Questions and Replies

Reply:

All the appointments of personnel in public sector positions are made in accordance with relevant legislation. No structure outside of these prescribed in legislation can determine the deployment of personnel in public sector positions. Where the legislation requires me to make an appointment, I apply myself to the requirements of the entity concerned, the legislative prescripts and the merits of candidates for the positions.

As part of building a capable state, I make all reasonable efforts to strengthen the skills mix in those public sector appointments within my remit. I therefore carefully consider the suitability of candidates on the information available to me and the need to have a diverse set of skills and experiences on an entity’s board.

Remarks: Approved / Not Approved

Jacky Molisane Pravin Gordhan, MP

Acting Director-General Minister

Date: Date:

Reply:

a) The service provider that was appointed to conduct an investigation into DPE information and data leak on Ms Borotho’s recruitment process including matters of a personal matter to the media was Abacus Financial Crime Advisory (Pty) Ltd.

b) The report concluded that there was a concerted and intentional release and dissemination of confidential DPE information and documentation to the media.

c) R281 168.00

d) (i) Establish whether there was a concerted intentional release of secure or private/confidential information to an untrusted environment (the media);

(ii) Collect evidence to fully understand the scale and the impact of a breach;

(iii) Identify the source of the leak and identify where DPE can be assisted in respect of data and information leakage;

(iv) Whether or not any matter should be referred to the South African Police Services (SAPS) or any other law enforcement agents, and

(v) Provide recommendations on the outcome of the investigation.

2. It was recommended that disciplinary action be considered against the official who shared her password with the official who leaked the information.

The official who shared her password and against whom disciplinary action is recommended left the Department a while back and it is therefore impossible to act against her.

Remarks: Approved / Not Approved

Jacky Molisane Pravin Gordhan, MP

Acting Director-General Minister

Date: Date:

Reply:

1. I have not appeared before or met with the Deployment Committee of any political party.
2. Not applicable

Remarks: Approved / Not Approved

Jacky Molisane Pravin Gordhan, MP

Acting Director-General Minister

Date: Date:

Reply:

(a)

To contribute to the National Just Energy Transition framework, the Department developed a Just Transition framework for Eskom. The purpose of the framework is to guide the SOC within the department’s portfolio in developing a response plan/strategy to the global call to reduce emissions by developing their own plans on how they can contribute to South Africa’s climate change plans.

(b)

To date, only Eskom and SAFCOL submitted draft plans to transition in their respective environment, While Transnet, Alexkor and Denel’s plans are in the process of being developed.

Remarks: Reply: Approved / Not Approved

Jacky Molisane P J Gordhan, MP

Acting Director-General Minister of Public Enterprises

Date: Date:

Reply:

According to Information Received from Eskom:

a) A conviction was obtained for coal procurement fraud against Meagra Transport CC and an Eskom employee, for coal procurement transactions. The company was contracted to transport coal for Eskom and generated fake invoices for which they were paid for coal that was never delivered. The conviction followed a fraud case where Eskom suffered a loss of approximately R35 000 000.00.

There are currently seven (7) transport companies that are under investigation by the Hawks for coal procurement fraud and theft against Eskom.

b) There are several matters pending before the South African Police Services (Hawks), Special Investigating Unit (SIU), National Prosecuting Authority (NPA) and Asset Forfeiture Unit (AFU) involving coal transport contractors and coal supply agreements. Civil and criminal litigation are being pursued against the various offenders.

The former Director of Meagra Transport, Victor Tshabalala and the former Eskom employee were found guilty in the Palm Ridge Specialised Commercial Crimes Court (Case no. SCCC232/2019) for fraud against Eskom and sentenced on 29 March 2022, to an effective twenty (20) years imprisonment respectively. Meagra Transport (Pty) Ltd was also subjected to an internal supplier review process (disciplinary) and the outcome led to the supplier being deregistered and restricted from doing business with Eskom and other state entities for a period of five (5) years, with effect from 1 September 2020. A preservation and forfeiture of property order was also granted by the Gauteng High Court on 9 November 2021 against the properties owned by both Victor Tshabalala, as well as the former Eskom employee, Bernard Moraka.

Eskom has recently contracted the services of a dedicated specialised investigative capability to focus on coal procurement fraud and theft investigations. In the recent months several criminal cases for coal theft and fraud have been opened by Eskom and are with the South African Police Services (SAPS) for investigation. The most recent incidents under investigation involved the theft of coal and fraud at Kendal and Camden power stations, respectively where three contractors to Eskom were arrested and are facing criminal charges.

Eskom reports all allegations of coal procurement fraud and theft to the SAPS for criminal investigations. The SAPS currently refers all cases of Eskom coal procurement fraud and theft to a dedicated team within the Directorate of Priority Crimes Investigations (DPCI), commonly known as the Hawks, for further investigation and prosecution.

 

Remarks: Approved / Not Approved

Jacky Molisane Pravin Gordhan, MP

Acting Director-General Minister

Date: Date:

Reply:

SAA faced a myriad of challenges over the years resulting in the airline’s inability to generate enough revenue to sustain operations and relied on debt to fund operations.

SAA had been incurring losses for an extended period which resulted in the airline being placed under business rescue by the SAA Board in December 2019. The business rescue period coincided with the country being placed under lock down due to the outbreak of Covid-19 pandemic in March 2020, resulting in all airlines’ suspension of commercial flights.

The airline successfully exited the business rescue in April 2021 and subsequently resumed operations in September 2021.

Remarks: Reply: Approved / Not Approved

Jacky Molisane P J Gordhan, MP

Acting Director-General Minister of Public Enterprises

Date: Date:

Reply:

According to Information Received from Eskom:

a) The total cost associated with the activities needed to support the licence application for long-term operation is projected to amount to an estimated R21 billion.

b) The installation schedule of the specific project to replace the steam generators has moved to coincide with the outage starting in December 2022 for Unit 1 and the outage for Unit 2 starting in October 2023. This change to the installation of the steam generators still aligns with the overall schedule and the milestones associated with the Eskom licence application to operate Koeberg for an additional 20 years. This schedule has not changed.

 

 

Remarks: Approved / Not Approved

Jacky Molisane Pravin Gordhan, MP

Acting Director-General Minister

Date: Date:

Reply:

According to Information Received from Eskom:

a) The Transmission Development Plan (TDP 2022) identified the new infrastructure required to implement the Integrated Resource Plan (IRP) 2019 and Eskom’s 2035 Corporate Strategy. However, it takes time to establish new transmission infrastructure (especially the building of long lines and substations), mainly due to servitude acquisitions and constructability challenges. Eskom is aware of these challenges and is making every effort to expedite the build programme by engaging key government and private stakeholders.

In the interim, Transmission has taken the following steps to assist Independent Power Producers (IPPs) and expedite the TDP implementation programme:

1. The Grid Connection Capacity Assessment (GCAC 2024) document on Eskom’s website provides an indication of available network capacity elsewhere on the system that could be considered for integration of renewable energy (RE) projects.

While network capacity may be limited/restricted in the broader Cape areas, there is available capacity inland, for example, Free State, North-West, Mpumalanga, and Limpopo provinces, that can be considered for the integration of future RE IPPs.

2. Transmission is currently taking measures to “fast-track” projects across the network, especially in areas with interest and potential to integrate RE resources. These include the following:

2.1 A Programme Management Office (PMO) has been established that tracks, monitors, and reports on the deliverables from the various work streams.

a) There is positive movement in the engagements with DPE/DPWI to address servitude challenges by implementing expropriation with compensation at market value. Steps are in place to expedite the process going forward.

b)  Engagements with the dtic/NT to address opportunities for localisation and in cases of challenges with the local manufacturing and industry capacity, for example, for large transformers, exemptions are being considered to source from international suppliers.

c) Engagements with industry associations, for example, The Powerline Association of South Africa (POLASA) and the Steel Manufacturers Association (SMA), to increase preparation capacity to meet the TDP build requirements,

d) The majority of the capital expenditure for the first five years of the TDP was secured from Corporate Finance

e) Supplier engagement forums were held with industry participants to share the transmission build programme.

2.2 The TDP prioritised list of projects has been escalated to the PICC and SIP10 as critical infrastructure requirements for the country.

2.3 Ongoing and close working relationships with the DFFE to expedite the Environmental Impact Assessments (EIA) processes.

2.4 Ongoing discussions with DMRE/IPPO on the transmission network requirements to meet the RE procurement programmes.

2.5 Transmission is represented on the Electricity Crisis Committee (Natjoints Stream1) that was recently established to address Transmission grid strengthening challenges.

2.6 Finalising the Owner’s Engineer (OE) and EPC (turnkey) strategy to leverage our in-house capability to expedite the TDP roll-out programme.

(b) Eskom is placing a strong focus on the implementation of projects over the next five years. The analysis carried out reflects a requirement of approximately 2 890 km of extra high voltage lines and 60 transformers, requiring a capital investment of approximately R51 billion by FY2027. This requires that some challenges beyond Eskom’s full control, such as the lead time to obtain servitudes, among other relevant authorisations, and the country’s resource capacity be urgently addressed.

As at the end of October 2022, the total portfolio of Transmission’s expansion projects equated to 224 and is summarised as follows:

• There are 45 projects in the execution phase that are under construction.
• There are 56 projects in the definition phase that are finalising servitude acquisitions and detail engineering designs before achieving execution release approval.
• There are 123 projects in the pre- and concept phases, that are projects in the early stages of development requiring EIA and conceptual level designs.

 

 

Remarks: Approved / Not Approved

Jacky Molisane Pravin Gordhan, MP

Acting Director-General Minister

Date: Date:

Reply:

According to information received from Eskom:

a) Eskom is experiencing a very high number of incidents of illegal connections, meter bypassing and tampering, unauthorised operations on the network, infrastructure vandalism and theft, and the non-payment and non-purchasing of electricity tokens. This number is constantly on the rise. Over the years, Eskom repeatedly replaced and repaired failed equipment without holding customers accountable, even when the failure was because of illegal electricity activities. Eskom has since implemented stringent control measures, as it is financially unsustainable for Eskom to replace this equipment continuously, especially without any return on investment. The debt levels, however, continue to grow, and the operational costs, on the other hand, also keep accelerating exponentially, while the business takes further financial strain as Eskom has to keep repairing, refurbishing, or replacing infrastructure that breaks or is frequently vandalised. Eskom has also reinstated the Deferred Payment Arrangement (DPA) to accommodate customers who cannot immediately settle the R6 052,60 remedial fee for tampering with Eskom infrastructure, to allow those customers to pay the balance over a maximum period of six months.

Sixty per cent of customers who have been issued with remedial charge sheets must have made the upfront payment of R500 before supply can be restored. The 60% threshold is aimed at ensuring that most customers honour the payment to avoid repeated equipment failure.

It should also be noted that in Ivory Park there are a number of customers have illegally connected transformers to the Eskom network and are refusing Eskom entry into the area to remove these illegally connected transformers. Out of 158 failed transformers, Eskom has replaced 107 and is in the process of replacing the remaining 51. With that said, Eskom is not refusing to replace the failed transformers in Ivory Park, but merely following the equipment replacement process it has implemented for the reasons mentioned above.

(b)(i) The Eskom network is not configured according to wards. Therefore, Eskom is unable to provide the customer base according to wards. However, Eskom has a total of 24 446 customers in Ivory Park, of whom 12 001 are zero buyers (prepaid customers). This means that 49% of customers in Ivory Park are not buying electricity from registered electricity vendors.

(b)(ii)The frequent equipment failures unfortunately inconvenience law-abiding and paying customers of electricity in these areas, while costing Eskom billions of rands in damaged infrastructure and lost sales. Furthermore, to try and protect the customers who are paying for electricity, Eskom has tightened its existing measures, such as audits, maintenance, education and awareness campaigns, to avert failures that lead to unplanned and extended outages and also to influence and change the culture of non-payment and non-purchasing of electricity tokens.

Over and above trying to prevent inconveniencing paying customers, these control measures are also aimed at combating illegal connections, meter bypassing and tampering operations on the Eskom network, infrastructure theft and vandalism and other electricity-related crimes.

 

Remarks: Approved / Not Approved

Jacky Molisane P J Gordhan, MP

Acting Director-General Minister

Date: Date:

Reply:

The Commission of Inquiry into State Capture Report revealed that boards and senior executives were installed to systematically to collapse governance in Eskom, SAA, Transnet, Denel and Alexkor.  According to the Report, Board members and senior executives worked tirelessly to benefit the architects of state capture “by providing long term contracts, increasing scope and budget while completely flouting public procurement prescripts”.  The report published by the Commission indicates that “The evidence heard by the Commission revealed quite clearly that part of the reason why some of the state-owned companies have performed as badly as they have and why some rely on Government bail outs year in year out is the calibre of some of the people who are appointed as members of the Boards of these companies or who are their Chief Executive Officers and Chief Financial Officers”. The report unequivocally indicates that good governance was systematically and deliberately collapsed to enable the illegal diversion of resources from SOEs, which affected their financial and operational sustainability. The department and SOEs are working tirelessly to undo the impact of state capture by improving performance and the quality of service, some of which may take years to see the fruits thereof. 

It should therefore be noted that the factors that affect the ability of State-Owned Companies (SOC) with the Department of Public Enterprises (DPE) to submit audited Annual Financial Statements (AFS) within the stipulated time are not as a result of decline in quality of service and their performance, but usually beyond the control of either the SOC or DPE. The main driver is going concern which requires funding. Therefore, SOC experiencing liquidity challenges have to develop mitigating factors and demonstrate sources of funding to ensure that they will be able to operate as a going concern over a period of twelve months.

The following have been the circumstances for specific SOCs with plans to remedy the situation:

1. SAA

The airline could not complete the AFS on a going concern basis for the 2017/18 financial year. This resulted in the airline being placed under business rescue from 6 December 2019 to 30 April 2021. The 2017/18 AFS were completed after the entity exited the business rescue. The Auditor-General is currently auditing the 2018/19 to 2021/22 AFS.

2. Denel

Denel continues to face liquidity challenges, which has resulted in the 2020/21 and 2021/22 AFS audits not being finalised. However, Denel has been allocated R3.4 billion to implement its turnaround plan. It has also commenced on disposing off non-core assets. This has enabled it to develop plans to conclude the outstanding audits over the 2022/23 and 2023/24 financial years.

3. Eskom

Eskom experienced delays in publishing the Group's 2022 Annual Financial Statements (AFS) due to the delay in the appointment of the new external auditor. The entity anticipates publishing the AFS not later than 31 December 2022 once the audit is completed.

4. Alexkor

The AGM relating to the 2020/21 financial year was only held in May 2022. As a result, there was a delay in appointing external auditors to audit Annual Financial Statement for the year ended 31 March 2022.

 

 

Remarks: Reply: Approved / Not Approved

Jacky Molisane PJ. Gordhan, MP

Acting Director-General Minister

Date: Date:

Reply:

According to information received from Eskom:

See the table below for the requested information.

Period: 1 January 2021 to 20 November 2022
Station	a) Operating hours	(b) Electricity generated (GWh)
(a)(i) Gariep	24 724.7	2 230.0
(a)(ii) Vanderkloof	15 895.8	1 928.7

Remarks: Approved / Not Approved

Jacky Molisane Pravin Gordhan, MP

Acting Director-General Minister

Date: Date:

Reply:

According to Information Received from Eskom:

a) Generation’s power plant units are required to undergo maintenance outages periodically to prevent future failures, address load losses, meet statutory requirements, and fix broken equipment.

The table below summarises the projected outages over the next five years in accordance with the capacity plan published in October 2022 and the plant maintenance philosophies of the stations.

FY of outage start and type of outage (count)
Type of outage	FY23	FY24	FY25	FY26	FY27
General Overhaul (GO)	15	12	12	6	13
Minor Overhaul (MO)	18	14	12	7	5
Interim Repairs (IR)	16	14	15	18	13
Inspections (IN)	16	11	20	9	12
TOTAL	65	51	59	40	43

 

b) The required outage budget for the next five years, FY2023 to FY2024, was R46 713 billion, compared to an affordability cap of R41, 800 billion (what Eskom could afford), resulting in an R4,913 billion financial constraint. Since then, the Chief Financial Officer has raised the affordability level to R44, 700 billion, reducing the gap to R2, 013 billion.

Eskom is working hard to stay within this restriction; but there are risks presented by this funding plan that may result in plant reliability challenges if all maintenance scopes are not completed. In addition, it does not allow for any scope variations in case of additional maintenance requirements discovered during outages.

 

Remarks: Approved / Not Approved

Jacky Molisane Pravin Gordhan, MP

Acting Director-General Minister

Date: Date:

Reply:

According to the information received from Transnet

The salary increases will be funded through a combination of cost control measures, improvement of operational performance and the rebasing of tariffs in line with tariff methodology or customer contracts which allow for salary increases as pass-through costs.

Cost control measures have been implemented across the business to preserve cash without limiting expenditure in critical areas of the business.

Improvement in operational performance will be supported by the initiatives that are strategically driven to unlock the current binding constraints i.e., locomotives availability, theft, and vandalism challenges as well as the focus on infrastructure maintenance backlog.

Remarks: Reply: Approved / Not Approved

Jacky Molisane P J Gordhan, MP

Acting Director-General Minister of Public Enterprises

Date: Date:

Reply:

(1) (a) The process that was followed in appointing Rand Merchant Bank (RMB) as the transaction advisor was through competitive bidding process carried out by South African Airways (SAA). The Department opted to participate in the contract that had been concluded by another organ of state, in this case SAA.

(1) (b) Minister did not play a role in the appointment of RMB by SAA or the Department.

 

Reply:

According to the information received from Transnet

(a) – (b) and (i) - (ii)

The Competition Commission (CC) is yet to make its final findings in relation to the CC investigations against TNPA and TPT. To this end there is no administrative fine imposed by the Commission against Transnet and any of its ODs, at this stage. The CC report will be made public once it is available.

 

Reply:

According to the information received from Transnet

(a)– (b)

Capital Budget Detail for the period 2018/2019 to 2021/2022

	(i)	(ii)	(iii)	(iv)
Port	2018/2019	2019/2020	2020/2021	2021/2022
Port of Durban	441,022,538	424,554,750	825,653,729	652,534,096
Port of East London	20,360,000	25,256,552	69,346,552	17,867,284
Port of Port Elizabeth	62,040,000	137,543,429	60,783,599	58,162,514
Port of Cape Town	221,204,907	256,639,379	207,388,203	117,222,693
Port of Saldanha	1,269,411,580	1,244,406,126	870,384,205	559,712,854
Port of Richards Bay	481,714,757	407,769,148	422,441,498	404,784,263
Port of Ngqura	112,325,882	138,701,408	30,871,000	92,228,961
Head office	113,500,000	242,569,008	113,919,050	123,635,445
Total	2,721,579,663	2,877,439,801	2,600,787,836	2,026,148,110

Reply:

According to the information received from Transnet

(a)– (b)

The total percentage and monetary value of capital under-expenditure by Transnet National Ports Authority in the past four (4) financial years, i.e., 2018/19 to 2021/22 has been 32%, translating into R 9 696 million under-expenditure. The proportion of the capital under-expenditure (both in monetary and percentages) per port and/or business unit is as shown in Table 1 on the following page.

Table 1: Under/ over-expenditure

	Port/ BU	Under/ Over -expenditure 2018/19	Under/ Over -expenditure 2019/20	Under/ Over -expenditure 2020/21	Under/ Over -expenditure 2021/22	Under/ Over -expenditure Over past 4 Years
i.	RCB	- R 219m	- R 144m	- R 278m	- R 100m	R 1,883m
		70%	49%	93%	41%	49%
ii.	DBN	- R 305m	- R 905m	- R 317m	R 736m	- R 2,036m
		41%	78%	70%	336%	25%
iii.	EL	- R 83m	- R 23m	- R 28m	R 56m	- R 429m
		81%	32%	67%	525%	41%
iv.	NGQ	- R 245m	R 227m	- R 182m	- R 245m	- R 390m
		77%	48%	41%	56%	10%
v.	PE	- R 30m	- R 31m	- R 25m	R 22m	- R 362m
		40%	49%	45%	52%	25%
vi.	MSB	- R 27m	- R 10m	R 0m	- R 3m	- R 110m
		86%	31%	0%	14%	57%
vii.	CPT	- R 119m	- R 26m	- R 146m	R 148m	- R 844m
		82%	24%	63%	112%	25%
viii.	SLD	- R 243m	R 7m	- R 275m	- R 107m	- R 1,326m
		92%	6%	80%	47%	50%
	DRS	- R 356m	- R 340m	- R 178m	- R 369m	- R 1,578m
		88%	100%	99%	99%	50%
	HO	- R 63m	R 149m	- R 54m	- R 119m	- R 426m
		34%	2092%	52%	38%	20%
	LHS	- R 40m	- R 13m	- R 21m	- R 40m	- R 312m
		76%	32%	71%	62%	51%
	Grand Total Under-expenditure	- R 1,732m	- R 1,108m	- R 1,503m	- R 22m	- R 9,696m
		66%	41%	69%	1%	32%

NB – All negative amounts and percentages denote under-expenditure.

 

Reply:

According to the information received from Transnet

(a) – (b):

The total capital budget for Transnet National Ports Authority for the past four (4) financial years, i.e., 2018/19 to 2021/22 was R 9,611,861,186. The total per year and the corresponding proportion of the capital budget per port and/or business unit is as shown in .

Table 1: Capital Budget for the past four financial years

	Ports/ BU	Budget 2018/19 (R)	Budget 2019/20 (R)	Budget 2020/21 (R)	Budget 2021/22 (R)	Budget Total 4 Years (R)
i.	Richards Bay	313,675,026	293,419,973	299,517,725	247,695,964	1,154,308,688
ii.	Durban	739,948,775	1,162,104,371	449,722,731	218,638,550	2,570,414,427
iii.	East London	103,433,433	71,192,492	41,579,111	10,663,936	226,868,972
iv.	Ngqura	320,143,274	473,228,241	445,569,466	434,321,234	1,673,262,216
v.	Port Elizabeth	74,999,174	62,525,281	56,625,106	43,079,731	237,229,292
vi.	Mossel Bay	32,108,064	32,196,033	3,897,130	18,594,591	86,795,818
vii.	Cape Town	144,279,479	106,752,864	231,964,582	131,976,905	614,973,830
viii.	Saldanha Bay	265,588,285	126,142,313	345,848,743	230,189,938	967,769,279
	Dredging	405,660,000	332,589,480	179,241,695	371,512,961	1,289,004,137
	Lighthouse	52,500,644	39,074,500	29,950,002	64,568,000	186,093,146
	Head Office	184,104,169	7,127,723	103,763,171	310,146,317	605,141,380
	Grand Total	2,636,440,324	2,706,353,272	2,187,679,462	2,081,388,128	9,611,861,186

 

Reply:

According to the information received from Transnet

(a) and (b):

The table below shows Transnet National Ports Authority’s total revenue for the past four financial years from FY 2018/19 to FY 2021/22, as well as revenue contributions per port.

i.

ii.

iii.

iv.

v.

vi.

vii.

viii