Madam Chairperson, hon Minister and Deputy Minister, hon members, executives of the state-owned enterprises, ladies and gentlemen, the ANC supports this Budget Vote. The Department of Public Enterprises is responsible for the performance of nine state-owned enterprises. Therefore effective and efficient functioning of these is very important, as they advance the development agenda.
State-owned enterprises are key instruments in our infrastructure development programme, employment creation and innovative economic development and growth. The department has to ensure that state-owned enterprises' business strategies are in line with the policy and regulatory framework such as the Public Finance Management Act, Act 1 of 1999. One of the resolutions taken at the 52nd ANC conference in Polokwane was for the state to intervene strategically in these sectors to drive growth, development and transformation of the structure of our economy.
Chairperson, hon members, we have to strengthen the role of state-owned enterprises in remaining financially viable, to respond to a clearly defined public mandate in terms of our industrial policy and economic transformation. State-owned enterprises must be sustainable, competitive and promote economic efficiency. To this end financial management is very critical. In terms of the manifesto, the President said, and I quote:
The developmental state will play a central and strategic role in the economy. We will ensure a more effective government; improve the co- ordination and planning efforts of the developmental state by means of a planning entity to ensure faster change. A review of the structure of government will be undertaken, to ensure effective service delivery.
The department has registered, among other things, the following progress: The steel sourcing project was completed; a proposed strategy to leverage the 20-year power build to develop national industry is under way; it has made a self-assessment toolkit available on its website; it has established a cross-cutting artisan training initiative; and the department has established a Public Enterprise Employment and Skills Development Agency, which will facilitate Seta-funded workplace placements for the FET college graduates with state-owned enterprise suppliers to enable the graduates to obtain trade certificates.
Let me address myself to three state-owned enterprises, namely the Pebble Bed Modular Reactor, Alexkor and Safcol.
Regarding the Pebble Bed Modular Reactor, while engagement continues to ensue on the utilisation of alternative energy sources, nuclear power generation has dominated discourse in South Africa and the world. The PBMR technology largely addresses the safety and waste management concerns that are raised globally and has been embraced by the staunchest critics of nuclear energy.
To ensure that South Africa is at the cutting edge of nuclear technology development, PBMR Ltd was established in 1999 with the intention to develop and market the pebble bed reactor.
As an alternative, the pebble bed technology stands to reliably provide efficient energy generation. South Africa's energy generation capacity continues to be pressured by increased consumption and operating with tight electricity reserve margins and energy infrastructure investment. To meet energy development challenges, South Africa needs optimally to use all energy sources available and vigorously to pursue energy-efficient programmes. PBMR total contributions received from 2005-06 to 2008-09 amount to R6 billion. This is intended to fund essential contracts for the demonstration plant and fuel plant. Expenditure is expected to remain high, at R2,1 billion in 2008-09 and just under R2 billion in 2009-10, as Broadband Infraco and PBMR continue to receive substantial transfer payments. Expenditure is expected to decrease from R2 billion in 2009-10 to R12,7 million in 2011-12, at an average annual rate of 81,9% when transfers to entities are ceased. Although there is significant progress in a number of programmes, there are challenges in the implementation of other programmes. For example, Eskom's operating costs increased and derivative instruments continue to be of concern.
Regarding Alexkor, a deed of settlement in the land application lodged by the Richtersveld community against the state and Alexkor was concluded and confirmed by an order of court. The settlement requires a transfer of assets to the Richtersveld community and establishment of a joint venture between Alexkor and the community. It should be noted that the Pooling and Sharing Joint Venture will develop a long-term business plan for a viable mining venture.
In terms of assessing Alexkor's performance, the carat production decreased to 25 620 carats in 2008, from 33 503 carats in 2007. This was 19 080 carats below budget, due to the downscaling of land mining operations and a reduction in the number of production sea days achieved. The poor carat recovery was compensated for by an increase in the average price per carat received for the diamond production. This resulted in the diamond income for the year 2008 being R139,8 million, compared to R109,3 million in 2007, exceeding the budget by R22,6 million.
The SA Forestry Company Limited, Safcol, manages and develops state commercial forests. Its activities include forestry management and timber harvesting and processing, both domestically and in neighbouring countries. Soft saw timber is sold in South Africa, and soft and hardwood saw timber and pulp wood in Mozambique. Komatiland Forests has an 80% shareholding in the Mozambican forestry company, while the remaining 20% is held by the Mozambican government. Although a decision was taken by Cabinet in 2007 to dispose of Komatiland Forests, the decision was revisited due to land claims. About 60% of land on which Komatiland Forests operates is subject to land claims. This will have a bearing on the disposal of the assets.
Due to the land claim status, the disposal has been shelved until 2011- 2012. This is intended to allow for the resolution of land claims. Safcol has been mandated to develop a five-year business and corporate plan in order to maintain, where possible, the value of the business. There is another opportunity here to address challenges facing women, youth and people with disabilities.
In 2007-08 a transformation committee was established to track the alignment of Safcol's policies and procedures with government's objectives for social and economic transformation. The portfolio committee's primary tasks are to drive the transformation agenda, maximise community participation and ensure greater empowerment in the forestry sector. One of the milestones reached was the signing of a memorandum of understanding with the Development Bank of Southern Africa jointly to promote the development of sustainable forest communities and industries, and an agreement was also signed with AgriSA to develop the honey industry in one of the Komatiland forestry plantations.
This is in line with the state of the nation address by the President to build economic and social infrastructure, and develop and implement comprehensive rural development linked to land and agrarian reform and food security. I thank you. [Applause.]