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Public Enterprises lists achievements during past financial year

October 22, 2008

Portfolio Committee on Public Enterprises

During the previous financial year, government had signed shareholder compacts with key state owned enterprises in a bid to enhance their efficiency and profitability. The department of public enterprises presented its Annual Report to the portfolio committee on public enterprises in Parliament. Highlights mentioned during the past financial year included the completion of a draft Government Shareholder Management Model, the settlement of the Richtersveld community land claim, securing emergency recapitalisation for South African Airways (SAA) and the signing of shareholder compacts with Eskom, Denel, SAA and Safcol. Shareholder compacts impose performance targets on state owned enterprises (SOE). The department was responsible for the oversight management of nine SOEs. According to the department, the vacancy rate at the beginning of the present financial year stood at 13.49% and the staff turnover rate was at 17.40%.

Detail was provided on the department’s Intern and Graduate Development Programme. The department declared that as many interns as possible were recruited into the department at entry-level positions after completion of their internships. A recent attempt had been made to assign B.Com honours graduates to the Graduate Development Programme. The department would make a concerted effort to appoint more male African employees to meet the target of 39.2%. African females made up 41.3% of the total staff complement.

In terms of administration, business and strategic plans had been approved and each portfolio had to now report to the department’s board on a quarterly basis. All movable assets had been transferred to the Richtersveld community during the previous financial year. The community would now be able to operate as owners in any future mining activities. A human resources training programme had been developed and implemented and a staff retention strategy had been approved. The department had received an unqualified audit from the auditor-general and no irregular expenditure had been recorded. An important achievement was that the asset register had been updated. The department regarded the development of the Government Shareholder Management Model with regard to SOEs as an important step in its quest to create sustainable and efficient enterprises.

The department noted that its internal Electricity Consumption Reduction Project had secured a total saving of R51 390 since May 2008. The department had participated in the formulation of the National Electricity Emergency Response Plan and formed part of the implementing team. Attention would remain focused on managing the level of demand and encouraging more efficient use of electricity. The Eskom build programme had also received cabinet approval and was of paramount importance to meet energy demand. Construction had started on the Medupi power station in Lephalale that would alleviate pressure on supply.

In terms of broadband enterprises, the African West Coast Cable Project design had been completed. The creation of Broadband Infraco as a stand-alone SOE was a notable milestone on the road to improved broadband communications capacity. An expanded terrestrial network was being implemented. Cabinet had approved a review of the department’s remuneration guidelines. A 2010 risk task team had been established to monitor those SOEs involved with the World Cup preparations. During the past financial year, SAA had received R1.5bn and the International Air Transport Association had been appointed to advise the airline on its long-range aviation strategy.

SAA had also embarked on a cost-cutting exercise to render a more efficient operation. A strategic overview of the state’s involvement in the airline business had been completed. The department would, in future, be responsible for the management of the South African Express Airways that had been separated from Transnet. As regards human resources, the department had established the Employment and Skills Development Agency and key SOEs such as Eskom had been approached to assist trainee artisans with valuable work experience. During the year, the department spent R 30 million on consultants, contractors and special services. Transport enterprises’ expenditure increased from R3.5 million to R752.1 million due to the capital transfer to SAA. The departments of public enterprises and defence had compiled an advocacy document that would guide the restructuring process of Denel.