Committee Section briefings on budget vote process, sector overview; Department of Public Enterprises briefing

Meeting report

Appointment of Acting Chairperson
Mr Disang Mocumi, Committee Secretary, announced that the Chairperson was not present, and Mr F Adams (ANC) was duly nominated and elected as Acting Chairperson by the Members.

Acting Chairperson’s Opening Remarks
The Acting Chairperson noted that the Department of Public Enterprises (DPE or the Department) would be briefing Members that afternoon on the strategic plan. Because of the timing of elections, it was not possible to call for public input, as was normal in the budget process, because budgets had to be passed by end July to enable departments to receive money from National Treasury.

He encouraged all Members to forget about their political affiliations, for the sake of making progress in the Committee, and noted that everyone’s views and input needed to be discussed.  

Committee Section briefings: Budget vote process and sector overview
Mr Disang Mocumi, Committee Secretary, presented an overview of the budget vote process, which he reminded Members was similar to the Members’ training session documentation in the previous weeks.

He noted that departments had submitted their strategic plans to the Fourth Parliament at the beginning of 2014, but because of elections these were withdrawn and the strategic plans now presented were aligned with processes since the new government elections.

He reminded Member that each department’s executive authority was responsible for tabling strategic plans and annual performance plans before Parliament. This tabling was then followed by an announcement in the Announcement, Tabling and Committee Reports (ATC). The documents would then be available on the multimedia website and the committee assistants would ensure that Members got the documents as soon as they were tabled. The Speaker would then refer the documents through the ATC officially to the Committee for consideration. The Committee would consider the annual reports and budget, in line with a programme developed by each Committee. He reiterated that normally the public and other interested parties could comment, but because in this year there was only a two-week time frame, public comment would not be possible.

He highlighted what the budget process involved (see slide 2 of the attached presentation). A scrutiny of the tabled documents was to be done that afternoon, and drafting and adoption of the Committee Report was to be handled the following Wednesday. He noted that the challenges included the short time periods between the establishment of Committees, election of the Acting Chairpersons and Expanded Public Committees, and the revival of the formerly-tabled strategic plans.

Discussion
Mr K Morapela (EFF) asked about the legal implication of not involving the public in the budget process.

Ms D Rantho (ANC) questioned the remarks about tabling of reports, and wondered whether the strategic plan would be published once tabled, or after being taken back to this Committee. She too was concerned about the limited opportunity for public comment. She hoped that the short period for Members of the Committee to familiarise themselves with their portfolio could somehow be addressed.

Ms N Michael (DA) pointed out that she had served on the previous Committee in the Fourth Parliament, which had adopted a Legacy Report. She suggested that other Committee Members be given a copy of this Report, to bring them up to date on where that Committee stood on certain issues. She thought also that it would be important for the Researcher to give an executive summary of each one of the entities’ to all the new Members, to prepare them for the budget process, as it would be impossible, this year, for the Committee to go through the annual plan of each entity. She offered to assist in any way she could. She pointed out that the entire economy of the country revolved around the Public Enterprises sector, to a large degree. She believed an executive summary would help Members to overcome their uncertainty and give better insight on the budget.

Dr Z Luyenge (ANC) agreed that it was of paramount importance for Members to understand the issues and aspects that were prioritised by the previous Parliament and the Legacy Report to allow this new Committee to take over where the Fourth Parliament’s committee had ended. The Legacy Report would help Members understand the mandate of the Department and help them locate areas of focus. The Parliamentary Budget Office was also new and was one of the tools to be used in order to influence the budget process.

The Acting Chairperson explained that the current short period was as a result of the elections being conducted so late, and thus the Committee had to squeeze in a number of topics now. He said that the Constitution required public engagement, but the Department’s budget was already open for public scrutiny. He encourage political parties to engage with the public, as they represented constituencies. He noted that previously, budgets had been handled by National Treasury, but Parliament had recently set up its Parliamentary Budget Office (PBO) and the processes of the Committee had grown. The mid-term Budget Policy Statement was scheduled to be tabled in Parliament in October. This required extensive budget processes from the sides of the Committee ad Parliament.

Mr Mocumi noted that the previous Parliament’s Committee had done the budget process and that it had not been opened up for the public that much, in comparison to other committees, such as those dealing with budgets for social development, or health. The Committee dealt with shareholders and management of State Owned Companies (SOCs). In the past three years there had not been transfers to State Owned Companies; hence the previous Committee saw no need to open the budget process up to the public for comment. There were no legal implications of not doing so, but Parliament could not unreasonably exclude the public. This was the first time the budget vote was being done without a committee being familiar with the politics of the SOCs. He pointed out that the Legacy Report of the Fourth Parliament’s committee had been included in the documents handed to the Committee Members in the previous week. An orientation pack was also prepared on the SOCs, and Members were encouraged to look at that. The documents were to be sent electronically.

Mr Morapela expressed his satisfaction with the explanation given on public participation but nevertheless highlighted the importance of involving the public somehow.

Mr R Tseli (ANC) asked whether the Committee was only going to rely on the Legacy Report without full briefings about the performance.

The Acting Chairperson replied that this would happen, but only for the current year. He suggested that the Chairperson and management of the Committee look for suitable dates when the Committee could spend two days or so looking intensively at strategic plans, drawing up a plan of action, and calling upon the SOCs to give a proper briefing to the Committee on what they did and what the Committee expected them to be doing. The Committee was not a service delivery body, but the entities were.

He added that the Annual Performance Plans (APPs) were available in an electronic version. The process of drawing these included public participation. He clarified that both houses of Parliament were required to pass the budget, otherwise National Treasury could not approve funding, and pointed to Chapter 9 of the Constitution.

Mr Tseli asked at what stage the Committee would know how entities had been performing so as to inform questions to be posed to the Department.

The Acting Chairperson replied that the Content Advisor and Committee Researcher would piece together information citing facts prior to the meeting with the Department, to assist Committee Members. The report of the Auditor-General (AG) was not yet available.

Committee Researcher’s Overview of the 2013/14 Financial Year
Ms Lee Bramwell, Committee Researcher, explained that the document entitled “Overview of the 2013/14 Financial Year (Second Document)” was an update of Part 2 of the document entitled “2014 Budget Vote 11 Analysis: The Department of Public Enterprises (Document 1)”. Document 1 dealt with the 3r Quarter financial report for the Department. The Second Document was to be considered first, as it was based on an overview of the 2014 financial year.

She explained that the Department of Public Enterprises’ focus of spending was directed towards strengthening and expanding its oversight capacity over the State Owned Companies’ plans and the rollout of the Strategic Integrated Projects (SIPs).

The budget allocated to the DPE was R 294.1 million. It was one of the smallest budgets by comparison with other departments. R272.5 million was spent, with R21.7 million underspending.

She highlighted the strategic objectives for the Programme: Legal and Governance, giving the budget and spending figures (see attached presentation for full details). There was overspending, but she said that the Department was structured to have three programmes and where there was underspending on one, the balance of budget could be transferred from another to compensate. The
overall expenditure on this programme had decreased by R300 000,due to lower spending on goods and services, and this was a positive move as it meant that the DPE was spending less on consultancy services.

The Researcher highlighted the budget allocated for the Programme 3: Portfolio Management and Strategic Partnerships, the largest amount, and indicated that there was underspending here. The decrease in spending was attributed to delays in the implementation of some major projects. The programme dealt directly with the State entities and the underspending was therefore not a good sign.

She then highlighted that the increase in the number of posts in the Department, from 191 to 222 posts by the end of March 2014, accounted for the increase in expenditure on compensation of employees. This was a positive move. There was a general decrease in the expenditure on goods and services, which was attributed, amongst others (see document for list) to delay in implementation of major projects, including the Telecom Benchmarking Study. She suggested that the Committee should critically examine this, as this was likely to have an impact in the future.

In particular, she raised concerns over the delays in the construction at Medupi, as well as South African Airways and its strategies, as more fully outlined in the attached document.

Finally, she noted that there was no one piece of legislation specifically governing the Department of Public Enterprises itself.

Department of Public Enterprises 2014 Budget: Analysis of Vote 11
The Committee Researcher explained that this document focused on the budget for the current year. She summarised the mandate of the DPE as including driving investment, productivity and transformation in its portfolio, as well as to unlock growth, drive industrialisation, create jobs and develop skills. The strategic goals over the medium term were fully summarised in the attached presentation.

She noted that the DPE’s function included oversight but did not extend to developing policies for the SOCs. The Department did, however, need to align policies according to the National Development Plan (NDP), the New Growth Path, Industrial Policy Action Plan and various other charters.

Pages 4 to 5 highlighted the strategic goals of each of the three DPE programmes. She emphasised that the Portfolio Management and Strategic Partnership Programme dealt directly with the SOCs themselves, who fulfilled the service delivery function, whilst DPE carried out the oversight function.

She noted that the expenditure trends showed that spending was more focused towards increasing the DPE’s capacity to oversee the SOCs, and the rollout of the Strategic Integrated Projects.

The decrease in the Department’s budget for 2014/15, when compared to 2013/14, was attributed to the increase in indemnity claims in 2013/14, but no additional funding would be channelled for this in future budgets. She also highlighted that the “medium term” meant the period from 2014/15 to 2016/17.

The Researcher highlighted the three sub-programmes of the Programme: Legal and Governance, which were management, legal and governance. The legal services cost increase could not be verified from the tables in the document presented. The sub-programmes under the Programme: Portfolio Management and Strategic Partnerships related to energy and broadband enterprises, manufacturing enterprises, transport enterprises, economic impact and policy alignment and strategic partnerships.

She summarised the key issues for consideration by Parliament, and touched on the capacity to strengthen the Department’s oversight role, operational and financial instability of the SOCs, the Departments’ budget decrease and the need for the Department to be proactive in identifying and managing the SOCs’ financial and operation risk.

Discussion
The Acting Chairperson thanked the Researcher for the information that would help to inform questions to be put to the DPE by the Members. Most of the points raised needed to be answered by the DPE itself.

Mr Luyenge was pleased with the relevant information provided by the Researcher in order to engage with the Department. He asked how the salaries of the Chief Executive Officers (CEOs) of the SOCs could be justified. He expressed dissatisfaction on the quality of electricity services provided to many communities.

Mr Tseli appreciated the analysis of the budget. He asked the Researcher to clarify the analysis on the 18.2% expected increase on consumption.

Mr N Singh (IFP) thanked the Content Adviser and Researcher on the well drafted documents. He asked to what extent recommendations had been followed by the Department. He said that further documents, especially the Auditor-General’s report, were needed. He asked to what extent the Committee was to interact with SOCs, and said that there was a need to measure the Annual Performance Plan (APP) with the Department’s performance.

The Acting Chairperson highlighted the need for the Committee to have a two to three day strategic workshop to address and strategise on some issues. The Committee had a large oversight role over the Department and the SOCs.

Ms Michael said there were several serious issues, some of which had been under-played in the previous year for political expediency.

Mr Morapela asked about the role of this Portfolio Committee in relation to socio-economic conditions on the ground, and especially the increase in electricity costs.

The Acting Chairperson replied that National Energy Regulator South Africa (NERSA) determined the electricity price increases and there was a need to invite this body to the Committee to gain understanding of how this process worked. Entities were established under the Companies Act and Members must familiarise themselves with the scrutiny process and how they dealt with issues.

The Researcher said there was a policy for the standardisation of the SOCs’ remuneration for their executives. The DPE had brought this to Parliament. There were reasons for the increase in consultancies but the numerical amount for the increase, whilst it may be justified by events on the ground, needed to be clarified.

DPE Budget Vote Sector Analysis
Mr Rodney Mnisi, Content Advisor to the Committee, presented this document, firstly describing the social, economic environment and the policy environment analysis. The growth of the South African economy was to be stimulated by infrastructure development. Part of this related to the implementation of the energy plan, restructuring of the energy industry and Integrated Resource Plan. Key issues affecting energy included the issues on nuclear and renewable energy. The budget implications included the need to understand constraints in the legal environment, look at the policy frameworks and the long-term turnaround strategies, as well as continual monitoring of the demand strategies. Full details were provided in the attached document.

Finally, he gave a synopsis of the entities.

Discussion
Mr Morapela was impressed by the honesty of the presentation, which was strong on projections of the labour sector, not only the management in charge of the industry, and how they affected the economic environment. There was a need to balance the analysis.

Mr Singh asked to the extent to which skills development and mobilising of funds had been achieved, towards strategic goals and development. He wondered whether there was a document on the shareholders’ agreement that could be shared with the Committee. He questioned what role the Department played in Alexkor.

The Acting Chairperson explained the background of Alexkor and replied that Alexkor was a public enterprise which had not delivered in terms of the court order around the mine and the community. He encouraged the Committee to call entities to appear for questions by the Committee.

Department of Public Enterprises strategic and Annual Plan presentation
Mr Tshediso Matona, Director General, Department of Public Enterprises, said that the strategic and annual plans guided the Department over the next five years and summarised the requirements on each department when developing these plans. The strategic development was informed by key principles which included coordination and coherence with government’s overarching policy framework, identification of clear outcomes to be pursued by the Department, the need for delivery in the constrained economic environment and a focus on cross-cutting outcomes. Mr Matona indicated that the strategy had been presented to the Executive Authority and extensively discussed with the senior management, and the focus was now on the implementation through Annual Performance Plan (APP).

The DPE was the shareholder representative for Government, with oversight responsibility for eight State Owned Companies (SOCs). These were Eskom, Denel, SAFCOL, Broadband Infraco, Alexkor, Transnet, South African Airways (SAA) and South African Express Airways (SAX). The mandate of the Department was embedded in the founding legislation of the SOCs and Public Finance Management Act (PFMA), and DPE must ensure that each SOC, within its own portfolio, served Government’s strategic objectives as clearly highlighted in the National Development Plan (NDP) and further articulated in the New Growth Path (NGP) and the Industrial Policy Action Plan (IPAP). He added that the Department was very specific on the outcomes it planned to achieve and what it proposed to be doing in the next five years.
 
The Department had three overarching programmes, namely Programme 1 (Administration), Programme 2 (Legal and Governance) and Programme 3 (Portfolio Management and Strategic Partnerships). The purpose of the Administration programme was basically to provide strategic management, corporate management and administrative support to the Department, which then enabled the Department to meet its strategic objectives. The programme comprised units that were critical for the development of systems, plans and processes that would aid the Department in executing its mandate and enhancing coordination in the delivery of its plans. Programme 2 provided legal services and corporate governance systems and facilitated the implementation of all legal aspects of transactions that were strategically important to the Department and the SOCs. It also ensured that there was an alignment with Government’s strategic intent, and monitoring of key risk factors that had affected the achievement of key performance indicators contained in the shareholder compacts. Programme 3 focused specifically on aligning the corporate strategies of the SOCs with Government’s strategic intent, and monitored their financial and operational performance and capital investment plans. This contributed to the implementation of overarching economic, social and environmental policies focused on building strategic partnership between SOCs, strategic customers, suppliers and financial institutions.

Mr Matona noted that the South African economy remained constrained, and growth over the past five years had been slow, which resulted in slower employment growth and limited the economy’s ability to absorb more people into the labour market. He added that while significant progress had been made to transform the economy, there were still major structural constraints. The Government developed a suite of policy interventions that were targeted to accelerate growth, and ensure inclusive (investment driven) growth. The vision of the DPE was to drive investment, productivity and transformation in the Department’s portfolio of SOCs, and their customers and suppliers, so as to unlock growth, drive industrialisation, and create jobs that would develop skills. The mission of the Department was to provide decisive strategic direction to the SOCs, so that their businesses were aligned with national growth strategies arising out of the NDP. Mr Matona also stated that the Department was fully focused on key outcomes that included unlocking economic growth and employment, industrialisation, transformation and regional development.

The DPE planned to achieve its strategic objectives by focusing on the review of the shareholder oversight in order to ensure alignment of SOCs to developmental outcomes. Mr Matona noted that the Department was concerned about the high level of corruption in the country, and indicated that it was therefore important for the Department to promote good corporate governance and build internal capacity that would enhance Department’s ability to execute its strategic plan and fulfil its mandate. The Department also focused on the stabilisation of SOCs, specifically the strengthening of balance sheets and funding options. He emphasised that the Department needed to leverage SOC procurement spend to support industrialisation and transformation. The Department had clearly defined its objectives over the Medium Term Strategic Framework (MTSF) period and key strategic initiatives or areas defined the current fiscal framework. There was also engagement with the Executive Authority to ensure alignment, and, most importantly, in order for the Department to achieve its objectives, there was a need to enhance coordination and collaboration with other departments and state entities. The Department needed to be appropriately resourced to execute its strategy.

The Department’s budget had decreased from R1.4 billion in 2012/13 to R259 million in 2014/15. However, it continued to increase by 9.9% to 2016/17. He explained that the decrease from R1.4 billion was the result of transfers to the SOCs. Mr Matona added that over the medium term, the line item for Compensation of Employees was expected to increase, from R149.6 million in 2014/15 to R169.9 million in the following year, and this was the result of the expansion of the establishment over this period. The Goods and Services, including Payments for Capital Assets, were also expected to increase from R110 million in 2014/15 to R115.7 million in 2016/17 to support the increased establishment. The structure of the Department increased from 168 employees in 2009 to 210 in the 2012/13 financial year and was still projected to increase to 227 over the MTEF period. Mr Matona also alluded that the Department had also succeeded in reducing its vacancy rate from 11.9% in March 2013 to 1.8%. The increased scope required the Department to enhance its capacity and the Department was still faced with challenges in respect to retention of specialist skills.

Mr Matona added that the Department must leverage its Strengths and Opportunities to overcome Threats and Weaknesses. The Department had identified its strengths of a dedicated and competent workforce, with the ability to oversee companies that were the cornerstone of the economy. More importantly, the Department also had strong financial management and practices and this was important to curb corruption and maladministration. The Department also managed to identify key weaknesses that still needed to be overcome, and these comprised of shareholders’ inability to finalise the shareholder management model, and lack of a common view on shareholder oversight. Mr Matona also emphasised that the Department still needed to deal with the duplication of effort among some units and with the lack of clarity on the role and responsibilities. The Department also managed to identify a number of opportunities that DPE could capitalise on, and these included positioning DPE as an “activist” shareholder representative. Other opportunities included the acceleration of industrialisation and localisation. He also added that it was important for the Department to drive SOC transformation, and focus on driving new build-programme that would potentially stimulate economic growth through extensive investment in infrastructure. The threats that were faced by the Department  included the fact that not all enabling sector policies and legislations were in place, and there was also a burden on the fiscus with questions on the financial sustainability of SOCs. There was not a clear legislative framework setting out the DPE’s shareholder mandate.

Mr Matona concluded that the State of the Nation Address had re-emphasised the Government’s commitment to address the development challenges, whilst the NDP provided the long-term vision, and the Department would need to ensure alignment of SOC activities to support the achievement of the vision. He also noted that over the medium term, the DPE would focus on implementation of actions aligned to the NDP, contained in the NGP and IPAP, to deliver on the radical socio-economic transformation programme. The Department needed to continue its oversight mechanisms to ensure implementation of MTSF targets by SOCs. The Department also needed to work with SOCs and Development Finance Institutions, to improve its project management capacity, in order to improve monitoring of the build programme. Finally, the resourcing of the Department remained a challenge that needed to be addressed promptly, as the scope continued to expand. 

Discussion
Ms Michael indicated that she was worried about the delays in both Medupi and Kusile Power stations, and indicated that the Department needed to come up with possible solutions to remedy this embarrassment. She added that she was also worried about the National Union of Metalworkers of South Africa (NUMSA) strike in the Medupi power plant, as it was reported that the operations had been shut down and this was likely to hurt the economy of South Africa. Ms Michael indicated that it was almost impossible for the Department to meet the deadline for the completion of Medupi and Kusile Power stations, unless there could be introduction of stringent measures to resolve the labour disputes at these two particular stations.

Ms Michael commented that although she recognised that the Department was understaffed, it was worrying that few of the targets were met, especially for SOCs, and the Department needed to solve this problem as it was damaging its reputation.

Finally, Ms Michael wanted clarity on the reports that DPE could be dissolved and each one of the entities would go to where they belong.

Mr Matona responded that he was not aware of any possibility of dissolving DPE and indicated that as long as the State maintained ownership of companies, the role of this Department would remain relevant. He added that the main role of the Department was shareholder oversight and indicated that the Department was also an internal consultant in Government on shareholder advice.

Mr Matona indicated that there was no doubt that the NUMSA strike would have an impact on the Department in meeting the deadline for the completion of the Medupi power station.

In regard to the targets, Mr Matona responded that he was not aware of the Auditor-General’s (AG) report that Ms Michael was referring to, as the Department had achieved 68% of its target, although he conceded that this was still under-performance as the Department needed to achieve at least 80% of the targets. He also indicated that there were certain areas of ambiguity on how entities must prove to the AG how they had performed. 

Ms Rantho asked the Department about the possibility of introducing legislation that would govern the SOCs to encourage transparency and accountability. She added that she was worried about leverage of SOC procurement spend to support industrialisation and transformation and asked whether the Department had any strategy to support SOCs.

Ms Rantho asked whether the Department had enough sub-power stations and added that the Department needed to focus on maintenance of other sub-stations. She asked whether the Department needed more power stations in order to support the national grid, and prevent the possibility of power shortages.

Ms Rantho advised that the Department needed to have a close relationship with the Department of Higher Education in relation to skills development and formulate a strategy to track graduates that could be assisted by the Department, in order to utilise their skills later.

Mr Matona agreed that indeed the Department needed to introduce a piece of legislation that would ensure compliance and accountability in the SOCs. He indicated that the Department had developed tools that were standard for shareholder oversight, and although there were cases where the Department failed to develop these tools, he added that the Department was generally proud that it had done well on oversight, although he added that there was always room for improvement.

Mr Matona explained that numerous problems affecting SOCs were associated with a number of key factors, including economic slowdown, geographical location of South Africa to other key economic players and the increase in oil prices.

Mr Matona responded that indeed the Department was understaffed, and therefore in need of scarce skills, and he agreed that the Department needed to consider working with the Department of Higher Education to track down the graduates that had been assisted by the Department.

Mr Simphiwe Makhathini, Deputy Director-General, Department of Public Enterprises, responded that there were not enough sub-stations in South Africa and there was also a huge backlog in the maintenance of the sub-stations. He added that the Department of Energy had managed to identify this problem in its MTSF as needing to be resolved. Mr Makhathini also emphasised that there was an issue around the funding for the upgrading of sub-stations, as there was no agreement on whether this project would be funded through tariffs or the fiscus. 
      
Mr Tseli was pleased to note that five senior staff were women. It was important for the Members to also know how the Small, Medium and Micro Enterprise (SMMEs) were doing in terms of gender equality. He also wanted more information on the 2% target for the employment of people with disability. He wanted clarity on the role of the eight entities on economic growth, and how they were dealing with the issue of inequality and unemployment, as these challenges were identified in both SONA and the NDP.

Mr Tseli was concerned about the 19% increase in the use of consultants and asked whether the Department had a strategy to deal with this serious challenge. He requested the Department to provide the Committee Members with the document containing the shareholder agreement with the eight entities. He added that the DPE needed to deal urgently with the lack of clarity on roles and responsibilities as this was a serious challenge that could impact on the functionality of the Department.

Mr Matona responded again that the Department was understaffed, and that the consultants had been needed for special skills that were scarce, but agreed that indeed this was a matter of concern. However, he emphasised that the Department had to find ways to use consultants to the full benefit of the Department. He also added that the document containing the shareholder agreement was a public document and therefore the Committee Members would be given access to it. This document set out a pragmatic approach and various options that could be implemented by the Department on SOCs.

Mr Matona noted that it was difficult to get access to information on the SMMEs in order to track down the progress that had been made in terms of gender representation and the people with disability.
 
Mr Singh asked about the possibility of semi-privatisation of some SOCs, especially those that were underperforming, so as to encourage capital injection.

Mr Matona responded that the Department had considered options to semi-privatise some of the SOCs so as to encourage capital injection. He also stated that the policies of the ruling party did envisage the role of private sector in some sectors of the economy. However, he added that the Department needed to deal with underlying problems that caused underperformance in some SOCs.
 
Mr Morapela wanted to know the reasons for the delays in the delivery of Broadband Infraco and how the Department was planning to deal with this challenge. He also asked the Department to explain how the strategic plan could ensure that the SOCs were economically viable and not dependent on government bailouts.

Mr Matona responded that bailouts were associated with a hopeless situation, linked to maladministration and mismanagement.

Mr Morapela also asked what remedial actions that were in place to deal with labour disputes that were delaying the projects in both Medupi and Kusile power stations.

Mr Matona indicated that the labour model used at Medupi power station was problematic, as Eskom was a project owner but the work was conducted by the contractors who were therefore responsible for employment. He added that Eskom made a huge mistake by not getting involved in the labour disputes, leaving the responsibility to the contractors. Eventually, Eskom had signed a partnership agreement to ensure that the contractors complied with labour laws. He said that the Department was concerned about the influence of unions in the South African economy, and added that NUMSA needed to take full responsibility for the labour strike in the Medupi power stations, as the Court had declared the strike illegal.

Ms Rantho asked the Department to further explain the SWOT analysis and said the Department needed to give detailed information on the weakness and threats identified by the Department and how it planned to remedy these challenges. She added that it was concerning that the Department had not finalised the shareholder management model, as this was a fundamental problem that needed to be dealt with urgently.

The meeting was adjourned.