Transnet Pension Fund Amendment Bill.

The Committee was also briefed by the Department of Public Enterprises on its performance in the second quarter of 2006. Members felt that the Department should explain how it planned to convince the public and South African Airways’ competitors that the new low-cost airline, Mango, is not, and will never be a state sponsored subsidiary of the national carrier.  Other questions dealt with the issue of intellectual property held by Denel, the future of the SA Forestry Company and litigation against the Department.

MINUTES

Finalisation of the Transnet Pension Fund Amendment Bill
The Chair stated that a sub-committee of the full Committee was appointed to process the Bill. The sub-committee went through various drafts and changes were then made in an attempt to simplify the language of the Bill. The sub-committee also consulted the Transnet Pension Fund and the trade unions in order to make sure that the changes did not affect the existing agreements between the two parties.

The Chairperson stated that the sub-committee could not undermine the overall intentions of the Bill. The unions had argued that they were not given enough time to examine the actual text of the Bill, as a result were unable to comment on the amendments. Therefore there should be a provision in the Bill which would allow the unions to object to any changes that affected the existing agreements.

Clauses 1 and 3 were agreed to.

Clause 5
The Chair stated that the Department's lawyers were happy with the proposed change, and will be included in the proposed document. The chair then went through the changes made in the proposed document and stated that Clause 5 was rejected and had to be re-written. In the re-witting there were no fundamental changes included to the principles of Clause 5, however it had to be simplified in a language that could be easily understood. The Chair then put forward Clause 5, as amended and asked Members if they agreed.

All Members agreed.

Clause 6
The Chair stated that the clause dealt with how rules must be agreed to by the general board of the Pension Fund. The clause was agreed to

Clause 7
The Chair put forward Clause 7, as amended in the document and asked Members if they agreed.
 
Clause 9
The Chair said Clause 9 essentially deals with what happens when an employee is declared bankrupt, and that it provides that the pension money remains protected and cannot be used to settle any other debt. Members agreed to the clause.

Clause 13
The Chair put forward Clause 13, as amended in the document and asked Members if they agreed.
 
All Members agreed

Clause 15
The Chair stated that the clause allows for the transfer of members who are not members of the second defined pension fund, but are being paid by Transnet to be incorporated into the second defined pension fund. Members agreed to the clause.

Clause 17
The Chair put forward Clause 17, as amended in the document and asked Members if they agreed.
 
All Members agreed

Clause 2, 4, 8, 10-12,14, and 16

The Chair put forward the clauses, without amendments and asked Members if they agreed.
 
All Members agreed

The Committee agreed to the short title, long title, preamble and the Bill as a whole.

Committee Report on Transnet Pension Fund Amendment Bill
The Chair outlined the history of the processing of the Bill, the Committee’s views, and the stakeholders concerns.

Mr J Minnie (DA) argued that it is unfair to single out the Freedom Front Plus for its submission in the report.

The Chair said the FF+ made a written submission to the Committee, which the report reflected.

Mr B Nkosi (ANC) argued that it was unfair to single out one party.

The Committee agreed to amend the wording to state that collective submissions were received from various parties.

The Committee agreed to the amended report.

Department of Public Enterprises (DPE) presentation
The DPE presentation on its various programmes was made by Mr J Theledi (Deputy Director General), Ms U Fikelepi (Chief Director: Legal Services), Ms S Hutchings (Chief Financial Officer), Mr E Harris (Chief Director: Transport), Ms S Crosson (Head: Human Resources) and Ms K Vennier (Coordinator: Joint Projects). Mr L Mcwabeni (Deputy Director General) was also present to answer questions.

Mr Theledi provided an overview of the Department's 2nd quarter performance. He stated that significant progress had been made with regards to the Alexkor deal, the establishment of Infraco, recapitalisation of Denel and the separation of South African Airways (SAA) from Transnet. Ms Hutchins then gave an overview of the Department’s expenditure and stated that it had spent 45% of its budget. Ms Crosson stated that in terms of human resources, the Department had filled 131 out of the 157 available posts. At the moment 63% of the Department’s workforce is female; however the Department targets to have a 50/50 gender representation by 31 March 2009.
 
Ms Fikelepi focused on the Department's Legal Governance and Transaction (LGT) programme, and stated that the Department is currently defending itself against legal action instituted by the Pahapur / Londoloza Consortium. So far it had filed all the necessary documents with the registrar of the High Court, and will soon be tracing all the documents required in the legal action.

Mr Harris gave an update on the
Capital Expenditure Programme (CAPEX), stating that CAPEX has planned big projects in the major ports of the country, and that the Department is confident that the approved budget for 2006/07 will be largely spent.

Ms Vennier concluded the presentation by giving an overview of the Joint Project Facility (JPF).

Discussion
Mr J Stevens (DA) asked when the Committee would be informed about the study into the shareholder compacts and about the future of the SA Forestry Company Limited (SAFCOL).


Mr Theledi stated that the shareholder compacts have yet to be clarified.

Mr Mcwabeni said that SAFCOL had significant research capacity in forestry. The Department is currently making recommendations to the Minister on the future of SAFCOL. The Minister will report to Cabinet before March 2007.

The Chair asked the Department to provide a list of the consultants it was using and their services. The Department should elaborate on its relations with the Department of Communications (DOC) with regards to INFRACO.

Mr Theledi stated that there was a database on the consultants and it will be forwarded to the Committee. The Department is working together with DOC on INFRACO on the licensing issue and the role of the Independent Communications Authority of South Africa (ICASA).

Mr C Gololo (ANC) questioned the percentage interest that will be given to Eskom in the Pebble-bed Modular Reactor (PBMR) Company. Secondly, the Department should state whether it had a deliberate strategy to employ females as more than half the staff.

Mr Mcwabeni stated that Eskom planned to have greater representation in the PBMR; however Eskom still has to inform the Department about their intentions.

Ms R Issel (Chief Operating Officer) said that the high female representation was not a deliberate strategy, but a matter of coincidence.

The Chair questioned board remuneration. The Department had apparently completed their study on board remuneration; however during that period the Minister had substantially increased the remuneration of some board members. Were the increases made before or after the study?

Ms Fikelepi stated that the increases were given before the completion of the study.

The Chair stated that the issue of board remuneration had to be reviewed as it was unfair for the Miinister to earn an annual salary of R700 000, while a part-time board member could earn as much as R500 000 per annum.

Mr Nkosi asked if the Department would win the court cases against it.

Mr Theledi stated that there had been two bidders on the Komatiland deal. Bonier won the bid but the Competition Commission disallowed the deal, and the Department was forced to cancel the agreement. Bonier argued that the deal could not be cancelled, and then decided to take legal action.

Mr Stevens thanked the Department for giving feedback on intellectual property; however it was of great concern that agreements with the Department of Trade and Industry (DTI) have not been finalised. Secondly, have the Department thought of solving the intellectual property issues of selling a part of Denel through commercial agreements? This could be done by specifying licensing arrangements for new intellectual property. With regards to SAA, there seems to be a perception amongst SAA’s competitors that it would be a state subsidised entity. Since the state helped SAA with its recapitalisation programme and SAA funded Mango, the perception appeared to be accurate. Therefore, the Department should elaborate on how they planned to convince the public that Mango is not a state sponsored subsidiary of SAA.

Mr Mcwabeni stated that there has been no resolution to the issue of intellectual property. However the Department felt it should reduce Denel’s research capability as it was not a research institution. The defence research aspect, however, can never be given to a private contractor as the law prohibited it, and this posed a large dilemma for the Department. Therefore the Department proposed that there should be licensing agreements with South African commercial companies that performed defence research.

Mr Harris assured Mr Stevens that the state has not financed SAA directly for a long time, and was not intending to do so any time soon. In instances where SAA was assisted it was via guarantees and SAA had to pay the money back. When SAA approached the Minister for approval for Mango, the Department raised concern about its sustainability.

Mr Chang raised the issue of new nuclear power plants and asked for clarity.

Mr Mcwabeni stated that no new plants have been built due to problems with licensing and regulations, the massive costs of decommissioning and nuclear waste management issues.

The meeting was adjourned.


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