PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES By PORTIA MOLEFE DIRECTOR-GENERAL
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Transcript of PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES By PORTIA MOLEFE DIRECTOR-GENERAL
PRESENTATION TO THE
PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES
By
PORTIA MOLEFE
DIRECTOR-GENERAL
ON THE 3RD QUARTER PERFORMANCE OF DPE
28 MARCH 2007
OUTLINE OF THE PRESENTATION
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•Overview of the 3rd Quarter Performance
•Review per Programme
•Administration- (Rashida Issel - COO)
•Energy, Mining and Broadband Enterprises (James Theledi - DDG)
•Legal, Governance, Risk and Secretariat (Sandra Coetzee - DDG)
•Manufacturing Enterprises (Litha Mcwabeni - DDG)
•Transport Enterprises (Andrew Shaw - DDG)
•Joint Project Facility (Katherine Venier - JPF Coordinator)
Overview of the 3rd Quarter
• Developed dashboard for Eskom and Transnet as part of monitoring progress.
• Cabinet approved the establishment of six wall to wall Regional Electricity Distributors
as Public Entities to be regulated by the National Energy Regulator of South Africa
(NERSA)
• Commenced with legislative processing of Transnet Pension Fund Amendment
(“TPFA”) Bill
• Processing SOE applications in terms of section 54(2) PFMA• 9 Transnet applications approved• 8 Eskom applications approved• 5 Denel applications approved
• Five non-core businesses (Denel) have been disposed of, realising income of R400m.• Cabinet memorandum on Competitive Supplier Development program was finalised
and approved. • SOE have put in place plans to make optimal use of training facilities for internal skills
development programmes.
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PROGRAMME 1 - ADMINISTRATIONSub programme
Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Human resources
Employment Equity plan
Employment Equity statistics submitted and presented to EXCO, Transformation Committee, Department of Labour, and Portfolio and Select Committees.
Continue monitoring the department’s performance against the employment equity plan
Management of the internship programme
20 interns placed at DPE, attended various training sessions with different service providers. In-house training was also organised to enhance their skills in preparation for the world of work.
Assist all interns with placements in the job market
Corporate services
Management of off-site document storage
400 hundred boxes of old documents were indexed and sent for off-site storage
Continue to sort and index old documents
Efficient production room with centralised fax and photocopy machines
Tender process was followed and a service provider was appointed to enhance the efficiency in the production room
Service provider will be on site from January 2007
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PROGRAMME 1 - ADMINISTRATIONSub program
Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Comms Crisis management strategy
DPE SOE Shareholder Crisis Plan has been adopted by joint CEO / Chairpersons forum
DPE branding
Folders, paper bags, letter heads and notepads are branded in DPE colours
Distribution
Finance Adjustments estimates 06/07
Adjustments were approved for additional funds for re-capitalisation of SOE for the current year, as well as internal movement of funds
Transfers will be effected to SOE in tranches
Expenditure 06/07
The Department has spent R68,780,531 of its operational budget made up of Compensation of Employees, Goods and Services and Capex which amounts to 66.6% of the operational budget (excluding commitments) which, if based on flat line expenditure (75%) over the past nine months reflects an 8.4% underspend, however large projects are being completed during the fourth quarter which will ensure a less than 2% saving overall on operational expenditure. The 54.6% balance reflected on transfer payments will be paid to the SOE over the next three months.
Finance is closely monitoring and liaising with the units on operational expenditure
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DPE STATISTICSas at 2 March 2007
Total Posts Filled Posts Vacancies TerminationsApril to date
Turnover RateApril to date
Vacancy RateApril to date
157 140+1
Secondment
16 19 12% 10%(if 5 posts in interview
stage are filled)7%
Level 1 - 10 65 6
Level 11 - 12 27 2
Level 13 - 15 48 + 1 Secondment
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Interviews in progress
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Advertised Posts 4
Resignations 16
Contract Expiry 1
Transfers 2
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DPE Organisation – EE STATSTOTAL POSTS
AFRICAN INDIAN COLOURED WHITE DISABLED
Statistics South Africa (Mid year population estimates 2004)
79.3% 2.4% 8.8% 9.5% (4% of total as per Strategic Planning decision = 6)
F40.1%
M 39.2%
F1.2%
M1.2%
F4.5 %
M 4.3 %
F4.9 %
M 4.6 %
Total posts plus vacancies: Should be:
157
62 62 2 2 7 7 8 7
Total posts as at 28/2/2007
138
57
44 6
1
9
3
14
4
2
1 disabled employee joining in 1/05/07
Posts:28/2/2007 as a % 100 % 41.30% 31.88% 4.35% 0.72% 6.52% 2.17% 10.14% 2.90%
Vacancies 19(12-SMS) &(7 Level 1-12)
4 9 2 2 2
Target: Number of people with disabilities
6 1 1
Males needed in DPE: People with Disabilities needed in DPE:• African and White: Lower level i.e., 1 – 12 The status of 4 people needs to be confirmed - Coloured and Indian: All levels which will affect this total
Females needed in DPE: • African with the emphasis on SMS level. Current Gender compilation on SMS level: 59% male and 41% female - Target 50/50 % by 31 March2009.
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SALARY GRADING LEVEL TOTALPOSTS
TOTALFILLED
TOTAL VACANT
DISABLED AFRICAN INDIAN COLOURED WHITE
LEVEL F M F M F M F M
MINISTER1
1 1
DIRECTOR GENERAL
16 1 1 11
SPECIAL ADVISOR: 151
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DEPUTY-DIR. GENERAL
15 4 3 1 2 1
CHIEF DIRECTORS14 16 12 4 2 6 1 1 1 1
DIRECTORS 1335
29 6 5 12 2 1 3 1 3 2
TOTAL SMS’s 13 - 16 58 46 12 8 20 3 1 4 2 4 4
DEPUTY DIRECTORS(11&12)
11 - 1229
27 2 2 11 7 3 2 4
ASST DIRECTORS(9&10)
9 - 1010
9 1 3 5 1
LEVEL (7 & 8) 7 - 8 49 47 2 29 9 3 1 5
LEVEL (1 - 6) 1 - 6 11 9 2 6 3
TOTAL LEVEL 1-12 1 - 12 99 92 7 2 49 24 3 5 1 10
TOTAL DPE 157 138 20 57 44 6 1 9 3 14 4
TOTAL FUNDED POSTS
156
TOTAL UNFUNDED POSTS
1Spec Adv
1
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EXPENDITURE REVIEW
DEPARTMENT TOTAL
EXPENDITUREAPRIL –
DECEMBER 2006
ADJUSTEDAPPROPRIATION
COMMITMENTS
AVAILABLE BUDGET
JANUARY - MARCH 2007
% OF TOTAL
BUDGET USED
(excluding commitments)
Compensation of Employees 34,572,015 54,005,000 0 19,432,985 64.02
Goods and services 32,624,555 47,331,000 4,917,214 9,789,231 68.96
Transfers 1,510,990,154 2,766,752,000 0 1,255,761,846 54.61
Payment for capex 1,583,961 1,835,000 145,553 105,486 86.31
TOTAL 1,579,770,686 2,869,923,000 5,062,767 1,285,089,548 55.05*
The Department has spent R68,780,531 of its operational budget made up of Compensation of Employees, Goods and Services and Capex which amounts to 66.6% of the operational budget (excluding commitments) which, if based on flat line expenditure (75%) over the past nine months would reflect an 8.4% underspend, however large projects are being completed during the fourth quarter which will ensure a less than 2% saving overall on operational expenditure. The 54.6% balance reflected on transfer payments will be paid out to the SOE in tranches over the next three months.
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PROGRAMME 2 – ENERGY, MINING AND BROADBAND ENTERPRISES
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Energy Sector
Eskom
GENERATION
Monitor Return to Service of the Mothballed Plants (Camden, Grootvlei & Komati)
Monitor the construction of the Open Cycle Gas Turbine (OCGT) plants
Developed dashboard as part of monitoring progress.
Reports on progress incorporated in quarterly report.
Reports on progress incorporated in quarterly report.
Expansion plan
Reserve Margin and the Security of Supply
Waiting for DME to finalise the reserve margin policy.
Engage DME at technical sub-committee meetings.
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PROGRAMME 2 – ENERGY, MINING AND BROADBAND ENTERPRISES
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Energy Sector
Eskom
Distribution
Establishment of the six Metro REDs
On 25 Oct. 06, Cabinet approved the establishment of six wall to wall Regional Electricity Distributors as Public Entities to be regulated by the National Energy Regulator of South Africa (NERSA)
Prepare a position paper on implementation of Cabinet decision and alternative scenarios.
New Gen Independent Power Producers
Deal with the Revised Power Purchase Agreement and the Fuel issue. DG and Minister updated on progress.
Performance monitoring
Analyse 2nd quarterly report.
Identify strategic KPIs for inclusion in 2007/8 shareholder compact
Memo approved by Minister.
Letter sent to CEO of Eskom on identified KPIs
Prepare for 3rd quarter report.
Analyse the targets for these KPIs on receipt of Corporate Plan.
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PROGRAMME 2 – ENERGY, MINING AND BROADBAND ENTERPRISES
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Mining Sector
Alexkor
Recapitalisation R81.9 million received from National Treasury through the Adjusted Estimates process. R80 million transferred
Monitoring thereof to take place.
Conduct performance review of Alexkor
Monthly reports review for Oct, Nov completed and approved by Minister. Quarterly report review completed and approved by DG.
Minister to sign the memo.
Separation of ABT from Alexkor
ABT has been incorporated. Transfer of movable assets to ABT
Settlement agreement with RVC
MOU signed Finalisation of agreement.
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PROGRAMME 2 – ENERGY, MINING AND BROADBAND ENTERPRISES
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
ICT Sector
Infraco
Establishment of InfraCo
Commissioning of FSN
Cabinet Decision on the establishment of InfraCo pending
Work plan presented to Joint Steering Committee and agreed. Testing in March 2007
International Connectivity
Long distance network being commissioned.
High level traffic study and draft West Coast marine cable study completed and report tabled Dec 2006.
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PROGRAMME 3 - LGRS
Sub programme
Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Legal PBMR
Reviewing the shareholders agreement and cooperation agreement
Input to the institutional restructing of the SA Nuclear Industry and Eskom/PBMR’s role
TOR for advisors to finalize comment on Shareholders Agreement
Denel Guarantee Review and comment on Heads of Agreement relating to guarantee between DPE and Denel
Submit draft Heads of Agreement to Denel for review and comment
ALEXKOR
MOU with Richtersveld Community
Management of legal processes and principles with State Attorney and Senior Council
Confirmation of settlement through PSJV Agreement; Final Settlement Agreement and Order Court
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PROGRAMME 3 - LGRS
Sub programme
Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Legal SAA
Separation from Transnet and transfer to Government – Fulfillment of suspensive conditions
Commencing legislative processing of Transnet Pension Fund Amendment (“TPFA”) Bill
Public Hearings on, deliberation and adoption of TPFA Bill by National Assembly
Preparing SAA Bill, first reading debate of SAA Bill at National Assembly
Debate and voting on PFA Bill by NCOP
Public Hearings, deliberation and voting on SAA Bill by National Assembly
SAX
Cabinet Memorandum
Draft Bill
Transaction Documents
Draft Cabinet Memorandum
Draft Bill
Transaction Steering Committee
Preparation and review of due diligence reports and valuation by transaction advisors
Cabinet Decision
Review of draft transaction agreements and commence negotiations
Commence processing draft enabling SAX Bill
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PROGRAMME 3 - LGRS
Sub programme
Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Legal INFRACO
Cabinet Decision
Infraco Bill
Transaction Agreements
Cabinet Memorandum prepared
Draft Bill prepared
Legal advisors appointed to assist in reviewing and drafting various agreements between DPE, Eskom and Transnet and between DPE and Neotel and attending negotiations on the agreements
Sale of shares and loan account agreement signed.
Draft FSN sale agreements
Draft agreements for FSN network lease to NeoTel
Cabinet Decision
Processing of draft Bill
Negotiate and finalise establishment lease and related agreements with Eskom, Transnet and Neotel (Pty) Ltd
GENERAL
Processing SOE applications in terms of section 54(2) PFMA
•9 Transnet applications approved•8 Eskom applications approved•5 Denel applications approved
Review progress reports from SOE on approved transactions
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PROGRAMME 3 - LGRS
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Governance Governance workflow project
ToRs for this project submitted and approved by Bidding Committee
Advertisement and appointment of service provider
Director appointments
ToRs for this project submitted and approved by Bidding Committee
Advertisement and appointment of service provider
Board remuneration
Study completed. The Remuneration Guidelines in process of being submitted to the Minister for approval.
Submission to Chairpersons Forum
Review of Founding Documents
ToRs for this project submitted and approved by Bidding Committee.
Advertisement and appointment of service provider
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PROGRAMME 3 - LGRS
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Governance SOE Shareholder’s Compacts
Signed compacts: SAFCOL, Denel
Transnet, Eskom, Alexkor-outstanding due to land claim,
SAA, SAX, Infraco-await passing of bill & incorporation
Board Induction toolkit & training
ToRs for this project submitted and approved by Bidding Committee
Advertisement and appointment of service provider
Board performance appraisals
ToRs currently being developed Submit ToRs for review and Approval
Subsidiary Boards
ToRs currently being developed Submit ToRs for review and Approval
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PROGRAMME 3 - LGRS
Sub program
Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Risk Review Risk management plans
Risk profiles for each SOE completed. Level 1 risks per SOE documented.
Follow-up with the SOE on level 1 risk mitigation plans and monitor the same on quarterly basis.
Develop a Risk Management Framework
The CEO forum noted the framework in its Feb 07 meeting and approved it as a working document.
Present the framework to the PC and implement the plan w.e.f. 07/08 financial year
Determine effectiveness and appropriateness of risk management in SOE
2006/07 SOE risk management survey was completed.
Assist the SOE with deficient risk management practices to improve thereon.
Manage and reduce risks government is exposed to through the activities of SOE
SOE risk profiles completed. Monitor the SOE profiles for impact on Shareholder level risks.
Maintain the SOE/DPE risk governance structure
Risk Forum meeting on 10 November
Quarterly forum meetings
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PROGRAMME 3 - LGRS
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Secretariat Management of SOE fora: Chairpersons’, CEOs’, CFOs’, Risk Officers’, company secretary/legal
10xEXCO
8Xproject meetings
9XEconomic Cluster meetings
2 Cluster workshops
6XCEOs Forum
4XRisk Forums
3XCFOs Forum
4XChairpersons’ Forum
10XMANCO
3xLabour Forums (additional forums)
3xBilaterals (additional forums)
2xImbizo’s (additional)
Continued activity
Communication of key decisions to Stakeholders.
All decisions communicated to members of various forums (records of minutes available)
Continued activity
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PROGRAMME 4 - MANUFACTURING
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Defense Sector
Denel
Oversight of implementation of Denel’s business strategy
1. Denel’s recaptialisation
2. Business alliance negotiations
3. Disposal of non-core businesses
4. Strategy implementation
1. Guarantee of R233 m finalised with Treasury. R567 m cash injection in December 2006.2. Indemnity with Saab in process with National Treasury.
Denel has signed the transaction with Zeiss Optronics. Government will retain a 30% golden share.
3. Five non-core businesses have been disposed of, realising income of R400m.Negotiations on sale of properties continuing.
4. Review of Denel’s monthly and quarterly reports.
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PROGRAMME 4 - MANUFACTURING
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Defence Sector
Denel
Defence sector strategy
Local and international experts appointed to develop a comprehensive strategy for the industry. Research commenced in December 2006. Project to be completed by 31 March 2007. Joint DoD, DTI, DST, DPE, AMD and Denel funded project.
SOE National Interest Facility (NIF) – to support large SOE medium and long-term exports
Research completed. Meeting held with the DTI and ECIC - agreed that ECIC would implement, subject to Treasury approval. Joint presentation to Treasury will be made.
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PROGRAMME 4 - MANUFACTURING
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Defence Sector
Denel
Acquisition policy, the 10 year defence Capex plan and NIP and DIP policy alignment
DoD benchmarked acquisition policy with global best practice and will continue to review on an on-going basis. Sector strategy will determine industry niches for future investments under NIP and DIP.
Establishment of DERI
Migration and governance teams that will establish DERI set up and planning process commenced.
Draft Cabinet Memorandum prepared by DoD.
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PROGRAMME 4 - MANUFACTURING
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Forestry Sector
Safcol
Determination of the future role for SAFCOL in forestry development
Research completed during this Quarter. Analysis on various scenarios for the future role done and completed.
Consultations with Interdepartmental Task Team undertaken.
Briefing to the Minister to present final recommendations done on 5 December 2006.
Drawing up of a possible implementation plan.
Cabinet decision on the recommendation
Transfer of SAFCOL 25% shareholding in privatised packages to workers, communities and NEF.
Further meetings held with the DTI and DWAF.
Decision taken that a workshop needs to be held by all affected departments.
Decision also taken internally that a consultant will be contracted to conduct work and advise on the entire 25%.
Legal advice on the optimal way to dispose of the 25% shareholding.
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PROGRAMME 4 - MANUFACTURING
Sub program
Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Nuclear Sector
PBMR
Demonstration Power Plant
EIA Process - New Plan of Scoping delivered to libraries for public comment.
New Project Master Plans and Information Memorandums expected in February
Pilot Fuel Plant EIA Process - Positive RoD expected during January 2007.
New Project Master Plans and Information Memorandums expected in Feb
Eskom Contract:•Positive RoD.•NNR Licence.•Plant Price.•Premature•Decommissioning Fund.•Nuclear Indemnity
No progress made with negotiating a contract to build the Demonstration Power Plant
DPE to arrange a meeting between Eskom and PBMR
Demonstration
Power Plant
EIA Process - New Plan of Scoping delivered to libraries for public comment.
New Project Master Plans and Information Memorandums expected in Feb
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PROGRAMME 4 - MANUFACTURING
Sub program
Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Nuclear Sector
PBMR
Guarantees:•Letter of Comfort•Premature closure costs
All guarantees to be delayed until completion of NT investigation.
DPE to request timeframe of NT investigation
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PROGRAMME 5 - TRANSPORT
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Transport Sector
Transnet
Disposal of Metrorail
Employee liabilities quantified, National Treasury set aside over R400m
Disposal of Blue Train
Presentation on disposal strategy given to DPE in Dec.
Advert for Expression of Interest to be released in local and international media in first quarter 2007.
Normalization of Railway Concessions
New agreement between Spoornet and CFM concluded
Coega PSP Transnet discussed their proposal for Coega PSP with Minister
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PROGRAMME 5 - TRANSPORT
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Aviation Sector
SAA
Separation of SAA from Transnet
DPE, SAA and Transnet made presentation to the GCC for replacement of Guarantees in December 2006. NT requested verification of amounts outstanding from various creditors, which information will be forwarded.
Withdrawal from ATCL
The shares in ATLC were sold for $1 to the Government of Tanzania on 29 August 2006. ATLC was reflected as a discontinued operation at the end of August 2006was fully disposed out at the end of September 2006
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PROGRAMME 6 – JOINT PROJECT FACILITY
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Competitive Supplier Development Programme
Development of SOE supplier development plans
Cabinet memo on CSDP prepared for submission
SOE procurement capacity building
Finalised curriculum and business plan completed for large-scale five year procurement capacity and capability building programme.
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PROGRAMME 6 – JOINT PROJECT FACILITY
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Environment Impact Analysis
Report on SOE EIA capacity
Report on SOE EIA capacity finalised and submitted for approval.
Further bi-laterals held between DEAT and DPE to establish way forward.
Human Resources and Capacity Building
Audit of the SOE Skills requirements
Information gathered on internal SOE skills requirements.
Further information required regarding suppliers’ skills requirements
Assessment of the current SOE training facilities
Assessments underway and presentation made to CEO Forum on Denel Youth Foundation.
SOE must put in place plans to make optimal use of training facilities for internal skills development programmes.
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PROGRAMME 6 – JOINT PROJECT FACILITY
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Information Communications Technology
Call Centres Capital structure incentives secured from DOE for three sites at 40% of budget capex.
Data network rationalisation
High level proposal on options to pursue submitted to CEO’s Forum.
Property Project
SOE non-core property disposals
Transnet-Servcon negotiations underway. Disposal of most of Denel’s non-core property in progress.
SOE property developments
Proposal to facilitate property development submitted to Transnet for consideration. Response pending.
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PROGRAMME 6 – JOINT PROJECT FACILITY
Sub programme Output Progress 3rd quarter Oct, Nov and Dec 2006
Follow-up action
Rest of Africa Identify and implement infrastructure projects (2-4) in Africa
sector analysis and country analysis reports finalised and submitted to CEO Forum.
Prepared TOR and memorandum for appointment of project manager
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Thank you