Hansard: NA: Debate on Vote 9: Public Enterprises (NA Chamber)
House: National Assembly
Date of Meeting: 14 May 2015
No summary available.
EPC – NATIONAL ASSEMBLY CHAMBER
Thursday, 14 May 2015 Take: 14
THURSDAY, 14 MAY 2015
PROCEEDINGS OF EXTENDED PUBLIC COMMITTEE – CHAMBER OF THE NATIONAL ASSEMBLY
Members of the Extended Public Committee met in the National Assembly Chamber at 16:47.
House Chairperson Ms A T Didiza, as Chairperson, took the Chair and requested members to observe a moment of silence for prayers or meditation.
THE MINISTER OF PUBLIC ENTERPRISE
START OF DAY
Debate on Vote No 9 – Public Enterprises:
The MINISTER OF PUBLIC ENTERPRISES: Hon Chairperson; hon Ministers and Deputy Ministers; Deputy Minister Bulelani Magwanishe; chairperson of the portfolio committee; hon members; the acting director-general of the department; chairpersons and board members of state-owned companies, SOCs, who are present here today; chief executives and senior managers of state-owned companies; distinguished guests, in particular those beneficiaries of bursaries and training programmes of our state-owned companies who are present here today, thank you for coming. Ladies and gentlemen, the Department of Public Enterprises is somewhat unusual. It does not deliver services directly to citizens or private companies. However, its work, when executed effectively, has a profound positive impact on the quality of life of all citizens, businesses and the economy as a whole.
Formally, the sole purpose of this department is to assist the Minister to play certain roles as the designated representative of government in relation to Eskom; Transnet; Denel; South African Express; the SA Forestry Company, Safcol; Alexkor and the Pebble Bed Modular Reactor (Pty) Ltd Company. For periods in the past fiscal year, this included SA Airways and Broadband Infraco.
In supporting me, the department plays a great number of strategic and supportive roles in relation to the companies but also in respect of the development and co-ordination of national policy and strategy in the economic sectors in which the companies operate.
In recent times, it has also fallen to the department and me to play a leading role in relation to the development of policy and standards for all of the more than 700 state-owned entities.
At its February 2015 lekgotla, Cabinet took a number of resolutions on implementing key aspects of the report of the Presidential Review Committee on State-Owned Entities.
The department and I have been tasked with championing the development of an overarching shareholder policy defining criteria for continued state ownership in critical and strategic entities.
After a comprehensive process, a report will be presented to the Cabinet lekgotla in July. The report will focus on a shareholder policy and appropriate ownership model; a framework for disposal of noncore assets supported by National Treasury and the Economic Sector and Infrastructure Development cluster; a private sector participation framework and a board appointment manual, which will be led by the Department of Public Service and Administration.
The process will culminate in the establishment of a conceptual framework, which will inform the proposed Government Shareholder Management Bill – a single overarching piece of legislation, particularly for Schedules 2 and 3b entities. We hope to introduce it in the not-too-distant future. [Interjections.] I cannot help if you can’t understand it.
Progress has also been made on the standardisation ... [Interjections.] You must be careful of what you understand or not.
Progress has also been made on the standardisation of governance practices within state-owned enterprises. The department has submitted to Cabinet proposals for remuneration and incentive standards for state-owned company executive directors, prescribed officers and nonexecutive directors. The standards aim to introduce good governance, transparency and accountability in the manner in which remuneration and incentives are applied in the entities.
This budget seeks to finance the initial interventions proposed in the department’s five-year strategic plan. However, before I elaborate, let me offer some insight into the nature of the terrain within which the department and I operate.
In Long Walk to Freedom, Madiba says: ``After climbing a great hill, one only finds that there are many more hills to climb.’’ I must tell you that I have come to believe that at the time that he wrote that, he must have been thinking about Public Enterprises. No doubt you have noticed there are many hills to climb.
The following metrics define the breadth and depth of the landscape within which we operate. The six active companies have an asset base value of R755 billion, with Eskom and Transnet accounting for some R745 billion. They have annual revenues of over R200 billion. They will alsocontribute the lion’s share of the state’s investment in infrastructure of more than R330 million a day, every day, over the next three years.
In the context of an economy with a gross domestic product, GDP, of about R4 trillion, this places the SOCs in this portfolio, especially Eskom and Transnet, at the sharp end of driving growth, thisadministration’s industrial development strategy, transformation of the economy and, therefore, the assault on poverty, inequality and unemployment.
The highest priority goals, which the department and I are required to drive over the next five years, are set out in the National Development Plan-rooted Medium-Term Strategic Framework of this fifth democratic administration. Foremost among these are critical initiatives to lower the cost of doing business to stimulate job-creating growth and to increase the efficiency of the economy, which include the following:First, ramp-up the electricity generation reserve margin from its current levels to 19% by 2019. Second, increase the tonnage moved on rail from the current 207 million tonnes to 330 million tonnes by 2019. Third, improve the operational performance of sea ports and inland terminals by increasing the average gross crane movements per hour by 25% by 2019.Fourth, use the Eskom and Transnet infrastructure development and replacement investment spend to drive the overall national investment rate to 25% in a way that crowds in private sector investment and creates opportunity for new suppliers and sectors.
These are the foundations upon which radical economic transformation will be built. In order to do this, we need to deal with two main sets of issues – company-specific matters, like the well documented challenges at Eskom, and just getting the generic basics right. The generic basics include financial sustainability; stability; funding which requires little or no assistance from the fiscus; the cost of capital; the pace and quality of the delivery of capital projects; the viability of the commercial operations; cost management; efficient procurement; operational efficiency; the quality, effectiveness and stability of boards; the quality, effectiveness and stability of executive management teams; recruitment and retention of scarce and critical skills; maximising the impact of the state’s industrial development and transformation goals, and eliminating corruption.
It was pretty easy to rattle off that list, ... [Interjections.] ... as attested to by the young man on my left. [Interjections.] The crisp question, though, is: Does this small department, whose proposed budget we are discussing today, have the cutting-edge resources to address these in an impactful way, specifically to do the following.
Firstly, it has to translate government’s broad socioeconomic mandates and very specific industrial development strategies into detailed, precisely targeted annual shareholder’s performance compacts for the companies.
Secondly, it should monitor and evaluate the companies’ performance against these compacts with the standard that would be expected by the shareholders of a R750 billion privately owned group of companies.
Thirdly, there is a need to interpret and understand the companies’ performance within the context of a global business environment, which changes frequently, sometimes dramatically, and needs rapid responses by the shareholder.
Lastly, it should assist the companies to respond rapidly to changes in the trading environment in a manner that would be expected by the shareholders of a R750 billion privately owned group of companies.
The department and I asked ourselves these questions recently. We concluded that the global environment within which our companies operate has become so much more competitive and complex that it is becoming unreasonable to expect conventionally structured government departments to meet these challenges with conventional resources and standard methodologies, no matter how gifted and committed the staff may be.
Therefore, we are currently engaged in an exercise to design and put in place the institutional architecture which will position us to be able to answer ``yes’’ to each of these four questions by the time I stand here again in a year’s time.
Let me turn to the companies. I will cover Eskom, Transnet, Denel and SA Express Airways... [Interjections.] ... I will respond to you later ... while Deputy Minister Magwanishe will focus on Safcol, Alexkor and some of the cross-cutting themes that are very important and have produced many of those young people up there who have been beneficiaries of our bursaries and our programmes. [Applause.]
Given the frequency with which I report to the nation on day-to-day developments at Eskom and given the frequency with which Eskom reports to Parliament’s committees, I will focus on broader issues.
First, I would like to touch on some important achievements, which seemed to have been lost in the avalanche of publicity about other matters in Eskom.
A year ago, I backed Eskom’s promise that Medupi Unit 6 would be delivering its full capacity of about 800 megawatts by mid-2015. Today, I am very pleased to announce that the ramp-up towards full output has passed the 700 megawatt milestone. When fully operational by the end of June 2015, as promised, it will deliver the equivalent of more than 40% of the output of the Koeberg Nuclear Power Station. So, acting CEO, please extend my gratitude to everyone in the Medupi team who made this possible. [Applause.]
On the subject of Koeberg, the scheduled three-month maintenance of Unit 1 is well on track and is scheduled to bring more than 900 megawatts back to service by the end of this month. Remember, I told you a while ago that it was going off for maintenance.
In December 2014, Eskom successfully completed the construction of the 100 megawatt Sere Wind Farm near Koekenaap on the West Coast. What pleased me most was that the project was delivered ahead of schedule and within budget. So, again, a huge thank you to the Sere Wind Farm team. [Applause.]
An additional 160 000 households were connected to the grid, improving the lives of about 800 000 citizens and contributing to government’s objective of universal access. Since I last spoke to you in the House, a total of 160 000 more households have access to electricity. [Applause.]
If you have been able to just switch the lights on every day of your life since you were born, you wouldn’t understand what it means for 160 000 families to have access to electricity immediately when they switch the lights on. [Applause.] An amount of 800 000 more citizens have access to electricity.
The HOUSE CHAIRPERSON (Ms A T Didiza): On behalf of the Minister, I would like to welcome all the guests of the Minister. Since you are now in Parliament, you are also the guests of Parliament. Unfortunately, the Rules of Parliament do not allow our guests to participate in the business of the House by clapping hands, or through gestures that might mean dissatisfaction or excitement. So, I just want to say that I am sorry for that. I know some of you are very happy about this budget debate, but the Rules of the House don’t allow you to do that.
The MINISTER OF PUBLIC ENTERPRISES: I am glad that hon Shivambu did not raise a point of order. I don’t want to give him any more speaking time. [Laughter.]
Eskom also successfully completed the construction of 315 kilometers of transmission lines; most of this is to serve Medupi and Kusile.
The new substations in Vuyani in the Eastern Cape and Gumeni in Mpumalanga will change the lives of those currently without connections in those areas.
In the year ahead, over and above addressing all the administrative basics which I listed earlier, the leadership of Eskom needs to accelerate the completion of the build programme, with improved project management and contracting; increase the generation capacity of the existing fleet; re-establish a responsible maintenance regime that cannot change; eliminate the need for load shedding by all other means as well; develop a sustainable funding model; reduce the costs of primary energy, currently at close to 60% of the revenue; fill critical vacancies; bring far greater reliability to the load shedding schedule to allow consumers to plan effectively; act timeously to stave off the so-called ``coal cliff’’; address very demanding environmental compliance obligations and do everything possible to win back the confidence of citizens, business, financial markets, international and domestic investors and staff.
While I am speaking primarily to the leadership of Eskom, achieving this will require strong government support and contribution by other departments, agencies and the regulator.
Once again, I would like to use this opportunity to thank all citizens and businesses for their patience in dealing with the inconveniences which are part of load shedding. I would also like to thank those who have come forward with proposals to offer new capacity, especially through co-generation. At the end of March, we signed up 879 megawatts of co-generation.
As matters stand now, I believe that it will require at least two to three more years of dedicated work by a number of players to restore electricity supply security. The good news is that it is possible to turn around this super tanker and set it on a long-term positive trajectory. [Interjections.]
I would like to touch briefly on the forecasts of Transnet’s performance over the 2014-15 fiscal year. [Interjections.] You just have to live in the Western Cape where I do and then you will know. [Interjections.] I was born here.
On the freight rail side, Transnet is expected to have moved approximately 225 million tonnes, a 7% year-on-year volume growth.
Container volumes for the 2014-15 financial year are likely to be slightly below target at approximately 4,6 million 20-foot equivalent units. Transnet pipelines are expected to achieve the 2014-15 volume target of 16,7 billion litres.
Among the major achievements in the last fiscal year were the following.
Firstly, there is the successful completion of the expansion of the City Deep Inland Terminal from 400 000 20-foot equivalent units capacity to 800 000 a year. Further work is under way to upgrade the Kascon Terminal to create additional capacity of 300 000 20-foot equivalent units.
Secondly, Transnet took delivery of the last 85 locomotives, which were assembled at its facilities in Koedoespoort, providing a huge boost to local manufacturing companies and increasing the engineering manufacturing capacity of the economy. Most of these locomotives have been deployed in the current manganese export line from the Northern Cape to Port Elizabeth. This has resulted in a 28% improvement in train cycle times.
Thirdly, the company received approval to procure 100 locomotives to be deployed on the coal export line, which will allow it to cascade an additional 125 locomotives from the current coal line fleet to the general freight business.
Lastly, it also received approval for a project to increase manganese export capacity from 7 million tonnes a year to 16 million tonnes.
During this fiscal year, the department and I expect the general freight business volumes to increase by 18%, given that about half of Transnet’s market demand strategy capital investments have been allocated to this area.
The department and Transnet will also be working closely to ensure that the key Operation Phakisa projects, for which the department and companies are responsible, materialise on time. These are the SaldanhaBay rig repair facility, the Mossgas quay and the RichardsBay floating dock installation.
Denel continues to show a pleasing improvement in financial performance. Over 50% of revenue was derived from its international business. The order book stands at over R33 billion. Revenue is expected to exceed R5,5 billion. Preliminary numbers suggest more than R200 million in net profit after tax. Well done to Denel! [Applause.]
Denel Aerostructures is on course to achieve breakeven in the next fiscal year. Denel’s cash facilities improved on a scale which allows the company to mitigate against any liquidity risk. In addition, banks have also granted Denel R10 billion in facilities on the strength of the company’s balance sheet. That is music to my ears and should be to yours. [Applause.] I am not seconding the CEO to Eskom as well. [Interjections.]
I can’t hear you. Say something clearer so that I can respond. [Interjections.] You get up and you ask a question. That is all.
The department and I have the following matters clearly in our sights in the next five years: developing more partnerships with other global original equipment manufacturers, like its joint venture with the UAE’s Tawuzan; addressing the linked issues of the aging workforce and the pace of transformation; and investing in plant and equipment ... [Time expired.] [Applause.]
Ms D B LETSATSI-DUBA
The MINISTER OF PUBLIC ENTERPRISES
Ms D B LETSATSI-DUBA: Hon Chairperson, Minister of Public Enterprises, Deputy Minister of Public Enterprises, Ministers and Deputy Ministers present here, hon Members of Parliament, acting director-general of the department and the officials, distinguished guests and fellow South Africans, I rise on behalf of the ANC to support Budget Vote No 9 presented by the Minister of Public Enterprises, hon Lynne Brown. We stand here in support of Budget Vote No 9 for the following reasons:
Firstly, the South African economy remains constrained and growth has been very sluggish or slow. Secondly, we support the Budget Vote because the second phase of our democratic transition, as defined by the ANC, calls for bold and decisive steps to place the economy on a qualitative path. Thirdly, we also support this Budget Vote because addressing the triple challenges of inequality, poverty and unemployment remains the priority of the ANC-led government. Fourthly, we also support this Budget Vote because the roll-out of the National Development Plan, NDP, the implementation and co-ordination of economic cluster departments and the state-owned companies are of utmost importance. Our people are crying out for better jobs and better lives and these cries cannot be ignored. It is for these reasons that we support this Budget Vote. The ANC has long pronounced on achieving a better life for all.
In his 8 January 2008 statement, President Jacob Zuma endorsed the developmental state and the expansion of state-owned enterprises, SOEs, when he stated that, I quote:
The developmental state should maintain its strategic role in shaping the key sectors of the economy. This means that we need to ... strengthen the role of state-owned enterprises and agencies in advancing our overarching industrial policy and economic transformation objectives.
Our mandate as the Portfolio Committee on Public Enterprises is to provide oversight to the department and its state-owned companies. This is done through constant engagement with the department on issues of policy alignment and implementation to ensure that the state-owned companies are indeed commercially viable and are focused on discharging their developmental mandate. We continue to ensure that the department and state-owned companies are central in the implementation of the National Development Plan, the New Growth Path and the Industrial Policy Action Plan, Ipap.
State-owned companies within the department’s portfolio form the cornerstone of the economy and their capacity must be strategically utilised to support the delivery of the National Development Plan outcomes. The Department of Public Enterprises is at the core of delivery of the nine-point plan for economic recovery as outlined by the President. We are pleased that the department in its strategic plan and in their response when we were questioning them clearly and effectively outlined how they will seek to address the issues outlined by the President. We urge the state-owned companies to do likewise.
The proposed government shareholder management Bill is fundamental in the definition and communication of a consistent strategy, the enhancement of governance policies and practices, the setting of performance criteria and access to adequate funding for the state-owned companies. In this regard, the committee urges the department to initiate this process and I’m glad you said the process has already started and will be concluded soon. We also urge the department to critically look into the recommendations as proposed by the Presidential Review Committee on State-Owned Entities and how they should be accommodated.
The shareholder’s compacts remain effective tools of performance management in state-owned enterprises, SOEs. We urge the department to enhance the mechanisms through which it holds state-owned companies to account. This requires appropriate strategic planning and performance management. It is imperative for the corporate plans to include strategic objectives and outcomes agreed upon by the Minister in the shareholder’s compact or in key performance indicators for assessing the performance and the delivery of the desired outcomes and objectives in line with the Treasury regulations.
Good corporate governance is critical for the success of state-owned enterprises. Ongoing monitoring and supervision must be undertaken to enable state-owned companies to improve their audit outcomes and financial reporting and compliance with the laws and regulations. We also want to urge the department to confirm critical posts in its structure and that of the state-owned enterprises. The committee is pleased with the continuation of the clean audit status of the department and improvement is expected in all the entities. [Applause.] We commend Denel and Transnet for their outstanding audit outcomes. We would like to see this best practice shared in all the entities.
The portfolio committee will monitor, strictly so, the department’s ability to enhance the efficiency of strategic transport corridors including the monitoring of Transnet’s market demand strategy to expand rail and pipeline capacity and to improve ports’ productivity. We will provide oversight to the department in order to assess the shareholder compacts with Transnet on improving efficiency on capital projects.
We will continue to assess the implementation of Operation Phakisa which seeks to facilitate economic growth through optimisation of available land and sea space and new business initiatives. This will be viewed in line with the Transnet initiatives in the port of Saldanha, which the Minister spoke about, to establish oil and gas marine repair, engineering and logistics services complexes, servicing the needs of the up and midstream exploration, and production of oil and gas in that sector.
We expect initiatives such as Operation Phakisa and the market demand strategy of Transnet to change the outlook of our economy through the development of the black industrialists, youth and women empowerment, massive job creation, skills development and creating opportunities for African communities through direct investment.
I’m pleased that the executives of the state-owned enterprises and the boards are here with us this evening. We will demand answers if these initiatives are not implemented. Our people are crying out for jobs and we can’t postpone this forever.
The Transnet oversight function is funded through the portfolio management and strategic partnership programme under the subprogramme of transport enterprises, which is allocated R72,9 million over the medium term.
The committee will monitor government’s support package to Eskom, which is intended to both improve Eskom’s financial sustainability and ensure that the New Build Programme which started in 2005 is delivered within the timeframes specified in government’s 2014-19 Medium-Term Strategic Framework. The Eskom oversight function is strategically located insubprogramme energy enterprises which is allocated R52,4 million over the medium term.
Together with the Department of Energy, the Department of Public Enterprises will also co-ordinate the implementation of government’s five-point plan which was announced in December 2014 to stabilise the electricity generating system in the short and medium term. We commend the work done at the Ingula Pumped Storage Scheme and we are confident that the completion of the hydropower station will ensure that electricity demand during peak hours will be reduced.
We commend the Minister on the appointment of the interim chief executive officer, CEO, of Eskom, Mr Brian Molefe. This has brought confidence into the markets and it shows that the entity is poised for success. Hon members will remember ... [Time expired.] [Applause.]
The HOUSE CHAIRPERSON (Ms A T Didiza): I must thank hon Breytenbach for assisting the Chair here by pinching the ears of two hon members who were troubling me by making a noise. [Laughter.] They are a bit quiet now. Thank you, hon Breytenbach, for that.
Mrs N W A MAZZONE
Ms D B LETSATSI-DUBA
Ms N W A MAZZONE: Hon Chairperson, Minister Brown, Deputy Minister, members of the Portfolio Committee on Public Enterprises and ladies and gentlemen, it is a sad, sad day when you have to hold your breath that the lights in the National Assembly Chamber stay on long enough for your budget debate to happen in the light. [Interjections.] However, this is the reality that we as South Africans now experience on a daily basis.
In our debate of national importance, Minister Brown thought it appropriate - even though it was not - to call me a ``sour mouth’’ because I complained about the state of affairs in our country’s electricity supply. Well, Chairperson, Minister Brown better have her mints to hand because this sour mouth is about to tell some home truths.
The current state of the South African electricity situation can only be described as one of chaos. The electricity crisis can be attributed, in large part, to Eskoms’s insufficient generating capacity; the never-ending delays in completing its new build programme; the lack of proper and regular maintenance of its existing plants; a lack of competence in the management of the utility and insufficient political will to address the issue of the prioritisation of political imperatives over the technical imperatives of the utility. The current situation is further exacerbated by the precarious financial reality the company finds itself in. Is it not then completely bizarre that the ANC who is responsible for the cadre deployment to Eskom now organises a march on its very own creation? Talk about the worm that turned![Applause.]
The DA supports a short-term action plan based on rapidly and vastly increasing the number and size of energy projects undertaken by Independent Power Producers, IPPs, as a means to increase the South African power generation capacity over the coming three to five years.
There is no quick-fix solution to these problems, but we can take certain steps immediately to stop the problem from escalating. These include ending the complete state monopoly control of the electricity industry by putting a stop to the Minister of Energy’s sole determination of what technology is built and who gets to build it, and in passing the long overdue Independent System and Market Operator, Ismo, Bill. The Independent System and Market Operator Bill would essentially remove the operation of the transmission grid from Eskom and place it in a separate state-owned entity.
The government must make its intention clear as to when it will release the Integrated Resource Plan of 2015. The 2013 update report, as opposed to the 2010 iteration, has a distinct focus on those technologies that can be brought on stream in the shortest possible time. This would include renewable energy and gas-fired turbines.
The government must urgently publish the Gas Utilisation Master Plan so as to give clarity to the market as to what investments into the gas sector are being made and contemplated and similarly give policy certainty over mining property rights. The use of liquefied gas must be fast-tracked as gas turbines can be brought on stream within a few years.
The government must exhibit strong and unwavering political will in terms of fast-tracking the finalisation of the Medupi and Kusile projects. This is absolutely essential.
Investigations need to be undertaken with regard to procurement processes for diesel and coal. A number of questions have been raised regarding the procurement process that Eskom uses when buying diesel fuel for its turbines. A transparent procurement process is vital to ensure that middlemen benefiting from dubious tenders do not enrich themselves at the cost of consumers.
The government must urgently implement an appropriate subsidy scheme for embedded generation so as to promote its uptake both at commercial and residential levels.
The government must ensure that Eskom provides a detailed report on backlogged maintenance at all its power plants as well as instituting international best practice measures in a number of areas.
A rational explanation needs to be provided in relation to the salaries and bonuses which have been paid to Eskom officials. There is undoubtedly a perverse incentive architecture in the structuring of Eskom salaries and bonuses paid to the officials. This is scandalous!
The National Energy Regulator of SA, Nersa, must be required to make Eskom accountable for its tariff increases and give full and rational explanations to the South African people as to why these increases are being requested over and over again.
The government must rapidly support measures to increase generation capacity, decrease the demand for electricity and improve efficient energy use.
The government must take immediate steps, including the splitting of Eskom, to begin the expansion and updating of the grid, which will allow more independent power producers, IPPs, to connect and begin contributing towards generating capacity.
It is now time for some very important conversations to take place. It is time for roundtable discussions between the Department of Energy, the Department of Public Enterprises, the Department of Finance and the Department of Co-operative Governance and Traditional Affairs. No longer can we pretend that we are not in the midst of a national crisis. There is no other word for it. The only way forward is to break down the walls between these departments and get them working together.
The fact of the matter is this: A secure energy supply is the lifeline of any economy. We are - without being overly dramatic - on a path to economic destruction if we do not take action now. We do not complain, Minister; we have solutions. Let us be part of the solutions that take our country forward. Let us put party politics aside and work together as South Africans to solve this national crisis. I thank you. [Applause.]
Mr K Z MORAPELA
Mrs N W A MAZZONE
Mr K Z MORAPELA: Hon Chairperson, the EFF does not support the Public Enterprises Budget Vote. [Interjections.] The existence of this Ministry is not necessary and is a waste of money
Unless line function departments are responsible for oversight to ensure that state investment through state-owned companies is aligned with government policies, we will continue to see private companies doing business with Eskom, and exploiting workers at Medupi and Kusile Power Stations. Workers must be paid decent salaries. We will continue to see Eskom proposing sickening tariffs beyond what the poor and working South Africans can afford. South Africans must reject this. [Interjections.] We will continue to see the ANC marching against itself, like they are doing today in Soweto, because of policy confusion within the ANC. Their factional battles are impeding state-owned companies from working effectively.
Eskom must be moved to the Department of Energy, Denel to Defence, SA Forestry Company to Agriculture, and Transnet and SA Airways to Transport.
When state-owned companies are with line departments for policy guidance, then you will be able, Minister, to create a state-owned assets supervision and administration commission for proper co-ordination and coherent contribution to state investment, following in the footsteps of the second biggest economy, your friend China.
We are not telling you something new, Minister. [Interjections.]
For Broadband Infraco to be moved to Telecommunications was, by the way, the correct move. Minister, we are not sure about the rationale behind moving SA Airways to National Treasury instead of Transport, but we know there is a lot of confusion in your party. We are not surprised about that and we can really excuse you. [Interjections.]
Otherwise, what we have in this Ministry is a special ministry to appoint and disband boards. Your department spends almost 60% of its budget on administration. It must be a really special Ministry.
In addition to that, your department has spent more than R100 million on consultants in the last four years for work that could have been done by other departments. [Interjections.]
We must never underestimate the role of state-owned companies if we are serious about industrialisation. When Japan was at the height of its industrialization, the state companies owned 30% of mining and metal industries, 50% of machinery and equipment, and 60% of commercial stock exchange. We must use state-owned companies to industrialise and beneficiate our people.
Eskom and Transnet must use their purchasing power to address the challenges of unemployment and underdevelopment of our people. We have multinational corporations who are not compliant with the Mining Charter like BHP Billiton and Exxaro, but they continue to get contracts from the state-owned companies. [Interjections.]
Also, in a presentation that Prof Ben Turock made to the Portfolio Committee on Trade and Industry, he made the very interesting observation that state-owned companies spend a lot of money buying financial and other software from multinational companies who continue to exploit aggressive tax planning and do not contribute to the transformation. [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon member ... [Interjections.]
Mr K Z MORAPELA: State-owned companies are doing everything in their power to undermine transformation. [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon member, conclude. [Interjections.]
Mr K Z MORAPELA: Niya qhuba nge-reverse. [You drive backwards.] Because you continue to be corrupt. [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon member! Hon member!
Mr K Z MORAPELA: You are a corrupt government. That is why everything is collapsing in your hands! ... [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon member! Take your seat! [Interjections.]
Mr K Z MORAPELA: ... because you are corrupt! [Interjections.]
Mr Z LUYENGE
Mr K Z MORAPELA
Dr Z LUYENGE: Hon Chairperson, allow me to greet all hon Ministers and Deputy Ministers who are present here, hon Members of Parliament, officials of the department, the boards and the executives of all the entities, distinguished guests, fellow South Africans, ladies and gentlemen ...
Hon Chairperson, I am tempted to respond to hollow insinuations that have been made here as if the ANC is doing nothing, but I have a responsibility to represent the ANC correctly. The ANC in support of this budget has this to say, because this is a very critical year in the ANC’s work and zeal to make a difference in the people’s lives.
The declaration by the National Executive Committee, NEC, of the ANC about 2015 as the year of Freedom Charter has important significance in this Budget Vote.
The spirit and intention of the Freedom Charter clause that speaks to the people sharing in the country’s wealth means that state-owned companies must lead by example, driving growth and transformation in the South African economy.
The responsibility of state-owned companies to aggressively invest in the infrastructure programme and maintain demand is critical when there are economic challenges nationally and globally.
The state-owned companies equally have the responsibility to encourage the private sector to invest in the ongoing drive to build growth and development in the country.
The contribution of state-owned companies, SOCs, to industrialisation and economic transformation is reflected in the strategic plan of the department, and is a consequence of the ANC’s economic policy.
The October 2012 transformation dialogue began the process in the development of a transformation framework and guidelines for SOCs.
Whilst progress is always uneven, we can confidently say progress has been achieved.
Kuyahanjwa, kuyaqhutywa. [We are moving forward.]
With regard to the airline sector, as a direct result of undercapitalisation and operating with an aging fleet within a highly competitive trading environment, this has a direct impact upon operational profits and presents a challenge to achieve financial targets.
Globally airlines experience challenges, including reduced profit margins, passenger demand and increased airport charges, currency exchange rates and increased airport operations and fuel costs. The cost reduction strategy that the airline stakeholders agreed to will bear fruits.
The turnover increase by 11,5% is welcome. An overall reduction of 30% in cargo handling due to contracting challenges and fraud requires serious attention, hon Minister. The passenger revenue growth in both domestic and regional routes indicates clear room for further growth.
The ANC is encouraged by the serious work being done on assessing profitable routes.
The SAA Cadet Pilot Development Programme must be welcomed and acknowledged as progress in skills development. Because of the Cadet Pilot Development Programme, sixty-eight per cent black, 38% females, and over 20% black pilots have been trained, with 61% of the technicianswho have been trained and have graduated being black. The Cadet Pilot Development Programme is a real incubator for critical aviation skills, with over 150 pilots, 250 technicians and 100 learnerships being recorded.
The ANC further calls upon all stakeholders to mobilise all expertise, put forward all efforts at their disposal from their diverse backgrounds and be patriotic enough in collectively taking forward the airline sector.
On Transnet, the ANC has this to say: During the period 2004-05, Transnet embarked on a four-point turnaround strategy as a direct result of complex performance, unfocused and inefficient business structures, weak governance, low morale and lack of capital investment and high gearing. The four focal points included: Business reengineering on operational strategy; strengthening the balance sheet on disposal of non-core business assets and reduction of liabilities; establishing strong governance structures and implementing proper risk management, and human capital development.
That has actually doubled operational profits from R4,7 billion to R8,5 billion; capital investment increased from R3,8 billion to R11,7 billion while gearing reduced dramatically from 83% to 39%. What a remarkable transition. [Applause.]
Thanks go to the board and management for such wonderful strides, including your endeavors, Mr Molefe. There is nothing that will thwart you from doing the same at Eskom. We may differ with the opposition on many aspects but on the matter of Transnet, it is all thumbs up at a committee level.
The quantum leap in 2008 from the successes of the turnaround strategy culminated in the volume demand outstripping the capacity of Transnet.
Transnet felt obliged to review its strategy in order to meet the demand and developed a market demand strategy. Through a Market Demand Strategy, MDS, investment plan, Transnet committed over rolling seven-year costs to address backlogs in rail, port and pipelines and new logistical projects.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Please conclude, hon member.
Dr Z LUYENGE: Since the introduction of the MDS, with R90 billion of expenditure on infrastructure projects, 70 000indirect jobs have been created, and 3 000 artisans trained.
In conclusion, our SOCs are a unique instrument for our developmental state, and are systematically driving investment, industrialisation and transformation in the broader economy. The investment in SOCs has led to tangible changes and a contribution to the growth of our economy.
What is clear is that SOCs are in the process of transforming the economic landscape of our country and, through their investment process and the resultant additional capacity, they are producing a myriad of new business opportunities for a wide range of stakeholders. Thank you. [Applause.][Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Just avoid the temptation to tell us what the time is. [Interjections.]No. I said he must conclude, but he has time on the clock. I am not sure what you want to do. Really, I am not sure what ... [Interjections.] If you want to come here, you can come. I call hon Singh.
Mr N F SHIVAMBU: No problem, Chair. We can come and take that seat and take over the chairing because you are not focusing. [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Singh.
Mr N F SHIVAMBU: We can take over! [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Sit down!
Mr N SINGH
The TEMPORARY CHAIRPERSON (Mr M R Mdakane)
Mr N SINGH: Hon Chairperson, hon Minister, what is music to my ears from what you have said is the fact that this government is taking very seriously the Presidential Review Committee on State-Owned Entities’ recommendations. I really thought that these were put away in File 13 and would be forgotten like many other initiatives that were presented to us in the past 20 years. I think it is interesting to note that in considering the Presidential Review Committee’s, PRC, recommendations, hon Minister, one would be looking at overarching policy that would govern the way state-owned enterprises, SOEs, operate, moving forward.
I think many of us in this House, except for those of us who read the Presidential Review Committee report, would have realised that there are something like 700 SOCs - which you mentioned - in municipalities, provinces and here at the level of the national department and, certainly, there needs to be some co-ordinated way of ensuring that they are managed properly.
Now one of the areas that I think we need to look at, and I hope it will arise from these recommendations, Madam Minister - through you, hon Chair - is this arms-length approach that we have with the SOCs. One understands that, because of government’s model at the moment, one has to have this arms-length approach, and a Minister and a department cannot directly interfere in an SOC because there are boards, but that is not helping us, because when we look at the number of SOCs that are failing us, it requires serious intervention by the government, and is not government intervention only; it is government’s intervention on behalf of the taxpayers. We own these SOCs, so government has a responsibility to intervene directly.
So, I hope that this arms-length approach that we have is something that we can put behind us as we move forward. You know, hon Chairperson, the hon Minister mentioned some of the successful SOCs we have. Yes, we give credit to Denel. We give credit to Transnet and some of the other SOCs. But, really, when you look at SA Express who yesterday announced a R206 million net loss in the 2013-14 financial year, it doesn’t fill us with hope. And whilst we are told that is because of undercapitalisation and other reasons, we still need to grapple with this problem moving forward, and show the public out there that we have confidence in these SOCs carrying out their mandate to be profitable in the long run, and not to run at a loss all the time.
You know some of these SOCs, hon Chairperson, think that government is an Automated Teller Machine, ATM, and whenever they need a bail-out they come to this ATM government and they just withdraw. It is like having an uncle in the furniture business. I think you have heard about that, and we cannot allow that to go on forever and ever.
Now turning to the hardy annual called Eskom, hon Minister, I don’t want to speak about what Eskom can do and should not do. That is left to the Portfolio Committee on Energy.
But, seriously, we need to know where we are with this commission of inquiry. It is now months since the chief executive officer, who was ... By the way, your very trusted director-general in this department was suspended together with three other senior people. Where are we at this moment in time? We have been given to understand that the termsof reference have been finalised. Perhaps you can tell us when this inquiry is going to be completed. Or is it going to be another inquiry where we are going to call off the inquiry and then have golden handshakes and things like that and tell the people ``Bye-bye, thank you, you have done well’’? So, that is something that we have to look at.
I am very pleased that, yesterday, the National Energy Regulator of SA, Nersa, did not consider the request for an additional 12% increase in a positive light, and they are going to hold public participation meetings. It is cold comfort because we must certainly resist any move to bring the increase in electricity rates up to 25% this year. It is just not affordable for the man in the street. Soweto has already started the protest, and we don’t want to have another Soweto uprising because I think what the people of Soweto are doing is expressing what everybody else ... [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Please conclude!
Mr N SINGH: Hon Chairperson, we will support this Budget Vote to the extent that your department has a role to play over oversight.
Whether there is a need for the department to continue in the medium to long term, and whether some of these SOCs should fall under their mother departments is a debate for another day. Thank you very much. [Applause.]
The DEPUTY MINISTER OF PUBLIC ENTERPRISES
Mr N SINGH
The DEPUTY MINISTER OF PUBLIC ENTERPRISES: Chairperson, hon Minister Lynne Brown, hon Ministers and Deputy Ministers, hon members, leadership of our state-owned enterprises, the acting director-general, Department of Public Enterprises colleagues, distinguished guests and fellow South Africans, where we once were should remain our motivation to move forward. As we look back, we should do so to measure the extent of our success and prepare for the road ahead.
In 1984, a young African male graduated with a BProc degree from the University of Cape Town. For two years, he struggled to secure a firm at which to do his articles. He kept to his passion and eventually opened his law firm. His name is Noor Kapdi from the Western Cape province. Our state-owned enterprises, namely Alexkor, the SA Forestry Company Limited, Safcol, and Eskom, showed confidence in this company by giving it legal work. When we celebrated 20 years of democracy, we also celebrated this company, KapdiTwala, becoming SNR Denton South Africa, part of SNR Denton global. It is now part of the largest law firm in the world. [Applause.] These are the fruits of 21 years of democracy. Transformation of the legal profession is central to the rule of law. The rule of law is central to economic activity.
In this Medium-Term Strategic Framework, MTSF, we shall be monitoring how our state-owned enterprises are giving work to black and female legal firms. Our state-owned enterprises are the catalysts for ensuring that black and female legal practitioners enter the commercial practice space. We have directed our state-owned enterprises to drastically improve the quality and quantity of legal briefings to black and female law practitioners. We can report to this House that four of the six state-owned enterprises reporting to the Department of Public Enterprises are being audited by black accounting firms. South Africa can no longer afford to have only the big four auditing firms. We want the big 100 and more. Our state-owned enterprises are positioned as strategic levers to drive transformation. Our resolve to capacitate the previously disadvantaged firms supports the country’s broader transformation agenda.
Safcol has been proceeding progressively without any reliance on the national fiscus. The company invested about R5,1 million on social economic development, whilst R1,5 million was directed towards enterprise development. True to our commitment to the development of rural communities, Safcol signed social compacts with 13 communities where it operates. The company’s spend on socioeconomic development increased to R6,8 million in the past financial year. In developing communities, the company has been directed to ensure increases in the development of skills in research and development, procurement inputs and contract forestry services from black-owned enterprises, skills development programmes for local communities, and enterprise development projects.
Alexkor continues to make progress towards financial sustainability. Investment in mining operations led to improvement in diamond production and job creation. In the past financial year, Alexkor realised growth in the operations of the mine. This enabled Alexkor to effect a greater impact on the socioeconomic conditions of the people of Namaqualand. The 2013-14 financial year saw an increase in diamond production from 46 000 carats to 79 000 carats in the 2014-15 financial year. Revenue from the sale of diamonds increased from R277 million in 2014 to R414 million in 2015. The marine mining rights have been granted, and production is envisaged to start in the third quarter of this financial year. This operation will result in the production of 180 000 carats per year at full production. This progress carries the community along.
The government identified a need to approach the shortage of critical skills from all fronts. In the 2014-15 financial year, the state-owned enterprises collectively enrolled 5 286 new trainees in various scarce and critical skills. This group of new trainees is comprised of 790 artisans, 616 technicians, 387 engineers and 11 cadet pilots. A further 3 320 trainees were enrolled in various sector-specific critical skills programmes. [Applause.] Eskom collaborated with its supplier network to train a further 1 916 matriculants in artisan trades. A total of 541 graduates were placed in experiential programmes. The 2015-16 financial year will see a collective enrolment of 5 776 trainees in various skills. The targeted beneficiaries are the young people.
Once Africans in particular were barred from receiving this type of training. Verwoerd once said, ``What is the use of teaching the Bantu child mathematics when it cannot use it in practice?’’[Interjections.] Our answer to Dr Verwoerd and his followers is to go to Transnet, Denel, Eskom, SA Express, Safcol, and Alexkor ...
Dr P J GROENEWALD: Agb Voorsitter ... [Tussenwerpsels.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Deputy Minister, take your seat. Hon Groenewald?
Dr P J GROENEWALD: Agb Voorsitter, ek wil vir die agb Adjunkminister vra of hy bereid is om ’n vraag te beantwoord. [Tussenwerpsels.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Deputy Minister, would you like to take a question? [Interjections.]
The DEPUTY MINISTER OF PUBLIC ENTERPRISES: After I finish my speech.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Afterwards.
The DEPUTY MINISTER OF PUBLIC ENTERPRISES: They should go to SA Express, SA Forestry Company Limited, and Alexkor, and they will see what South Africans do with maths and science.
The memorandum of understanding signed with the Department of Higher Education has seen Denel receiving R58 million to train 197 artisan trainees. Eskom received R174 million to train 1 250 artisan trainees. We are responding to the National Development Plan’s call to increase the artisan pool.
Our state-owned enterprises continue to ensure that the winter of despair is changed into a summer of hope by driving entrepreneurship. Denel’s local spend in the 2014-15 financial year was R3,1 billion. From this budget, black-owned companies received R685 million, black women-owned companies received R251 million, black youth companies took R29 million, and a further 114 companies received support to an amount of R17,3 million through the Enterprise and Supplier Development Initiatives. Transnet spent over R43 billion on local content in the last financial year. A total of R9 billion was spent on black-owned companies, R4 billion on women-owned companies, whilst R748 million was directed to black youth-owned companies and companies with people with disabilities. Eskom spent an amount of R102 billion in line with the broad-based black economic empowerment requirements.
We have placed a lot of emphasis on the corporate social investment, CSI, collaborations. Moving beyond our relationship with Tata Africa Holdings, we are in discussions with MTN and Nedbank to foster collaboration on our CSI spend. We believe that public-private partnerships will contribute to achieving government’s developmental objectives. In education, we have connected more schools to the telematics system. The Transnet SA Football Association School of Excellence registered a 93% pass rate in Grade 12, with 35% obtaining exemptions. The Eskom Annual Expo continues to provide a platform for thousands of young learners to demonstrate their innovations in the fields of science, technology and mathematics.
Where we once were, rural people did not matter. Under our ANC-led government, rural development is a priority. The Eskom Infrastructure Development Programme funded infrastructure improvement of schools in the rural areas of the North West, KwaZulu-Natal and Limpopo provinces. Denel and Safcol have spent about R3,2 million supporting rural schools in Limpopo, Mpumalanga and KwaZulu-Natal.
On health, to date Eskom’s mobile health clinics have had an impact on 2 900 people in 37 schools in rural areas. By June 2015, the number is expected to increase to 5 000. Transnet is committed to comprehensive primary health care. The two Phelophepa Trains of Hope touched the lives of 133 000 patients and provided experiential training to 1 335 students. The state-owned enterprises continue to support disadvantaged communities through their teenage health programme. Dignity packs are distributed to learners including children with disabilities in poor communities. We ask you to support this budget to change the face of rural health for our people.
Collaboration between the Municipal Infrastructure Support Agency, Misa, and the Department of Public Enterprises’ state-owned enterprises is set to roll out in the WestonariaLocalMunicipality in Gauteng. Artisans trained by Transnet, Eskom, Denel and Misa will be working on reviving the municipal infrastructure in the municipality.
In conclusion, Peter Tosh in his album Equal Rights said the following:
Everybody is heading for the topbut tell me how far is it from the bottom ...
Everybody want to go to heaven,but nobody want to die ...
I need equal rights and justice. [Applause.]
I ask that those ... [Interjections.] I ask that those who know how far it is from the bottom but who want to go to the top and those who want equal rights and justice to support this Budget Vote. I thank you. [Applause.]
Mr N F SHIVAMBU: Chairperson, before he speaks, I would like some clarity. Did he just quote Peter Tosh? [Laughter.] Just for the purpose of clarity ...
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): No, no! Hon Shivambu, it is preferable to cite the Rule when you stand up. Because you did not cite any Rule, you will sit down.
Mr N F SHIVAMBU: All right, that is fine. I wanted to check whether he quoted Peter Tosh as a point of clarity. [Interjections.]
Mr R M TSELI
Mr N F SHIVAMBU
Mr R M TSELI: Hon Chairperson, hon Ministers and Deputy Ministers, and distinguished guests ...
Vho R M TSELI: Ndi madekwana.
I am indeed privileged to be one of the participants in the debate on Vote No 9 of the Department of Public Enterprises on behalf of the ANC. We really appreciate the department's commitment to assist state-owned companies in the substantial acceleration of economic growth, employment creation and the reduction of inequality as a way of achieving the UN Millennium Development Goals of which South Africa is a signatory. A lot of progress has been made in that regard, and I would like to focus largely on the SA Forestry Company Ltd, Safcol, and the Alexander Bay Development Corporation, Alexkor.
Safcol has the potential to partner with business in agroforestry, timber frame structures and furniture manufacturing, which has been recognized by the Industrial Policy Action Plan to be key in terms of benefits for rural communities. A furniture manufacturing training project has been initiated with over 1 400 people trained to date. It is also encouraging to note that a project for social infrastructure programmes is being developed and has been piloted through the provision of schools, frail-care centres and clinics in Limpopo, Mpumalanga and KwaZulu-Natal.
Its management of the plantation is the best in the country, with the company generating a profit of R51 mil1ion which includes dividends of R41,8 million from associated companies, and it has increased its reserves by 45% to R222 million. However, 61% of the land it operates on is subject to land claims, which is a worrying factor as it hampers its long-term planning. As the ANC we are pleased with the ongoing engagements between the Department of Public Enterprises and the Department of Rural Development and Land Reform which are aimed at ensuring the speedy processing of those land claims. The fact that it has not received any capital injections from government is an indication that it is financially sustainable and has the potential to grow.
A number of cases of misconduct have been reported but we are assured that they are receiving attention and that those found wanting will be dealt with appropriately. As the portfolio committee we will be following these cases with keen interest to ensure that those responsible are held accountable.
Alexkor, on the other hand, is in the process of reviewing its strategy to enhance financial sustainability and also to oversee the implementation of the Richtersveld Deed of Settlement which resulted in the establishment of a formal township in Alexander Bay. We would like to call upon the Department of Public Enterprises to move with speed in the signing of the transfer agreement of the township with the community.
For the first time in 12 years, land-based mining is taking place through investment in a R60 million diamond processing plant, resulting in 230 jobs being created with most of the employees coming from the four townships that the beneficiaries originate from. Another positive development is the state-owned corporations’, SOCs, net profit of R237 million as compared to the R4,7 million it achieved in 2013.
The ANC is committed to clean governance and a corruption-free society; hence, the company has a fraud hotline facility which is operational to report fraudulent, corrupt and unethical conduct as and when it arises.
With regard to transformation, Alexkor has made sufficient progress in improving its equity status in that 60% of its top management is constituted of African females. Surely that is a good story. [Applause.]
The need for the intensification of oversight over state-owned entities by the shareholder cannot be overemphasized and, equally, performance and consequence management will have to be introduced for the executives and SOCs that do not achieve their key performance targets.
Allow me to address some of the hon members of this House. I would like to remind some of you that your policies have been rejected by 94% of the electorate of this country ... [Interjections.] ... who instead gave the ANC an overwhelming mandate of 62% to govern, and we will never be apologetic. They said, with a big ``no’’, that we don't want to associate ourselves with what you believe in. As I said, I am just reminding you because sometimes you come here and get excited because people are watching you on TV at home. [Interjections.]
To the hon members on my left, I must warn you that even if you embark on a rent-a-black-leader campaign, using the Maimanes of this world, you must know that our people are clever. Also know that you will always remain the very Democratic Alliance of yesterday. You will never succeed in playing with the minds of our people. [Interjections.]
Mbongola naho ya ambadzwa rokho kana vhurukhu a i mbo ḓishanduka ya vha muthu, i ḓidzula i mbongola.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon member, please take your seat. Take your seat.
Dr A LOTRIET: Chairperson, there are two things. Is it parliamentary to refer to the Leader of the Official Opposition as a rent-a-black ... [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): It is not. [Interjections.] Hon members, I request that when you stand up to raise a point of order, you should please cite the Rule in terms of which you are rising; otherwise all of us are going to be raising point after point of order. However, my understanding is that the member did not mention any specific member. [Interjections.] He never specified any member. [Interjections.] Hon member, please take your seat.
Dr C P MULDER: Hon Chairperson.
Mr N F SHIVAMBU: Chair, these microphones are switched off ... [Inaudible.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Shivambu.
Mr N F SHIVAMBU: Yes?
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Just take your seat. There is an hon member at the back who raised his hand.
Mr N F SHIVAMBU: Then you must please come back to me because I want to raise a point of order.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): That’s fine. Hon Mulder?
Dr C P MULDER: Thank you, hon Chairperson. I think before the Chair interprets on behalf of the member what he said, why don’t we just ask the member if he referred to any specific member when he said ``rent a black’’? The member knows; so let him speak. [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Kalyan?
Ms S V KALYAN: Chairperson, I rise on the Rule that refers to impugning the integrity of a member of this House. The member at the podium definitely said, ``rent a black like the Maimanes of this world’’ ... [Interjections.] ... so he was specific about the name. He referred to a member of this House who is the Leader of the Opposition. I submit that it is unparliamentary. [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon members, just bear in mind that you must moderate whatever you say because it doesn’t contribute to any form of debate.
Hon Tseli, withdraw your remark. [Interjections.] I am calling on the member to withdraw his remark.
Dr A LOTRIET: Please withdraw it.
Mr R M TSELI: I withdraw my remark.
Mr N F SHIVAMBU: Hon Chair.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Take your seat, hon member. Hon members, you are not assisting us in this debate if you just rise without citing a Rule. Sit down, hon member.
Mr K Z MORAPELA: It’s on a point of order.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Then with regard to points of order, these must be raised based in terms of a Rule. It should not just be a point of order for the sake of it. What is the Rule that you are using to raise your point of order?
Mr K Z MORAPELA: It’s a convention that when one stands up on a point of order one is given an opportunity to speak without being asked to quote a Rule. It has been the practice. [Interjections.] No, Chair!
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon member ...
... inkinga yakho ukuthi ngizama ukukukhipha odakeni.
Mr K Z MORAPELA: It’s Rule 63. [Laughter.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon member, take the floor.
Mr K Z MORAPELA: Chairperson, the hon member must be reminded that the EFF was only six months old ... [Interjections.] ... when it came and won six per cent of the votes to be in this Parliament. It means that in 2019 we will be the government in this particular Parliament.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Thank you, hon member. Hon members and hon Tseli, let us stick to the Rules. Just stick to the Rules because if we don’t apply the Rules the debate won’t assist us. Stick to the Rules. Hon Tseli.
Mr R M TSELI: You will never succeed in playing with the minds of our people.
Mbongola naho ya ambadziwa vhurukhu, i do didzula i mbongola.
Our people know that it is only the ANC that has a clear programme of action to address the triple challenges of poverty ... [Inaudible.] [Interjections.]
Mr N F SHIVAMBU: Hon Chair, on a point of order. The member on the podium spoke now in Venda. I will interpret what he said. He said that even if a donkey is wearing trousers it is still a donkey. [Interjections.] So, he is referring to people in this Parliament as donkeys. I think he must be asked to withdraw that remark because we are not here for games. We are not here for games. [Interjections.] We are not here for games, so he must withdraw such language, please. [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Deputy Minister, cite the Rule and stand up. Please, colleagues; let us not stand up just for the sake of it. We are making it very difficult. The problem that we will have is that when we translate all proverbs and idioms it will become difficult for us. [Interjections.] Hon member, please conclude.
Mr R M TSELI: Our people know that it is only the ANC that has a clear programme of action to address the triple challenges of poverty, unemployment and inequality. Minister and Deputy Minister ... [Interjections.]
Mr N F SHIVAMBU: Chair, on a point of order: What is your ruling? I rose on a point of order and you have not given your ruling. [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): No, hon member. Sit down. The hon member never mentioned anyone’s name. You know the language better than I do. The member was using a proverb and a saying which doesn’t affect anyone. Let us sit down ... [Inaudible.]
Mr N F SHIVAMBU: Let’s put it on record that we can use such language when ... [Inaudible.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): It’s on record. It’s on record.
Mr N F SHIVAMBU: If you are setting a precedent then we will say that there are a lot of donkeys on the other side, so we take that as ... [Inaudible.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Shivambu, take your seat. Hon member, conclude. [Interjections.]
The CHIEF WHIP OF THE OPPOSITION: Chairperson, on a point of order: There has been a previous ruling in this House in 2000 with regard to the former ... [Interjections.]
... Do you want to take ... [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon members, let us listen to the hon member, please.
The CHIEF WHIP OF THE OPPOSITION: At that stage it involved the hon Douglas Gibson who had used an English phrase or idiom which contained language that was deemed unparliamentary. It was ruled unparliamentary by the House and, therefore, the use of quotations or idioms themselves cannot protect a member from unparliamentary behaviour. So, if the member said something unparliamentary, even if it is contained in a quotation or an idiom, he must be asked to withdraw it. [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon member, please conclude.
Ms M S KHAWULA: On a point of order ...
... ngiyacela ngesihle.
USIHLALO WESIKHASHANA (Mnu M R Mdakane): Hlala phansi.
Nks M S KHAWULA: Ngiyabonga, bengifuna ukuthi ... [Ubuwelewele.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon member, I was trying to persuade you to not get involved in mudslinging. The member was using a proverb, idiom or saying. The only member who understood that was hon Shivambu who rose on a point of order. We have said that we are going to look at this, and come back and make a statement.
Nks M S KHAWULA: Sihlalo, bengifuna ukubuza ukuthi uma ngabe ngineso elilodwa ukhona yini umthetho othi mangithule nesici sami? Ngoba njengoba ngithule, kade ngilalela ngapha kukhona abangenawo amazinyo ngaphambili kodwa babizwa ngesici nangayo yonke into [Ubuwelewele.]Ngicela ukuthi ungibhekele lapho ngoba namanje angikhumbuli ukuthi kukhona lapho umuntu okumele abizwe ngembongolo.[Ubuwelewele.]
USIHLALO WESIKHASHANA (Mnu M R Mdakane): Mhlonishwa, sesicele ukuthi amalungu asebenzise ulimi olufanele ngoba awekho amalungu avumelwe ukuthi athuke amanye amalungu. Cha! Awekho amalungu okumele athukane.
Let us engage in a debate and not attack individuals. Hon Tseli, conclude now.
Mr R M TSELI: Minister and Deputy Minister, as the portfolio committee we would like to assure you of our support in the wonderful work that you are doing as you move South Africa forward. The ANC supports Budget Vote No 9.
Mr N L S KWANKWA
Mr R M TSELI
Mr N L S KWANKWA: House Chairperson, hon members, well ...
... ndifumanisa ukuba nditsalwa ngapha ngala masela nangapha ngamanye athi mandingaxhasi ... [Uwele-wele.] ...
... therefore, after careful consideration the UDM supports Budget Vote No 9 ... [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Order! Hon members, my appeal ...
... ningabahlonishwa, masisebenzise ulimi olufanale.
... for us to have a very effective debate.
Mr K Z MORAPELA: Order, Chair. Order, Chair.
Mr N L S KWANKWA: No, I was referring to drinkers of water in isiXhosa. [Interjections.]
Mr K Z MORAPELA: House Chair.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Kwankwa, there is a point of order.
Mr K Z MORAPELA: Chairperson, I rise on a point of order. I agree with you that there are amasela [thieves] that side but not on this side, please. [Interjections.]
Mr N L S KWANKWA: That was meant to be a joke; I withdraw it. Thank you very much.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Is it not better, if it was a joke, to withdraw it?
Mr N L S KWANKWA: Yes, I have withdrawn it.
State-owned enterprises, SOEs, have a critical role to play in helping the state to achieve its developmental agenda of balancing economic growth and social development. To this end, the success of a developmental state depends on its ability to develop a mixed economy with both the public sector and the private sector co-existing.
Therefore, the notion that the relationship between SOEs and the private sector is inherently antagonistic in a developmental state is in every respect inaccurate. An antagonistic relationship between the two role-players only occurs in the context of SOEs that are either poorly managed or where there is a poor understanding of their developmental mandate, which is sometimes the case in South Africa.
Unless something drastic is done to change the status quo, the UDM is of the view that currently SOEs lack the requisite capacity to drive our country’s developmental agenda.
While most SOEs are in turmoil, Eskom, and its load shedding stick out like a sore thumb. Power outages are estimated to cost the South African economy more than R20 billion a month. This makes government’s commitment to place South Africa on a path to high economic growth and prosperity a pipe dream.
As if this is not enough, Eskom is asking for a double digit electricity price increase over and above the 12,9% it was already granted for this year.
The UDM is worried about the negative impact this will have on the economy and the poor. We would therefore like to request and propose that the free basic electricity units which were set at 50 units in 2003 be increased to 100 units in order to once more cushion the poor from the full impact of the tariff increase.
I want to show you posters as we talk about cushioning the poor from the full impact of the electricity price tariff increase. Hon Minister, last year, there were three kids who were sent by their grandmother to go and collect firewood because she could not afford electricity.
The oldest one here is nine years old. They are seven, eight and nine years of age. When I visited the family the grandmother said ``I did this because I am very frail and I need to cook for my grandchildren’’.
Now, when we talk about the importance of cushioning the poor from the full impact of the electricity price increase, it is very important that we understand that there are people who are going through these things on daily basis.
The other very important question that you must ask is: Given all the challenges that we experience with our SOEs, does this then not compel us to pose the normative question whether SOEs in their current form are effective in addressing market failure and forging a developmental state; if not, what is the way forward.
In the meantime, we should employ competent people to run our SOEs. In this regard, we welcome the appointment of Mr Brian Molefe as acting CEO of Eskom and take this opportunity to wish him and the entire board of Eskom all the best in their new assignment.
The UDM supports this Budget Vote. I thank you very much. [Applause.]
Dr P J GROENEWALD
Mr N L S KWANKWA
Dr P J GROENEWALD: Agb Voorsitter, dit is so. As jy nie respek het vir die Voorsitter nie, hoef jy dit nie te sê nie.
Ek wil begin deur vir die agb Adjunkminister te vra - hy het ’n aanhaling gemaak wat Dr Verwoerd sou gesê het – Minister, ek is nie bewus daaarvan nie; en as dit so is, dan is dit total onaanvaarbaar, maar vir billikheid en regeverdigheid wil ek hê u moet vir ons die bron gee van waaruit dit kom. Ons moet dit sien. Anders is u geloofwaardigheid op die spel.
Agb Minister, u het, toe u u toespraak gelewer het, verwys na die linkerkant toe en gesê, vandat ons gebore is het ons net skakelaars aan en af gesit. Ek het vir u nuus, ek het my matriekeksamenvoorbereidings gedoen met ’n olielamp. En ek was nie die enigste een nie, daar was baie. So, u het ’n wanindruk van mense aan hierdie kant van die Raad. Maar, agb Minister, ek wil vir u sê, ek en u leef in twee verskillende lande op hierdie oomblik, want as ek luister na wat u hier gesê het vandag, dan gaan dit wonderlik met Eskom; daar’s geen probleme nie; daar’s genoeg krag; daar gaan nog meer reserwes wees. Maar die werklikheid is dat daar wel beurtkrag is. Die werklikheid is dat die mense van Suid-Afrika nie die prentjie ervaar van wat u hier kom stel het nie. Die ergste van alles is, ek het vanoggend na ’n amptenaar van Nersa geluister, waar Eskom nou vir ’n verdere 25% verhoging vra. Hy sê daar is ’n verpligitng op Nersa om te verseker dat daar behoorlike likiditeit is wat Eskom betref. Wat sê hy? Hy sê dat hulle moet verseker dat Eskom genoeg geld kry.
Agb Minister, weet u wat die problem met Eskom is? Swak leierskap en swak bestuur – dit is die werklike probleem. U betaal, en ek weet dit was nou voor u tyd, vir Brian Dames, ’n vorige uitvoerende amptenaar van Eskom, ’n R23 million goue handdruk. As gevolg, onder andere, van prestasie. Wat was Dames se prestasie gewees by Eskom? Behalwe dat Medupi nie kon klaarkom nie, het ons vetragings by Kusile en Suid-Afrika se ekonmomie ondervind ernstige probleme in terme van kraglewering. Maar dan gee u of die regering van die dag goue handrukke. Dit, agb Minister, is totaal onaanvaarbaar. U moet die volle verandwoordelikheid neem, en ek gaan vir u sê, as u Eskom wil regruk, raak ontslae van u vakbondvenoot van Cosatu, want dis die ander probleem by beide Kusile en Medupi, daar word kort-kort gestaak. Op die oomblik is hulle weer besig met stakings by, onder andere, Kusile. Dan is dit mos geen wonder dat die werk nie kan voltooi word nie.
U voorganger, Minister Gigaba, het op ’n stadium toe hy nog die Minister was, gesê dat daar nou bietjie geskop gaan word onder hierdie mense, want as daar nie gewerk word nie, sal daar opgetree word. Wat het daarvan geword? Weet u wat was die optrede? Om vir Suid-Afrikaners te sê, “wees tog asseblief net geduldig, die krag sal kom.” Intussen is ons weer terug by olielampe. Dis waar ons is. Die ANC regering, agb Minister, onder u leiding nou as die nuwe Minister, veroorsaak dat Suid-Afrika weer teruggaan na olielampe toe. En ek dink nie dit is iets om op trots te wees nie. U sal daadwerklik iets moet doen.
My ander vraag is: Hoeveel keer wil u nog die Sui-Afrikaanse Lugdiens red van ondergang? Ook as gevolg van swak bestuur, swak leiding en onervare en onbevoegde amptenare as gevolg van regstellende aksie.Ek dank u.
Mr W M MADISHA
Dr P J GROENEWALD
Mr W M MADISHA: Chairperson, the department purports that it is there to drive industrialisation, create jobs, and develop skills through our state-owned companies. Saying it is very different to doing it. If anything, we are seeing deindustrialisation, shedding jobs and a continuous deficit in scarce skills.
Under the circumstances, we must conclude that the department is failing. Clearly the department is not delivering on its mandate.
The department claims that state-owned companies have emerged as key instruments for creating jobs. Minister, will you please back up this big claim with big figures. We want to interrogate the statistics.
State-owned companies are the very cornerstone of the economy. It is natural to use them in a strategic manner to support the delivery of the National Development Plan, NDP, outcomes.
The NDP has numerous targets and we ask the Minister to enlighten us on the achievement of state-owned companies in achieving these targets.
Let me now come to the very important function of state-owned companies supporting socioeconomic transformation. This is the imperative of our times. In every township in our country people have waited for 21 long years to witness socioeconomic transformation. Did socioeconomic transformation take place in Soweto, Umlazi, Dimbaza and Khayelitsha? Did any other township realise this goal?
In rural areas the same thing has been the case. We have to ask questions because the department is extremely thin on furnishing proof and facts.
The department’s transfer of oversight of SA Airways to National Treasury is a good development. Likewise, it is good that the department has transferred Broadband Infraco to the Department of Telecommunications and Postal Services.
It must empty its portfolio so that we have fewer Ministers, and I want to emphasise that. The department is also wasting resources in hiring consultants to conduct technical research. The reduction of R23,6 million by Cabinet is not enough. This department is literally achieving nothing and creating unnecessary overlaps.
Having state managers in the department over other state-appointed managers in the state-owned companies creates wheels within wheels.
There is only one solution. To the President of South Africa - wherever he is - if he is listening and has not gone to a wedding, for example, we say that he must close this department. [Interjections.]
Cope is very dissatisfied with the performance of this department. [Interjections.] It has not met the targets it has set for itself. All we have had is very heavy load shedding.
This is happening in wrong places for our people. [Interjections.] Load shedding must happen in government, not among ordinary people.
As I step down, I want to say to you that in very big countries such as China where there are about 1,3 billion people, there are 18 Ministers, but here we are talking about 78 Ministers and lots and lots of money. Where are our people? Thank you. [Interjections.] [Time expired.]
Mr E J MARAIS
Mr W M MADISHA
Mr E J MARAIS: Chairperson, Minister, Deputy Minister and members, in his state of the nation address, the President stated that infrastructure investment was a key priority of the National Development Plan. The Department of Public Enterprises plays a key role in contributing to the achievement of the main objectives of the NDP which are to grow the economy, reduce poverty and increase employment.
The department has to contribute to the objectives of the NDP through Eskom’s build programme and Transnet’s capital expenditure programme that will improve industrial capabilities, provide sustainable jobs and improve the productive capacity of the economy. Long-term growth and investment require a shared vision, trust and co-operation between government, business and labour. We, therefore, must look into more public-private partnerships, as these will ultimately benefit South Africa.
Over the Medium-Term Strategic Framework for the 2014-2019 period, the department will seek to achieve strategic objectives. I want to highlight two of them: the promotion of good corporate governance and economic infrastructure investment to enhance the capacity of the economy with an emphasis on the strategic integrated projects. We, as the portfolio committee doing oversight, will see to it.
The 2014-19 Medium-Term Strategic Framework focuses on infrastructure development as an enabler of future economic growth. This infrastructure expansion relies heavily on state-owned enterprises, Transnet and Eskom in particular, but Eskom struggles seriously. The department must focus its attention and support on rail and ports, on accelerating the capital programme for Eskom and Transnet, and improving the performance management of the boards and executives of these companies.
Transnet is steadily making strides in catching up on the decades of underinvestment in South Africa’s freight system and in driving operating efficiencies to match the world’s best practices. Transnet has to increase tonnage moved on rail from 307 to 330 megatonnes by 2019, and also has to improve operational performance of sea ports and inland terminals.
One of the strategic integrated projects in the Medium-Term Strategic Framework is the Saldanha-Northern Cape development corridor that is in my constituency. Since the 1970s, national government has promised to invest in the West Coast. The people of the West Coast were excited about the capital investment to come, as well as the promised job opportunities. It has taken up until now to materialise.
Transnet has a seven-year capital investment plan of R336 billion. Saldanha will benefit from the further expansion of the export iron ore channel from 60 megatonnes to 70 megatonnes, which will be done incrementally in line with the customer demands. The Transnet National Ports Authority will invest in e-infrastructure projects in the port of Saldanha which includes the refurbishment of the general maintenance quay that will focus on the oil and gas supply base and rig repair facility.
An industrial development zone was proclaimed in Saldanha Bay, just behind the Transnet operations and harbour, that will contribute to economic development in the area.
Wat egter kommerwekkend is, is die voorbladberig hierdie afgelope Sondag, 10 Mei 2015, in Rapport. Dit is ’n treinramp! Die Passasierspooragentskap van Suid-Afrika, Prasa, se tender van R51 miljard – nie miljoen nie – vir die nuwe treinwaens is in die weegskaal. Dit blyk dat die bodprys vir die lewering van die waens in die plaaslike vervaardigingskringe as te laag en onvolhoubaar beskou word.
Die kontrak is vir die lewering van 3 600 treinwaens, of te wel, 600 treinstelle van ses waens elk. Volgens die tenderkontrak, moet 65% van die onderdele wat gebruik word van plaaslike vervaardigers kom, maar dat daar ernstige probleme is, is verseker. Hier is duidelik ’n probleem om aan al die tendervoorwaardes te voldoen, en ek versoek die Minister om asseblief hierop feitelik te reageer.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Please conclude, hon member.
Mr E J MARAIS: In conclusion, the assets of the various state-owned enterprises do not belong to the government alone; they belong to the people of South Africa because they were established and built with taxpayers’ money. Therefore, it is vital that state-owned enterprises are managed well, and that the Minister, the department and we, as Members of Parliament, conduct our oversight role vigorously to ensure that the correct investments are made for the future of our country. Thank you. [Applause.]
Ms G N NOBANDA
Mr E J MARAIS
Ms G N NOBANDA: Hon Chairperson, hon Minister and Deputy Minister, hon members, the acting director-general and management of our state-owned enterprises, guests in the gallery and ladies and gentlemen ...
... iyabulis’ i-ANC.
Let me take this opportunity to dedicate this debate to our stalwart,
Seapara nkwe, mme Ruta ...
... who passed away on Tuesday, and say thank you for the contribution she made to the struggle which ensured that today I, as a young woman, am afforded the opportunity to be part of the august House as an hon member, and for all other opportunities we have in this country. [Applause.]
Robala ka kagiso, Sedibelo, Kgabo, wena Mokgatlha wa ga MmaNala. Kgabo Mokgatlha a e palame setlhare e je boreku.
The Department of Public Enterprises is focusing on implementing the NDP during the 2015-16 financial year, and its main goal is to ensure that state-owned enterprises support the implementation of the NDP and contribute to the achievement of outcomes outlined in the plan, thus explaining our support for this Budget Vote.
The main challenges facing state-owned enterprises are insufficient returns on investments, and many are undercapitalised, but this does not mean in any way that privatisation is an option. Let me engage with the Budget Vote, with a particular focus on Eskom and Denel to give the Department of Public Enterprises a mandate for the 2015-16 financial year.
The ANC continues to applaud Eskom on its delivery and achievements even through the difficulties that are affecting them in their smooth operations. We also commit our continued support and monitoring mandate to ensure Eskom’s sustainability and profitability. Eskom has managed to reach payment agreements with 10 of our municipalities.This represents about R3,8 million people or seven per cent of the population of those municipalities, including ...
... mmasepala o mongwe wa Cape Town wa Nama Khoi, tse tharo kwa Free State, e lenngwe kwa Limpopo, tse tharo kwa Bokone Bophirima le tse pedi kwa Gauteng.
The recent unhappiness that has been portrayed by our people in Soweto with regard to the Eskom prepaid metres requires Eskom to fully investigate the reasons for the unhappiness. We urge our people to exercise patience while this matter is being investigated.
Eskom is a fully integrated power utility which supplies 95% of South Africa’s electricity, and the fourth largest power utility in the world in terms of installed capacity. Due to a backlog of maintenance it is necessary for Eskom to continue with its maintenance programme, thus the experience of load shedding by South Africans.
Even with load shedding, Eskom still supplies 96% of the required electricity demand at stage 1 of load shedding; at stage 2, it supplies 94% of the required demand. Eskom is continuously looking into ways of avoiding load shedding but this is necessary and, through all this, Eskom has added about 160 000 new electrification customers in the last financial year. Siyaqhuba!
The Medupi Legacy Programme is a well co-ordinated and integrated programme whose objectives are to ensure that while Eskom is building a power station, it leaves a sustainable legacy in the Lephalale area and the Waterberg District which will contribute to the Limpopo provincial gross domestic product. Its mission is to ensure that the immediate socioeconomic concerns of the local community are addressed.
Eskom is procuring about R202 million locally, with 70% of procurement coming from companies owned by black women.
At the Medupi Power Station, Eskom placed contracts worth R1,67 billion with suppliers within the Lephalale and Waterberg district. Medupi had employed 16 800 people by the end of March 2013 and, of these, 7 249 or 43% of the workforce are residents of Lephalale. Seventy-two per cent of the unskilled and semi-skilled workers are from the Limpopo province and 95% of the total workforce is South African. A total of 53% are under the age of 35, which is classified as youth.
It is estimated that the project may have or will indirectly create approximately 25 000 employment opportunities within the Waterberg district.
Although there have been delays in the completion of the Medupi Power Station and this has had a serious impact on the power utility’s ability to provide enough energy to the country as the capacity in the system is already constrained, the project is bringing much-needed job creation, skills development and local and social development in Lephalale, Limpopo.
The Western Cape province has received a lot of interest from local and international wind and solar energy project developers through the Sere Wind Farm Project. Three projects from the department of ...
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Please conclude, hon member.
Mme G N NOBANDA: Modulasetilo, a ke konosetse gonne ke setse ke jelwe ke nako. Go ditlamo tsotlhe tsa puso ke batla gore: Nko mogala tshwara ka thata, e se re go utlwa sebodu wa kgaoga. Moseka phofu wa gaabo ga a šwe lentswe.
Having considered the Budget Vote and strategic plans of the department, we support Budget Vote No 9 of the Department of Public Enterprises.
Ke a leboga. [Thank you.]
Mr M L SHELEMBE
Ms G N NOBANDA
Mr M L SHELEMBE: Hon Chairperson, the NFP accept that a developmental state must use state-owned enterprises to fulfil its developmental role. In principle we are in agreement with this practice.
However, these entities should not be a bottomless pit into which tax money is poured with very little actual benefit for the taxpayers and citizens of the country. Neither should these entities become a safe haven for political deployees who have neither the skills nor experience to run such important instruments of state sponsored development.
Within this context, we view the budget presented here today with a great deal of scepticism. According to the official website of the department, its stated core function is to provide decisive strategic direction to the state-owned companies, and to act as a shareholder representative for government with oversight responsibility for the state-owned companies. We are of the opinion, in view of the perpetual crisis surrounding Eskom with its inability to supply uninterrupted electricity to the country, and the ongoing uncertainty about Transnet and the doubt surrounding its viability, that the department does not have a very good track record in executing its mandate.
Ironically, a news report today deals with the ANC that is marching against Eskom in protest against installing prepaid electricity meters in Soweto. Only in South Africa, Chairperson, could you have a party that designs a policy to be implemented, and then protests against the very same policy. This, we submit, is the consequence of empty political promises, cadre deployment and shoddy planning.
The budget presented today is motivated by sound intentions and noble objectives. We fully support the emphasis which the department intends to place on facilitating an environment which is conducive for repositioning state-owned companies to advance their developmental mandate and enhance their financial viability. Entities such as Eskom and the SA Airways, which is now under the direct oversight of the Treasury, have become a burdensome drain on the fiscus and the taxpayers with the frequent requests for bail outs and tariff hikes.
However, we note that the lion’s share of the budget is dedicated to Programme 1, the administration of the department, and a substantial reduction is effected in Programme 3 which is responsible for portfolio management and strategic planning. The NFP fails to understand how administration of a department can take financial precedence over and be at the expense of its very stated core function.
We also question how it can be that a department, which allocates 55,8% of its total budget on compensation for employees, also deems it fit and appropriate to spend an additional 12,5% of its budget on consultants. What is the department paying its employees to do then, if such a large percentage of its expenses goes to consultants?
Finally, we reluctantly support the budget. [Applause.] [Time expired.]
Ms P T VAN DAMME
Mr M L SHELEMBE
Ms P T VAN DAMME: Before I start, Chairperson, through you, I would like to address hon Tseli, who - I am just saying ``hon’’ because that is required of me in this House and there was nothing honourable about what he said ... [Interjections.]
Ungabi nomona, nhe!
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Van Damme, sit down. I am trying to assist you. [Interjections.] Hon members, let us allow her to be heard, please. Hon Van Damme.
Ms P T VAN DAMME: As I was saying to hon Tseli, I only said ``hon’’ because that is what is required of me in this House. What you said here was not honourable.
Ungabi nomona ubona umntu omnyama eya phambili. [Uwelewele.] Nawe ...
... perhaps one day you will be elected a leader of a party but I doubt it. [Interjections.]
Chairperson, our state-owned enterprises, SOEs, have great potential. They have the potential to improve the lives of the people of South Africa. They have the potential to be used for fairness to redress the legacy of apartheid. They have the potential to provide our people with freedom by allowing people the freedom to earn a living. They also have the potential to provide our people with opportunities ... [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon members, please, let us just allow the member to be heard.
Nksz P T VAN DAMME: Unomona ngoba ngikhuluma la. [Ubuwelewele.]
Our SOEs have the potential to provide our people and entrepreneurs with opportunities by providing them with access to the economy. I am sad to say today that our SOEs are sadly not being used to their full potential, with many of them in crisis, particularly those under the management of the Department of Public Enterprises.
Today, I hope that the Minister will stand up here and admit that our SOEs are not only in trouble but in crisis, especially Eskom. Instead, member after member of the ANC stood here obfuscating, providing spin and using propaganda to try and convince South Africa that everything is hunky-dory. It is not. In fact, so strong is the propaganda game that you have convinced the people of Soweto that load shedding is not the ANC’s fault, when it absolutely is.
Load shedding in Soweto is the result of poor management at Eskom by an executive that has been appointed by the ANC in an ANC-run province in an ANC-run city. That is why the ANC will lose Johannesburg and Tshwane next year. [Interjections.] It does not matter how much racially divisive language you use, you will lose.
Here are the facts about the SOEs: Eskom can barely keep the lights on; SA Airways - because the DPE couldn’t manage SA Airways - has been passed off to National Treasury; SA Express, SAX, has old planes that are always delayed and they are also now begging for more money. Luckily, Alexkor, Denel andthe SA Forestry Company (Ltd), Safcol, seem to be doing okay but they are merely trudging along.
Minister, we will not be satisfied with mediocrity. We acknowledge some of the good that you have done, but we need better. We challenge you to come back here next year with a good story, not some sad fairy tale we are being told in the dark. Thank you. [Applause.]
Ms D Z RANTHO
Ms P T VAN DAMME
Ms D Z RANTHO: Hon Chair; hon Ministers and Deputy Ministers; hon Members of Parliament; acting directors-general and your officials; our state-owned enterprises, SOE, delegation; guests in the gallery and fellow South Africans, good evening. At its 53rd National Conference in Mangaung in 2012, the ANC rearticulated that the economic vision of the country rested on the clause in the Freedom Charter that says, ``The people shall share in the country’s wealth’’.
Indeed, this is one of the factors that brought about the important concept of radical socioeconomic transformation in the second phase. In the past 21 years, we have been able to respond progressively to the basic needs of our people as demonstrated by the growth of the social wage and the provision of social infrastructure, but we are aware that the redistribution of economic wealth and assets and the growth of the job creating industry have not yet been achieved as per expectation in 1994.
Hon Mazzone, remember, when you say that this is chaos, that it is chaos that was not created by us; it was created by the white regime who never thought that black residential areas should have electricity. [Interjections.] They never thought of us staying in houses with electricity. We have provided electricity to about95% of this country since 1994. As you have already said, stop complaining and be part of the transformation that we are engaged in, hon Mazzone.
This Budget Vote we are debating raises the strategic question: What does the ANC want to see taking place in our state-owned companies? Firstly, the interests of SOEs need to be balanced with national interests. The regulatory framework should be reviewed to enhance accountability.
Secondly, SOEs have a developmental role to play within the context of their legislative framework and should not be subject to exclusive balance sheet constraints.
Thirdly, the state as sole shareholder should manifest an active and strategic relationship with the entities. The role of the shareholder should be unambiguous and certain.
Hon Morapela, the Department of Public Enterprises is here to stay. Our policies as the ANC are clear. That is why you chose to be an ANC member in the first place before you became a member of the EFF. There were many organisations, but you chose the ANC. [Interjections.]
We are not taking orders from anywhere other than from our people. The community in Soweto has the right to mobilise and march. They were given that right by the ANC-led government. [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Take your seat, hon member.
Mr K Z MORAPELA: Hon Chairperson, I am rising in terms of Rule 70. [Interjections.]
Nks D Z RANTHO: Hayi, awunayo wena imiThetho, hayi, hayi.
Mr K Z MORAPELA: With due respect, I really want to hear what the hon member is saying. Can you just relax and explain properly so that I can understand.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Rantho.
Ms D Z RANTHO: Fourthly, the entire SOE portfolio must be driven to give added momentum to comprehensive industrialisation and the economic transformation programme of our economy. This must include setting aside other mechanisms to radically accelerate the promotion of black industrialists and the entrance of youth and women-owned businesses into the mainstream economy. This must include stakeholders effectively engaging large private sector customers and suppliers in the resource extraction and processing sectors to contribute to developmental programmes which must also act as the state draws influence over SOE-related pension funds to provide the necessary support in this developmental agenda.
The Department of Public Enterprises plays a critical role in shaping the outcomes of the Medium-Term Strategic Framework, MTSF, and ultimately the National Development Plan, NDP. The mandate of this department is ensuring that SOEs are directed to serve the government’s strategic objectives as outlined in the NDP, articulated in the National Growth Path, NGP and the Industrial Policy Action Plan, Ipap. It also has to ensure that SOEs are financially stable and able to support the priorities of economic growth, expanding employment and developing infrastructure.
The SOEs are implementation agents of the developmental state and central to the South African economy. The ANC lekgotla of January 2015 supported the five-point plan to respond to the energy emergency and intervention in the stabilisation of Eskom. The current development, like the Sere Wind Farm in the Western Cape, where a capacity of 100 MW is operational and adds to the national power grid, will contribute to preventing nearly six million tons of greenhouse gas emissions over its 20 years of operation expectation. Through this facility Eskom has shown that it can compete with the world by constructing a world-class wind energy facility.
Kweli phondo laseNtshona Koloni u-Eskom ...
... has set up grid access units for independent power producers, IPPs, with the objective of being a point of entry for IPPs.
Ingaba nisifuna ntoni? [What else do you want from us?] [Kwahlekwa.]
It created 564 jobs. The 160 000 households that are now connected across the country are in addition to the 95% of people who have already been connected since the dawn of democracy. We are confident that the current intervention will stabilise the electricity industry’s position in the medium term.
During the first two weeks after the appointment of the Acting CEO of Eskom, Brian Molefe, hon N L S Kwankwa, which included long weekends, we were pleased that we experienced no load shedding. We are aware that Eskom has embarked on a long working hours plan in maintaining the plant at Medupi Power Station and we welcome that.
Qhubani madoda, themba limbi asinalo. Sijonge kuni. [Kwaqhwatywa.]
With regard to Transnet, the first batch of electronic locomotives has been completed. The President of this country and of the ANC has welcomed this move. The 95 locomotives will form part of Transnet’s long-term fleet renewal programme aimed at increasing the capacity while reducing the average age of the locomotive fleet. Eighty-five of these locomotives were assembled in Koedoespoort by black and white young women and men. That is youth development at its best. That is what we know as the ANC.
Besiphaya ke eKoedoespoort, singamaqela ezopolitiko ahlukeneyo saze savumelana ukuba lo rhulumente uyaqhuba; iyaqhuba i-ANC. Savumelana sisonke xa besibona ulutsha lusebenza kwaDenel, eKoedoespoort. Siye savumelana saze sazibuza umbuzo othi, ingaba simfuna ntoni ngenene lo rhulumente. Lihle eli linge leNew Growth Path, NGP, ekwakheni amathuba emisebenzi nanje ngeminqweno yelekgotla yama-2011.
When the unemployment rate was at 25%, the lekgotla saw it as a disaster, hence all these initiatives. This lekgotla adopted the NGP as a framework with the five job drivers that have a high potential to absorb unemployment in great numbers. Transnet engineering has developed into an excellent locomotive assembly and equipment manufacturing entity within its 133 depots.
Silwa indlala ngandlela zonke. Siyabaqhuba abantwana bethu, sibafundisa ukwakha oolilewe ngezandla zabo. Akufunekanga ukuba sifune abantu ngaphandle.
Transnet also intends to open maritime schools of excellence in places that are nearer to ports.
Uza kuva ukuba kuyadlalwa na!
If we are able to train our youth on skills needed by the country to develop economic growth, we will be able to completely win the battle against poverty, unemployment and inequality.
Hon Chair, this budget is much-needed by disadvantaged people. Those that are at an advantage will not see this budget ...
... ukuba luhlahlo-lwabiwo-mali ekufanele ukuba lukhona. Thina siyi-ANC siyazi indlala, sihlala nabantu abangasebenziyo, siyayazi ukuba amashishini karhulumente, SOEs, ayasinceda ekukhuliseni uqoqosho lwaseMzantsi Afrika. Siyaqhuba. Yizani kuthi ukuze sakhe uMzantsi Afrika kunye niyeke ukusoloko nakhalaza. Enkosi. [Kwaqhwatywa.]
The MINISTER OF PUBLIC ENTERPRISES
Ms D Z RANTHO
The MINISTER OF PUBLIC ENTERPRISES: [Interjections.] You were. In fact hon member Mazzone, I cannot ever call you bitter, sour or anything. I am very pleased that you said we should hold hands and solve this problem. Thank you very much for that.
In fact, I am really wondering how to respond to this debate and I want to ask Octavius and the young pilots to just stand so that I can show the difference between 1994 and 2015. Please stand. [Applause.] And all they do, Chair. . .
Mr K Z MORAPELA: I stand on a point of order. Earlier on, Chair, you made a ruling that members in the gallery shouldn’t participate in the debate but that is what they are doing. They are participating in the debate. Can you please make a ruling on that? [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Minister, please don’t address people directly from the podium. Just direct a question to us then we will show them.
The MINISTER OF PUBLIC ENTERPRISES: Thank you very much, Chair.
The point I’m making is that for the first time in 21 years, we now today, hon member Groenewald, have young black women and men who are pilots in this country. [Applause.] We did not have that pre-1994. Apartheid South Africa, hon member Mazzone, contributed to 5 million households, largely white. [Interjections.] Electricity and, yes, ...
... toe was dit volop. En, ja, ons bly in twee verskillende wêrelde. [Then it was plentiful. And, yes, we live in two different worlds.]
I have to say that today seven million more households have access to electricity in 21 years. [Applause.]
Hon members, I must say I’m actually really pleased with today’s debate just because of some little things. I think what we all - besides a few people who don’t but it is a case of needing Economics 101 or something - agree on is that state-owned companies need every single one in this House to hold them accountable to make sure that they deliver on their promise because I only represent the shareholders.
You are right, hon member Marais. I almost called you Minister. [Interjections.] You wish!Hon member Marais, I agree with you. I am a shareholder representative for all of us. It is the duty of all of us to hold the state-owned companies accountable. The hon member from the EFF has just reshuffled me without my knowing, but I have to tell you that I’m afraid you have to win the elections. [Interjections.] You’ve had 6% of the votes, and it is going to take a very long time before you are able to give any bit. He was a bit confused about some issues but I’m pleased to say that he understands that state-owned companies must be used in a proper way. We must make sure that we get the governance right; we have to get its financial modelling right. We have to ensure that the business model for state-owned companies works.
To the chairperson of the portfolio committee, I want to say thank you very much for supporting the proposed Government Shareholder Management Bill. I think that is where we will deal with the issues around governance.
I want to address hon Kwankwa because I think that’s one of the most important issues that you’ve raised. How, in this period, do we cushion the poor? It is for the first time in the last 21 years that we have an indigent policy. We also have free basic services. We must make sure - and we have the sliding scale - about the problem and the issue is that we must get the municipalities to get this right so that the poor are cushioned within the challenges we have around electricity.
I have to tell the hon member Mazzone - who I am very friendly with at the moment, and whose new surname is more complex to say - that the City of Cape Town is responsible for load shedding here. [Interjections.] Oh yes, oh yes! All municipalities are responsible, especially the metros, and I am very grateful that we’ve not had load shedding in this period.
But I’m saying to you as well that there will be load shedding and it doesn’t matter how much vitriol we launch against it. We must know that we are going to have load shedding going into the future because we have to turn around the cause of electricity provision as soon as possible. I would be lying if I said we were not going to have load shedding. So, I don’t want to say that.
Hon member van Damme said that state-owned companies are really bad and they don’t do anything right and are badly managed and I spin about it. I told you, you also promised 30% of the votes to the DA and nothing happened.
I am very keen to make sure that the West Coast issues are dealt with quite quickly. The Passenger Rail Agency of South Africa, Prasa, is not part of my portfolio but I think the issue you raised is an important one, hon member Marais.
Eskom has never actually had a failed local bond issue. Eskom bonds in this period were subscribed and oversubscribed. I have to also say that when I appointed Brian Molefe, the bonds went up five. . .
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Minister, please conclude.
The MINISTER OF PUBLIC ENTERPRISES: Chairperson, you have been very sweet.
Members, thank you very much for the support for this Vote. I think we will try and take up all of the issues that you have raised. Thank you very much. [Applause.]
The Committee rose at 19:05.
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