REPORT OF THE SELECT COMMITTEE ON LABOUR AND PUBLIC ENTERPRISES ON OVERSIGHT VISIT TO THE EASTERN CAPE, DATED 30 NOVEMBER 2005:
A. Background
The Select Committees on Labour & Public Enterprises and on Economic and Foreign Affairs undertook a joint oversight visit to the Eastern Cape for the period 5–7 September 2005. The programme for the Select Committee on Economic Affairs was scheduled for 7 September 2005. This report will cover only the activities of the Select Committee on Labour and Public Enterprises.
B. Terms of Reference
On 5 September, the Committee met with the Sector Education and Training Authority (Seta) of the Local Government, the Local Government, Water & Related Services (LGWSETA) in East London. The purpose was to assess the effectiveness of the Seta in realizing the objectives of the 1st phase of National Skills Development Strategy. On 7 September the Committee met with the National Ports Authority (NPA). The purpose was to assess progress made by the Port Elizabeth Port and the Coega Development Zone, in implementing an economic infrastructure that is responsive to the second economy, enterprise development and poverty alleviation with the Eastern Cape Province.
Delegation
The delegation consisted of the following persons:
Ms MP Themba (Chairperson) (ANC)
Ms ND Ntwanambi (ANC)
Mr DG Mkono (ANC)
Mr K Sinclair (NNP)
Mr DD Gamede (ANC)
Ms P Mpoyiya (Committee Secretary)
Ms N Sihawu (Transcription Typist
D. Findings
1. Report on meeting with LGWSETA in East London
The mission of the National Skills Development Strategy is to equip South Africa with the skills to succeed in the global market and offer opportunities to individuals and communities for self-advancement to enable them to play a productive role in society.
The Committee received a presentation from Mr Nini, the Regional Manager of LGWSETA, in Eastern Cape. The focus of the presentation was on the experiences of the Seta in implementing the 1st phase of National Skills Development Strategy (SDS) until March 2005.
The mandate of the Seta is to identify gaps within the sector and design education and training programmes for the betterment of those involved and the community at large.
The Committee noted that, the Seta has successfully established relations with 40 municipalities in the Province, and also succeeded in facilitating a number of learnership programmes in the Province.
The following programmes were noted:
120 learners have completed training on water related learnerships;
in March 2005, 84 Learners from Nelson Mandela Metro, District Municipality and local municipalities have started in the LED Officer learnership;
in September 15 learners from Lukhanji district will receive training on Basic Municipal Finance and Administration learnership; and
in the Nelson Mandela Metro 226 learners have completed 6 modules on Sanitation Skills Programmes.
In order to improve its governance and in response to its mandate, the Seta formed provincial committees to provide provincial and political guidance within the province. Further capacity building workshops were arranged to capacitate Provincial Committee members on Skills development issues so that they can make well-informed decisions within the sector.
1.1 Sector Skills Plan
The Skilled Development Facilitators (SDF) has been identified to assist the municipalities in promoting the NSDS agenda within the Province. In 2003, the SDF received training, through the University of Fort Hare. The effectiveness of SDF can be realized with the Provincial Office within the respective municipalities. To strengthen their capacity, an SDF Forum was established and a Provincial Workshop was held in 2004. Further training was provided in February 2005. Since 2003 the Seta has managed to train 1500 learners through the LGWSETA strategic ABET Project.
1.2 Challenges
Despite the noted achievements, there are a number of factors that hinder the effective performance of the Seta. The following concerns were identified:
The SDFs are located in the Human Resources Department with the councils and this makes it difficult for the tasks to be realized. This further impacts on the start of learnerships and skills programmes.
The SDFs are reduced to the level of training good have to report to many people. Yet the global requirement is that SDF should have skill and direct influence.
The use of private service providers to compile the WSP affects the target of WSP submission. This leads to strained relations between labour and employer due to lack of consultation.
The Seta has no direct control of the Skills levy and some municipal managers tend to misuse the fund. It was reported that R800 000 for training has been spent on related matters.
The learnership programmes are still to be approved by the Department of Labour in terms of South African Qualifications Authority, SAQA.
The Seta is concerned that the water related services have been removed form the Seta. These services are at the core of training provided by the Seta.
The issue of administration fee for handling of learnership funds remains a challenge in some Municipalities, due to capacity problems. The authority that SDFs have in some Municipalities undermines their commitment to function. The Provincial Manager and his secretary are responsible for all the actitivites of the Seta in the Province. The shortage of staff hinders makes it difficult for the Seta to handle all its duties within the province. The delay in the payment of learnership funds by LGWSETA to Municipalities has caused some problems that led to suspension of some and drop out to others. Those service providers who deal with matters outside of its mandate mostly approach the LGWSETA and this creates problems.
1.3 Conclusion
The Select Committee noted that despite the difficulties, the Seta has taken some milestones in proceeding in line with NSDS Strategy. The highlighted challenges with the municipalities however affected its ability to operate effectively. The Setas have a strategic role to play in addressing problems associated with skills shortages in the country and it is crucial that they are well capacitated to perform well. The Water component of the Seta has been taken way yet sanitation is still at the center of the Local Government Sector Education and Training Authority (Lgseta). The service providers who respond to the adverts are mainly from outside the province in Johannesburg. They set high standards, which are not responsive to those of the Province. The Committee is not satisfied with the fact the Seta experiences delays in payment to the municipalities.
Recommendations
The Department of Labour should ensure that Preferential Procurement system benefits the people of the Province.
The Minister of Labour to explain why it is that until now only one person is employed to service the Seta.
The Committee recommends that clear mechanisms should be developed to ensure that capacity of the office is increased and that the challenges are dealt with effectively. This method should also assist in addressing the noted delays in payments to local governments by the Seta.
The Minister of Labour to be invited to explain about the removal of water related matters from the Lgwseta.
2. Report on meetings with National Ports Authority
2.1 Terms of Reference
The Committee undertook the visit to assess progress made by the Port Elizabeth Port in implementing an economic infrastructure that is responsive to the second economy, enterprise development and poverty alleviation within the Eastern Cape Province.
2.2 (a)National Ports Authority- Port Elizabeth
The Committee was briefed on the overview of services provided in the port and plans in place to improve its deliveries.
The container terminal, mainly services the motor industry, it has a stack capacity of 385 000 tons. There is a need to reduce the dwell time of the containers in order to increase capacity. The output for the period 2004/2005 the terminal recorded 338 550 TEU’. This was higher than 26% up on 03/04) the port has budget 05/06: 356 575 tons.
The Port Elizabeth Port has a car terminal which carries up to 59 486 units (Imports 28 926 units, Exports 30 559 units). This terminal is predominantly used by VWSA (export to Japan and Europe) and GMSA (import to Germany and US) respectively. GMSA export contract will start towards end of October 2006.This will mean that the actual dwell time for these cars will have to be effectively managed, currently dwell time for imports is 6 days while for exports is 10 days. In terms of output, for 2004/05 period the terminal recorded 59 485 units (Imports = 28 926 units, Exp = 30 559 units)
Another section is reserved for bulk terminal. In this section the customers store different types of minerals like the Assomang 55% and Samancor (BHP Billiton) 45%. The Manganese Ore is mined at Hotazel in the Northern Cape and then brought to Port Elizabeth by rail after which it is exported to Japan and China. It is designed for capacity 3 million tons. The section for Storage bins has a carrying capacity of up to 380 000 tons of 40 different grades. In terms of the plans it is considered for relocation to the Port of Ngqura.
Further the Port has a section for Liquid Bulk Terminal. The NPA has reserved this section for Oil Companies. It is reserved for the importing of CW Processed Petroleum Products. The Liquid bulk terminal has a capacity of 2 500 000 tons. Currently there is limited storage available. In terms of 2004/05 report, there were 1 039 574 tons and, it is estimated that a capacity for 1 057 200 tons will be made available.
The cold storage is reserved for fruit terminal and is outsourced to a BEE Company for operation. This terminal operates 65% citrus from Sundays River, and the deciduous fruits from Langkloof, which is exported to Europe. This section is seasonal and operates over 7 months period. It also serves as major growth opportunity for the province. There are plans to have a dedicated terminal for an increase capacity for a cold storage facility.
2.2.1 Multi Purpose Terminal (MPT) Terminal
In addition the Port has SAPO terminal operator. It operates two areas, for Importing of Wheat, Grain, Maize: 85 000 tons: Sasko and Fertilizer about 25 000 tons. This section will be possibly relocated to Ngura. Another section services 30 000 tons of steel rails operated by Spoornet. The area also export 40 000 tons of steel by the Reclamation Group. In order to control the freight and reduce the load, the National Port Authority plans to redistribute the existing business of ore, bulk liquids and most of the containers to the Port of Ngqura. This will allow opportunity to increase bay capacity car terminal, the fruit terminal and also create more space for the fishing industry. The fruit terminal will be increased as well.
The Multipurpose will allow for further development for leisure tourism and other activities. There are further plans for economic development, tank farm and ore terminal including vacant land, with further opportunities for housing development.
2.3 Conclusion
The Committee has observed that the port has been operating under immense pressure and not able to control all the freight. The reports reflect that in all the respective sections the Port has experienced problems of delays and capacity. There are clear and well thought plans in response to the Presidential plan to reduce the control of freight in the ports. The Committee took note that the NPA has addressed the problem of increased dwell time, which had negative impact for the delivery of the Port. The planned redistribution of storage relocation magnesium, reduction in container terminal; realignment in liquid terminal are indications that the port has responded well to the Presidential call. The Committee is satisfied with the plans to expand the port into tourism and housing development. In addition to noted changes on services common to port operations, the Port is considered for leisure and economic development. These plans are at initial stages of extending the port to a waterfront. This will create opportunity for further growth. The success of the plans is depended on successful collaboration and joint planning with the Nelson Mandela Metro Municipality (NMMM) and the Port of Ngqura.
3. Report on meeting with Coega Project
Mr Zuko Mapoma from the Office of the Chief Executive officer (CEO) gave an analytical update on the Coega Project and highlighted on some of the critical investment projects.
In terms of infrastructure roll out plan, the following project have been completed
Bulk connecting infrastructure
Marine works to phase 1 of harbour
Construction Village phase
RIC complete and operational
ITC and Operations structure in place
Currently, there are 75 potential investors across all sectors with significant and economically viable projects. These being:
CAS – U$D 2 billion
Integrated Stainless Steel complex – USD 3 billion
U$D 80 billion over 30 to 40 years
Below are major projects having huge job opportunities.
Coega Aluminium Smelter
Integrated Stainless Steel Project
Manganese Re-location project
Oil Tank Farm Re-location
Ferro-Manganese Plants
Ferro Nickel and Ferro Chrome Plants
Logistics Hub
Ship repair Yard
Manganese Relocation Project from the Port Eilzabeth Port:
The project will bring in a number of spin-offs for the province. It carries a R1, 5-billion concession opportunity, which will unlock re-development of Port Elizabeth. It has the potential of R3.0bn revenue for Port Elizabeth. It will further boost the export potential with possibilities of doubling the current employment opportunities. There is excitement because it carries significant contribution to GDP and attraction for tourist in the city.
The success of the entire project is depended on sustainable use of power:
Ensure that Eskom’s Network Master plan is implemented
Equitable allocation of connection fees
Implementation of base load generation plan
4. Report on meeting with Port on Ngqura
4.1 Background
The port of Ngqura was originally conceived as an Industrial Port to serve the immediate surrounding areas. Its operations are closely aligned with DTI’s Spatial Development Initiative and are being considered to be a key success factor for the Coega IDZ.
4.2 Effect of Ngqura on Port of Port Elizabeth
Mr Chris Matchettgave a brief report the Port of Ngqura will allow for permanent relocation of tank farm and manganese ore terminal.
In terms of the development plans, some of the container operations will be moved from PE Port of Ngqura: These include the following: dry bulk, bulk liquids and industrial feed stocks.
4.3 Economic Impact of Port of Ngura
The construction work in the Port construction has created a total of 2 500 jobs and this also marked a boost for the local economy
Approximately 30% of the Capex spent (R2bn) has gone through the local economy.
About 25% of the Capex spent has been towards Black Economic Empowerment projects.
The ZLA, agreed between the Construction Industry and Unions, has benefited labour employed in the Coega IDZ and the Port of Ngqura.
The Committee is satisfied with the coordination and cooperation between Transnet and the National Ports Authority as reflected in the programmes of Port Elizabeth Port, Coega and Port of Ngqura.
5. Conclusion
The Committee is satisfied with the plans and joint coordination between the NPA and Coega development. It is hopeful that these will go a long way in addressing challenges of employment in the province. This will improve the economic position of the province and will surely find a place in the global economy.