Department of Public Enterprises Strategic Plan and Budget: briefing

Meeting report

LABOUR AND PUBLIC ENTERPRISES SELECT COMMITTEE
18 June 2004
DEPARTMENT OF PUBLIC ENTERPRISES STRATEGIC PLAN AND BUDGET: BRIEFING

Chairperson: Ms N Ntwanambi (ANC)

Documents handed out:
Director-General's presentation

SUMMARY
In his address, the Director-General pointed out that his Department was responsible for seven state-owned enterprises in various stages of intensive restructuring. Key achievements were listed and a considerable array of key deliverables were introduced ranging from disposing of non-core assets to effecting large improvements in infrastructure in the electricity, transport and water supply sectors. Budgeted amounts for the 2002/03, 2003/04 and 2004/05 years and actual expenditures for 2002/03 and 2003/04 were presented and explained.

The discussion revolved around opportunities for job creation, especially for (rural) women, and many questions relating to details of the restructuring processes were asked.

MINUTES
Director-General's presentation
Dr M Mokenyane (Director-General of Public Enterprises) discussed the seven SOEs (State Owned Enterprises): in defence (DENEL), in electricity (ESKOM), in transport (TRANSNET), in forestry (SAFCOL), in diamonds (ALEXKOR), in information technology (ARIVIA.KOM) and in the hospitality trade (AVENTURA). The growth areas were in electricity, transport and water supply infrastructure. The Department did not intend disposing of their assets in "fire sales" but were intent on restructuring, inter alia by disposing of non-core assets of which eight had been identified and ten more in the process of being investigated. Some of the key challenges were the outstanding land claims connected to Aventura and attracting and retaining young, technically skilled staff such as attorneys, accountants and economists. Personnel and staff costs were by far the dominant expense items of the budget.

Discussion
The Chair asked for clarity on: the suspensions at DENEL, the old South African Railway houses along railway lines that appeared to be unoccupied and untended, whether there was a new tendering process for disposing of SAFCOL assets, and the current stage of the AVENTURA process.

Mr C van Rooyen (ANC) congratulated the Department on achieving an unqualified audit report and their success with the Telkom process. Were the 'mothballed' power stations such as in the Free State, going to be recommissioned?

Ms N Ndalane (ANC) asked about the relationship of the Department to non-governmental organisations.

Mr Z Kolweni (ANC) wanted more detail on investment plans, the status of the National Ports Authority (NPA) Bill, and the plans for empowering black economic enterprises (BEEs) when disposing of AVENTURA. Were personnel to be engaged through an agency? Further, where did the Department fit in with the Lesotho Water Project.

Dr Mokeyane replied that new electricity capacity was going to be provided. Transnet properties in disrepair due to inadequate maintenance were going to be subjected to a package treatment with due regard to protection to dwellers and in the interest of BEEs. For additional electricity generation mothballed power stations were being recommissioned and to this end they had advertised for project management support. New investment would aim at integration and co-ordination for maximum impact, as at Coega port, where the relationships that link economic projects for the proposed smelter would demand these from ESKOM and the NPA. By end September 2004 specific projects were to have been submitted with details of places, budgets and funding strategies.

He continued that his Department was the lead department for the Lesotho Water Project and met with technical officials of other departments to clarify needs and resources. The NPA Bill needed only minor modifications. His Department advertised to recruit personnel and, only after exhaustive responses to advertising and if necessary, would approach database companies as a last resort. The increase in the budget for personnel was mainly due to the growth of the Department.

Mr James Theledi (Department of Public Enterprises: Chief Director of Restructuring) said that of the 15 Aventura holiday resorts nearly all had been sold. There were still land claims from communities, though. They went to BEE companies, and conditions were that jobs had to be retained, new investment was required, and rental payments to communities were to be effected. DENEL was an internal issue and he would ask for information. The housing stock of TRANSNET was not supporting core business but required the raising of loans and would be disposed of to the private sector, including empowered companies. Local government was loath to take them over because of the difficulty in servicing them due to their scattered location.

Mr Kolweni enquired about the stage that the AVENTURA process had reached.

Mr Theledi replied that clear commitments were sought that there would be no retrenchments but investment.

Ms M Themba (ANC) asked whether communities were adequately informed about opportunities such as in the SAFCOL process.

Mr Theledi replied that SAFCOL followed a normal tendering process. A consortium that tendered would include the relevant communities. 10% set aside for the community would be transferred to them, and annual rentals paid out to them. In March 2004, for example, R 96 million was raised by a sale to a non-governmental organisation, Cape Timber Resources. The sale was still subject to approval by the Competition Commission.

The Chair said that it was important to ensure public awareness of the Department's actions that might lead to opportunities, especially for rural women.

Ms Themba enquired about job opportunities in forestry projects in KZN, especially for women.

Dr Mokeyane explained that it was a challenge for the Department to furnish information of the most useful type and at the right time as the restructuring was a time-consuming process. They were always afraid that they would leave out somebody. The NPA Bill would be placed before Parliament during the following sitting in August/September and should be enacted before end 2004 as it was a high-priority bill.

Mr van Rooyen asked whether the public hearings for the Bill had been completed.

Mr Mokeyane replied that they had indeed been done.

Ms Themba asked for a detailed organogram of the Department showing a gender breakdown, agendas for each programme and budgets.

Mr Mokeyane replied that much of the requested information was contained in the Annual Report, and for the new agenda would be made available.

The Chair requested more information about ESKOM, Coega and its port, Ngqura, employment in the Nelson Mandela Metropole and especially in East London. Committee members could then pass this information on to their constituencies.

The meeting was adjourned.