Annual Performance Plan 2014 - Department of Public Enterprises

Transcription

DEPARTMENT OF PUBLIC ENTERPRISES
ANNUAL PERFORMANCE PLAN
2014/2015
TABLE OF CONTENTS
Minister’s Foreword5
Glossary6
PART A: STRATEGIC OVERVIEW 9
1
UPDATED SITUATIONAL ANALYSIS 10
1.1 Performance Delivery Environment10
1.2 Organisational Environment13
Economic Overview10
2
16
REVISIONS TO LEGISLATIVE AND OTHER MANDATES
OVERVIEW OF BUDGET AND MTEF ESTIMATES
17
Relating expenditure trends to strategic outcome oriented goal
20
PART B: PROGRAMME AND SUB-PROGRAMME PLANS 29
3
3.1
Expenditure estimates17
4.PROGRAMMES30
4.1 PROGRAMME 1 - ADMINISTRATION30
4.1.1 Strategic Objective Annual Targets for 2014/15 for Administration
31
4.1.2 Programme Performance Indicators and Annual Targets for Administration for 2014/15
32
4.1.3 Reconciling Performance Targets with the Budget and MTEF
35
4.2 PROGRAMME 2 - LEGAL & GOVERNANCE
38
4.2.1Strategic Objective Annual Targets for Legal and Governance for 2014/15
38
Over the MTEF period the programme will ensure effective shareholder oversight of state owned companies by:
•
Providing legal services and coordinate governance systems
•
Facilitate the implementation of all legal aspects of transactions that are strategically important to the department and state owned companies
•
Ensuring that financial and operational risk management processes are embedded
throughout the department as and when required, over the medium term
•
Addressing constraints on state owned companies’ contract negotiations and
management to improve commercial competence and contribute to economic
growth and development on a regular basis
•
Providing assistance on developing and negotiating shareholder compact
framework annually in terms of Public Finance Management Act (1999)
•
Providing guidance on approriate delegation frameworks between the SOC boards
and executive management on a regular basis
38
38
38
38
38
38
4.2.3Programme Performance Indicators and Annual Targets for Legal and Governance
for 2014/1540
4.2.4 Quarterly Targets for Legal and Governance for 2014/15
40
40
DPE ANNUAL PERFORMANCE PLAN 2014-2015
P3
4.3 PROGRAMME 3 - PORTFOLIO MANAGEMENT AND STRATEGIC PARTNERSHIPS
42
4.3.1.1 Energy and Broadband Enterprises comprises:
43
4.3.1.1.1
Strategic Objective Annual Targets for 2014/15
43
4.3.1.1.2 Programme Performance Indicators and Annual Targets for Energy and Broadband Enterprises for 2014/1544
4.3.1.2 MANUFACTURING ENTERPRISES47
4.3.1.2.1 Strategic Objective Annual Targets for 2014/15 4.3.1.2.2
47
Programme Performance Indicators and Annual Targets for Manufacturing
Enterprises for 2014/15
48
4.3.1.2.3 Quarterly targets for financial year 2014/15
49
4.3.1.3 TRANSPORT ENTERPRISES
50
4.3.1.3.1 Strategic Objective Annual Targets for 2014/15
4.3.1.3.2 Programme Performance Indicators and Annual Targets for Transport Enterprises
51
for 2014/1552
4.3.1.3.3 Quarterly targets for Transport Enterprises for 2014/15
53
4.3.1.4 ECONOMIC IMPACT AND POLICY ALIGNMENT
55
56
4.3.1.4.3 Programme Performance Indicators & Annual Targets for Economic Impact & Policy Alignment for 2014/1556
4.3.1.5 STRATEGIC PARTNERSHIPS58
4.3.1.5.2 Programme Performance Indicators and Annual Targets for Strategic Partnerships
58
for 2014/1559
4.3.1.5.3 Quarterly targets for strategic partnerships for 2014/15
60
4.3.2 61
Reconciling Performance Targets with the Budget and MTEF
PART C: LINKS TO OTHER PLANS65
5
LINKS TO THE LONG-TERM INFRASTRUCTURE AND OTHER CAPITAL PLANS
66
7
STATE OWNED COMPANIES REPORTING TO THE DEPARTMENT
66
7.1 Alexkor
67
6
CONDITIONAL GRANTS
66
7.2
Broadband Infraco69
7.3
Denel69
7.4 Eskom
70
7.5 Pebble Bed Modular Reactor (PBMR) mention that PBMR is now with Eskom 71
7.6
South African Forestry Company71
7.7
South African Airways72
7.8 South African Express Airways73
7.9
Transnet73
PART D: LINKS TO OTHER PLANS75
8
P4
ANNEXURE E76
FOREWORD BY
THE MINISTER
This Annual Performance Plan is the detailed
articulation of what the Department of Public
Enterprises is undertaking to achieve, in the first
instance, in the current fiscal year and what it hopes
to achieve over the Medium-Term Expenditure
Framework period.
The performance plan arises from the Department’s
Five-Year Strategic Plan which, in turn, is informed
by the National Development Plan and its effective
Five-Year implementation plan, the MediumTerm Strategic Framework of the Fifth Democratic
Administration.
In the past month, the programme of action
contained in these seminal plans has tasked this
portfolio with, inter alia, acting with the utmost
urgency to accelerate the pace of developing and
executing the following critical mega-initiatives:
• Overcome the constraint on growth and the
recruitment of investment arising from the
undersupply of electricity. The scale and
innovative nature of these initiatives need to be
a game-changer for the economy.
• Find ways to finance significant levels of
additional electricity generation capacity
without excessive tariff increases which would
harm growth.
• Accelerate the pace of delivery of the StateOwned
Companies’
infrastructure
build
programme and use it to drive sustainable and
inclusive growth.
been underway for a few months now. However, I
happy to report that the interventions and activities
contained in this Annual Performance Plan have set
in place all the necessary building blocks to allow it
to rise to these challenge immediately.
In general, the Department’s raison d’etre is to support
the Minister, as the Shareholder Representative, to
obtain the best possible outcomes for the State, the
fiscus and, hence, all citizens, from the eight Stateowned Companies in its remit. What is promised
in this Annual Performance Plan leaves me with a
sense of being well-supported in fulfilling that role.
In this light, it gives me great pleasure to table the
Annual Performance Plan for the 2014/2015 fiscal
year for the Department of Public Enterprises.
Ms Lynne Brown, MP
Minister
Given that the fiscal year is already underway, I am
a latecomer to the unfolding of this APP which has
P5
OFFICIAL SIGN-OFF
It is hereby certified that this Annual Performance Plan was developed by the management of the Department
of Public Enterprises under the guidance of Mr Tshediso Matona, Director-General, and was prepared in line
with the current Strategic Plan of the Department of Public Enterprises.
It accurately reflects the performance targets which the Department of Public Enterprises will endeavor to
achieve given the resources made available in the budget for the 2014/2015 financial year.
Mr Gcina Hlabisa
Signature:
Date: 21/08/2014
Director: Strategic Planning Monitoring and Evaluation
Ms Sandy Hutchings
Signature:
Date: 21/08/2014
Chief Financial Officer
Ms Yoliswa Makhasi
Signature:
Date: 21/08/2014
Deputy Director-General: Corporate Management
Mr Tshediso Matona
Signature:
Date: 21/08/2014
Director-General
Approved by:
Ms Lynne Brown, MP Signature:
Date: 21/08/2014
Minister
P6
GLOSSARY
Below is a glossary of acronyms used in the Department of Public Enterprises
AFDB African Development Bank
AGM Annual General Meeting
BB-BEE
Broad Based Black Economic Empowerment
CAPEX
Capital Expenditure
CFO Chief Financial Officer
CS
Corporate Services
CSDP Competitive Supplier Development Programme
DAFF Department of Agriculture, Forestry and Fisheries
DCT
Durban Container Terminal
DEA
Department of Environmental Affairs
DG
Director-General
DDG Deputy Director-General
DHET Department of Higher Education and Training
DM
Deputy Minister
DMR
Department of Mineral Resources
DOC
Department of Communications
DOD DOE
Department of Defence
Department of Energy
DOT Department of Transport
DPE Department of Public Enterprises
DRDLR
Department of Rural Development & Land Reform
DTI Department of Trade and Industry
EDI Electricity Distribution Industry
EE
Economic Equity
EIA
Environmental Impact Assessments
EMP
Environmental Management Plan
ExCo Executive Committee
FET Further Education and Training
FOSAD
Foundations of Security Analysis and Design
FSN Full Services Network
HR
Human Resources
ICASA
Independent Communications Authority of South Africa
ICT
Information and Communication Technology
IGR
Inter-Governmental Relations
IP
Intellectual Property
P7
IPO Initial Public Offering
IPP
Independent Power Producers
IRP
Integrated Resource Plan
ISMO Independent System and Market Operator
EIPA Economic Impact Policy Alignment
JV
Joint Venture
KLF
Komatiland Forests
KPIKey Performance Indicator
LTTS
Long Term Turnaround Strategy
MISS
Minimum Information Security Standards
MOU
Memorandum of Understanding
MTEF Medium-Term Expenditure Framework
MTSF Medium Term Strategic Framework
MYPD Multi- Year Price Determination
NCPM
National Corridor Performance Measurement
NDP
National Development Plan
NEDLAC
National Economic Development and Labour Council
NERSA
National Energy Regulator
NT
National Treasury
PAIA
Promotion of Access to Information Act
PBMR Pebble Bed Modular Reactor
PFMA Public Finance Management Act
PPP Public-Private Partnerships
PSJV
Pooling and Sharing Joint Venture
PSP Private Sector Participation
R&D
Research and development
RMC
Richtersveld Mining Company
SAA South African Airways
SAAT
South African Airways Technical
SAFCOL South African Forestry Company Ltd
SAQA
SAX
South African Qualification Authority
South African Express Airways
SCM
Supply Chain Management
SIP
Strategic Integrated Projects
SLA
Service Level Agreement
SOC
State Owned Companies
SSA
State Security Agency
TNPA Transnet National Ports Authority
TOR
Terms of Reference
TFR
Transnet Freight Rail
WACS
West Coast Submarine Cable
P8
PART A
STRATEGIC OVERVIEW
1. UPDATED SITUATIONAL ANALYSIS
1.1 Performance Delivery Environment
In 2013/14, the government formally adopted the National Development Plan (NDP) as an overarching
framework that must inform and shape the programmes of government departments including State Owned
Companies (SOC). This coincided with the end of the administration term, which meant that the realignment
of the Departmental Plans could only be done during the first year of the new administration in the 2014/15
financial year. The 2014/15 to 2018/19 administration period represents the first phase of implementation of
the NDP.
In the 2013/14 financial year, the Department embarked on a comprehensive planning process to assess
the performance of the Department over the previous administration period and begin to define the priorities
for the new administration period. Reflection on the Department’s performance clearly showed that the
delivery of infrastructure projects and refocusing of state entities to support government outcomes such
as industrialisation and transformation will remain crucial in the new administration period. The continued
lacklustre economic performance will require sustained implementation of policy initiatives identified in the
previous administration. This will include increased oversight on SOC to ensure that their investment and
operational activities support the developmental objectives contained in the NDP and other government
policies such as the New Growth Path (NGP) and Industrial Policy Action Plan (IPAP).
Reflection on the past 5 years (2009 – 2014) depicted an increased role of the SOC in the economy through
the implementation of the build or capacity expansion programme. During this period, Transnet launched
its Market Demand Strategy that substantially increased their infrastructure expenditure over the next seven
years from R110 billion to R300 billion. Furthermore, Eskom continued with the capacity expansion programme
with the Return to Service (RTS) programme being concluded and work at the 3 main construction sites i.e.
Medupi, Kusile and Ingula progressing. The turnaround plan for Denel began to yield results and refocusing
of the SAFCOL and Alexkor Strategies continued. The turning around of the aviation entities also gained
traction through increased government support and focus on improving governance.
ECONOMIC OVERVIEW
Over the past 20 years, the South African economy has grown significantly and has built a new layer of middle
class that drove economic expansion between 2004 and 2007. This section focuses at the economic outlook
and how the Department expects this to evolve over the MTEF as well as the policy framework that seeks
to achieve a step change in the level of economic growth. The growth rate over the past 10 years has been
mixed. Between 2003 and 2007, the economic growth averaged 4.8 percent and 2.2 percent between 2008
and 2012. The growth between 2003 and 2007 was largely supported by strong consumption growth and
global demand that increased demand for South African commodities.
P 10
PERCENTAGE CHANGE IN GDP 2003-2012
Source: Stats SA GDP data, 2013
The high unemployment rate remains a major challenge that threatens to erode the economic progress that
has been made since 1994. While the economy created over 3 million jobs between 1994 and 2012, this
has not been sufficient to reduce the stubbornly high unemployment rate. The economy has been unable to
create new job opportunities at a high rate, and this has resulted in the unemployment rate remaining above
23 percent. Between July 2013 and September 2013, the economy created 308 000 jobs, recuperating all the
jobs lost during the economic crisis between 2008 and 2009.
UNEMPLOYMENT RATE 2008-2013
Source: Stats SA Quarterly Labour Force Survey, 2013
Investment in the economy by the public corporations has remained buoyant over the past years. This has
played a crucial role to limit the impact of the global economic slowdown and pushing the economy towards
an investment driven growth path. Investment by public corporations in particular Eskom and Transnet has
played a crucial role in crowding in private sector investment and boosting demand for supplier industries.
Investment by public corporations increased from R22.6 billion in 2003 to R134.9 billion in 2012. The increases
in investment between 2008 and 2012 reflected the counter cyclical policy approach adopted by government.
P 11
demand for supplier industries. Investment by public corporations increased from R22.6 billion in 2003 to
R134.9 billion in 2012. The increases in investment between 2008 and 2012 reflected the counter cyclical
policy approach adopted by government.
Investment by Transnet and Eskom remained dynamic between 2003 and 2012. Transnet investment
increased from R7.8 billion in 2003 to R27.5 billion in 2012. This was essential in increasing the infrastructure
Investment
by Transnet
Eskom remained
between
2003 and 2012.
Transnet Investment
investment
capacity of the economy and
improved
theand
efficiencies
in dynamic
the freight
logistics
systems.
by Eskom
increased from R7.8 billion in 2003 to R27.5 billion in 2012. This was essential in increasing the infrastructure
has also played an important
roleofinthe
averting
theimproved
rolling the
blackouts
that
werelogistics
last experienced
capacity
economy and
efficiencies in
the freight
systems. Investmentin
byJanuary 2008,
Eskom has also played an important role in averting the rolling blackouts that were last experienced in
although the system remains
tight.
Thus,
the
drive
bythethe
publicdrive
sector
January
2008,
although
theinvestment
system remains tight.
Thus,
investment
by the has
publicplayed
sector hasa fundamental
played a fundamental role in reflecting government’s commitment towards an investment driven
role in reflecting government’s
commitment
towards
an
investment
driven
economic
growth
path.
economic growth path.
700000 600000 500000 400000 300000 Government Public Corpora;ons Private sector 200000 100000 0 Source: SARB, 2014
Source: SARB, 2014
The 20 Year Review shows that progress has been made in the transformation of South Africa from an
apartheid dispensation to a democratic society that seeks to promote cohesion and transformation. The
economic assessment over the 20 year period showed progress that has been made in economic
transformation and rebuilding of the South African economy. The Strategic Plan (2014/15 – 2018/19) of
the Department recognises the challenges that currently exist in the transformation of the South Africa
economy and seeks to leverage state ownership in the economy to accelerate transformation. Over the
MTSF period, growth is expected to recover to just over 3 percent level but there are still strong
downward risks that continue to persist. In this regard, shareholder management will be informed by a
need to ensure that the build or expansion programmes are leveraged to support higher growth levels.
The 20 Year Review shows that progress has been made in the transformation of South Africa from an apartheid
dispensation to a democratic society that seeks to promote cohesion and transformation. The economic
assessment over the 20 year period showed progress that has been made in economic transformation
and rebuilding of the South African economy. The Strategic Plan (2014/15 – 2018/19) of the Department
recognises the challenges that currently exist in the transformation of the South Africa economy and seeks
to leverage state ownership in the economy to accelerate transformation. Over the MTSF period, growth
is expected to recover to just over 3 percent level but there
are still strong downward risks that continue
11
to persist. In this regard, shareholder management will be informed by a need to ensure that the build or
expansion programmes are leveraged to support higher growth levels.
2014/15 – 2018/19 STRATEGIC PLAN SOC
The Department has concluded the Strategy development process. The Strategic Plan defines 6 Strategic
objectives that will inform the formulation of priority programmes and allocation of budget to these key
programmes over the MTSF period. The 6 objectives are:
• Review the shareholder oversight management function to ensure alignment of SOC to developmental outcomes
• Promote good governance
• Build internal capacity to enhance the Department’s ability to execute its strategic plan and fulfil its mandate
• Stabilise the SOC looking at strengthening of balance sheets and funding options
• Drive economic infrastructure investment to enhance the capacity of the economy with emphasis on the SIPs
• Leverage SOC procurement spend to support industrialisation, transformation and skills development
The strategy will be implemented under the new administration which commenced post the 2014 election.
This APP is informed by the Strategic Plan of the Department that outlines the strategic objectives that would
need to be achieved in the new administration period. In this regard, the Strategy is informed by the long
term aspirations outlined in the National Development Plan. The annual plans of the different programmes
P 12
have been defined by these objectives. This allows the Department to focus on fewer projects that will directly
contribute to the achievement of these objectives.
The constrained fiscal framework requires the Department to explore additional mechanisms to support the
expansion plans of SOC. The shareholder related functions will be executed such that the achievement of the
outcomes outlined in the NDP is supported.
1.2 Organisational Environment
In the 2011/12 financial year, the Department underwent a process to review its establishment to ensure
that it was properly structured and capacitated to carry out its mandate. From this process, it was clear that
additional human resources were required to ensure that the Department is appropriately and sufficiently
capacitated. Extensive engagement with the Department of Public Service and Administration and National
Treasury was undertaken to explore options to capacitate the Department in light of the constrained fiscus
and the need to increase capacity within government to oversee the build programme. In 2012/13 National
Treasury approved an additional 12 critical posts and a further 17 posts over the MTEF to augment the
capacity of the Department.
The assessment of the Department’s capability to deliver on the new Strategic Plan shows that there is a need
to boost the capacity of the Department. Given the constrained fiscal environment, the Department needs
to employ innovative solutions to augment its capacity and develop a talent pool sufficient to respond to the
future human resource requirements of the Department. In this regard, the following has been prioritised.
• Expansion of the graduate programme to ensure a talent pool that the Department can tap into to fill
critical positions
• Enhancement of the training programmes that will ensure improvement of skills for the levels below SMS
• Continued marketing of the Department as an employer of choice for young talent
• Development and implementation of the talent management strategy
In order to improve organisational efficiency, the Department is engaging in a comprehensive business
mapping process. This will ensure that the current processes within the Department are streamlined to
improve productivity and efficiency. The focus will be on eliminating duplications, streamlining approval
processes within the organisation, identification of strategic processes crucial for oversight and gradual
automation of these processes.
P 13
Organisational Structure
Minister
Public Enterprises
Deputy Minister
Public Enterprises
Director-General
Public Enterprises
Programme 1
Administration
Programme 2
Legal and
Governance
Programme 3
Portfolio Management
and Strategic
Partnerships
Corporate
Management
Energy and
Broadband
Enterprises
P 14
Manufacturing
Enterprises
Strategic
Partnerships
Economic
Impact and
Policy Alignment
Transport
Enterprises
OVERVIEW OF PROGRAMMES
PROGRAMME 1 - ADMINISTRATION
Ministry
Management
Corporate Services
Human Resources
Communications
Minister
Deputy Minister
Director-General
Corporate Management
Security and Facilities Management
Information Management and Technology
Human Resources
Communications
Strategic Planning, M and E
Strategic Planning, Monitoring and Evaluation
Inter-Governmental and Stakeholder
Relations
Inter-Governmental and Stakeholder Relations
Internal Audit
Internal Audit
Office Accommodation
PROGRAMME 2 - LEGAL AND GOVERNANCE
Management
Legal
Governance
PROGRAMME 3 - PORTFOLIO MANAGEMENT AND STRATEGIC PARTNERSHIPS
Energy and Broadband Enterprises
Management
Broadband Infraco
Eskom
Manufacturing Enterprises
Management
Denel
Alexkor
SAFCOL
Transport Enterprises
Management
Transnet
South African Airways and South African Express Airways
Economic Impact and Policy Alignment
Management
Environmental Policy Alignment
Economic Policy Alignment
Transformation, Skills and Youth Development
Strategic Partnerships
Management
Project oversight
Funding Mechanisms
Supplier Relationships
P 15
2. REVISIONS TO LEGISLATIVE AND OTHER MANDATES
As the shareholder Ministry, on behalf of Government, the Department’s mandate continues to evolve to
ensure that SOC within its portfolio are clearly directed towards the prioritised outcomes in order to serve the
Government’s strategic objectives. This evolution is underpinned by an overarching shareholder management
process aimed at providing enduring strategic rationale for the SOC.
Expansion of the role of the SOC within the current economic management framework has required the
Department to introduce measures to ensure that SOC contribute to the following:
• Promotion of economic growth by facilitating development of new industrial capabilities through supplier
development and expansion of local content particularly in the build programme;
• Expansion of training and skills development programmes to support the Government to develop skills
required by the economy;
• Achievement of minimum standards of universal service and affordability for key services such as rail,
broadband and electricity, and
• The correction of past social injustice.
PENDING COURT CASES
One of the major shareholder risks is litigation. This risk is, in most cases, inherent to the Minister because,
inevitably, when SOC are sued, the Minister is in most cases cited as a defendant. Over-time, the Department
has improved on cooperative arrangements and stakeholder relations to minimise and mitigate against the
risk of being joined in as a party to SOC litigation. These efforts have paid off and to date, there are few cases
where the Minister is cited as a party. However, because SOC are separate juristic personalities, there are a
number of pending court cases against Alexkor, Eskom, Transnet and SAA. The cases are at different stages
of litigation and legally the details thereof cannot be disclosed as they are still sub judice.
P 16
3. OVERVIEW OF BUDGET AND MTEF ESTIMATES
3.1 Expenditure estimates
Table 1 Department of Public Enterprises
2010/11
2011/12
2012/13
Audited
outcome
Audited
outcome
Audited
outcome
Administration
88,192
108,635
115,367
131,032
Legal and
Governance
14,653
19,518
23,477
Portfolio
Management
and Strategic
Partnerships
437,156
217,962
Total for
Programmes
540,001
Rand thousand
Programmes
Direct charge
against the
National
Revenue Fund
Total
2013/14
2014/15
2015/16
2016/17
Revised
Baseline
Revised
Baseline
Revised
Baseline
131,032
152,123
160,528
158,286
22,338
22,338
23,967
25,536
26,885
1,228,205
140,769
140,769
83,696
93,260
100,451
346,115
1,367,049
294,139
294,139
259,786
279,324
285,622
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
540,001
346,115
1,367,049
294,139
Adjusted
Appropriation
Change to 2013
Budget Estimate
Revised
Estimate
294,139
259,786
279,324
285,622
(57,250)
-
-
-
160,148
185,060
195,661
234,450
234,450
255,617
275,620
281,721
Compensation
of
employees
83,058
96,158
105,327
131,887
131,887
149,574
159,527
169,945
Salaries and
wages
78,165
96,158
105,327
131,887
131,887
149,574
159,527
169,945
Social
contributions
4,893
-
-
-
-
-
-
-
77,090
88,902
90,334
102,563
102,563
106,043
116,093
111,776
79
131
866
1,064
1,064
810
817
823
3,482
1,778
1,962
3,649
3,649
2,515
2,667
2,825
308
362
444
983
983
1,055
1,113
1,174
Audit cost:
External
2,580
4,117
1,908
1,294
1,294
2,200
2,300
2,400
Bursaries:
Employees
917
629
393
1,000
1,000
1,000
1,054
1,110
1,144
1,136
1,341
1,867
1,867
949
996
1,045
Economic
classification
Current
payments
Goods and
services
Administrative
fees
Advertising
Assets less than
the
capitalisation
threshold
Catering:
Departmental
activities
P 17
2010/11
2011/12
2012/13
2014/15
2015/16
2016/17
Audited
outcome
Audited
outcome
Audited
outcome
Revised
Baseline
Revised
Baseline
Revised
Baseline
Communication
(G&S)
2,431
3,260
3,741
3,439
3,439
3,645
3,961
4,173
Computer
services
3,035
2,726
3,078
3,102
3,102
3,974
4,188
4,410
Consultants and
professional
services:
Business
and advisory
services
26,809
26,815
22,995
29,981
29,981
37,551
43,673
35,229
Consultants and
professional
services:
Legal
costs
5,419
2,396
430
2,000
2,000
3,166
3,282
3,402
Contractors
1,780
1,012
2,250
2,304
2,304
1,476
1,941
2,059
Agency and
support /
outsourced
services
2,857
2,542
4,110
3,552
3,552
3,979
4,067
4,246
26
60
32
415
415
312
326
341
Fleet services
(including
government
motor transport)
349
765
805
1,302
1,302
1,108
1,168
1,232
Inventory:
Clothing
material
and accessories
-
-
-
14
14
-
-
-
Inventory:
Food
and food
supplies
-
122
113
199
199
-
-
-
Inventory:
Fuel, oil
and gas
-
-
21
-
-
-
-
-
30
85
64
50
50
-
-
-
Inventory:
Medical
supplies
-
1
8
-
-
-
-
-
Inventory:
Medicine
-
-
2
-
-
-
-
-
49
24
25
19
19
-
-
-
Consumable
supplies
-
-
34
2
2
708
747
787
Consumable:
Stationery,
printing
and office
supplies
1,555
2,028
2,693
3,186
3,186
1,361
1,502
1,607
Operating
leases
2,814
1,720
1,814
684
684
1,790
1,887
1,986
Rand thousand
Entertainment
Inventory:
Materials and
supplies
Inventory: Other
supplies
P 18
2013/14
Adjusted
Appropriation
Revised
Estimate
2010/11
2011/12
2012/13
2014/15
2015/16
2016/17
Audited
outcome
Audited
outcome
Audited
outcome
Revised
Baseline
Revised
Baseline
Revised
Baseline
5,435
6,884
9,137
8,100
8,100
8,472
8,918
9,380
Travel and
subsistence
12,185
24,329
23,499
26,522
26,522
24,977
26,515
28,308
Training and
development
1,645
2,386
1,624
2,238
2,238
2,004
2,112
2,223
Operating
payments
1,161
1,655
3,618
2,006
2,006
1,491
1,278
1,350
Venues and
facilities
1,000
1,939
3,327
3,591
3,591
1,500
1,581
1,666
237,990
156,978
118,638
57,405
57,405
100
105
111
Public
corporations
and private
enterprises
237,296
156,255
118,313
57,250
57,250
-
-
-
Other
transfers
to public
corporations
237,296
156,255
118,313
57,250
57,250
-
-
-
Households
694
723
325
155
155
100
105
111
Other
transfers to
households
694
723
325
155
155
100
105
111
Payments for
capital assets
3,169
4,071
2,742
2,284
2,284
4,069
3,599
3,790
Machinery and
equipment
3,169
3,922
2,649
2,284
2,284
4,069
3,599
3,790
Transport
equipment
1,821
1,411
-
608
608
3,356
2,853
3,005
Other machinery
and equipment
1,348
2,511
2,649
1,676
1,676
713
746
785
-
149
93
-
-
-
-
-
Payments for
financial assets
138,694
6
1,050,008
-
-
-
-
-
Total economic
classification
540,001
346,115
1,367,049
294,139
294,139
259,786
279,324
285,622
Rand thousand
Property
payments
Transfers and
subsidies
Software
and other
intangible
assets
2013/14
Adjusted
Appropriation
Detail of
transfers and
subsidies
2010/11
2011/12
2012/13
Recipient
Audited
outcome
Audited
outcome
Audited
outcome
694
723
93
100
-
-
134
694
723
227
Revised
Estimate
2013/14
2014/15
2015/16
2016/17
Revised
Baseline
Revised
Baseline
Revised
Baseline
100
100
105
111
55
55
-
-
-
155
155
100
105
111
Adjusted
Appropriation
Revised
Estimate
Rand thousand
Gifts and
donations
Employee social
benefits
Total
P 19
Relating expenditure trends to strategic outcome oriented goal
The spending focus over the medium term will continue to be on strengthening and expanding the Department’s
capacity to carry out its oversight role in relation to the state owned companies, and improving internal
efficiencies and the functioning of the Department. Support for the achievement of the NDP goals will form the
central part of the oversight function. To this end, the personnel establishment is expected to increase over
the medium term to 265 posts, including 6 graduates and 30 interns. At the end of 2013/14 financial year, the
Department had a vacancy rate of 2.8 percent. The strong recruitment drive implemented by the Department
between the 2012/13 and 2013/14 financial years is expected to increase expenditure on compensation of
employees, which, at 54.6 per cent, is the largest spending item of the Department’s budget over the medium
term. To carry out the Department’s high level stakeholder interactions, intergovernmental and coordinating
activities and general oversight role of the government’s investment in state owned companies, personnel
travel extensively domestically and internationally; and the Department relies on the services of consultants
who conduct highly technical research in the transport, manufacturing, energy and broadband sectors. As
a result, travel and subsistence and consultants are the largest spending items in goods and services, and
spending on these items is projected to increase over the medium term.
Between 2010/11 and 2013/14, certain SOC, such as Denel and Broadband Infraco, received non-periodic
recapitalisation payments, which explains the significant fluctuation in spending in the Portfolio Management
and Strategic Partnerships programme over this period. Spending in the programme is expected to decline
significantly over the medium term as no recapitalisations are contemplated.
Achievements with regard to outcomes announced by the Department of Performance
Monitoring and Evaluation
In relation to Government’s 12 Outcomes, the Department is primarily contributing to creating an efficient,
competitive and responsive economic infrastructure network (Outcome 6), which forms the basis of the
delivery agreement signed in October 2010. This delivery agreement forms the core of the performance
agreement between the President and the Minister. Furthermore, the Department, through the activities of its
SOC, contributes to other outcomes such as decent employment through inclusive growth, skills development
and rural development. The following is the Department’s contribution towards achieving the outcomes that
have been prioritised by government:
3.1 Creating an efficient, competitive and responsive economic infrastructure network (Outcome 6)
The past MTSF was adopted during the recession. One of the key objectives was to stabilise the economy
and place it on a different growth trajectory. At the centre of this objective was: implementation of the capital
expenditure programme that would address the capacity constraints experienced by the economy during
high growth periods between 2005 and 2007; to act as a stimulus to jump-start the economy. In this regard,
Eskom’s build programme, as well as the Transnet capital expenditure programme, formed the core of the
government’s infrastructure investment strategy.
The progress that has been made to accelerate infrastructure investment in the economy is highlighted
below.
P 20
Eskom
Funding of the build programme up to 2018
Funding of the build programme emerged as one of the major challenges with roll-out of the build programme
in the electricity sector. This is as a result of tariffs not being sufficient to cover operational costs as well as
provide a reasonable return on investment to allow the utility to fund investment in additional generating
capacity. Over the past five years, the Department has supported Eskom to secure tariff adjustments that will
support its financial sustainability as well as provision of guarantees to keep the financing cost lower. As at
31 March 2014, R271.6 billion (90.5%) of the R300 billion borrowing programme had been secured. The R300
billion borrowing programme is based on the original funding requirements as at April 2010 and covers the
period 1 April 2010 to 31 March 2017.
It should be noted that additional funding requirements, including those resulting from the lower than expected
MYPD 3 tariff determination, are not included in this borrowing programme. The drawdowns for the year
ending 31 March 2014 against the R300 billion funding plan is R44.7 billion, bringing the cumulative amount
that has been drawn to execute the build programme to R188.7 billion.
Additional funding for the period until 31 March 2018, as a result of the MYPD3 decision amounts to R301
billion which still needs to be secured.
Progress on delivery of build programme
(Medupi, Kusile, Ingula, Transmission Lines and Renewable Projects) Eskom spent R58.2 billion on capital expenditure in 2013/14, reflecting a sustained increase in the capital
expenditure in support of Government outcomes. The following are the key achievements of the build
programme:
• Eskom completed the return-to-service project during the reporting period. All three power stations
(Camden, Grootvlei and Komati) are fully operational. The last unit of this project – Komati Power Station’s
Unit 3 – was commissioned in September 2013. This brought the total amount of generating capacity for
return-to-service added to the grid since 2005 to 3 731MW. This has been one of the factors that have
played a crucial role in averting the collapse of the national electricity grid.
• The refurbishment projects have made good progress, despite the ongoing challenge of outage constraints.
All the Kriel units have now been refurbished, with the final unit (Unit 5) being synchronised on load on 15
March 2014. Furthermore, three of the six Matla units have been refurbished, with the third unit (Unit 5)
synchronised on load on 25 March 2014. Delays were experienced at Duvha due to outage movements.
• As at 31 March 2014, Medupi had a day variance of 24.48 days (within the target of 30 days late variance).
Eskom remains on track for synchronisation during the second half of 2014. Commissioning of the first unit
has started and Eskom is working with contractors to ensure that agreed schedules and processes are
adhered to. Key challenges include finding solutions for the control systems.
• Kusile achieved a day variance of 12.9 days (within the target of 30 days late variance). The station is
scheduled for synchronisation by the end of 2015. The key challenge is finding a solution for control
systems to avoid a repetition of the delays experienced at Medupi. Four medium term contracts have been
signed for coal supply to Kusile Power Station during the commissioning phase. The conclusion of long
term coal and limestone supply agreements for Kusile Power Station remains a focus area.
• Work continues at Ingula, but the tragic incident that cost the lives of six contractors has affected the
schedule. The delay has been estimated at 18 months. At the end of the reporting period, Ingula had a day
variance of 11.6 days (within the target of 30 days late variance). Work to install turbines and generators
will begin soon.
P 21
Construction of the 100MW Sere Wind Farm is progressing well, with 69% of the tower
foundations and 17% of the turbines completed.
• Approximately 811km of power lines and 3 790MVA of sub-station capacity were also commissioned
during the course of the year.
• Mega Generation Projects reported construction progress as follows as at 31 March 2014” Medupi - 60%;
Kusile - 30%; Ingula - 72%; and Sere Wind Farm - 47%.
IPP contracts that have been signed
The electricity industry is undergoing reforms targeted at: enhancing participation of the private sector;
attracting additional investment to address current capacity challenges; enhance the use of renewable
energy. The first project under the Department of Energy (DOE) renewable independent power producers
(RE-IPP) programme was connected to the grid on 27 September 2013 and the first IPP was commissioned
on 15 November 2013. A total of 467.3MW is currently available to the system from these Independent Power
Producers (IPPs). The DOE approved an additional 1 457MW, pursuant to the third window submissions. No
contracts have yet been signed for this capacity.
Further PPAs, totalling 1 005MW, for DOE Peaker Plants were entered into on
3 June 2013 and became effective on 29 August 2013 (DOE Peaker Programme). Commissioning of these
plants is expected during the 2015/6 financial year.
Transnet
Transnet Capital Investment Five Years Review
Division(s)
2009/10
2010/11
2011/12
2012/13
2013/14
Total
TE
0.4
0.5
0.7
1.3
1.0
3.9
TNPA
3.2
2.0
1.7
1.7
1.2
9.8
TPT
2.4
0.7
1.5
2.2
1.6
8.4
TPL
3.1
6.1
4.5
2.8
3.4
19.9
(O.4)
(0.3)
(0.9)
1.1
0.2
(0.3)
18.4
21.5
22.3
27.4
32.5
122.1
TFR
Other
Total capex
9.7
12.5
14.8
18.3
25.1
80.4
The 2014/15 financial year is the third year of Transnet’s roll-out of the Market Demand Strategy (MDS) that is
underwritten by a rolling capital programme worth over R300bn. In the past five years, Transnet has invested
over R120bn in infrastructure and capital projects, most of which has been committed to the rail business.
This is crucial to enhance the efficiency of the logistics system and to reduce the cost to move goods, which
will contribute to the overall competitiveness of the economy. Key projects executed by the company over the past five years included the following:
GFB locomotives
During the 2013/14 financial year, Transnet awarded a R50 billion contract for acquisition of 1 064 locomotives
(599 new dual-voltage electric locomotives and 465 diesel locomotives) – this makes it the largest locomotive
acquisition contract in the history of South Africa. Not only will this acquisition of locomotives enable Transnet
to increase its rail volume capacity, but the procurement process has been structured in such a way as to allow
for maximisation of localisation benefits. The transaction is expected to boost the country’s manufacturing
capacity while also transforming the rail industry. P 22
Nine of the 95 electric locomotives were delivered in the 2013/14 financial year. Local assembly of the
locomotives commenced on 4 February 2014 at Transnet Engineering in Koedoespoort. The remaining 23 of
the 43 Class 43 diesel locomotives were received in the 2013/14 financial year.
Iron ore line expansion up to 60,0mt
The last 26 of the 32 locomotives needed to facilitate the increase in iron ore capacity to 60,0mt were tested
and accepted into operations during the 2013/14 financial year. The pre-feasibility study to expand capacity
from 61mt to 82,5mt has been completed. Phase 1D (being the addition of a 3rd tippler and associated rail
works) has been approved by the Transnet Board of Directors, at a cost of approximately R1,6 billion. The
3rd tippler will ensure that 60mt can be exported on a sustainable basis, as the existing two tipplers currently
do not allow for any down time.
Coal line expansion up to 81,0mt
Infrastructure work required to expand the coal line from 68mt to 81mt commenced during the 2013/14
financial year. The work is expected to gain momentum during the 2014/15 financial year, with construction
of the consolidation yards at Saaiwater and Blackhill yards.
Durban Container Terminal (DCT)
Transnet has commenced with the reconstruction and deepening of seven steel sheet piled berths at Maydon
Wharf, in the Port of Durban. Construction of the first berth was successfully completed and is now fully
operational. The contract for the remaining six berths was awarded recently and on-site construction is
expected to commence in the near future
.
Durban Dig-Out Port
The Durban International Airport (DIA) site acquisition from ACSA was concluded during the 2012/13 financial
year at a total cost of R1,85 billion. The DIA site is proposed to be developed into a dig-out port to address
demand requirements in the container, liquid bulk and automotive sectors up to 2040.
Cape Town Container Terminal
Expansion of the Cape Town Container Terminal aims to increase capacity from 0.9 million TEUs to 1,4 million
TEUs to address growth in demand for containers in the Western Cape region. The capital project to deepen
berths and increase container handling capacity to 900 000 TEUs has been completed. Consideration is now
being given to increasing the container handling capacity to 1, 4 million TEUs.
Ngqura Container Terminal
The Nqgura Container Terminal was launched in 2012. The port is positioned as a trans-shipment hub and
a gateway for container traffic into Southern Africa. The second phase A of the project, to expand capacity
from 800 000 TEUs to 1.5 million TEUs, has commenced and is expected to be completed during the 7 year
MDS period.
P 23
New Multi-Product Pipeline (NMPP)
Significant progress has been made on the NMPP with favourable weather conditions having enabled
accelerated construction work to take place. The project has, however, faced some challenges with regard
to industrial action and tank construction work. In spite of these challenges, the project is expected to be
completed during 2015.
Ports productivity
Durban
During the period under review, ship turnaround time was slightly below the target of 59, largely due to
inclement weather. The gross crane moves per hour (GCH) on Pier 1 and Pier 2 are below target, with Pier 1
at 24 moves (target is 28) and Pier 2 at 25 moves (target is 30). Anchorage waiting time was also below target,
at 57 hrs (target is 46). Infrastructure upgrades are being implemented to improve functioning of the port.
Cape Town
The ship turn-around time was 29,6hrs better than the set target of 30hrs. The gross crane moves per hour
were better than target, at 34 moves against a target of 32. Anchorage waiting time was below target at 57
hrs (target was 46 hrs).
Average ship turn-around time in Cape Town and Durban improved from the previous year. The Port of Durban
improved anchorage waiting time from the previous year, which is important for customer satisfaction. Cape
Town’s performance was marginally lower than in the previous year.
Volumes Transported by Rail
Transnet has continued to move volumes above 200 mt per annum, despite the lacklustre performance of the
economy. During the period under review, 210.43 mt were showing a 1.3% increase in volumes compared to
the previous financial year. The volume growth was attributable to the following:
• General freight (GFB) volumes of 88mt reflected a positive growth of 6% compared to the previous year.
• Export coal volumes of 68.2mt were 11% below budget and 1% below the previous year.
• Export iron ore volumes of 54.3mt were 12% below budget and 3% below the previous year.
The 8.4% shortfall on the budgeted volume of 229.72mt was mainly due to export coal and export iron ore.
Key reasons for the deviation of a 19mt (88.4%) shortfall on total rail volumes were as follows:
• A 7.3mt shortfall on export iron ore due to customer production problems and a decline in export iron
prices due to slow global economic growth.
• The 8.8mt export coal volume shortfall was partly due to a decline in export coal prices, customer related
equipment failure, as well as internal and external operational constraints (such as locomotive failure and
power failure, including RBCT cable failure and cable theft).
• The GFB sector accounted for the remaining shortfall of 3.2mt. A range of factors affected volume
performance, including slow domestic growth, industrial strikes, customer loading and offloading
challenges and wet weather conditions.
P 24
Migration of transportation of coal from road to rail
The coal business under-achieved on its annual target of 95.151mt. The actual achievement for coal was
83,13mt in 2014, which represents a 12.6% under-achievement.
Road to rail migration efforts are as follows:
• Freight Rail’s market development initiatives target retention and growth of traditional rail customers in
the mining and heavy manufacturing sectors (e.g. export coal and iron ore), including companies that
beneficiate mining commodities. Other major customers are in the fuel, chemicals, agricultural and timber
sectors.
• The business is targeting new customers in the FMCG, textile and light manufacturing industries, where
there are opportunities for ‘rail friendly’ commodity types to be shifted from road to rail.
• The rail migration programme that focuses on Eskom coal is progressing well in support of the road to rail
programme.
GFB Productivity
On-time train departures improved by 24% compared to the previous year and by 5% compared to budget;
this was due to diligent monitoring and follow-up on the root causes of deviations. On-time arrivals also
improved by 4.5% compared to the previous year, but declined by 31% compared to budget, partly due
to en-route system-failures. Diligent monitoring and follow-up on the root causes of departure and arrival
problems will continue.
The gradual delivery of 43 Class diesel locomotives for General Freight and focused attention on operational
efficiency and volume growth resulted in an 8% improvement in asset utilization, compared to both the prior
year and budget.
3.2 Outcome 4: Decent employment through inclusive growth
The Department was identified as one of the contributors required to support implementation of the outcome
4 delivery agreement. Infrastructure investment was identified as one of the job drivers in the NGP. The
industrial capabilities that exist within SOC such as Denel are being leveraged to support the development of
advanced manufacturing in the South African economy, in line with IPAP.
Denel
The turnaround of Denel has been crucial to preserve advanced industrial capabilities within the State’s
portfolio. The company has continued to support the needs of the South African Defence Force, which has
played a crucial role in developing capability to secure other markets. In June 2013, the company reported
a R21 billion order book, which increased to R30 billion by December 2013. This will enable the business to
meet its plan of doubling revenues to R8 billion by 2018/19. One significant order secured by the SOC in the
2013/14 financial year was a R10 billion contract by the South African Department of Defence to produce 238
Hoefyster infantry fighting vehicles (IFV) for the South African Army. The programme is critical in maintaining
the country’s advanced defence manufacturing capabilities. Importantly, 70% of the components for the
vehicles will be developed and manufactured in South Africa, with 2 000 jobs to be created at Denel and in
the related South African defence industry.
In 2013/14 Denel revived its space and satellite capabilities, after entering into a collaborative relationship
with the South African National Space Agency (SANSA). This will not only ensure that the country’s space and
P 25
satellite capabilities are enhanced, but will provide local industry with the opportunity to tap into the growing
and strategic global space and satellite industry.
The SOC has delivered and supported the deployment of the Rooivalk combat support helicopter in combat
operations in the Democratic Republic of Congo (DRC). The deployments were done under the United
Nations Organisation Stabilisation Mission (MONUSCO) and have proven to be a game changer in peace
enforcement operations.
Localisation and transformation
The Department has continued to monitor implementation of the Supplier Development Plans of both Eskom
and Transnet. Furthermore, the Department has incorporated localization targets into the shareholder
compacts of these entities; to ensure that their procurement expenditures advance the industrialization
programme of Government. The proportion of both components and services sourced locally by these SOC
has gradually increased since the introduction of the Competitive Supplier Development Programme (CSDP).
In the 2013/14 financial year, Transnet achieved 92% local content procurement as a percentage of total
spend. This is an exceptionally good performance for the year, especially if you take into consideration that
the local content target was only 70% of total spend.
Transnet also exceeded the supplier development target by achieving 37% commitment of contract
value to be invested in the country: the target was only 35%. Transnet’s performance in regard to supplier
development would have been significantly higher if the SOC was not bound by the Preferential Procurement
Policy Framework Act (PPPFA). Engagement with National Treasury on the PPPFA is ongoing in order to find
a solution that will allow SOC to maximize their procurement spend.
BBBEE spend amounted to 94% of Total Measurable Procurement Spend (TMPS); this was against a target
of 70%. Spend on Black Women Owned and Black Youth Owned remains low. The Department is, however,
continuing to engage Transnet to find ways to improve spend on these two groups.
3.3 Outcome 5: A skilled and capable workforce to support an inclusive growth path
SOC within the DPE portfolio committed to support the National Skills Agenda through implementation of
various skills initiatives, with a specific focus on scarce and critical skills. These initiatives include alignment
of skills development programmes to the National Skills Development Strategy (NSDS) and National Skills
Accord in support of the New Growth Path (NGP) and the National Development Plan (NDP). To ensure
alignment to these interventions, the Department has established partnerships with the Department of Higher
Education and Training (DHET), the Economic Development Department (EDD) and the Department of Trade
and Industries (DTI). This is crucial to ensure that the skills development capacity of SOC is leveraged to
develop core and critical skills to meet the economy’s requirements. The commitments made by SOC and partnerships with relevant government departments has resulted in the
enhancement of provisioning of scarce and critical skills by SOC to address skills gaps within SOC, as well as
closing the national scarce and critical skills gaps. Thus SOC’ alignment to the National Skills Accord focuses
on the following commitments:
• Commitment 1: Expand the level of training using existing facilities more fully.
• Commitment 2: Make internships and placement opportunities available within workplaces.
• Commitment 5: Improve funding of training and the use of funds available for training and incentives.
• Commitment 8: Improve the role and performance of FET Colleges.
P 26
These commitments have been translated to form part of the targets that are included in the shareholder
compacts concluded with the Executive Authority. In the 2013/14 financial year, and in line with the National
Skills Accord, SOC collectively committed to enrol 2 764 new artisan trainees of which: 1 040 trainees were to
be enrolled at Eskom; 1 550 were to be enrolled at Transnet; and the remainder were to be enrolled at South
African Airways, South African Airways Express (SAX), Alexkor and SAFCOL.
Transnet’s enrolment includes 1000 additional artisan trainees funded through the R175 million from the
National Skills Fund (NSF) to be trained over a period of three years, which will optimise their training facilities
in addressing the national skills gaps and with a special focus on supporting SIPs. To this end, a Memorandum
of Understanding (MoU) was concluded between the Department and the DHET in October 2013.
Other commitments made by SOC include: training of technicians and engineers supported through bursary
schemes and internship programmes; enrolment for training of cadet pilots; and training of learners in scarce
and critical skills in areas such as train drivers at Transnet, energy field workers at Eskom, forestry workers at
SAFCOL and airport crew members at both SAA and SAX.
In addition, Eskom has also committed to ensuring that at least 2 500 matriculants and 2 500 graduates in the
pipeline are trained in artisan trade skills and supported in work experiential learning programmes through
Eskom and its supplier network.
As at 31 March 2014, a total of 2 109 new artisan trainees were enrolled at SOC in the Department’s portfolio,
of which: 1 569 artisans were enrolled at Transnet; 94 new artisan were enrolled at Eskom; 306 new artisan
trainees enrolled at Denel (237 of the trainees enrolled for training through Denel Technical Academy
partnerships with private companies); 147 artisan trainees enrolled at SAA; 36 artisan trainees enrolled at
SAX; 4 and 6 artisan trainees enrolled at Alexkor and SAFCOL, respectively.
A total of 459 technician trainees (Transnet – 339; Eskom – 100; Denel – 12; Broadband Infraco – 6; SAFCOL
- 2) and 367 engineering trainees (Transnet – 138; Eskom – 179; Denel – 41; Broadband Infraco – 4;
and SAFCOL - 4) were enrolled in various programmes supported through bursary schemes and internship
programmes. Other SOC scarce and critical skills enrolments include 55 new cadet pilots enrolled for training
at SAA (34) and SAX (21), with 2 176 new learners enrolled in sector specific scarce and critical skills learning
programmes to address sector skills shortages.
In addition, Eskom has enrolled 172 matriculants in artisan trade skills and 195 graduates in various work
experiential learning programmes within Eskom and its supplier network. Thus, as at March 2014, Eskom and
its suppliers had 2 718 matriculants and 1 607 graduates in the pipeline, who are being trained and placed
in various learning programmes.
3.4 Outcome 7: Vibrant, equitable and sustainable rural communities with food security for all
Alexkor
The SOC has delivered on government obligations to the Richtersveld community, with a R120 million
upgrade of the Alexander Bay Township infrastructure (roads, electrical and water reticulation and waste
water treatment) being completed on 31 March 2013 and the town’s registration confirmed on 22 November
2013. This means that the town, which was previously a mining compound, is one of the new towns in South
Africa and part of the Richtersveld Local Municipality. The value of property in the town that will be transferred
to the community is estimated at R200 million.
P 27
The jointly-owned mine, which had previously seen its diamond production decrease substantially due to
the land restitution process, has seen an improvement in carat production from 35 000 carats to over 50 000
carats. This has been on the back of a newly commissioned R50 million processing plant at Muisvlak near
Port Nolloth, which has created 200 jobs for the community.
During the period under review, the Minister approved the strategy for the SOC to become a diversified
mining company; this will include coal supply in support of the national energy security imperative. The
Department is working closely with the SOC to ensure success of the strategy and significant projects will be
announced in 2014/15.
SAFCOL
In 2012/13, the Department revised the SOC mandate to enable product diversification and further vertical
integration. The SOC will announce the new corporate strategy within the ambits of the revised role in
2014/15. As at the end of the financial year, SAFCOL spent R6,591 million on socio-economic development
initiatives. This represents 3.3% of the Net Profit After Tax (NPAT) - a significant achievement compared to
the Shareholder Compact (SHC) target of 1%. SAFCOL continues to create jobs in communities surrounding
its plantations through the Extended Public Works Programme (EPWP).
SAFCOL completed 11 socio-economic development initiative projects during the 2013/14 financial year.
Details of the completed projects are as follows:
• Emhlabaneni Primary School (classroom and ablution block)
• Esihlengeni Combined School (supplied 20 new computers and installed table tops, ICT burglar proofing
and electrical work)
• Mayflower Disability Centre (retaining walls and burglar proofing)
• Dinethemba and Daviddale ECD centres (wash basins and ablution blocks)
• Tshitavhadulu Community Hall (new building)
• Mantjolo Market Stalls (market stalls and ablution facility)
• Ntabamhlophe Primary School (3 ablution blocks)
• Thathe-Vondo Guest House (renovations)
• Leroro Shelter (burglar proofing)
• Diepdale Youth Centre (site establishment has been completed and excavation of trenches is 90%
complete)
• Desk Manufacturing Project (industrial machines and tools have been procured)
P 28
PART B
PROGRAMME AND
SUB-PROGRAMME PLANS
4. PROGRAMMES
4.1 PROGRAMME 1 - ADMINISTRATION
Purpose:
Provides strategic management, direction and administrative support to the Department, which enables the
Department to meet its strategic objectives
Programme Overview:
The programme includes the Ministry, the Office of the Director-General and Support Services. The programme
is currently made up of the following sub-programmes: Ministry; Management; Corporate Services; Chief
Financial Officer; Human Resources; Communications; Strategic Planning, Monitoring and Evaluation; InterGovernmental and Stakeholder Relations; Internal Audit and Office Accommodation.
Office of the Director-General is responsible for Corporate Management.
Corporate Services is responsible for:
Security and Facilities Management – Provide a safe and secure environment and internal administration and
facilities services to internal customers.
Information Management and Technology – IT infrastructure and support, Records Management and Library
Services.
Office of the Chief Financial Officer is responsible for Financial Management Services to ensure compliance
with the Public Finance Management Act, 1999 (Act No 1 of 1999) and Treasury Regulations; and efficient
and effective supply chain management services
Human Resources is responsible for assisting line management to implement operational excellence and
developing the Human Capital potential in the department.
Communications is responsible for repositioning the DPE as an activist shareholder; make the DPE brand
relevant and meaningful to ordinary South Africans; impact media relations and media communication; and
improve employee engagement.
Strategic Planning, Monitoring and Evaluation is responsible for co-ordination, management and oversight
of outcomes based performance reporting of the Department; implementation of performance monitoring and
evaluation processes for individual programmes and business units as a mechanism for measuring delivery
of our strategic objectives; and reporting to various stakeholders. Inter-Governmental and Stakeholder Relations is responsible for coordination, support and provision
of advice to the Minister, Deputy Minister, Director-General and the Department on matters related to the
Intergovernmental, International and Stakeholder Relations.
Internal Audit is responsible for the preparation of a three year strategic plan and a one year internal audit
plan based on its assessment of key risks for the Department, in consultation with and for approval by the
Audit Committee
Office Accommodation is for the devolution of funds from the Department of Public Works for the DPE
premises
P 30
4.1.1 Strategic Objective Annual Targets for 2014/15 for Administration
Office of the Director-General
• Provide strategic direction and leadership to the Department.
Corporate Services
• Information Management and Technology
• Security and facilities management
Office of the Chief Financial Officer
• Sound financial management policies and practices
• Efficient and effective Supply Chain Management function
Human Resources
• Development of staff and succession planning.
• High performance culture.
• Effective, efficient and timeous recruitment and selection to ensure an adequately capacitated department.
• Skills development programme.
•
Communications
• Provide strategic Communication support that aligns with DPE goals and objectives to the executive
leadership and the Department.
• Provide internal communication services, based on departmental mandate to ensure awareness,
understanding and acceptance on strategic and operational priorities of the department.
• Provide strategic stakeholder support on matters that are important to the department.
• Adhere to Government’s communication protocol, policy guidelines, and align with the strategic priorities
contained in the Government Communication Strategy.
Inter-Governmental Relations
• Foster closer relations and co-operation between DPE and other departments to advance the DPE
mandate and objectives.
• Manage DPE International Relations’ responsibilities ensuring alignment to South Africa’s Foreign Policy.
• Establish and maintain mutually beneficial relations with strategic stakeholders.
• Support the BRICS programme that relate to the State Owned Companies
Strategic Planning, Monitoring and Evaluation
• Co-ordination, management and oversight of outcomes based performance reporting; performance
monitoring and evaluation and reporting to stakeholders
• Oversee the strategic planning within the Department and ensure its alignment to Medium Term Strategic
Framework priorities
• Development and implementation of tools to support outcome based planning, monitoring and reporting
• Strengthen SOC performance review tools and system
• Provide secretariat support to the Department’s governance structures
Internal Audit
• Provide independent and objective assurance and consulting Internal Audit services designed to add
value and improve the Department’s operations.
• Assist the Department to accomplish its objectives by bringing a systematic, disciplined approach to
evaluate and improve the effectiveness of risk management, control and governance processes.
P 31
• Management of devolution of funds from the Department of Public Works for the DPE premises.
4.1.2 Programme Performance Indicators and Annual Targets for Administration
for 2014/15
Programme 1 is a support function and its primary focus is to create an organisational environment necessary
to achieve the objectives outlined in Department’s Strategic Plan and APP. In the 2014/15 financial year, the
programme will focus on improving processes and systems within the Department and capacitation of the
Department, as the mandate of the Department continues to evolve and expand. In the 2014/15 financial
year, the focus will be on achieving the following:
• Continued strengthening of financial management tools to return to a clean audit opinion
• Implementation of the Strategic Planning, Monitoring and Evaluation Policy
• Payment of invoices within 30-days.
• Alignment of individual performance to organisation performance and implementation of talent management
processes
• Strengthening of the human resource function within the Department to ensure that the vacancy rate is
kept below 10 percent. • Implementation of the Department’s communication strategy including improving engagements with
provinces and other stakeholders.
• Improvement in IT governance
• Expansion of the Public Sector Participation Programmes to improve engagements with ordinary South
Africans
Performance
indicator
Reporting
Period
Annual
targets
Quarterly
targets
2014/15
1st
2nd
3rd
4th
Business Process Mapping
concluded
initiate BPM
project and
map prioritised
processes
Mapping of as
is completed
Conduct work
studies, gap
analysis and
benchmarking
Review DPE
structure in
line with the
work study,
gap analysis
and benchmarking
report.
Independent
assessment
concluded
Develop TORs,
RFQ process,
Appointment
of service
providers
Draft and sign
-off of project
plan, Conduct
assessment
Produce ICT
Assessment
report
Implementation of
recommended plans
Approved
communication plan
Review of the
current communication
plan
Communication plan
approved
Quarterly
Quarterly
monitoring of
monitoring of
implementation implementation
1.1 Promote good governance
HUMAN RESOURCES
1.1.1
Business
Process
Mapping
Quarterly
INFORMATION MANAGEMENT
1.1.2
IT Independent Quarterly
assessment
COMMUNICATIONS
1.1.3
P 32
Communication plan
Quarterly
Performance
indicator
Reporting
Period
Annual
targets
Quarterly
targets
2014/15
1st
2nd
3rd
4th
STRATEGIC PLANNING, MONITORING AND EVALUATION
1.1.4
Service
Delivery
Improvement
Plan
Quarterly
Approved
Service
Delivery
Improvement
Plan
Completion
of the SOC
Satisfaction
Survey
New Service
Delivery
Improvement
Plan Approved
Quarterly
monitoring
Quarterly
monitoring
1.1.5
SOC
performance
review
standards
Quarterly
SOC Performance review
standards
-
Standard SOC
financial ratios
identified
SOC financial
performance
index developed
Application of the
performance
index in SOC
financial
performance
review
1.1.6
Development
Quarterly
3 Year
Evaluation Plan
Approved 3
Year Evaluation Plan
-
List of projects
to be part of
the Evaluation
Plan identified
Funding
proposals
submitted to
DPME
1 project
funded
OFFICE OF THE CHIEF FINANCIAL OFFICER
1.1.7
Payment within
30 days
(Compliance
with Treasury
Regulations
8.2.3)
Monthly
Payment of
correct invoices within 30
days
3 monthly reports on the 30
days payment
of service
providers
days payment
of service
providers
days payment
of service
providers
3 monthly
reports on
the 30 days
payment
of service
providers
1.1.8
Reporting
PFMA s40
(4)(c)
Annual
Submission
of 12 monthly
management
reports to DG
and Minister
and National
Treasury 15th
of each month
3 x monthly
management
report
3 x monthly
management
report
3 x monthly
management
report
3 x monthly
management
report
1.1.9
Contract
Management
Annual
Contract
management
policy
Approved contract management policy
Monitoring of
renewal date
and capturing
of new contracts on the
system
Monitoring of
renewal date
and capturing
of new contracts on the
system
Monitoring of
renewal date
and capturing of new
contracts on
the system
INTER-GOVERNMENTAL RELATIONS
1.1.10
Annual Plan
for the Public
Participation
programme
Quarterly
Public ParticiDevelopment
pation engage- and approval
ments
of PPP annual
plan and calendar
4 PPP engagements
held. Quarterly
reporting on
commitments
4 PPP engagements
held. Quarterly
reporting on
commitments
4 PPP engagements
held. Quarterly reporting
on commitments
1.1.11
Provincial
engagements
Quarterly
4 provincial
engagements
Two provincial
engagements
held. Quarterly
reporting on
commitments
One provincial
engagement
held. Quarterly reporting on
commitments
One provincial engagement held.
Quarterly
reporting on
commitments
Approved Plan
for provincial
engagements
P 33
Performance
indicator
Reporting
Period
Annual
targets
Quarterly
targets
2014/15
1st
2nd
3rd
4th
1.2 Build internal capacity to enhance Department’s ability to execute its strategic plan and fulfil its mandate
HUMAN RESOURCES
1.2.1
Human Resources Plan
Quarterly
Approved Human Resources Plan
Review
existing HR
Plan based on
DPSA guidelines
1.2.2
Attraction and Quarterly
retention policy
Attraction and Capabilities
retention policy and competenapproved
cies defined
in line with the
DPE Strategic
Plan
1.2.3
DPE Competency Model
Approved DPE
Competency
Model
Quarterly
Assessment of
the Strategic
Plan Capability
requirements
HR plan
half yearly
implementation report
submitted to
DPSA before
30 September
2014
Conduct work
studies, gap
analysis and
benchmarking
Review DPE
structure in
line with the
work study,
gap analysis
and benchmarking
report.
Review
demand and
supply of human resources
based on the
Department’s
capability and
competency
requirements
Annual HR
Plan report
submitted to
DPSA.
Draft Retention
Policy and
identification
of core and
critical skills
completed
Attraction and Implementaretention policy tion plan
approved
Draft compeCompetency
catalogue and tency model
proficiency levels identified
Consultation
with stakeholders and
approval of
the competency model
1.3 Support transformation initiatives within the Department
1.3.1
Internal DPE
Transformation
plan
Quarterly
Approved
internal
transformation
framework Transformation
Committee
established
Operationalize and train
committee
members
transformation
plan developed and
Approved
Transformation plan
implementation
1.3.2
Implementation of the
Performance
Management
policy
Annual
Roll out of
the new
performance
management
policy
Workshop employees on the
new policy
Implement
quarterly
reward and
recognition for
high performers
Implement
Performance
Management
policy
Implement
Performance
Management
policy
11% vacancy
rate
10% vacancy
rate
Moderate
and payout
individual
performance
incentives
1.3.3
P 34
Current
vacancy rate
reduced
Annual
10% vacancy
rate
14% vacancy
rate
12% vacancy
rate
Expenditure Estimates
Table 2: Administration
Expenditure estimates - Table 2: Administration
2010/11
2011/12
2012/13
Audited
outcome
Audited
outcome
Audited
outcome
25,766
31,861
30,036
31,375
31,375
34,799
36,595
38,612
5,198
8,240
4,173
10,346
10,346
18,180
24,238
15,187
21,443
23,920
28,334
26,545
26,545
29,437
27,837
29,253
9,557
11,171
10,074
9,834
9,834
11,725
12,417
13,032
Human Resources
9,877
9,499
12,698
18,189
18,189
19,753
21,006
22,077
Communications
7,929
13,050
12,840
10,727
10,727
12,042
10,103
10,369
Strategic Planning,
Monitoring and
Evaluation
-
-
3,379
4,850
4,850
5,625
6,729
7,075
Intergovernmental
Relations
-
-
1,772
7,158
7,158
7,657
8,109
8,509
Internal Audit
3,009
4,285
3,276
4,250
4,250
4,823
4,976
5,202
Office
Accommodation
5,413
6,609
8,785
7,758
7,758
8,082
8,518
8,970
88,192
108,635
115,367
131,032
131,032
152,123
160,528
158,286
Current payments
84,235
103,835
112,390
128,593
128,593
147,954
156,824
154,385
Compensation
of employees
42,657
51,287
56,714
66,372
66,372
70,972
75,533
79,333
Rand thousand
2013/14
Adjusted
Appropriation
Revised
Estimate
2014/15
2015/16
Revised
Baseline
Revised Revised
Baseline Baseline
2016/17
Sub-programmes
Ministry
Management
Corporate Services
Total
Economic classification Salaries and wages
39,240
51,287
56,714
66,372
66,372
70,972
75,533
79,333
Social contributions
3,417
-
-
-
-
-
-
-
Goods and services
41,578
52,548
55,676
62,221
62,221
76,982
81,291
75,052
79
131
718
261
261
810
817
823
Administrative fees
3,482
1,771
1,883
3,649
3,649
2,515
2,667
2,825
Assets less than the
capitalisation
threshold
Advertising
308
362
442
983
983
1,055
1,113
1,174
Audit cost: External
2,580
4,117
1,908
1,294
1,294
2,200
2,300
2,400
Bursaries: Employees
917
629
393
1,000
1,000
1,000
1,054
1,110
Catering:
Departmental
activities
981
974
1,147
1,483
1,483
835
877
920
Communication (G&S)
2,054
2,864
3,344
2,639
2,639
2,759
3,026
3,188
Computer services
3,035
2,726
3,078
3,102
3,102
3,974
4,188
4,410
Consultants and
professional services:
Business and
advisory services
1,847
3,237
2,325
7,456
7,456
20,901
21,726
12,321
Consultants and
Legal costs
716
96
-
-
-
1,000
1,000
1,000
P 35
Expenditure estimates - Table 2: Administration
2010/11
2011/12
2012/13
Audited
outcome
Audited
outcome
Audited
outcome
1,941
2,059
2,281
2,199
3,558
2,397
2,397
3,979
4,067
4,246
20
57
30
355
355
252
264
279
349
765
805
1,261
1,261
1,108
1,168
1,232
Inventory:
Food and food
supplies
-
122
113
199
199
-
-
-
Inventory:
Fuel, oil and
gas
-
-
21
-
-
-
-
-
30
61
63
50
50
-
-
-
-
1
3
-
-
-
-
-
49
24
25
19
19
-
-
-
-
-
34
2
2
708
747
787
Consumable:
Stationery,
printing and
office supplies
1,553
2,021
2,616
3,120
3,120
1,361
1,502
1,607
Operating leases
2,814
1,720
1,814
363
363
1,790
1,887
1,986
Property payments
5,435
6,884
9,137
8,100
8,100
8,472
8,918
9,380
Travel and
subsistence
8,621
16,418
14,838
17,108
17,108
16,392
17,690
18,733
Training and
development
1,259
1,932
1,068
1,990
1,990
2,004
2,112
2,223
Operating payments
1,031
1,078
2,352
1,938
1,938
1,491
1,278
1,350
Venues and facilities
358
1,376
1,831
1,150
1,150
900
949
999
Transfers and
subsidies
694
723
227
155
155
100
105
111
Households
694
723
227
155
155
100
105
111
Other transfers to
households
694
723
227
155
155
100
105
111
Payments for capital
assets
3,169
4,071
2,742
2,284
2,284
4,069
3,599
3,790
Machinery and
equipment
3,169
3,922
2,649
2,284
2,284
4,069
3,599
3,790
Transport equipment
1,821
1,411
-
608
608
3,356
2,853
3,005
Other machinery and
equipment
1,348
2,511
2,649
1,676
1,676
713
746
785
-
149
93
-
-
-
-
-
94
6
8
-
-
-
-
-
88,192
108,635
115,367
131,032
131,032
152,123
160,528
158,286
Rand thousand
Contractors
Agency and support /
outsourced services
Entertainment
Fleet services
(including
government motor
transport)
Inventory:
Materials and
supplies
Inventory:
Medical supplies
Inventory:
Other supplies
Consumable supplies
Software and other
intangible assets
Payments for
financial assets
Total
P 36
1,779
983
2013/14
2,130
Adjusted
Appropriation
2,302
Revised
Estimate
2,302
2014/15
2015/16
Revised
Baseline
Revised Revised
Baseline Baseline
1,476
2016/17
DETAIL OF
TRANSFERS
AND
SUBSIDIES
Recipient
2010/11
2011/12
2012/13
Audited
outcome
Audited
outcome
Audited
outcome
2013/14
Adjusted
Appropriation
Revised
Estimate
2014/15
2015/16
2016/17
Revised
Baseline
Revised
Baseline
Revised
Baseline
Rand thousand
Gifts and
donations
Employee social
benefits
Total
694
723
93
100
100
100
105
111
-
-
134
55
55
-
-
-
694
723
227
155
155
100
105
111
Performance and Expenditure Trends for Administration
The spending focus over the medium term will be on supporting the Department in playing its oversight
role over SOC by providing administrative support to the minister, and corporate and human resource
services to the Department. The programme will also focus on improving the Department’s efficiency and
productivity by reconfiguring its business, which will enable it to carry out its mandate; and will put in place
a three-year rolling evaluation plan to assess the impact of programmes that have been implemented by
the Department and the state owned companies. Thus over the medium term, the bulk of the programme’s
allocation will be spent on compensation of employees, who provide technical and administrative support
to the Department. Spending on this item is projected to grow following the reconfiguration. This will result
in the number of personnel increasing from 138 in 2013/14 to 141 in 2016/17. The increase in expenditure
on compensation of employees between 2010/11 and 2013/14 was due to additional funding for improved
conditions of service and to fund the increase in the number of personnel needed to take up roles in the
Strategic Planning, Monitoring and Evaluation and intergovernmental Relations sub programmes, which deal
with international and intergovernmental issues and performance monitoring and evaluation processes for
individual programmes.
Directly related to the growth in personnel is an increase in expenditure on goods and services. Within
this, significant items are consultants and professional services. These provide the specialist expertise
required particularly in the transport, manufacturing, energy and broadband sectors. Over the medium
term, expenditure on consultants is expected to increase due to the reassignment of consultants from the
Portfolio Management and Strategic Partnerships programme to this Administration programme, following the
reorganisation of the department programmes.
P 37
4.2 PROGRAMME 2 - LEGAL & GOVERNANCE
Purpose: Provides legal services and corporate governance systems, as well as facilitates the implementation
of all legal aspects of transactions that are strategically important to the Department and SOC, and ensures
alignment with Government’s strategic intent.
The sub-programmes in this programme are as follows:
• Management comprises the office of the deputy director general, which provides strategic leadership and
management of the programme personnel. The sub-programme has a staff complement of 2 and 82.07
per cent of the budget is used for compensation of employees.
• Legal - internal legal services and support to oversight of the SOC. The unit provides legal services,
including transaction and contract management support to the Department as well as work specifically
related to the commercial activities of the sector teams in respect of the SOC within their oversight. The
sub-programme has a staff complement of 12 and 62.5 per cent of the budget is used for compensation
of employees whilst the balance of the budget is used on goods and services which includes, expert legal
advice and normal operational expenditure.
• Governance – develops and manages effective corporate governance and shareholder management
systems for the Department and its portfolio of SOC. This includes:
Risk Management - identifies reports and monitors both the operational and shareholder risks including
but not limited to SOC specific and cross cutting risks;
Compliance - Ensures that the Department eestablishes and implements systems and processes to
ensure the department and its SOC comply with legislative, regulatory and supervisory requirements in
line with international best practice.
4.2.1 Strategic Objective Annual Targets for Legal and Governance for 2014/15
Over the MTEF period the programme will ensure effective shareholder oversight of state owned companies by:
• Providing legal services and coordinate governance systems
• Facilitate the implementation of all legal aspects of transactions that are strategically important to the
department and state owned companies
• Ensuring that financial and operational risk management processes are embedded throughout the
department as and when required, over the medium term
• Addressing constraints on state owned companies’ contract negotiations and management to improve
commercial competence and contribute to economic growth and development on a regular basis
• Providing assistance on developing and negotiating shareholder compact framework annually in terms of
Public Finance Management Act (1999)
• Providing guidance on appropriate delegation frameworks between the SOC boards and executive
management on a regular basis
Advising the Minister regularly on the appointments of board of directors including remuneration,
preparations for AGMs, conducting annual reviews of ownership policies
P 38
4.2.2 Programme Performance Indicators and Annual Targets for Legal and Governance for 2014/15
Programme
performance indicator
Audited/
Actual performance
2010/11
2011/12
2012/13
Estimated
performance
Medium-term targets
2013/14
2014/15
2015/16
2016/17
2.1 Review oversight function to ensure alignment of SOC to developmental outcomes
2.1.1
Aventura
Deregistration
Addressed
litigation
matters and
the Annual
General
Meeting
The approach to
the winding-up
process
reviewed
and approved. The
Department
had the AFS
for 2010/11
audited and
secured the
Master’s
directive on
the provision
of security
requirements.
The Aventura Board
resolution
secured in
May 2012 to
liquidate the
company.
Lodge of
relevant
documentation with the
registrar of
companies
Liquidation
process
initiated and
appointment of a
liquidator by
the Master
of the High
Court
Bill to repeal
the Overvaal
Resorts Act
developed
Repeal of
the Overvaal
Resorts
Act, 1993
initiated and
submit legislation to
Parliament
Implementation
2.1.2
Resolution
of the 20%
state shareholding in
Namaqualand Mines
-
-
-
-
Agreement
on the disposal of the
20% state
shareholding
2.1.3
Government
Shareholder
Management Bill
(CTSM)
-
-
-
Presidential Review
Committee
on State
Owned
Enterprises Report
Issued by
Presidency
including
recommendations
Bill tabled at
Draft Bill
approved by Parliament
and ratified
Cabinet
into law
-
Approved
Risk Enterprise Risk
Management Framework
Feasibility
Report on
Modelling
Implementation
Implementation
2.2 Promote good corporate governance
2.2.1
Risk modelling tool
-
-
Implementation
Implementation
P 39
4.2.3 Quarterly Targets for Legal and Governance for 2014/15
Performance indicator
Reporting
Period
Annual targets
Quarterly targets
2014/15
1st
3rd
2nd
4th
2.1 Review shareholder oversight function to ensure alignment of SOC to developmental outcomes
Draft Bill
developed
2.1.1
Deregistration
of Aventura
Quarterly
Draft Bill to
repeal the
Overvaal Act
127 of 1993
Assist the
Liquidator to
prove creditor’s claims
and transfer of
assists
Transfer of
initiated
Transfer of
assets completed (confirmation from
the liquidator
received)
2.1.2
Resolution of
the 20%State
Shareholding
in Namaqualand Mines
Quarterly
Agreement on
the disposal or
housing of the
20% shareholding in
Namaqualand
Mines
Agreement on
the warehousing of the 20%
state’s shareholding
complete eval- Commence
uation of the
negotiations
20% stake
on the disposal approach
Agreement on
the disposal
approach sent
to the Minister
of Mineral
Resources for
ratification
2.1.3
Government
Shareholder
Management
(GSM) Bill
Quarterly
GSM Bill
-
Development
of project plan
in line with instruction from
Presidency
Implementation of project
deliverables
as per project
plan (in line
with progress
as per Q2)
Implementation of project
deliverables
as per project
plan
-
Assessment
of Maturity
of SOC Risk
Management
Practices
(Interviews/
Consultation
with SOC Risk
Officers
Assessment
of Maturity
of SOC Risk
Management
Practices
(Interviews/
Consultation
with SOC Risk
Officers
Compile and
issue a report
with recommendations to
the Minister
2.2 Promote good corporate governance
2.2.1
Risk modelling tool
Quarterly
Feasibility
report on risk
modelling tool
Expenditure Estimates
Table 3: Legal and Governance
Rand thousand
2010/11
2011/12
2012/13
Audited
outcome
Audited
outcome
Audited
outcome
2013/14
1,581
1,822
2,252
2,089
2,089
2,826
2,999
3,158
10,340
12,775
13,370
11,789
11,789
12,919
13,737
14,461
2,732
4,921
7,855
8,460
8,460
8,222
8,800
9,266
14,653
19,518
23,477
22,338
22,338
23,967
25,536
26,885
Adjusted
Appropriation
Revised
Estimate
2014/15
2015/16
2016/17
Revised
Baseline
Revised
Baseline
Revised
Baseline
Subprogrammes
Management
Legal
Governance
Total
P 40
2010/11
2011/12
2012/13
Audited
outcome
Audited
outcome
Audited
outcome
14,653
19,518
23,450
22,338
22,338
23,967
25,536
26,885
Compensation of
employees
6,453
13,206
14,111
15,429
15,429
18,198
19,459
20,486
Salaries and wages
6,145
13,206
14,111
15,429
15,429
18,198
19,459
20,486
Rand thousand
2013/14
Adjusted
Appropriation
Revised
Estimate
2014/15
2015/16
2016/17
Revised
Baseline
Revised
Baseline
Revised
Baseline
Economic classification
Current payments
Social contributions
308
-
-
-
-
-
-
-
Goods and services
8,200
6,312
9,339
6,909
6,909
5,769
6,077
6,399
Administrative fees
-
-
148
-
-
-
-
-
Advertising
-
-
41
-
-
-
-
-
Assets less than the
capitalisation threshold
-
-
2
-
-
-
-
-
Catering: Departmental
activities
51
54
74
71
71
24
24
27
Communication (G&S)
79
78
124
125
125
204
215
226
Consultants and
Business and advisory
Services
2,404
422
4,322
2,924
2,924
1,450
1,529
1,610
Consultants and
Legal costs
4,557
2,300
430
2,000
2,000
2,166
2,282
2,402
-
28
84
-
-
-
-
-
576
343
552
705
705
-
-
-
Contractors
Agency and support /
outsourced services
Entertainment
6
1
2
8
8
14
15
15
Inventory: Materials and
supplies
-
24
-
-
-
-
-
-
Inventory: Medical
supplies
-
-
2
-
-
-
-
-
Consumable:
Stationery, printing and
office supplies
-
2
74
1
1
-
-
-
Operating leases
-
-
-
5
5
-
-
-
402
2,547
2,753
775
775
1,831
1,928
2,030
Training and
development
Travel and subsistence
34
120
170
191
191
-
-
-
Operating payments
48
275
325
24
24
-
-
-
Venues and facilities
43
118
236
80
80
80
84
89
Transfers and
subsidies
-
-
27
-
-
-
-
-
Households
-
-
27
-
-
-
-
-
Other transfers to
households
-
-
27
-
-
-
-
-
Payments for capital
assets
-
-
-
-
-
-
-
-
Payments for financial
assets
-
-
-
-
-
-
-
-
14,653
19,518
23,477
22,338
22,338
23,967
25,536
26,885
Total
P 41
DETAIL OF
TRANSFERS AND
SUBSIDIES
Recipient
2010/11
2011/12
2012/13
Audited
outcome
Audited
outcome
Audited
outcome
2013/14
Adjusted
Appropriation
Revised
Estimate
2014/15
2015/16
2016/17
Revised
Baseline
Revised
Baseline
Revised
Baseline
Rand thousand
Employee social
benefits
-
-
22
-
-
-
-
-
Employee social
benefits
-
-
5
-
-
-
-
-
Total
-
-
27
-
-
-
-
-
Performance and Expenditure Trends
The spending focus over the medium term will be on increasing the programme’s capacity to provide legal
services and transaction and contract management support; and on facilitating the creation of a legislative
framework for the department’s mandate to ensure compliance with applicable legislation and enhance
corporate governance procedures by state owned companies. As a result, the Legal and Governance sub
programmes receive the bulk of the programme’s allocation over the medium term. In line with the laws
governing state owned companies, the Minister of Public enterprises is obliged to exercise care in carrying out
these responsibilities. Specialist corporate legal expertise is frequently required to assist on issues including
proposals by state owned companies, and the assessment of contractual obligations and transactions.
Spending on consultants who provide legal services decreased between 2010/11 and 2013/14 as the internal
capacity to perform this function increased. However, due to an increase in transaction services, contractual
arrangements and governance arrangements, spending on legal costs is expected to increase over the
medium term.
Over the medium term, 74.5 per cent of the programme’s budget is allocated to spending on compensation
of employees, with the number of personnel projected to increase from 19 in 2013/14 to 27 posts in 2016/17.
The projected increase in the establishment and its effect on compensation of employees is a continuation of
the trend observable between 2010/11 and 2013/14. There were 3 vacancies as at 30 November 2013 due
to the scarcity of skills in these sector specific areas. However, these vacancies are in the process of being
filled.
4.3 PROGRAMME 3 - PORTFOLIO MANAGEMENT AND STRATEGIC PARTNERSHIPS
Purpose: to align the corporate strategies of the SOC with Government’s strategic intent, as well as
monitoring and benchmarking their financial and operational performance and capital investment plans. To
align shareholder oversight with overarching Government’s economic, social and environmental policies as
well as building of focused strategic partnerships between the SOC, strategic customers, suppliers and
financial institutions.
The sub-programmes in this programme are as follows:
• Energy and Broadband Enterprises – Includes Eskom, PBMR and Broadband Infraco.
• Manufacturing Enterprises - Includes Denel, Alexkor and SAFCOL.
• Transport Enterprises - Includes South African Airways (SAA), South African Express (SAX) and Transnet.
• Economic Impact and Policy Alignment – aligns SOC with overarching government economic, social
and environmental policies.
P 42
• Strategic Partnerships – has evolved from the work of the Chief Investment and Portfolio Manager (CIPM)
and aims to ensure SOC commercial sustainability and attainment of desired strategic outcomes and
objectives by SOC.
4.3.1.1 Energy and Broadband Enterprises comprises:
• Management comprises the office of the Deputy Director-General which provides strategic leadership
and management of the programme personnel.
• Eskom - shareholder management and oversight of the Eskom business, including the generation,
transmission and distribution of electricity with particular emphasis on ensuring security of supply. To
also provide strategic financial and transactional analysis of Eskom businesses as well as monitoring of
its capital investment programme. Additionally, provide oversight of the implementation of the PBMR care
and maintenance programme to preserve intellectual property and assets.
• Broadband Infraco - shareholder management and oversight of Broadband Infraco and monitoring of
the implementation of its investment programme, as well as strategic financial and transactional analysis
including interfacing with investors and strategic stakeholders across the sector.
4.3.1.1.1Strategic Objective Annual Targets for 2014/15
Over the MTEF period the sub-programme will ensure the following:
• Strengthen the department’s oversight role by ensuring the alignment of strategic intent in relation to
the state owned companies’ role in achieving government objectives in the energy and information and
communication technology sector on an ongoing basis.
• Contribute to the enhancement of the performance of state owned companies by:
- Evaluating corporate plans to determine whether state owned companies’ performance aligns with
agreed key performance indicators, and providing advice and guidance to their boards on an ongoing
basis.
- Monitoring the implementation of corporate plans and shareholder compacts quarterly
- Assessing shareholder and enterprise risk quarterly and advising boards on areas of concern.
Eskom
• Support the security of electricity supply by:
- Examine Eskom’s maintenance plans, operational practices, electricity generation and distribution
efficiency, and its reserve margins on an ongoing basis.
- Ensuring that Eskom supplies electricity by monitoring, evaluating and engaging with Eskom on system
security and the new build programme to alleviate constraints on an ongoing basis.
- Monitoring the rollout of the capital investment programme to ensure it is delivered on time, is of
appropriate quality and within budget.
• Ensure the legal and regulatory compliance of Eskom by regularly engaging with relevant stakeholders
such as the department of Energy, Environmental Affairs and Water Affairs and with the National Energy
Regulator of South Africa regarding policies and regulations affecting Eskom.
• Reduce Eskom’s dependence on funding from the fiscus by monitoring cost escalations for its capital
investment programme and operations in order to cost effectively roll out the build programme.
• Exercise oversight to ensure that Eskom’s capital investment support local suppliers industries by
monitoring the implementation of the competitive supplier industries by the company’s quarterly reports to
assess progress.
P 43
Broadband Infraco
• Support Broadband Infraco in securing government as an anchor client after the fanalisation of the
information, communication and technology strategy and the broadband implementation plan, thus
contributing to its long term sustainability, which will reduce reliance on government for recapitalisation of
the company.
4.3.1.1.2 Programme Performance Indicators and Annual Targets for Energy and Broadband Enterprises for 2014/15
Programme
2010/11
Audited/Actual performance
2010/11
2011/12
2012/13
Estimated
performance
Medium-term targets
2013/14
2014/15
2015/16
3.1 Ensure effective shareholder oversight and monitoring of Eskom and Broadband Infraco
2016/17
3.1.1
Approved
Corporate Plans
aligned to
Department
and Government Developmental
Objectives
Approved
Corporate
Plans
Approved
Corporate
Plans
Approved
Corporate
Plans
Obtain
assessed
Corporate
Plans
Assessed
Corporate
Plans
Assessed
Corporate
Plans
Assessed
Corporate
Plans
3.1.2
Analysis
of annual
report
Annual
Report Assessments
produced
before the
AGMs.
Annual
Report Assessments
produced
before the
AGMs.
Annual
Report Assessments
produced
before the
AGMs.
Draft Annual
Report
Assessments
completed
Draft Annual
Report
Assessed.
Draft Annual
Report
Assessed.
Draft Annual Report
Assessed.
3.1.3
Minister’s
address in
preparation
of the Annual General
Meetings
(AGMs)
Minister’s
addresses
issued at the
AGMs
Minister’s
addresses
issued at the
AGMs
Minister’s
addresses
issued at the
AGMs
Minister’s
addresses
issued at the
AGMs
Minister’s
addresses
issued at the
AGMs
Minister’s
addresses
issued at the
AGMs
Minister’s
addresses
issued at
the AGMs
3.1.4
Strategic
Intent Statement
Strategic
Intent
Statements
issued at
AGMs
Strategic
Intent
Statements
issued at
AGMs
Strategic
Intent
Statements
issued at
AGMs
Strategic
Intent Statements issued
at AGMs
Strategic
Intent
Statement
developed
Strategic
Intent
Statement
developed
Strategic
Intent
Statement
developed
3.1.5
Negotiation and
approval of
shareholder
compact
Approved
Shareholder
Compacts
Approved
Shareholder
Compacts
Approved
Shareholder
Compacts
Shareholder
Compacts
approved
Approved
Shareholder
Compacts.
Approved
Shareholder
Compacts.
Approved
Shareholder Compacts.
3.1.6
Assessment
of quarterly
reports
Quarterly
report assessed
Quarterly
report assessed
Quarterly
report assessed
Quarterly
report assessed
Quarterly
report assessed
Quarterly
report assessed
Quarterly
report
assessed
P 44
Programme
2010/11
3.1.7
Financial and
Technical
assessment
of PFMA Applications
Estimated
performance
Medium-term targets
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
Rigorous assessment of
PFMA applications with
appropriate
recommendations to
Minister
within
required
timeframes
appropriate
recommendations to
Minister
within
required
timeframes
appropriate
recommendations to
Minister
within
required
timeframes
appropriate
recommendations to
Minister within required
timeframes
All received
PFMA
application
assessment
submitted
All received
PFMA
application
assessment
submitted
All received
PFMA
application
assessment
submitted
3.2 Stabilise our SOC looking at strengthening their balance sheets and funding options
3.2.1
Funding for
BBI
Transfer
of R138.6
million for
capital and
operational
cost
-
-
-
Secure
funding for
BBI
-
-
3.2.2
MYPD 3
-
-
-
NERSA
decision
on MYPD3
application
MYPD 3
Implementation
Implementation
3.2.3
Position
paper on the
10 year tariff
path
-
-
-
Position
paper on the
10 year tariff
path
-
3.3 Driver economic infrastructure investment to enhance the capacity of the economy with emphasis on the SIPs
3.2.4
Assessment
of Eskom
Capex
Program
-
-
Independent review
study of the
Eskom’s
CAPEX completed
Quarterly
Assessment
of Eskom
CAPEX
program
Review and
update
Review and
update
Reporting
Period
Annual targets
Quarterly targets
2014/15
1st
2nd
3rd
4th
3.1 Ensure effective oversight and monitoring of Eskom and Broadband Infraco
3.1.1
Analysis of
Eskom and
BBI Corporate
Plans
Annual
Assessed
Corporate
Plan
Decision
Memo on the
assessment of
the Corporate
Plan submitted
-
-
3.1.2
Analysis of
Annual reports
Annual
Draft Annual
report assessed
-
-
-
Assessment
of the draft
annual report
completed
P 45
3.1.3
Minister’s
addresses in
preparation of
the AGMs
3.1.4
Annual
Minister’s
addresses
submitted for
the AGMs
-
Minister’s
addresses
issued at the
AGMs
-
-
Strategic Intent Annual
Statement (SIS)
Strategic
Intent
Statement
developed
-
Strategic Intent Statement
issued
-
-
3.1.5
Negotiation
and approval
of shareholder
compact
Annual
Approval
of 2015/16
Shareholder
Compact
-
Engagement
with SOC on
the compact
initiated
Identification
of KPAs and
KPIs for Minister’s approval
Approved
2015/16
Shareholder
Compacts
3.1.6
Assessment
of Eskom and
BBI quarterly
reports
Quarterly
4 quarterly
reports assessed
Quarterly
report (Q4)
assessed and
investor brief
developed
when necessary
Quarterly
report (Q1)
assessed and
investor brief
developed
when necessary
Quarterly
report (Q2)
assessed and
investor brief
developed
Quarterly
report (Q3)
assessed and
investor brief
developed
Quarterly
Assessment of
PFMA
applications
All received
PFMA
application
assessment
submitted
All received
PFMA
application
assessment
submitted
All received
PFMA
application
assessment
submitted
All received
PFMA
application
assessment
submitted
Progress of
report on the
participation
and project
based funding
-
Assessment
of operational
and financial key areas
Monitoring
Road to rail
migration
3.1.7
Assessment of
PFMA
applications
3.2 Stabilise our SOC looking at strengthening of balance sheets and funding options
3.2.1
Funding for
BBI
Quarterly
Secure
funding for
BBI
-
-
Submission
of guarantee
application for
BBI
3.2.2
MYPD 3
Quarterly
Brief Cabinet
on Eskom
financial challenges
Decision
Memo on
the Business
Productivity
Program
Draft a joint
cab memo
with National Treasury
Shareholder’s
loan to equity
-
-
3.2.3
Position paper
on the 10 year
tariff path
Quarterly
Position paper
on the 10 year
tariff path
Engagements
government
departments
and SOC to
define the
scope
Review
modelling of
various tariff
and demand
scenarios to
determine the
optimal tariff
Position paper
on 10 year
tariff path
-
3.3 Drive economic infrastructure investment to enhance the capacity of the economy with emphasis on the SIPs
2.3.1
P 46
Assessment of
Eskom Capex
Program
Quarterly
Quarterly
assessment of
Eskom CAPEX
program
Assessment
memo on
Eskom Capex
Program
Assessment
memo on
Eskom Capex
Program
Assessment
memo on
Eskom Capex
Program
Assessment
memo on
Eskom Capex
Program
4.3.1.2 Manufacturing Enterprises
•Denel – Shareholder management and oversight of Denel’s financial performance and strategy
implementation.
• Alexkor – Shareholder management and oversight of Alexkor including review of Alexkor’s strategy to
enhance financial sustainability, and overseeing the implementation of the Richtersveld Deed of Settlement.
• SAFCOL- shareholder management and oversight including forestry management, timber harvesting,
timber processing and related activities, both domestically and internationally as well as oversight of the
entity’s restructuring.
Over the MTEF period the sub programme will:
• Ensure continuous alignment between shareholder strategic intent and the objective of state owned
companies in the defence, mining and forestry sector by annually reviewing their enterprise strategies
and mandates in the context of industry and sectorial policy shifts, and alert their boards and enterprises
to material deviations.
• Support the state owned companies in delivering on their outcome as set out in the shareholder compacts
and corporate plan by benchmarking key performance measures annually and analysing quarterly and
annual reports in order to assess the extent of progress
• Collaborate with other state owned companies to contribute to achieving the national economic
development objectives.
Denel
• Oversee the development of a long term growth strategy to achieve financial stability and growth of
manufactured export products.
• Leverage off the company’s advanced manufacturing capability through securing work packages in
support of the industrialisation drive aligned with industrial policy action plan.
Alexkor
• Monitoring the implementation of Alexkor’s strategy to promote financial sustainability and monitor the
implementation of the pooling and sharing joint venture turnaround strategy to ensure increased production
and promote financial stability of joint venture.
South African Forestry Company
• Oversee the formulation and implementation of the SAFCOL corporate strategy, within the forestry sector
over the medium term.
P 47
4.3.1.2.2 Programme Performance Indicators and Annual Targets for Manufacturing Enterprises for 2014/15
Programme
performance
indicator
Estimated
Medium-term targets
performance
2010/11
2013/14
2011/12
2012/13
2014/15
2015/16
2016/17
3.1 Ensure effective shareholder oversight of Denel, SAFCOL and Alexkor
3.1.1
Approved
Corporate Plans
aligned to
Department
and Government developmental
objectives
Approved
Corporate
Plans
Approved
Corporate
Plans
Approved
Corporate
Plans
Obtain
assessed
Corporate
Plans
Assessed
Corporate
Plans
Assessed
Corporate
Plans
Assessed
Corporate
Plans
3.1.2
Analysis
of annual
reports
Annual
Report
assessment
produced
before the
AGMS
Annual
Reports
assessment
produced
before the
AGMS
Annual
Reports
produced
before the
AGMs
Draft Annual
Report
assessed
Draft Annual
Report
Assessed
Draft Annual
Report
Assessed
Draft Annual Report
Assessed
3.1.3
Minister’s
address in
preparation
of Annual
General
Meeting
(AGM)
Strategic
Intent
Statements
issued at
AGMs
Strategic
Intent
Statements
issued at
AGMs
Strategic
Intent
Statements
issued at
AGMs
Minister’s
main address issued
at AGMs
Minister’s
addresses
issued at
AGMs
Minister’s
addresses
issued at
AGMs
Minister’s
addresses
issued at
AGMs
3.1.4
Strategic
Intent Statement (SIS)
Strategic
Intent
Statements
issued at
AGMs
Strategic
Intent
Statements
issued at
AGMs
Strategic
Intent
Statements
issued at
AGMs
Strategic
Intent Statements issued
at AGMs
Strategic
Intent
Statement
developed
Strategic
Intent
Statement
developed
Strategic
Intent
Statement
developed
3.1.5
Negotiation and
approval of
shareholder
compact
Approved
Shareholder
Compacts
Approved
Shareholder
Compacts
Approved
Shareholder
Compacts
Shareholder
Compacts
approved
Approved
Shareholder
Compacts
Approved
Shareholder
Compacts
Approved
Shareholder Compacts
3.1.6
Assessment
of quarterly
reports
Quarterly
report assessed
Quarterly
report assessed
Quarterly
report assessed
Quarterly
report assessed
Quarterly
report assessed
Quarterly
report assessed
Quarterly
report
assessed
3.1.7
Financial and
Technical
assessment
appropriate
recommendations to
Minister
within
required
timeframes.
appropriate
recommendations to
Minister
within
required
timeframes.
appropriate
recommendations to
Minister
within
required
timeframes.
appropriate
recommendations to
Minister within required
timeframes.
All received
PFMA application assessments
submitted
All received
PFMA application assessments
submitted
All received
PFMA
application
assessments
submitted
Monitor
implementation
Monitor
implementation
3.2 Stabilise our SOC looking at strengthening their balance sheets and funding options
3.2.1
P 48
Monitor the
Implementation of
Alexkor’s
Strategy
-
-
-
Draft
Strategy
developed
by Alexkor
Alexkor
Strategy
approved
by the
Shareholder
to ensure
sustainability of the
company
Programme
performance
indicator
Estimated
Medium-term targets
performance
3.2.2
2010/11
-
2013/14
Review SAFCOL’s New
Strategy
2011/12
-
2012/13
Study
on state
ownership in
the forestry
sector completed
Draft Strategy submitted
by the company to the
shareholder
2014/15
2015/16
Submission
Implemenof SAFCOL’s tation of
Strategy to
interventions
the shareholder for
approval
2016/17
Implementation of
interventions
3.3 Leverage SOC procurement spend to support industrialisation and transformation
3.3.1
South Africa’s MRO
Services
Hub
-
-
-
-
Technical
capability
assessment of the
3 entities
concluded
(SAA, SAX
and Denel)
Structure
for the MRO
agreed
begin
integration
and monitor
implementation
Reporting
Period
Annual targets
2014/15
Quarterly targets
1st
2nd
3rd
4th
3.1 Ensure effective oversight and monitoring of Denel, Alexkor and SAFCOL
3.1.1
Analysis OF
SAFCOL,
Denel and
Alexkor’s
Corporate
Plans
Annual
Assessed
Corporate
Plans
Decision
Memo on the
assessment
of Corporate
Plans
submitted
-
-
-
3.1.2
Analysis of
SAFCOL,
Denel and
Alexkor’s
Annual reports
Annual
Annual reports
assessed
-
Assessment
of draft annual
reports
completed
-
-
3.1.3
Minister’s
addresses in
preparation of
the AGMs
Annual
Minister’s
addresses
submitted for
the AGMs
-
Minister’s
addresses
issued at the
AGMs
-
-
3.1.4
(SIS)
Annual
developed
-
Strategic
Intent
Statement
issued
-
-
3.1.5
Negotiation
and approval
of shareholder
compacts
Annual
2015/16
Shareholder
compacts
approved
-
Engagement
with SOC on
the compact
initiated
Identification
of KPA and
KPI for Minister’s approval.
Approved
2015/16
shareholder
compact
P 49
Reporting
Period
3.1.6
Quarterly
Quarterly
Assessment
of SAFCOL,
Denel and
Alexkor’s
quarterly
reports
Annual targets
1st
2nd
3rd
4th
4 quarterly
reports assessed
Quarterly
report (Q4)
assessed and
investor brief
developed
when
necessary
Quarterly
report (Q1)
assessed and
investor brief
developed
when
necessary
Quarterly
report (Q2)
assessed and
investor brief
developed
when
necessary
Quarterly
report (Q3)
assessed and
investor brief
developed
when
necessary
Assessment of
PFMA applications
All received
PFMA
application
assessment
submitted
All received
PFMA
application
assessment
submitted
All received
PFMA
application
assessment
submitted
All received
PFMA
application
assessment
submitted
2014/15
• Assessment of
operational
and financial key
areas
3.1.7
Assessment of
PFMA
applications
Quarterly targets
3.2 Stabilise SOC looking at strengthening of balance sheets and funding options
3.2.1
Monitor the
implementation of
Alexkor’s
strategy
Quarterly
Monitor the
Implementation of Alexkor
Strategy
Monitoring
the implementation of
the strategy
(through the
assessment
of quarterly
reports)
Monitoring
the strategy
(through the
assessment
of quarterly
reports)
Monitoring
the strategy
(through the
assessment
of quarterly
reports)
Monitoring
the strategy
(through the
assessment
of quarterly
reports)
3.2.2
Review SAFCOL’s new
strategy
Quarterly
Submission
of SAFCOL’s
Strategy to the
shareholder
for approval
-
Submission
of Corporate
Strategy by
SAFCOL
Assessment
and approval
of the Corporate Strategy
Monitor the implementation
of the strategy
Develop a
benchmarking
framework
Decision
support for the
roadmap
3.3.1
South Africa’s
MRO Services
Hub
Quarterly
Technical
capability
assessment of
the 3 entities
concluded
(SAA,SAX,
and Denel)
Consultation
(internally and
externally)
Finalisation of
the MOU
Finalisation of
the MOA
Finalisation of
the TORs
4.3.1.3 TRANSPORT ENTERPRISES
Purpose: to align the corporate strategies of Transnet, South African Airways (SAA) and South African
Express Airways (SAX) with Government’s strategic intent and to monitor and benchmark their financial and
operational performance.
The programme comprises of the following sub programmes
• Transnet - shareholder management and oversight of Transnet which includes the capital expansion
programme and the effective operation of Transnet and its business units.
P 50
• SAA and SAX shareholder management and oversight of SAA and SAX as well as monitoring SAA’s
transformation into a commercially successful national carrier that will contribute to the development of
trade and tourism domestically and the rest of Africa, and overseeing the establishment of SAX as a
regional carrier with a focus on the African market.
Over the MTEF the sub programme will:
• Ensure the alignment of the corporate strategies of Transnet, SAA and SAX with government’s strategic
intent and ensure that these state owned transport companies remain competitive, financially sustainable,
and deliver an optimal service to the economy.
• Support Transnet, SAA and SAX in delivering their outcomes by identifying appropriate benchmarks and
key performance measures for their respective shareholder compacts and corporate plans and assess
their performance on a quarterly and annual basis.
• Create an enabling environment for transport enterprises and ensure an appropriate balance between the
enterprises’ interests, sustainability and developmental objectives by engaging with policy departments
and relevant regulators at least once every quarter to discuss and resolve areas of misalignment; and
inform boards of Transnet, SAA and SAX accordingly.
• Implement the national corridor performance measurement system, over the medium term, which will
identify inefficiencies in the logistics systems in South Africa; contribute to increased competitiveness;
ensure an appropriate modal split between road, rail, and pipeline services ensure effective utilisation
of existing logistics infrastructure and identify those areas that legitimately qualify for investment and
upgrade.
• Contribute to and facilitate the national transport policy formulation, as and when required, to achieve
improvements in passenger and cargo movements.
Transnet
• Provide oversight of Transnet’s implementation of the market demand strategy to optimise the economic
impact of infrastructure investment on the economy by monitoring the rollout of Transnet’s capital
expenditure programme on quarterly and annual basis to assess any significant deviations from corporate
plans and potential cost overruns and time delays on major capital projects; and taken necessary action
when there are deviations.
• Ensures that Transport’s operates an efficient, competitive and responsive transport and logistics systems by:
- Reviewing the logistics cost in the economy and finalising the methodology o measure Transnet’s
contribution to transport costs as a percentage Gross Domestic Product; this will be completed in
March 2016
- Overseeing the introduction of multiple private rail operators on the branch line network to revitalise the
rail network , and quantifying the operational efficiency of freight corridors to realise socioeconomic
benefits by March 2015
- Monitoring the implementation of the competitive supplier development programme to leverage off
Transnet’s locomotive fleet procurement for the development of local railway supplier industries by
evaluating progress towards achieving localisation targets in the Transnet quarterly and annual reports.
South African Airways and South African Express Airways
• Monitor and assist with the implementation of SAA Long Term Turnaround Strategy (LTTS) and SAX 20:20
Vision, on an ongoing basis.
• Provide strategic guidance as and when required to strengthen the financial positions of SAA and SAX to
ensure their long-term sustainability.
P 51
4.3.1.3.2 Programme Performance Indicators and Annual Targets for Transport Enterprises for 2014/15
Programme
2010/11
Estimated
performance
Medium-term targets
2011/12
2014/15
2015/16
2016/17
2012/13
2013/14
5.1 Effective shareholder oversight of SAA, SAX and Transnet
5.1.1
Approved
Corporate Plans
aligned to
Department
and
Government
Developmental
Objectives
Approved
Corporate
Plans
Approved
Corporate
Plans
Approved
Corporate
Plans
Obtain
assessed
Corporate
Plans
Assessed
Corporate
Plans
Assessed
Corporate
Plans
Assessed
Corporate
Plans
5.1.2
Analysis
of Annual
Report
Annual
Report
assessment
produced
before the
AGMs
Annual
Report
assessment
produced
before the
AGMs
Annual
Report
assessment
produced
before the
AGMs
Draft Annual
Report
assessment
completed
Draft Annual
Report
assessed
Draft Annual
Report
assessed
Draft Annual
Report
assessed
5.1.3
Minister’s
address in
preparation
of the Annual General
Meeting
(AGMS)
Strategic
Intent
Statements
issued at the
AGMs
Strategic
Intent
Statements
issued at the
AGMs
Strategic
Intent
Statements
issued at the
AGMs
Strategic
Intent
Statements
issued at the
AGMs
Minister’s
address
issued at the
AGMs
Minister’s
address
issued at the
AGMs
Minister’s
address
issued at the
AGMs
5.1.4
Strategic
Intent Statement (SIS)
Strategic
Intent
Statements
issued at
AGMs
Strategic
Intent
Statements
issued at
AGMs
Strategic
Intent
Statements
issued at
AGMs
Strategic
Intent
Statements
issued at
AGMs
Strategic
Intent
Statement
developed
Strategic
Intent
Statement
developed
Strategic
Intent
Statement
developed
5.1.5
Negotiation and
approval of
Shareholder
Compacts
Approved
Shareholder
Compacts
Approved
Shareholder
Compacts
Approved
Shareholder
Compacts
Approved
Shareholder
Compacts
Approved
Shareholder
Compacts
Approved
Shareholder
Compacts
Approved
Shareholder
Compacts
5.1.6
Assessment
of quarterly
reports
Quarterly
report
assessed
Quarterly
report
assessed
Quarterly
report
assessed
Quarterly
report
assessed
Quarterly
report
assessed
Quarterly
report
assessed
Quarterly
report
assessed
5.1.7
Financial and
Technical
assessment
appropriate
recommendations to
Minister
within
required
timeframes
appropriate
recommendations to
Minister
within
required
timeframes
appropriate
recommendations to
Minister
within
required
timeframes
appropriate
recommendations to
Minister
within
required
timeframes
All received
PFMA applications assessments
submitted
All received
submitted
All received
submitted
Monitor
implementation
Monitor
implementation
5.2 Stabilise SOC looking at strengthening of balance sheets and funding options
5.2.1
P 52
Monitor the
SAA LTTS
and SAX
20:20 Vision
-
-
-
LTTS supported by
the shareholder and
presented to
Cabinet
Quarterly
monitoring
of the SAA
LTTS and
SAX 20:20
Vision
Programme
2010/11
5.2.2
Review
Funding
requirement
for SAA and
SAX
Estimated
performance
Medium-term targets
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
-
-
Approval of
the guarantees to
support the
airlines
Approval
of the LTTS
and 20:20
Strategy
Funding requirements
for SAA
and SAX defined
Monitor
implementation
Monitor
implementation
5.3 Drive economic infrastructure investment to enhance the capacity of the economy with emphasis on SIPs
5.2.3
Quarterly
Assessment of the
Transnet’s
investment
programme
Quarterly
Assessment of the
Transnet’s
investment
programme
Quarterly
Assessment of the
Transnet’s
investment
programme
Quarterly
Assessment of the
Transnet’s
investment
programme
Quarterly
Assessment of the
Transnet’s
investment
programme
Quarterly
Assessment of the
Transnet’s
investment
programme
Quarterly
Assessment of the
Transnet’s
investment
programme
Quarterly
Assessment of the
Transnet’s
investment
programme
5.2.4
Quarterly
assessment of the
airlines fleet
renewal
programme
-
-
-
-
Quarterly
assessment of the
airlines fleet
renewal
programme
Quarterly
assessment of the
airlines fleet
renewal
programme
Quarterly
assessment of the
airlines fleet
renewal
programme
5.2.5
Whole-ofstate policy
review
-
-
-
-
Whole-ofstate policy
review
-
-
• Fly
South
Africa
policy
• Transit
visa
• Airlift
strategy
alignment
with
Tourism
with
Tourism
strategy
4.3.1.3.3 Quarterly targets for Transport Enterprises for 2014/15
Reporting
Period
Annual targets
2014/15
Quarterly targets
1st
2nd
3rd
4th
5.1 Ensure effective oversight and monitoring of Transnet, SAA and SAX
5.1.1
Analysis of
Transnet, SAA
and SAX Corporate Plans
Annual
Assessed Corporate Plan
Decision
memo on the
assessment
of Corporate
Plan submitted
-
-
5.1.2
Assessment
of Annual
Reports
Annual
Annual report
assessed
-
Assessment
of the draft
annual report
completed
(SAA and
SAX)
-
Assessment
of the draft
annual report
completed
(Transnet)
P 53
Reporting
Period
5.1.3
Minister’s
addresses in
preparation of
the AGMs
Annual
5.1.4
(SIS)
5.1.5
Annual targets
Quarterly targets
2014/15
1st
2nd
3rd
4th
Minister’s
addresses
submitted for
the AGMs
Minister’s
addresses
issued at the
AGMs
(Transnet)
Minister’s
addresses
issued at the
AGMs
(SAA and
SAX)
-
-
Annual
Strategic
Intent
Statement
developed
-
Strategic
Intent
Statement
issued
-
-
Negotiation
and approval
of shareholder
compacts
Annual
2015/16
Shareholder
compacts
approved
-
Engagement
with SOC on
the compact
initiated
Identification
of KPAs and
KPIs for Minister’s approval
Approved
2015/16
Shareholder
Compact
5.1.6
Assessment of
Transnet, SAA
and SAX quarterly reports
Quarterly
4 quarterly
reports assessed
Quarterly
report (Q4)
assessed and
investor brief
developed
when necessary
Quarterly
report (Q1)
assessed and
investor brief
developed
when necessary
Quarterly
report (Q2)
assessed and
investor brief
developed
when necessary
Quarterly
report (Q3)
assessed and
investor brief
developed
when necessary
5.1.7
Assessment of
PFMA applications
Quarterly
Assessment of
PFMA applications
All received
PFMA
application
assessment
submitted
All received
PFMA
application
assessment
submitted
All received
PFMA
application
assessment
submitted
All received
PFMA
application
assessment
submitted
Quarterly
monitoring of
the SAA LTTS
and SAX 20:20
Vision
Quarterly
monitoring of
the SAA LTTS
and SAX 20:20
Vision
5.2 Stabilise our SOC looking at strengthening of balance sheets and funding options
5.2.1
Monitor the
implementation of the SAA
LTTS and SAX
20:20 Vision
Quarterly
Monitor the
Implementation of the SAA
LTTS and SAX
20:20 Vision
Quarterly
monitoring of
the SAA LTTS
and SAX 20:20
Vision
Quarterly
monitoring of
the SAA LTTS
and SAX 20:20
Vision
5.2.2
Review Funding requirement for SAA
and SAX
Quarterly
Funding
requirements
for SAA and
SAX defined
Review of
funding requirements for
SAA and SAX
Submission
to National
Treasury
developed
for recapitalisation of the
Airlines
5.3.1
Quarterly
assessment of
the Transnet’s
investment
programme
Quarterly
Quarterly
investment
programme
assessments
Quarterly
investment
programme
assessments
Quarterly
investment
programme
assessments
Quarterly
investment
programme
assessments
Quarterly
investment
programme
assessments
5.3.2
Quarterly
assessment
of the airline’s
fleet renewal
programme
Quarterly
Quarterly
assessment
of the airline’s
fleet renewal
programme
Quarterly
assessment
of the airline’s
fleet renewal
programme
Quarterly
assessment
of the airline’s
fleet renewal
programme
Quarterly
assessment
of the airline’s
fleet renewal
programme
Quarterly
assessment
of the airline’s
fleet renewal
programme
P 54
Reporting
Period
5.3.3
Annually
Whole-of-state
policy review
Annual targets
2014/15
Whole-of-state
policy review
• Fly south
Africa
policy
• Transit
visa
• Airlift strategy alignment with
Tourism
strategy
Quarterly targets
1st
2nd
3rd
4th
DPE and state
owned airlines
position paper
on the whole –
of-state policy
DPE and state
owned airlines
position paper
on the whole –
of-state policy
-
-
4.3.1.4 ECONOMIC IMPACT AND POLICY ALIGNMENT
The sub-programme has been realigned from a function as a consulting facility (previously in Programme
6: Joint Project Facility) and its purpose is to align Shareholder oversight of SOC in relation to overarching
government economic, social and environmental policies, and implement strategic interventions to contribute
towards achievement of national objectives in support of economic growth and transformation.
This sub-programme comprises:
• Management - comprises of the Office of the Deputy Director General, which provides strategic leadership,
and management of the programme and special projects (i.e property disposal)
• Environmental Policy Alignment - oversee alignment and implementation of SOC Strategically Important
Developments (SIDs) with special focus on Eskom’s and Transnet’s Build Programmes. Oversight and
alignment of the Climate Change Policy Framework for SOC in support of national policies and the green
economy.
• Economic Policy Alignment - focuses on appropriate macro-economic modeling and research to enhance
the links between industrial policy, macro-economic policy and the role of the SOC. Economic modeling
will be outsourced to relevant institutions to determine the impact of SOC investment and operations on
the economy including the impact on customers and suppliers.
• Transformation, Skills and Youth Development - focuses on the provision of scarce and critical skills by the
SOC in support of the National Skills Agenda the New Growth Path (NGP) and the National Development
Plan (NDP) as well as optimizing the SOC skills training facilities through National Skills Funding amongst
others. The unit’s mandate includes overseeing the alignment and implementation of SOC transformation
agenda in support of national policies and the New Growth Path Framework with focus on: Job creation;
Youth development and development of targeted groups (i.e. women, people with disabilities, cooperatives, etc); Broad–Based Black Economic Empowerment (B-BBEE), Employment Equity (EE) and
disposal of non-core property.
The activities and outputs of this sub-programme entails systematic coordination and partnerships with the
relevant government Departments with primary mandate on the above as well as other key stakeholders.
P 55
1. Oversee and supervise processes to conduct macro-economic modelling, research and impact evaluation
to ensure SOC contribution towards economic growth Enhance alignment between national industrial
policy, macro-economic policy and the role of SOC as well as monitor implementation.
2. Oversee processes to ensure that SOC comply with the environmental laws and optimise the impact of
SOC on the reduction of carbon emissions and development of a green economy, while supporting SOC
business needs.
3. Oversee alignment and implementation of SOC economic and social transformation agenda in support
of national policies and economic growth, with specific focus on skills development, job creation,
procurement/BBBEE and corporate social investments targeted at designated groups (youth, women,
PWD and co-operatives, etc)
4.3.1.4.3 Programme Performance Indicators & Annual Targets for Economic Impact & Policy Alignment for 2014/15
Programme
performance
indicator
Estimated
performance
Medium-term targets
2010/11
2013/14
2014/15
2011/12
2012/13
2015/16
2016/17
6.1.1
Transet’s
pricing
structure
assessment
-
-
-
-
Impact
assessment
reports on
Transnet
Pricing
Structure
on logistical
costs
Monitor
progress of
the adjustments
Monitor
progress of
the adjustments
6.1.2
Monitor the
Streamlining
of environmental
processes
(EIAs,
WUL,WA
and AEL
through
MoU structures)
-
-
Quarterly
monitoring
of the applications
Quarterly
monitoring
of the applications
Analysis of
SOC quarterly WULs
applications
on Dashboard
Quarterly
monitoring
of the applications
Quarterly
monitoring
of the applications
6.2 Leverage SOC developmental and transformation interventions to support socio-economic objectives
6.2.1
Approved
Transformation Framework and
Guidelines
-
-
-
Draft framework
Transformation strategic Framework and
Guideline
approved
Monitoring
implementation
Monitoring
Implementation
6.2.2
Developed
Transformation measurement
tool
-
-
-
Transformation measurement
tool
Transformation
measurement tool
developed
Monitoring
implementation
Monitoring
implementation
P 56
Programme
performance
indicator
Estimated
performance
Medium-term targets
2010/11
2013/14
2014/15
2011/12
2012/13
2015/16
2016/17
6.2.3
Defined
transformation indicators the
shareholder
compacts
-
-
Transformation
indicators
incorporated in
shareholder
compacts
Transformation
indicators
incorporated in
shareholder
compacts
SOC Transformation
indicators
incorporated
in shareholder compacts and
Corporate
Plan defined
SOC Transformation
indicators
incorporated in
shareholder
compacts
SOC Transformation
indicators
incorporated in
shareholder
compacts
6.2.4
SOC contribution to
transformation monitored and
assessed
-
-
Reports
on SOC
contribution
to transformation
Reports
on SOC
contribution
to transformation
Transformation implementation
monitored
and assessed
monitored
and assessed
monitored
and assessed
4.3.1.4.4 Quarterly targets for Economic Impact and Policy Alignment for 2014/15
Performance
indicator
Reporting
Period
Annual
targets
2014/15
Quarterly targets
1st
2nd
3rd
4th
7.1.1
Transnet pricing structure
assessment
Quarterly
Impact
assessment
reports on
Transnet Pricing Structure
on logistical
cost
-
Best practice
review and
stakeholder
engagements
Draft pricing
structure and
assess impact
of the pricing
structure
Validate pricing structure
and submit
proposal to
the shareholder
7.1.2
Monitor
Quarterly
Streamlining of
environmental
processes
(EIAs, WUL,
WA and AEL
through MoU
structures)
Analysis of
SOC quarterly
WULs & EIAs
applications
on Dashboard
Analysis of
SOC quarterly
WULs & EIAs
applications
on Dashboard
Analysis of
SOC quarterly
WULs & EIAs
applications
on Dashboard
Analysis of
SOC quarterly
WULs & EIAs
applications
on Dashboard
Analysis of
SOC quarterly
WULs & EIAs
applications
on Dashboard
7.2 Leverage SOC developmental and transformation interventions to support socio-economic objectives
Develop TORs
for Transformation
framework
and Guidelines internal
procurement
process
7.2.1
Quarterly
Approved
Transformation
Framework
and Guidelines
Transformation strategic
Framework
and Guideline
approved
7.2.2
Quarterly
Developed
Transformation
measurement
tool
Draft Transformation
measurement
tool developed
Facilitation of
the Stakeholder Consultation process
by appointed
services provider
Finalise and
undertake approval process
of Transformation Framework AND
Guidelines
Review SOC
shareholder
compacts
KPIs against
the Framework.
-
-
Develop a
draft measurement tool and
check lists
P 57
Performance
indicator
Reporting
Period
7.2.3
Defined Quarterly
Transformation
indicators in
the Shareholder compact
7.2.4
SOC conQuarterly
tribution to
Transformation
monitored and
assessed
Annual
targets
Quarterly targets
2014/15
1st
2nd
3rd
4th
SOC socio-economic
indicators in
Shareholder
Compacts
and Corporate
Plans defined
-
Engage SOC
to define socio-economic
indicators in
the Shareholder Compacts
Conclude
engagement
process and
incorporate
final indicators
into the Compacts
Inputs on
the approval
process of the
Compacts
Reports on
SOC transformation
contribution
Quarterly
assessment
reports
Quarterly
assessment
reports
Quarterly
assessment
reports
Quarterly
assessment
reports
4.3.1.5 STRATEGIC PARTNERSHIPS
The sub-programme drives the building of strategic relationships between SOC and key customer and
supplier sectors to transform the sectoral and social composition of the economy.
The sub-programme comprises of the following components
• Project Oversight - definition of catalytic investments to be driven by DPE and oversight of project
implementation from pre-feasibility to completion, including the design of relevant compacts.
• Funding Mechanisms - development of innovative funding structures and design of associated compacts
with relevant partners.
• Strategic Relationships - development of overarching procurement leverage policies; oversight of SOC
fleet procurement design and implementation, and development and implementation of capability building
programmes and institutions.
1. Oversight of catalytic project implementation from pre-feasibility to completion, including the design of
relevant compacts.
2. Implementation of innovative funding structures and design of associated compacts with relevant partners.
3. Oversight of Eskom’s and Transnet’s implementation of the Competitive Supplier Development Programme;
oversight of Transnet’s locomotive fleet procurement design and implementation, and development and
implementation of Executive Leadership Programme.
P 58
4.3.1.5.2 Programme Performance Indicators and Annual Targets for Strategic Partnerships for 2014/15
Programme
performance
indicator
Estimated
performance
Medium-term targets
2010/11
2013/14
2014/15
2011/12
2012/13
2015/16
2016/17
6.1.1
DPE MOA
with DBSA
-
-
-
Establishment of the
Steering
Committee
to evaluate
projects
Projects
Evaluation
by the
Steering
Committee
Projects
Evaluation
by the
Steering
Committee
Projects
Evaluation
by the
Steering
Committee
6.1.2
Funding
strategy for
SOC
-
-
-
-
Funding
proposals
for key infrastructure
projects that
are part of
the SIPs
Monitor
implementation and
project
evaluations
Monitor
implementation and
project
evaluations
6.1.3
Private sector participation concept
framework
-
-
Draft private
sector
participation
framework
Approved
private
sector
participation
framework
Monitor
implementation
Monitor
implementation
6.1.4
Implementation of
the Africa
Strategy
-
-
-
Establishment Africa Stratof the Steeregy Project
ing CommitPipeline
tee
Update project pipeline
and monitor
implementation
Update
project
pipeline and
monitor
implementation
6.1.5
Coal Mining
Fund
-
-
-
-
Quarterly
monitoring
on the establishment
of the Fund
Monitor on
a quarterly basis
expenditure
and projects
funded by
the Fund
Monitor on
a quarterly basis
expenditure and
projects
funded by
the Fund
6.1.6
Project Management
Office
-
-
-
Project Management Office Structure
approved
Operational
PMO within
the Department
Quarterly
reports on
SIPs within
the portfolio of SOC
reporting to
the Department
Quarterly
reports on
SIPs within
the portfolio of SOC
reporting
to the Department
6.2 Leveraging SOC procurement spend programmes to support industrialisation and transformation
6.2.1
Strategic
SOC customer sector
forum – Oil
and Gas
and Boat
Repair
-
-
-
-
Proposals
on service
offering improvements
by Transnet
monitor
progress
Monitor
progress
P 59
Programme
performance
indicator
Estimated
performance
Medium-term targets
6.2.2
Strategic
SOC customer sector
forum – Automotive
2010/11
-
2011/12
2012/13
2013/14
2014/15
2015/16
Monitor
progress
Monitor
progress
6.2.3
DPE-SOC
industrialisation and
localisation
forum
-
-
-
Approved
supplier
development
plans and
Forum established
Quarterly
meeting
of the
DPE-SOC
industrialization and
localization forum
Quarterly
meeting
of the
DPE-SOC
localization forum
Quarterly
meeting
of the
DPE-SOC
localization forum
-
-
-
Proposals
on service
offering improvements
by Transnet
2016/17
4.3.1.5.3 Quarterly targets for strategic partnerships for 2014/15
Performance
indicator
Reporting
Period
Annual targets
2014/15
Quarterly targets
1st
2nd
3rd
4th
6.1.1
DPE MOA with
DBSA
Quarterly
Establish
steering committee for the
review of key
infrastructure
projects for
funding
Establish the
secretariat
functions to
support the
steering committee and its
activities
Schedule
quarterly
meeting to
review and
refer projects
to DBSA for
funding
Schedule
quarterly
meeting to
review and
refer projects
to DBSA for
funding
Schedule
quarterly
meeting to
review and
refer projects
to DBSA for
funding
6.1.2
Funding strategy for SOC
Quarterly
Funding proposal for key
infrastructure
projects that
are part of
SIPs
Assessment
of funding requirements of
SIPs projects
that are lead
by SOC in the
Department’s
portfolio
Assess SOC
equity and
debt requirements
Proposals on
the Common
Borrowing
Authority and
infrastructure
bond
Begin
consultation
with National
Treasury and
private sector
and agree
implementation plan with
SOC
6.1.3
Private sector
participation
concept
framework
Quarterly
Draft Private sector
participation
framework
Appoint specialist team
to design the
guidelines for
private sector
participation
Consultation
with SOC on
the concept
and approach
Consultation
with SOC on
the concept
and approach
Agreement
reached
with SOC on
the application of the
private sector
participation
framework
6.1.4
Africa Strategy
Quarterly
Establishment
of the Steering
Committee
Set up the
Project pipeline developed
coordination
structure
and updated
(steering committee) to drive
Africa strategy
Update project Update project
pipeline
pipeline
6.1.5
Coal Mining
Fund
Quarterly
Quarterly monitoring of the
establishment
of the fund
Review and
advice on the
structuring
of the Coal
Mining Fund
Monitor
progress on
a quarterly
basis on the
establishment
of the fund
P 60
Participation
in the engagement with
the private
sector on the
positioning of
the fund
Monitor
progress on
a quarterly
basis on the
establishment
of the fund
Performance
indicator
6.1.6
Reporting
Period
Project
Management
Office
Annual targets
Quarterly targets
2014/15
Quarterly
Operational
PMO within
DPE
1st
2nd
3rd
PMO Structure
implemented
Recruitment
of key staff
initiated
Monte Carlo
Dashboard
simulations
development
and probability
training of the
staff
PICC Quarterly Reports
submitted
submitted
submitted
submitted
4th
6.2.1
Strategic SOC
customer sector forum – Oil
and Gas and
Boat Repair
Quarterly
6.2.2
Strategic SOC
customer
sector forum –
Automotive
6.2.3
DPE – SOC industrialisation
and localisation Forum
Quarterly
Proposals
on service
offering improvements by
Transnet
Oil and Gas
and Boat
Repair service
requirements
defined
Gap analysis
undertaken
on the service
requirements
of the industry
and services
currently
provided by
Transnet
Value proposition to
meet industry
requirements
Submission of
the proposals
to the shareholder for
consideration
Proposals
on service
offering improvements by
Transnet
Develop TORs
for the review
of Transnet
services
against industry requirements
Obtain approval of TOR
and commission the study
Proposals
on service
improvements
developed
based on the
study
Oversee
implementation of the
proposals
Quarterly
meetings of
the Forum
Quarterly
meetings of
the Forum
Quarterly
meetings of
the Forum
Quarterly
meetings of
the Forum
Quarterly
meetings of
the Forum
Table 4: Portfolio Management and Strategic Partnerships
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
Audited
outcome
Audited
outcome
Audited
outcome
Adjusted
Appropriation
Revised
Estimate
Revised
Baseline
Revised
Baseline
Revised
Baseline
Energy and Broadband Enterprises
170,857
56,488
13,944
17,731
17,731
17,708
21,082
22,032
Manufacturing
Enterprises
225,595
123,423
1,178,268
72,896
72,896
18,131
17,975
18,796
Transport
Enterprises
19,077
18,752
20,030
20,089
20,089
24,297
25,038
24,089
Economic Impact
and Policy
Alignment
10,134
11,744
9,990
19,139
19,139
13,286
14,054
14,637
Strategic Partnerships
11,493
7,555
5,973
10,914
10,914
10,274
15,111
20,897
Total
437,156
217,962
1,228,205
140,769
140,769
83,696
93,260
100,451
Rand thousand
Subprogrammes
Economic classification
Current payments
61,260
61,707
59,821
83,519
83,519
83,696
93,260
100,451
Compensation of
employees
33,948
31,665
34,502
50,086
50,086
60,404
64,535
70,126
P 61
2010/11
2011/12
2012/13
2013/14
Audited
outcome
Audited
outcome
Audited
outcome
Salaries and wages 32,780
31,665
34,502
Adjusted
Appropriation
Social contributions 1,168
-
Goods and
services
27,312
Administrative fees
-
Rand thousand
2014/15
2015/16
2016/17
Revised
Estimate
Revised
Baseline
Revised
Baseline
Revised
Baseline
50,086
50,086
60,404
64,535
70,126
-
-
-
-
-
-
30,042
25,319
33,433
33,433
23,292
28,725
30,325
-
-
803
803
-
-
-
Advertising
-
7
38
-
-
-
-
-
Assets less than
the capitalisation
threshold
-
-
-
-
-
-
-
-
Catering:
Departmental
activities
112
108
120
313
313
90
95
98
Communication
(G&S)
298
318
273
675
675
682
720
759
Consultants and
professional
services: Business
and advisory
services
22,558
23,156
16,348
19,601
19,601
15,200
20,418
21,298
Consultants and
professional services: Legal costs
146
-
-
-
-
-
-
-
Contractors
1
1
36
2
2
-
-
-
Agency and support / outsourced
services
-
-
-
450
450
-
-
-
Entertainment
-
2
-
52
52
46
47
47
Fleet services
(including
government motor
transport)
-
-
-
41
41
-
-
-
Inventory: Clothing
material and
accessories
-
-
-
14
14
-
-
-
Inventory:
Materials
and supplies
-
-
1
-
-
-
-
-
Inventory:
Medical
supplies
-
-
3
-
-
-
-
-
Inventory:
Medicine
-
-
2
-
-
-
-
-
Consumable:
Stationery, printing
and office supplies
2
5
3
65
65
-
-
-
Operating leases
-
-
-
316
316
-
-
-
Travel and
subsistence
3,162
5,364
5,908
8,639
8,639
6,754
6,897
7,545
Training and
development
352
334
386
57
57
-
-
-
Operating
payments
82
302
941
44
44
-
-
-
Venues and
facilities
599
445
1,260
2,361
2,361
520
548
578
P 62
2010/11
2011/12
2012/13
2013/14
Rand thousand
Audited
outcome
Audited
outcome
Audited
outcome
Adjusted
Appropriation
Transfers and
subsidies
237,296
156,255
118,384
237,296
156,255
118,313
Public corporations
and private
enterprises
2014/15
2015/16
2016/17
Revised
Estimate
Revised
Baseline
Revised
Baseline
Revised
Baseline
57,250
57,250
-
-
-
57,250
57,250
-
-
-
Public corporations
237,296
156,255
118,313
57,250
57,250
-
-
-
Other transfers
to public
corporations
237,296
156,255
118,313
57,250
57,250
-
-
-
Households
-
-
71
-
-
-
-
-
Other transfers to
households
-
-
71
-
-
-
-
-
Payments for
capital assets
-
-
-
-
-
-
-
-
Payments for
financial assets
138,600
-
1,050,000
-
-
-
-
-
Total
437,156
217,962
1,228,205
140,769
140,769
83,696
93,260
100,451
DETAIL OF
TRANSFERS AND
SUBSIDIES
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
Recipient
Audited
outcome
Audited
outcome
Audited
outcome
Adjusted
Appropriation
Revised
Estimate
Revised
Baseline
Revised
Baseline
Revised
Baseline
Denel (Pty) Ltd
181,296
116,255
118,313
57,250
57,250
-
-
-
Alexkor Ltd
36,000
-
-
-
-
-
-
-
Pebble Bed
Modular Reactor
20,000
40,000
-
-
-
-
-
-
Employee social
benefit
-
-
71
-
-
-
-
-
Total
237,296
156,255
118,384
57,250
57,250
-
-
-
Rand thousand
Performance and expenditure trends
The spending focus over the medium term will be on enhancing the capacity to boosting the department’s
capacity to oversee strategic infrastructure projects. This includes training staff and developing new project
management tools to improve oversight of the current build programme. Because of the need to provide
effective oversight to the state owned companies spending on compensation of employees increased over
the medium term. The increase in the number of personnel from 90 in 2013/14 to 97 in 2016/17 is attributed to
additional approved and funded posts, which come into effect in 2014/15 to strengthen the strategic oversight
function of the department on infrastructure projects. As at 30 November 2013 there were 4 vacancies due
to new positions created, which will be filled by 2014/15. The department makes use of consultants for
specialised services in transport, manufacturing, energy and broadband sectors, which, notwithstanding
the increased capacity in the department is still a necessity. Due to realignment of functions expenditure on
goods and services is expected to decrease over the medium term.
In the Energy and Broadband Enterprises and Manufacturing Enterprises sub programmes, expenditure
deceased significantly between 2011/12 and 2013/14, and is expected to decrease over the medium term
due to once-off recapitalising payments in 2012/13 to the state owned companies. Between 201/11 and
2012/13, a total of R473.2 million was paid to Denel for claims under an indemnity agreement, while Denel
P 63
received a further R700 million in 2012/13 for recapitalising the entity. In 2010/11, R36 million was paid to
Alexkor to establish a joint venture with the Richtersveld community under and out of court settlement for land
claims. A further R350 million was allocated to the entity in 2012/13 to address liabilities in terms of the deed
of settlement and other obligations. Between 2010/11 and 2011/12 a total of R60 million was transferred to the
Pebble Bed Modular Reactor company to comply with statutory requirements for the decommissioning and
dismantling of the fuel development laboratory and implementation of the care and maintenance programme.
Broadband Infraco received R138.6 million for capital and operational costs; this is reflected as a payment
for financial assets during 2010/11.
P 64
PART C
LINKS TO OTHER PLANS
5. LINKS TO THE LONG-TERM INFRASTRUCTURE AND
OTHER CAPITAL PLANS
Not Applicable
6. CONDITIONAL GRANTS
Not Applicable
7. STATE OWNED COMPANIES REPORTING TO THE
DEPARTMENT
7.1 Alexkor
Alexkor reported better results for the year ended 31 March 2011 than the previous year’s performance.
Alexkor achieved revenue of R195.9 million in 2010/11, and this a 19.5% increase from the R163.9 million
achieved in the previous year. Alexkor recorded a gross operating profit of R11.3 million, its first gross
operating profit since 2005/06. Net profit for the year amounted to R84.2 million. The improved performance
is mainly as a result of higher carat production (13.3% higher carat production achieved compared to the
previous year) coupled with better cost management.
The Settlement Agreement reached between Alexkor, Government and the Richtersveld Community in the
matter of the Richtersveld Community’s land claim against Alexkor and the State entails, inter alia, that Alexkor
transfer its land mining rights to Richtersveld Mining Company (RMC).The parties agreed to form a Pooling
and Sharing Joint Venture (PSJV) between Alexkor and the Richtersveld Mining Company (RMC) as follows:
• Alexkor will remain the holder of its marine mining rights and RMC will remain the holder of its land mining rights;
• Alexkor and RMC will respectively put their marine mining rights and their land mining rights under the full
control of a Joint Board of the Joint Venture for purposes of mining both the marine mining resources and
the land diamond resources. Alexkor and the Richtersveld Mining Company are each entitled to appoint,
remove and replace three (3) members of the Joint Board, who shall be duly authorised to represent that
party in respect of all matters relating to the pooled operations
• Alexkor will have a beneficial interest of 51% in the PSJV and the Richtersveld Community, through RMC,
will hold a 49 % interest
The commencement of the PSJV was subject to the fulfilment of a number of suspensive conditions namely
that:
• RMC and Alexkor must obtain the required approvals to implement the pooling transaction from
the Competition Authorities under the Competition Act, 1998; all on an unconditional basis or under
circumstances where any conditions attached to any of such approvals, that such conditions are
reasonably acceptable to Alexkor and the RMC. The Competition Commission subsequently advised that
the transaction was not notifiable;
• The Land Claims Court grants an order confirming or noting the Deed of Settlement and, to the extent
necessary, the terms, provisions and conditions of the PSJV. The Land Claims Court made the DoS an
order of court on 9 October 2007;
• The existing Environmental Management Plan of Alexkor be amended as contemplated in the Deed
of Settlement. Alexkor’s revised EMP was submitted to the Department of Mineral Resources (DMR) in
November 2008; and
P 66
• The land mining rights are transferred to RMC with the permission of the Minister of Minerals and Energy,
as contemplated in clause 8.2 of the Deed of Settlement. The Notarial Deed of Cession of the Alexkor land
mining right (transferring Alexkor’s land mining right to RMC) was registered by the Mineral and Petroleum
Titles Registration Office on 6 April 2011.
All the suspensive conditions for the PSJV to come into effect have been fulfilled. Effectively what this means
is that given that Alexkor has transferred its land mining rights to the Richtersveld Mining Company, and that
the PSJV has now come into effect, Alexkor’s operations in Alexander Bay now fall under the control of the
Joint Board of the PSJV. In terms of the Deed of Settlement, Alexkor and RMC is each entitled to appoint,
remove and replace three members of the Joint Board, who shall be duly authorised to represent that party
in respect of all matters relating to the pooled operations. The Joint Board has overall supervision of the
operations of the pooled operations and will prepare a development plan in order to upgrade the land and
sea diamond resources at Alexander Bay.
An amount of R200 million was allocated to the PSJV, which will be expended both with respect to the land
and sea operations, for the establishment of a viable mining operation.
Significant progress has been made in the implementation of the Deed of Settlement signed with the. Alexkor’s
agricultural and maricultural assets have been transferred to the community. All Alexkor, State and Northern
Cape Provincial land has been transferred, except for the properties in Alexander Bay Township. These
properties will be transferred to the community soon after the upgrade of the township’s civil and electrical
engineering services to municipal standards. The township upgrade project is expected to be completed in
June 2012.
The Deed of Settlement has considerably changed the landscape of Alexkor and its strategic outlook. Alexkor
currently has the following outstanding obligations and liabilities:
1. Environmental rehabilitation liability at Alexander Bay mine: R256.7 million;
2. Payment to Richtersveld Property Holding Company to secure Alexkor’s right of occupation of the
transferred residential properties for a period of 10 years: R45 million;
3. Post-retirement medical aid liability: R58.4 million.
Given that the PSJV has now come into effect, Alexkor’s operations in Alexander Bay will fall under the control
of the Joint Board of the PSJV. Alexkor’s only source of revenue to fund its obligations and liabilities is revenue
from the 51% interest in the profits of the PSJV operations. It is not expected that the mining operations under
the PSJV will generate positive returns within the first three years, as the PSJV will first embark on exploration.
Alexkor’s financial resources are currently insufficient to meet its obligations and liabilities. Alexkor must
therefore actively seek opportunities to procure new mining ventures to secure new revenue streams beyond
the Alexander Bay, and independent of the PSJV operations. This will ensure Alexkor’s future growth and
sustainability and enable the company to effectively address its historical obligations and liabilities. In
pursuance of this new strategy, Alexkor will be guided by Government’s policy objectives. Alexkor will also
explore opportunities for downstream beneficiation, to contribute to the creation of new jobs, development
of requisite skills, investment in research and development, economic growth, sustainable development and
cost-effective support for the broader policies of government.
As these opportunities will undoubtedly require funding, it will be important to explore different funding
mechanisms and sources available for the new mining ventures, so as not to depend entirely on the fiscus to
fund Alexkor’s growth opportunities. The new business ventures will bolster the sustainability of the company
and contribute to the broader developmental objectives of Government.
P 67
7.2 Broadband Infraco
Broadband Infraco SOC Limited is a state SOC in the telecommunications sector, intended to improve
market efficiency in the long distance connectivity segment by increasing available long distance network
infrastructure and capacity to stimulate private sector development and innovation in telecommunications
services and content offerings, as well as to provide long distance national and international connectivity to
previously under serviced areas.
The value proposition of the Company is that the existing National Backhaul can and should be leveraged in
an expanded manner in that a wider range of services more aligned with large operators can be offered. This
value proposition is fully supported by the Government which is evidenced by the appointment of Broadband
Infraco as the coordinating agent of the Strategic Integrated Project 15 (SIP 15) as part of the Presidential
Infrastructure Coordinating Commission (PICC) which is chaired by the President of RSA. SIP 15 deals with
“Expanding Access to Communications Technology” which seeks to ensure 100% broadband coverage to
all households by 2020 through a creation of several layers of connectivity across the country by establishing
core Points of Presence (POPs) in district municipalities, extend fibres and radio networks across provinces
linking districts, establish POPs, fibres and radio connectivity at local level, and further expanding the network
into deep rural areas. Apart from the said national imperatives, there is also the critical role that the Company
plays in consolidating International, Regional and Provincial connectivity.
Pursuant to achieving the above value proposition and the mandate, the Company made strong strides as
recorded in its 2011/12 financial year highlights:
• The Company turned cash positive, posting R52.1 million generated from operations, for the first time in
Broadband Infraco’s history.
• The company received an unqualified audit recovering from the last year’s (2010/11) qualified audit
opinion.
• Managed service revenues continue to grow with the customer base increasing from 3 last year (2010/11)
to 7 this year (2011/12) and the company worked hard to improve network integrity to meet customer
expectations.
• Segment commissioning of the West Africa Cable system (WACS) was completed in March 2012, with
interconnection to the terrestrial network on track for completion in early 2012/13.
• The Company has successfully expanded maintenance activities on the 12 750 km fibre footprint to twelve
sites across South Africa with 110 Points of Presence (POPs) established nationally of which 55 of these
are in under-serviced areas.
However in order for the company to entirely fulfil its mandate, investment is required to revitalise the
network, expand metro access to enable connectivity to other Information Communications Technology (ICT)
operators as well deliver on the mandate of expanding broadband access to all. Also the regulatory aspects
of Broadband Infraco will need to be unlocked with regards to the licensing of the company. The individual
Electronic Communications Network Services (i-ECNS) license issued to Broadband Infraco, means that the
company is able to execute most of its mandate and selected business model, by providing network services
to the majority of its intended customers (i.e. limited to other ECNS/ECS licensed operators or licensed
exempt entities). However, because of the restrictions included in the definition of Electronic Communications
Services (ECS), Broadband Infraco may not provide services directly to end users or to unlicensed State
entities since it lacks the ECS license.
P 68
7.3 Denel
Although Denel has made some progress since the company embarked on a turn-around strategy in 2005,
the solvency position of Denel continues to pose serious challenges. Nonetheless, the turnaround strategy
has seen a noticeable reversal of the downward spiral in the fortunes of Denel. Since 2005, when the company
posted a loss of R1.6 billion, Denel has steadily reduced its losses and recorded a R111 million profit in the
2010/11 financial year. Denel’s Aerostructures business remains a challenge to the entire Denel group as
it continues to be the major contributor to Denel’s losses. This is largely as a result of the A400M contract
concluded with Airbus Military which is not commercially viable. A framework for the resolution of DSA has
been developed and is underway. The framework included internal restructuring and renegotiation of the
Airbus A400M work package contracts. The 28% improvement in the performance of the Aerostructures
business in the previous year was an encouraging sign that the company is beginning to turnaround, mainly
due to the ongoing restructuring in the business. Whilst the trading losses in the other trading entities have
been reduced, some of Denel’s business entities remain financially challenged. A more robust turn-around
plan; one that pursues financial recovery and stability through improvements in its operational and financial
performance needs to be developed to secure the company’s long term viability.
The current mandate of Denel is to:
• Provide the Department of Defence (DoD) with key strategic defence equipment and services in an
efficient and sustainable manner;
• Contribute towards the building of a dynamic defence-related industrial cluster;
• Act as a catalyst for advanced manufacturing in the broader economy and; and
• Earn export revenue.
In the main, the current mandate of Denel is still relevant as it points to the company being a strategic state
asset that provides the DoD with key strategic defence equipment and services. However, Denel’s current
defence-related strategy is not optimally aligned with the DoD’s strategic defence requirements. A structured
mechanism will thus be required in order to effect the necessary re-alignment of Denel’s defence-related
strategies with those of the DoD.
Globally, cutbacks in defence budgets may be seen in the lower turnover figures for companies specializing
in defence. The reduction in orders for the defence industry has been reflected by a contraction of activity
and has led to an unsustainable rise in production costs due to reductions in economies of scale. Shrinking
defence budgets have resulted in the scaling back of certain procurement programmes, with lower economies
of scale and increasing unit costs. In addition to this first source of cost increases, the defence industry is
subject to the general phenomenon of increases in Research and Development (R&D) spending (and hence
overheads). When combined, these two trends lead to an increase in unit costs of such magnitude that
they can no longer be covered solely by military budgets. There is thus a need to re-think Denel’s strategic
direction going forward.
Given the downward trends in domestic defence spending, Denel must increasingly rationalize defence
production, while concentrating on its competitive strengths. Denel must pare back its product lines,
collaborate with other firms that have complementary technological assets, and focus on poles of excellence
where it enjoys a technical or market advantage.
Denel needs to limit its dependence on defence work and expand its market share in commercial areas, as
well as exploring new markets for its product offerings. In the current environment, those companies whose
economic survival depends on a narrow range of military products will be exposed to sharp fluctuations in
procurement, putting them at risk of going out of business. The more a firm is diversified into the civil sector,
the better it can survive slowdowns in military or commercial sales; assuming, of course, that both markets do
not decline simultaneously. Denel must diversify by developing civil spin-offs of its core military technologies.
P 69
The ability to offer products to both civilian and military markets also holds out the prospect of restructuring
production operations to benefit from joint expenditure and various synergies. Diversification into civilian
sectors will make up for the drop in military budgets and exploit technological dynamics.
One further trend that Denel and the country may have to consider is increased collaboration on military
programmes to contain escalating R&D costs. The success achieved in the A-Darter programme with Brazil
provides the country with a blueprint. This will assist both Denel and the country to continue improving
capabilities whilst containing costs.
The advanced industry results in networks of skills and technologies being created in order to deliver the
high technology products and/or services. During this process, the newly created skills and knowledge are
provided free of charge to other firms in related industries. The process of ‘learning by doing’ is one of the most
effective ways of learning and innovating as it is aims at building tacit knowledge – the most difficult type of
knowledge to generate and transfer. The development of new knowledge and skills by the advanced industry
is analogous to what occurs at a university. However, in an advanced industry the skills development and
learning is not restricted to graduate level as it also takes place at the unskilled and artisan level. In addition
to skills and technology development, a commercial product is being produced which creates revenue and a
sustainable learning environment. Denel will be expected to accelerate its efforts towards skills-development
and transformation. The company must generate skills across the full spectrum, ranging from artisan level to
engineers and highly skilled technologists.
7.4 Eskom
Eskom generates 95 per cent of the electricity used in South Africa and 45 per cent of the electricity used
in Africa. Eskom’s reserve margin has been steadily declining since 1999 as a result of increasing demand,
increases in maintenance backlogs, and under-investment in the new generation capacity required to meet
rising demand. This was particularly acute in January 2008, when the reserve margin dropped to alarmingly
low levels (3.6 percent commercially available), which resulted in extensive load shedding that impacted
the economy negatively, and diminished investor confidence in Eskom’s ability to provide reliable electricity
supply.
Eskom has since introduced a recovery plan, which includes securing enough primary energy (coal stockpile
to 42 days level). This has resulted in the average reserve margin increasing to over 10 percent commercially
available.
Additionally, Eskom has since 2004 been undertaking a capacity expansion (build) programme to ensure the
secure and reliable supply of electricity. Completed projects between 2005/06 and 2011/12 include the return
to service and construction of three power stations. As a result, Eskom installed and commissioned 5 381MW
of additional generating capacity into the system and installed and strengthened 3 531 km of transmission
networks. The focus for 2012/13 includes securing the balance of the required funding to complete the
new build programme; monitoring the rollout of this programme improving operational and maintenance
performance to ensure security of supply; assessing the role of Eskom in the implementation of the IRP 2010,
and developing the appropriate investment plan for Eskom’s future build programme.
Over the five-year period from 2011/12 to 2017/18, the cost of Eskom’s build programme is estimated at
R453 billion. Eskom plans to deliver additional 11 699MW of capacity into the system and to install 1 169 km
of transmission network by 2017/18.
Eskom continues on its profitability path, recording a net profit after tax of R8.4 billion for the 2010/2011financial
year, following a net profit of R3.6 billion in the 2009/10 financial year. The operating profit for the year was
R16.4 billion while in 2009/10 it was R4.8 billion. The 139% increase in profitability can be attributed mainly to
the tariff increases in the 2010/11 financial year, rather than sales volume.
P 70
- Cabinet approval was obtained for Eskom to be granted R174 billion additional guarantees, bringing the
total guarantee framework to R350 billion. As a result of the Government Support Package, Eskom was
able to issue a US$ bond and raise R12 billion, without utilising a Government guarantee. Eskom’s funding
plan to 2017 has been finalised, and 70% of the funding has been secured.
7.5 Pebble Bed Modular Reactor (PBMR) mention that PBMR is now
with Eskom
The PBMR project was initially set up as a nuclear architect engineering company focused on the design
and licensing of a standardised nuclear heat supply system and pebble fuel. It was established in 1999 to
develop and market small scale, high temperature reactors locally and internationally. The company has not
been able to acquire additional investment into the PBMR project, nor has it been able to acquire a customer,
despite revising its business model in 2008/09, since Government’s last funding allocation in 2007, of which
the last transfer was made in 2009/10. The company’s business model was subsequently revised in May 2009
and the company’s main focus will be the preservation and maintenance of intellectual property and assets.
In the light of the PBMR’s participation, a consortium in the United States Department of Energy’s next
generation nuclear programme which did not materialise, Cabinet approved that the company be placed
into care and maintenance to protect its intellectual property and assets, while ensuring that no additional
funding will be required from Government. The Department of Public Enterprises will therefore be monitoring
the implementation of this transition.
No further funds have been committed by Government, except for R20 million, which was provided in
the adjustments budget and which was disbursed in 2010/11, and a further R40 million disbursement in
2011/12. These funds were allocated to ensure that the necessary provision for the statutory requirement for
decommissioning and dismantling the fuel development laboratory is met by the company.
During 2011/12, the Department commissioned a retrospective review of the PBMR project, as part of
the winding down of PBMR in line with Cabinet decision. The focus for 2012/13 includes assessing the
recommendations of the retrospective reviews, and monthly and quarterly monitoring of the implementation
of the care and maintenance strategy.
7.6 South African Forestry Company
South African Forestry Company (SAFCOL) manages and develops commercial forests. The company’s
activities include forestry management and timber harvesting and processing. The company’s main subsidiary,
Komatiland Forests, operates in Mpumalanga, Limpopo, KwaZulu-Natal and Mozambique. Softwood saw
timber is sold in South Africa and soft and hardwood saw timber and pulp wood in Mozambique. Komatiland
Forests has an 80 per cent shareholding in the Mozambican forestry company, Indùstrias Florestais de Manica
(IFLOMA), while the remaining 20 per cent is held by the Mozambican government through its Instituto de
Gestão das Participações do Estado. The company plays an important role in rural development, and various
enterprise development projects have been initiated to contribute to poverty alleviation in the rural areas in
which it operates.
In 2007, the Minister of Public Enterprises extended the disposal of the company by five years to 2011/12 to
allow for the resolution of the land claims lodged with the Department of Rural Development and Land Reform,
since 61 per cent of South African Forestry Company land is subject to land claims, with the understanding
that shareholder value would be preserved in the interim. However, the company’s operations and revenue
have been severely impacted by the prevailing economic conditions over the past two years. The company
reported a net loss of R468.9 million in 2009/10, yet has since seen improvements, with the net loss of
P 71
R79.1million in 2010/11, SAFCOL managed to turnaround the previous two year’s results by generating cash
from operations of R73m and posting a net profit of R205m for the 2011/12 financial year.
Government is currently re-examining the privatisation of Komatiland Forests and the future role of the South
African Forestry Company, in the context of the developmental state. While the Department is carrying out its
own review, the Presidency is conducting a broader review of State Owned Enterprises across all spheres
of Government. The department will be engaging closely with the Presidential Review Committee on the
implications for the company, as well as other key stakeholders such as the Department of Agriculture,
Forestry and Fisheries and the Department of Rural Development and Land Reform. Thereafter, a joint
proposal will be submitted to Cabinet for consideration.
7.7 South African Airways
South African Airways (SAA) is South Africa’s national air carrier which operates a full service network in the
international, regional and domestic markets, from its head office at OR Tambo International Airport.
Following the 2009/10 appointment of a new board of directors and a new Chief Executive Officer, SAA
continues to build on the successes achieved from the restructuring exercise where savings of R2.5 billion
were achieved over an 18-month period to March 2009. The airline achieved a net profit of R398 million in
2008/09, profits of R323 million in 2009/10 and profits of R649 million in 2010/11 financial years, respectively. The sustained profits were as a result of strict cost control and lower hedging losses that have reduced
over the period from R1.564 billion in 2008/09 financial year to R970 million in the 2009/10 financial year,
and R202 million in 2010/11 financial year. The repayment of R1.567 billion in September 2009 following
the recapitalisation of SAA by government also led to savings in interest payment of about R100 million per
annum.
Despite the improvements in profitability there are still challenges with cash generation. This follows reduced
forward sales as a result of the slowdown in the world economy. The decline in the cash position resulted in a
request for government support in 2009 when government provided a R1.6 billion going concern guarantee.
The provision of this guarantee was based on certain commitments made by SAA, to ensure that the
achievements made with the 2007-09 restructuring exercise were sustained. The department and National
Treasury are jointly monitoring the implementation of the commitments although these were recently revised
in 2011 in consideration of current economic circumstances. To date, SAA has only utilised R437 million for
Air Traffic Liability guarantee from the R1.6 billion guarantee from National Treasury. This indicates that SAA
has additional guarantee of R1.163 billion to utilise should the need arise.
In the 2010/11 financial year SAA achieved twenty of the thirty four Key Performance Indicators. In addition,
there have been significant improvements in procurement processes and compliance with the PFMA. The
legacy agreement for the purchase of Airbus A320 aircraft was satisfactorily resolved in the 2009/10 financial
year by rescheduling the delivery dates of the aircraft from 2010 to 2013. Delivery of the first aircraft under
the contract will be in middle of 2013. SAA is developing a financing plan which as industry practice requires
should be in place at least 6 months before the first delivery.
The worsening market conditions in the airline industry, has required government to provide additional support
to the Airline to ensure that it continues to function as a going concern. For the period ahead, the focus will
be to ensure the finalisation of the turnaround plan as part of the guarantee requirement and its sustained
implementation, implementation of the fleet acquisition programme, consolidate SAA’s Route Network in the
African market, and establish South African Airways Technical as an African Maintenance Repair Overhaul
centre of excellence. These will seek to ensure consistent generation of bottom line profits to strengthen
the airline’s balance sheet. The filling of critical posts, in particular, the appointment of the CEO will also be
prioritised by the shareholder.
P 72
7.8 South African Express Airways
South African Express Airways (SAX) was established in 1994 and transferred to the Department of Public
Enterprises in 2008/09. It operates regional and domestic flights from OR Tambo International Airport in
Johannesburg, serving secondary routes in South Africa and the continent. SAX operates regional routes to
Botswana, Namibia, the Democratic Republic of the Congo and Mozambique. It also provides a feeder air
service that connects with the South African Airways network.
The airline’s joint venture with a local partner in the Democratic Republic of Congo (DRC), Congo Express,
which began in February 2010 as part of the implementation of the African hub strategy, was dissolved in
September 2010. This was subsequent to efforts to address the financial and operational performance having
failed to improve the joint venture prospect. Lessons learnt from the failed operations in DRC will be used in
all future implementation of the African hub strategy.
SAX has been consistently generating profits in the last six years which in turn strengthened its balance
sheet. The financial position improved from accumulated losses of R228 million in the 2006/07 financial year
to accumulated profits of R288 million by 2009/10 financial year. However due to recent economic slowdown
the airline has not been able to sustain similar levels of profit generation. Most significantly, the operation of
aged aircraft, most of which are over 15 years of age, resulted in high maintenance cost and disruption in
flight schedules due to regular breakdown, and this affected the performance of the airline. Fortunately SAX
has now commenced with a fleet replacement programme, and the first six new aircraft were received in the
second half of the 2011/12 financial year. SAX expects to receive the remaining 18 aircraft over the next two
years.
There were allegations of irregularities at SAX in the 2011/12 financial year, which may have arisen over
several years back. The investigations have been concluded resulting to the restatement of 2010/11 financial
results.
The focus over the MTEF period will be to expand SAX operations in the African market, and to strengthen
the airlines balance sheet through generation of profit and cash flow to fund the fleet renewal programme.
7.9 Transnet
Transnet’s mandate is to assist in lowering the cost of doing business in South Africa, enabling economic
growth and ensuring security of supply by providing appropriate port, rail and pipeline infrastructure in a
cost-effective and efficient manner, within acceptable benchmarks.
Transnet has relentlessly focussed on improving service levels and customer responsiveness over the
past five years. Significant investments have been made in infrastructure and equipment to improve the
condition of assets in order to support the drive for greater operating efficiencies, service levels and customer
responsiveness.
For the first six months ended 30 September 2011, Transnet posted an impressive set of financial results as
ongoing efficiencies, productivity improvements and the growth in volumes were driven by the increased
capital expenditure programme.
Export iron ore volumes increased significantly by 21.5% to 24.9Mt (2010: 20.5Mt) due to improvements in
operational efficiencies, and additional capacity created through the capital investment programme. Export
coal volumes improved only marginally by 2.6% to 31.3Mt, primarily due to the extended period during which
the line was shut down during the first quarter, as well other operational challenges faced by the business.
P 73
Transnet Freight Rail (TFR) recorded a 6.3% increase in general freight volumes and reported an impressive
25.3% improvement in containers transported by rail, thereby reducing the number of trucks on the roads.
Management focus is now on on-time departures and arrivals for the general freight business and export
coal line. For the GFB, a 24-hour, seven days national command centre has been introduced and manned
by TFR executives to plan, resource and manage the movement of trains across the country. This initiative
is already yielding positive results. At the ports, the Pier 1 Container Terminal at the Port of Durban recorded
and impressive leap in productivity with gross crane moves per hour (GCH) – a key measure of productivity
for container terminals – improving to an internationally acceptable average of 28 GCH compared to 23GCH
achieved in the prior period.
The New Multi-Product Pipeline (NMPP) is a strategic investment to secure the supply of petroleum products
to the inland market over the long term. This line will replace the old Durban-Johannesburg pipeline,
which is running at full capacity and nearing the end of its economic life. Some of the benefits of the new multiproduct pipeline include (when fully operational) a reduction in congestion on the roads, and a reduction in
carbon emissions from road transportation of petroleum products.
The NMPP construction is progressing according to the revised plan, and Transnet Pipelines successfully
commissioned the Kendall-Watloo, Jameson Park-Alrode and Alrode-Langlaagte sections of the pipeline on
31 May 2011. Construction of the pipeline and pump stations are now complete, and the focus will be aimed
at completing the construction of the coastal and inland terminals.
The financial performance for the six months ending 30 September 2011 reported improved profits and cash
flows.Net profit from continuing operations for the period was R2.3 billion, which represents an increase of
33.5% per cent compared to R1.7 billion up to 30 September 2010. This was mainly due to an increase in
revenue. Revenue increased by 20.3per cent to R22.4 billion (30 September 2010: R18.7 billion). The growth
in revenue is mainly due to the 7.1% weighted average growth in volumes, as a result of strong growth in iron
ore and container volumes.
Cash generated from operations increased by 25.6 per cent to R10 billion (2010: R7.9 billion), demonstrating
the company’s ability to generate strong and sustainable cash flows. The cash-interest cover ratio has
decreased to 3.1 times from 3.4 times compared to the same period in 2009/10, due to an increase in net
finance costs, which is a consequence of the capital expenditure programme. This ratio, however, remains
above the target of a minimum of 3 times.
Transnet is planning to borrow approximately R33 billion over the next five years to fund the rolling five year
capital expenditure programme. The Group commenced the financial year with a cash balance of R10.9
billion. Consequently only an amount of R1.9 billion was raised during the six months ended 30 September
2011. The capital expenditure for the six months ended 30 September 2011 (excluding capitalised borrowing
costs) was R9.5 billion. R5 billion of the total capital expenditure was invested in expanding the current
infrastructure and equipment, while R4.5 billion was invested in maintaining the existing capacity.
P 74
PART D
ANNEXURE E
ANNEXURE E
This annexure provides description of technical indicators and how these will be measured. It does not
include all the indicators in the APP of which some are self-explanatory.
PROGRAMME 1
Indicator
Payment of invoices within 30 days of receipt of invoice
Short definition
In terms of Section 8.2.3 of the Treasury Regulations all invoices must
be paid within 30 days of receipt of invoice, or in the case of civil
claims, from the date of settlement court judgement. Any invoices in
dispute are excluded from this requirement.
Purpose/importance
Compliance with TR 8.2.3
Source/collection of data
Invoices received from suppliers directly or via units
Method of calculation
None
Data limitations
None
Type of indicator
Compliance
Calculation type
None
Reporting cycle
Monthly report to DG for submission to National Treasury by the 7th
of every month.
New Indicator
None
Desired Performance
No invoices paid later than 30 days from date of receipt of invoice.
This however is the desired outcome – in some cases payment
may be delayed due to, amongst others, supplier having changed
banking details and not notified Finance, unit does not submit
timeously (recourse is warning ito FOSAD resolution after DG has
taken all circumstances into account), systems are down and no
payments can be effected. When there are instances of late payment
an explanatory memo is sent to the DG with the monthly report.
Indicator responsibility
Office of the CFO – Director: Financial Management
PROGRAMME 3
1. OVERSIGHT OF STATE OWNED COMPANIES
The oversight role of the SOC is applicable to Denel, SAFCOL, Alexkor, Eskom, Infraco, Transnet, SAA, SAX
Indicator
Assessment of SOC Corporate Plan by business units
Short definition
Corporate plan demonstrates the SOC Board understanding of
its shareholder’s goals, the SOC business & of how the SOC will
achieve the shareholder’s objectives outlined in the shareholder
compact
Purpose/importance
Implementation details on the attainment of key performance
measures
P 76
Approved Corporate Plan by the SOC Board
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Annually
New Indicator
None
Desired Performance
Achievement of the planned objectives
DDG: Transport
Indicator
Approved SOC Shareholder Compacts by the Shareholder
Short definition
Documents the mandated key performance measures & indicators
to be attained by the SOC in delivering the desired outcomes &
objectives as agreed between the SOC Board & Shareholder
Purpose/importance
Monitor the key performance indicators to be attained by the SOC
Approved Shareholder Compacts by the Shareholder and SOC
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Annually
New Indicator
None
Desired Performance
Attainment of the key performance indicators as outlined in the
compact
DDG: Transport, Energy and Manufacturing
Indicator
Assessment of SOC Quarterly Reports by business units
Short definition
Report that accurately provide information regarding achievement
of quarterly targets of the SOC
Purpose/importance
Provide performance feedback on the set of quarterly targets
Approved quarterly reports by the SOC Boar
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Annually
P 77
New Indicator
None
Desired Performance
Achievement of the set of quarterly targets
DDG: Transport, Energy and Manufacturing, EIPA
Indicator
Annual General Meetings (AGM)
Short definition
Gathering of the SOC Directors and shareholder as required by
law to be held each calendar year
Purpose/importance
Provides a platform for the shareholder to comment on the
performance of the company and communicate strategic
objectives that must inform the business activities of the company
The Notice of the Annual General Meeting & the Annual Financial
Statements (“AFS”) should be submitted 15 business days before
the AGM
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Annually
New Indicator
None
Desired Performance
Interaction with SOC Boards
Chief Director: Governance
Indicator
Assessment of SOC Annual Reports by business units
Short definition
The annual report provides the shareholders and potential investors
with information on how the company has been performing and
how it expects to grow in the future.
Purpose/importance
To record the activities and provide a report on performance of
the SOC during a particular financial year
Approved Annual Report by the SOC Boar
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Annually
New Indicator
None
Desired Performance
Evaluate the performance of a public entity after the end of the
financial year
DDG: Legal, Transport, Energy, Manufacturing, EIPA and SP
P 78
Indicator
Financial and Technical assessment of PFMA Applications
Short definition
Shareholder approval for Section 54 application in terms of the
PFMA
Purpose/importance
Rigorous assessment of PFMA applications with appropriate
recommendations to Minister
Section 54 Applications from SOC
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Annually
New Indicator
None
Desired Performance
Assessment of applications within 30 days of receipt by business
units
DDG: Legal, Transport, Energy, Manufacturing
2. LEGAL AND GOVERNANCE
Indicator Title
Government Shareholder Management (GSM)
Short definition
Legislative and regulatory framework to provide for the legislative
environment within which SOC operate
Purpose/importance
To create a legislative framework on the shareholder oversight
function
Government gazette
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Quarterly
New Indicator
None
Desired performance
Government Shareholder Management Bill
DDG: Legal
P 79
Indicator Title
Deregistration of Aventura
Short definition
Implementation and monitoring of the deregistering of Aventura
Purpose/importance
To assess the deregistration process of Aventura and ensure
that it meet all the statutory requirements.
Reports submitted by the board of Aventura.
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Quarterly
New Indicator
None
Desired performance
Tabling of the Bill to repeal the Overvaal Resorts Act in Parliament
Legal and Governance
Indicator Title
Risk Modelling Tool
Short definition
Assessment and monitoring of risks affecting performance of
SOC
Purpose/importance
Measures to mitigate risks
SOC Risk Officers
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Quarterly
New Indicator
None
Desired performance
Feasibility report on risk modelling tool Indicator responsibility
Chief Risk Officer
3.
INDUSTRY IMPACT
3.1 Energy and Broadband Enterprises
Indicator
MYPD 3
Short definition
Engagement to develop an MYPD3 response strategy
Purpose/importance
To ensure reliable and efficient electricity supply
SOC and other sources
None
P 80
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Annually
New Indicator
None
Desired Performance
Response on MYPD 3
DDG: Energy
3.2
Manufacturing Enterprises
Indicator
Monitoring of Alexkor Strategy
Short definition
Realignment of Alexkor’s role
Purpose/importance
Strategy to ensure sustainability of the company
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Quarterly
New Indicator
None
Desired Performance
Alexkor implementation of the strategy
DDG: Manufacturing
Indicator
SAFCOL Strategy
Short definition
Realignment of SAFCOL role
Purpose/importance
Strategy to ensure sustainability of the company
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Quarterly
New Indicator
None
Desired Performance
SAFCOL Corporate strategy
DDG: Manufacturing
P 81
Indicator
South Africa’s MRO service Hub
Short definition
Assessment of technical capabilities of the aviation sector
Purpose/importance
Roadmap on SAA, SAX and Denel aviation
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Quarterly
New Indicator
None
Desired Performance
Study on the technical capabilities of SAA, SAX and Denel
DDG: Manufacturing
3.3 TRANSPORT ENTERPRISE
Indicator Title
Short definition
Ministerial task team to monitor the implementation of the
SAA Long Term Turnaround Strategy (LTTS) and SAX 20:20
Vision
Monitor the implementation of the strategies according to the
developed integrated project plan
Purpose/importance
To assess the State Aviation operating approach
None
Type of indicator
Process indicator
Reporting cycle
Quarterly
Desired performance
Strategy of the airlines implemented
SAA and SAX
Data limitations
None
Calculation type
None
New Indicator
None
DDG: Transport
Indicator Title
Assessment of the Transnet’s investment programme
Short definition
Delivery of the investment programme on time and within
budget
Purpose/importance
Quarterly assessment of Transnet investment programme
Transnet
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
P 82
Reporting cycle
Quarterly
New Indicator
None
Desired performance
Oversight monitoring of the Transnet build programme
DDG: Transport
Indicator Title
Assessment of the airlines fleet renewal programme
Short definition
Delivery of the investment programme on time and within budget
Purpose/importance
Quarterly assessment of the airlines investment programme
SAA and SAX
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Quarterly
New Indicator
None
Desired performance
Oversight monitoring of the airline fleet programme Indicator responsibility
DDG: Transport
3.4 STRATEGIC PARTNERSHIPS
Indicator Title
Project Management Office
Short definition
Establishment of the PMO to assist in the monitoring of key strategic
infrastructure development projects
Purpose/importance
Improve the impact of the build programme on the domestic
economy and improvement in industrial capabilities
SOC
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Annual
New Indicator
None
Desired performance
Enhanced capacity to oversee large infrastructure projects
DDG: Strategic Partnerships
P 83
Indicator Title
Implementation of the Africa Strategy
Short definition
Rollout of Africa Strategy - Pipeline of projects
Purpose/importance
Coordinating mechanism and pipeline management for South Africa
investments
SOC
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Quarterly
New Indicator
None
Desired performance
Implementation of the Africa Strategy
Indicator Title
Funding Strategy
Short definition
Plan that outlines funding
Purpose/importance
Secure funding for major investment projects that go beyond SOC
balance sheet capacity
Internal and SOC
None
Data limitations
None
Type of indicator
Qualitative indicator
Calculation type
None
Reporting cycle
Annual
New Indicator
None
Desired performance
Funding proposals on the SIPs
Indicator Title
Private Sector Participation (PSP) Framework
Short definition
Framework that seeks to outline the role of the private sector in the
infrastructure development
Purpose/importance
Guide private sector participation
Internal and SOC
None
Data limitations
None
Type of indicator
P 84
Calculation type
None
Reporting cycle
Annual
New Indicator
None
Desired performance
Improved investment into infrastructure to support economic development
Indicator Title
Coal Mining Fund
Short definition
Strategic advice on the Coal mining fund proposal and structuring
Purpose/importance
Advise on the Coal Mining Fund
Internal and SOC
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Annual
New Indicator
None
Desired performance
Monitoring of the Coal Mining Fund
Indicator Title
Strategic SOC customer sector forum – Oil and Gas and Boat
Repair
Short definition
Requirements of oil and gas sector and boat repair industries to
build a competitive platform in South African ports
Purpose/importance
Improvement of service offering by Transnet
SOC
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Quarterly
New Indicator
None
Desired performance
Proposals on the service offering improvements by Transnet
P 85
3.5 Economic Impact and Policy Alignment (EIPA)
Indicator Title
Economic Model
Short definition
Oversee process to conduct macro-economic modelling, research and impact evaluation and ensure SOC contribute to New
Growth Path
Purpose/importance
Assessment of impact of SOC investment and operation activities
Internal and SOC
None
Data limitations
None
Type of indicator
Calculation type
None
Reporting cycle
Annual
New Indicator
None
Desired performance
Developed economic model to assess impact of SOC investment
DDG: EIPA
Indicator Title
Transnet Pricing Structure
Short definition
Conduct Impact of Transnet pricing structure on logistics
Purpose/importance
Assessment of Transnet pricing structure
SOC
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Quarterly
New Indicator
None
Desired performance
Transnet pricing structure
DDG: EIPA
P 86
Indicator Title
Transformation indicators
Short definition
Development of key transformation performance indicators
Purpose/importance
Identification of key socio economic indicators to be included into
the shareholder compact
SOC
None
Data limitations
None
Type of indicator
Process indicator
Calculation type
None
Reporting cycle
Quarterly
New Indicator
None
Desired performance
Key socio economic indicators identified
DDG: EIPA
P 87
RP165/2014
ISBN: 978-0-621-42817-9
Suite 301, Infotech Building, 090 Arcadia Street, 0083, Private Bag X15
Hatfield
0028
Pretoria Tel: 012 431 1000
Fax: 086 501 2624
Cape Town Tel: 021 469 6760
Fax: 021 461 1741
www.dpe.gov.za

Annual Performance Plan 2014 - Department of Public Enterprises

Transcription

Similar documents

Supporting Information Metal-Ion Catalysis in Alkaline Ethanolysis of

DPE Strategy and Annual Performance Plan Presentation to the

Volume 1, Issue 1 - Lowe Family Young Scholars

Quarter Report 2015-16

Here`s

Holman`s Referral Program

preview

INAZUMA F (GW250 F) SPECIFICATIONS Accessories

Haul Master - Prairie Sky Equipment Ltd.

2-21-13 Full Board Minutes FINAL