STRATEGIC PLAN 2010-2013 PRESENTATION TO THE PORTFOLIO COMMITTEE 19th March 2010 CONFIDENTIAL.

STRATEGIC PLAN 2010-2013

PRESENTATION TO THE PORTFOLIO

COMMITTEE

19th March 2010

CONFIDENTIAL

Mission Statement

To optimise the alignment between the role of State-Owned Enterprises (SOE) in the national economic strategy and the performance of the DPE’s portfolio of enterprises through delivering best practice shareholder management services and engaging with stakeholders to create an enabling environment for such alignment.

SOE reporting to the DPE are: Alexkor, Broadband Infraco, Denel, Eskom, Pebble Bed Modular Reactor, South African Airways, South African Express Airways, Safcol and Transnet.

2CONFIDENTIAL

The Role of SOE in Industrial Policy

The DPE has identified strategic roles for SOE in three areas of economy:

Ensuring the security of supply and the efficient and competitive provision of key economic infrastructure.

Facilitating the development of advanced manufacturing capability through:

direct investment via current or new SOE SOE investment and procurement programmes strategic partnership engagements with global enterprises.

SOE can be used by the State to sort out economically stifling market or regulatory failures especially in the area of network infrastructure.

3CONFIDENTIAL

DPE also has a secondary, supporting role to the programmes of other National Government departments that it provides through the activities of the SOE:

Align skills development programmes within the SOE with the programmes and objectives of the responsible National Government departments.

Align investments in and by SOE with the national innovation development programmes of the responsible National Government departments.

Supporting government strategies focused on labour absorption and rural development by providing infrastructure investments and SOE-services with marginal commercial viability.

4CONFIDENTIAL

In order to effectively play its role, the DPE strategy will focus on the following four areas:

1. Integrating Strategic Mandates in Policy SOE economic Impact (e.g development of suppliers and supply

chains) Structure of industry in which the SOE operates (e.g role of SOE

and private sector) SOE operational and financial performance (e.g efficiency,

productivity, profitability and capital investments)

1. Enhanced Coordination Across Government

3. Funding Solutions for SOE

4. Building Shareholder Management Capability

5CONFIDENTIAL

Strategic Plan of the DPE 2010/2013

The State Owned Enterprise can be a powerful instrument for industrial policy. To optimise the contribution of SOE in industrial policy will require a combination of :

rigorous shareholder oversight; a coherent policy and regulatory environment; and well co-ordinated Government programmes to support targeted

SOE initiatives.

The Department’s Strategic Plan is focused on achieving this combination.

6CONFIDENTIAL

Director-General

Public Enterprises

Minister

Public Enterprises

DDGLegal, Governance, & Transactions

DDGEnergy & BroadbandEnterprises

Head Corporate

Services Chief

Financial Officer(CFO)

Organisational Structure as at March 2010

DDGTransport

Enterprises

DDG Joint Project

Facility

OPSCOChairperson

DDGManufacturin

gEnterprises

HeadCommunicati

ons

DDGChief Investment &Portfolio Manager

Special Advisor

Deputy Minister

Public Enterprises Special Advisor

7CONFIDENTIAL

DPE Budget – Appropriation per Programme

Expenditure decreases from R3.9 billion in 2009/10 to R196.2 million in 2012/13. The significant decline in 2010/11 and in the remaining outer years is as a result of reduced transfer payments to the State Owned Enterprises.

The operational budget of the Department remains within the baseline over the period, which is linked to the business plans of the units.

8CONFIDENTIAL

DPE Budget – Appropriation per Economic Classification

9CONFIDENTIAL

DPE Budget – Summary of Transfer payments to SOE

2009/10 – 2012/13

The transfer payments for Broadband Infraco and South African Airways have been re-classified from Transfers to public corporations and private enterprises to Payments for financial assets in the Economic Classification on the Standard Chart of Accounts.

The reason for the re-classification is that when Government makes an equity investment, Government’s equity position in the entity is enhanced. Accordingly, the transaction directly affects governments financial asset position. Shares are issued for these transactions by the entity. As this was implemented by National Treasury for the first time this year, the department has had to re-state the previous year’s figures in the Estimates of National Expenditure.

10CONFIDENTIAL

Transfers To SOE From 2004/05 (including amounts approved for 2009/10 and

2010/11)SOE

2004/05

2005/06 2006/07 2007/08 2008/09 2009/10 2010/11Total

per SOERand million

Alexkor 2.0

13.4

82.1

72.7

130.0

129.1

36.0

465.3

Broadband Infraco

627.0

377.0

208.5

138.6

1,351.1

Denel 2,000.0

567.0

1,154.0

257.6

191.9

4,170.5

Pebble Bed Modular Reactor

600.0

580.0

1,204.4

2,502.3

1,750.0

1,737.8

8,374.4

South African Airways

744.4

1,549.1

2,293.5

South African Express

445.0

445.0

Transnet (SAX)

140.0

140.0

Total per year

602.0

2,593.4

2,480.5

4,473.3

3,099.6

3,816.3

174.6

17,239.8

11CONFIDENTIAL

Purpose Of Transfers (1)Alexkor

2004/05Valuating Alexkor’s business units (R2 million). The valuation was done in support of Government’s negotiations with the Richtersveld community to reach an amicable out-of-court settlement on the land claim.

2005/06Costs incurred by Alexkor during the cancelled strategic equity partnership process (R13.4 million).

2006/07Working capital shortfalls and exploration (R32.9 million), township establishment (R20 million), land claim obligations (R27.3 million) and VAT (R1.9 million)

2007/08Working capital (R44.7 million), restructuring (R16.1 million) and VAT (R11.9 million)

2008/09PSJV capitalisation (R100 million) and township establishment (R30 million). Part of land claim settlement obligations

2009/10PSJV capitalisation (R100 million) and township establishment (R29 million). Part of land claim settlement obligations

2010/11 Township establishment (R36 million)

Broadband Infraco

2006/07R627 million to establish Broadband Infraco, including the purchase of the full service network from Eskom/Transnet. Shares subscribed

2008/9-2010/11

R727 million of capital will be injected into Broadband Infraco to expand South Africa’s ICT infrastructure

12

Denel

2005/6 R2 billion for recapitalisation

2006/7 R567 million for recapitalisation

2007/8R220.969 million indemnity claim for SAAB Aerostructures and R933 million for recapitalistation

2008/9 R257.64 million indemnity claim for SAAB Aerostructures

2009/10 R191.866 million indemnity claim for SAAB Aerostructures

SAA

2006/7 Labour restructuring (R744 million)

2009/10 Grounding of Boeing 747 aircraft (R1 549 million)

Transnet (SAX)

2008/9 Payment to Transnet for SAX purchase (R140 million)

SAX

2008/9Recapitalisation for aircraft financing (R405 million) and working capital (R40 million). Shares to be subscribed

Purpose Of Transfers (2)

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PBMR

2004/5 R600 million to fund operations.

2005/6 R580 million to fund operations.

2006/7 R1,204.4 million to fund operations.

2007/8 R2,502.3 million to fund operations

2008/09 R 1,750.0 million to fund operations.

2009/10 R1,737.8 million to fund operations.

Purpose Of Transfers (3)

14

Transfers Per SOE As Proportion Of Total Transfers

From 2004/05 (including amounts approved for 2009/10 and

2010/11)

15CONFIDENTIAL

Guarantor institution

Guarantee in respect of:Original Guaranteed Capital Amount

R’000

Transnet

T001 Bond Unlimited

T018 Bond 6,000,000

Euro-Rand medium term note (Tranche 1) 2,000,000

Euro-Rand medium term note (Tranche 2) 1,500,000

Aircraft Boeing B 747- 400 (Loan 60A) ^ 444,703

Aircraft Boeing B 747- 400 (Loan 60 C) ^ 145,342

SAA Recapitalisation 1,300,000

Going concern support 1,600,000

Perpetual Subordinated Loan 1,560,000

B747-400 ZS-SBK 787,381

B747-400 ZS-SBS 787,381

B747-400 ZS-SAK 681,474

Government Guarantees Issued (1)

16

Government Guarantees Issued (2)

Guarantorinstitution

Guarantee in respect of:Original Guaranteed Capital Amount

R’000

DenelDNG 04 BondDNG 02 BondDNG R550 million BondES33 BondES26 BondES18EL15Issued Floating Rate NotesAFDB Loan (Euro)AFDB Loan (ZAR)

420,000

880,000

550,000

14,104,464

8,068,000

7,257,354

4,000,000

3,800,000

9,990,111

10,630,000

76,506,210

17

PROGRAMMES

PRIORITY AREAS AND EXPECTED OUTCOMES

18CONFIDENTIAL

For the period under review, the Department and SOE have indentified key measurable outputs. These include:

Delivery of new Electricity Generation capacity by Eskom according to its approved build plan and as directed by the Integrated Resource Plan (IRP)

Facilitation of the introduction of Independent Power Producers as determined by the IRP

Restructuring the Pebble Bed Modular Reactor Company The restructuring of Denel The creation of a Remuneration Panel that will promote

appropriate remuneration policies and practices for Chief Executives and the Boards of Directors of SOE

The appointment of CEOs and Board Members to SOE and ensuring that vacancies are filled with minimum delays

Agreement on a way forward with the Richtersveld Community to ensure that the lives of the community are improved

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Continued… Pursuing completion of the land settlement claims at Safcol and

to have concrete plans regarding the future of the SOE Rail reform policy process and implications for Transnet Freight

Rail Efficiency improvements on the main freight corridors Create scope for multi-operator involvement in under-utilised

branchlines Assessment of strategic options for a future SAA and alignment

to African Aviation Strategy Continuing to leverage SOE as instruments of industrial policy to

achieve the State’s social and economic development objectives The creation of a clear path of sustainability for the SOE, thus

reducing their dependence on the fiscus Leveraging private sector investment to retain momentum in

the infrastructure build programme and to promote competition in targeted areas.

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Programme 1: Administration

Purpose:Achieve the Department’s strategic objectives through providing overarching management and key supporting functions and processes.

Priorities (Operations): Monitoring in-year cost-saving initiatives Attraction and retention of relevant specialist sector skills Internal Risk Management Effective and efficient knowledge management Enhancing departmental performance management

reporting Continued compliance with relevant legislation e.g. PFMA

and Treasury Regulations including tender and procurement processes

Secure and stable IT environment

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Chief Investment & Portfolio Management (1)

Purpose A portfolio approach applied to the management &

shareholder investment process of all SOE falling under the purview of the DPE to ensure SOE commercial sustainability & attainment of desired strategic outcomes & objectives by the SOE

Building on frameworks developed, focus on effective investment processes for shareholder value optimisation and SOE commercial sustainability

Outcomes Synchronized logical planning, monitoring and evaluation process to link

national strategic priorities to SOE delivery and ensure effective shareholder oversight management and achievement of desired strategic outcomes and objectives by all SOE.

Application of consistent SOE performance monitoring and shareholder risk management

Portfolio equity interest and contingent liability exposure management Ongoing transaction advice and input on financial, legal, governance and

risk issues relating to SOE

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Logical Planning, Monitoring & Evaluation Process (2)

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Key Projects Measure/Indicator2010/11

Target/Milestone

Logical planning, monitoring and evaluation process

Strategic intent statements All SOE strategic intent statements issued by end April

Shareholder compacts All SOE shareholder compacts signed annually by end April

Corporate plan analysis SOE corporate plans assessments and feedback to SOE

Performance monitoring and evaluation SOE quarterly reports reviewed

Investor Briefs Investor briefs issued to SOE Boards every quarter and annually

Fully populated Isibuko Dashboard and reportingQuarterly Shareholder briefs to board on performance assessments, detection, monitoring and mitigation of cross-cutting shareholder risks

Shareholder risk management frameworkRisk management framework fordetection, monitoring and mitigation of cross-cutting shareholder risks

SOE performance, sector and economic impact 5 year review of SOE performance, sector and economic impact

Capital structure and dividend policy

Investment policy for SOE commercial sustainability

Financing Instruments Framework

SOE capital restructuring assessments

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Target/Milestone

Economic and regulatory cohesion for network infrastructure

Regulatory frameworks employed for infrastructure investment

Study on regulatory frameworks employed for infrastructure investment

BenchmarkingIndustry, sector and national economy benchmarks SOE performance indicator and target setting

Shareholder value enhancement Portfolio valuationMethodological framework for measuring shareholder value per SOE and aggregation to portfolio

Specialist advisory Transaction advice and input Ongoing transaction advice and input on financial, legal and governance issues relating to SOE

Portfolio equity interest and contingent liability exposure management

Share, shareholder loans and guarantee office

Quarterly monitoring and reporting of government guarantees and shares

Register and safe custody of government guarantees, shares and shareholders’ agreements

25CONFIDENTIAL


Alexkor


Target/Milestone

Richtersveld Deed of Settlement implementation

Pooling and Sharing Joint Venture

PSJV exit transaction

Township infrastructure upgrade

Environmental rehabilitation

Review of Alexkor future post-PSJV

26CONFIDENTIAL

Programme 1 – Administration

There is very little change to this Programme other than an inflationary increase for Compensation of Employees which includes the newly established office of the Deputy Minister as well as provision for remuneration of 21 interns per annum for the period.

Goods and Services has increased slightly to accommodate the requirements of the Office of the Deputy Minister which was established during the 2009/10 financial year. As in previous years support services such as in-house printing and reproduction services, training, bursaries, stationery, information technology services, software licences, computer equipment , leasing of vehicles, office accommodation, communications, audit fees and telephones, are centralised in this unit.

27CONFIDENTIAL

Programme 2: Energy & Broadband Enterprises (1)

Purpose: Provide shareholder oversight of Eskom which

includes the generation, transmission and distribution of electricity, with a particular emphasis on the execution of its infrastructure progamme and the optimisation of current operations.

Provide shareholder oversight of Broadband Infraco which includes development of a sustainable business model, assessing the business plan and monitoring the commissioning of the full service network (FSN).

Provide shareholder oversight of PBMR.

28CONFIDENTIAL

Priorities: Monitor Eskom’s system adequacy and the delivery and funding of

its capital expenditure programme (Generation, Transmission and Distribution)

Enable and support the execution and implementation of the Inter-Ministerial Committee on Energy workplan, leading the facilitation of a Strategic Equity Partner for the Kusile new build project as well as the development of a sustainable coal haulage solution.

Resolution of Infraco’s licensing and the development and implementation of an associated sustainable business model

Rationalisation of PBMR whilst protecting skills and intellectual property of value to South Africa’s possible future Nuclear Fleet Build Programme


29CONFIDENTIAL


Outcomes (Across Eskom, PBMR and Infraco): Shareholder Compact and Corporate Plan alignment to

government objectives for the Energy & Broadband Sector. Alignment and delivery against key objectives of Infrastructure

IMC outcomes based approach. Guidance to Minister on Annual General Meeting and associated

Shareholder rights. Appropriate skills mix on the Eskom, Infraco and PBMR Boards. Assessment of performance against agreed compact targets.

Outcomes (Eskom): Delivery of Eskom’s infrastructure expenditure programme as

planned and directed by the Integrated Resource Plan and the optimisation of its maintenance and operational practices.

A sustainable coal haulage solution. The introduction of a Strategic Equity Partner for Kusile. Facilitation of the introduction of Independent Power Producers.30CONFIDENTIAL


Outcomes (Infraco): Infraco’s impact on Broadband Pricing in South Africa. Development of a sustainable business model for Infraco to

achieve its mandate. Infraco’s execution of projects to complete the terrestrial cable

network. Implementation of the International Submarine Cable (West

Africa Cable System).

Outcomes (PBMR):

PBMR successfully restructured.

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Key projects Measure/indicator2010/11

Target/Milestone

SOE Performance Monitoring

Annual Reports, Corporate Plan,Shareholder Compact

Analysis and Assessment of the Annual Report and Corporate plan

Negotiation and approval of Shareholder Compact Preparation of the Quarterly Investor Brief Shareholder Strategic Intent Communiqué in preparation for

the Infraco AGM Assessment of SOE Board

Achievement of MTEF targets Assessment of PFMA Applications Explore and facilitate access to debt and alternative funding

structures

Infraco performance review

Perform Infraco 3 year performance review (based on previous publication)

Analysis of Infraco’s 3 year performance Input to DPE SOE 5 year review publication

Assessment of Infraco’s Impact on Broadband Pricing in South Africa

Compile Benchmark: Price, Service level, Capacity, etc Assessment of Broadband pricing in South Africa, outside

South Africa and key destinations Analyse industry results on South African Broadband pricing

and produce a midyear and annual report

Capital Expenditure Programme:International Submarine Cable and TerrestrialNetwork

Monitor Implementation of the International Submarine Cable (West Africa Cable System)

Monitor execution of projects to complete the terrestrial cable network.


Broadband Infraco

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Target/Milestone


Annual Reports,Corporate Plan,Shareholder Compact

Analysis &Assessment of Annual Report and Corporate plan Negotiation and approval of Shareholder Compact Preparation of the Quarterly Investor Brief Shareholder Strategic Intent Communiqué in preparation for

the AGM Assessment of SOE Board


structures

SOE five year performance review Perform 5 year performance review Analysis of 5 year performance Input to DPE SOE 5 year review publication

Monitor the restructuring of PBMR with the intention of preserving critical skills and intellectual property.

Monitor and facilitate the implementation of restructuring plan

Participate in EDI facilitated process towards establishment of REDs

Monitor progress of implementation of Regional Electricity Distributors through Inter-Ministerial Committee on Energy

Continue to participate in the Coal Transport Logistic Working Group

Monitoring of the coal haulage road to rail migration plan and the coal haulage road maintenance and refurbishment through the Inter-Ministerial Committee on Energy

Engage with Eskom on its maintenance and operational practices

Monitor the reserve margin


Eskom and Pebble Bed Modular Reactor

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Programme 2 : Energy & Broadband Enterprises (7)

Expenditure decreases from R1.96 billion in 2009/10 to R14.9 million in 2012/13. This is due to no further funding being made available to PBMR.

Broadband Infraco is expected to raise funding on the Capital Market for its capital expenditure projects for the years 2011/12 and 2012/13 , thus no further funding from government.

The operational budget in this Programme remains within the baseline over the medium term.

34CONFIDENTIAL

Programme 3: Legal, Governance & Transactions (1)

Purpose: To provide effective and sound legal advice to the Department that will highlight and manage potential legal risks; and to develop effective corporate governance frameworks that will promote transparency and good corporate governance by SOE.

Outcomes: Transfer Diabo Trust assets to the beneficiaries and wind up

the trust Transfer remaining Aventura resorts and wind up Aventura Internal legal advice to minimise DPE’s legal risk (e.g. adequate

legal protection in contracts with service providers) Successfully resolve all litigation in government’s favour Continuously improve DPE adherence to applicable legislation

through developing templates for legal and regulatory compliance (e.g.PAIA, PAJA and PFMA Compliance framework)

35CONFIDENTIAL

• Develop SOE legal and governance frameworks to• Align SOE governance to developments in corporate governance regulation (e.g. Companies Act, 2008, King III)

• Contribute towards shareholder and Board effectiveness (Owner’s Manual; Board Database)

• Oversee SOE adherence to corporate governance principles to promote stronger Boards (including improving reporting on SOE Board and CEO remuneration)

• Promote transparency and accountability of governance processes through annual governance audits and strengthening SOE governance reporting requirements

• Ongoing monitoring of SOE acquisition and disposal of subsidiary list


Outcomes:

36


Legal & TransactionsKey projects Measure /indicator

2010/11Target/Milestone

Oversight

Legal advice The Department’s Legislative Compliance

Presidential Public Liaison Unit Respond to queries from the Presidential Public Liaison Unit.

Special Projects

Aventura Implementing and monitoring of the winding up process

Diabo Trust Transfer Trust assets to Government File for deregistration of Trust Trace and payout to beneficiaries

Londoloza /Paharpur (Litigation) Review and conclude Pleadings Pre – trial proceedings Conclusion of Litigation

Nabera Review alternative measures to conclude the litigation

Shareholder Management Practices

Legislative Review Implementing Companies Act corporate governance tools e.g. standard Memorandum of incorporation for all SOE Provide support to the Inter Ministerial Oversight Committee

37CONFIDENTIAL


Governance

Key projects Measure /indicator2010/11

Target/Milestone

Oversight

Governance Toolbox and Audit Monitor SOE adherence to corporate governance principles

Owner’s expectation manual Finalise manual with SOEs and obtain Minister’s and Cabinet approval

SOE Board and Executive remuneration Monitor and oversee SOE remuneration

SOE Subsidiary Lists Monitor acquisition and disposal of subsidiaries by SOE

Board Appointment Database Database for potential SOE Board members

Shareholder Management Practices

Legislative Review Implementing Companies Act corporate governance tools e.g. standard Memorandum of incorporation for all SOE Provide support to the Inter Ministerial Oversight Committee

38CONFIDENTIAL

The operational budget in this Programme increases slightly as a result of additional funding required to cover anticipated legal costs for a number of transactions as well as inflationary increases in Compensation of Employees.

The transfer payments to Alexkor in 2009/10 and 2010/11 are earmarked for the capitalisation of the pooling and sharing joint venture and the establishment of the Alexander Bay township. These form part of the land claim settlement obligations.


39CONFIDENTIAL

Programme 4: Manufacturing Enterprises (1)

Purpose:

Provide shareholder oversight of Denel which includes business turnaround and sustainability, alignment with the strategic requirements of the Department of Defence and its contribution to government objectives such as skills development and advance manufacturing.

Provide shareholder oversight of SAFCOL which includes assessing the business plan and the future role of SAFCOL in the economy and other government objectives.

40CONFIDENTIAL

Outcomes (Denel): The key outcome is a financially sustainable company.Monthly / Quarterly / Annual Interventions:

Approved and aligned Corporate Plan, Shareholder Compact, Annual Reports and effective Board control

Shareholder Strategic Intent communique Quarterly investor brief to the SOE Board

Key Deliverables

In conjunction with dti, NT, DST, DoDMV: Resolution of Denel’s going concern status and long term solvency issues Oversee Denel’s turnaround plan and business growth strategy Alignment of Denel’s restructuring plans with DoD’s requirements

DPE will facilitate: Denel’s programme delivery Skills development and transformation The role of Denel in advance manufacturing Equity partnerships for Denel entities


41CONFIDENTIAL

Outcomes:

Future state of Denel Finalisation of Rooivalk programme Multi year orders from DoDMV Right sizing / restructure the Denel Group


42CONFIDENTIAL

Outcomes (Safcol):The key outcome is to finalise SAFCOL’s future post the land claims.Monthly / Quarterly / Annual Interventions:

Approved and aligned Corporate Plan, Shareholder Compact, Annual Reports and effective Board control

Shareholder Strategic Intent communique Quarterly investor brief to the SOE Board

Key Deliverables

In conjunction with DAFF, DRLR, Water & Environmental Affairs, DST, Economic Development, Industrial Relations and Co-operation: Resolve SAFCOL’s future post the land claims – Cabinet Memorandum

will be submitted Finalisation of IFLOMA divestures Finalise the transfer of minority shares

DPE will monitor SAFCOL’s financial position and borrowings


43CONFIDENTIAL

Programme 4: Manufacturing Enterprises (5)Denel


Target/Milestone



Assessment of the Annual Report and Corporate plan Negotiation and approval of Shareholder Compact Preparation of the Quarterly Investor Brief Shareholder Strategic Intent Communiqué in preparation for

Denel’s AGM Assessment of SOE Board


structures

Special Programmes

Retention of strategic and sovereign capabilities in areas agreed to with DoD

Finalisation and Implementation of Denel Future State Process Submission of follow up Denel End-State cabinet

memorandum. Ongoing alignment between Denel and SANDF

Entering into design-to-build contracts or lines of business in sectors identified in sectoral strategies

Align Denel’s strategy with Industrial policy Identify key DTB and/or new LoB opportunities

Resolution of Denel’s going concern status and long term solvency issues - Self funding sustainable organisationDevelopment of new business/growth strategy for Denel -Resolution of A400M industry supportImplementation of DSA turnaround-Oversee conclusion & execution of equity transaction in DDM-Oversee consolidation within the landward sector

Adequately funded Business by March 2011 Implementation / monitoring of the growth strategy Establish government position on the required support for

the aerospace / aerostructures industry Agreement on the future of DSA and the turnaround plan Cabinet memorandum on the equity transaction with MBDA Monitor the process and progress to consolidate the

landward sector

Productivity & capabilities comparable to world class level Part of turnaround and growth strategy

Full compliance by Denel with all applicable legislations and regulations

Ongoing monitoring of compliance

44CONFIDENTIAL


Safcol


Target/Milestone



Assessment of the Annual Report and Corporate plan Negotiation and approval of Shareholder Compact Preparation of the Quarterly Investor Brief Shareholder Strategic Intent Communiqué in preparation for

SAFCOL’s AGM Assessment of SOE Board


structures

Special Programmes

Conclude share transfer agreement Transfer of minority shareholding out of SAFCOL

Finalisation of SAFCOL future post land claims Definition of role and institutional form of SAFCOL post land claims and implementation plan thereof

Conclude disposal transaction of KLF Dependant on finalisation of Land Claims process

Define Land Claims Settlement Model Implement Land Claims settlement Model

Establishment of divesture process and governance structures Establishment of a Joint SA and Mozambique Team

Adherence by SAFCOL with key legislation Ongoing

45CONFIDENTIAL

There are no transfer payments planned for Denel. Denel must embark on an operational turnaround and any future recapitalisation must be for growth and not working capital. Furthermore, the decrease in transfers are because future claims cannot be quantified in advance. The expenses have to be incurred and then audited to verify validity of the claim..

The operational budget increases substantially in 2010/11 due to an increase in Goods and Services which is mainly made up of expenditure for specialist services for the Competitive Supplier Development Programme in partnership with UNIDO. Compensation of Employees increases slightly in line with the normal annual inflationary increases.


46CONFIDENTIAL

Programme 5: Transport Enterprises (1)

Purpose:

Align the corporate strategies and performance of Transnet, South African Airways and South African Express Airways against government's objectives.

Outcomes – Transnet, SAA and SAX:

Alignment of Shareholder Compact and Corporate Plan to Government objectives for the transport sector

Guidance to Minister on AGM and associated shareholder rights

Appropriate skills mix on the Transnet, SAA and SAX Boards Assessment of performance against agreed Compact targets

47CONFIDENTIAL

Outcomes – Transnet

Work with DoT to achieve: Greater transparency between infrastructure and operations in ports, Multi-operator involvement (including BBBEE) in container terminal

operation in order to improve efficiency, and Multiple operators on the branch line rail network in order to open rural

areas to effective rail supply.

Monitor efficiency improvements on the main freight corridors Turnaround of Transnet Freight Rail (TFR) and development of restructuring

options Assessment of Transnet infrastructure provision to meet market demand Competitive local railway supplier industry through the DPE’s CSDP process Monitor implementation, levy allocation and cost containment of NMPP Develop options for structural change to Transnet to align to Government

policy and retain financial sustainability


48CONFIDENTIAL

Outcomes – SAA and SAX

Monitor alignment of SAA and SAX with African Aviation Strategy

Monitor sustainability and turnaround of SAA including ability to effectively replace aircraft (sustainable funding of Airbus transaction without recourse to government funds)

Assess route network and the suitability of fleet deployment of SAA and SAX.

Assessment of strategic options for a future SAA Ring-fence SAA business units and review of their business

plans and strategic alignment Establishment of SAAT as a multi-airline focused African

maintenance hub Assess sustainability and future of Mango as a subsidiary of

SAA


49CONFIDENTIAL


Transport


Target/Milestone



Assessment of the Annual Report and Corporate plan Negotiation and approval of Shareholder Compact Preparation of the Quarterly Investor Brief Shareholder Strategic Intent Communiqué in preparation

for Transnet’s AGM Assessment of SOE Board

Achievement of MTEF targets Quarterly and annual monitoring Assessment of PFMA Applications

Annual General Meetings - Advice to Minister on exercise of shareholder rights

AGM agenda and shareholder response

SOE five year performance reviewAnalysis of 5 year performanceInput to DPE SOE 5 year review publication

Agreed process for private sector involvement and execution of transaction

Finalise transaction structure with DoTRequest for proposal

Establishment of institutional structureFramework for concessionsNew operators on the branch line network

Concession and rollout of first wave of concessions

50CONFIDENTIAL


Transport


Target/Milestone

Develop National Corridor Performance Measurement (NCPM) tools and indicators

IT system in place Agreed indicatorsPopulation and monitoring of system dataBusiness intelligence outputs

RBCT Capecor (i)Sishen SaldanhaNorthern Cape – PE

Monitor rollout of Transnet’s capex programme

Monitor compliance to budgetAssess impact of changes in plan Annual assessment

Implementation of Competitive Supplier Development Programme

Leverage of Transnet capex in the development of local supplier industries Monitor implementation

Implementation of the National Ports Act, 2005

Establishment of the National Ports Authority and to provide for matters referred to in the Act , as part of bi-lateral process with DoT

Review option for restructuring of PortsInvestigate integrated freight infrastructure policy impactsActive engagement with DOT workstreams

Implementation of Transnet levy for pipelines and corporatisation of Transnet Pipelines

Levy payments to TransnetScenario Schedules

Undertake financial modeling exercise to ascertain viabilityMonitor levy disbursements

51CONFIDENTIAL


Target/Milestone

Rail reform policy process & implications for Transnet Freight Rail

Operational & financial efficiencies Active engagements with DOT workstreams Develop turnaround strategy for TFR

Consideration of Transnet corporate structure options

Develop scenarios and options aligned to government policy

Review Transnet financial statements and corporate plan

scenarios and financial modeling

Board appointments Cabinet approval of board appointments Appropriately skilled and representative boards


Transport

52CONFIDENTIAL


Aviation

Key projects Measure/indicator 2010/11Target/Milestone



Analysis and Assessment of the Annual Report and Corporate plan

Negotiation and approval of Shareholder Compact Preparation of the Quarterly Investor Brief Shareholder Strategic Intent Communiqué in preparation

for the AGM Assessment of SOE Board

Achievement of MTEF targets Quarterly and annual monitoring Assessment of PFMA Applications

Annual General Meetings - Advice to Minister on exercise of shareholder rights

AGM agenda and shareholder response

SOE five year performance review Analysis of 5 year performance Input to DPE SOE 5 year review publication

Test alignment of SAA Africa Development Plan and SAX African Hub Strategy

Implementation of the African Aviation Strategy by SAA and SAX

Agree business plans Assessment of the business plans

53CONFIDENTIAL


Aviation


Develop a strategic scenario planning model for SAA

Assessment of strategic options Financial model developed and scenarios assessed

Ring-fencing of selected SAA business units and strategic equity investments(Voyager, Air Chefs, Galileo and Cargo)

Development of an independent business focus and new strategic alignment

Work with SAA to develop business plan for selected business units and assess capital requirements

Assess options for establishing South African Airways Technical as a multi-airline focussed African maintenance hub

Feasibility study Assessment of feasibility of SAAT as a separate SOE

Consumer Protection and ATL Guarantee

Establish adequate consumer protection Review consumer protection requirements and reduce international ATL guarantees

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The significant reduction in the budget for this Programme is attributed to the decrease of transfer payments, the final transfer to South African Airways being in 2009/10.

There is no substantial increase in the operational budget in this Programme. A greater part of the budget over the next three years (2010/11 to 2012/13) will be spent on the National Corridor Performance Management (NCPM) project.


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Programme 6: Joint Projects Facility (1)

Purpose:To provide project management support for a number of projects that aim to identify and unlock synergies among State Owned Enterprises, and to coordinate cross-cutting projects that leverage the assets, activities and capabilities of SOE to the benefit of the enterprise and the economy as a whole. Outcomes: Skills Development, TSAPPRO and CSDP: Leveraging of SOE

build programmes to promote investment in plant, technology and skills so as to increase the level of national economic activity and decent employment through inclusive growth.

Environmental Oversight: Reduction in delays associated with environmental authorisations for the Build Programmes whilst ensuring integrity of environmental assets and natural resource protection.

Property Project: Release of SOE non-core property ensures state’s right of first refusal for developmental benefits (e.g. contributes to sustainable human settlements) and land use optimisation.

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Programme 6: Joint Project Facility (2)

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Skills Development:Reporting, monitoring and evaluation of skills development: within SOE and SOE supplier network for the build and maintenance programmes

Trainee artisans, technicians and engineers placedwithin SOE and SOE suppliers

Monitoring and evaluation

Ensure targeted skills development facilitation

SOE-College and Industry partnerships as appropriate to increase national pool of artisans.Alignment of FET NCV curricula as required for select scarce and critical skills to meet industry needs.Integrated workplace guidelines approved by relevant regulatory body.FET College graduates placed by SOE and suppliers for work experiential learning component.SETA commit workplace experience grants.

Implementation

Optimisation of SOE training facilitiesSOE train artisans over and above their needs to increase national pool of artisans.

Investigate surplus training capacity and facilitate necessary support for implementation

SWH skills development for accelerated SWH geyser installation and maintenance in support of Eskom’s Rebate Programme

Facilitate the implementation of new SWH qualifications within training institutions (for semi-skilled and new entrants to plumbing industry).

Ensure training institution preparedness.Improved learning toolsTraining fundraising.

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Management Learning Programme Institutionalisation of MLP. MLP launch by UCT Graduate School of Business

Learning Programme for Parliamentary Portfolio and Select Committees

Hosting of annual learning programme for Portfolio and Select Committees. Tailor programme according to need.

Nuclear Procurement:- Funding Strategy- Risk Management Framework- Institutional Strategy for procurement- Procurement Framework- Continuous oversight of procurement and build process

Fleet is fundable.Framework accepted by governmentInstitutional decision taken.Cabinet approval of procurement framework.Alignment of procurement and build with government objectives.

Implementation

Renewables Financing Initiative:- Institutional design completed- Technology strategy completed- Subsidy structure finalised.

Funding mechanism launched.International support for fund.National business support for fund.

Design of institutional and funding mechanism and technology strategy development.

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CSDP:- DPE-dti alignment and thought leadership- Development of buyer requirement database and buyer use of supplier database- Development and implementation of comprehensive Enterprise and Shareholder Supplier Development Policy- Continued SOE supplier development planning and implementation- Design and implementation of five fleet procurements

Joint DPE-dti workshop with Brazil held

Establishment of databases

Definition of policy and its adoption

SOE supplier development plans defined and monitoredComponent hubs established by SOEFleet procurements designed and implemented

Leadership coherence


Complete policy


First fleet procurement designed

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Africa:Regional Supplier Benchmarking Programme To be determined pending outcome of re-

evaluation. Re-evaluation of RSBP.

Property:Disposal of SOE non-core property.

Development of strategically located SOE non-core property.

Land released in support of national objectives.Non-core property disposals on open market to support core operations.

Determination of optimal development of strategically located properties.

Facilitation.Monitoring and evaluation.

Review approach to,property for development.

Environmental Issues:`Alignment of infrastructure build plans with environmental planning. Streamlined Environmental Impact Assessments

for Strategically Important Development. Monitoring, evaluation and facilitation.

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The operational budget for this Programme decreases substantially over the medium term due to the completion of some of the projects and programmes , such as the Aerostructures, Technology Management Framework (TMF) and ICT/Marine Cable projects. The oversight and implementation of components of other projects such as the Africa programme and TMF have shifted to the relevant SOE teams and other departments.


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The End

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STRATEGIC PLAN 2010-2013 PRESENTATION TO THE PORTFOLIO COMMITTEE 19th March 2010 CONFIDENTIAL.

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Transcript of STRATEGIC PLAN 2010-2013 PRESENTATION TO THE PORTFOLIO COMMITTEE 19th March 2010 CONFIDENTIAL.