ATC170530: Joint oversight Report to Mpumalanga, Nkangala District by the Select Committee on Trade and International Relations, and Select Committee on Economic and Business Development, dated 30 May 2017

NCOP Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour

JOINT OVERSIGHT REPORT TO MPUMALANGA, NKANGALA DISTRICT BY THE SELECT COMMITTEE ON TRADE AND INTERNATIONAL RELATIONS, AND SELECT COMMITTEE ON ECONOMIC AND BUSINESS DEVELOPMENT, DATED 30 MAY 2017.
 

The Select Committee on Economic and Business Development jointly with the Select Committee on Trade and International Relations, having conducted an oversight visit to the Mpumalanga, Nkangala District, from 27 - 31 March 2017, reports as follows:

 

1. Introduction

In terms of section 42(4) of the Constitution, the National Council of Provinces (NCOP) are mandated to ensure effective cooperative governance and intergovernmental relations between the three spheres of government. This unique mandate of the NCOP further seeks to ensure that the provincial interests are taken into account in the national sphere of government. It is within this context that the two Select Committees - Economic & Business Development and the Trade & International Relations conducted a joint oversight to Nkangala District Municipality in Mpumalanga Province.

 

The District is one of the three District Municipalities in Mpumalanga Province, and its headquarters are in Middelburg (Steve Tshwete Local Municipality). The District is composed of six Local Municipalities namely: Victor Khanye Local Municipality, Emalahleni Local Municipality, Steve Tshwete Local Municipality, Emakhazeni Local Municipality, Thembisile Hani Local Municipality and Dr J S Moroka Local Municipality.

The purpose of the oversight was to assess the levels of progress being made in terms of policy implementation and challenges on various sector departments in the Provincial economy with a particular focus on Emalahleni and Thembisile Hani local municipalities.  

 

The primary objective of the oversight was to assess how the sector departments influence growth and development of the regional economy, and thus ensure local businesses expand and create much needed jobs and the local business environment attract investments.

 

Key to the government’s social development agenda is to eradicate poverty, reduce inequality and create jobs. Hence it is imperative for regional and local governments to function well by strategically allocating resources to improve local economies and attract local and external businesses.

Furthermore the oversight sought to evaluate various implementation efforts of public agencies across all spheres of government in attaining government policy priorities. The oversight was structured around key government policy priorities such as infrastructure investment, small business development, industrialisation, tourism, and skills development as expressed in the National Development Plan (NDP), the Nine-point Plan and 2017 State of the Nation Address and the 2017 Budget Review.  

 

The report will capture observations, deliberations and recommendations of both Select Committees based on the presentation made by various government agencies including private sector players, and it will also include observations made in relation to the project sites that were visited. 

 

2. Multiparty delegation

The delegation consisted of Hon E. Makue (ANC) and Hon MI Rayi as leaders of the delegation; Hon B.G. Nthebe (ANC); Hon M. Chabangu (EFF); Hon S.G. Mthimunye (ANC); Hon W.F. Farber (DA); Hon Y.C Vawda (EFF).

 

The delegation was accompanied by the following parliamentary officials: Ms N.G. Dinizulu and Mr H. Mtileni (Committee Secretaries), Mr L. Sishuba (Content Adviser), Mr M. Erasmus Committee Assistant and Mr S. Maputi (Media Officer) and the following Committee Researchers:  Mr Z. Ngxishe, Mr A. Ganief, and Mr T. Makhanye.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                2.1 In attendance

The meetings were attended by the District Mayor (Cllr L M Malatjie), officials from the District and Local Municipalities, National and Provincial Departments and other stakeholders as listed below:

Nkangala District Municipality: Mr W Makgai; LED Manager; Mr B Mathe: Deputy Manager; Mr P Moseri: Councillor; Ms N Nkosi;

Department of Trade and Industry/NEF: Mr S Zikhode: Deputy Director-General; Mr B Oellerman: Director; Mrs Malentswe Tshabalala: Media Relations Manager

Department of Public Works: Mr W Hlabangwane: Chief Director; Mr M Mashaba: Parliamentary Liaison Officer

Department of Economic Development: Ms N Mamabolo: Parliamentary Liaison Officer; Mr K Baloyi: Deputy Director

Department of Transport/SANRAL: Mr W Mphakela: Acting Chief Director; Mr K Sebei: Deputy Director; Mrs N Mathenjwa: Project Manager; Mrs G Bester: Provincial Coordinator

Development Bank of Southern Africa (DBSA): Ms LL Lenong: Construction Project Manager

Department of Public Enterprises: Mr J Mahloko: Head of Project – Kusile Power Station

Mpumalanga Economic Growth Agency (MEGA): Mr F Msiza: T Camane: General Manager; Mr P Makgopela: Manager

Department of Energy: Mr L Madzhie; IGR Director; Ms N Ndebele: Director; Mr J Mohudi: Regional Controller; Mr S Chiume: Regional Prospect Manager

Eskom/Kusile Power Station: Mr S Mazibuko: Acting Project Director; Mrs MH Hughes: General Manager Stakeholder Relations; Mr P Govender: Acting Group Executive; Mr M Chettar: General Manager; Ms K Xulu: Communication Manager; Mr M Makwela: Senior Manager Project Stability; Mr M Mvana: Stakeholder & Communication Manager; Mr J Bore: Acting Deputy Project Director.

 

3. Presentations and submissions by stakeholders

The Select Committees received submissions and presentations from the following stakeholders: Nkangala District Municipality, Bethusile Projects and Construction, Evraz Highveld Steel and Vanadium, Lulama Business Enterprise, Mpumalanga Economic Growth Agency (MEGA), Department of Transport and SANRAL, Zithabiseni Resort, ESKOM (Kusile Power Station), Verena Police Station, and Witbank Magistrate Office.

 

 

 

3.1 Economic overview of Nkangala District

According to the Census 2011, the District population was approximately 1.3 million, or 32.38 per cent of Mpumalanga’s population. Steve Tshwete Local Municipality recorded the largest growth rate of 60 per cent between 2001 and 2011. The black population formed the bulk of the District’s population with 90.9 per cent, followed by the White population with 7.8 per cent, and the Indian and Coloured people constituting the remaining 1.3 per cent.

 

The majority of the population in the District resides in Emalahleni Local Municipality (35.4 per cent) constituting 11.9 per cent of the Provincial population. Emakhazeni Local Municipality has the smallest population in the District, with only 3.6 per cent and forming 0.9 per cent of the Provincial population.

 

In terms of economic growth and development programmes, the District Municipality focus areas covers:

  • Economic and social infrastructure investment, that includes electrification of households in partnership with ESKOM
  • Empowerment of youth, women and people with disabilities programmes
  • Job creation through EPWP
  • Tourism initiatives
  • Supporting and promoting SMMEs and cooperatives
  • Enhancing development partnership with mining companies to accelerate economic development.

 

The main challenges in the District are:

  • Low economic growth
  • High unemployment
  • Gross inequality
  • Education remains a challenge including shortage of skills
  • Low infrastructure investment (both social and economic infrastructure).

 

The 2011 Census report indicated that the District has recorded a growth increase in population and that has caused high demand for basic services. The development of coal mines in the District has attracted many migrants from other parts of the Province and the rest of the country.

 

The economy of the District is commonly referred to as a ‘resource based economy’. Although mining contributes a substantial part to the District economy, agriculture, forestry and tourism also contributes to the overall economy. Industrial and residential property including retail services have a growth potential. One of the Eskom’s new coal power stations, Kusile power station operates in the District, and generates significant economic and business activity’s spin-offs.   

 

In terms of financial governance the District Municipality has received clean audits for two consecutive years (2014/15 and 2015/16 financial years). However, local municipalities are unable to generate substantial revenue, and recently some of the local municipalities under the District’s jurisdiction were unable to settle outstanding debts owed to Eskom, and to that effect have no mitigating plans to address the problem that has the potential to cause community strife, damage business activity and affect the local economy. ESKOM has issued demand notices for the payment of outstanding debt, and failure to comply with the demand could see households and local businesses disconnected from the electricity supply channels.

 

Improving the performance of District and local municipalities is central to achieving the purpose to grow local economies. Creating partnerships with companies operating in the local economy, in mining the industry, agriculture and other industries such as tourism is critical.

 

Social Labour Plans (SLPs) with mining communities need to be developed, in consultation with local municipalities, in order to respond to the needs of the local communities.

 

The delegation emphasized that the District need to work with appropriate government departments, at all levels, (including state development agencies) to facilitate and accelerate regional economic growth, connect local municipalities with businesses and remove barriers that could inhibit business growth and undermine job creation initiatives. Key to the development of the local economies, is addressing the skills deficit. Human capital investment is one of the critical priorities that need urgent attention.

 

Sound planning could enhance the way in which resources are allocated. To this end, the delegation emphasised the need for the District to strengthen planning and resource allocation processes. Infrastructure investment in road, energy and ICT would natural yield positive economic spin-offs. Investment in the development of the Moloto Development Corridor was seen as one of the key growth enhancing development projects that need to be supported.

 

3.1.1 Recommendations

Recommendations made are as follows:

  • District should establish partnerships with private sector companies to address socio-economic challenges.
  • Working with national and provincial government departments and their development agencies, the District should create an environment that would attract investment in the region, and further connect the District with local businesses with the aim to lift the economy and create jobs.
  • Public and private sector procurement remains a critical priority, and it should be used to support growth of local businesses.
  •  Mining social investment plans should address the needs of local municipalities. Closer working relations with the departments of Mineral Resources and Labour including mining companies with the local municipalities should be established.
  • Municipalities should build revenue generation capacity and capability to meet their obligations (that includes paying Eskom electricity bill).

What is more critical is for local economies to grow and generate income for households and businesses. This would require detailed economic development and growth plans that would present economic opportunities in order to attract investments, increase jobs and sustainable incomes.

 

3.2 Department of Transport and SANRAL on the Moloto Road Corridor

The National Department of Transport reported that the Moloto Road Corridor, as an integral part of the Moloto Development Corridor, would support regional growth and enhance industrial development initiatives. The Department emphasised the importance of investing in transport infrastructure for both rail and road transport.

 

Investment in transport infrastructure could address the following social and economic challenges:

  • Transport safety, in particular road accidents,
  • Underinvestment in infrastructure that yield low economic growth, increase unemployment and poverty,
  • Low private sector investment initiatives,
  • A vibrant tourism industry.

 

Investment in economic infrastructure could yield social, economic and environmental benefits as well as promote the sustainability of the District and position it as one the important growth points.

 

The Moloto Road Corridor also present an opportunity for cross provincial government collaborative investment efforts, within the 3 provincial governments (Gauteng, Limpopo and Mpumalanga); channelling investments for the construction of the Moloto Road Corridor, and SANRAL working as the development partner. Limpopo and Mpumalanga provincial governments have transferred development and management of the road to SANRAL, whilst Gauteng has not done so but has signed a Memorandum of Agreement with SANRAL to fund the upgrade and maintenance of the road.

 

Funding and financing of infrastructure projects would require participation of the private sector. The Department of Transport is in discussion with National Treasury to find sustainable investment solutions that could attract private sector investment in the road and rail infrastructure. Public entities such as Passenger Rail Agency of South Africa (PRASA) could also play a critical role particularly in addressing passenger transport challenges.

 

Investment in the Moloto Road Corridor has already attracted potential investment from China Communications Construction Company Limited (CCCC). On 7 September 2016, PRASA has signed a Memorandum of Understanding (MOU) to specifically explore areas of possible cooperation on the planning and implementation of the Moloto Rail Corridor Initiative.

 

The Department emphasised that any investment in either road or rail infrastructure would take into consideration economic and fiscal policy considerations, including environmental policy concerns.  

 

Preliminary cost estimates indicate that additional subsidy requirement is approximately R82 million per annum. Given the complexities of the proposed changes and the difficulties of contracting services across provincial boundaries, an intergovernmental structure will be established to coordinate the project and the role of three affected provinces and various municipalities.

 

In terms of the Roads Initiative, funds have been secured by the Department and plans are in place for the upgrade of the R573 (Moloto Corridor) within the next 5 years. The R573 cuts across the Gauteng, Limpopo and Mpumalanga provinces.

 

The Road Sections of National Treasury did not consider the funding request for implementation mainly due to the implications of a rail corridor on broader settlement and development patterns of the region and therefore viewed the rail option as unaffordable and unlikely to yield the social, economic and development dividends that would warrant an investment of the scale and magnitude required.

 

On 3 February 2017, the Department, PRASA and National Treasury met to discuss the future of the PPP application as well as the procurement procedures related to a positive outcome of the possible funding solution being pursued between PRASA and CCCC in terms of the MOU. Treasury’s views remain unchanged concerning the viability of the Moloto Rail Development Project. The MOU between PRASA and CCCC, if pursued will have to comply with procurement rules and applicable legislation and should Government pursue the implementation of the Moloto Rail Development Corridor, funding will have to be reprioritised within the Department’s Budget first, however, if not possible, funding will have to be reprioritised within Government broadly.

 

3.3 Bethusile Projects and Construction

Bethusile Transport and Construction is a family business, which is owned on a 50/50 percentage basis by Ms Jeaneth Thoko Siwela and her daughter Cindy Rose Siwela. The company was registered in 2006, and started operating in 2012 focusing in the transport industry. The company provides transport services in the area of Nkangala in Mpumalanga.  The business’s offices are situated in Emalahleni and operating in the offices of the local taxi association.

 

The first major contract awarded to the company, was a staff transport contract which was received from Grinaker LTA, a business unit of Aveng (AFRICA) Limited. The staff transport contract was for 3 years, to provide transport to employees to and from work.

 

Currently, the company transports 500 passengers a month from its contracts with Grinaker; Ukwazi Engineering and Pegasus Industrial. The fleet that is servicing the contracts comprises; one 65-seater bus; ten 22-seater buses and one 14-seater mini-bus. Of these, five 22-seater and seven 15-seater mini-buses are outsourced. The company received R3 million from the National Empowerment Fund and 39 job opportunities were created.

 

The committees congratulated the company on the progress made and wished the owners prosperity in their business.

 

3.4 Evraz Highveld Steel and Vanadium,

Evraz Highveld Steel and Vanadium was a steel and vanadium manufacturer. The company was founded in 1957 and its operating name was Minerals Engineering. The operation plant was built in eMalahleni to produce 1.4 million kilograms’ vanadium pentoxide. In1959, two years later, Anglo American plc (then Anglo American Corporation of South Africa Limited) acquired a two-thirds share in Minerals Engineering. In November 1964 the company embarked on a programme to build an integrated iron and steel works, with its unique features of extracting vanadium from the titaniferous magnetite ore from the company’s mine in Roossenekal, approximately 160 km from the plant. The name of the Highveld Development Company was changed to Highveld Steel and Vanadium Corporation Limited on 11 June 1965. By 1966, the company was an established integrated steel manufacturer and a global leader in vanadium production. During March 1969 the Company listed on the Johannesburg Securities Exchange (JSE), and from 1969 to 2007 it operated as a successful JSE listed company (majority owned by Anglo American).

 

In 2006, the sale of Anglo American plc’s shareholding in Highveld to Evraz Group S.A. commenced, then Evraz and Credit Suisse each acquired 24.9 per cent of Highveld’s issued share capital. The following year in 2007 Evraz exercised its option to acquire the share capital held by Credit Suisse as well as the share capital still held by Anglo American plc. In the period from 2009 to 2014, Highveld experienced successive sustained financial losses due to operational and market factors.

 

Evraz PLC took a strategic decision to sell its majority shareholding in Highveld in 2013. In October 2014, a new Chairman, CEO and CFO were appointed with a new Executive Management team. In 2015, first quarter operational profits were achieved following the implementation of the turnaround strategy. However, in April 2015, due to a lack of funding or further shareholder support, the company’s new board resolved to file for business rescue. The Industrial Development Corporation (IDC) provided R150 million for Post Commencement Funding in May 2015.  The IDC’s funding replaced the banking facility that was withdrawn from the company. Subsequently all credit terms of the company were withdrawn resulting in the company having to procure all purchases on an upfront cash basis. Furthermore, the domestic steel demand decreased, exacerbated by a steep surge in low priced imports, as well as lack of anticipated funding This together with safety, health and environmental concerns led to a decision to cease all operations during July 2015. 

 

A business rescue plan was approved to sell the company to the Hong Kong based IRL. The transaction failed at the end of January 2016 as financial guarantees for the transaction was not delivered, leading to the implementation of the wind-down as contemplated in the business rescue plan. The company was unsuccessful in procuring Training Layoff Support (TLS) funding from the Department of Labour to retain employees and restart operations, which ultimately resulted in the retrenchment of all staff during February 2016. At this point Evraz was on the verge of liquidation and at risk of its assets being scrapped. The rescue team however was of the view that a strategic asset of this nature could not be lost and developed a strategic plan to re-positioning the company and the plant as an Industrial Business Park to take advantage of the infrastructure that it has on-site.

 

The Industrial Development Corporation has also played a significant role to ensure that the company is re-positioned. Recently the company has signed a contract with ArcelorMittal South Africa (AMSA) to supply blooms and slabs for a 24-month period with the option for AMSA to procure the structural mill. This contract allows for the restart of the only medium to heavy structural mill in Africa and 300 job opportunities will be created with the restart of the structural mill at steady state.

 

In order to keep the rail infrastructure operational, the company leased its rail infrastructure to 2 logistics operators and it is expecting to conclude another lease agreement with another operator that will result in optimising rail infrastructure. The company’s facilities are positioned to be utilised in the supply of coal to Kusile Power Station, and that would also ease the use of roads to transport coal. To date about 80 jobs have been created by the 2 operators.

 

The company also plans to use the current infrastructure as a training centre that would produce required technical skills.  Furthermore, the company has leased one of its Heavy Duty Workshops to a company that will refurbish dragline buckets for the surrounding mining industry and has created ten jobs.

 

The committees toured the plant and reserved its prerogative to make recommendations as the steel industry is complex and receiving attention from various government departments, especially the of Trade and Industry..

 

3.5 Lulama Business Enterprise

Lulama Business Enterprise is a 100 per cent black-women-owned and managed entity, which was established in 2011 by Mrs Portia Khensani Malabela.  In November 2006 she bought her first fuel service station (Sasol) in Midrand which she has been running successfully since takeover. Over the years of being a fuel retailer, she has gained vast knowledge in the petroleum industry.

 

Her second filling station, Engen Masakhane, is situated in Kwa-Guqa, Emlahleni in Mpumalanga province. Engen is currently the only service station in the Masakhane area and has been in existence for more than 11 years. The site offers five islands with ten pumps, a branded quick shop, Corner Bakery, Equatorial Coffee Company, four ATMs (Standard Bank (2), ABSA (2) and ablution services. The business operates on the franchise model empowered by a strong Engen brand which is the leading oil company in South Africa in terms of litres pumped.

 

The business operates in the retail space where it receives supply of fuel from Engen and sell to the general public, including businesses in the surrounding areas. The fuel price is regulated by the Government and this is set on a monthly basis.

 

Mrs Malabela has committed to transferring business management skills to her managers. She is involved in the management of both fuel retail outlets situated in Witbank and Midrand. She expressed unhappiness with the franchising model and arrangement she has with Engen. The total funding received from the National Empowerment Fund was R8,6 million and which created 57 job opportunities.

 

3.4.1 Select committee decision

The SC on Economic & Business Development should consult with the Ministry of Energy to explore the possibilities of the franchising model of fuel stations favouring emerging and black entrepreneurs.

 

3.5 Ekandustria Industrial Park & Mpumalanga Economic Growth Agency (MEGA),

The Mpumalanga Economic Growth Agency (Mega) was formed in terms of the Mpumalanga Economic Growth Agency Act (Act No. 4 of 2005) through a merger of the Mpumalanga Economic Empowerment Corporation and the Mpumalanga Investment Initiative. Mega briefed the select committees on the background of Ekandustria Industrial Park and its future prospects.

 

In its presentation, Mega outlined the historical perspective of the industrial park. As presented, Ekandustria Industrial Park was established by the former Kwa-Ndebele Government in the place previously called Ekangala. The Industrial Park is situated adjacent to Maputo Corridor, approximately 67 Km outside Pretoria and 100 Km from Johannesburg city center. In terms of geographic demarcation, the industrial park falls within the boundary of Tshwane Municipality, however with respect of administrative jurisdiction the industrial park is owned and managed by Mega.

 

The industrial park is located just under 45 minutes’ drive from one of the country’s major power utility plants known as Kusile Power Station. Within the same economic region there are large numbers of mining companies, steel industries and agricultural land.

 

The main focus of the industrial park is to attract investments, and its prime land and advantageous geographic location presents significant growth opportunities for the region. In the past, the industrial park provided economic relief in the region by creating employment opportunities to local townships and rural areas such as Kwa- Mhlanga, Siyabuswa and Mamelodi. The intervention by government to revitalize the industrial park has the potential to accelerate economic growth in the region, and thus create employment opportunities, boost efforts to eliminate poverty and reduce inequality.

 

Although, faced by many challenges such as poor infrastructure, low intake in tenants, revenue collection that has an effect on the financial sustainability, the industrial park is able to supply vital basic services to its clients. The industrial park has its own landfill site, waste water treatment plant and bulk electricity substation. The attempt by government to revive old industrial parks has huge positive socio-economic outcomes.  What is needed is investment to upgrade and build new capital infrastructure; furthermore to enhance management capacity and capability and strengthen financial health capability.

 

With all its challenges, the industrial park that was built more than thirty years ago, has contributed to the creation of approximately 6000 jobs. It consists of 118 occupied factories, 11 vacant factory properties with a total area of 16 962 m². It also has a small industrial area to allow small scale industries to grow. This area covers 4937 m² of the park. In addition, the Industrial park still has 173 serviced vacant stands. There are five factories that have been damaged by fires with a total floor area of 10 189 m².

 

Time pressures inhibited the select committees from engaging in thorough oversight on this site.

 

3.5.1 Recommendations

The select committees agreed that another visit to the site is imperative. Accordingly, it was recommended that the NCOP delegate from Mpumalanga (Hon Mthimunye) takes the lead in arranging another visit to the site. Government department officials that can contribute to the quality of the visit will be requested to accompany the committee delegate/s.

 

3.6 Zithabiseni Resort

Zithabiseni Resort was developed in the late 1960s around a hot spring which was used by the Afrikaner community for informal gatherings over weekends. Due to its location on the attractive ridge it was known as Die Bron. In 1986 the Transvaal Provincial Administration handed it over to the then KwaNdebele government which renamed the facility, Zithabiseni – meaning a place for pleasure and tranquillity. The resort was taken over by the Mpumalanga Provincial Government (MPG) after the 1994 democratic election. Within the MPG the management and control of the resort moved through a series of ownerships; from the Mpumalanga Parks Board to the Department of Agriculture, then the Department of Environmental Affairs and Tourism and presently it rests with the Department for Economic Development, Environment and Tourism.

The resort fits in within the “Cultural Heartland” tourism region of Mpumalanga Province. Although it has great potential to contribute to the region’s economic and development agenda, lack of infrastructure investment, poor governance and management could compromise its growth potential.

In 2009, the National Department of Tourism (NDT) allocated an amount of R30 million assist in revamping the resort. The grant from NDT was intended to renovate 80 chalets, kitchens, dining hall, construction of a new office building, new ablution facilities at the entrance gate, new reception area, and paving of walk-ways, drilling of boreholes, upgrading of 7km access road, replacement of kitchen equipment and installation of additional furniture in chalets and other new buildings.

3.6.1 Recommendations

The select committees, after inspecting and viewing the resort, recommends that there may be a need for government to increase investment in the facility and also devise mechanisms to attract private investment including community participation in ownership and management of the resort.  This recommendation will be tested with the Ministry of Tourism.

3.7 Verena Police Station

 The delegation received a presentation on the present status and progress of the condition and the physical structure. The presentation highlighted the maintenance on civil, electrical and structural elements of the police station. The work consisted of painting, tiling, carpentry, plumbing, replacing of roofs, fencing repairs, paving, construction of car ports and electrical repairs.

 

Recommendations 

The select committees recommended that the matter of non-functioning telephone lines be referred to the select committee dealing with Public Enterprises where Telkom reports as an entity to intervene.

 

3.8 Kusile Power Station

Kusile Power Station is considered as one of the largest energy infrastructure projects under construction in the world. The Kusile Power Station project is located near the existing Kendal power station, in Nkangala District of Mpumalanga and comprises six (6) units, each rated at 800 megawatt (MW) with a total capacity of 4 800 MW.

 

Officials from Eskom HQ travelled from Johannesburg to join Kusile management in presenting the briefing session. In its presentation, Eskom indicated that Kusile is the largest coal fired station in the Southern Hemisphere and the 4th largest in the world. Kusile is recognised as the most ‘Technologically Advanced’ plant in the Eskom’s list of projects. To bolster this point, it was further reported that the project employs environmental designs which include: Supercritical steam generator, Wet Flue Gas De-Sulfurisation, Direct Air Cooling, Low Nox Burners, Pulse Jet Fabric Filters and Zero Liquid Discharge. All of these components are meant to reduce carbon emissions.

 

In terms of its cost structure and expenditure report, the total cost of the Kusile project is R161.4 billion with actual expenditure of R116 billion and 80 percent completion rate in the scope of the project. The Kusile Executing Team (KET) reported 8 main lessons from the project:

  • Make timely investment decisions
  • Secure adequate funding
  • Drive localisation and skills development
  • Effective contracting framework
  • Work closely with all key stakeholders, particularly (contractors) and monitor developments in ensuring sound labour relations
  • Understand the impact of project completion in terms of jobs reduction in the local community
  • Prepare and reskill workers for a smooth transition from Capital Expenditure (CAPEX) construction phase to Operational Expenditure (OPEX)
  • Manage quality control; on-site workmanship.

 

The identified challenges in project implementation of Kusile construction included the following:

  • Grievances by members of local community about the project’s ability to provide enough employment in area.
  • Project instability – the project is 80 per cent completed and this creates a challenge as some workers have to be laid off through project demobilisation and this requires some funding for skills development and training to ensure a soft landing and ability of workers to transcend to other industries.

 

During the deliberations, the select committees raised a number of issues ranging from the role of Kusile Power Station on implementation of key national policies such as minimum wage, industrialisation, localisation, skills development, environmental commitments to local fauna and flora.

 

The Kusile management team in response mentioned that substantive written responses would be sent to the Committees through the Committee Secretary. These include progress report on skills development, employment statistics and community outreach programmes.

 

3.8.1 Recommendations

Acknowledging that Kusile is accountable to both the Department of Energy as well as the Department of Public Enterprises, the select committees agreed to consult further on its recommendations and that initial consultations be had with the Department of Energy.

 

During the Eskom presentation it was agreed that Eskom would provide written responses to the unanswered questions of the select committees (time limitations influenced this approach).

 

3. 9 Witbank Magistrate Court

The project scope covered repairs and maintenance work in the Witbank Magistrate Court. The challenges with the project include poor workmanship and the project was behind schedule with the expenditure sitting at 7.6 per cent equivalent to R533 631 thousands which was paid to the contractor. The select committees were not satisfied with the contractor being paid without meeting minimal requirements stipulated in the contact.

 

3.9.1 Recommendations

The committees resolved that all Department of Public Works projects implemented in Mpumalanga need to be reviewed. The Department of Public Works should be invited to (urgently) come and account to Parliament via the Select Committee on Economic and Business Development on all projects being implemented in the province and specifically on the Witbank Magistrate’s Court.  Having a joint meeting with the Portfolio Committee on Public Works for such accounting should be considered.

 

4. Select Committees’ Observations

 

  • The select committees observations emphasised a need for government departments and development agencies (across the spheres) to coordinate resource allocations to the regions/beneficiaries in order that better outcomes/results are achieved.
  • Contract management and implementation of public works projects need to be improved and local enterprises need to be given more opportunities.
  • Tourism is one of the key industries that has the potential to create jobs. Public and private sector investments need to be mobilised to boost the provincial tourism industry and increase participation of the local communities in the tourism industry.
  • The role of infrastructure investment, particularly in energy and transport sectors and logistics can drive regional economies. It was recognised that investment in infrastructure should spur growth of local industries. Such approaches must be encouraged and supported.
  • The Ministry of Trade and Industry, in collaboration with the Ministry Economic Development and the National Treasury should devise workable measures that would protect local industries from cheap imports. However, all must be done within the international economic and trade-regime requirements.
  • Revitalisation of industrial parks in former homelands requires select committees and parliamentary support, but more needs to be done in terms of capital investment, management and financial sustainability of the parks. The reference case was the Ekandustria Industrial Park.
  • With regard to the Moloto Road development corridor, although there is work being done, the select committees felt a need to accelerate the implementation of the programme. The committees wanted to see well-coordinated approaches in the implementation of the programme. In order for the programme to be successfully implemented, private and community participation should be supported and promoted.
  • Furthermore, the committees acknowledged the economic spin-offs. In addition, it was emphasised that public infrastructure investment, as much as it may be needed, should not drain the fiscus, private sector participation should be promoted.

   

Report to be considered.

 

Documents

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