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PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES By PORTIA MOLEFE DIRECTOR-GENERAL ON THE 3 RD QUARTER PERFORMANCE OF DPE 28 MARCH 2007.

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Presentation on theme: "PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES By PORTIA MOLEFE DIRECTOR-GENERAL ON THE 3 RD QUARTER PERFORMANCE OF DPE 28 MARCH 2007."— Presentation transcript:

1 PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES By PORTIA MOLEFE DIRECTOR-GENERAL ON THE 3 RD QUARTER PERFORMANCE OF DPE 28 MARCH 2007

2 OUTLINE OF THE PRESENTATION 2 Overview of the 3 rd Quarter Performance Review per Programme Administration- (Rashida Issel - COO) Energy, Mining and Broadband Enterprises (James Theledi - DDG) Legal, Governance, Risk and Secretariat (Sandra Coetzee - DDG) Manufacturing Enterprises (Litha Mcwabeni - DDG) Transport Enterprises (Andrew Shaw - DDG) Joint Project Facility (Katherine Venier - JPF Coordinator)

3 Overview of the 3 rd Quarter Developed dashboard for Eskom and Transnet as part of monitoring progress. Cabinet approved the establishment of six wall to wall Regional Electricity Distributors as Public Entities to be regulated by the National Energy Regulator of South Africa (NERSA) Commenced with legislative processing of Transnet Pension Fund Amendment (“TPFA”) Bill Processing SOE applications in terms of section 54(2) PFMA 9 Transnet applications approved 8 Eskom applications approved 5 Denel applications approved Five non-core businesses (Denel) have been disposed of, realising income of R400m. Cabinet memorandum on Competitive Supplier Development program was finalised and approved. SOE have put in place plans to make optimal use of training facilities for internal skills development programmes. 3

4 4 PROGRAMME 1 - ADMINISTRATION Sub programme OutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Human resources Employment Equity plan Employment Equity statistics submitted and presented to EXCO, Transformation Committee, Department of Labour, and Portfolio and Select Committees. Continue monitoring the department’s performance against the employment equity plan Management of the internship programme 20 interns placed at DPE, attended various training sessions with different service providers. In-house training was also organised to enhance their skills in preparation for the world of work. Assist all interns with placements in the job market Corporate services Management of off- site document storage 400 hundred boxes of old documents were indexed and sent for off-site storage Continue to sort and index old documents Efficient production room with centralised fax and photocopy machines Tender process was followed and a service provider was appointed to enhance the efficiency in the production room Service provider will be on site from January 2007

5 5 PROGRAMME 1 - ADMINISTRATION Sub program OutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action CommsCrisis management strategy DPE SOE Shareholder Crisis Plan has been adopted by joint CEO / Chairpersons forum DPE branding Folders, paper bags, letter heads and notepads are branded in DPE colours Distribution FinanceAdjustments estimates 06/07 Adjustments were approved for additional funds for re-capitalisation of SOE for the current year, as well as internal movement of funds Transfers will be effected to SOE in tranches Expenditure 06/07 The Department has spent R68,780,531 of its operational budget made up of Compensation of Employees, Goods and Services and Capex which amounts to 66.6% of the operational budget (excluding commitments) which, if based on flat line expenditure (75%) over the past nine months reflects an 8.4% underspend, however large projects are being completed during the fourth quarter which will ensure a less than 2% saving overall on operational expenditure. The 54.6% balance reflected on transfer payments will be paid to the SOE over the next three months. Finance is closely monitoring and liaising with the units on operational expenditure

6 6 DPE STATISTICS as at 2 March 2007 Total PostsFilled PostsVacanciesTerminations April to date Turnover Rate April to date Vacancy Rate April to date Secondment % 10% (if 5 posts in interview stage are filled) 7% Level Level Level Secondment 8 Interviews in progress 5 Advertised Posts 4 Resignations16 Contract Expiry1 Transfers2

7 7 DPE Organisation – EE STATS TOTAL POSTS AFRICANINDIANCOLOUREDWHITEDISABLED Statistics South Africa (Mid year population estimates 2004) 79.3%2.4%8.8%9.5%(4% of total as per Strategic Planning decision = 6) F 40.1% M 39.2% F 1.2% M 1.2% F 4.5 % M 4.3 % F 4.9 % M 4.6 % Total posts plus vacancies: Should be: Total posts as at 28/2/ disabled employee joining in 1/05/07 Posts:28/2/2007 as a % 100 %41.30%31.88%4.35%0.72%6.52%2.17%10.14%2.90% Vacancies 19 (12-SMS) & (7 Level 1-12) Target: Number of people with disabilities Males needed in DPE: People with Disabilities needed in DPE: African and White: Lower level i.e., 1 – 12The status of 4 people needs to be confirmed -  Coloured and Indian: All levels which will affect this total Females needed in DPE: African with the emphasis on SMS level. Current Gender compilation on SMS level: 59% male and 41% female - Target 50/50 % by 31 March2009.

8 8 SALARY GRADINGLEVELTOTAL POSTS TOTAL FILLED TOTAL VACANT DISABLEDAFRICANINDIANCOLOUREDWHITE LEVELFMFMFMFM MINISTER 1 11 DIRECTOR GENERAL SPECIAL ADVISOR: DEPUTY-DIR. GENERAL CHIEF DIRECTORS DIRECTORS TOTAL SMS’s DEPUTY DIRECTORS (11&12) ASST DIRECTORS (9&10) LEVEL (7 & 8) LEVEL (1 - 6) TOTAL LEVEL TOTAL DPE TOTAL FUNDED POSTS 156 TOTAL UNFUNDED POSTS 1 Spec Adv 1

9 9 EXPENDITURE REVIEW DEPARTMENT TOTAL EXPENDITURE APRIL – DECEMBER 2006 ADJUSTED APPROPRIATION COMMITMENTS AVAILABLE BUDGET JANUARY - MARCH 2007 % OF TOTAL BUDGET USED (excluding commitments) Compensation of Employees 34,572,01554,005,000019,432, Goods and services32,624,55547,331,0004,917,2149,789, Transfers1,510,990,1542,766,752,00001,255,761, Payment for capex1,583,9611,835,000145,553105, TOTAL1,579,770,6862,869,923,0005,062,7671,285,089, * The Department has spent R68,780,531 of its operational budget made up of Compensation of Employees, Goods and Services and Capex which amounts to 66.6% of the operational budget (excluding commitments) which, if based on flat line expenditure (75%) over the past nine months would reflect an 8.4% underspend, however large projects are being completed during the fourth quarter which will ensure a less than 2% saving overall on operational expenditure. The 54.6% balance reflected on transfer payments will be paid out to the SOE in tranches over the next three months.

10 10 PROGRAMME 2 – ENERGY, MINING AND BROADBAND ENTERPRISES Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Energy Sector Eskom GENERATION Monitor Return to Service of the Mothballed Plants (Camden, Grootvlei & Komati) Monitor the construction of the Open Cycle Gas Turbine (OCGT) plants Developed dashboard as part of monitoring progress. Reports on progress incorporated in quarterly report. Expansion plan Reserve Margin and the Security of Supply Waiting for DME to finalise the reserve margin policy. Engage DME at technical sub- committee meetings.

11 11 PROGRAMME 2 – ENERGY, MINING AND BROADBAND ENTERPRISES Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Energy Sector Eskom Distribution Establishment of the six Metro REDs On 25 Oct. 06, Cabinet approved the establishment of six wall to wall Regional Electricity Distributors as Public Entities to be regulated by the National Energy Regulator of South Africa (NERSA) Prepare a position paper on implementation of Cabinet decision and alternative scenarios. New Gen Independent Power Producers Deal with the Revised Power Purchase Agreement and the Fuel issue. DG and Minister updated on progress. Performance monitoring Analyse 2 nd quarterly report. Identify strategic KPIs for inclusion in 2007/8 shareholder compact Memo approved by Minister. Letter sent to CEO of Eskom on identified KPIs Prepare for 3 rd quarter report. Analyse the targets for these KPIs on receipt of Corporate Plan.

12 12 PROGRAMME 2 – ENERGY, MINING AND BROADBAND ENTERPRISES Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Mining Sector Alexkor RecapitalisationR81.9 million received from National Treasury through the Adjusted Estimates process. R80 million transferred Monitoring thereof to take place. Conduct performance review of Alexkor Monthly reports review for Oct, Nov completed and approved by Minister. Quarterly report review completed and approved by DG. Minister to sign the memo. Separation of ABT from Alexkor ABT has been incorporated.Transfer of movable assets to ABT Settlement agreement with RVC MOU signedFinalisation of agreement.

13 13 PROGRAMME 2 – ENERGY, MINING AND BROADBAND ENTERPRISES Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action ICT Sector Infraco Establishment of InfraCo Commissioning of FSN Cabinet Decision on the establishment of InfraCo pending Work plan presented to Joint Steering Committee and agreed. Testing in March 2007 International Connectivity Long distance network being commissioned. High level traffic study and draft West Coast marine cable study completed and report tabled Dec 2006.

14 14 PROGRAMME 3 - LGRS Sub programme OutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Legal PBMR Reviewing the shareholders agreement and cooperation agreement Input to the institutional restructing of the SA Nuclear Industry and Eskom/PBMR’s role TOR for advisors to finalize comment on Shareholders Agreement Denel GuaranteeReview and comment on Heads of Agreement relating to guarantee between DPE and Denel Submit draft Heads of Agreement to Denel for review and comment ALEXKOR MOU with Richtersveld Community Management of legal processes and principles with State Attorney and Senior Council Confirmation of settlement through PSJV Agreement; Final Settlement Agreement and Order Court

15 15 PROGRAMME 3 - LGRS Sub programme OutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Legal SAA Separation from Transnet and transfer to Government – Fulfillment of suspensive conditions Commencing legislative processing of Transnet Pension Fund Amendment (“TPFA”) Bill Public Hearings on, deliberation and adoption of TPFA Bill by National Assembly Preparing SAA Bill, first reading debate of SAA Bill at National Assembly Debate and voting on PFA Bill by NCOP Public Hearings, deliberation and voting on SAA Bill by National Assembly SAX Cabinet Memorandum Draft Bill Transaction Documents Draft Cabinet Memorandum Draft Bill Transaction Steering Committee Preparation and review of due diligence reports and valuation by transaction advisors Cabinet Decision Review of draft transaction agreements and commence negotiations Commence processing draft enabling SAX Bill

16 16 PROGRAMME 3 - LGRS Sub programme OutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Legal INFRACO Cabinet Decision Infraco Bill Transaction Agreements Cabinet Memorandum prepared Draft Bill prepared Legal advisors appointed to assist in reviewing and drafting various agreements between DPE, Eskom and Transnet and between DPE and Neotel and attending negotiations on the agreements Sale of shares and loan account agreement signed. Draft FSN sale agreements Draft agreements for FSN network lease to NeoTel Cabinet Decision Processing of draft Bill Negotiate and finalise establishment lease and related agreements with Eskom, Transnet and Neotel (Pty) Ltd GENERAL Processing SOE applications in terms of section 54(2) PFMA 9 Transnet applications approved 8 Eskom applications approved 5 Denel applications approved Review progress reports from SOE on approved transactions

17 17 PROGRAMME 3 - LGRS Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Governance Governance workflow project ToRs for this project submitted and approved by Bidding Committee Advertisement and appointment of service provider Director appointments ToRs for this project submitted and approved by Bidding Committee Advertisement and appointment of service provider Board remuneration Study completed. The Remuneration Guidelines in process of being submitted to the Minister for approval. Submission to Chairpersons Forum Review of Founding Documents ToRs for this project submitted and approved by Bidding Committee. Advertisement and appointment of service provider

18 18 PROGRAMME 3 - LGRS Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Governance SOE Shareholder’s Compacts Signed compacts: SAFCOL, Denel Transnet, Eskom, Alexkor- outstanding due to land claim, SAA, SAX, Infraco-await passing of bill & incorporation Board Induction toolkit & training ToRs for this project submitted and approved by Bidding Committee Advertisement and appointment of service provider Board performance appraisals ToRs currently being developedSubmit ToRs for review and Approval Subsidiary Boards ToRs currently being developedSubmit ToRs for review and Approval

19 19 PROGRAMME 3 - LGRS Sub program OutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Risk Review Risk management plans Risk profiles for each SOE completed. Level 1 risks per SOE documented. Follow-up with the SOE on level 1 risk mitigation plans and monitor the same on quarterly basis. Develop a Risk Management Framework The CEO forum noted the framework in its Feb 07 meeting and approved it as a working document. Present the framework to the PC and implement the plan w.e.f. 07/08 financial year Determine effectiveness and appropriateness of risk management in SOE 2006/07 SOE risk management survey was completed. Assist the SOE with deficient risk management practices to improve thereon. Manage and reduce risks government is exposed to through the activities of SOE SOE risk profiles completed.Monitor the SOE profiles for impact on Shareholder level risks. Maintain the SOE/DPE risk governance structure Risk Forum meeting on 10 November Quarterly forum meetings

20 20 PROGRAMME 3 - LGRS Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Secretariat Management of SOE fora: Chairpersons’, CEOs’, CFOs’, Risk Officers’, company secretary/legal 10xEXCO 8Xproject meetings 9XEconomic Cluster meetings 2 Cluster workshops 6XCEOs Forum 4XRisk Forums 3XCFOs Forum 4XChairpersons’ Forum 10XMANCO 3xLabour Forums (additional forums) 3xBilaterals (additional forums) 2xImbizo’s (additional) Continued activity Communication of key decisions to Stakeholders. All decisions communicated to members of various forums (records of minutes available) Continued activity

21 21 PROGRAMME 4 - MANUFACTURING Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Defense Sector Denel Oversight of implementation of Denel’s business strategy 1. Denel’s recaptialisation 2. Business alliance negotiations 3. Disposal of non-core businesses 4. Strategy implementation 1. Guarantee of R233 m finalised with Treasury. R567 m cash injection in December Indemnity with Saab in process with National Treasury. Denel has signed the transaction with Zeiss Optronics. Government will retain a 30% golden share. 3. Five non-core businesses have been disposed of, realising income of R400m.Negotiations on sale of properties continuing. 4. Review of Denel’s monthly and quarterly reports.

22 22 PROGRAMME 4 - MANUFACTURING Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Defence Sector Denel Defence sector strategy Local and international experts appointed to develop a comprehensive strategy for the industry. Research commenced in December Project to be completed by 31 March Joint DoD, DTI, DST, DPE, AMD and Denel funded project. SOE National Interest Facility (NIF) – to support large SOE medium and long-term exports Research completed. Meeting held with the DTI and ECIC - agreed that ECIC would implement, subject to Treasury approval. Joint presentation to Treasury will be made.

23 23 PROGRAMME 4 - MANUFACTURING Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Defence Sector Denel Acquisition policy, the 10 year defence Capex plan and NIP and DIP policy alignment DoD benchmarked acquisition policy with global best practice and will continue to review on an on-going basis. Sector strategy will determine industry niches for future investments under NIP and DIP. Establishment of DERI Migration and governance teams that will establish DERI set up and planning process commenced. Draft Cabinet Memorandum prepared by DoD.

24 24 PROGRAMME 4 - MANUFACTURING Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Forestry Sector Safcol Determination of the future role for SAFCOL in forestry development Research completed during this Quarter. Analysis on various scenarios for the future role done and completed. Consultations with Interdepartmental Task Team undertaken. Briefing to the Minister to present final recommendations done on 5 December Drawing up of a possible implementation plan. Cabinet decision on the recommendation Transfer of SAFCOL 25% shareholding in privatised packages to workers, communities and NEF. Further meetings held with the DTI and DWAF. Decision taken that a workshop needs to be held by all affected departments. Decision also taken internally that a consultant will be contracted to conduct work and advise on the entire 25%. Legal advice on the optimal way to dispose of the 25% shareholding.

25 25 PROGRAMME 4 - MANUFACTURING Sub program OutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Nuclear Sector PBMR Demonstration Power Plant EIA Process - New Plan of Scoping delivered to libraries for public comment. New Project Master Plans and Information Memorandums expected in February Pilot Fuel PlantEIA Process - Positive RoD expected during January New Project Master Plans and Information Memorandums expected in Feb Eskom Contract: Positive RoD. NNR Licence. Plant Price. Premature Decommissioning Fund. Nuclear Indemnity No progress made with negotiating a contract to build the Demonstration Power Plant DPE to arrange a meeting between Eskom and PBMR Demonstration Power Plant EIA Process - New Plan of Scoping delivered to libraries for public comment. New Project Master Plans and Information Memorandums expected in Feb

26 26 PROGRAMME 4 - MANUFACTURING Sub program OutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Nuclear Sector PBMR Guarantees: Letter of Comfort Premature closure costs All guarantees to be delayed until completion of NT investigation. DPE to request timeframe of NT investigation

27 27 PROGRAMME 5 - TRANSPORT Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Transport Sector Transnet Disposal of Metrorail Employee liabilities quantified, National Treasury set aside over R400m Disposal of Blue Train Presentation on disposal strategy given to DPE in Dec. Advert for Expression of Interest to be released in local and international media in first quarter Normalization of Railway Concessions New agreement between Spoornet and CFM concluded Coega PSPTransnet discussed their proposal for Coega PSP with Minister

28 28 PROGRAMME 5 - TRANSPORT Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Aviation Sector SAA Separation of SAA from Transnet DPE, SAA and Transnet made presentation to the GCC for replacement of Guarantees in December NT requested verification of amounts outstanding from various creditors, which information will be forwarded. Withdrawal from ATCL The shares in ATLC were sold for $1 to the Government of Tanzania on 29 August ATLC was reflected as a discontinued operation at the end of August 2006was fully disposed out at the end of September 2006

29 29 PROGRAMME 6 – JOINT PROJECT FACILITY Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Competitive Supplier Development Programme Development of SOE supplier development plans Cabinet memo on CSDP prepared for submission SOE procurement capacity building Finalised curriculum and business plan completed for large-scale five year procurement capacity and capability building programme.

30 30 PROGRAMME 6 – JOINT PROJECT FACILITY Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Environment Impact Analysis Report on SOE EIA capacity Report on SOE EIA capacity finalised and submitted for approval. Further bi-laterals held between DEAT and DPE to establish way forward. Human Resources and Capacity Building Audit of the SOE Skills requirements Information gathered on internal SOE skills requirements. Further information required regarding suppliers’ skills requirements Assessment of the current SOE training facilities Assessments underway and presentation made to CEO Forum on Denel Youth Foundation. SOE must put in place plans to make optimal use of training facilities for internal skills development programmes.

31 31 PROGRAMME 6 – JOINT PROJECT FACILITY Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Information Communicatio ns Technology Call CentresCapital structure incentives secured from DOE for three sites at 40% of budget capex. Data network rationalisation High level proposal on options to pursue submitted to CEO’s Forum. Property Project SOE non-core property disposals Transnet-Servcon negotiations underway. Disposal of most of Denel’s non-core property in progress. SOE property developments Proposal to facilitate property development submitted to Transnet for consideration. Response pending.

32 32 PROGRAMME 6 – JOINT PROJECT FACILITY Sub programmeOutputProgress 3 rd quarter Oct, Nov and Dec 2006 Follow-up action Rest of AfricaIdentify and implement infrastructure projects (2-4) in Africa sector analysis and country analysis reports finalised and submitted to CEO Forum. Prepared TOR and memorandum for appointment of project manager

33 33 Thank you


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