Questions and Replies

Reply:

According to the information received from Transnet

A Task Team comprising officials from Transnet National Ports Authority (TNPA), the South African Maritime Safety Authority (SAMSA), South African International Maritime Institute (SAIMI) and the Gauteng Department of Education (GDE) has conceptualised a programme on maritime schools.

In 2019, a secondary school in Sedibeng Municipality – Sharpeville in Vereeniging was converted into a maritime school, renamed Mohloli Maritime School. Two (2) maritime subjects were introduced, with the aim of introducing key aspects of the blue economy to the educators and learners.

Between 2018 and 2019, further preparatory work was done with other schools in Gauteng, Western Cape, Eastern Cape and KwaZulu-Natal. TNPA and SAMSA participated in several engagements organised by the GDE to map out the process and progress on reorganising the remaining schools in the six (6) identified corridors.

TNPA has also launched several initiatives which culminated in a programme where a group of grade eleven (11) and twelve (12) boys from these schools are invited to TNPA under the theme, “Tomorrow’s men - Bring a Boy Child to work” in parallel with the “Take a Girl Child to Work Day”, to create awareness and exposure to the maritime environment where the learners are engaged and introduced to career possibilities in the maritime sectors.

The Maritime School of Excellence (MSoE) conducts roadshows to create awareness on career opportunities in the maritime sector. Furthermore, to encourage learners to meet the requirements to study maritime-related subjects while schools are in the process of being converted, the Port of Durban has donated a science laboratory to Ndukwenhle High School and Smart Boards to Seven (7) adopted Schools in the South Durban Basin.

Reply:

Neither the Minister nor the Department of Public Enterprises received the correspondence referred hereto.

(a)(b)(c) not applicable.

Reply:

1. The settlement agreement reached between Government, Alexkor and the Richtersveld Community comprised of the following obligations:

• Transferral and restoration of portions of land by the State and Alexkor to the Richtersveld Community.
• The transfer of Alexkor’s land mining rights to Richtersveld Mining Company and the setting up of Alexkor RMC PSJV. The State through Alexkor would capitalise the Alexkor RMC PSJV with R200 million in order to restore mining operations.
• The transfer of Alexkor’s mariculture and agricultural assets to the Richtersveld Agricultural Holdings.
• A sum of R190 million to be paid as reparation to the Richtersveld Investment Holding Company (RIHC) over three years.
• R50 million development grant to be paid as a lump sum development grant to the RIHC for agriculture and mariculture.
• R45 million to be paid to the Richtersveld Property Holding Company (RHPC) as compensation for Alexkor’s occupation on transferred residential properties for ten years.
• The establishment of a township at Alexander Bay including the upgrade of the municipal infrastructure to be handed over to the Richtersveld municipality.

• Environmental rehabilitation of historical mining areas.

Only R200 million was provided to the Alexkor Richtersveld Mining Company Pooling and Sharing Joint Venture (PSJV) as recapitalization loan to resuscitate the diamond operations following the protracted legal proceedings.

R200 million is a loan and is repayable, to date the PSJV has made payment of R14 million.

2. The PSJV is an unincorporated entity and does not qualify as a national public entity or a national government business enterprise based on the definition of the two by the PFMA namely the PSJV is not juristic entity nor under the ownership control of the national executive.

Given that the PSJV is not a public entity that it could not be listed in either Schedule 2 or 3 of the PFMA. Section 3 of the PFMA provides that the PFMA applies to departments, public entities listed in Schedule 2 or 3, and constitutional institutions. The PSJV is none of these and the PFMA does not apply to the PSJV itself in its own name.

3. Despite the PJSV not being subjected to the PFMA by virtue of its arrangement, the department referred the matters of financial misconduct, corruption and mismanagement to the Special Investing Unit (SIU). On 10 December 2021, the President Cyril Ramaphosa signed the proclamation authorizing SIU to investigate affairs of Alexkor SOC which extend to the PSJV.

Reply:

According to the information received from Denel

PMP, like other divisions of Denel, has been experiencing liquidity challenges. From a tax compliance point of view, PMP is not a legal persona but an operating division of Denel. Therefore, PMP uses the tax credentials of Denel SOC Ltd. Denel is in discussions with South African Revenue Services on its overall tax compliance matter.

Reply:

According to the information received from Denel

Denel Pretoria Metal Pressings (DPMP) has not approached Independent Power Producers (IPPs). The IPPs do not form part of Denel’s overall strategy at this stage. However, as part of a strategic review, these options will certainly be considered.

Reply:

According to the information received from Transnet

(1). Transnet is engaging with the Department of Human Settlements and the Housing Development Agency with the aim of facilitating the disposal of its mass housing portfolio and some of the vacant pieces of land to municipalities, so that they can be used for human settlement purposes.

(2). N/A.

(3). A portion of Transnet’s property portfolio is reclassified as non-core as it is not required to support operations. Transnet entered into a Memorandum of Understanding with the National Department of Human Settlements to create housing opportunities across the country and facilitate the release of vacant land, buildings and hostels to convert them into liveable residential accommodation.

To this end, Transnet has made available vast tracks of land across the country to various municipalities and other state organs for the development of human settlements.

Engagements between Transnet, the National Department of Human Settlements, Housing Development Agency and municipalities are ongoing to conclude the release of the hostels portfolio for human settlements.

Reply:

According to the information received from Eskom

(1) In the absence of the free cash flow or equity from the shareholder to execute the recent build program, Eskom has had to, in the main, fund the program using debt. Even though funding with debt was not ideal, the build program was needed and has been executed for the benefit of the country. The burden of debt now sits with Eskom.

If Eskom receives a cost reflective tariff, recovers arrear municipal debt, manages internal costs and deals with its current excessive leverage, Eskom’s reliance on future Government support will be minimised. Currently the debt service costs cannot be adequately covered by the amount left from operations. Eskom can afford to service a debt of approximately R200 billion. This means that the balance sheet needs to be deleveraged by R200 billion.

Eskom has communicated the need to reduce its debt by at least half its current level to its shareholder representative. Details on the unified approach toward a solution is in the ambit of Government and will in due course be communicated.

(2) Besides the aforementioned forensic report, there have been many other investigations that Eskom Management conducted at Tutuka Power station, leading to criminal charges and arrests of implicated employees and suppliers.

Some senior employees are still on suspension and are being subjected to internal disciplinary process, while some are referred to authorities to deal with the fraudulent and criminal activities committed during their tenure at Eskom.

Reply:

According to the information received from Alexkor

The allocation that ALEXKOR set aside for State Diamond Trader is ten percent (10%) of the saleable goods at the time of the tender.

Reply:

This question should be directed to the Ministry of Mineral Resources and Energy, as the competent authority over the State Diamond Trader (SDT).

Reply:

1. The Hon Member will be supplied with Eskom’s media briefing record of the 19th November 2021, regarding loadshedding.
2. The Department will also contact your office for further clarity and then respond accordingly.

Reply:

1. Denel will be most affected, if no further funding is made available for SOC.
2. However, Denel is not looking for a bailout but to fund a new operating model to deal with high fixed costs and improvements of internal controls to respond better to the shrinking local defence budget and growing competition in its traditional markets. This funding will also come from disposing of non-core assets and entering into strategic partnerships.

Reply:

(1)

(a). The Ministry of Public Enterprises and the Ministry of Finance are currently assessing the submission. Once all the government processes have been adhered to and finalized, the Departments of Public Enterprises will revert to parliament to  provide a final response accordingly.

(b). Refer to (a).

(c). Refer to (a)

(2)

(a) Refer to 1 (a)

(3) The Minister of Public Enterprises will not be making any statement on the matter.

 

 

Remarks:                                             Reply: Approved / Not Approved

 

Jacky Molisane                                     P J Gordhan, MP
Acting Director-General                      Minister of Public Enterprises
Date: 11/01/2022                                   

Reply:

According to the information received from Denel

(1). Members of the Denel Board of Directors (Non-Executive Directors) have received Directors’ fees for official meetings attended for the following periods:
​(a). The payment of Board fees made in full:

i). Quarter 2 of 2020/21 financial year;
ii). Quarter 3 of 2020/21 financial year
iii). Quarter 4 of 2020/21 financial year;
iv). Quarter 1 of 2021/22 financial year; and
v). Quarter 2 of 2021/22 financial year

(b). Board member’s fees for Quarter 3 of 2021/22, are still outstanding in full and committee fees for Quarter 1, Quarter 2 and Quarter 3 of 2021/22 financial year are still outstanding due to Denel’s liquidity situation.

(2). 

(a). (i) Denel has a total of 5 (five) divisional Chief Executive Officers (CEOs). All 5 of them have been receiving partial salary payments since June 2020.

(b). (i) The Interim Group Chief Executive Officer is currently receiving a partial salary.

(ii) The Divisional CEOs and the Interim Group Chief Executive Officer have outstanding salary and other related payments due to them from Denel for the period under question.

(3). Denel Land Systems (DLS) currently has (1) one employee with artillery design experience. The employee works with 4 (four) other employees, who have been subcontracted from the group’s Engineering Department.

Reply:

According to the information received from Transnet:

REPLY TO NA PARLIAMENTARY QUESTION No. 2329
Question No.	Question	Response
1	What (a) (i) is the total number of private logistics companies contracted to provide transport services for Manganese Ore to the port of Port Elizabeth?	Total No: 4
	What (a) (ii) volume of manganese ore is transported by road?	Volume: Year:18/19: 500 000 Tonnes Year: 19/20: 2,100 000 Tonnes Year: 20/21: 3,500 000 Tonnes
	What (b) are the details of the logistics companies transporting manganese ore including the total number of trucks used by each company?	Name of Company	Number of trucks used
		Tradekor Autoforce Black Magic Nexus	1) 200 2) 100 3) 150 4) 120
	What (c) is the total value of the contracts for transporting manganese ore by road?	R 5 100 000(incl. Vat)
	and what (d) is the frequency rate of trucks arriving with manganese ore in the port of Port Elizabeth for each financial year since 1 April 2015?	April 2015: 30 - 50 Truck per day April 2016: 30 - 50 Truck per day April 2017: 30 - 50 Truck per day April 2018: 30 - 50 Truck per day April 2019: 30 - 50 Truck per day April 2020: 10 - 15 Truck per day April 2021: 10 - 15 Truck per day
2	What is the (a) total number of trains used to transport manganese ore to the port of Port Elizabeth?	Total No: 1 187 trains (2020/21) COVID-19 pandemic reduced capacity. + 1400 trains (2019/20) Capacity restricted due to current rail infrastructure. Plans underway to increase capacity
	What is the (b) volume of manganese ore that is transported by rail?	Volume: 7 776 861 tons (2020/21) COVID-19 pandemic reduced capacity + 9 200 000 tons (2019/20) Capacity restricted due to current rail infrastructure. Plans underway to increase capacity
	What is the (c) frequency of trains arriving with manganese ore in Port Elizabeth?	Frequency: 4/5 trains daily carrying 6552 tons per train

and what is the (d) total cost to the department (Transnet not the department) of transporting manganese ore by rail to the port of Port Elizabeth for each financial year since 1 April 2015?

April 2015: R 942 694 147 (Excl. Vat) April 2016: R 1 258 868 403 April 2017: R 1 333 216 868 April 2018: R 1 466 192 336 April 2019: R 1 757 581 402 April 2020: R 2 478 138 165 April 2021: R 2 547 559 998

Reply:

The order by the Gauteng High Court requires the National Energy Regulator of South Africa (NERSA) to fulfil its mandatory role in accordance with an approved methodology. This is a normal process that NERSA undertakes whenever a price adjustment application is made. When NERSA makes its decision in February 2022, it will give an indication of the price adjustment that electricity consumers will experience.

Reply:

According to the information received from Eskom

There is no misalignment between Eskom and the Shareholder Representative.

The solution on R 402 billion debt remains work in progress – parliament and other stakeholders will be informed of the strategy on the debt as soon as the necessary processes have been completed.

1. A significant proportion of funding offered by the international partner group countries (the so-called USD 8.5 bn) is expected to be used for Eskom’s just transition plans. In particular, these funds will be utilised to support Eskom’s plans to repower and repurpose coal plants that are shutting down, with renewables,

battery storage and gas. This financing will not (and cannot) be used for financing the legacy coal debt. The DPE has been fully supportive of Eskom’s JET plans,

1. including its renewable energy aspirations, and was part of the task team, coordinated by the Presidency between August-November 2021, that put together the plan accepted by the international lenders. Furthermore, to ensure alignment between the Eskom JET plans and the DPE’s JET framework, Eskom and the DPE have a regular monthly meeting between the relevant teams.

1. Eskom’s Loss Control function was established in 1 April 2021. Management is working with the business to ensure that all possible PFMA items are registered with the Loss Control function for assessment and determination. Once a determination is completed, and if any indication of fraudulent activities is identified, only then is it referred to the Assurance and Forensic Department for investigation. However, the Assurance and Forensic environment has limited resources and is currently in the process of being capacitated to deal with the workload.

(3)(a) Eskom does not have a fully-automated record-keeping system, and as a result, records were and are, maintained manually. During our annual audit processes, there are limited audit turnaround times which are not always adhered to. However, Eskom is focusing on addressing the automation issue.

(3)(b) We acknowledge the fact that at times it takes long to finalise some matters. This is mainly due to the complexity of the matters and the shortage of internal capacity to deal with the volumes of disciplinary actions. The process to outsource some of these matters is rigid due to the governance process required by National Treasury. This notwithstanding, there has been significant progress made in addressing these matters.

Reply:

According to the information received from Transnet

(1)

Manganese Tonnes Financial Year	Port of Port Elizabeth Million Tonnes	Port of Ngqura Million Tonnes
2015/16	6 139 602 Mt	0
2016/17	7 446 310 Mt	0
2017/18	8 979 026 Mt	0
2018/19	9 100 464 Mt	984 901
2019/20	9 397 272 Mt	1 770 486 Mt
2020/21	8 347 956 Mt	2 918 683 Mt

(2) (a) The Bulk Ore Terminal at Port of Port Elizabeth will cease to operate at the end of the 2026/27 financial year. The Decommissioning application process to the Department of Environment, Forestry and Fisheries for a Record of Decision will commence in the financial year

2024/25. The Decommissioning will start in 2027/28 thereafter a remediation process will take place. The entire process takes place within a period of 4 years.

(b) The Ngqura Manganese Ore Terminal will be commissioned by January 2026 in a phased manner, until the Port of PE Ore Terminal is phased out in March 2027.

Reply:

According to the information received from Eskom

(a) Eskom appoints contract managers with delegation, after contract award and upon confirmation that the individual has the necessary pre-requisite training as prescribed in the Procurement Procedure. Eskom has an approved Contract Management Competency Development Program, that is run with the Eskom Academy of Learning.

In compliance with the National Treasury regulations and other legislative prescripts, Eskom has its approved Procurement Plans which serve as the basis for monitoring expiring contracts in accordance with project plans. Monthly reports on Procurement Plans provide the status of each contract and flags contracts expiring, thus enabling the business to commence with the procurement process of replacing/placing new contracts in advance.

Guided by the Eskom Procurement and Supply chain Management procedure, various

procurement mechanisms are applied when acquiring the services of contractors depending on the nature of the service or product. The mechanisms include inter alia Open tender, Closed tender, Single/sole source, Urgent and Emergency procurement as well as Informal tendering. In instances where the confined market/tendering mechanisms (i.e. Closed tender, Sole/Single source) must be applied, approval is sought from National Treasury prior to commencement with the procurement process.

(b)(i) As at 1 November 2021 there 4547 active contracts at Eskom. Annexure A provides the number of contracts by plant code i.e. Divisional plant/operating unit/grid area.

(b)(ii)Eskom does not have readily available reports with description for each of the 4547 contracts.

However, contracts across the business will vary, for example, Eskom Distribution will mainly have electrification, operations, and maintenance, vending and asset creation contracts.

1. Of the 4547 active contracts:

• • 537 of these contracts have an expiry date between 0 and 3 months.
  • 1094 of these contracts have an expiry date between 0 and 6 months.
  • 1920 of these contracts have an expiry date between 0 and 12 months; and
  • 2627 after 12 months.

1. Eskom does not have consolidated records of contractors who did not adhere to the specifications. Defects are dealt with through contractual remedies in accordance with the specific contract, as explained in (e)(i) below.

(e)(i) When Eskom enters into a contractual agreement with a contractor a performance evaluation criteria forms part of the agreement, against which the contractor’s performance is measured. Should the contractor not deliver according to the agreement, the contractor is given an opportunity to correct.

Non-conformance is addressed within the provisions of the contract via the Non- Conformance Request (“NCR’s”) process. When an NCR is raised, consultations take place with the contractor and if an agreement is reached the NCR is either closed (i.e. satisfactorily rectified) or voided/withdrawn (no longer regarded as a NCR). An NCR will remain open until it is resolved or rectified. In cases where there is failure to rectify, a dispute is raised, and contractual dispute processes are followed.

(e)(ii) The names of contractors who did not adhere to the specifications will not be disclosed as the information is commercially sensitive and may compromise the resolution and rectification initiatives. Further, the confidentiality provisions of the contracts must be followed in order to release contractual information.

Reply:

According to the information received from ALEXKOR

1. Alexkor and Richtersveld Mining Company (RMC) Pooling and Sharing Joint Venture, known as Alexkor RMC PSJV, is an unincorporated joint venture where Alexkor holds 51% interest and RMC holds 49%.

The settlement agreement reached between Government and the community of Richtersveld directed that land-based diamond assets previously owned by Alexkor be transferred to the community and Alexkor to retain the marine based diamonds assets

The Alexkor RMC PSJV is led by a board composed of three (3) members from Alexkor and three (3) from the communities.

2. In terms of the settlement agreement, the court ordered that R200 million be expended to the recapitalisation of the diamond operations post the prolonged court proceedings.

The terms of repayment are outlined in the settlement agreement. No further funding has been provided to the PSJV nor Alexkor

Alexkor is a Schedule 2 company bound by the PFMA. Alexkor RMC PSJV is not Schedule 2 company therefore it is not bound by PFMA provisions.

3. Alexkor is a Schedule 2 company bound by the PFMA. Alexkor RMC PSJV is not Schedule 2 company therefore it is not bound by PFMA provisions.

4. The Alexkor RMC PSJV is an unincorporated entity and does not qualify as a national public entity or a national government business enterprise based on the definition of the two by the PFMA namely the Alexkor RMC PSJV is not juristic entity nor under the ownership control of the national executive. Given that the Alexkor RMC PSJV is not a public entity that it could not be listed in either Schedule 2 or 3 of the PFMA. Section 3 of the PFMA provides that the PFMA applies to departments, public entities listed in Schedule 2 or 3, and constitutional institutions. The Alexkor RMC PSJV is none of these. It is therefore advised that the PFMA does not apply to the Alexkor RMC PSJV itself, in its own name.

Reply:

According to the information received from ALEXKOR

1. Not Applicable
2. (i), (ii) Not Applicable

According to the information received from DENEL

1. Not Applicable
2. (i), (ii) Not Applicable

According to the information received from ESKOM

1. Not Applicable
2. (i), (ii) Not Applicable

According to the information received from SAFCOL

1. Not Applicable
2. (i), (ii) Not Applicable

According to the information received from SAA

1. Not Applicable
2. (i), (ii) Not Applicable

According to the information received from TRANSNET

1. Not Applicable
2. (i), (ii) Not Applicable

 

Remarks: Reply: Approved / Not Approved

Kgathatso Tlhakudi Pravin Gordhan, MP

Director-General Minister of Public Enterprises

Date: Date:

Reply:

According to the information received from ALEXKOR

1. (a) Scarlet Skye Investment (SSI) does not possess a diamond marketing licence instead a licence belonging to the company Daniel Nathan Trading (now called) Alexander Bay Diamonds) was used. Daniel Nathan is the director of SSI.

(b) The valuator was appointed by SSI. Alexkor does not have the records of the

valuators details.

(c) Alexkor SOC obtained a diamond marketing licence in May 2020. Alexkor SOC has since assumed the function on behalf of the Alexkor RMC PSJV.

2. (a) The brokers notes are provided to individual companies who have a contract with Alexkor and PSJV. These are subject to confidentiality, Alexkor is unable to provide these without consent from the Alexkor RMC PSJV and contractors.

(b) The fact that SSI did not have the licence, Daniel Nathan Diamonds was used which made the selling of diamonds legal. As for Brokers Notes and Invoices, these are private and confidential information Alexkor SOC is unable to provide

these without consent from the Alexkor RMC PSJV and contractors.

 

The DPE will attempt to obtain the necessary consent for disclosure.

Reply:

According to the information received from ESKOM

1. With respect, the two issues are not linked.

The increased tariff contributes to the revenue of Eskom and its financial performance. Eskom has managed to meet its debt commitments and not defaulted on its debt commitments. There are various factors that contribute to this including the equity support that Eskom has received from Government. The increase in the tariff will improve cash from operations and will assist in strengthening Eskom’s financial position.

The load shedding minimization and impact on the national grid is not related to the price increase. Various other issues, from a technical operational point, need to be considered in this regard.

2. Eskom will work together with the private sector and IPPs to rollout renewables. Our plans and strategies are not mutually exclusive. An important part of our strategy is to ensure we deal with the socio-economic impacts of transition from coal. We are working on repowering and repurposing options, as well as plans to drive localisation, in collaboration with other industry players. This is meant to spur economic growth and grow local manufacture and industrialisation.

3. The unbundling process will not affect the completion of the new build programme.

• At Medupi, following the Commercial Operation (CO) of the last unit (Unit 1) on 31 July 2021, focus is now on completion of the remaining issues on the balance of plant (outside plant), including but not limited to the ash dump facility, ash silos, coal stockyards and building structures with their associated systems.

• At Kusile, the three remaining units (Units 4, 5 and 6) are under construction, with the last unit (Unit 6) targeted for completion in May 2024.

Reply:

According to the information received from SAA

 

1. (a) Captain Themba McClain was appointed at SAA as a Captain on 1 June 1992. He held the position of Chief Standards Pilot during his career at SAA.

(b) During his employment with the airline he received and completed training required for the execution of his duties as a pilot, as required by all pilots. Captain McClain’s training as a Commander with SAA, commenced on 29 January 2007.

c) This information is of a confidential nature

2. (a) & (b) No investigations or findings thereof are known to SAA. The SACAA in their role as regulator approves all pilots license. It is Important to note that the Chief Pilot position is a regulated post holder in terms of CARS 121.06.2, and all incumbents acting for a period in excess of 30 days are approved by the CAA. Captain Themba acted as the Chief Pilot from 8 November 2016 until 31 December 2017. He was approved by the CAA on the 3 November 2016.

3. Please refer to responses in (1) and (2) above.

4. Capt. Themba McClain was offered the position of Chief Pilot at SAA, which he declined.

Reply:

There are a number of factors (and therefore, government departments) that are possible contributors to ultimately, to ultimately resolving the challenge of loadshedding.

The government is working closely with Eskom to reduce the duration of loadshedding. Cabinet has acknowledged the inconvenience loadshedding has caused and National Treasury is working with Eskom to grant it the appropriate exemptions to acquire the spare parts needed for repairs and maintenance.

Government notes that Eskom is making progress in re-employing skilled personnel – including plant managers – to help the organisation make headway at individual power stations and across other operations.

In addition, government is making every effort to bring new power generation capacity online in the shortest possible time. While Cabinet is aware that the current energy challenges are frustrating and counterproductive to economic growth, it is confident that the practical actions to restructure and strengthen our electricity system will eventually improve South Africa’s energy capacity.

We are very mindful of the economic constraints and social (and political) negativity unleashed by loadshedding.

We should always be mindful of the operational and technical damage done by those involved in state capture – their priority together with insiders and businesses, was to steal, to overprice services and parts and engage in other forms of malfeaseance. The parliamentary enquiry conducted in 2017, exposed many of these shenanigans.

Reply:

According to the information received from Transnet

Financial performance

For the 31 March 2021 financial year, Transnet experienced challenges due to the nationwide lockdown resulting in subdued volume demand as well as operational challenges.

• Transnet’s revenue decreased by 10,5% to R67,3 billion (2020: R75,2 billion), due to a:
• 13,7% decline in rail freight volumes,
• 26,4% decline in pipeline volumes, and
• 11,5% decline in port container throughput mainly as a result of the nationwide lockdown.

Transnet performance was at a backdrop of South Africa’s real GDP that had contracted by 7% in 2020 after GDP growth of only 0,2% was recorded in 2019. In a historic context, it was the worst SA GDP performance since the great depression years of the 1930’s.

In addition, net operating expenses increased by 16,2% to R47,8 billion (2020: R41,2) mainly due to:

• fixed costs that have not decreased in line with the reduced activity - personnel costs, maintenance, and security costs,
• unbudgeted third party claim provision and increased environmental provisions relating to pipeline spills arising from product theft incidents, which also resulted in increased security costs (R5,6 billion),
• unbudgeted Covid-19 related expenses of R232 million, and
• lower operating income due to the lower sale of scrap, lease recoveries and PRASA recoveries.

The 2022 YTD results indicate that recovery is further evident in the steady improvement of revenue achieved (96,2% of the plan).

Management has also implemented cash preservation measures to safeguard financial performance and cash flows over and above the plan. Key focus areas include amongst others:

• Collections from overdue customers;
• Revenue initiatives;
• Sale of non-core properties;
• Sale of scrap;
• Procurement optimisation;
• Moratorium on discretionary and other costs;
• Review of contract spend; and
• Capital investment optimisation.

It is important to note that no employee has been forced to take severance packages, however, employees voluntarily selected to leave the company.

Irregular expenditure

The Company has embarked on a PFMA improvement programme which has both a long-term ( STATE CAPTURE LINKED IRREGULAR EXPENDITURE) and short-term emphasis, which collectively focusses on addressing the audit qualifications and improving internal controls, to ensure a sustainable process is in place where all information required by the PFMA are identified, actioned and reported timeously.

The PFMA improvement programme was implemented through an enhanced 2021 financial year remedial plan to deal with the root cause and the recommended remedial action that is required to create sustainable solutions around people, processes and systems in the procurement environment and to reduce the occurrence of irregular expenditure.

Planned outcomes of the PFMA remedial plan include:

• improved procurement processes;

• reduction in PFMA transgressions; and

• improved completeness and accuracy of PFMA reporting through implementing sustainable solutions embedded within the business.

Transnet remains committed to continuing to enhance consequence management efforts and investigating PFMA related transgressions. As a result, the forensic investigations process has been centralised. The centralisation was to enhance the coordination and efficiencies of the investigation process, to ensure consistent application of corrective action throughout the organisation that resulted in areas of improvement.

Challenges exist due to the history in managing and reporting PFMA transgressions which make it impractical for Transnet to disclose all irregular expenditure reliably. The National Treasury accepted the impracticability judgement for the historic periods up to and including 31 March 2021, given the legacy of state capture that this process will take time to complete. However, Transnet will still need provide evidence to demonstrate the impracticability assertion and for the Auditor General of South Africa to assess its applicability.

Transnet will continue engaging the National Treasury to find a way to ring-fence the legacy issues of irregular expenditure as these do not impact on the fair presentation of the annual financial statements.

Reply:

The Department spent a total amount of R24 million on consultants as shown below:

Service Provider (1)	Service Rendered (2)	Amount
Matsei Technology	Development and implementation of the enterprise architecture	912 640,00
Tipp Focus holdings	On Demand IT Technical Services	169 883,77
R. Kalidass	Provision of co-sourced internal audit and forensic investigation services	291 121,35
Full Stream Business	Development of the ICT Security Strategy	819 057,41
21st Century	Conduct SOC Remuneration Survey	1 202 400,00
Vortex	Development of the Board Evaluation Framework	543 950,00
Government Technical Advisory Committee	Development of the Risk Management Framework	1 691 754,70
Seabury International	SAA Business Rescue	17 486 565,00
Basadzi Personnel	Recruitment and Selection	192 648,00
Quest Staffing Solutions	Recruitment and Selection	17 725,00
Gijima Holdings	Recruitment and Selection	16 882,00
Mogoma Research and Development	Recruitment and Selection	21 200,04
Audit and Risk Committee Members	Audit and Risk Committee meetings	676 356,58
Azile Resources	Impact Assessments of Corporate Social Investment Projects	145 600,00
Total	24 187 783,85

Reply:

According to the information received from Eskom

Eskom’s current leadership is committed to rooting out fraud and corruption and addressing issues related to past corporate governance breaches, in order to restore Eskom's reputation as a trusted corporate citizen and further, to improve the organization’s financial and operational sustainability.

(1)

There are a number of safeguards built into the operationalization of the JET financing facility. Firstly, we see the facility, and disbursement of funds being managed by a strict governance committee comprised of the lender group. Financing will be released in tranches, based on project milestones being met. This means if we do not meet project deliverables and timeframes for deliverables, the financing will not be released.

(2)(b)

The total amount identified through investigations conducted by the Eskom Forensics team is R3 448 024.

(2)(b)

While loadshedding cannot ALWAYS BE attributed to corruption, the financial losses due to corruption have had a negative impact on Eskom’s overall financial position. This in turn negatively affect Eskom’s ability to reliably provide electricity.

For instance, the underlying cause of Eskom’s poor operational performance is insufficient maintenance on Generation plant over the years which is now resulting in poor plant performance. There is an increase in mechanical power station breakdowns.

Therefore, the sum of R3 448 024 which was lost due to maladministration could have been used to perform much-needed maintenance on Eskom’s power generating units.

 

We also provide details of Eskom’s response to the fraud and corruption challenge:

• Eskom is making good progress in the implementation of the Fraud Risk Management Plan, to maximise fraud prevention and enhance good corporate governance practices. The Anti-Fraud and Corruption Integration Committee monitors the implementation of this plan and ensures integration between forensic, legal, ethics, industrial relations and supplier review functions, with progress reported to Exco and the Audit and Risk Committee (ARC) on a regular basis.

• In financial year 2020/21, our fraud prevention and whistleblowing policies were revised to enforce our zero-tolerance approach to fraud, strengthen our whistleblowing processes and ensure compliance with changes to relevant legislation. Furthermore, a whistle-blowing procedure has been developed to provide step-by-step guidance to report incidents of unethical behaviour through an independent, confidential hotline. As an additional measure, we also encourage reporting through DPE's whistle-blowing channels.

• Ethics and fraud awareness programmes have been enhanced and remain mandatory for all employees. To complement these, anti-fraud training has been developed for managers and supervisors to ensure that they understand their roles and responsibilities in the management of risks associated with fraud, corruption and irregularities. Fraud awareness for suppliers was also implemented during the year.

• Our Assurance and Forensic Department and Human Resources Division are collaborating to improve consequence management and disciplinary processes. Feedback on disciplinary cases is reported regularly to executive management. Disciplinary action is monitored, particularly where line managers and supervisors have decided not to take action against an employee despite findings from an investigation.

Reply:

According to the information received from Eskom

(a) and (b)

Investigations on the fuel oil crime syndicate are ongoing and at a critical stage therefore we are unable to offer any more information on the matter at this stage.

Eskom issues media statements to the public, and reports progress on investigations into cases of suspected fraud and corruption to the Standing Committee on Public Accounts, on a regular basis.

The media statement issued on 5 November 2021 on the fuel oil crime syndicate is attached.

Reply:

According to the Information Received from Denel

Denel SOC has no intention to sell off Denel Pretoria Metal Pressings. This part of business remains strategic to both Denel and THE Department of Defence. The development and manufacturing of small and medium caliber munitions are core to Denel’s business model of Denel. However, the SOC overall structure and business model required for sustainability is under review.

Reply:

According to the Information received from Alexkor

ALEXKOR

a) None b) N/A c) N/A d) N/A e) N/A

No	Operating Division	Description of Services	Value of awarded Tender	Name of Service Provider	Duration of Contract (Start date-End Date)
1	ALEXKOR	NONE	NONE	NONE	NONE

According to the Information received from Denel

DENEL

a) None b) N/A c) N/A d) N/A e) N/A

No	Operating Division	Description of Services	Value of awarded Tender	Name of Service Provider	Duration of Contract (Start date-End Date)
1	DENEL	NONE	NONE	NONE	NONE

According to the Information received from Eskom

ESKOM

a) Eskom has 47 active bus transport services contracts during 2021/2022 financial year. b) Eskom c), (d) and (e) Details of each contract, in terms of the value, the suppliers who were awarded the contracts and the period, are as set out on the table below

Area	No.	Name of Supplier	Validity Per. Start	Validity Period End	Contract Duration	Contract Amount
Gx	1	MAKALANE PLANT MAINTENANCE	2018/09/01	2023/08/31	5 Years	R14 976 783.36
Gx	2	MAKALANE PLANT MAINTENANCE	2019/01/01	2023/12/31	4 Years	R5 776 440.00
Gx	3	NAREMOTHO TRADING ENTERPRISE	2018/09/01	2023/08/31	5 Years	R15 996 713.00
Gx	4	Scsokos Transport (Pty) Ltd	2017/08/01	2022/07/31	5 Years	R8 328 060.00
Gx	5	Nkodosi Trading Enterprise(Pty) Ltd	2017/08/01	2022/07/31	5 Years	R20 462 222.52
Gx	6	Beactress Business Enterprise CC	2017/08/01	2022/07/31	5 Years	R2 040 000.00
Gx	7	Wozungithathe Business Enterprise CC	2017/08/01	2022/07/31	5 Years	R7 260 293.38
Gx	8	Simadlala’s Trading Enterprise	2017/08/01	2022/07/31	5 Years	R4 303 200.00
Gx	9	NAREMOTHO TRADING ENTERPRISE CC	2018/09/18	2023/09/18	5 Years	R1 048 800.00
Gx	10	MAKALANE PLANT MAINTENACE CC	2018/09/18	2023/09/18	5 Years	R11 289 780.00
Gx	11	NTHUSE AMOS MODISE CC	2018/09/18	2023/09/18	5 Years	R12 546 822.00
Gx	12	Qedumana Transport	2019/11/01	2024/10/31	5 Years	R4 453 088.00
Gx	13	Beactress Business Enterprise	2019/05/01	2024/04/30	5 Years	R6 552 000.00
Gx	14	Wozungithande Business Enterprise	2019/05/01	2024/04/30	5 Years	R14 163 788.00
Gx	15	SC ZONDO Transport	2019/05/01	2024/04/30	5 Years	R13 515 788.47
Gx	16	MK Engineering construction &suppliers	2019/05/01	2024/04/30	5 Years	R33 903 849.38

Area	No.	Name of Supplier	Validity Per. Start	Validity Period End	Contract Duration	Contract Amount
Gx	17	Simadala’s Transport	2019/05/01	2024/04/30	5 Years	R11 183 480.00
Gx	18	Thandimpilo Supply and Projects	2021/04/08	2021/08/31	4 Months & 23 days	R125 000.00
Gx	19	Thandimpilo Supply and Projects	2021/09/01	2021/09/30	1 Months	R24 924.00
Gx	20	Mphakathi Tours cc	2019/08/13	2022/08/12	3 Years	R45 043 208.40
Gx	21	Mphakathi Tours cc	2019/09/13	2022/09/12	3 Years	R8 833 567.00
Gx	22	MPHAKATHI TRANSPORT	2018/12/01	2021/11/30	3 Years	R12 684 751.00
Gx	23	CHARLANNA TRANSPORT AND PROJECTS	2018/12/01	2021/11/30	3 Years	R5 673 119.04
Gx	24	BLF SIKHOSANA LOGISTICS	2018/12/01	2021/11/30	3 Years	R7 372 072.80
Gx	25	MELSEE TRADING ENTERPRISE	2018/12/01	2021/11/30	3 Years	R6 622 770.60
Gx	26	MS THUGWANA	2018/12/01	2021/11/30	3 Years	R11 211 092.64
Gx	27	NKODOSI TRADING ENTERPRISE	2020/02/04	2022/01/31	3 Years	R1 007 755.20
Gx	28	MPHAKATHI TOURS	2020/02/04	2022/01/31	3 Years	R5 112 470.40
Gx	29	KUHUMUSA TRANSPORT AND PROJECT	2020/02/04	2022/01/31	3 Years	R1 061 280.00
Gx	30	KUHLWILE CONSULTING	2020/11/01	2022/10/31	3 Years	R862 118.40
Gx	31	MPHAKATHI TOURS	2021/01/15	2023/01/14	3 Years	R1 874 880.00
Gx	32	SINOBUHLE AND JOY SUPPLIES TRADING	2020/12/01	2021/05/31	6 Months	R396 000.00
Gx	33	ENNEAD CONSULTING	2021/06/01	2021/06/30	1 Month	R5 956.50
Gx	34	SINOBUHLE AND JOY SUPPLIES TRADING	2021/07/01	2021/07/31	1 Month	R26 000.00
Gx	35	SINOBUHLE AND JOY SUPPLIES TRADING	2021/08/01	2021/11/30	4 Months	R264 000.00
Gx	36	ADAMS TRANSPORT	2021/08/01	2021/11/30	4 Months	R209 000.00
Real Estate	37	ADAMS TRANSPORT	2021/08/01	2021/11/30	4 Months	R500 000.00
ERI	38	STABUS PTY LTD (2015/061938/07)	2017/05/01	2022/04/30	5 years	R177 053 830
ERI	39	ERMELO TAXI ASSOCIATION	2017/08/01	2022/07/31	5 years	R33 738 263.60
ERI	40	MS THUGWANA	2017/04/01	2022/03/31	5 years	R11 159 564.88
ERI	41	MMABATHO TRANSPORT	2017/04/01	2022/03/31	5 years	R4 050 000.00
ERI	42	STANDERTON TAXI GROUP	2017/05/19	2022/05/31	5 years	R56 798 280.00
ERI	43	MS THUGWANA	2017/10/01	2022/09/30	5 years	R24 964 802.00
ERI	44	DUVHA UNITED LONG DISTANCE	2017/11/01	2022/10/31	5 years	R34 338 041.00
ERI	45	MATHES TOUR TRANSPORT	2018/11/01	2022/07/31	5 years	R10 443 442.25
ERI	46	MAGAIA TRADING ENTERPRISE	2019/10/24	2024/10/31	5 years	R25 331 615.15
ERI	47	AMERSFOORT LOCAL AND LONG TAXI ASOCIATION	2020/02/27	2024/03/01	5 years	R22 909 868.00

According to the Information received from Safcol

SAFCOL

a) One b) SAFCOL c) R6 105 500.00 (incl. VAT) d) Myboet General Trading e) RFB016/2019, for a period of three (3) years, effective from 20 May 2020

No	Operating Division	Description of Services	Value of awarded Tender	Name of Service Provider	Duration of Contract (Start date-End Date)
1	SAFCOL	For the provision of bus transportation services for the SAFCOL	6 105 500.00	Myboet General Trading	3 years (2020/05/01 2023/05/01)

According to the Information received from South African Airways

(b) PURPORSE OF TENDER	(c ) AMOUNT	(d) NAME OF SERVICE PROVIDER	( e) PERIOD
Crew transport by bus	R7 207 162,90	Mahle Wonke Co-operative limited	March 2019 – Sep 2020
	R2 567 624,20	Mudziwa Travel Pty Ltd	March 2019 to March 2020
	R165 000,00	Xhamla-Buhle Shuttle Services	March 2019 to March 2020
Charter flights from Jhb to Cape Town	R238 500,00	African Soil Tours	Mid-June 2020 to 30 Sep 2020
	R68 000,00	Compass Travel	Mid-May 2020 to June 2020

No	Operating Division	Description of Services	Value of awarded Tender	Name of Service Provider	Duration of Contract (Start date-End Date)
1	SAA	Crew transport by bus	7 207 162.90	Mahle Wonke Co-operative limited	March 2019 – Sep 2020
2			2 567 624,20	Mudziwa Travel Pty Ltd	March 2019 to March 2020
3			165 000,00	Xhamla-Buhle Shuttle Services	March 2019 to March 2020
4	SAA	Charter Flights from JHB to Cape Town	238 500,00	African Soil Tours	March 2019 to March 2020
5			68 000,00	Compass Travel	Mid-May 2020 to June 2020

According to the information received from Transnet

a) The total number of tenders for the provision of bus transport services to Transnet is 24 (twenty-four).

b) The services were provided to Transnet (SOC) Ltd.

c) Refer to table below for detailed amounts.

d) Refer to table below for names of service providers that were awarded the tenders.

e) Refer to table below for the period of time for services rendered.

Transnet Bus Transport Services Tenders
No	Operating Division	Description of Services	Value of awarded Tender	Name of Service Provider	Duration of Contract (Start date-End Date)
1	TFR / TCC	For the provision of bus transportation services for the Transnet-Phelophepa health care Train 1 project for a period of nine (09) months	1 002 858,00	Mbita Holdings	9 Months (2020/03/16 - 2020/12/15)
2	TFR / TCC	For the provision of bus transportation services for the Transnet-Phelophepa health care Train 2 project for a period of nine (09) months	454 925,00	Mbita Holdings	9 Months (2020/03/16 - 2020/12/15)
3	TNPA	Provision of staff transport at TNPA	1 730 750,00	Umlazi General Plant Hire	9 months (01 December 2019-31 Aug 2020)
4	TPT	Bus Services at Durban Pier 2	3 530 630,00	C & D Martins	6 months (2021/01/06 to 2021/06/13)
5	TPT	Bus Services at Durban Pier 1	1 903 280,00	Dumas Transport	6 months (2021/01/22 to 2021/06/08)
6	TPT	Bus Services at Durban Pier 1	725 760,00	Umlazi Plant Hire	6 Months (2021/01/22 to 2021/06/23)
7	TPT	Bus Services at Richards Bay	21 791 737,50	Ikhwezi Buses	10 months (2020/08/13 to 2021/06/08)
8	TPT	Bus Services at Point and Maydon Wharf	7 124 400,00	Umlazi Plant Hire	12 months (2020/09/29 to 2021/08/19)
9	TPT	Bus Services at Saldanha	3 950 749,30	Ikhwezi Bus Services	12 months (01 Aug 2020- 23 Aug 2021)
10	TPT	Bus Services at Cape Town Container Terminal	21 371 432,50	New Era	12 months (01 Aug 2020- 23 Aug 2021)
11	TPT	Bus Services at Cape Town MPT	11 258 518,82	Fox Transport	10 months (01 April 2020-1 Feb 2021)
12	TPT	Bus Services at Cape Town MPT	1 897 500,00	Waterfront Shuttle Services	07 months (02 Feb 2021- 31 Aug 2021)
13	TPT	Bus Services at East London	375 260,00	Xhamla-Buhle Trading	12 months (01 Aug 2020- 23 Aug 2021)
14	TPT	Bus Services at TPT Port Elizabeth	2 698 502,50	Glenlinx-Qwabe Joint Venture Transport	4 months (01 Aug 2020- 30 November 2020)
No	Operating Division	Description of Services	Value of awarded Tender	Name of Service Provider	Duration of Contract (Start date-End Date)
15	TPT	Bus Services at TPT Port Elizabeth	1 019 046,00	Glenlinx-Qwabe Holdings Pty Ltd	4 months (04 May 2021- 31 August 2021)
16	TPT	Bus Services at TPT Port Elizabeth	413 185,50	Glenlinx-Qwabe Joint Venture Transport	2 months (06 August 2020 - 30 Sept 2020)
17	TPT	Bus Services at Nqura Container Terminal	1 093 976,80	Ntando Tours	1 month (02 Sept 2020 - 30 Sep 2020)
18	TPT	Bus Services for TPT Port Elizabeth	1 658 537,00	Laphumikhwezi Transport	4 months (21 Dec 2020 until 30 April 2021)
19	TE	Transportation of Employees	20 700 000,00	Lifetime Tours and Projects	36 months (27 Aug 2019 - 31 Aug 2022)
20	TNPA	Bus Services for TNPA PE	1 020 901,00	Chumile Holdings (Pty) Ltd	12 months (01 September 2021 to 31 August 2022)
21	TNPA	Bus Services for TNPA PE	169 383,50	Chumile Holdings (Pty) Ltd	2 months (01 July 2021 -31 August 2021)
22	TFR	Provision of Employee Bus Services for Richards Bay	1 890 000,00	Ikhwezi Bus Services	6 months (25 July 2021 – 24 January 2022)
23	TFR	Provision of Employee Bus Employee Bus Services for Vryheid	942 000,00	Ikhwezi Bus Services	12 months (19 Nov 2019 – 18 Nov 2021)
24	TFR	Provision of Employee Bus Service for Saldanha	14 600 000,00	Ikhwezi Bus Services	25 months (1 July 2019 – 31 Aug 2021

Reply:

According to the information received from Transnet:

We have not been provided with sufficient information to respond. The member is, therefore, requested to provide more precise information on the project, including the wagon type and year of contracting.

Reply:

a) The Department is supporting Denel’s new operating model which is aimed at stabilising operations and cost structure. The National Treasury has agreed to settle Denel’s government guaranteed debt, which will save the entity approximately R250 million in interest payment annually.

b) Plans are under considerations to raise the required funding to address both operational requirements and legacy obligations, which includes salaries. Amongst others, Denel has identified assets and other investment assets for disposal to raise funding to raise part of the obligations and to increase operational activities which is key to the SOC generating the minimum required cash flows. However, this process will take some time, none the less, we remain committed to do the best for all employees as soon as possible.

Reply:

According to the information received from ALEXKOR

a) In Alexkor no one is unqualified

b) Not Applicable

c) Not Applicable

According to the information received from DENEL

(a, b, c) Denel is currently executing the new operating model. Part of the strategy is to do contract scrubbing and perform a skills audit to ensure that qualified personnel are placed in the right positions, these will be done across all levels in the organization.

In implementing the new operating model. Denel has identified an opportunity to establish a Workforce Transition Plan, with clear Principles and Guidelines. The process is backed by a Governance Framework to ensure that all Managerial and Leadership positions adhere to a defined criteria which only allows for positions to be filled with suitably qualified and competent incumbents.

 

According to the information received from ESKOM

(a)

Eight (8) Senior Managers do not hold the national higher diploma (B.Tech) but have national diploma (T3). However, all have on average more than 20 years on the job experience as well as the required technical competencies in Maintenance, Engineering, Operating, Outages and Project Management.

(b)(i) and (ii)

The eight (8) Senior Managers are employed in the following areas within Eskom:

Location	Number of Senior Managers
Megawatt Park – Gauteng	3
Arnot Power Station – Mpumalanga	1
Hendrina Power Station – Mpumalanga	1
Majuba Power Station – Mpumalanga	1
Tutuka Power Station – Mpumalanga	1
Lethabo Power Station – Free State	1

(c)

When determining whether a person is suitably qualified for a job, Eskom considers all the factors listed below and the minimum inherent requirements of the job.

The minimum inherent requirements of the job are considered, in conjunction with the employment equity plan of the business unit (BU) and the division, as follows:

a) Appointment or succession into a position is made in line with the Employment Equity Act. Eskom has set the following requirement to select suitable candidates:

b) Formal education – relevant qualification with due consideration to circumstances where the qualification is a statutory or is an essential requirement for the position.

c) Recognition of prior learning – where the individual has undergone an RPL process and has acquired a formal qualification with the required number of credits equivalent to the minimum requirements of the job

d) Relevant experience – where the individual has demonstrated knowledge and skills in previous positions that are similar or related to the position being applied for.

e) Capacity to acquire, within a reasonable time, the ability to do the job – the candidate’s potential to do the job will be assessed using a battery of relevant psychometric assessments.

Although the managers do not have national higher diploma (B.Tech), they however meet all other key requirements of the jobs they occupy as set out by the Eskom Talent Discovery Procedure and therefore there is no specific action required as it relates to the eight managers.

Eskom utilises a rigorous selection process when making decisions to either appoint or promote individuals into managerial levels, which includes psychometric assessments. Where any gaps are identified when promoting or appointing individuals into managerial positions appropriate development programmes are put in place to close the gaps. Eskom also management development programmes, that are in-house and in partnership with institutions of higher learning.

According to the information received from SAFCOL

a) None at SACOL, all Senior Managers have the required and relevant qualifications and credentials for the positions they currently occupy

b) Not Applicable

c) Not Applicable

According to the information received from SAA

a) There are no Managers at SAA without the required qualifications. The inherent requirements as outlined in the job profile for each position are always factored in placement decisions. This includes qualifications and credentials, as applicable to deliver on the requirements of the position. All managers qualify for the positions they occupy and these appointments are in line with SAA’s Recruitment Policy and Practices.

The recent Section 189 Process undertaken involved a matching and placement process against the job criteria to ensure best fit for position. For promotions or placement moves across divisions or functions, interviews were conducted to establish position fit.

b) All positions are occupied by competent individuals, and where gaps exist, it does not adversely affect the core deliverables of the position. Opportunities for skills development and personal growth remains a priority for SAA, and employees are encouraged to sign up for training opportunities when they arise.

Additionally, SAA has developed a system consisting of subjective (self) assessments that we are rolling out, which will be enhanced with objective psychometric assessments that will enable the airline to develop individualised development plans to further enhance the skills and competencies required.

According to the information received from TRANSNET

a) Transnet SOC Ltd, (“Transnet”) has 113 approved roles for Senior Executive Management, 15 at top Executive Management and 98 at Senior Management levels. 98% of all appointed Senior Managers meet full requirements as stipulated in the job description. Only one manager does not meet the stipulated qualification requirements.

b) The senior manager joined Transnet Group from 1 September 2011.

c) The employee has a lower qualification but has extensive unique experience within operations and critical business areas within Transnet. He will undergo Recognition of Prior Learning (RPL) and is currently registered for the Rail Business Performance Programme through the University of Pretoria, to be completed in 2022. The University of Pretoria and Franklin Covey (SA) developed the Rail Business Performance Enhancement Programme for Executives.

This Programme is evaluated at NQF Level 8 (Postgraduate) whereafter delegates can choose to pursue a master’s degree in Public Administration (40 Credits) at the University. The Senior Manager has also demonstrated and achieved exceptional performance over time in the roles that he has been assigned to perform in the organisation. Noting the extensive experience and performance, the decision was taken to appoint the employee.

Reply:

This question needs to be referred back to Transport, in as far as issues of the Ports Regulator of South Africa are concerned. All other issues relating to Public Enterprises and Transnet have been fully covered in our response to PQ2019.

Reply:

According to the information received from the South African Airways:

South African Airways has not acted as an agent for any other airline and/or travel agent in the period 01 January 2021 to 15 August 2021.

2119.

Reply:

According to the information received from Transnet:

(a) The port networks have not been negatively impacted by the attack, as the surface area of attack was on the server domain and applications.

(b) Transnet networks were shut down in the attack to prevent the spread of the malware.

(b)(i) Through the shutdown period, some terminals operated manually, while others could not operate in manual mode, given the complexity of the operations. This impacted on vessel and truck turnaround times.

(b)(ii) No long-term impact is foreseen, as catch-up planning takes place within the terminals. No IT systems were compromised or lost at Transnet Port Terminals. We have seen similar cyber-attacks on large organisations - including shipping lines - that have recovered without a long-term negative impact on trade.

 

Reply:

According to the information received from Transnet:

(1)(a) The Shareholder Ministry - the Department of Public Enterprises (DPE) - has been kept abreast of all developments pertaining to the declaration of a force majeure, following the incursion on Transnet systems that occurred on 26 July 2021. It is not accurate to suggest that the force majeure has resulted in a ports crisis. The current status of the global shipping environment has been as a result of a number of factors which are more often than not, exogenous to Transnet’s operations. The current perception of Transnet as the fault-line and the cause for a “ports crisis” is factually incorrect. 1a

(1)(b) Transnet National Ports Authority (TNPA) has engaged with the Ports Regulator of South Africa on measures to follow in the event of a similar incident recurring. 1b

(1)(c) We have provided a detailed analysis of the number of import containers that have left the country since 26 July 2021, to-date. (see the attached annexure A)

(2)(a) Transnet has engaged all affected stakeholders following the incursion on the systems.

(2)(b) Since the ICT challenges first began on Thursday 22 July 2021, Transnet Port Terminals has continued to keep all customers and stakeholders informed of the progress made, both on the ICT side and on the operational recovery. This has taken the form of daily meetings and letters, among others.

(2)(c) Whilst the frequency has declined as the crisis was addressed, as at 20 September 2021, Transnet still conducts the following stakeholder engagements:

• A daily operational meeting with port stakeholders (shipping lines, transporters, freight forwarders, TNPA, TFR, TPT)
• A weekly engagement with the citrus stakeholders
• A weekly engagement with members of Business Unity South Africa

(2)(d) Transnet will continue to engage in dedicated recovery forums, until all operations and the entire supply chain have normalised.

(3) The question should be directed to the Department of Transport as the Port Regulator of South Africa is an entity under its authority.

(4) There are a number of reasons for Shipping Lines omitting South Africa from their schedules, these include:

4.1. Omissions for shipping line convenience (trying to catch-up on schedule integrity/make the next window in the following port; profitability; inability to complete the customer’s voyage, e.g. when the vessel plans to omit a destination port in Europe).

4.2 Blank voyages (lack of vessels on a line service network e.g. there should be 7 vessels in a row to make a weekly call in every port, but due to shortages of vessels the line plans to only have 6 vessels, in order to save costs and effectively balance supply with anticipated logistics delays which may impact any one of the number of ports within the schedule).

4.3 Omissions because of delays in the port (caused by TPT operational inefficiencies/delays; wind delays; port congestion; landside congestion. It is worthwhile to note that it becomes difficult to quantify the percentage of TPT’s responsibility because all incidents (wind, operational, congestion etc) have a combined impact on the total terminal delay, resulting in decisions by the shipping line to omit. It is worthwhile to note that it becomes difficult to quantify the percentage of Transnet Port Terminals (TPT) responsibility because all incidents (wind, operational, congestion etc.) have a combined impact on the total terminal delay resulting in decisions by the shipping line to omit.

• TPT is undertaking initiatives to reduce congestion at the ports. This includes increasing equipment availability to improve productivity. The initiatives are tracked through the Durban Decongestion Workstreams, where all stakeholders participate. These include:

• Decongesting Durban Container Terminal (DCT) imports through promoting prompt evacuation in partnership with the shipping lines (carrier haulage).

• Working closely with citrus exporters to ensure the export reefers arrive within the terminal in time to make the vessel sailing deadlines.

• Mass evacuation of imports through Transnet Freight Rail (TFR) supporting the short-haul evacuation to back-of-port facilities in the greater Durban precinct.

 

 

Reply:

According to the information received from Eskom:

(a)

Eskom has concluded 2 Coal Supply Agreements (“CSA’s”) for FY2022 as follows:

• Modification to the CSA with South32 SA Coal Holdings (Pty) Ltd from MMS to supply Duvha Power Station.
• A new CSA with Arnot OPCO (Pty) Ltd from Arnot Mine to supply Arnot Power Station.

(b)

Eskom cannot, at this point in time, fulfil the parliamentary request of disclosing the contractual prices of the above-mentioned CSA’s.

Eskom is currently progressing with coal supply negotiations with the shortlisted tenderers from RFP’s issued to the market. By disclosing this information to the public, the tenderers could potentially use this information to erode Eskom’s bargaining power.

 

Reply:

According to the information received from Eskom:

(1)(a) Eskom is not ignoring the community of Pimville.

Eskom has responded to all 32 faults logged by the Pimville customers since June 2021. Regrettably, 24 of the 32 faults relate to cable theft, five to network overload and three were due to planned maintenance.

In the Pimville area Eskom has ~24 700 registered customers however 70% (~17 300) of these customers do not buy electricity.

The causes of power interruptions in Pimville are vandalism, cable theft and illegal connections which result in an overloaded network.

It is to be noted that queries and faults from customers that do not buy electricity are scheduled for meter audits. Upon auditing, customers that are found to be buying electricity legally are restored. However, customers that are found to be buying illegal electricity tokens; not buying at all; or have tampered meters, are issued with fines and their supply is only restored once payment of the tamper fine is received.

Recently, the longest outage experienced was due to infrastructure vandalism at Moroka substation which affected supply in multiple areas in Soweto, including Pimville. The vandalism resulted in an explosion at the substation which took almost a week to repair due to the extent of the damages.

Even though Eskom secures the substation, thieves still find a way to break in, steal cables and other equipment, leading to massive destruction and extended unavailability of electricity to customers.

(1)(b)(i) and (ii) Eskom has taken the following measures:

• Eskom replaced the credit meters with prepaid split meters in the area, where amongst other benefits customers are able to manage their consumption and limit it to their affordability, however most communities continue to bypass these meters resulting in vandalised equipment, indiscriminate use of energy and overloaded networks. Eskom has tried to remove these meter bypasses but experiences retaliation from the community which in some cases, makes it unsafe for our technicians to work in those areas.

• In cases where major networks are affected resulting in extended outages, Eskom dispatches technicians to the fault areas and customers are updated through contact details of the registered account-holders. Customers are also updated through media statements, radio, and via social media platforms such as Facebook and Twitter.

• Eskom implements load reduction in all areas where the networks are at risk of being damaged by overloading, and Pimville is one of these areas. Load reduction is carried out to prevent loss or damage of equipment and extended outages. Customers are notified of pending load reduction, which normally lasts for a maximum of five (5) hours and is implemented up to twice a day per customer.

• Eskom continues to educate customers on the safe and responsible use of electricity. Eskom encourages communities to protect their infrastructure by reporting any nefarious activities undertaken by their neighbours including Eskom technicians and contractors. Eskom intends to run community co-operatives where communities will co-own the problem and joint solutions will be sought and implemented.

(2) Yes, Eskom conducts routine assessments as required by our maintenance philosophies.

The tampering and the bypassing of meters, illegal connections and unauthorised operations result in electricity demand exceeding the design capacity of the network and overloads and damages electricity infrastructure i.e., transformers.

Of ~132 transformers in the area, six failed recently due to overloading however three have since been restored. The cost of replacing a transformer is ~R400 000.

For Pimville area alone Eskom has lost revenue of ~R36 million in the last four (4) months.

Reply:

1. The due diligence is at an advanced stage and should be completed shortly. The parties have started negotiating the Sale and Purchase Agreement (SPA). After the successful completion of the SPA stage, we will be able to announce the completed deal to the public pending regulatory approval.
2. Once the Sale and Purchase Agreement have been concluded, the Memorandum of Incorporation will be finalised.

Reply:

According to the information received from Denel:

1(a) Technically Skilled lost in past 3 Financial years = 173

1(b) Total number of technically skilled currently employed = 157

2.(a)- (b) details of the tenders that Denel Vehicle Systems (DVS) finalised in term of due process in the past financial years are mentioned in Annexure 1.

3. The business has existing contracts with customers and are at the different stages. These are shown in Annexure 2: DVS Existing contracts. Along with these are the opportunities at varying stages:

(a) DVS has submitted a number of proposals to various potential clients but none are at the stage of being finalised;

(b) The new opportunities are valued at R700 million;

(c) DVS would seek project financing from corporate office, alternatively it would be asking clients to pay for material directly to suppliers where possible.

(d) The business is financially strained and cannot meet short to medium term financial obligations.

4. Financing of Programmes

(a) DVS is not in a position to raise any capital to finance these contracts due to liquidity challenges;

b) DVS is seeking external sources to finance existing programmes as well as the potential contracts.

Reply:

According to the information received from Denel:

1. The increase in the number of contractors in the period from 1 April 2021 to 30 June 2021 was as a result of permanent employees, who resigned from their permanent positions and later offered their services on a fixed term basis.

2. SARS is amenable to granting Denel a deferred payment arrangement for the legacy tax debts and a compliant tax status provided the entity pays the current monthly Value Added Tax (VAT) and Pay as You Earn (PAYE) for August and the subsequent tax periods. Denel managed to pay the VAT due on 31 August but the PAYE remains unpaid.

SARS has indicated their intention to invoke the provisions of section 169 of TAA and recover tax that is due to the fiscus followed by the provisions of section 172 (Application for civil judgment for recovery of tax) in the event of not securing enough cash to liquidate the current outstanding liabilities.

Provisions of section 234(2)(k) that lead to conviction, fine or imprisonment for a period not exceeding two years may be applied by SARS against the management of Denel due to non-payment of VAT and PAYE withheld and not paid over to SARS.

3. The three (3) executives, implicated in the Ngidi Report are currently on precautionary suspension with full pay. The suspension with full pay is in line with the Denel SOC Ltd Disciplinary Code.

4. Four (4) employees who were implicated in the ENNE 7 contract were subjected to disciplinary hearings. Two were found not guilty. The other 2 were found guilty and were given Final Written Warnings. In addition to the Final Written Warning, one also received an additional 12 months suspension without pay.

Reply:

(1)(a) There is no plan to sell assets to private companies.

(1)(b) There is no plan to privatise ports under the control of Transnet. The position in this regard is to crowd in private capital to co-invest in the ports equipment, technologies, skills and operations with the aim of improving efficiencies of the country’s port systems which is critical for the country’s economic competitiveness ability to grow the export market and support the growth of local businesses.

Transnet’ balance sheet alone is not sufficient to support the investment resources required to upgrade the ports to worldclass standards. The private sector participation model leaves the ownership of the port and resultant improvements in the balance sheet of Transnet, enables the participation of the private sector in supply chain efficiencies as port users but still leaves the ownership of the entity with the State while simultaneously reducing the financial reliance on the national fiscus.

2. No. The invitation of the President was not informed by any plan to privatise the Port of Durban or any other port under Transnet. The visit by the President was to evaluate progress made from his visit to the Port of Durban in October 2019. During that visit, many local businesses and port users raised specific concerns about the performance of the Port of Durban. Shipping companies in particular, expressed concern about the low productivity levels in the port which included amongst others, truck congestion and waiting times, ship berthing delays and poor reliability of critical port equipment. The visit in April 2021 was aimed at affording the President a firsthand check on the progress against the commitments that were made in the 2019 visit; and for Transnet to apprise him about further plans to reposition the port. This was to reinforce the commitment that the President had made to local business regarding the improvement of the efficiencies at South African Ports.

Reply:

Mango has been placed under Business Rescue and a Business Rescue Practitioner has been appointed to be responsible for the affairs of the airline. The Department will be providing oversight support during this process by ensuring that a sustainable model is developed for Mango. Of significance would be the restructuring of Mango to successfully ease the reliance of the airline from Government funding and taking into account the current market dynamics.

Reply:

According to the information received from Alexkor

1. (a) The initial contractual obligations were to buy Alexkor Richtersveld Mining Company Pooling and Sharing Joint Venture (PSJV) production and pay the nett value percentage to PSJV.

(b) The initial period was 3 years as stated above. Then it was amended to include IMDSA (Deep sea marine mining), at this point SSI changed the operating model to buy, market and sell. Which was not the original plan at the tender stage.

(2) The company did change the model agreed to tender system which was agreed to by previous management to buy the whole production. This means that they did not fulfil the obligations initially agreed to.

3. The agreement payment was 1.5% commission for all carats sold at the tender. It was paid in full and no outstanding amounts.

4. (a) No company was appointed, Alexkor SOC is conducting the marketing and selling function in house with corporation from Diamond Export and Exchange (DEEC) and Government Diamond Valuation (GDV) office.

5. No company was appointed, Alexkor SOC is processing in house with corporation from DEEC. The Contractors and the Alexkors appointed evaluators are still in operation.

Reply:

According to the information received from Eskom

(1)

Eskom maintains the position that it supports nuclear power, in particular the life extension of Koeberg Power Station. The procurement process is being dealt with by the Department of Minerals and Energy (DMRE) in accordance with IRP19. The DMRE should be approached for any further information.

(2) this matter is being dealt with by the Department of Minerals and Energy (DMRE) in accordance with IRP19. The IRP makes it clear that additional nuclear power generation will only be added to the electricity mix at a pace and scale that the country can afford .The DMRE should be approached for any further information.

 

(3) the DMRE is best placed to respond to this.

Eskom is ready to provide support where needed as the operator of nuclear power plants in South Africa, and in accordance with the Nuclear Energy Policy of 2008.

Reply:

According to the information received from Safcol

a) (i) Total number of land claims: 46 (1X KZN, 24X Limpopo, 21X Mpumalanga)

(ii) Status of each specified land claim: Status of each claim indicated in Annexure A.

(iii) (aa) Total number of land claims that have been settled: 4 settled.

(bb) Challenges hampering the settling of land claims: finalization of claims by the Department of Agriculture, Land Reform and Rural Development. Signoff of title deeds handover by respective departments.

b) Title deeds handed over: 1 Mpumalanga CPA

c) How land claims are dealt with by SAFCOL to date:

(i) Engage land claimants proactively in terms of SAFCOLs Proactive Community Engagement Model (before settlement of land claim) to establish commercial partnerships in the value chain:

Value Chain Position	Description
Downstream	Utilising SAFCOLs final products
In the value chain	Directly related to SAFCOL
Related activities	Conservation, tourism, unplanned areas, agro-forestry
Upstream	Before entering SAFCOLs value chain

Reply:

According to the information received from Eskom

(1)(a)&(b) Eskom does not engage with the sub-contractors, they are engaged by the principal contractors. Eskom therefore cannot provide details of sub-contractors.

However, there are 22 active principal construction and supply contracts at the Kusile project site.

(2) As mentioned above, Eskom does not engage with sub-contractors. However, for principal contractors:

The contracts in place are either from the International Federation of Consulting Engineers (FIDIC) or New Engineering Contract (NEC) suite of contracts and include specific Eskom approved clauses. The contracts include specific penalty clauses for performance issues and delays. The penalty clauses and the quantum of the penalty vary from one contract to the next – the penalties generally vary between 5% and 10% of the contract value.

(3)(a) On 14 December 2015, the Eskom Board approved a budget of R161.40 billion for Kusile Power Station, excluding interest during construction (IDC).

(3)(b) As at 31 July 2021, R142.93 billion (excluding interest during construction) was spent in relation to the budget.

(3)(c) No additional budget was approved.

(3)(d) No amount was overspent.

(4)(a) On 9 June 2020, Eskom Board approved a time extension only from 30 September 2022 to 31 May 2024 for commercial operation of the last unit (Kusile unit 6).

(4)(b) The approved project period is still valid and has not been exceeded (see 4a above).

(5)(a)(i) The average monthly spend on accommodation is R5.27 million, including value-added tax (VAT).

(5)(a)(ii) The average monthly spend on meals is R7.55 million, including VAT, which includes meals for residents at Kendal Village.

(5)(b) The current suppliers of accommodation are:

• Combined Accommodation (Kendal Village and Khaya Resort),
• Raziserve (Nan Hau and Cathy Hostel),
• Cross Atlantic Properties 219, and
• T L Marule Property Developer (Villa Shekina).

The current supplier of meals is: Tsebo Solutions Group ATS (Pty) Ltd.

Additional Information:

1. We provide a list of contractors with whom Eskom has active principal construction and supply

contracts at the Kusile project site.

It is to be noted that there are 22 principal contracts with 17 contractors because some contractors have two or more contracts e.g. Alstom has two contracts; ABB has two contracts and Tenova Mining and Minerals has three contracts. 

The 17 principal contractors are as follows:

1. MHI Power ZAF (Pty) Ltd and Mitsubishi Power Europe GmbH	2.  Aveng Africa
3. Alstom S and E Africa (General Electric)	4. Ingersoll Rand South Africa
5. Kusile Civil Works JV	6. PDNA Industrial Projects 7. (Mott Macdonald)
8. Eskom Rotek Industries	9. Zest Electric Motors
10. Siemens	11. Static Power
12. SSBR (Stefanutti Stocks Basil Read Joint Venture)	13. Honeywell Automation
14. Industrial Water Cooling	15. ACI Technical Services
16. ABB South Africa	17. Actom Contracting, a division of Actom
18. Tenova Mining and Minerals

2. We provide a historical view of all Kusile business case approvals:

ERA’s (Business Cases)	ERA Value (excluding IDC)	Approval Date	Approved By
ERA Rev. 0	R80.7Bn	March/April 2007	Eskom Board
ERA Rev. 1	R103.9Bn	September 2009	Eskom Board
ERA Rev. 2	R121.0Bn	May/June 2011	Eskom Board
ERA Rev. 3	R156Bn (P50) R161.4Bn (P80)	December 2015	Eskom Board
ERA Rev. 4	R156Bn (P50) R161.4Bn (P80)	June 2020	Eskom Board

Reply:

According to the information received from Eskom

(1)(a) and (b)

The incident is not related to the steam pipe / or steam generator as it occurred on the Electric Generator that is coupled to the steam turbine centreline through a Turbo Gen rotor. The Medupi Generators original equipment manufacturer (OEM) is General Electric (GE).

(2)

The 8th of August 2021 Medupi unit 4 generator failure incident is still under investigation, however, following the preliminary investigation, it appears that while performing the purging of hydrogen activity, air was introduced into the generator at a point where hydrogen was still present at sufficient quantities to create an explosive mixture. This is not related to the steam pipes or to issues with previous maintenance activities.

(3)(a)(i)

The final damage assessment will only be quantified once the all-turbine cylinders and the generator are fully stripped. The process underway is making the area safe to commence with stripping and internal inspections. The cost of repairs will be established once the contracts are placed as per detailed scope of work following damage assessments.

3(a)(ii)

The repairs will depend on the extent of the damage and the long lead components to be replaced. It is safe to say that the repair duration will be in excess of one year.

3(b)

Eskom has insurance cover for all its assets.

Reply:

According to the information from Transnet response:

(a) Initially all ICT systems were shut down to stop the spread of the malware.  Some servers and some workstations that were online at the time of the attack were encrypted by the ransomware.

(b)(i) An incident response team was brought in to assist with the secure rebuild of the active directory servers. A second incident response team assisted with containing the incident and performing a forensic scan of all machines.

(b)(ii) Transnet was already in the process of rolling out additional security measures across the network. This has been fast-tracked and all machines that are brought back on on-line have the security stack deployed. A separate Endpoint Detection and Response (EDR) and forensic agent has been deployed on all machines before they were brought back online.

All older operating systems have been upgraded to current operating systems and were fully patched before being brought back online.

Transnet has also deployed a web access firewall, reverse proxy and an anti-distributed denial of service system for all public websites.

(c) It was a ransomware attack. There is a criminal investigation in progress.

(d) There is a criminal investigation in progress.

(e) All customer interfaces and the NAVIS terminal operating system have returned to normal. TPT has continued to keep customers and stakeholders informed of the progress made since Thursday 22 July 2021. Transnet will continue to engage in the dedicated daily recovery fora and meetings until all operations and the entire supply chains have normalised. For example, Transnet has a dedicated weekly recovery session with Business Unity South Africa, which commenced on 28 July 2021 and is planned to conclude on 20 September 2021. Other meetings with port stakeholders will continue daily, until congestion has been resolved.

(f)(i) Container volumes were delayed as a result of the cyber-attack or the resulting congestion. However, most imports and exports would still be serviced through SA or neighbouring Ports, albeit later than originally planned.

Automotive vessels were delayed due to system unavailability, which was mitigated by the implementation of manual processes. Some vessels have been diverted between terminals and other delayed volumes have caught up. Hence, the impact on volumes through SA ports is negligible.

In respect of Bulk and Breakbulk cargo, Business Continuity (manual processes) significantly mitigated the potential loss of volumes. No material impact is expected on Bulk and Breakbulk volumes as a result of the system down time.

(f)(ii) TPT will continue to engage in dedicated recovery forums, until all operations and the entire supply chains have normalised.

In addition to the broader fora, TPT engages directly with the shipping lines, to plan jointly to ensure fluid operations at the terminals and on the waterside.