Chairperson Election and Department briefing

Meeting report

LABOUR AND PUBLIC ENTERPRISE SELECT COMMITTEE
10 November 2004
CHAIRPERSON ELECTION AND DEPARTMENT BRIEFING

Chairperson: Ms P Hollander (ANC)

Documents handed out:
Department's Acting Director-General PowerPoint presentation: 'Maximising Shareholder Value'

SUMMARY
The Committee elected Ms P Hollander as its new Chairperson. They also heard a briefing from the Department of Public Enterprises (DPE) on state-owned enterprises (SOEs). The SOEs were guided by the policies of the Department. Its primary role was to monitor performance and to ensure alignment with government policy. The electricity sector would undergo restructuring while Transnet would be the recipient of massive infrastructure investment. In the mining sector, the government would share ownership of the Alexkor diamond mine with the Richtersveld community that had recently won a land claim in the mine's area of operations. Members were concerned about the role of SOEs in creating jobs and saw under-utilisation of the railways as depriving poor people of jobs and cheaper, safer public transport.

MINUTES

Election of Chairperson
Mr D Mkhono (ANC) nominated Ms P Hollander (ANC), and she was unanimously elected in the absence of other nominations. The Chairperson officially took her position and proceeded with the following item on the agenda.

Department briefing
Mr T Mputi, Acting Director-General: Department of Public Enterprises reported to the Committee about the mandate of the Department. The mandate included monitoring of performance, management of the restructuring process of State Owned Enterprises (SOE), influencing board appointments and to facilitate communication between SOEs and the government. SOEs that were the responsibility of the Department comprised Eskom, Denel, Transnet, Arivia.com and Alexkor. The Department had received unqualified audit reports for the past four years and had complied with the Public Finance Management Act. A Fraud Prevention Plan had been developed and implemented.

The Department had acted as a guarantor for the SOEs, and that necessitated use of an automated system known as Guarantee Exposure Monitoring Systems. In the energy sector, the Cabinet's policy guidelines included among others, the creation of a Power Transmission company as a separate national entity and the establishment of the South African Power Exchange. Black Economic Empowerment groups were expected to benefit from the restructuring of the energy sector. The transport sector under Transnet would be the beneficiary of a huge infrastructure investment. The railways would see massive refurbishment of ailing rolling stock which had been used for more than thirty years.

The National Ports Authority Bill would be finalised in December 2004. The bill would establish the Port Regulatory Authority that would regulate private port operators. The mining sector had seen the community of Richtersveld winning a land claims settlement. The community won the mineral and land rights where Alexkor was operating. The Department had been negotiating with the community to design a settlement. The defence industry SOEs would see Denel selling off non-core business such as plastic container manufacturing operations and the Information Technology subsidiary Arivia.com. The Department had been looking at means of locating Transet, Eskom and Denel within Public-Private Partnerships to increase efficiency.

Discussion
Ms Mabe (ANC) enquired about the gender balance in the Department

Mr Mputi replied that the Department had four Deputy Directors-General of whom one was female while the Department was still headhunting for a second female DDG.

Mr Sibiya enquired why the railways had not been functioning at full capacity and what measures would be taken by the Department to reverse the situation.

Mr Mputi replied that massive investment injection in Spoornet would include refurbishment of the rolling stock and infrastructure.

Mr K Sinclair (NNP) asked why Alexkor had neglected its social responsibility in the Northern Cape and what steps would be taken to rectify the situation.
Mr Mputi answered that 10% of profits at Alexkor used to go to the Social Responsibility Trust which served the people of the Richtersveld. When the community won the land claim and mineral rights, they and the mine agreed to terminate the Trust fund and work out a comprehensive strategy which would act as a catalyst for the development of the area.

Mr Sinclair asked what the Department's plans for communities who lived in poor provinces were, because funds were not filtering down or creating jobs. It seemed the current plans were not working.

Mr Mputhi replied that Transnet and Spoornet would integrate plans for the development of Intermodal Transport Systems that would serve the population.

The Chairperson commented that it was clear that the report lacked "something". The Committee would invite the Department to come up with a comprehensive plan that would address all the concerns of the Committee.

Mr Mkhono asked how far the Department could go in influencing decisions. Optimal use of the railways would ease traffic congestion on the roads. What was the problem with security at the airports? The Committee had been led to believe that the South African Airways was doing fine, but this was clearly not the case. What plans did the Department have to help SAA?

Mr Mputi replied that ferrying rail passenger over long distances was not sustainable and it needed to be cross-subsidised by freight operations.

Mr Sibiya enquired why most people were not using trains to travel long distances anymore. What about handing over unused infrastructure such as railway houses, warehouses and other facilities to nearby communities?

Mr Mphuti replied that Transnet housing that was situated along the railway lines was built on private farms. The farmer owned the land and Transnet owned the building. It would be irresponsible to hand over those crumbling buildings to the communities. The farmers had been wary of people settling on their land.

Mr Mkhono asked why the railway line between East London and Umtata was no longer used, because the infrastructure was still in place.

Mr Mputhi replied that Spoornet would first have to consider the viability of re-commissioning the line and the capacity of the equipment to function properly.

Mr Sinclair suggested an improvement in the public transport subsidy because people were at risk in minibus taxis.

Mr A Aphane, DPE Chief Director: Communications said rail passenger transport would be moved from Spoornet to the Department of Transport and would work in complimentary fashion with other modes of transport.

The Chairperson recommended that the Department's officials should speak to the Minister about re-focussing on the railways to create jobs and stimulate economic growth. Furthermore, she urged the Department to go back to the drawing board and come up with policy that would serve the People's Contract.

Mr Aphane said there had been no proper communication strategy between the people and the Government.

The meeting was adjourned.