Public Enterprises Budget: Committee Report; Alexkor oversight report

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Public Enterprises

19 May 2021
Chairperson: Mr K Magaxa (ANC)
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Meeting Summary

Tabled Committee Reports

The Committee convened virtually to consider and adopt two of its reports.  

On the Department’s Budget Vote Report, Members appreciated the fact that the Department intends to fast-track the filling of vacancies was included in the report. They asked if the Committee could receive the list of vacancies so that they can keep track of vacancies that have been filled and those that need to be filled. They also asked for Eskom to give the Committee a winter programme for load shedding. The third wave of COVID-19 is imminent, and the virus is said to be friendly to the cold season. A programme for the period of elections would also be valuable. There should not be power cuts during the counting stage.

On the Alexkor report, amongst the rising issues was the report conclusion, where it addresses liquidity issues. Members pointed out that the Committee never talked about liquidity challenges facing the company. What should rather be said as part of the conclusion is that the Committee wants to get the business model, the one that would be revised, so that the Committee could understand the restructuring. This is something that needs to be interacted with.

The Committee also discussed its programme for the remainder of the term.

Meeting report

The Chairperson opened the virtual meeting, welcoming the Members and the Committee support staff.

Mr D Mocumi, Committee Secretariat, reported that there were apologies from Ms O Maotwe (EFF), Ms M Clark (DA) and Mr G Cachalia (DA). Ms N Mazzone (DA) was present as an alternative. He said that six Committee Members was necessary in order for the documents to be adopted.

Report of the Portfolio Committee on Public Enterprises on Budget Vote 10: Public Enterprises, and the Annual Performance Plan for 2021/22 of the Department of Public Enterprises

Mr S Gumede (ANC) greeted the Chairperson and the Members. He said that when it comes to the report-back on regular bases, half-yearly may be too late; he proposed that it be at least quarterly. This is so that the Committee and officials are kept on their toes.

He said he was glad that the fact that the Department intends to fast-track the filling of vacancies was included in the report. Can the Committee receive the list of vacancies so that the Committee can keep track of vacancies that have been filled and those that need to be filled? The allocation for the compensation of employees keeps increasing. That implies that the Department may not be willing to engage more on employment at this stage.

Mr Gumede said that Mr Mnisi (Committee staff) indicated that there is a decrease on the side of Alexkor in terms of production. It might have been beneficial to elaborate on what caused the decrease. The revenue has declined. The entity is putting the blame on the currents, but it cannot only be the production of currents. It would have been better to get some elaboration on other factors.

With regards to Denel, one may say that the entity has an obsolete business structure. One knows that it is being restructured; but what is the timeframe? Let the timeframe not be open-ended. Otherwise, things could be left half-done and not have achieved anything.

With regards to Eskom, could the utility give the Committee a winter programme in terms of load shedding? The third wave of COVID-19 is imminent, and it is said that it is friendly to the cold season. A programme for the period of elections would also be valuable. There should not be power cuts during the counting stage.

When the budget allocation was being presented, there was mention that there will be an increase on allocation of consultants. Is there an intention to bring in more consultants? Or is it just the work that may have increased internally, consequently increasing the budget allocation too?

There needs to be further explanation when it comes to the South African Forestry Company SOC Limited (SAFCOL) in a situation where losses are said to be higher than revenue. How does that happen? It necessitates that if the Department is providing oversight, it really needs an intervention. The Committee did not hear anything on the non-submission of reports from the state-owned enterprises (SOEs). These are the things that need to be strategised. Let one form a strategy in terms of non-payment of workers so that when it happens, one knows how to intervene. He thanked the Chairperson.

Ms J Tshabalala (ANC) thanked the Chairperson. She said that the report covered exactly what the Committee has been talking about. Mr Gumede could find answers to his queries in the Observations section of the report. She said she was happy with the report and commended the researcher and content advisor for it. The recommendations really speak to the observations that the Committee has been making. She moved for the adoption of the report. She thanked the Chairperson.

The Chairperson asked who would second the motion for the adoption of the report.

Mr Gumede seconded the motion for the adoption of the report.

The report was adopted with amendments.

Ms Mazzone thanked the Chairperson and asked him to note that the DA withholds its rights with regard to the adoption of the report. It must first be taken to the DA’s caucus for a full discussion.

The Chairperson noted Ms Mazzone’s submission.

Oversight Visit Report: Alexkor

Mr N Dlamini (ANC) thanked the Chairperson and said the report largely covered what was discussed on the Committee’s visit to Alexkor, but there was one issue that did not reach conclusion. It was regarding where the offices are going to be located. It was tentatively agreed that they would move from Gauteng, but there was a counter-proposal of moving the offices to Kimberley. The motivation for that was that it is closer to the market. The buyers do not want to travel long distances. There was no conclusion in terms of that. He thanked the Chairperson.

Ms Tshabalala said that point 8.5 of the report stipulates that one is waiting for a lease agreement to be moved from Pretoria to Alexander Bay for the recommendation at 9.1.3. The recommendation says that locating operations closer to Richtersveld. One has to be reflective in the body of the report but also go into detail around the issue of Kimberley, because arguments were given that when one locates how much has been spent on the office and the rental, it was quite expensive. It was over R160 000.

Going to the conclusion where it addresses liquidity issues, the Committee never talked about liquidity challenges facing the company. It does not read well. What should rather be said as part of the conclusion is that the Committee wants to get the business model, the one that would be revised, so that the Committee could understand the restructuring. This is something that needs to be interacted with.

On the Black Economic Empowerment (BEE) matter, there was a serious issue around community beneficiation. The Committee engaged with stakeholders on the concerns that were raised. One must make sure that young Black women and other demographics in the country are able to benefit from the diamond mining. Currently, the demographics are not reflected.

There was a matter on improvement. It needs to be included in the recommendations that there needs to be improved stakeholder engagement so that investors feel confident to invest in mining.

The matter on the application of the exemption from the Department of Mineral Resources and Energy (DMRE) that seeks to accommodate artisinal miners needs to be flagged because it was identified that the mining area for the artisinal miners’ exemption should be approved.

Lastly, on the access to local fishermen being granted to the mine, she said that there was an issue within this project of being more to do with unification with the Department of Environmental Affairs. A portion of the farm of Voorkop was allocated to the current agricultural project. It should be noted as part of the report.

The report covers the Committee’s submissions and observations. The Committee needs to have a checklist and receive an updated report, including matters raised and observed. There needs to be progress report around this matter.

Ms Tshabalala moved for the adoption of the report. She thanked the Chairperson.

The Chairperson asked for a seconder.

Ms Mazzone asked the Chairperson to note the DA’s right to withhold its vote until after a caucus meeting. She thanked the Chairperson.

The Chairperson noted the submission.

Mr Gumede seconded the move for the adoption of the report. The report has taken Mr Gumede as part of the delegation that visited, even if he was not there. It was very exciting.

Who exactly are the beneficiaries? Are we talking about the number of houses in which there are people or also the people that are working? Is there anything, whether it is the Consumer Protection Act (CPA) that has been ploughed back to the community? For the community, or CPA, at least taking some people to universities to be engineers, etc., can really be a benefit to the community because many of those things will be controlled by people who are in the society. “One brings money into the community, one brings animosities… there is quite a lot of money that goes to the community.”

He said he was happy that the report does reflect some of the things the Committee had concerns about. He said that he was happy with the recommendations. He seconded the motion for the adoption of the report.

The Chairperson thanked Mr Gumede.

Committee minutes

The Committee adopted its minutes for 12 May and 17 March 2021.

Draft Committee Programme

Mr Mocumi (Committee Secretariat) said there were two weeks remaining of the current term. Alexkor is the only company that has not presented its annual report. The Committee would advise on the form of this meeting for June 2021.

South African Airways (SAA) has a new CEO. The Committee needs to decide on the issues of the oversight visits. There is going to be a 10-week constituency period between 4 June and August. The Committee has not yet visited Eskom and the port of Durban.

Ms Tshabalala welcomed the proposed programme. She noted that there was an issue of business rescue practitioners on 02 June 2021. When the Committee was doing the Annual Performance Plans (APPs), it would have received the business rescue practitioners doing due diligence, handing over, and so on. She said she did not necessarily have an issue with it, but she doubted the Committee would get much around the update regarding SAA’s progress. There is a new airline that must be formed and it is only fair that the Department is given time.

There are a number of developments happening at Denel. She wanted to make that addition on the Denel matter. For the constituency period, she seconded that the Committee does the Durban port as well. This comes from the Committee’s interaction with Transnet when the Committee did the Cape Town port. Ten weeks is a long period, so let the oversight be done during that time. The Committee has learned from its oversights that it is even better to be right on the ground with the issues. She said she hopes approval will be received as soon as possible.

The Chairperson asked for a seconder.

Mr Dlamini seconded the adoption of the programme.

The Chairperson asked Mr Mocumi to make amendments to the programme, as suggested by Ms Tshabalala, so that when the Committee meets again, all the details will be finalised. He thanked Mr Mocumi.

Mr Mocumi indicated that he omitted something on the issue of Alexkor. The Chairperson received a correspondence from Organised Labour that complained that when the Committee visited Alexkor; the Committee engaged everyone except for the Organised Labour at Alexkor. So, the unions requested an opportunity to also have an input to the Committee on their view of Alexkor and their challenges there. The Chairperson advised that when Alexkor presents to the Committee, he will allow the two main unions at Alexkor to have an input.

The Chairperson said it will have to be considered when Alexkor is making its presentation.

The Chairperson thanked the Members for attending the meeting.

The meeting was adjourned.

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