Minister for Public Enterprises Media Briefing before Budget Speech

Journalist: Minister two questions if your may, the first relates to the PBMR, what sort of alternative funding mechanism are being pursued in that and with who is possible? I know Western Resolve and Toshiba are existing partners in that technology. The second question relates to page seven of your speech, you are saying here that’s it’s also very encouraging that Eskom is quite advancing in negotiating special pricing agreements, is this referring to the aluminium agreements with BHP and what do you see the outcome of that, timeframes please.
 
Journalist: Minister in your speech you mention about CEO’s thinking that they are above the board, if you can give us some examples of what you mean by that. And also now that Eskom has acquired this loan from the World Bank, is that for its funding requirements in the immediate future are is there going to be more needs to raise funds.

Journalist: On the Eskom loan, I wondered whether it was wise to have at this stage a loan denominated in dollars instead of rands, since it’s going to cost us a lot more.

Minister Barbara Hogan: The future of PBMR, firstly let me state PBMR is not the sole nuclear technology that Government is looking at for further investment in nuclear in fact PBMR is still a project in its research and design phase, it’s not even yet a reactor so it’s really research and design project. As you know we’ve had to drastically reduce its size, given the economic constraints and the fact that they’ve haven’t been able to secure a customer or an investor. Government is not in a position to further fund in on the scale it was done before, that is regrettable but we are confident that we are retaining the critical skills that are required for the PBMR program. We are not concerned about validity of the technology in fact the Americans have nominated the PBMR to be a partner in their further NGNP program, it’s not a question of the technology itself it’s just to what extent Government is to deep pockets to invest long term, this is not a short term project. What has been actively explored at the moment is what other funding arrangements can be made, what are the investors, and pending the outcomes of those arrangements we will decide then and go to Cabinet and the inter-ministerial committee will make recommendations in PBMR future. The special pricing agreements, I recall that Eskom issued a very welcome news release about the renegotiations of those special pricing agreements.

Chris Foley: Well Eskom has made the press release in that they have agreed on a term sheet on how they will go ahead with negotiations they have indicated it would take a number of months but I think Eskom would be in a place to give us some timing on that as they go ahead, obviously it’s not going to be a simple type of thing but what is encouraging is that all the parties have shown the willingness to reach a solution, you know to sort of solve the problem we have in terms of the SPA’s and to find a better way forward, so probably most of the detail is in that press release, but I’m sure Eskom will release details as they go, I’m not a lawyer but the final detail of the contract being a commercial agreement probably wouldn’t be something that you are going to publish in the media.

Minister Barbara Hogan: I’m sure that Eskom and Mr Makwana and I see the whole Eskom team, if you want to add on that please indicate. The CEO’s above boards, I’m sure you would have picked up a debate that has been around for some time now initiated by the Minister of Co-operative Governance about the governance problems at local councils when a municipal manager for instance regards himself for some reason or other, as favourably seen in certain quarters as above a council and even above a mayor and the havoc that creates for the effective operating of a council. That is the analogy that we would like to apply to boards in the parastatal domain. If we step back from the fury of these recent events relating to CEO’s and just take an objective cool look at just what are the corporative governance issues and perhaps, I see many of our chairs sitting here and perhaps we need to have a session with them. What are the corporate governance issues that have precipitated such a flurry of intense activity and issues relating to CEO’s? In the case of the SAA, normally one would plan, a CEO has an appointment for a certain number of years and you would do succession planning. In the case of SAA, the CEO had to leave after a long and loud severance period, how can I put it, the unions got involved it became a massive strike and that almost started a whole set of problems, I think for us who are keen about corporate governance, what were the issues that arouse there. One of the issues is that if a CEO believes that they have endorsement for what they do from bodies or agencies or influential people outside of the board and therefore they can with very little risk challenge a board, or act outside of the mandate of a board and we saw, now the things are past, I don’t want to reflect on the individual actions of anyone of these agencies but we saw similar phenomenon in that herculean struggle around the CEO for Eskom.

We have seen phenomena in Transnet where an individual has literally just stood up and asserted that they are the CEO designate, now we can all have our views on all of these matters but is it not pointing to a corporate governance issue affecting parastatals at the moment. Our response as DPE and the Deputy Minister and I have worked hard together is to say that this can no longer be tolerated, we value CEO’s they are extremely important for the proper operating of our parastatals. They play a vital role but we can’t have CEO’s feeling that they are not accountable to the board and boards in the reverse not holding CEO’s accountable, managing that CEO relationship is important, nor can we have CEO’s going out in the public domain and publicly campaigning to secure their position. We have seen how that kind of corporate governance failure affects the function of municipalities and we are seeing how it’s affecting the function of parastatals and I think Government has been very clear, Minister of Co-operative Governance and ourselves that, that is a corporate governance failure which has to be addressed firmly and decisively. So that is what we mean by the CEO’s being above the board.

Deputy Minister Enoch Godongwana: Just to reinforce that there is quite a distinction between me who is a politician and who is elected on the basis of campaigning and the CEO appointed on the basis of skills and expertise. We need to draw the line between the accountability chain between the CEO, board and ourselves and that is what we are emphasising, that role should be clear, moving forward.

Journalist: Within the whole context of BEE and the politicisation of these appointments, do you not find that your own decision making part to appoint who you feel is fit, is compromised within that context?

Minister Barbara Hogan: Not at all and I think that’s the mistake that is made that there is not a wealth of experience and skill out there, it’s definitely out there  we don’t have to look for a so called affirmative action candidate, there’s an amount of skill out there the problem we have though in this current conjecture because there has been such a politicisation of these positions is that often very good candidates say listen we would love the job but does this mean we are going to be thrust into the public domain, our names dragged through the mud in endless struggles and that is why this matter has to be put to rest because it actually prohibits very good candidates from coming forward. They say you know I’ve got a good job, why should I come into a situation like this, and secondly and I think this is important whilst the Minister might motivate for a candidate at Cabinet, it’s actually the board who must do the recruitment, the interviews and come to the Minister with a set of proposals, this is not the Minister’s prerogative to just simply appoint a CEO. If a Minister goes that way then it’s very clear that the CEO has in the back of their mind that they are God ordained because they were appointed by the Minister and why worry about a board. It’s that kind of problem, so no, I think the problem of getting suitable candidates is because the situation has become politicised in this way.

Deputy Minister Enoch Godongwana: Does the World Bank loan actually attend to Eskom’s immediate needs, the truth is no. You will recall that Eskom applied for a 45% increase and revised that application to about 35% and we ended up getting 25% that has created a funding whole, particularly in the first three years of Eskom, so it’s a matter that’s being attended to. As to the implication of the dollar denominated loan, I think we have to look at the loan in its totality in terms of the interest, repayment period and also assumption about the relation between the rand and the dollar in the longer term. We can’t come to a conclusion on that it’s going to be expensive, that is an assumption that the rand is going to depreciate faster and moving forward against the dollar. I think if you look at the totality of the package, the repayment and the interest being charged, it’s quite a generous package for Eskom.

Journalist: It hasn’t been discussed at all in Parliament this loan? You hear this thing across the country, but not in Parliament?

Deputy Minister Enoch Godongwana: It is Mr Ambrosini’s view and I suspect that is why you are asking that question that you attended his press briefing, it’s his view that this loan should have been discussed in Parliament, it’s new to us, our SOE’s go to the markets everyday and it’s never been a requirement that they must go to Parliament and as far as we are concerned there is no parliamentary requirement protocol that would require these SOE’s when they go to the market that they must go to Parliament.

Journalist: Chancellor House and the involvement in the Medupi deal via Hitachi, you have expressed yourself on that before and you expressed reservations about it, I wonder if you had any comment on the discussion going on now whether the African National Congress should pull out or not. Another aspect of that is the only way to prevent that in future for the Government to do it or could the Department of Enterprises actually put into its own tender arrangements that it won’t do business with an organisation that involves political parties. The other is when you first came into this job and you made a comment and I don’t have the exact phrase in my mind but you made the comment suggesting that some SOE’s might need to be wrapped up and there was a very strong reaction to that but yesterday the Finance Minister was speaking and he reminded us of the twin track review of SOE’s and he referred to the viability of SOE’s. Is it possible that as a result of this twin track reviews that some SOE’s might in fact be wind up?

Journalist: You say in the speech that you hope that Chancellor’s House’s shareholders do the right thing if there is any conflict of interest, are you considering from Government’s side doing the right thing, investigating this deal from Government’s side to see whether or not the right thing can be done. And a conflict of interest, what in your mind would it be? And your estimation of what is going on at the moment is there a conflict of interest in your mind?

Journalist: When exactly do you expect Eskom to appoint a new CEO? And can you comment on the IFP’s statement that the World Bank should have been the lender of last resort because treasury could have issued its own bonds for the loan? The last question, if you are not going to take Parliament into your confidence when you go for these massive loans when we’ve avoided the World Bank for so many years and if you are not going to disclose the preferential prices given to corporations for electricity, how do you expect civil society to have any confidence in you when you engage with them? Given that their constituents are the ordinary people who are actually paying the price for all these deals that are being done in secret.

Minister Barbara Hogan: The question of the Hitachi and Chancellor House involvement in the Medupi build, I said that I have associated myself with what Minister Gordhan said in that if there’s a conflict of interest it must be sorted out and the right thing must be done. It’s complex and I’m not just going to sit and try and detangle what is going on, the African National Congress (ANC)  is not an equity partner in Chancellor House, Chancellor House has a trust fund of which there are no nominated beneficiaries, there’s all kinds of arms link issues here which makes this a complicated set of things. Incidentally the Deputy Minister and I have got a solution for the DA and the IFP on this matter, we are going to suggest that they lobby Chancellor House to become a beneficiary of their trust and then all of us will be happy. On a serious note, we can look at the Hitachi and this deal and I think it gives us a reference point to really look at what should be the relationship between business, parties and parastatals in this case. Many of us seem to have forgotten that the constitution in terms of Section 236, said that legislation must be enacted to regulate the way in which political parties are funded.

Parliament did indeed pass that legislation but they limited the funding of political parties to simple election funding now I don’t want to sound very old and like a dinosaur in Parliament but I was part of the constitutional assembly that particular clause was put in specifically because there was a recognition that there were many new parties such as the African National Congress (ANC) who just been unbanned and had no access to funding and that the state should provide some funding as you have in Germany where the state funds the various party institutes. It’s a pity that Parliament only limited the funding of political parties to election funding. The African National Congress (ANC) itself in terms of the Polekwane resolution has said that they believe that legislation must be enacted to regulate the way parties are funded. In the IDASA application to court where IDASA applied to the court for four political parties the DA, IFP, African National Congress (ANC) and the New National Party at the time to release their source of funding, the African National Congress (ANC) said in the application that you know perhaps we can introduce legislation to regulate the way parties are funded. My view is that we can fight about this Hitachi thing and as Minister Gordhan says the right thing must be done on this matter but it won’t solve the longer term problem or the medium term problem.

It places Eskom, Transnet, SAA in an invidious position because what happens if you give a contract and somehow one of those contractors then gives donations to a political party. You think of someone like Anglo American in the old days, they funded parties we know that, they never had a Government contract and it then means you are going to be spending endless times trying to unravel who are the beneficiaries of all of this and I don’t think that is the way we should be going around this. I think we need in this country a common view on how parties should be funded and what their relationship should be in terms of contracting and I think it would solve a lot of our problems. So we are calling on Parliament to actually deal with those issues.
The twin track process on the review of the IMC, I don’t anticipate that this will come up as an issue here; I think this is a parliamentary issue not a matter for the executive to have a thing here. Eskom the new CEO, my understanding is that they are engaging in the interviewing processes that shortly within the next couple of weeks they will be able to make a set of recommendations on this.

Deputy Minister Enoch Godongwana: I will deal with the Beeld question, why this matter hasn’t been investigated; this matter has been investigated by the public protector.

Minister Barbara Hogan: Can I just comment on this, in fact the conflict of interest story you will know the public protector investigated this and I have the report if anyone is interested but I’m not going to quote from that report. The public protector said the chair was remiss in not recusing himself from the particular meeting but the public protector found no evidence that the chair had actually influenced the course of that procurement. I know that Eskom itself did an internal inquiry and asked for external auditors to audit that procurement and that came out clean as well the public protector then said they found no evidence that the Hitachi contract had been influenced by any outside party, it went according to plan.

Deputy Minister Enoch Godongwana: Mr Ambrosini basically says a couple of things, first and foremost we should not be going into the market in the first place we should be bringing Independent Private Producers which we have responded to him long time ago and said for goodness sake bring them forward. The second set of issues when he says but why not national treasury going to the market itself, we have given these SOE’s to go to the market themselves as national treasury’s support in the form of guarantees, Eskom itself has R176bn guarantees in terms of this loans they’ve got to go to the market and so on, we can’t make sense of what his trying to achieve. The last point I want to deal with is that notion is that Eskom has entered into secular agreements with aluminium smelters, everyone who understands the history and evolution of the electricity supply industry in this country will know when this economic reaches excess capacity we attracted an investment and through cheaper electricity smelters these were not secular agreements it was signed long term agreements of over thirty years, so those agreements are old agreements not secular agreements but they are costly for Eskom now in the current demand constraint and therefore the need of the review of those contracts. We wanted to place that on record as for taking Parliament in confidence it’s for the first time that when these SOE’s go into the markets it’s because they’ve gone to the markets for some time. You will hear that last year alone Transnet spend about R18bn and they were spending another R93bn over the next five years, they can’t whenever they go to the market and call a standing committee and parliament debate before you get to the market, it doesn’t work like that.

Minister Barbara Hogan: Can I make a comment on electricity tariffs, the issue around secret pricing came up when a mistaken notion arouse and there were many editorials which were misguided in which it was said that Eskom has a 138 secret pricing agreements. We were not able to stop the indignant editorials based on false information there are no secret pricing agreements, those companies are all regulated by the tariffs which are determined by NERSA and are on the NERSA website. The special pricing agreements refer to the smelters and those are the ones that are being renegotiated. I would like someone here in this audience to please stand up and tell me whether they can understand the electricity accounts and this isn’t an Eskom problem the problem is that often when you listen to talk shows and stuff, Eskom has become the favourite person to bash and it’s unfortunate because it plays a major role in our economy and it’s achieving one. Many of the issues that arise, people say that you know in Sandton they pay so much and here they pay so much, Eskom is just not transparent and industries pay more and we pay less, all of these kinds of debates and some of them misfounded completely. Industry does not pay more than residential it’s a cross subsidisation from industry to individual customers. When you step back and reflect on this part of the problem is also that municipalities place their own surcharges on electricity, so that complicates because what one municipality puts on is different to what another municipality puts on. So you and I as a consumer are sitting there boggled eyed and then all of a sudden you don’t know whether a prepaid meter is more expensive and there’s a big debate in my sister’s neighbourhood as to whether put prepaid meters in, because are they more expensive them if the council charges you.

I am not making pronouncements but I am of the view that transparency is probably required to assist all of us in this, and I am not talking about transparency around secret agreement. I think it is difficult given the complexities and the number of players who all have an impact on electricity prices for the customer to have a really transparent understanding of what is going on and perhaps in discussions with the Chair of Eskom in the discussions with the Minister of Co-operative Governance and in this IMC that we are talking about, perhaps we should be pioneering a way and looking at ways in which electricity pricing can become a little more clearer and transparent. I don’t want to you know that is very difficult for us to anticipate but bear in mind even in the DPE Portfolio there is a company itself which is being wound up Aventura. Virtually all of its assets were dispose of some time ago particular land claim had just stopped the final disposal. Again there is another company Safco which had privatized most of its assets and Land Claims have been holding that up. Now the Deputy Minister and I are of the view that in fact the Safco mandate needs to be reviewed given that forestry play such an important role in rural areas and perhaps the State has an extremely important role to play. I you look at companies like Mondi who have managed through their forestry holdings to launch major initiatives around economic and community development in the areas in which they are involved I think Safco needs a renewed mandate. So the issue that we want to say is that the question of wounding up, privatising, are not ideological issues here, it’s not a question that if you privatise everything succeeds and if you stay in public it fails.

We have seen the most spectacular private sector failure that has ever been experienced in the world, internationally, where banks that we thought that were institutions that will last forever just collapsed, this was a private sector. We cannot hold ideological positions either way, the merits of the situation will, the merits of each case must be taken into consideration and not approached by strict ideological considerations.

Journalist: Firstly I am not sure if we have an answer about what the right thing is to do with regards to Hitachi and Chancellor House but secondly are you aware of any other investments by Chancellor House in State projects either direct or indirect and thirdly are you not being a little disingenuous regarding companies which have State contracts giving donations to political parties which is quite different from a company which is a front for a political organisation. I mean you don’t for instance have a Western Cape business which is a DA controlled business doing business with the Western Cape Government, that is the principle. Can you give us more clarity on these things?

Minister Barbara Hogan: You might not have that at a Provincial level but what at Local Government level? 100’s of small contactors, many contractors with party affiliations, you get yourself into a real problem when you try to attribute one party having a business interest and contracts with Government, and not wishing to downplay the importance of the issue related to Hitachi but please do not, I think we can tire ourselves in real knots. My response is that the whole issue of political party funding needs proper regulatory frame, if we start making distinctions between this one and that one. Conflict of interests, I am with Minster Gordhan on this issue, I fully don’t understand how this, what the conflict of interest when there is no actual political party involvement when there is no actual beneficiary, it’s not the normal arrangement and so I would not want to venture a judgement on those issues. But as I say and as Minister Gordhan has said I think when this is finally untangled the writing must be done. One of the issues that come up continually is that the World Bank loan covers the boiler contract which is what the Hitachi contract is for, the World Bank loan does not cover the Hitachi contract, and it’s completely separate from the boiler so the World Bank is not involved in funding the boiler program that Hitachi had contracted for. 

Journalist: The say reducing national connection cost by 73%, when we will see that filter through to the NG’s, ordinary people and organisations? Then the Infrace Act stipulates that it should get two licences an IECS licence and then an Electronic Communication Services licence which ICASA refuse but the regulators has gone against the law there, so what will happen now, are they going to do something about this? Then thirdly the funding of the Infrace for its participation in the West Coast cable system is that approved and sorted?

Minister Barbara Hogan: The Infrace Act does specify that there should be an ECS and an ECNS licence perhaps my Acting DG, it just might be that an Act is, that these two provisions might actually be infringing on the territory of the Regulator because in fact it’s a regulator that must decide the allocation of licences. So I think there is still a moot point there that has to be resolved and the Minister of Communications is clearly of the view that he is in his right to issue a policy directive that only an ECNS licence would be issued to Infrace. In terms of the West Coast project Chris am I right that the West Coast project is being entirely funded off their balance sheet, so there is no problem. In terms of the reduction of broadband costs, we had a professional consultancy that has international, that has bought in the international IT specialist to look at the business case for Infrace and Sandra and Chris you can assist me their estimation was that broadband cost have been brought down I think it was, can you assist me there Chris, the exact amount? By 75% already through the intervention of, and in fact it was very interesting, is that their view is that given the problems that most countries have in these broadband networks of bringing down costs, that the money expended on Infrace which was one of the primary vehicles to bring down that cost. There quote to us was in fact we have been able to bring down cost fairly cheaply in this country.

Deputy Minister Enoch Godongwana: The ECS licence for Infrace is not totally off the agenda, if the need arises the matter will come back onto the agenda, that’s our discussion with the Department of Communications.

Journalist:  On the review of the SOE’s, President Zuma was quoted was while back saying that one should also look at Eskom going to energy and everybody going back to their own portfolio, is there a strong discussion around this at the moment? You also mentioned your speech a cool assessment, a cool assessment would that mean just because we have had our own weapons manufacturer like Denel for years that we don’t need, that if it has to be closed down it has to be closed down, no emotion round that?

Minister Barbara Hogan: I think when we talk about a cool assessment its really looking at the bottom line at what is actually delivering, what is the cost to the State and interestingly enough let me just say that although we have some people out there who is saying that Government has actually funded State Owned Enterprises to the amount of R243bn, that is so misleading that its almost unbelievable. In fact in DPE’s stable Government funding of State Owned Enterprises is in terms of just straight cash transfers, there aren’t bailouts, its only R17bn over a 7yr period and this represents I think a 0.0 something percent of the total budget of that period. This amount of R243bn is completely misleading because the people who are propagating this view which is a view that it’s just profligate spending by Government on State Owned Enterprises have confused the fact they have included the R176bn guarantees for Eskom, a guarantee is not cash, it’s a contingent liability and we are talking about a drain on the fiscus and it just baffles me that we have that kind of approach when we are talking about Government subsidization. In terms of the review yes we will be looking, I think there is a whole number of issues that we will be looking at there is no discussion that this Department will take over that and whatever. Part of the problem of shifting parastatals to other Departments is that many of our sister Departments for instance Energy, Transport, Communications are actually Departments which are responsible for the Regulator ant therefore for them to have the parastatals in their fold would be a clear conflict of interest because the regulate the Regulator as it were. But I do not want to anticipate the outcomes of this review; I think we should wait when that happens.

Journalist: Eskom is on record as saying they need 40 000 megawatts by 2025 of new power, they hope the 20 000 will come from nuclear, what is the total estimated cost for this new power and what proportion, how much will the nuclear element cost and how much will nuclear one cost?

Minister Barbara Hogan: Those are important questions but unfortunately I am unable to respond now at the moment. Government is involved in, we have already an integrated resources plan which specifies the energy mix going forward for the short term but we are working and it should be completed after June. The entire integrated resources plan which will specify what energy sources will fuel our power going forward, you know what mix of renewable, what mix of nuclear and until such time that that is finalized I think it would be incorrect for us to anticipate what those costs would be. But you are right in asking the question of just how costly this is going to be, we do have to double our energy supplies going forward, to an amount of 40 000-50 000 already just to secure our energy for the short and medium term to like 2018 and that is what building Medupi and Kusile for. Already because the Regulator has given us only 25% which doesn’t even cover Eskom’s operating and interest costs already there is a hole. So we are more ceased at the moment of how we meet that funding difficulty going forward. Eskom is doing its own estimates about what is the likely build going forward and what is the likely shortfall there but I don’t want to speak until we actually understand what the IRP’s is going forward. So the funding model becomes extremely important we are as I say, investigating 46 options for funding this build going forward and it’s receiving attention at the very highest level now.

Journalist: 50 000 by?

Minister Barbara Hogan: 2028, this is based on the projections of what consumers say they will be requiring let me also finally just add that Eskom has performed incredibly well since the glitch in 2008. There were operational efficiencies that Eskom had to address and DPE keeps a very close monitoring on a weekly basis of what demand is being made at peak periods going forward and it’s been remarkable how Eskom has been able to keep the show on the road, things moving again without the kind of problems we had in 2008 and I think we need to congratulate them for that. But 2011 and 2012 and then later it’s around 2017 and 2018, Eskom and the country is going to be facing constraints on energy supply, therefore Government and all of us have to look at the way that we use energy, there’s a very demand side management program to manage the demand for electricity and unless we succeed in bringing down that amount of energy which is consumed we will face problems in 2011 and 2012. Eskom has worked out just how much energy has to be saved, how much have to be controlled and we welcome business for instance who have just recently come to the table and I think a considerable saving which they are brining to the table and this kind of co-operation between business, ourselves, labour, civil society is extremely important for these two years going forward. We will manage if we can bring demand down and that is also one of the issues we are looking at the IMC, we are down to the nitty gritty of the project management of the role out of the solar water geyser program. It’s no longer just a good idea to roll out one million we are down to how many plumbers are being trained, how the insurance industry is going to play a role, it’s really down to the nitty gritty of that.

Journalist: Can I just say the nuclear component, we’ve heard 1.3 trillion. Does that sound right?

Minister Barbara Hogan: I don’t even want to comment on that at this stage, it’s very difficult to say outside of the IRP going forward.

Media briefing ends.

STATEMENT BY MINISTER BARBARA HOGAN
Thank you very much I do understand that most of you have been distributed with the speech that is due to be delivered in the House this afternoon. So I am not going into long details, read through this speech because God forbid you have to listen to the same speech twice in one day. I just want to draw the attention to relevant matters that we believe, the Deputy Minister and I believe are very central to the debate on parastatals. Firstly to say that I think in no time in our history has there been so much strong and vociferous debate about the rules of SOE’s in our country and that is to be encouraged and it is right. And so we look forward to that engagement always and we have some salient comments that we would like to make about some aspects of that engagement.

Second issue which there is a huge amount of public debate is energy. I think South Africans have never been as ceased with this debate about energy as we’ve seen in the last couple of months. What is extremely important is that Government, the Regulator, Eskom all of us who are responsible for the secure supply of energy engage vigorously with civil society with the public. Everybody has their view point everybody has an idea of how they would see energy requirement configured in this country and what the role of Eskom should be. There is a whole welter of very interesting energy debates here so the Deputy Minister and I are going to be engaging with other ministers. We are really committed to engaging with stakeholders in the energy sector. The reason why we are doing this is that energy affects each and every one of us as consumers and it affects our future, it affects our wellbeing it affects our economy. We do not spend unnecessary time arguing and debating and having furious debate and feeling anguish and worried about the energy that we have to pay for and the security of that energy supply and that is why we want to hear South Africa about what was and allow that to feed into our planning processed because these as Mr Makwana sitting here as chair of Eskom will be able to tell us that these 6 months are probably most important decision making months in deciding energy issues for our country going forward. Fundamental decisions will have to be made in these 6 months because we are engaging in a major long term planning process so from  a energy point of view we are committed to get the united South Africa around agreeing around what energy should look going forward in the future.

The third issue that we raised is economic infrastructure we have in our portfolio some of the most important infrastructure players for our economy particular Transnet, Eskom and SAA if we are not able to get the efficiency that we require into these sectors there will be a strangle hold on the economy that is why we are engaged in the biggest infrastructure bill the country has ever seen and I ‘m sure all of you are very tired of me repeating that but the significant of this infrastructure investment cannot be underestimated so both Transnet and Eskom are heavily engage with the building program probably the funding model how we fund this very  expensive very expansive infrastructure program becomes a key priority  from energy alone we have a working team working consisting of all the roll players in different departments Eskom all around working none stop particular with our new CFO in Eskom to look at the very real funding options I think there is  46 funding option going forward. Transnet with a turn around that it achieved from 2004 onward in terms of its balance sheet has done remarkable well and Transnet is one of the great success in this regard and that they able to fund their growth program off their balance sheet so the Bill program and its funding is also extremely important in order to secure the infrastructure that we need them for.

Then there are other matters that are Governance related matters you will see in the speech what we have to say about these matters one of them is the role of political parties and their relationship to Government business enterprises and that has come up very high on the Hitachi contract as well as the role of CEO’s and the vacancies that have existed in some of our major CEO’s. We address those issues in the speech I think there are real reasons it is not a case of neglect is points to certain corporate governance issues which we need to reflect about as Government. We also briefly touch on each of our State Owned Enterprises here this isn’t really the time that we deal with the result of our performance and assessment of the performance results of our State Owned Enterprises that comes up when the annual report of the department is taken but nevertheless it would be remiss of us not to mention some of the critical issues facing so the portfolio of State Owned Enterprises under our domain so we refer briefly to each of these in our speech going forward.

That in brief covers the issues that are covered in the speech Deputy Minister is going to be speaking to Transnet one of the most critical SOE’s for unblocking our logistic problem and also be dealing with the very enterprising CSDP program a local manufacturing capabilities from the infrastructure procurement that we are presently engage in so that then covers some of the critical issues that we are covering in our address to the House this afternoon.