Questions & Replies: Public Enterprises

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2012-12-06

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Reply received: June 2012

QUESTION NO.: 834

DATE OF PUBLICATION: 23 April 2012

834. Mr L W Greyling (ID) to ask the Minister of Public Enterprises:

(1) Whether the original cost of R32 billion for the Medupi Power Plant was in line with the average cost per megawatt of coal fired power stations; if not, why not; if so, what are the relevant details;

(2) Whether Eskom insisted on a change in specifications that resulted in the cost escalating to R92 billion; if not, what are the reasons for the escalating cost; if so, what justification was put forward for this increase in cost;

(3) What is the expected total cost for the Medupi Power Plant upon commissioning? NW1010E

Reply:

(1)The Medupi Power Station Project to construct a three unit station of 794 MW each as a critical pulverised fuel plant with a Flue Gas Desulphurisation (FGD) plant was approved in December 2006 at a cost of R32 billion. The budget for the project remains in line with international benchmarks such as the Electric Power Research Institute (EPRI) of the USA, Lazard and the International Energy Agency (IEA) in France.

The table below shows the 2011 renowned benchmarks (Source: Eskom Annual Report).

(2) The Integrated Strategic Electricity Plan (ISEP) of Eskom called for an increase in supply requirements. The approval of R92 billion was for a six unit station in comparison with a three unit station that was estimated at R32 billion in 2004 monetary terms. In addition, the difference in phasing of the capital expenditure on the units, supporting infrastructure requirements such as roads, rail and housing, transmission integration, regulatory requirements and market conditions had an impact on the cost estimate variances. The specification of the project has not changed but the configuration has changed in line with original plans.

(3) The current cost to complete the Medupi Power Station is estimated at R98.9 billion excluding interest during construction, but including escalation and transmission integration costs.

Reply received: May 2012

QUESTION NO.: 810

DATE OF PUBLICATION: 23 April 2012

810. Mr P J Groenewald (FF Plus) to ask the Minister of Public Enterprises:†

(1) What (a) was the total expenditure on (i) hotel accommodation, (ii) functions and (iii) other specified expenses for Transnet's (aa) executive and (bb) nonexecutive board members (aaa) in the (aaaa) 2009-10, (bbbb) 2010-11 and (cccc) 2011-12 financial years and (bbb) during the period 1 April 2012 up to the latest specified date for which information is available and (b) were the reasons for the expenditure;

(2) What was the (a) salary, (b) bonus and (c) percentage increase in salary for Transnet's (i) executive and (ii) nonexecutive board members (aa) in the (aaa) 2009-10, (bbb) 2010-11 and (ccc) 2011-12 financial years and (bb) during the period 1 April 2012 up to the latest specified date for which information is available;

(3) What percentage of Transnet's budget (a) in the (i) 2009-10, (ii) 2010-11 and (iii) 2011-12 financial years and (b) during the period 1 April 2012 up to the latest specified date for which information is available was spent on the (i) salaries and (ii) bonuses of its (aa) executive and (bb) nonexecutive board members? NW978E

Reply:


The total amount spent on hotel accommodation functions and other expenses by Transnet executive and non-executive board members are attached as Annexure A.

Reply received: December 2012

QUESTION NO.: 785

DATE OF PUBLICATION:

785. Mr S C Motau (DA) to ask the Minister of Public Enterprises:

Whether any officials from (a) his department and (b) any entities reporting to him were on an official visit to Bloemfontein in (i) December 2011 and (ii) January 2012; if so, in each case, what (aa) is the (aaa) name and (bbb) position of the specified official, (bb) was the (aaa) purpose and (bbb) date of such visit and (cc) was the cost of (aaa) transport, (bbb) accommodation and (ccc) other expenses? NW956E

Reply:

(a)(i-ii)(aa)(aaa-bbb)(bb)(aaa-ccc) No officials from the Department of Public Enterprises (DPE) visited Bloemfontein in December 2011 and January 2012. The following State Owned Companies reporting to DPE, namely Alexkor, SAFCOL and SA Express had no officials visiting Bloemfontein in December 2011 and January 2012.

(b)(i-ii)(aa)(aaa-bbb)(bb)(aaa-ccc) The following State Owned Companies reporting to DPE had officials visiting Bloemfontein in December 2011 and January 2012.

According to Broadband Infraco

(b)(i-ii)(aa)(aaa-bbb) Puleng Sejanamane, Chief Sales and Marketing Officer went to Bloemfontein during the period.

(bb)(aaa)Introduction of Broadband Infraco and its mandate.

(bb)(bbb) 24 January 2012.

(cc)(aaa-ccc) Transport cost:

Airfares - R3366.00.

Car Hire - R676.10.

Airport Parking - R270.00

Accommodation - None

According to Denel:

The table below indicates names, dates and purposes of the visits by the Denel officials to Bloemfontein in December 2011 and January 2012.

Name

Dates

Purpose

Accommodation Cost

Transport Cost

Remarks

E Thomas

12-14 Dec 2011

Rooivalk Work Team

R 960

R 836

Used pool vehicle

T

Tharratt

28 Nov 2011 - 1 Dec 2011

Rooivalk Work Team

R 1,920

R 836

Used pool vehicle

W Louw

28 Nov 2011 - 1 Dec 2011

Rooivalk Work Team

R 1,920

-

Travelled with T Tharratt

According to Eskom:

(b)(i-ii)(aa)(aaa-bbb)(bb)(aaa-ccc) Details are outlined in Annexure A (attached).

Accordingly SA Airways:

The table below indicates names, dates and purposes of the visits by the SAA officials to Bloemfontein in December 2011 and January 2012.

FROM

TO

EMPLOYEE NAME

DESIGNATION

PURPOSE

COST

Airchefs

2011/12/13

2011/12/14

Grater Masemola

Shift Manager

Business – ER matters

R1455.96

2011/12/13

2011/12/14

Tebogo Moloto

ER Practitioner

Business – ER matters

R1 455.96

2012/01/12

2012/01/12

Isaac Sema

SAP Manager

SAP implementation

R286

2012/01/18

2012/01/18

Alison Crooks

CEO

First site visit and inspection

R286

2012/01/18

2012/01/18

Michael Muller

CFO

First site visit and inspection

R286

2012/01/18

2012/01/18

Mandisi Feni

GM: HR

First site visit and inspection & HR matters

R286

According to Transnet:

(b)(i-ii)(aa)(aaa-bbb)(bb)(aaa-ccc) Details are outlined in Annexures 1 and 2 (attached).

Reply received: April 2012

QUESTION NO.: 725

DATE OF PUBLICATION: 16 March 2012

725. Mr L W Greyling (ID) to ask the Minister of Public Enterprises:

(1) Whether Eskom is buying back electricity from energy intensive companies; if not, how was this conclusion reached; if so, (a) under what regulatory authority is Eskom buying back electricity and (b) at what rate per kilowatt hour;

(2) Whether the rate was negotiated with individual companies; if not, why not; if so, what were the terms of reference during the negotiations;

(3) Whether Eskom is compensating companies for (a) the profit they have foregone or (b) total revenue lost as a result of not running operations at full capacity; if not, in each case, how was this conclusion reached; if so, in each case, what is the (i) name of the company and (ii) cost to Eskom? NW891E

Reply:

(1) Yes. Eskom commenced with negotiating and buying back electricity from large industrial customers in December 2011.

(a) Eskom's buying back of electricity is based on an arrangement with the relevant customers. The National Energy Regulator of South Africa (NERSA) is comfortable with the approach being used by Eskom and is kept informed of its (Eskom's) longer term buy back plans.

(b) The rate is determined by mutual agreement with the customer taking into account the business unique operational requirements, including amongst others, operational flexibility, fixed cost and Eskom's requirement of no job losses associated with the electricity buy-back. The agreed rate is within Eskom's cost of generating electricity within the existing fleet of generation options.

(2) A response is provided in (1) (b) above.

(3) Eskom does not compensate companies for the profit they have forgone. As indicated in (1)(b), the rate is determined by mutual agreement with the customer taking into account the business unique operational requirements including amongst others, operational flexibility, fixed costs and Eskom's requirement of no job losses associated with the electricity buy-back. Details pertaining to total revenue lost, name of the company and the cost to Eskom cannot be made public as it is a confidential agreement between Eskom and relevant customers.

Reply received: April 2012

QUESTION NO.: 723

DATE OF PUBLICATION: 16 March 2012

723. Mr L W Greyling (ID) to ask the Minister of Public Enterprises:

(a) At what capacity has Eskom's open cycle gas turbines been running since 1 August 2011 and (b) what (i) quantity of diesel has been burnt since 1 August 2011 and (ii) is the cost of generating one kilowatt hour of electricity in the turbines? NW889E

Reply:

(a-b)(i) The table below indicates the number of units installed, the total capacity that can be generated, the quantity of diesel consumed and quantity of energy produced since August 2011 at the Ankerlig and Gourikwa power stations.

Description

Ankerlig power station

Gourikwa power station

No. of units installed

9

5

Nominal Total Capacity (MW)

1327

740

Quantity of diesel consumed since 01 August 2011 (M litres)

124

107

Quantity of energy produced since 01 August 2011 (GWh)

350

279

(b)(ii) The average price of diesel varies each month and hence the cost of generating electricity with the Open Cycle Gas Turbines is not constant. The average cost over the period under consideration was 247c /kWh.

Reply received: March 2012

QUESTION NO.: 652

DATE OF PUBLICATION: 16 2012

652. Mr L S Ngonyama (Cope) to ask the Minister of Public Enterprises:

Whether he intends tabling a report to Parliament regarding the losses to the economy due to cable theft; if not, why not; if so, what are the relevant details? NW811E

Reply:

No, the issue of cable theft does not only affect State Owned Companies (SOC) reporting to the Department of Public Enterprises, but other entities as well.

The following tables indicate Transnet's and Eskom's losses, replacement costs and increased measures costs due to cable theft:

Eskom

Table 1 below indicates the amount of copper cable theft incurred by Eskom since 2006, as reported by Eskom.

Financial year

Loss

(R'm)

Replacement costs (R'm)

Increased security measures costs

(R'm)

2006/7

8.5

27

9.8

2007/8

8.6

13.3

14.5

2008/9

11.2

19

16.3

2009/10

11.8

39.5

23.4

2010/11

13.1

38.6

29.3

2011/12 (until December 2011)

13

18

35.3

Note: Costs indicated above are based on average estimates of cable cost per metre. Cost depends on specification of cable stolen. Cost is also inclusive of inflation.

Transnet

The table 2 below indicates the amount of copper cable theft incurred by Transnet since 2006, as reported by Transnet.

Financial year

Loss

(R'm)

Replacement costs (R'm)

Increased security measures costs

(R'm)

2006/7

7.3

18.4

76.0

2007/8

8.9

22.2

91.9

2008/9

12.0

30.1

116.0

2009/10

27.1

67.6

68.43

2010/11

38.6

96.5

32.44

2011/12 (until January 2012).

17.8

44.5

80.94

Reply received: May 2012

QUESTION NO.: 598

DATE OF PUBLICATION: 30 March 2012

598. Dr P J Rabie (DA) to ask the Minister of Public Enterprises:

(1) What (a) is the position with regard to the restoration of the Agulhas Lighthouse and (b) plans are in place in this regard;

(2) Whether any amount has been budgeted for this restoration; if not, why not; if so, what are the relevant details;

(3) Whether an agreement has been entered into with SANParks with regard to the on-going management of the Agulhas Lighthouse; if not, why not; if so, what are the relevant details? NW764E

Reply:

(1)(a) & (b) The restoration of the Cape Agulhas Lighthouse is being executed by Transnet Rehabilitation, Maintenance and Emergency Works (a unit within the Rail Network Department of Transnet Freight Rail). Sub-Contracting tenders for the work have been called for and five prospective tenderers attended the site inspection meeting which was held at the lighthouse on 12 March 2012. The tender closed on 26 March 2012 and three tenders were received. These tenderers are being evaluated and it is anticipated that an award will be made once the adjudication process is completed.

(2) An amount of approximately R4.2 million has been budgeted for the restoration of the lighthouse. The scope of work was approved by the South African Heritage Resource Agency Western Cape.

(3) The maintenance of all the aids to navigation related equipment and infrastructure at the lighthouse remains the responsibility of Transnet National Ports Authority, more specific Lighthouse and Navigational systems.

The current contractual agreement that was entered into with South African National Parks (SANParks) in 1999, provided for the conservation-related activities at the lighthouse and adjoining land to be transferred to SANParks.

Reply received: April 2012

QUESTION NO.: 579

DATE OF PUBLICATION: 02 March 2012

579. Mr J H Steenhuisen (DA) to ask the Minister of Public Enterprises:

(1) Whether his department has an internal audit unit; if not, why not; if so, (a) how many staff members are employed in the unit and (b) what (i) is the structure and (ii) are the functions of the unit;

(2) Whether the audit committee considers the internal audit reports; if not, why not; if so, what are the relevant details;

(3) Whether he holds meetings to discuss (a) the internal reports and (b) their findings with the audit unit; if not, why not, in each case; if so, (i) on what dates since 1 April 2010 has each specified meeting taken place and (ii) what are the further relevant details? NW744E

Reply:

(1)(a-b)(i) Yes the Department has an Internal Audit unit and has three staff compliment. The structure of the unit comprises of two internal audit professionals and an Administrative Officer. The unit has also entered into co-source arrangement with well known consortium auditing and accounting firms.

(ii) The Internal Audit Unit provides independent, objective assurance and consulting services designed to add value and improve the department's operations by evaluating and improving the effectiveness of risk management, internal controls and governance processes.

(2) The audit committee considers the internal audit reports. Every quarter the Audit Committee holds meetings to discuss reports submitted by the Internal Audit unit. Amongst other things the following are discussed: The Department's performance; IT Governance; Risk Management and Litigations and Management of Accounts.

(3)(a-b)(i-ii) The Minister is informed on matters arising from the internal audit reports, although the Internal Audit function reports administratively to the Accounting Officer not to the Minister and functionally to the Audit Committee.

The Accounting Officer meets regularly with the Internal Auditors and quarterly with the Audit Committee. The Minister receives Audit Committee meeting packs for information and noting purposes.

Reply received: April 2012

QUESTION NO.: 541

DATE OF PUBLICATION: 09 March 2012

541. Adv A de W Alberts (FF Plus) to ask the Minister of Public Enterprises:†

(1) Whether (a) his department and (b) any public entity which reports to him in terms of schedule 1 to 3D of the Public Finance Management Act, Act 1 of 1999, have entered into any contracts regarding the delivery of any services or goods with a certain company (name furnished) either (i) directly with (aa) the said company and (bb) a sister company of the said company and (ii) indirectly through (aa) another company, (bb) legal person and (cc) natural person; if not, what is the position in this regard; if so, in each case, (aaa) on what date, (bbb) what was the nature of the contracts, (ccc) for what period are the contracts in force and (ddd) what is the total financial value of the contracts;

(2) Whether, on account of the contracts that it has entered into in each case, the said company has to must make any social welfare investments; if so, what is the nature of these contractual obligations in respect of social welfare investments;

(3) Whether these contractual obligations have been met; if so, what are the relevant details; if not, what is the (a) extent and (b) financial implication of the noncompliance in each case;

(4) Whether he has taken any steps to correct this noncompliance; if not, why not; if so, what (a) steps and (b) are the further relevant details? NW696E

Reply:

With the exception of Eskom that has entered indirectly into a contract with the company referred to, the Department of Public Enterprises and other State Owned Companies that report to it did not enter into any contract with it.

According to Eskom:

(1)(b)(i)(aa-bb) The company has no direct contracts with Eskom.

(1)(b)(ii)(aa-cc)(aaa-ddd) Eskom cannot make public the names as requested since it is the prerogative of the company referred to, to disclose such information.

Eskom entered into various contracts with the consortium of which the said company formed part of. The consortium is made up of various members and assigned various functions ranging from engineering to boiler-making and the starting dates also vary between 2007 and 2010.


The terms of the contracts vary in length from about a month to the longest being 7 years. In the case of the consortium to which the company referred to is contracted to, the contracts range from 3 to 8 years. The total financial value of the contracts is a confidential matter between Eskom and the referred to company.

(2-3) As part of Eskom's requirements from contracting on large projects, Eskom focussed on skills development; supplier development and localisation. The areas of commitment and performance against commitments are reflected in table 1 below.

The table below indicates commitments and Performance to date - Company/consortium not named for contractual reasons.

Area

Company/consortium not named for contractual reasons

Commitment

Performance

Local content spend

Total contract

Certain company

91%

20%

Boilers

Consortium

61.7%

59.8%

Plant Investment

Manufacturing facilities

Certain company (same as the one above)

N/A

N/A

Consortium (same as the one above)

R904m

R450m

Own Supplier Procurement

B-BBEE

Certain company (same as the one above)

20%

16%

Consortium (same as the one above)

30%

76.1%

Black Woman-Owned

Certain company (same as the one above)

8%

0.4%

Consortium (same as the one above)

7.5%

7.5%

SME

Certain company (same as the one above)

10%

2%

Consortium (same as the one above)

5.6%

4.2%

Skills development

Training (engineers, technicians & artisans)

Certain company (same as the one above)

64 individuals

64 individuals

Consortium (same as the one above)

442 individuals

442 individuals

Job creation

Certain company (same as the one above)

N/A

N/A

Consortium (same as the one above)

4 162

4 162

(4) As part of the standard contract management function, these implementation plans are monitored and feedback on performance is provided to the supplier on a quarterly basis. Corrective actions have been identified and they are part of the revised plan going forward.

Reply received: April 2012

QUESTION NO.: 538

DATE OF PUBLICATION: 09 March 2012

538. Mr P J Groenewald (FF Plus) to ask the Minister of Public Enterprises:†

(1) Whether the SA Airways (SAA) sponsored any bodies (a) in the (i) 2009-10 and (ii) 2010-11 financial years and (b) during the period 1 April 2011 until the latest specified date for which information is available; if so, in each case, (aa) which bodies, (bb) to what amount and (cc) for what activities, in each specified financial year;

(2) Whether he will make a statement on the matter? NW692E

Reply:

Yes. South African Airways (SAA) has issued sponsorship from 2009 to 2015, detailed information is indicated in the table below.

Name of Entity

Detail

Value

Date

South African Football Association (SAFA)

This sponsorship afforded SAA branding opportunities, access to corporate accounts and exclusive travel/ marketing and sales "Follow Your Team" campaigns.

R13 383 500 and (R5 400 000 in travel rands/air tickets).

2009-10

Association of Tennis Professionals (ATP) TOUR

Legacy tennis sponsorship terminates: 31 December 2012. Benefits include international brand awareness and hospitality for corporate and key retail customers. Direct marketing and sales opportunities also driven through ATP Tour.

R160 000 000

2009-12

Name of Entity

Detail

Value

Date

South AfricanRugby

Tier 1 sponsorship of the Springboks, tier 2 sponsorship of the Springbok Sevens, tier 2 sponsorship of the SA Under 20 Rugby team. This will offer a branding and marketing opportunity, including official carrier title for the Springboks.

R90 100 000 value In kind/ air tickets

2011-15

(2) No statement will be made on the matter.

Reply received: April 2012

QUESTION NO.: 493

DATE OF PUBLICATION: 02 March 2012

493. Mr E H Eloff (DA) to ask the Minister of Public Enterprises:

Whether he met with the internal audit committee in the (a) 2010-11 and (b) 2011-12 financial years; if not, why not; if so, (i) on which dates did they meet and (ii) what are the further relevant details? NW642E

Reply:

(a-b)(i-ii) Yes, the Minister of Public Enterprises met with the Audit Committee on 2 June 2011. There are no further details.

Reply received: March 2012

QUESTION NO.: 472

DATE OF PUBLICATION: 02 March 2012

472. Mr L W Greyling (ID) to ask the Minister of Public Enterprises:

(1) Whether a specific quality of coal is required for Medupi Power Station as it will be a supercritical coal-fired power station; if not, how was this conclusion reached; if so,

(2) Whether Medupi will be supplied with this quality of coal; if not, why not; if so, what are the relevant details;

(3) Whether his department will ensure that Medupi's performance is not compromised by the quality of coal; if not, why not; if so, what are the relevant details;

(4) Whether there are any other supercritical coal-fired power stations internationally that burn the quality of coal that Medupi is currently contracted to burn; if not, how was this conclusion reached; if so, what are the relevant details? NW621E

Reply:

(1) Yes.

(2) The Medupi Power Station was designed on the basis of the coal available from Exxaro's Grootegeluk Colliery. The coal supply agreement that has been concluded with Exxaro is based on the qualities required by Medupi and contains commercial provisions for the assurance thereof.

(3)Coal Quality Management Procedure forms part of the coal supply agreement with Exxaro to ensure consistent coal quality for the duration of the supply period. The contract further contains detailed contractual remedies to enforce the delivery of the correct coal qualities and volumes.

(2)There are several other supercritical plants currently in operation or under construction/commissioning that utilise similar high ash low calorific value coals as compared to those the Medupi Power Station has been designed to operate on, particularly in India and China. Through the process of the Medupi feasibility study, it was concluded that the option would be the preferred technology solution for the Power Station.

Reply received: March 2012

QUESTION NO.: 471

DATE OF PUBLICATION: 02 March 2012

471. Mr L W Greyling (ID) to ask the Minister of Public Enterprises:

(1) Why were certain companies (names furnished) the only two preferred bidders to the initial tender for the boiler and turbine contracts of Medupi Power Station;

(2) Whether Eskom has been informed that these two companies were part of a cartel that had been found guilty by the European Competition Commission in 2007 for colluding on tenders; if so, what justification was given for awarding the tender;

(3) Whether Eskom changed the tender specifications from supplying Medupi only to a fleet contract; if not, how was this conclusion reached; if so,

(4) Whether the change to the tender specifications is contrary to the policy of Eskom; if not, how was this conclusion reached; if so, what justification was given;

(5) Whether the company to whom the tender for the boiler was awarded has the expertise to meet Eskom's specifications; if not, why was it awarded to the company; if so, what are the reasons for not meeting their contractual obligations? NW620E

Reply:

According to Eskom:

(1) The Medupi Power Station tender process commenced with a request for an expression of interest, issued on 23 March 2006, to nineteen pre-qualified boiler and/or turbine suppliers that had demonstrated a capability to meet Eskom's requirements. Fourteen suppliers expressed an interest to tender. An enquiry inviting bids for the boiler package and the turbine package was issued to the fourteen suppliers on 11 May 2006.

Technical and commercial clarification meetings for both enquiries were held on 20 June 2006 and 7 July 2006 respectively. The tender period for the Boiler Enquiry and the Turbine Enquiry was extended in response to a request for additional time. In an effort to encourage suppliers to submit tenders, Eskom extended the closing date to 10 November 2006.

Despite the extension, only two tenders were received for each package (Turbine Enquiry and Boiler Enquiry) by the referred to companies.

(2) When Eskom became aware of the findings of the European Competition Commission (ECC) in 2007, Eskom explored the matter further and sought additional essential information related to the findings. Amongst steps subsequently taken was the inclusion of a comprehensive anti-collusion undertaking in respect of the Medupi contract.

(3) The Boiler Enquiry and the Turbine Enquiry required bids to be submitted for an initial three units (for what was then known as Project Alpha) with an option for an additional three units(for what was then known as Project Charlie). Project Alpha and Project Charlie together comprise the six power generation units of Medupi Power Station. Eskom had created the two-phased-approach to allow flexibility to finalise other commercial and technical issues related to the second six units of the power station. Subsequently, the approval of Project Charlie was expedited due to the change in Eskom's planning assumptions on electricity growth from 2.3% to 4%, in support of the higher economic growth projections as well as the opportunity for a price reduction. Project Alpha was approved based on cost estimates prior to the power construction boom. These projections were subsequently revised based on the tender prices received.

(4) Due to the constraints in the market, Eskom explored an alternative procurement strategy for the second coal fired power station. The Fleet Strategy was a strategic initiative based on the outcome of the Medupi process and was negotiated with the successful bidders. The decision to proceed with a fleet contract was based on the following conclusions: The Fleet Strategy would leverage the benefits of the Eskom's total procurement spend for the twelve turbine and twelve boiler units required for Medupi and Kusile, to achieve an optimised solution on price, timing and local procurement spend.

(5) Yes, the company that was awarded a tender is a world leader in the design, build and commissioning of supercritical boilers. It has the expertise and capability to meet Eskom's technical specifications. Medupi delays may be attributed to geotechnical, labour, design and construction issues. The geotechnical delays are due to geo-technical substrate for the latter three units that deteriorated substantially warranting a new design for the civil foundations. The labour delays were as a result of a number of strikes in May 2011 and 2010 by the employees of the contractors, which resulted in delays caused by labour disputes. The design delays were as a result of certain critical civil designs which were not concluded timeously for construction.

Lastly, the construction delays experienced in the boiler area which are attributable to structural steelwork design, manufacturing, logistics and construction. Significant efforts have been made by the referred company to resolve and mitigate the problems and with the support of their European and Parent Company in Japan, there are improvements on site. The project schedule remains under constant review by the project and senior management teams from Eskom and the referred to company.

Reply received: March 2012

QUESTION NO.: 470

DATE OF PUBLICATION: 02 March 2012

470. Mr L W Greyling (ID) to ask the Minister of Public Enterprises:

(1) What are the specific reasons for the delay in the Medupi Power Station project;

(2) When is the Medupi Power Station expected to start producing electricity;

(3) What (a) are the penalty clauses relating to the boiler contract and (b) amount will a certain company (name furnished) be expected to pay Eskom in compensation for not completing their contract in time;

(4) Whether penalties will be levied; if not, why not; if so, when? NW619E

Reply:

(1) Delays at Medupi Power Station could be attributed to geotechnical, labour, design and construction issues. The geotechnical delays are due to geo-technical substrate for the latter three units that deteriorated substantially and which warranted a new design for the civil foundations. The labour delays were as a result of a number of strikes during 2010 and 2011 by employees of the contractors, which subsequently resulted in delays caused by labour disputes. The design delays were as a result of certain critical civil designs which were not concluded timeously for construction. Lastly, the construction delays experienced in the boiler area were attributable to structural steelwork design, manufacturing, logistics and construction.

(2) Based on the current programme, it is expected that Medupi will begin producing electricity from its first unit in the second half of 2013.

(3)(a) In terms of the contract, Eskom has relief against the contractor in terms of:

· Delay damages;

· Performance guarantees;

· BEE penalty for non-compliance; and

· Specific remedies for under-performance.

(b) The value is related to the loss experienced. However, the liability against the contractor is limited.

(4) Eskom is bound by the tenents of the contract which it entered into with the contractor. In this regard, the contractual process is being followed in respect of any penalties that will be affected.

Reply received: March 2012

QUESTION NO.: 426

DATE OF PUBLICATION: 02 March 2012

426. Mr J F Smalle (DA) to ask the Minister of Public Enterprises:

Whether any (a) municipalities or (b) Government departments have been in arrears with their accounts payments to Eskom for longer than 30 days; if so, (i) which (aa) municipalities and (bb) departments, (ii) what are the amounts and (iii) for what period have payments been overdue in each case? NW569E

Reply:

(a-b) Yes, the total number of institutions and total value of debt owed to Eskom for longer than 30 days as at 31 January 2012 is as follows

Institution

Total number of institutions owing Eskom for 30 days and older

Total value owed to Eskom over 30 days

Municipalities

84

R 533, 017, 454.72

*Departments

77

R 10, 376,045,00

Total

161

R 543, 393, 500.03

*The departments referred to include national and provincial departments.

(i)(aa-bb)(ii-iii) The information related to Eskom's customers is regarded as confidential and cannot be made public without consent of the relevant customers.

Reply received: March 2012

QUESTION NO: 338

DATE OF PUBLICATION: 24 February 2012

338. Mr E J Marais (DA) to ask the Minister of Public Enterprises:

What is the extent of his department's contribution to ensure the optimal development of the largest and deepest natural port in Southern Africa? NW420E

Reply:

The newly constructed port of Ngqura will be the outlet for the export of semi finished and finished goods produced in the Coega Industrial Development Zone (IDZ) and will also receive the raw materials to be processed. Its position at the centre of the world's main trade routes, equidistant from American, European and the Pacific Rim regions makes the Coega IDZ the ideal location for any manufacturer, adding value to raw materials, components and producing goods bound for the world markets.

The Department looks at placing the port of Ngqura ahead of its competitors through efficiency in port management and operations. The port is intended to be a catalyst, facilitator and attractor of the international sea borne trade. With best suited port equipments for a transshipment hub, facilities and technologies to cater for customer's needs and adopting new roles to cater for changing market forces. The port will, among other Government objectives, deliver its support to the Coega IDZ, more economic spin offs in the area by attracting more international sea borne trade, operate a more efficient and effective strategic port on strategic trade routes, support the regional transshipment within Southern African Development Communityand create more job opportunities in the Eastern Cape.

Reply received: March 2012

QUESTION NO.: 337

DATE OF PUBLICATION: 24 February 2012

Mr E J Marais (DA) to ask the Minister of Public Enterprises:

Whether he intends to intervene in the breakdown in discussions between the Transnet National Ports Authority and a certain Dutch shipping company (name furnished) with regard to the company's possible investment in the Saldanha Bay industrial development zone (IDZ); if not, why not; if so, what are the relevant details? NW419E

Reply:

No, I don't intend to intervene because Transnet National Ports Authority has not finalised any transaction with the company referred.

Reply received: March 2012

QUESTION NO.: 285

DATE OF PUBLICATION: 24 February 2012

285. Dr C P Mulder (FF Plus) to ask the Minister of Public Enterprises:†

(1)(a)(i) How many and (ii) which companies submitted a tender for the contract to supply 143 new locomotives to Transnet, which Transnet has awarded to a certain company (name furnished) and (b) what were the amounts in each case for which each company submitted a bid;

(2) Why was the contract awarded to the specified company;

(3)(a)(i) How many locomotives will originate from the United States of America (USA) and (ii) what is the (aa) total value of these locomotives and (bb) value of each locomotive and (b)(i) how many locomotives will be manufactured at Koedoespoort, (ii) what is the total value of (aa) the specified locomotives and (bb) each locomotive and (iii) what amount will the company contribute towards training the staff at Koedoespoort to manufacture the locomotives? NW363E

Reply:

According to Transnet:

(1)(a)(i-ii) Three companies responded to a closed tender for the supply of 100 new locomotives to Transnet, the other 43 locomotives were procured as described in paragraph (2)(b) below. The names of the companies that submitted tenders for the contract cannot be made public as it is a matter between the respective parties. However, the contract to supply 143 locomotives was awarded to General Electric.

(b) Transnet cannot disclose any detailed information relating to amounts as these are confidential and contractual matters.

(2) The contract was awarded after rigorous evaluations and performance on a localisation assessment using Transnet Rail Engineering (TRE). Site visits were also conducted and bidders submitted their final Competitive Supplier Development Plans (CSDP) for evaluation and negotiations. The tender was awarded after all these processes.

A further contract for the procurement of an additional 43 Class 43 Diesel locomotives was concluded in 2011 after approval by the Board Acquisition and Disposal Committee (BADC).

In this regard, Transnet followed a confinement process due to the following reasons:

· 69 locomotives are expected to run out over the 2012/2013 financial year and there is an urgent need for locomotives in order to deliver upon current committed volumes,

· While a production line is operational and a design was finalised, it is prudent to request for a continuation of assembly on the line to reduce lead times and maximise delivery of locomotives to Transnet,

· Present models are operating optimally,

· The locomotives have passed the post commissioning-teething phase with most initial manufacturing and operational faults rectified,

· Personnel were trained on the locomotives operations and maintenance and no additional training will be required,

· Approximately 186 jobs will be retained at the TRE assembly facility and further jobs will be retained in downstream enterprises,

· Delivery lead times will be minimised (reduced by approximately 2 years),

· Transnet Freight Rail's (TFR) intent to standardise the locomotive fleet was fulfilled,

· TRE's spare part inventory would be standardised, and

· TFR can use the opportunity to increase supplier development initiatives to support the New Growth Path (NGP).

(3) (a) (i) On the 100 Class 43 transaction, it was agreed that 10 locomotives would be manufactured in the USA, while the remaining 90 would be assembled in South Africa. This has been achieved. On the 43 Class 43 transaction, all locomotives will be assembled in South Africa.

(ii)(aa-bb) Transnet cannot disclose any detailed information relating to amounts as these are confidential and contractual matters.

(b)(i-ii)(aa-bb) 133 locomotives will be manufactured at Koedoespoort in South Africa and the amount cannot be disclosed because it is a confidential and contractual matter.

(iii) While Transnet cannot disclose any detailed information relating to pricing as this is contractually confidential, it can disclose the following with regard to CSDP and training:

The following CSDP percentages (calculated as a percentage of the total contracted value) were achieved;



· 100 Class 43 locomotive transaction, 54%

· 43 Class 43 locomotive transaction, 65%

On the 100 Class 43 transaction the agreement reached provides for the following training;

· The first 20 TRE candidates have completed a practical course on Lean and Six Sigma in the United States of America (USA),

· Five TRE employees are currently in Australia receiving Bogie Frame Manufacturing training specifically for these locomotives,

· Six TRE candidates and two TFR candidates are in the USA and have commenced training on field support, and

· TRE personnel were then sent to the General Electric facilities in the USA for formal training while the assembly facilities at Transnet Rail Engineering started to capacitate the assembly line in South Africa.

On the 43 Class 43 transaction, the agreement reached provides for the following training;

· Six engineers are to participate in the Candidate Engineering Programme in the USA,

· Forty TFR/TRE employees are to receive Lean and Six Sigma Development in the USA,

· Lean and Six Sigma Development (classroom sessions) for 40 TFR employees,

· Lean and Six Sigma coaching and mentoring to employees involved in five projects in SA,

· Service Shop Skills Development to six TRE maintenance staff, and

· Four suppliers to receive Supplier Training and Skills Development.

Reply received: April 2012

QUESTION NO: 262

DATE OF PUBLICATION: February 2012

262. Mr N J J van R Koornhof (Cope) to ask the Minister of Public Enterprises:

Whether his department intends requesting Transnet and Eskom to minimise the establishment of power lines and railways where possible in nature reserve areas in (a) Limpopo and (b) Mpumalanga; if not, (i) what is the position in this regard and (ii) what alternative routes have been explored in these areas in order to minimise the negative effect of such structures on the tourism industry; if so, what are the relevant details? NW154E

Reply:

(a-b)(i-ii) The establishment of infrastructure development such as power lines and railways requires Eskom and Transnet to comply fully with the National Environmental Management Act, 1998 (Act 107 of 1998) in current and planned operations. Therefore, Eskom and Transnet cannot build in officially proclaimed nature reserve areas unless a specific directive has been obtained from the Minister of Environmental Affairs declaring such activity permissible. It also becomes an overriding factor when considering the development of new power lines and railways infrastructure in Limpopo, Mpumalanga and other provinces.

Apart from Act 107 of 1998, Eskom and Transnet have their own environmental initiatives:

· To conduct environmental impact assessments for their own activities;

· Not to build power or rail lines in officially proclaimed nature reserve areas unless it is unavoidable;

· Not to increase the biodiversity impact in special nature reserves and national parks without an approved environmental assessment; and

· Not to build new infrastructure in important bird areas (BA) and/or bird sensitive environments.

Reply received: March 2012

QUESTION NO.: 216

DATE OF PUBLICATION: 17 February 2012

216. Mr D C Ross (DA) to ask the Minister of Public Enterprises:

(1) Whether, with regard to the current Eskom Capital Expansion Program for new coalfired plants, he has commissioned any studies into the (a) feasibility of and (b) alternative approaches to funding of capital expenditure for expansion; if not, why not; if so, what are the relevant details;

(2) Whether he intends to consider (a) energy bonds and (b) infrastructure bonds as funding models; if not, why not, in each case; if so, what are the relevant details in each case? NW236E

Reply:

(1)(a-b) Yes. Eskom in collaboration with Department of Public Enterprises and National Treasury went through a thorough process to establish funding instruments which were most suitable for Eskom and anticipated balance sheet capacity, anticipated revenue streams and availability of Shareholder support (equity and guarantees).

The table below indicates Eskom's proposed funding plan.

(2)(a-b) Conventionally, energy forms part of infrastructure. Eskom bonds, issued under its Domestic Multi-Term Note Programme (DMTN), are by their very nature energy/infrastructure bonds. The Programme Memorandum "Use of Proceeds" sets out the underlying use of the funds. The DMTN document can be sourced by visiting:

http://www.eskomfinance.co.za/upload/Ammended_restated_DMTN_Feb2010.pdf

Reply received: March 2012

QUESTION NO.: 182

DATE OF PUBLICATION: 17 February 2012

182. Mr P van Dalen (DA) to ask the Minister of Public Enterprises:

(1) What was the annual cost of copper cable theft from (a) Eskom and (b) Transnet (i) in the (aa) 2006-07, (bb) 2007-08, (cc) 2008-09, (dd) 2009-10, (ee) 2010-11 financial years and (ii) during the period 1 April 2011 up to the latest specified date for which information is available with respect of (aa) loss, (bb) replacement costs and (cc) increased security measures;

(2) Whether the (a) protection of copper cables and (b) action to combat theft thereof is outsourced; if not, why not, in each case; if so, (i) why are these functions outsourced and (ii) what are the names of the companies that have been contracted;

(3) Whether he has found that the outsourcing of these services had a reducing impact on the number of reported thefts; if so, what are the relevant details; if not, why not;

(4)Whether service providers have been held responsible for their nonperformance; if not, why not; if so, what steps were taken against the specified companies? NW200E

Reply:

Detailed information, according to Eskom and Transnet, about the annual cost of copper cable theft from Eskom and Transnet since 2006 to date is provided in the tables below.

Eskom

1(a)(i)(aa-ee)(ii)(aa-cc) The table below indicates the amount of copper cable theft incurred by Eskom since 2006.

Financial Year

(aa)

Loss

(R'm)

(bb)

Replacement Costs (R'm)

(cc)

Increased security measures costs

(R'm)

i (aa)

2006/7

8.5

27

9.8

i (bb)

2007/8

8.6

13.3

14.5

i (cc)

2008/9

11.2

19

16.3

i (dd)

2009/10

11.8

39.5

23.4

i (ee)

2010/11

13.1

38.6

29.3

(ii)

2011/12 (until December 2011)

13

18

35.3

Note: Costs indicated above are based on average estimates of cable cost per metre. Cost depends on specification of cable stolen. Cost is also inclusive of inflation.

(2)(a-b)(i-ii) No, Eskom did not outsource the protection of copper cable theft services. The Network equipment theft in Eskom is managed by the Eskom Network Equipment Crime Committee (ENECC) that coordinates strategies of relevant internal disciplines (technical, commercial, security etc.). There is no need to outsource the service.

Some of the combating actions, namely the Specialised Forensic Investigations and Air Support, are outsourced to two companies to supplement ENECC initiatives as Eskom does not have sufficient internal capacity to render these specific services. The names of the companies that render services mentioned above cannot be made public because of the risk nature of the services they provide.

(3) Yes, the activities of both companies are strictly monitored and managed by ENECC and both contracts stipulate penalties and for termination of services in instances of non-performance. The services of both companies exceeded targets thus far and no remedial actions were necessary.

(4) Not applicable.

Transnet

1(b)(i)(aa-ee)(ii)(aa-cc) The table below indicates the amount of copper cable theft incurred since 2006, as reported by Transnet.

Financial Year

(aa)

Loss

(R'm)

(bb)

Replacement Costs (R'm)

(cc)

Increased security measures costs

(R'm)

i (aa)

2006/7

7.3

18.4

76.0

i (bb)

2007/8

8.9

22.2

91.9

i (cc)

2008/9

12.0

30.1

116.0

i (dd)

2009/10

27.1

67.6

68.43

i (ee)

2010/11

38.6

96.5

32.44

(ii)

2011/12 (until January 2012).

17.8

44.5

80.94

(2)(a-b)(i-ii) The protection of copper cables and action to combat theft is outsourced. Transnet outsources the protection of copper services to specialised security service providers with expertise in information and intelligence gathering. The names of the companies that render services mentioned above cannot be made public because of the risky nature of the service they provide.

(3) According to Transnet, outsourcing the protection of copper cables has not necessarily yielded the desired results as was expected. Therefore, Transnet is in the process of introducing an element of proprietary security for the protection of critical/key areas.

(4) Contractually, all non-performing service providers are penalised for poor performance and direct losses recovered from them accordingly. The contractual clause to recover direct losses from

Reply received: February 2012

QUESTION NO.: 70

DATE OF PUBLICATION: 10 February 2012

70. Mr M M Swathe (DA) to ask the Minister of Public Enterprises:

(1)(a) How many copies of each annual report that was produced by (i) his department and (ii) the entities reporting to him were commissioned for print in the 2010-11 financial year, (b) how many copies were actually printed and (c) what were the (i) total and (ii) individual costs involved of printing these reports;

(2)(a) Who printed each specified report, (b) how was the specified printer decided upon and (c) on what date did the specified printer deliver the report to the specified entity;

(3) Whether any of the specified reports that had been printed were found to be unsatisfactory; if not, what is the position in this regard; if so, in each case, (a) which reports, (b) for which entity, (c) by which printer, (d) what action was taken and (e) what were the costs involved? NW4127E

REPLY

The number of copies of the Annual Reports of the Department of Public Enterprises (DPE) and the State Owned Companies (SOC) that report to it are attached as Annexure A. Pebble Bed Modular Reactor (PBMR) did not produce its report, for the 2010/11 financial year, since it has been placed in care and maintenance mode.

Reply received: February 2012

QUESTION NO.:27

DATE OF PUBLICATION: 10 February 2012

27. Ms E More (DA) to ask the Minister of Public Enterprises:

Whether any persons other than the designated driver have driven (a) his and (b) his Deputy Minister's official vehicles; if not, what is the position in this regard; if so, in each case, in respect of the (i) 2009-10 and (ii) 2010-11 financial years, (aa) what is each specified person's (aaa) name and (bbb) designation, (bb) which vehicle and (cc) why? NW31E

Reply:

(a-b)(i)(aa)(aaa-bbb)(bb-cc) There are no persons other than designated drivers that have driven the Minister's and Deputy Minister's official vehicles.