Title, initials and surname

The Portfolio Committee

14 June 2005

REPORT ON DISPOSAL STRATEGY

The purpose of this report is to provide information to the Portfolio Committee on the disposal of properties that are superfluous to the needs of Government.

Disposal Process

The Department’s Asset Register facilitates the identification of unutilised and superfluous properties. The identification of properties for disposal is an ongoing process and requires preliminary analysis before advancing to the next step in the disposal process. Confirmation that such identified properties are in fact superfluous to the needs of Government in terms of service delivery requirements, is essential in the disposal process.

One of the requirements is that all properties identified for disposal must be tabled at the Provincial State Land Disposal Committee (PSLDC). Each PSLDC consists of representatives of the National Departments of Public Works and Land Affairs and the Provincial Administration. The purpose of the PSLDCs, amongst others, is to ensure that Government’s (national, provincial and local) property needs are satisfied before disposal on the open market is considered.

This Department is also considering the long-term letting of superfluous properties, as an alternative to the sale thereof. This initiative is aimed at promoting the participation of HDIs to achieve Government’s strategic objectives on BBBEE. This Department further plays a key role in contributing to Government’s land reform objectives by releasing suitable State land for such purposes.

The Department’s revised business processes, in an effort to fast-track disposal and enhance the manner in which disposals are handled, emphasise the role of its Asset Management Branch to guide the identification and disposal of superfluous properties, as well as the roles of the Office of DDG: Operations (Directorate: Property Disposals) and its Regional Offices in executing disposals.

Establishment of New Directorate for Property Disposals

The Department has created a new Directorate: Property Disposals in the Office of DDG/Operations to execute large and complex commercial disposals and to co-ordinate, guide and assist Regional Offices in the execution of smaller commercial and all non-commercial disposals. This unit will furthermore be capacitated to undertake the disposal of State-owned properties in foreign countries at the request of the Department of Foreign Affairs.

The Department’s Property Policy directorate will remain responsible for the formulation of policies and strategies governing the disposal of immovable assets under the Department’s control (dealing with strategic issues, such as the fostering of Black Economic Empowerment through disposals; sale versus long term letting; conversion or co-use of military bases and other government installations); as well as the co-ordination of the release of State land under the Department’s control for land reform purposes.

The newly established Property Disposals Directorate in the office of the DDG: Operations together with the Portfolio Performance and Monitoring unit will facilitate and ensure disposal co-ordination in the department in addition to fast-tracking actual disposals and compliance to relevant regulations and acts such as the PPPFA. Disposals are therefore now managed in a more integrated and co-ordinated manner for efficiency and effectiveness.

Disposal Steering Committee

Furthermore, the Department has established a Disposal Steering Committee which will drive and project manage the disposals programme across the branches of the Department . Representatives from cross-functional units serve on this committee which is meeting monthly , with more frequent meetings of some of the members to fast-track and facilitate processes.

DISPOSAL PROGRAMME

Disposal Phase 1

The Department has recently identified, analysed, finalised and obtained Minister’s approval for the disposal of 177 superfluous properties with an estimated value of R12m for disposal in phase 1. These properties were unutilised and vacant for a number of years and will be disposed of before the end of the next financial year.

Disposal Phase 2

The Department has also done an investigation on additional unutilised and superfluous properties with an estimated value of R418m. These properties still require a thorough analysis , as explained below, before actual disposal and will therefore form part of disposal phase 2:

The Department , after confirming that properties are indeed superfluous to the needs of the State, will determine disposal costs and quantify expected returns as well as decide on the best method of disposal.

Before a property is listed on the Disposal phase, an analysis is done to consider other options such as holding or use by other government spheres. Also, the Provincial State Land Disposal Committee (PSLDC) must recommend disposal, and an Item 28 (1) Certificate must be obtained from the Minister of Land Affairs as proof of ownership. This is to ensure that disposing of the assets is the best option in terms of maximising value for government.

The Department will compile a submission to its Minister for disposal approval of the properties on the disposal phase.

Once approval is obtained from the Minister to dispose of the properties in a disposal phase (i.e. sell, exchange, donate or lease), the Regions will execute disposals.

Regions dispose of the properties subject to the Department’s disposal policy and in terms of the PPPFA.

It is planned that the properties in disposal phase 2 will be disposed of within the next 36 months.

Additional Disposal Phase over 5 years

In addition to the abovementioned disposal phases , a further 2000 possible under-utilised properties with an estimated value of R3billion are under investigation for possible disposal over a period of 5 years. By the time the disposal investigation is completed the number of the properties would have decreased as some properties would be found to be most suited to be utilised for other purposes such as the Land Reform Programme by the Department of Land Affairs or transferred to other spheres of government for socio-economic purposes such as development of low cost housing.

NATIONAL DEPARTMENT OF PUBLIC WORKS