PRESENTATION TO THE
PORTFOLIO COMMITTEE
By
DDG:JAMES THELEDI
ON 2ND QUARTER PERFORMANCE OF DPE
08 NOVEMBER 2006
OUTLINE OF THE PRESENTATION
2
•Overview of the 2nd Quarter Performance
•Review per programme
•Administration- (Rashida Issel - COO)•Analysis and Risk Management (James Theledi - DDG)•Legal, Governance and Secretariat (Sandra Coetzee - DDG)•Corporate Structure and Strategy (Litha Mcwabeni - DDG)•Joint Project Facility (Katherine Venier - JPF Co-ordinator)
•Summary
• Investment Dashboard Demonstration- Ntombifuthi Rapetsoa
Overview of the 2nd Quarter
-Completion of Shareholder compacts with Strategic Key Performance
Indicators for Eskom and Transnet
-Analysis of performance for all SOE completed
-Significant progress made on Alexkor deal, establishment of Infraco and
recapitalisation of Denel and PBMR
-Completed the study on the future of SAFCOL
-Separation of SAA from Transnet fairly advanced
-Successful management of the CEO, Chairpersons and the Risk fora to
improve co-ordination
-Budget expenditure on track, 45 % of the operational budget has been spent.
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InfraCo will participate in the national long distance and international connectivity only.
PotentialAbuse ofMarketPower
PotentialAbuse ofMarketPower
LessLess
MoreMore
ContentContent
ApplicationsApplications
ServicesServices
Tier 3 AccessInfrastructure
Tier 3 AccessInfrastructure
Tier 2 National Long DistanceInfrastructure
Tier 2 National Long DistanceInfrastructure
Tier 1 International MarineCable Infrastructure
Tier 1 International MarineCable Infrastructure
Impact ofGovernmentIntervention
Impact ofGovernmentIntervention
LessLess
MoreMore
Sco
pe o
fIn
terv
enti
on
InfraCoPhase I
InfraCoPhase I
InfraCoPhase II
InfraCoPhase II
Tier 3Operators
Tier 3Operators
Tier 3Operators
ISP
Tier 1 & 2Operators•Telkom•InfraCo
Intervention
Intervention
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Tier 2: National Long Distance Infrastructure
EskomEskom
TranstelTranstel
PIETERMARITZBURG
BEAUFORT WEST
DE AAR
NELSPRUIT
PHALABORWA
RICHARD'S BAY
George
Namibia
Bethlehem
Botswana
Klerksdorp
Mozambique
Poseidon
Swaziland
CAPE TOWN
DURBAN
EAST LONDON
PORT ELIZABETH
PRETORIA
Umtata
Kenhardt
Maputo
ManziniErmelo
Gaberone
Ellisras
Welkom
LadybrandLesotho
Copperton
KIMBERLEY
Rustenburg
Mosselbay
Stellenbosch
Potchefstroom
Cape Peninsula
Tongaat
New Castle
Alice
BritsZeerust
Leeudoringstad
Rhodes
Aggeneys
Witbank
Vereeniging
Saldanha
POLOKWANE
KOMATIPOORT
BLOEMFONTEIN
JOHANNESBURG
Musina
Future Future
InfraCo will take over Transtel’s and Eskom’s infrastructure and will lease it back to the private sector.
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PROGRAMME 1 - ADMINISTRATION
Sub programme
Output Progress 2nd quarter 1 July - 30 Sep 06
Follow-up action
Planning, monitoring & evaluation
Organizational performance reporting
Technical information on progress
reports approved (1st quarter, 2nd
quarter and annual reports).
Co-ordinate submission of 3rd quarter performance report to the Portfolio and Select committees
Human resources
Implement and monitor Employment Equity
Monthly EE report to EXCO, Dir. HR
and Transformation Committee.
Draft Employment Equity Report
Employment Equity on
line system was not
working until 28
September 2006.
Corporate services
Communication and IT Security
Scrambler devises installed where
needed
NIA did Information Audit assessment.
Still waiting for the assessment report from NIA.
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PROGRAMME 1 - ADMINISTRATION
Sub programme Output Progress 2nd quarter 1 July - 30 Sep 06
Follow-up action
Communications DPE News-letter Develop concept, undertake process to give publication a name.
Gathering of information and inputs from different Units and SOE.
Uploading of PDF file on both intranet and website
Finance Adjustments Estimates 2006/07
The adjusted estimates were submitted on due date and the department is awaiting the outcome of the submission.
Finance MTEF 2007/08 Operational and SOE recap budgets prepared and submitted on time. National Treasury has proposed that a task team be set up with DPE/NT to address the complexities of the SOE recap.
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DPE STATISTICSas at 6 November 2006
Total Posts Filled Posts Vacancies Terminations to date (April to date)
Turnover Rate(April 06 to date)
November Appointments
December appointment
157 131 26 14 119
(If calculated using resignations only)
5 1
Level 1 - 10 62 8 3 1
Level 11 - 12 24 5
Level 13 - 15 45 13 2
Interviews in progress
8
Advertised Posts
7
Resignations 11
Contract Expiry
1
Transfers 2
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Males needed in DPE: African and White: Lower level i.e., 1 – 12Coloured and Indian: All levelsFemales needed in DPE: African with the emphasis on SMS level.People with Disabilities needed in DPE: 4 People with Disabilities to be appointed on all levels and all racesCurrent Gender compilation on SMS level: 56% male and 44% female: Target 50/50 % by 31 March 2009.
TOTAL POSTS
AFRICAN INDIAN COLOURED WHITE DISABLED
Statistics South Africa (Mid year population estimates 2004)
79.3% 2.4% 8.8% 9.5% (4% of total as per Strategic Planning decision = 6)
F40.1%
M 39.2%
F1.2%
M1.2%
F4.5 %
M 4.3 %
F4.9 %
M 4.6 %
Total posts plus vacancies: Should be:
157
62 62 2 2 7 7 8 7
Total posts as at 7/11/2006 131
55
40 5
1
9
3
14
4 2
Posts:7/11/2006 as a % 100 % 41.98% 30.53% 3.82% 0.76% 6.87% 2.29% 10.69% 3.05%
Vacancies 26(13-SMS) &(13 Level 1-12)
5 16 1 2 2
Target: Number of people with disabilities
6
4 (potential candidates pending medical results)
DPE TARGETS IN COMPARISON WITH NATIONAL STATISTICS
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SALARY GRADING LEVEL TOTALPOSTS
TOTALFILLED
TOTAL VACANT
DISABLED
AFRICAN INDIAN COLOURED WHITE
LEVEL FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE
MINISTER 1 1
1
DIRECTOR GENERAL 16 1 1 0 11
SPECIAL ADVISOR: 15
1 1
DEPUTY-DIR. GENERAL 15 4 3 1 2 1
CHIEF DIRECTORS14
16 10 6 2 4 1 1 1 1
DIRECTORS13
3530 5 6 12 2 1 3 1 3 2
TOTAL SMS’s13 - 16 58 45 13 9 18 3 1 4 2 4 4
DEPUTY DIRECTORS(11&12) 11 - 12
29 24 5 1 10 6 2 2 4
ASST DIRECTORS(9&10) 9 - 10 10 8 2 3
4
1
LEVEL(7& 8) 7 - 8 49 45 4 27 9 3 1 5
LEVEL(1-6) 1 - 6 11 9 2 6 3
TOTAL LEVEL 1-121 - 12 99 86 13 1 45 21 2 5 1 9
TOTAL DPE 157 131 26 55 40 5 1 9 3 14 4
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EXPENDITURE REVIEW
DEPARTMENT TOTAL
EXPENSES APRIL -
SEPTEMBER 2006
TOTAL BUDGET
COMMITMENTS
AVAILABLE BUDGET
OCTOBER 2006 – 31
MARCH 2007
% OF TOTAL
BUDGET USED
Compensation of Employees 23,483,978 54,004,637 0 30,520,658 43.49
Goods and services 19,324,362 47,331,363 4,129,142 23,877,858 40.83
Transfers* 580,042,648 584,422,000 0 4,379,351 99.25
Payment for capex 1,120,159 1,835,000 161,132 553,707 61.04
TOTAL 623,971,149 687,593,000 4,290,275 59,331,575 90.75*
*The departmental operational expenditure, amounts to R48 261 424 which is 44.85% of the budget excluding the transfer to the PBMR (R580 million). The expenditure will level out in the coming months as the Diabo Trust transfer is also currently pending which affects the overall percentage expenditure to budget.
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PROGRAMME 2 - ARM
Output Progress 1st quarter1 April – 30 June 06
Progress 2nd quarter 1 July - 30 Sep 06
Follow-up action
Analysis of quarterly performance of SOE
1st quarter reports due from SOE on 18 August 2006 Analysis only prepared on receipt of 1st quarter reports from SOE
1st quarter reports analysed and briefing provided to Minister
The site visit and the appointment of consultants
2nd quarter reports due from SOE on 17 November 2006
Analysis to be prepared on receipt of 2nd quarter reports
Analysis of Annual reports of SOE
AGMs held after June with 21 day notice period for submission
Analysis of annual reports for SOE completed in preparation for AGMs
Benchmarking: Identify operational KPIs and peer group designation.
Developed project plan with specific focus SAA and the key divisions of Eskom and Transnet
Developed project plan with specific focus on SAA and the key divisions of Eskom and Transnet
Discussions held with relevant key management of abovementioned SOE on suitable operational KPI and possible peer groups
More research with the assistance of sector specialists culminating in memo to Minister.
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PROGRAMME 2 - ARM
Output Progress 1st quarter1 April – 30 June 06
Progress 2nd quarter 1 July - 30 Sep 06
Follow-up action
Develop a standardised quarterly reporting template to be completed by SOE
Planning to address problem of previous quarterly reports focusing on financial performance
Agreed that next report to include progress on infrastructure investment, non-core disposals, risk management and socio-economic performance
Comprehensive quarterly reporting template completed and sent to CFOs of SOE for comments
Template to be discussed at CFO forum
Develop a standardised corporate plan template that complements the Treasury Regulations framework
Planning to address lack of consistency ito contents and quality of corporate plans received from SOE
Comprehensive corporate plan template draft to be sent to CFOs of SOE for comments
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PROGRAMME 2 – RISK MANAGEMENT
Output Progress 1st quarter1 April – 30 June 06
Progress 2nd quarter 1 July - 30 Sep 06
Follow-up action
Risk management
Review Risk management plans
Only three (Transnet, Eskom & Safcol) of our SOE risk management plans were formally reviewed and assessed. Report was approved
Reporting requirements for annual risk management plans developed in consultation with SOE and included in draft risk management framework.
Draft framework to be discussed at Risk Management Committee meeting on 03 November and with DG and Minister on 10 November.
Risk management Development of the Risk Framework
The Concept document was approved by Exco in March 2006.
EXCO Risk Management sub-committee was established in May 2006.
Draft Framework developed in consultation with SOE and others.
Risk management committee held its first meeting on 26 July.
Draft framework to be discussed at Risk Management Committee meeting on 03 November and with DG and Minister on 10 November.
Risk management Reports from SOEs outlining risk profile and identified risks
The department has not yet formally identified SOE risks that could negatively impact government and its objectives.
Draft risk profiles prepared for each SOE. Same will be discussed at the next DPE Risk Management Committee meeting scheduled for 03 November 2006.
Developed a draft list of key cross-cutting shareholder level risks.
SOE risk profiles to be reviewed by SOE teams and Exco. Monitoring procedures will be implemented for Shareholder level risks.
Incorporate comments from Exco
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PROGRAMME 3 - LGT
Output Progress 1st quarter1 April – 30 June 06
Progress 2nd quarter 1 July - 30 Sep 06
Follow-up action
Section 54 PFMA application Guidelines
Consultation draft presented to SOE at CEO and Chairman Fora
Formal response from only 1 SOE, limited response from SOE
Infraco
Establishment
Draft Bill ready for Cabinet Approval
Transnet Pension Fund Amendment Bill
Bill before Portfolio Committee
Getting the Bill to be passed into law within a short space of time (i.e by the end of the year)
Litigation: Defending the legal action instituted by the Pahapur / Londoloza Consortium
The Department has filed all the necessary documents with the registrar of the High Court
Tracing all the documents required in the legal action
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PROGRAMME 3 - LGTOutput Progress 1st quarter
1 April – 30 June 06Progress 2nd quarter 1 July - 30 Sep 06
Follow-up action
Shareholder management legislative framework
Draft framework completed
Document discussed internally and presented to Minister
Legislative processes to follow the conclusion of the SMM Conceptual framework
Board remuneration Study completed. The Remuneration Guidelines have been submitted to the Minister for approval.
Consultation with the Chairpersons of SOE concluded, stakeholder consultation ongoing
Additional work on the guidelines following consultations
Governance workflow
None – have other priority projects
ToR updated and submitted for approval
Finalisation of procurement processes
Conclusion of SOE Shareholder's Compacts
Generic compact developed and approved by Minister
The following compacts have been signed:
Eskom and Transnet
SAFCOL, Denel, Alexkor and SAA to be signed
Management of SOE forums: Chairpersons’, CEOs’, CFOs’, Risk Officers’, company secretary/legal
1x Chairpersons’ Forum
2x CEOs’ Forum
1x CFOs’ Forum
1x Risk Officers’ Forum
0x Governance Forum
1x Chairpersons Forum
2x CEOs Forum
0x CFO Forum
1x Risk forum
0x Governance Forum (Terms of Reference approved on 2nd October 2006)
Development of calendar for 2007
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PROGRAMME 4 - CSS
Output Progress 1st quarter1 April – 30 June 06
Progress 2nd quarter 1 July - 30 Sep 06
Follow-up action
Transnet
Performance management
Signed compact imminent
Progress monitored against strategic KPIs
Annual Report reviewed
SKPIs incorporated in shareholder compact.
Transnet
Coega PSP
DPE position paper on transaction structure finalized.
Transnet PSP Framework developed, DPE engaging Transnet on proposed framework.
Urgent engagementwith DOT necessaryas part of the POA.Info memo and RFP tobe published afterprocess is agreed withTransnet.
SAA
Separation from Transnet
A re-evaluation of SAA done by Deutsche Bank on 20 March 2006
A draft Act and a Cabinet Memo has been done
The Sale Agreement has been signed subject to finalization of some suspensive conditions
Take over of Transnet guarantees is in progress and a request forwarded to NT in this regard
The team must still review the SOE pension rules. Awaiting NT response to our request
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PROGRAMME 4 - CSSOutput Progress 1st quarter
1 April – 30 June 06Progress 2nd quarter 1 July - 30 Sep 06
Follow-up action
PBMR
Successful Demonstration Power Plant and Pilot Fuel Plant
EIA and NNR licensing processes underway
EIA and NNR licensing processes continue to be a challenge
A fuel license (Nukem) has been obtained and approved by all shareholders.
SAFCOL
SAFCOL mandate and future role reviewed, and in place by March 2007.
Project Plan finalised.
Interdepartmental task team (DWAF, DTI) established.
Initial research on saw log data and industry structure completed.
Consultations with task team
ongoing.
Research ongoing on separate areas that will inform the review.
Initial scenarios for the future role of SAFCOL identified.
To bring on board the DLA and the National Treasury
SAFCOL
Transfer of SAFCOL 25% shareholding in privatised packages to workers, communities and NEF.
Consultations with National
Treasury and DTI done.
Meetings scheduled with
DWAF and DLA.
Way forward to expedite the process identified
Further consultations with the DTI and National Treasury
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PROGRAMME 4 - CSSOutput Progress 1st quarter
1 April – 30 June 06Progress 2nd quarter 1 July - 30 Sep 06
Follow-up action
Denel
1. Denel’s recapitalisation
• Presentation to Treasury Guarantee Certification Committee (GCC)• MTEC submission
• Guarantee secured• Further cash recapitalisation of R567m secured
Monitoring
Denel
2. Shareholder oversight
• Assisted with closing the Saab transaction• Analysis of revised Denel Corporate Plan finalised• Input into Shareholder Compact: SKPI’s
• Quarterly review of Denel’s 1st quarter’s performance completed
On going performance monitoring
Denel
3. Enabling projects (national task teams)
a. Defence Fund (financing/guarantee fund)
b. Sector strategy
c. Policy alignment
d. Rationalisation of national functions
a. Terms of reference (TORs) finalised
b. Behind schedule
c. Acquisition process alignment on major contracts by DoD.
d. Functions and budgets for units that will be moved into DERI identified.
a. Team of local and international experts appointed and initial research has commenced
b. TORs complete and tender advertised
c. Expecting 2 major contracts to be placed with Denel.
d. Cab Memo on DERI finalised and Schedule 3A listing with Treasury sought by DoD
Finalisation of research and implementation
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JOINT PROJECT FACILITYProject name Progress 1st quarter
1 April – 30 June 06Progress 2nd quarter 1 July - 30 Sep 06
Follow-up action
Rest of Africa
Review of current SOE investments on the Continent
Benchmark on SOE investments
Lessons learnt report Country analysis report
Sector analysis report
Energy & pipelines
A review of current state of SOE pipeline activities
Liquid fuels demand analysis being reviewed for Sasol IV shift case, & Eskom/ Mintek methodologies;
Mega-Terminal concept being reviewed and included in design.
Submitted memo to the Minister in this regard.
Initiated review of Moerane Commission impacts with Petronet, for incorporation into design.
Moz-SA pipeline: Introduced project to the DME re FSSTT & Strat Stocks;
Seeking mandate for ensuring that national strategic considerations bear on land use in South Durban Industrial Basin)
Finalise key project parameters: Pipeline routing & size
Moz-SA liquid fuels pipeline
Develop Gas Pipeline options
Develop Slurry Pipeline options
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JOINT PROJECT FACILITYProject name Progress 1st quarter
1 April – 30 June 06Progress 2nd quarter 1 July - 30 Sep 06
Follow-up action
Human resources & capacity building
Audit of the SOE Skills requirements
Skills requirement by SOE compiled and presented to DPE and JIPSA
Report on the SOE skills requirements findings is near completion.
Findings are scheduled to be presented at the CEO ‘s forum on 20th November 2006
Findings are scheduled to be presented at the CEO Forum on 20th November 2006
Information Communication Technology
Broadband Infrastructure
Complete. Business Plan submitted to National Treasury in June 2006.
Commissioning of FSN underway to ensure “lighting up” on 15th Dec
Information Communication Technology
Data network rationalisation
Suspended until Second Network Operator is operational.
Suspended until Second Network Operator is operational.
ICT team to make a presentation to DG on the implementation plan
29
JOINT PROJECT FACILITYProject name
Progress 1st quarter1 April – 30 June 06
Progress 2nd quarter 1 July - 30 Sep 06
Follow-up action
SOE Properties
SOE non-core property disposals
Cabinet approved •framework for non-core disposals•B-BBEE guidelines for disposals
Negotiating sale of SOE non-core properties with government departments, particularly Department of Housing and Department of Education.
Disposal policy and B-BBEE guidelines disseminated to SOE.
B-BBEE guidelines loaded on DPE website in July.
User friendly guide on B-BBEE guidelines to be developed
SOE property developments
Preliminary negotiations with Development Finance Institutions for the development of non-core properties.
Finalisation of model for development and disposal.
Rationalisation of non-core properties available for development.
Further meetings with Development Finance Institutions to discuss the institutional arrangements and determine the way forward.
Further negotiations likely to define the nature of a possible transaction.
30
JOINT PROJECT FACILITYProject name Progress 1st quarter
1 April – 30 June 06Progress 2nd quarter 1 July - 30 Sep 06
Follow-up action
Competitive Supplier Development Program
Development of SOE supplier development plans
SOE Procurement capacity building
Benchmark database of suppliers
Development of overarching policy and strategy re supplier development – approach accepted by the Minister and Chair’s forum
First phase industry research
completed by Wits and focus areas
for second phase defined with
SOEs.
KPIs for the program presented at workshop with SOEs
Procurement capacity building program proposal received from UK Procurement Professional Institute and Transnet and Eskom aligning job descriptions with program.
Draft cabinet memo written for exclusion from IPP.
Pilot supplier benchmarking program launched with Ekurhuleni
Work with DTI on NIPP issue and get Cabinet approval on the NIPP issue
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SUMMARY
-Great progress has been made against Medium Term Expenditure Framework (as outlined in the MTSF)
-The achievements during the second quarter are a good spring board for the remaining quarters
-The department will be working with other national departments to close the processes on Infraco, Electricity distribution, adding further capacity to the electricity distribution, the separation of SAA from Transnet, out of Court settlement with the Richtersveld community, finalising SAFCOL strategy and securing clear policy on PMBR
-Completion of the Risk Management Framework and the Shareholding Management model
-Complete the standards and framework for quarterly , corporate, annual reports and implement guidelines on Section 54, PFMA applications
-Improve co-ordination with other government departments in rolling out the Infrastructure investment and achieving goals as outlined in ASGISA