ATC121128: Report of the Select Committee on Labour and Public Enterprises on the oversight visit to Transnet and Medupi Coal-Fired Power Station, dated 27 November 2012
Report of the Select Committee on Labour and Public
Enterprises on the oversight visit to Transnet and Medupi Coal-Fired Power
Station, dated 27 November 2012
Committee on Labour and Public Enterprises (the Committee) undertook an
oversight visit to Medupi Coal-Fired Power Station. This included an oversight
visit to the Transnet offices in
purpose of the visit was to assess the progress made in the construction of the
power station and the impact of
on the immediate
communities around the power station. Key focus areas included job creation,
skills development, promotion of local businesses and localisation.
the Committees visit was aimed at interacting with the board of directors of Transnet
in order to understand the challenges faced and progress made with regard to
its infrastructure development projects.
delegation included the following members:
Mrs MP Themba (Chairperson of the Committee, ANC);
Mr MP Sibande (ANC); Mr HB Groenewald (DA); Mr Z Mlenzana (Cope); and Mr DB
delegation was accompanied by the following parliamentary officials: Ms PH
Sibisi (Committee Secretary), Mrs O Siebritz (Committee Assistant) and Mrs R
Barreto (Committee Researcher).
Visit to Transnet
ransnet freight rail is
the largest division of Transnet. It is a world class heavy haul freight rail
company that specialises in the transportation of freight. This company has
approximately 25 000 employees, who are spread throughout the country.
Transnet maintains an
extensive rail network across
The company is proud of
its reputation for technological leadership beyond Africa as well as within
Transnet freight rail is
proudly placed to dramatically alter the South African rail industry. This
enables Transnet to play a positive and active role in the transformation of South
This is done against
the backdrop of sound business principles, a regulatory framework and the
challenges of meeting the expectations of its customers.
There are several strategic infrastructure projects
(Sips), among which was a plan to develop and integrate rail, road and water
infrastructure, centred around the Waterberg and Steelpoort areas of Limpopo,
to unlock coal, platinum, palladium, chrome and other minerals, as well as the
stepped-up beneficiation of minerals.
There are initiatives to improve the movement of
goods through the Durban-Free State-Gauteng logistics and industrial corridor
by prioritising a range of rail and port improvements, supported significantly
by a R300 billion investment programme by Transnet over the coming seven years.
The programme aims to meet market demand by
2019. There are several external and internal factors that pose challenges,
although risks had been identified and mitigating action developed.
Of the R300 billion capital investment, R210 billion would come from
Transnets own cash flow. The additional R90 billion would largely come from
commercial paper and domestic bonds. The programme would also assist in
Job increase depends on
the requirements of jobs at the time.
employed 3 000 people during the period 2011/12.
The programme is expected to create
588 000 job opportunities at its peak and would focus on skills and
Transnets own staff would increase by 25%, but there would be a larger
effect on indirect jobs and an economy-wide impact. There would be an increased
intake in schools of excellence and R4.6 billion would be spent on bursaries
and grants. The entity would also help 2 000 apprentices to attain skills
- more than Transnet would need.
A new South Eastern node was being planned for the
An initiative was outlined for the roll-out of water, roads, rail and
electricity infrastructure in the
A range of projects was planned for the West Coast, including the expansion
of the Sishen-Saldanha iron-ore corridor to above 80 million tons.
Between 2012 and 2019, export coal would increase by 44% and export iron
ore would increase by 57%. General freight business is expected to meet market
demand by 2017 and would increase by 113%. Maritime containers would rise by
The strategy aimed to position
The Market Demand
The MDS involves the following:
R300 billion capital investment programme;
Expanding rail, port and pipeline
Increase incapacity to meet market demand;
Continued financial stability and
Significant productivity and operational
Shift from road to rail - reducing the
cost of doing business and carbon emissions;
Enabling economic growth;
Job creation, skills development,
localisation, empowerment and transformation opportunities.
Based on Transnets solid foundations, it
aims to capture identified growth opportunities over the next seven years
whilst maintaining a solid financial position and credit rating. Transnet
stated that 70% of its capital investment will be funded from operating cash
flows and it is confident that it can raise the balance internally. Transnets
planned infrastructure build will achieve various policy objectives.
The majority of Transnets investment will
be in rail business. The major programmes in this regard will be:
GFB rail capacity growth to meet market
demand volumes from 79.7mt to 170.2mt, including Waterberg;
Increase in fleet and improvement to
infrastructure in order to:
Increase in coal to 97.5mt;
Increase export iron ore to 82.5mt; and
Increase export manganese to 16mt;
Completion of the new Multi-Product
The impact of the infrastructure
development will be felt nation-wide. The national, countrywide investments
will equal R153.3 billion.
The provincial contribution to direct and
indirect jobs are as follows for all nine provinces:
2011/12: 83 000
2012/13: 99 000
2016/17: 123 000
2017/18: 108 000
2018/19: 88 000
of Mega Capital Projects
Transnet presented various maps to the
Committee showing the current network of its general freight line and heavy
haul lines and the planned network of the same over the next 30 years.
Maps were also presented in regard to the
long-term shared network between PRASA and Transnet (passengers). They stated
that the high-speed railway between
Transnet presented various maps to the
Committee showing the long-term vision of the national port system. The current
port developments and the developments in 30 years time were compared for the
Transnet informed the Committee that the pipelines
form part of a regulated industry and they have not done much planning in this
regard. They are however engaging on a long-term basis to extend the pipelines.
Transnet runs a
two-year graduate programme, after which a person gets permanent employment.
The programme provides
candidates with relevant workplace experience through a structured learning
programme and organisational support to grow them into positions/roles within
Transnet Rail Engineering, if available.
This drive is
aimed at addressing skills requirements and ensuring alignment with the Market
Demand Strategy. The Graduates-in-Training Programme is conducted over a
24-month period, during which the graduate-in-training will be assessed on a
Transnet Foundation is constantly searching for innovative ways in which to
ensure that its social responsibility programmes fit with the needs of South African
communities. In 1994 Transnet observed the lack of a dedicated institution that
would harness the abundance of football talent amongst youth from across the
country. This is how the
One hundred and twenty boys from across
Transnet has a sport incubator that seeks talent and then nurtures it to grow in a holistic and productive manner. To Transnet Foundation, the School cannot be an educational institution like any other; it has to set itself apart in that its mission is to prepare youngsters to be professional football players. Although football is their first love, the Foundation insists that the growth of the learners at the School should encompass a broad range of life skills that will benefit them as individuals, both on and off the sports field.
The mission of this unique establishment is to:
develop above average soccer talent and potential amongst school going
with academic, as well as holistic life skills education.
environment that is conducive for both football and academic excellence equip
them towards a sustainable professional career in football.
The School ensures that the boys have the necessary grounding in football,
that they are emotionally prepared for the demanding lifestyles of being a
football player in South Africa and anywhere in the world, and most
importantly, also ensures that the learners have been given the insight into
the fickle nature of their trade and are able to, even with the current stars
in their eyes, see productive lives for themselves beyond football. Transnet prides
itself in adopting such a broad approach to the School
Conclusions and recommendations
The Committee would like to see progress
with regard to the asset register (with specific reference to the dilapidated
buildings owned by Transnet). This is specifically the case with Transnets
non-core property where there were issues of security involved. The register
needs to be consolidated and made available to the Committee.
Information in relation to what Transnets
plans are in relation to the buildings that it owns in each province should be
provided to the Committee.
The Committee raised issues of security
with Transnet especially in relation to the theft of cables.
The Committee requested that more be done
to involve the stakeholders in the provinces in regard to the Transnet
projects. Members raised the
Transnet specifically requested that the Committee consider the dangers in
regard to level crossings for railways. These crossings were determined by municipalities.
Transnet would ideally like to see that municipalities are compelled by law to
erect booms at the crossings to minimise the terrible accidents that occur at
Visit to Medupi Power Station (Lephalale)
The Committee was welcomed by Eskoms General Manager, Mr Roman Crookes.
The Committee was taken through the safety induction by Ms Loria Mohlafatse.
Medupi ensured the safety of its employees and also that of visitors.
Construction at Medupi started in 2007.
The first unit (Unit 6) is expected to be the first South African power
station to incorporate super-critical technology, enabling it to operate with
greater efficiency than the previous generation boilers.
This would be the biggest dry-cooled power
station in the world, reducing the need for water consumption as
Overview of the Medupi project
Medupi is an
important project for improving
Job creation and skills development
Ninety five per cent (95%)
of workers were from
of local small and medium businesses
Eskom informed the Committee that 64% of the R51 billion was spent
locally. There was a project labour agreement with the contractors which made
provision for a bargaining council between labourers and contractors. There
were clear conditions stipulated in the contracts with companies with regard to
localisation. The contractors were responsible for the working conditions and any
grievances lodged by their workers, as per the project labour agreement.
involvements and development
Eskom had opened six Central Information Management Offices around
Lephalale, where information regarding developmental and business opportunities
is distributed. Management informed the Committee that there was decent housing
provided to four workers per communal unit.
The Committee resolved that:
(1) Eskom should not give contracts to
companies that do not adhere to labour legislation and treat workers as
sub-human beings. It was ultimately responsible for the workers employed by the
contractors, because Eskom is the custodian of the project.
2) Eskom should improve the participation and
empowerment of women and people with disabilities.
(3) Eskom should expand its skills
development to professions which are needed by society such as doctors, social
workers, and not only skills for the economic market.
It further recommended that Eskom should convene a stakeholder forum
with representatives of local business, organised labour and the local
authority and develop a joint proposal on how to respond to the concerns of the
community and workers.
Eskom should review the project labour agreement as the interpretation
was not clear to the parties concerned.
communication strategy of Eskom and its interface with the community should be
Report to be considered.
presentation to the Select Committee on Labour and Public Enterprises 22 August
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