SOUTH AFRICAN MARITIME SAFETY AU'IHORITY

F2008 BUDGET: EXPLANATORY NOTE FOR THE FINANCIAL YEAR ENDING 31 MARCH 2008

1 Introduction


1.1 This document is submitted in support of SAMSA's F2008 budget Its main purpose is to explain how the budget addresses SAMSA's statutory mandate and strategic objectives for the period 1 April 2007 to 31 March 2008 (F2008).

1.2 In particular, the document highlights the current deficit situation facing the organisation and the challenges that this presents for the organisation's sustainability going forward. A solution is proposed that requires reasonable tariff increases and the preservation and writing back of cash reserves over the short to medium term to move the organisation rapidly to a more sustainable balance between revenue and expenditure.

2 Statutory mandate

2.1 SAMSA's core mandate, and mission, is given in section 3 of the South African Maritime Safety Authority Act 1998. This mandate requires that SAMSA (1) ensure the safety of life and property at sea, (2) prevent and combat pollution from ships, and (3) promote South Africa's maritime interests.

2.2 The first two elements of the mandate are relatively straight forward, essentially requiring that SAMSA carry out its administrative responsibilities under the several safety and pollution laws entrusted to its administration, and example being its responsibilities under the Merchant Shipping Act 1951. Much of the budget is concemed with ensuring that SAMSA is able to carry out these core administrative responsibilities.

2.3 The third element of the mandate is more problematic, mainly because of the broad way in which it is framed. The strategic and operational challenge here is to give specific content to this element and, for F2008; this will be achieved through several programmes that are explained more fully under "Strategic initiatives" below.

3 Strategic initiatives

3.1 SAMSA's strategic plan gives SAMSA its vision - namely "to be a leading maritime authority globally" - and sets out how, in executing its mission, this vision will be achieved:

1 by ensuring maritime safety and security;

2 by preventing and combating pollution from ships;

3 by raising awareness of maritime opportunities and obligations;

4 by ensuring a coherent and productive maritime policy in order to facilitate and promote South Africa's maritime interests; and

5 by building a committed, transparent, professional and sustainable organisation.

3.2 The strategic plan also sets the achievement of this vision in a global dimension, requiring that SAMSA execute its mission by acting locally, regionally (i.e. in Africa), and internationally. How, then, does Budget F2008 support this strategic intent?

South Africa

3.3 First, looking at the local dimension, SAMSA's activities for F2008 will have both an internal and external focus and will be informed by the following key initiatives that are covered by Budget F2008:

Building the capacity of the organisation

3.3.1 One of SAMSA's key challenges going forward is to sustain and strengthen its internal capacity to deliver its core mandate and responsibilities. While significant progress has been made in addressing technical capacity, there is also a clear need to expand training and development initiatives into supporting areas and disciplines, for example into the fields of general maritime administration and general management. The emphasis here will be to strengthen significantly the organisation's capacity to think and act more strategically in relation to those maritime matters that have significance for South Africa.

This capacity is key to being able to influence more effectively, and to have an impact on, developments particularly at the international and regional levels and, closer to home, in our own maritime industries. The initiative is consistent with the commitment given by the Board at the last annual general meeting, where government's expectations of an expanded role for SAMSA, in supporting maritime initiatives internationally, regional and locally, were tabled and discussed.

The initiative, then, sets as its main aim building sustainable expert and leadership capacity, and depth, within the organisation through training and development, taking into account succession planning and employment equity considerations. Supporting aims cover the establishment of a scholarship programme, to encourage and support studies in maritime-related fields; a research programme, to complement and strengthen the organisation's research capacity; and redeployments in the Operations Division to create a dedicated, and more strategically oriented, technical support team. The key aspects of this initiative are covered by the following budgetary provisions:

1 Training budget (R1, 428,910= 2.5% of salary cost): This item also covers 1 placement at the IMO International Maritime Law Institute (IMLI) in Malta. Additional placements at the IMO World Maritime University in Malmo, Sweden, will also be explored but, because of timing around admissions, it is unlikely that full placements will happen during the budget period This item also covers special training for the 2 MRCC chief trainees (in the Maritime Rescue Co-ordination Centre) to be recruited during the budget period.

2 MRCC trainees: Provision is made for 2 additional trainee posts in the MRCC. Accordingly, 2 MRCC chief trainees will be recruited to address succession planning and employment equity considerations in the top management structure. Because of the highly specialised nature of MRCC work and the general absence of an appropriate skills pool, SAMSA has decided to develop suitable candidates itself, using the expertise it currently has. The aim is to ensure that critical skills and knowledge are transferred before these are lost to the organisation.

3 Partnership programme (R150k): SAMSA has established partnership arrangements with 2 of the world's leading maritime authorities, the Danish Maritime Authority and the Singapore Maritime and Port Authority. This item covers training and exchange placements with these organisations.

4 Internship programme (R150k): This item is intended to provide experiential exposure for students and graduates through short term placements with SAMSA. The programme will also be used as a vehicle to identify talent for future recruitment into the organisation.

5 Scholarship programme (R350k): This is a new item that is principally externally focussed and intended to provide educational assistance for undergraduate and postgraduate studies in maritime and related fields. The intention here is to build the broader pool of maritime-related expertise and, again, the programme will be used as a vehicle to identify talent for future recruitment into the organisation. A further anticipated benefit of this programme is the value that can be extracted from research output, particularly at the postgraduate level. While SAMSA is committed to the ongoing funding this programme, the intention going forward is to seek supplementary funding from the Maritime Fund and possibly the maritime industries.

6 Research programme (R350k): This is also anew item The programme addresses the concerns of the Minister's-representative expressed at the last annual general meeting that SAMSA should strengthen its research capacity, and develop a research agenda, to inform and support government's maritime initiatives both locally and abroad. While SAMSA is committed to the ongoing funding of this programme, the intention going forward is to seek supplementary funding from the Maritime Fund.

7 Technical support team: There are no significant additional costs associated with this initiative. The team will be made up through the redeployment and filling of certain vacancies and the redeployment of other existing staff within the Operations Division. The team is being set up to provide critically needed high-level strategic (policy and standards) support to the organisation and particularly its operations functions. The Team will also be positioned to playa leading role in strengthening SAMSA's technical research capacity and the quality of SAMSA's participation at the regional and international levels, particularly at bodies such as IMO.

Maritime operations (safety, health and environment)

3.3.2 Key initiatives in the operational environment will be delivered through the work of the Occupational Health and Safety Unit (OHS). The initiatives cover the following areas: fishing vessel safety, stevedore safety, seafarer labour standards and welfare, and casualty investigation.

3.3.3 A stevedore safety specialist has recently joined the unit and the unit's budget has been adjusted to cover its expanded role in this sector. The unit's work in this sector will be informed largely by the legislative changes around stevedore safety that have been completed by SAMSA and are currently awaiting Ministerial approval.

3.3.4 The other work of the unit, in the fields of fishing vessel safety, seafarer labour standards and welfare (where SAMSA is playing a particularly active role internationally, at IMO and ILO, but also locally), and casualty investigation are adequately resourced in the budget. In particular, casualty investigation receives special attention this year with R200k being set aside for training in this discipline. Work in the welfare field, particularly around drug and alcohol abuse and HIV / Aids, will continue and has been appropriately resourced with ''HIV / Aids awareness", for example, receiving R40k.

3.3.5 A survey presence is to be established at Port Nolloth with the opening of a new SAMSA office. The office will be a sub-office of the Saldanha office, will be staffed by 1 surveyor and will be service mainly the Northern Cape offshore diamond mining and fishing industries. The total budget for the office is R462, 691.

Improving business and management systems

3.3.6 Provision has been made (R700k) for critically needed maintenance and upgrading of the operations databases, e.g. the ships register and seafarers databases. Maintenance has not been performed on these databases for some time, and additional database modules are now also needed. This project is intended to expand, and improve integration and functionality across, these key operations databases.

3.3.7 Quality assurance also received special attention with R200k budgeted under the "quality assurance" programme. R150k is provided for ISO certification of the STCW seafarer examination and certification system, which is necessary for compliance with STCW Convention requirements. RSOk is also provided for limited external assistance to support the in-house quality assurance team in setting up an organisation-wide quality assurance system.

3.3.8 The new Compiere financial system will be rolled out in April, which should bring significantly improved functionality and control to the financial management (including procurement) environment. The enhanced procurement, which will include a supplier database) will enable improved control and more accurate monitoring of compliance with BBBEE procurement spends targets (currently 60%). R50k has been budgeted for ongoing support of the system.

Promoting South Africa's maritime industries

3.3.9 SAMSA is expected to play an increasing role in this terrain, which poses a number of challenges for an organisation that, fundamentally, is not currently configured to play that role. However, there are things that SAMSA can do and the budget provides resources for this purpose. A key event will be hosting a day of dialogue between the coal and shipping industries around opportunities in the coal export trade for South African shipping.

3.3.10 In anticipation of the tonnage tax initiative moving ahead, R30k is budgeted under "ship registration promotion" for promotional activities around this initiative.

The provision is substantially down on F2007 because of lingering uncertainty around the initiative's timeline.

External relations and communication

3.3.11 SAMSA's current website has to be completely redeveloped along with the intranet. As a key communication tool, a professional and informative website is critical to any successful corporate communication strategy, and corporate image. R250k is therefore budgeted for website and intranet redesign. Additionally, IT has been resourced to cover website hosting costs.

3.3.12 Much of the work in this field falls to Corporate Communications, and the "conference-external" budget of makes provision for year-end stakeholder functions (at all offices), and for SAMSA participation in, inter alia, the local World Maritime Day event and Transport Month. The unit has also been resourced to develop appropriate marketing and promotional material.

3.3.13 A standing SAMSA / industry forum will be set up in F2008 to bring about a more structured engagement with industry stakeholders. This follows a commitment given at the Fishing Safety Indaba last year. The budget makes provision for this under the "conferences/meetings-external" item.

Regional / Africa

3.4 On the regional, and particularly the Africa, front SAMSA's activities will centre on supporting DOT's Africa and IBSA initiatives. While SAMSA's involvement is not settled in any detail at this stage, provision is made on the budget, mainly under ''travel'', in support of these initiatives. This will ensure that SAMSA is able to participate in regional initiatives when appropriate.

3.4.1 Provision is also made under "conferences/meetings-external" item for hosting a conference of Southern African maritime administrations, the aim of such a conference being to examine the regional maritime agenda and how issues of regional significance might better be articulated in international bodies like IMO. Additionally, funds have been budgeted for unscheduled bilateral hosting.

3.4.2 SAMSA is the implementing agency for the GEF-World Bank funded Western Indian Ocean Marine Highway (WIOMH) Project. This project is likely to become effective in the first quarter of F2008 and R150k has been budgeted for preparatory costs connected with the project. These costs will be recoverable from the USD600k available under the project for SAMSA's implementing costs.

3.4.3 SAMSA will be hosting the Indian Ocean Memorandum of Understanding on Port State Control (IOMOU) committee meeting this year and R200k has been under "conferences/meetings-external" for this purpose.

International / IMO/ILO

3.5 SAMSA's activities on the broader international front centre mainly on IMO and ILO. The strategic intent here is to strengthen SAMSA's participation, and capacity to influence outcomes around issues of importance, in the key committees and subcommittees of IMO and ILO. While the "foreign travel" budget covers participation, it is the new Technical Support Unit, together with the research programme, that is expected to make a difference at a qualitative level.

4 Key aspects of the budgeted income statement for F 2008

Revenue

Forecast revenue for F2007             R55,448,191

Budgeted revenue for F2008            R60.014.152

Increase in revenue                        R 4.565.961

4.1 The following tariff and activity adjustments have been applied to revenue estimates:

·         5% increase in levy, charge and other income;

 

·         4.5% activity (business volume) increase applied to levy income collected on SAMSA's behalf by the National Ports Authority (NPA). This is a conservative adjustment based on forecast information obtained from the NP A Levies collected by NP A make up + 60% of SAMSA's total operational revenue.

 

·         The amount receivable from government is forecast to increase by 5%. The amount is stated as given by DOT in the preliminary national economic estimates.

 

4.2 Despite these adjustments, the budgeted operational loss for F2008 is estimated at R10,460,717 against a forecast operational loss for F2007 of R3,475,905 (against a F2007 budgeted deficit of R18,954,135. These figures exclude interest income, for F2007 forecast at R6,042,404 and for F2008 estimated at R6,639,261.

4.3 The operational deficit is historical and reflects the fact that increases in revenue have been insufficient to absorb corresponding increases in operational expenditure. However, the budgeted position has to be balanced against the actual financial performance of the organisation, which has consistently produced surpluses mainly because of under spending against budget. This has resulted in the considerable cash reserves that have been built up over the past 10 years and forecast for F2007 at R83,573,051. The effect has not been entirely benign, because key business systems have not been upgraded as planned and organisational capacity issues have not been effectively addressed.

4.4 While this budget begins to address these issues, it is clear that, in the short to medium term, the financial position of the organisation will have to be managed prudently to avoid reserves simply being consumed by recurrent operational deficits. What this budget proposes is an approach that will begin to narrow the gap between revenue and expenditure through a combination of reasonable tariff and activity increases and cost cutting measures (mainly through efficiency gains) over the next 3 to 5 years. During this period, interest income will be maximised and will continue to be used to reduce the overall deficit position. Limited, and reducing, write backs from the reserve will be necessary over this period to balance the budget. This approach can accommodate a reasonable capital and capacity expenditure programme and is unlikely, therefore, to have a significant adverse affect on the organisation's infrastructure and other capacity requirements. The attached Financial Sustainability Sheet illustrates the key elements of the approach in more detail.

Expenditure

Forecast expenditure for F2007              R58,924,095

Budgeted expenditure for F2008                   R70.474.869

Increase in expenditure                                R11.550. 77 4

4.5 Budgeted expenditure for F2008 represents a 20% increase against the F2007 forecast figure. However, against F2007 budgeted expenditure, it represents a decrease of 1,3%. The explanation for under spending against Budget F2007lies mainly in the fact that the organisation has continued to carry a number of high-level vacancies during this period (notably CEO, ICT manager, Communications manager, board secretary, and internal audit), which, apart from the impact on "employee costs", has also affected related "other expenditure" items. From the current budgeting round, it also appears that certain expenditure items may have been overstated in Budget F2007.

4.6 Budgeted expenditure for F2008 takes account of the organisation's current revenue constraints and has been put together after thorough and critical assessment of the organisation's cost structure, taking into account savings that are possible 1hrou~ improved efficiencies and budgetary control.

4.7 Significant expenditure items are tabulated below.

Employee costs

Forecast employee costs for F2007                           R37,974,100

Budgeted employee costs for F2008                          R44.155.529

Increase in employee costs                                      R 6.181.429

The F2008 budget assumes a total staff establishment of 127, which includes 14 vacancies plus an additional 2 posts to cater for the MRCC chief trainees at a total estimated cost ofRS,7 million. Additionally, the following is assumed:

·         CPIX adjustment at 5,3%;

 

·         Performance bonus provision at 10% of salary costs;

 

·         Benefits (cell-phone (R500) and computer allowances (R200» for eligible staff.

 

The main related expenditure items cover the following:

·         Staff recruitment at R981,500, based on current vacancies;

 

·         Staff training at R1,428,910, calculated at 2.5% of budgeted salary costs, excepting exceptional training provisions (e.g. IMLI, MRCC trainees, and casualty investigation training);

 

·         New provision for staff recognition and reward at R50k;

 

·         New provision for an employee assistance and wellness programme (EAP Projects) at R40k);

 

·         Casual labour at R200k, mainly as a vacancy contingency;

 

·         Staff refreshment at R151,960, covering the cost of tea and coffee, occasional staff lunches and a year-end fimction, and calculated at R80 per employee per month plus R200 for the year end function. Other refreshment costs attach to the relevant cost categories such as training and conferences;

 

·         Protective clothing at R45k.

 

The skills development levy has been forecast at 1 % of the direct staff costs as is currently required by the relevant legislation. Likewise the UIF contribution has been based on the current rate of 1 % of the total cost to company cost as directed by the relevant legislation. These provisions are included in "manpower costs".

Advertising, promotions, donations etc

Forecast advertising costs for F2007                   R324,312

Budgeted advertising costs for F2008                  R360.000

Increase in advertising costs                               R 35.688

This provision is for promoting SAMSA's services and corporate image and covers mainly corporate advertising, sponsorships, and promotional and marketing material.

Additionally, the following budgetary provisions fall under this category:

·         Contribution to NSRI at R50k, to support the good work done by that organisation;

 

·         Corporate gifts at R55k, to build up an appropriate range of quality items that will promote the image of the organisation;

 

·         Corporate clothing at R30k, again to enhance the image of the organisation;

 

·         Donations/social responsibility at R50k, to support socially worthy causes.

 

Cleaning services-daily

Forecast for F2007                  R 39,963

Budget for F2008                     R104.700

Increase                                 R 64.737

The increase covers contracted daily cleaning services for SAMSA offices.

Computer expenses

Forecast for F2007                  R1,307,419

Budget for F2008                     R1.322.954

Increase                                 R 15.535

This is a major expenditure item covering a range of computer-related costs, including maintenance and repairs, WAN lines, internet connectivity, website hosting, software licences and updates, off-site data storage, and computer consumables (excluding printer cartridges). Much of the planned basic ICT infrastructure work has been completed, and the recent appointment of an ICT manager is expected to improve 1he overall management and performance of 1his infrastructure, which has allowed costs to be contained.

Conference costs

Conference costs are now allocated over three related cost items. "Conference fees" (R53k) are now just that and no longer include other attendance costs (e.g., accommodation and travel which is captured under 1he travel budget item) and hosting costs, which are captured under the 2 other conference items. The "Conferences-external" item (R830k) covers externally focussed events that are hosted by SAMSA The increased provision for F2008 caters, in particular, for hosting the following planned events: a SADC maritime conference, an IOMOU port state control committee meeting, 2 maritime industry promotion events, maritime technical bilateral meetings, stakeholder functions, safety and seafarer seminars, and a standing stakeholder consultation forum. The "Conferences-internal" item (R193k) covers hosting costs associated with internal meetings, such as board and management meetings, and planning and teambuilding events.

Consulting fees

Forecast for F2007                  R1,945,967

Budget for F2008                     R1.591.200

Increase                                 R nil

In line with previous Board decisions, an effort has again been made to keep consulting costs to a minimum without adversely affecting SAMSA's operation. A breakdown of1his item is given below:


MRCC

210.000

A contribution to a SASAR media liaison capability

Human Resources

160,000

For labour relations, job evaluations/ remuneration benchmarking, and performance management system support

Public Relations

-

 

Legal (Compliance)

-

 

Finance (CEO)

50,000

A provision for independent advice

Finance

-

 

PTA General

7,200

For contracted library updating service

HQ (BOARD)

120,000

A provision for independent advice

HQ (CEO)

600,000

For contracted internal audit services and independent facilitation at planning events

IT

309.000

For the remaining portion of the IT support contract, which expires in June 2007

Gen Ops

100.000

For external expertise related to marine interventions and casualty investigation

Ops OHS

35,000

For external expertise at the planned casualty investigation courses

 

 

 

 

 

 



Depreciation

Forecast for F2007                  R1247,589

Budget for F2008                     R1.245.349

Increase                                 R nil


Depreciation has been forecast in line with planned capital expenditure, taking into account the current book value of assets in operation.

Entertainment

Forecast for F2007                  R129,936

Budget for F2008                     R124.400

Increase                                 R nil

Entertainment costs are provided for in accordance with fixed rates. The rates, which were last adjusted 6 years ago, are proposed to be increased by 2.5% for each of those years.

Finance projects

The new Compiere financial system will be rolled out finally on 1 April 2007. R50k is provided under this item for ongoing system support.

Implementation costs


The Occupational Health and Safety Unit has been tasked to ensure that SAMSA complies fully with the Occupational Health and Safety Act 1993. R20k is budgeted for this purpose.

Insurance

Forecast for F2007                  R498,728

Budget for F2008                     R667.000

Increase                                 R168.272

This item covers short-term, liability and travel insurance. The increase covers expected premium adjustments and the extension of liability cover to Board members.

Internship development

R150k is provided for the internship programme. This programme forms part of our broader capacity building initiative explained above.

Lease costs

Forecast for F2007                  R 62,673

Budget for F2008                     R176.880

Increase                                 R114.207

This item covers operational leases for equipment such as PABXs and photocopying machines The major part of this cost item (:I: R60k) covers communication equipment used by the MRCC.

Legal fees

Forecast for F2007                  R339,344

Budget for F2008                     R550.000

Increase                                 R210.656

The following cases are pending and are covered by this provision:

·         Cadets v SAMSA (unfair dismissal and reinstatement)

 

·         The "TMP Sagitarius" (recovery of pollution response costs)

 

·         Msikinya V SAMSA (constructive dismissal)

 

·         Haluodi v SAMSA (defamation and contractual damages)

 

Library books

Forecast for F2007                         R103,359

Budget for F2008                           R131,500

Increase                                        R 28.141

Provision for sustained spending is made under this item to ensure that essential reference works are available throughout the organisation. The provision takes account of the fact that many specialist and technical publications have to be sourced abroad.

Marine interventions

A provision of R100k is made under this item for costs related to interventions in the case of marine emergencies (e.g. pollution response, casualty management). The provision enables an immediate response, bearing in mind that, in most cases, costs of this kind are recoverable ultimately under shipowner insurance arrangements.

Motor vehicle expenses

Forecast for F2007                               R44,108

Budget for F2008                                  R68.000

Increase                                              R23.892


SAMSA operates 4 vehicles (2 at HO, 1 in Richards Bay, and 1 in Saldanha) and this item covers their operational costs such as fuel, repairs and maintenance. The increase arises from an expected increase in use and also covers planned repairs to the 4x4 vehicle in Richards Bay.

Office plants and decorations

Forecast for F2007                         R32,624

Budget for F2008                           R59.600

Increase                                        R26.976

Specific provision is made for these costs and covers general improvements to the office environment The major part of the provision (+R30k) covers contracted services to the Pretoria head office.

Parking expenses

Forecast for F2007                  R 8,349

Budget for F2008                     R11.400

Increase                                 R 3.051

This item covers parking costs not connected with local or foreign travel. The provision is based on a fixed amount per unit and office, taking into account anticipated loca1ised travel.

Partnership programme

This is a new expense item that supports capacity-building and benchmarking initiatives with the Danish Maritime Authority and Singapore Maritime and Port Authority. The provision of R150k is made to cover training placements and exchanges with these organisations.

Printing and stationary

Forecast for F2007                         R299,730

Budget for F2008                           R870.500

Increase                                        R570.770

The increase in this item arises from the reclassification of certain expenses, notably the printing of statutory forms (Which used to be covered under "Publications­ SAMSA") and replacement printer cartridges (which used to be covered under "Computer expenses").

Publications-SAMSA

Forecast for F2007                  R379,045

Budget for F2008                     R390.000

Increase                                 R 10.955

This item covers production of publications such as the annual report, information and safety brochures and pamphlets, marine notices and circulars, and codes of safe practice. Provision is also made for the consolidation and publication of the Code for South African Maritime Qualifications, to coincide with the planned implementation of revised seafarer training and certification standards to give effect to the International Convention on Standards of Training, Certification and Watchkeeping for Fishing Vessel Personnel 1995.

Quality assurance programme

Provision is made under this item (R200k) to cover the cost of quality assurance certification of the seafarer training and certification system, as required under the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers 1978. This certification must be in place before the end of 2007 to maintain South Africa's IMO ''White List" status. The provision also covers external assistance to the in-house team working on organisation-wide policies and procedures for quality assurance purposes.

Rent, water and electricity

Forecast for F2007                         R4,408,645

Budget for F2008                           R4.767.324

Increase                                        R 358.679

Provision is made in line with current lease agreements and anticipated consumption levels.

There are no immediate plans to purchase offices and all major office leases are committed over the budget period. However, a longer term plan will be developed for more cost efficient office accommodation, particularly for the Cape Town office, which could include consolidating the current MRCC and Cape Town offices.

Repairs and maintenance

Forecast for F2007                         RI69,724

Budget for F2008                           R276.000

Increase                                        RI06.276

Provision is made in line with expected repair and maintenance costs, the increase covering, in particular, maintenance work to be carried out at the Durban and Port Elizabeth offices, and at the Pretoria office on the air conditioning system.

Research programme

This is a new expense item that is intended to strengthen the organisation's research capacity. The provision of R350k covers external research support to complement SAMSA's in-house capacity. A key outcome of this programme is to build and consolidate the knowledge base around maritime-related affairs and to support, primarily at a qualitative level, SAMSA's participation at the regional and international levels.

Scholarship programme

This is also a new expense item that forms part of the organisation's broader capacity ­building initiatives. The provision ofR350k is intended to provide educational assistance for under- and post-graduate studies in maritime and related fields.

Ship registration promotion

The provision (R30k) has been reduced substantially because of delays in finalising the proposed new shipping tonnage tax regime. Since there is no clear indication of a future time-line for this initiative, only nominal provision has been made to support SAMSA's ongoing involvement in the Ship Registration Advisory Group.

Subscriptions

Forecast for F2007                  R199,573

Budget for F2008                     R110.000

Increase                                 R nil

This provision covers subscriber electronic and hard copy publications, such as statutes, law reports and other reference works, and trade journals and periodicals. Significant savings are anticipated by rationalising the periodicals subscriber list and through improved controls.

Surveyor costs

Forecast for F2007                               R 55,021

Budget for F2008                                  R379.900

Increase                                              R324.879

This item covers costs associated with survey-related equipment, e.g. calibration of radio equipment, hydrometers, torches and other incidentals. It also covers the reimbursement of travel costs exceeding 500km per month, which makes up the major portion of the provision. These reimbursement claims are covered at applicable government rates. It appears that costs related to this item were not properly provided for in Budget F2007. The proposed provision is based on proper estimates around equipment and travel.

Telephone and fax

Forecast for F2007                  R938,900

Budget for F2008                     R759.100

Increase                                 R nil

This item covers telephone and fax costs, and line and equipment rental costs, but does not include leased and financed assets which are included under "lease costs". The provision is based on the budget inputs from the various offices and takes account of anticipated savings through improved telephone control systems, which are being rolled out across the organisation. Further savings will be possible with the introduction of a VOIP system, which will be investigated during the 1st quarter.

Travel

Forecast for F2007                         R3,507,506

Budget for F2008                           R4.392.200

Increase                                        R 884.694

This item covers accommodation, travel and transport, meals and parking related to local and foreign travel. The increase arises mainly from under spending against Budget F2007 and is consistent with anticipated travel commitments for the F2008 period.

The local travel component is estimated at R2,205,200 assuming an average cost of R4,700 per trip. A breakdown is given below:

MRCC

112,800

HUMAN RESOURCES

84,600

COMMUNICATIONS

120,000

LEGAL

76,500

FINANCE

70,600

PTA GENERAL

29,500

HEADQUARTERS - CEO & IA

162,100

HEADQUARTERS-BOARD

360,900

INFORMATION TECHNOLOGY

47,000

OPERATIONS

1,141,200

 

The foreign travel component is estimated at R2,187,000 and is in line with the number of meetings the organisation is expected to attend, taking into account its more active role at the international level. In particular, the provision is intended to support participation in the work of international bodies such as the International Maritime Organisation and the International Labour Organisation, where SAMSA is playing a key role in the areas of fishing vessel safety and labour standards. Regional travel is budgeted at an average of R12,500 per trip and other international travel at R37,500. The meetings to be attended include the following:


IMO

Assembly (3)

Council (3)

MSC (3)

SLF (1)

DE (1)

BLG (1)

COMSAR (2)

MEPC (1)

TC (1)

LEG (2)

Wreck Removal Dipcon (2)

ILO

Labour Conference (2)

Technical working group meeting (1)

Bilaterals / Regional

Namibia (2)

Mozambique (2)

SAR related (5)

Port state control MOUs

Abuja (1) IOMOU (1)

Other

COSPAS-SARSAT (2)

SAR Task Group Meetings (2)

MAIIF (1)

Provision has also been made for each Board member to attend at least 1 IMO meeting' as part of board induction.

Efforts are being made to manage the travel budget more efficiently, a key aspect of this initiative being an in-house booking system Initial indications are that significant savings can be achieved through an in-house system

WIOMH project

This is a new expense item that i$ related to the GEF - World Bank funded Western Indian Ocean Marine Highway Project. SAM SA will be the implementing authority for this multi-year project when it is rolled out later this year. The provision of R150k is intended as bridging funding, mainly for preparatory purposes, until such time as project management costs can be recovered under the project. USD600k is available under the project for costs of this kind.

5 Capital expenditure plan for F2008

The Authority currently has cash resources amounting to R83,5 million. A reserve of R35,3 million, which is equal to 6 months operating expenditure, will be set aside to cover operational contingencies (e.g. for emergency response and for future infrastructure requirements). Because of the current operational deficit, there is no plan for large scale investment in office space in the budget period. Instead, the plan is to retain, and maximise the yield from, cash resources in the short to medium term to allow time for the achievement of a sustainable balance between operational revenue and expenditure. This will require limited write-backs over the next 3 to 5 years totalling R18 million. This assumes that the balance struck in revenue and expenditure assumptions will be achieved over the period, and any adverse change in that balance will mean obviously that a larger part of cash resources will have to be written back over a longer period, before a sustainable balance (breakeven point) is reached.

For the F2008 budget period, capital expenditure can be broken down as follows:

Furniture and fittings (R343,500)

The provision is for the replacement of old furniture in existing offices and to equip the new office in Port Nolloth.

Motor vehicles (R140,000)

The provision is for the replacement of one of the Pretoria vehicles which is fully depreciated.

Computer equipment (R289,900)

The provision is for the replacement of redundant computer equipment and also covers new additional equipment for current vacancies.

Computer software (R1,764,800)

Provision is made for software for replacement and additional computer equipment and for ICT policies enforcement and mail server upgrades. Additionally, R250,000 has been provided for website and intranet upgrades and R700,000 has been provided to begin upgrading, expanding and integrating the key operations databases, such as the ship and seafarers databases.

Office equipment (R316,500)

The provision is mainly for the replacement of old computer printing equipment and for the provision of additional server room air conditioning units at several offices.

Office alterations (R560,000)

The provision is for office upgrades and reconfiguration mainly at the Pretoria, Richards Bay and Cape Town offices. The provision takes account of current vacancies and R150k has been provided for the new Port Nolloth office.