Department of Public Enterprises Annual Report 2006/07 briefing

NCOP Public Enterprises and Communication

12 February 2008
Chairperson: Ms M P Themba (ANC)
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Meeting Summary

The Department of Public Enterprises provided an overview of the performance over the past year, as well as the performance review of all programmes. The presentation provided relevant statistics, as well as a detailed financial statement. It was noted that the Department had achieved an unqualified audit report.  Although it had a saving of R280 million, this related specifically to VAT on transfer payments to Denel, which was subsequently discovered should not have been paid, and apart from this there had been only 0.003% under spending. There were increases in the annual appropriation of funds. The Department was faced with various challenges, which included high tariff increases that had the potential of raising inflation, and the skills scarcity, which threatened the growth plans of State Owned Enterprises.

Members’ predominantly sought clarity on issues relating to employment, skills development and the ongoing energy crisis. Some questions around South African Airways, Metrorail, progress in Saldanha and the Pebble Bed Modular Reactor did not appear to have been answered.

Meeting report

Department of Public Enterprises (DPE) Annual Report Briefing
Ms Sandra Coetzee, Deputy Director General, Department of Public Enterprises, provided an overview of performance during the past year, as well as a performance review of all programmes. Key achievements cited included the sale of Metrorail to the Department of Transport, the settlement of the Richtersveld community land claim, and the separation of SAA from Transnet. The Department had also managed to implement an efficient and effective recruitment system, which had positively impacted on the Department’s ability to achieve its objectives.  It had introduced the Competitive Supplier Development Programme (CSDP) and had invested in skills development and improvements of capacity and resources. It had achieved better employment equity with regard to recruitment and appointment of people with disabilities.

Various statistics were tabled in relation to the establishment and filling of posts and employment equity. The targets and achievements of each of the DPE’s programmes were outlined.

It was noted that DPE achieved an unqualified audit and approved a risk based operational plan, which was implemented successfully to enable the unit to evaluate the effectiveness of risk management, internal control and governance processes. A saving of R280 million was recorded during the financial year and it was in respect of the transfer payments for VAT in respect of Denel. There had been 0,003% under spending by the Department. There had also been an increase in the annual appropriation of funds, which included the roll over of funds from the previous financial year, adjustments for VAT on previous transfer payments in respect of the Pebble Bed Modular Reactor (PBMR), a court settlement to an injured party, and completion of an environmental assessment project in respect of Alexkor. The Department however was faced with various challenges, which included high tariff increases that had the potential of raising inflation, and the skills scarcity, which threatened the State Owned Entities’ (SOEs) growth plans.

Ms N Ntwanambi (ANC, Western Cape) asked about Eskom’s recruitment policy, specifically what would happen to employers over 65 and younger persons rising through the ranks.

Ms Ntwanambi further enquired how the Mossel Bay and Atlantis substations would assist in alleviating the energy crisis and enquired as to the location of the new energy plant in the Western Cape. She also asked as to the progress of the Saldanha hub and the pebble bed modular reactor (PBMR).

Ms Ntwanambi enquired as to the location of the new hub in the Western Cape and whether there were any Black Economic Empowerment (BEE) beneficiaries of SAFCOR.

Ms Coetzee noted that the pilot fuel plant site had been identified next to Koeberg.

Ms Ntwanambi asked for the Department’s stance on the Fidentia debacle.

Ms Ntwanambi asked what the turnaround of South African Airways would bring.

Mr J Sibiya (ANC, Limpopo) enquired as to whether ARMSCOR was still active.

Ms Coetzee noted that ARMSCOR was still active and that it continued work as a procurement agency under the aegis of the Department of Defence. (DOD)

Mr Sibiya enquired as to how the DPE budgeted for claims and settlements.

Ms Coetzee noted that the DPE had access to the Contingent Liability Fund in the National Treasury when faced with claims.

Mr Sibiya asked about protection of South African technology such as the Rooivalk.

Mr Sibiya asked about the Department’s International Relations sub-unit and document production by the Department.

Ms Coetzee noted that document production was outsourced as the DPE had so many stakeholders and thus was slightly different to the Department of Home Affairs.

Ms S Mabe (ANC, Free State) asked about the retention strategy, noting that numbers of staff had left after their contracts expired. She also asked for a racial breakdown of the semi skilled people employed by the Department and made enquires regarding the reduction of staff in reference to Denel. She required further elaboration on efficient and effective recruitments.

Ms Coetzee made some general comments about training and skills. She said that the Joint Initiative for skills acquisition used the Office of the Presidency as a facilitator for those who wished to be trained, who required transition courses, or who were fully trained but unable to find jobs.  Eskom and Transnet identified specific skills and communicated this, thus ensuring a synergy between the programmes and ensuring that they were capable of responding to developments in democracy.
Ms Coetzee further stated that interns were recruited from predominately rural areas but a gender balance was maintained as provided for in terms of the Employment Equity Act. Internships typically lasted for a year and most interns secure employment afterwards.

She added that Eskom’s HR strategy was to ensure a workplace that possessed a sustainable environment. The general approach to HR and recruitment was to ensure statutory compliance with employment equity laws. She stated that Eskom was aware that there might be a need to call in consultants on an interim basis. This was not sustainable, and Eskom’s strategy is to develop new skills. In all procurements undertaken by Eskom, the contract must provide for a transfer of skills and the HR plan showed that they were developing new skills, so that a sustainable environment for energy could be developed.

Ms Coetzee stated that the Department was conscious of the need to call in old skills on an interim basis but this did not lend itself to stability or business continuity. It was then necessary to secure specialist skills

Ms Mabe enquired about the gas issues, and progress made.

Ms Coetzee said that Mosselbay and Atlantis were introduced as part of National Emergency Response Plan. This included LG gas and energy supply components.

The Chairperson noted DPE’s focus on the 16 days of activism against woman and child violence and enquired whether the Department focused on any other similar public interest campaigns.

Ms Coetzee noted that the 16 days of activism against violence against women and children was the Departments flagship project, which it budgeted for and mades significant investment in, but it was not DPE’s sole project of this nature.

Mr D Mkono (ANC, Eastern Cape) sought clarification on the implications of the sale of Metrorail to the Department of Transport (DOT) and the spate of incidents with airlines and mechanisms for ensuring the airworthiness of aircraft.

Ms S Cheng (DA, Gauteng) enquired as to where South African Chinese would fit into under employment equity legislation.

Ms Coetzee responded that the DPE was constrained by employment equity legislation, under which Chinese persons were probably classified as white.

Ms Ntwanambi enquired whether anything had been paid to Richtersveld claimants
Ms Coetzee replied that the concept of the community trust was created, as it was difficult to give individuals money when a community was dispossessed of land. The first beneficiary was the community trust which managed several other trusts and structures. She stated that she was not aware of any individual receiving an individual payment. She stated it was set up in such a way that no one member could abscond with the money. The money paid was dedicated for specific purposes, and to work towards the socio-economic development of the area.

Mr Sibiya said that the staff complement of was currently 67% male and asked how the department would achieve a 50/50 gender ratio.

Ms Coetzee stated that specialists were required but that the DPE would not take the route of severance packages and would not compromise effectiveness, but would consider giving preference to a particular segment.

The meeting was adjourned.


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