presentation to a joint sitting of the p ortfolio committee on public enterprises and the select...

Department of Public Enterprises DATE - April 22, 2023

Presentation to a joint sitting of the Portfolio Committee on Public Enterprises

and the Select Committee on Labour and Public Enterprises

Presenter: Minister Jeff RadebeVenue: Cape TownDate: 19 March 2003


Outline of Presentation

• Recap on DPE’s Restructuring Mandate

• Achievements in 2002/2003 and planned activities for 2003/2004– Restructuring of SOEs– Performance Monitoring and Strategic Analysis

• MTEF Budget Allocations


Recap on DPE’s Restructuring Mandate

• The primary mandate of DPE is to restructure and transform SOEs so that they can fulfill the requirements of Government’s development agenda in an efficient and sustainable manner.


• Energy • Telecommunications

- M-Cell

- Telkom IPO• Defence• Transport• Forestry• Restructuring of Non-Strategic /Non Core Assets

– Alexkor– Aventura

Programme 2: Restructuring of SOEs

Overview


Energy Sector

Progress to Date • Incorporation of Eskom as a company in terms of the Eskom Conversion

Act - Act No. 13 of 2001

• Appointment of Eskom Holdings’ new Board of Directors in 2002.

Work in Progress

• Ongoing restructuring of Eskom Enterprises


Energy Sector (Cont.)

Key Activities for 2003/2004

• Complete the Generation Cluster Review Study

• Complete the Design of the Multi Market Model and Implement the Market Rules

• Improve regulatory frameworks to sustain competitive markets.

• Ring fence Transmission appropriately

• Finalize BEE participation in Eskom Generation and commence with implementation.

• Proceed with 30% disposal of Generation market

• Complete the rationalisation of Eskom Enterprises


Progress 2002/2003• 19% of M-Cell was disposed of to an SPV comprising of M-

Cell Management and Staff for R4.8 billion and the ICE BV Structure was wound down.

Activities for 2003/2004• Detailed preparatory work is currently being finalized to

dispose of the remaining 4% of M-Cell shares currently held by Transnet.

Telecommunications Sector

M-Cell


Telkom IPO

2002/2003 ACHIEVEMENTS

• 25% of Telkom listed on the JSE and NYSE (ADR) 5 March 2003.

Proceeds to date: approx R4.1 Billion

• Largest mobilisation of ordinary South Africans countrywide

through a public education campaign

• Largest retail offering ever in South Africa. 127,000 citizens

participated in the retail scheme to the total sum of R340 million.

• Diabo Trust comprising 2% of Telkom Shares established to

ensure the transfer of shares to Telkom employees.

• The only significant listing in the Asian, Middle-East and African

market, demonstrating SA’s economic resilience


Defence Sector

Denel 2002/2003• Turbomeca Africa established from Denel's

Airmotive division and 51% stake of Turbomeca [France]

2003/04• Negotiations are at an advanced stage with BAE

Systems to acquire 30% stake in Denel• On the basis that acceptable terms are reached,

aim to complete transaction within the next 8 weeks.


• The internal restructuring and efficiency improvements at Spoornet are continuing

• Shadow incorporation of Spoornet divisions is continuing• Options for Orex are being reviewed, in terms of the

development of the iron ore deposits of the Northern Cape• Integration of Passenger Rail, initially the merge of Metrorail and

SARCC and later Shosholoza Meyl - process now at stage where a study is complete and Cabinet approval will be sought.

Transport Sector

Rail


Transport Sector (cont.)

Ports• Concession of DCT to commence in May 2003 as the first of a

series of Port Operation Concessions.

• National Ports Authority Bill referred back to Departments. Will return to parliament well before 2 month deadline required by Transport Portfolio Committee.

• Establishment of Ports Regulator in the next fiscal year. • 3 year tariff reform negotiation process continuing.


Aviation and Airports

• Re-acquisition of SairGroup’s 20% stake in SAA complete• The incorporation of SA Express into SAA is currently

being investigated.• ACSA End-State Model currently under review

Transport Sector (cont.)


Komatiland

• The new bidding process has commenced and it is expected that it will be completed by December 2003.

MTO • The negotiations with the preferred bidder are in process and

will be completed by end of June 2003.

Amatola• The finalisation of this transaction is expected by end of June

2003.

Forestry Sector


Alexkor - Mining Sector

• Cabinet decision taken to dispose of 51% of Alexkor stake to an SEP with BEE characteristics and international marketing exposure.

• 10 % Namaqualand community stake (in Trust) set aside.

• 4 Bidders have submitted final bids

• Adjudication process currently underway


Aventura

• 7 Resorts currently disposed of. These are :

Aldam, Bloemfontein, Christiana, Eiland, Kareekloof, Heidelberg and Roodeplaat.

• Remaining 8 resorts currently in the process of being sold. These 8 Resorts have Club Privè liabilities, bids are currently in the process of being adjudicated.


Other Transactions

Apron Services• 51% of Apron Services disposed of to Equity Aviation for R117

million.

Air Chefs• Ownership of Air Chefs now vests with SAA following

acquisition of 51% from Transnet and Fedics

Transnet Housing and Eskom Finance Company• Model for disposal has been approved by Cabinet. It is

envisaged that the disposal of these 2 entities will be finalised during 2003/04.


Performance Monitoring

Achievements for 2002 – 2003

• The financial evaluation model to evaluate the SOE’s financial performance has been developed, communicated to the SOE’s and is now at an implementation stage;

• Shareholder compacts are in place with Transnet, Eskom and Denel and reporting is in line with these;

• The Protocol on Corporate Governance in the Public Sector has been revised, approved and adopted by Cabinet and came into effect from September 2002.

• The SOE Boards have been restructured successfully in terms of Government’s Policy for Board Appointments.


Performance Monitoring(contd.)

Achievements For 2002-2003

• An audit of compliance with corporate governance in SOE’s was completed. Overall all SOEs are compliant with King II and the Protocol on Corporate Governance. Improvement measures such as training and capacity building of directors have been implemented to address the shortcomings identified;

• The design of the SOE Database is now complete.• Consistent policy for Affirmative Procurement within

SOEs finalised


Performance Monitoring (contd.)

Projects Planned For 2003-2004

• In order to achieve the objectives that the Department has set itself in terms of its role as a shareholder in SOEs, the following are some of the projects which have been planned for the year:– Finalization of the Remuneration Policy for SOE Boards, including

issues of bonus payments to executives;– Completion of an Investment Map of SOE’s;– Research on Socio Economic and other best practice and

benchmarks for each SOE, as well as the development of a database for the said benchmarks;

– Finalize the post-restructuring proposal for government’s shareholding in SOEs;

– Ongoing training and development for current and potential directors;– Implementation of the ESOP Policy for SOEs;– Implementation and monitoring of the affirmative procurement

framework at an SOE level;


VOTE 09: PUBLIC ENTERPRISES

• MTEF ALLOCATIONS for Financial 2003/2004

• R 60 205 000

• Responsible Minister: Minister of Public Enterprises• Administering Department: Public Enterprises• Accounting officer: Director-General of Public

Enterprises

• Budget Breakdown per programme reflected on the next slide


Budget Breakdown per programme

PROGRAMME BUDGETED AMOUNT2003/04

BUDGETED AMOUNT2002/03

EXPENDITURE 2002/03 as of

13/03/2003

Administration R 28 676 000 R 26 018 000 R 26 335 000

Restructuring of State Owned Enterprises

R 15 847 000 R 207 583 000 R 169 581 000

• Restructuring R 10 475 000 R 9 390 000 R 6 453 000

• Initial Public Offering R 5 372 000 R 198 193 000 R 163 128 000

Performance Monitoring and Strategic Analysis

R 15 682 000 R 15 477 000 R 7 077 000

• Performance Monitoring and Benchmarking

R 12 102 000 R 11 330 000 R 5 119 000

• Strategic Analysis R 3 577 000 R 4 147 000 R 1 958 000

DEPARTMENTAL TOTAL R 60 205 000 R 249 078 000 R 202 993 000


Thank You

http://www.dpe.gov.za/

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