1. PRESENTATION TO THE PORTFOLIO COMMITTEE By DDG:JAMES THELEDI ON 2 ND QUARTER PERFORMANCE OF DPE 08 NOVEMBER 2006

2. OUTLINE OF THE PRESENTATION 2 Overview of the 2nd Quarter Performance Review per programme Administration- (Rashida Issel - COO) Analysis and Risk Management (James Theledi - DDG) Legal, Governance and Secretariat (Sandra Coetzee - DDG) Corporate Structure and Strategy (Litha Mcwabeni - DDG) Joint Project Facility (Katherine Venier - JPF Co-ordinator) Summary Investment Dashboard Demonstration- Ntombifuthi Rapetsoa

3. Overview of the 2 nd Quarter - Completion of Shareholder compacts with Strategic Key Performance Indicators for Eskom and Transnet -Analysis of performance for all SOE completed -Significant progress made on Alexkor deal, establishment of Infraco and recapitalisation of Denel and PBMR -Completed the study on the future of SAFCOL -Separation of SAA from Transnet fairly advanced -Successful management of the CEO, Chairpersons and the Risk fora to improve co-ordination -Budget expenditure on track, 45 % of the operational budget has been spent. 3

11. 11 InfraCo will participate in the national long distance and international connectivity only. Potential Abuse of Market Power Potential Abuse of Market Power Less More Content Applications Services Tier 3 Access Infrastructure Tier 3 Access Infrastructure Tier 2 National Long Distance Infrastructure Tier 2 National Long Distance Infrastructure Tier 1 International Marine Cable Infrastructure Tier 1 International Marine Cable Infrastructure Impact of Government Intervention Impact of Government Intervention Less More Scope of Intervention InfraCo Phase I InfraCo Phase I InfraCo Phase II InfraCo Phase II Tier 3 Operators Tier 3 Operators Tier 3 Operators ISP Tier 1 & 2 Operators Telkom InfraCo Intervention

12. 12 Tier 2: National Long Distance Infrastructure Eskom Transtel PIETERMARITZBURG BEAUFORT WEST DE AAR NELSPRUIT PHALABORWA RICHARD'S BAY George Namibia Bethlehem Botswana Klerksdorp Mozambique Poseidon Swaziland CAPE TOWN DURBAN EAST LONDON PORT ELIZABETH PRETORIA Umtata Kenhardt Maputo Manzini Ermelo Gaberone Ellisras Welkom Ladybrand Lesotho Copperton KIMBERLEY Rustenburg Mosselbay Stellenbosch Potchefstroom Cape Peninsula Tongaat New Castle Alice Brits Zeerust Leeudoringstad Rhodes Aggeneys Witbank Vereeniging Saldanha POLOKWANE KOMATIPOORT BLOEMFONTEIN JOHANNESBURG Musina Future InfraCo will take over Transtel’s and Eskom’s infrastructure and will lease it back to the private sector.

13. 13 PROGRAMME 1 - ADMINISTRATION Sub programme OutputProgress 2 nd quarter 1 July - 30 Sep 06 Follow-up action Planning, monitoring & evaluation Organizational performance reporting Technical information on progress reports approved (1 st quarter, 2 nd quarter and annual reports). Co-ordinate submission of 3 rd quarter performance report to the Portfolio and Select committees Human resources Implement and monitor Employment Equity Monthly EE report to EXCO, Dir. HR and Transformation Committee. Draft Employment Equity Report Employment Equity on line system was not working until 28 September 2006. Corporate services Communication and IT Security Scrambler devises installed where needed NIA did Information Audit assessment. Still waiting for the assessment report from NIA.

14. 14 PROGRAMME 1 - ADMINISTRATION Sub programmeOutputProgress 2 nd quarter 1 July - 30 Sep 06 Follow-up action Communications DPE News-letterDevelop concept, undertake process to give publication a name. Gathering of information and inputs from different Units and SOE. Uploading of PDF file on both intranet and website Finance Adjustments Estimates 2006/07 The adjusted estimates were submitted on due date and the department is awaiting the outcome of the submission. Finance MTEF 2007/08Operational and SOE recap budgets prepared and submitted on time. National Treasury has proposed that a task team be set up with DPE/NT to address the complexities of the SOE recap.

15. 15 DPE STATISTICS as at 6 November 2006 Total PostsFilled PostsVacanciesTerminations to date (April to date) Turnover Rate (April 06 to date) November Appointments December appointment 157131261411 9 (If calculated using resignations only) 5 1 Level 1 - 10 62 83 1 Level 11 - 12 24 5 Level 13 - 15 45 13 2 Interviews in progress 8 Advertised Posts 7 Resignations11 Contract Expiry 1 Transfers2

16. 16 Males needed in DPE: African and White: Lower level i.e., 1 – 12 Coloured and Indian: All levels Females needed in DPE: African with the emphasis on SMS level. People with Disabilities needed in DPE: 4 People with Disabilities to be appointed on all levels and all races Current Gender compilation on SMS level: 56% male and 44% female: Target 50/50 % by 31 March 2009. 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: 157 62 2 2 7 7 8 7 Total posts as at 7/11/2006 131 55 40 5 1 9 3 14 42 Posts:7/11/2006 as a % 100 % 41.98%30.53%3.82%0.76%6.87%2.29%10.69%3.05% Vacancies 26 (13-SMS) & (13 Level 1-12) 5 16 1 2 2 Target: Number of people with disabilities 6 4 (potential candidates pending medical results) DPE TARGETS IN COMPARISON WITH NATIONAL STATISTICS

17. 17 SALARY GRADINGLEVELTOTAL POSTS TOTAL FILLED TOTAL VACANT DISABLE D AFRICANINDIANCOLOUREDWHITE LEVELFEMALEMALEFEMALEMALEFEMALEMALEFEMALEMALE MINISTER 1 1 1 DIRECTOR GENERAL 16 1 1 01 SPECIAL ADVISOR: 15 1 1 DEPUTY-DIR. GENERAL 15 4 3121 CHIEF DIRECTORS 14 16 106241111 DIRECTORS 13 35 305612213132 TOTAL SMS’s 13 - 16 58 4513918314244 DEPUTY DIRECTORS (11&12) 11 - 12 29 2451106224 ASST DIRECTORS (9&10) 9 - 10 10 823 4 1 LEVEL (7& 8) 7 - 8 49 45427 9315 LEVEL (1-6) 1 - 6 11 9263 TOTAL LEVEL 1-12 1 - 12 99 8613145212519 TOTAL DPE157 1312655405193144

18. 18 EXPENDITURE REVIEW DEPARTMENT TOTAL EXPENSES APRIL - SEPTEMBER 2006 TOTAL BUDGET COMMITMENTS AVAILABLE BUDGET OCTOBER 2006 – 31 MARCH 2007 % OF TOTAL BUDGET USED Compensation of Employees 23,483,97854,004,637030,520,65843.49 Goods and services19,324,36247,331,3634,129,14223,877,85840.83 Transfers*580,042,648584,422,00004,379,35199.25 Payment for capex1,120,1591,835,000161,132553,70761.04 TOTAL623,971,149687,593,0004,290,27559,331,57590.75* *The departmental operational expenditure, amounts to R48 261 424 which is 44.85% of the budget excluding the transfer to the PBMR (R580 million). The expenditure will level out in the coming months as the Diabo Trust transfer is also currently pending which affects the overall percentage expenditure to budget.

19. 19 PROGRAMME 2 - ARM OutputProgress 1 st quarter 1 April – 30 June 06 Progress 2 nd quarter 1 July - 30 Sep 06 Follow-up action Analysis of quarterly performance of SOE 1 st quarter reports due from SOE on 18 August 2006 Analysis only prepared on receipt of 1st quarter reports from SOE 1 st quarter reports analysed and briefing provided to Minister The site visit and the appointment of consultants 2 nd quarter reports due from SOE on 17 November 2006 Analysis to be prepared on receipt of 2 nd quarter reports Analysis of Annual reports of SOE AGMs held after June with 21 day notice period for submission Analysis of annual reports for SOE completed in preparation for AGMs Benchmarking: Identify operational KPIs and peer group designation. Developed project plan with specific focus SAA and the key divisions of Eskom and Transnet Developed project plan with specific focus on SAA and the key divisions of Eskom and Transnet Discussions held with relevant key management of abovementioned SOE on suitable operational KPI and possible peer groups More research with the assistance of sector specialists culminating in memo to Minister.

20. 20 PROGRAMME 2 - ARM OutputProgress 1 st quarter 1 April – 30 June 06 Progress 2 nd quarter 1 July - 30 Sep 06 Follow-up action Develop a standardised quarterly reporting template to be completed by SOE Planning to address problem of previous quarterly reports focusing on financial performance Agreed that next report to include progress on infrastructure investment, non-core disposals, risk management and socio- economic performance Comprehensive quarterly reporting template completed and sent to CFOs of SOE for comments Template to be discussed at CFO forum Develop a standardised corporate plan template that complements the Treasury Regulations framework Planning to address lack of consistency ito contents and quality of corporate plans received from SOE Comprehensive corporate plan template draft to be sent to CFOs of SOE for comments

21. 21 PROGRAMME 2 – RISK MANAGEMENT OutputProgress 1 st quarter 1 April – 30 June 06 Progress 2 nd quarter 1 July - 30 Sep 06 Follow-up action Risk management Review Risk management plans Only three (Transnet, Eskom & Safcol) of our SOE risk management plans were formally reviewed and assessed. Report was approved Reporting requirements for annual risk management plans developed in consultation with SOE and included in draft risk management framework. Draft framework to be discussed at Risk Management Committee meeting on 03 November and with DG and Minister on 10 November. Risk management Development of the Risk Framework The Concept document was approved by Exco in March 2006. EXCO Risk Management sub-committee was established in May 2006. Draft Framework developed in consultation with SOE and others. Risk management committee held its first meeting on 26 July. Draft framework to be discussed at Risk Management Committee meeting on 03 November and with DG and Minister on 10 November. Risk management Reports from SOEs outlining risk profile and identified risks The department has not yet formally identified SOE risks that could negatively impact government and its objectives. Draft risk profiles prepared for each SOE. Same will be discussed at the next DPE Risk Management Committee meeting scheduled for 03 November 2006. Developed a draft list of key cross-cutting shareholder level risks. SOE risk profiles to be reviewed by SOE teams and Exco. Monitoring procedures will be implemented for Shareholder level risks. Incorporate comments from Exco

22. 22 PROGRAMME 3 - LGT OutputProgress 1 st quarter 1 April – 30 June 06 Progress 2 nd quarter 1 July - 30 Sep 06 Follow-up action Section 54 PFMA application Guidelines Consultation draft presented to SOE at CEO and Chairman Fora Formal response from only 1 SOE, limited response from SOE Infraco Establishment Draft Bill ready for Cabinet Approval Transnet Pension Fund Amendment Bill Bill before Portfolio Committee Getting the Bill to be passed into law within a short space of time (i.e by the end of the year) Litigation: Defending the legal action instituted by the Pahapur / Londoloza Consortium The Department has filed all the necessary documents with the registrar of the High Court Tracing all the documents required in the legal action

23. 23 PROGRAMME 3 - LGT OutputProgress 1 st quarter 1 April – 30 June 06 Progress 2 nd quarter 1 July - 30 Sep 06 Follow-up action Shareholder management legislative framework Draft framework completed Document discussed internally and presented to Minister Legislative processes to follow the conclusion of the SMM Conceptual framework Board remunerationStudy completed. The Remuneration Guidelines have been submitted to the Minister for approval. Consultation with the Chairpersons of SOE concluded, stakeholder consultation ongoing Additional work on the guidelines following consultations Governance workflow None – have other priority projects ToR updated and submitted for approval Finalisation of procurement processes Conclusion of SOE Shareholder's Compacts Generic compact developed and approved by Minister The following compacts have been signed: Eskom and Transnet SAFCOL, Denel, Alexkor and SAA to be signed Management of SOE forums: Chairpersons’, CEOs’, CFOs’, Risk Officers’, company secretary/legal 1x Chairpersons’ Forum 2x CEOs’ Forum 1x CFOs’ Forum 1x Risk Officers’ Forum 0x Governance Forum 1x Chairpersons Forum 2x CEOs Forum 0x CFO Forum 1x Risk forum 0x Governance Forum (Terms of Reference approved on 2 nd October 2006) Development of calendar for 2007

24. 24 PROGRAMME 4 - CSS OutputProgress 1 st quarter 1 April – 30 June 06 Progress 2 nd quarter 1 July - 30 Sep 06 Follow-up action Transnet Performance management Signed compact imminent Progress monitored against strategic KPIs Annual Report reviewed SKPIs incorporated in shareholder compact. Transnet Coega PSP DPE position paper on transaction structure finalized. Transnet PSP Framework developed, DPE engaging Transnet on proposed framework. Urgent engagement with DOT necessary as part of the POA. Info memo and RFP to be published after process is agreed with Transnet. SAA Separation from Transnet A re-evaluation of SAA done by Deutsche Bank on 20 March 2006 A draft Act and a Cabinet Memo has been done The Sale Agreement has been signed subject to finalization of some suspensive conditions Take over of Transnet guarantees is in progress and a request forwarded to NT in this regard The team must still review the SOE pension rules. Awaiting NT response to our request

25. 25 PROGRAMME 4 - CSS OutputProgress 1 st quarter 1 April – 30 June 06 Progress 2 nd quarter 1 July - 30 Sep 06 Follow-up action PBMR Successful Demonstration Power Plant and Pilot Fuel Plant EIA and NNR licensing processes underway EIA and NNR licensing processes continue to be a challenge A fuel license (Nukem) has been obtained and approved by all shareholders. SAFCOL SAFCOL mandate and future role reviewed, and in place by March 2007. Project Plan finalised. Interdepartmental task team (DWAF, DTI) established. Initial research on saw log data and industry structure completed. Consultations with task team ongoing. Research ongoing on separate areas that will inform the review. Initial scenarios for the future role of SAFCOL identified. To bring on board the DLA and the National Treasury SAFCOL Transfer of SAFCOL 25% shareholding in privatised packages to workers, communities and NEF. Consultations with National Treasury and DTI done. Meetings scheduled with DWAF and DLA. Way forward to expedite the process identified Further consultations with the DTI and National Treasury

26. 26 PROGRAMME 4 - CSS OutputProgress 1 st quarter 1 April – 30 June 06 Progress 2 nd quarter 1 July - 30 Sep 06 Follow-up action Denel 1. Denel’s recapitalisation Presentation to Treasury Guarantee Certification Committee (GCC) MTEC submission Guarantee secured Further cash recapitalisation of R567m secured Monitoring Denel 2. Shareholder oversight Assisted with closing the Saab transaction Analysis of revised Denel Corporate Plan finalised Input into Shareholder Compact: SKPI’s Quarterly review of Denel’s 1 st quarter’s performance completed On going performance monitoring Denel 3. Enabling projects (national task teams) a. Defence Fund (financing/guarantee fund) b. Sector strategy c. Policy alignment d. Rationalisation of national functions a. Terms of reference (TORs) finalised b. Behind schedule c. Acquisition process alignment on major contracts by DoD. d. Functions and budgets for units that will be moved into DERI identified. a. Team of local and international experts appointed and initial research has commenced b. TORs complete and tender advertised c. Expecting 2 major contracts to be placed with Denel. d. Cab Memo on DERI finalised and Schedule 3A listing with Treasury sought by DoD Finalisation of research and implementation

27. 27 JOINT PROJECT FACILITY Project nameProgress 1 st quarter 1 April – 30 June 06 Progress 2 nd quarter 1 July - 30 Sep 06 Follow-up action Rest of Africa Review of current SOE investments on the Continent Benchmark on SOE investments Lessons learnt report Country analysis report Sector analysis report Energy & pipelines A review of current state of SOE pipeline activities Liquid fuels demand analysis being reviewed for Sasol IV shift case, & Eskom/ Mintek methodologies; Mega-Terminal concept being reviewed and included in design. Submitted memo to the Minister in this regard. Initiated review of Moerane Commission impacts with Petronet, for incorporation into design. Moz-SA pipeline: Introduced project to the DME re FSSTT & Strat Stocks; Seeking mandate for ensuring that national strategic considerations bear on land use in South Durban Industrial Basin) Finalise key project parameters: Pipeline routing & size Moz-SA liquid fuels pipeline Develop Gas Pipeline options Develop Slurry Pipeline options

28. 28 JOINT PROJECT FACILITY Project nameProgress 1 st quarter 1 April – 30 June 06 Progress 2 nd quarter 1 July - 30 Sep 06 Follow-up action Human resources & capacity building Audit of the SOE Skills requirements Skills requirement by SOE compiled and presented to DPE and JIPSA Report on the SOE skills requirements findings is near completion. Findings are scheduled to be presented at the CEO ‘s forum on 20th November 2006 Findings are scheduled to be presented at the CEO Forum on 20th November 2006 Information Communication Technology Broadband Infrastructure Complete. Business Plan submitted to National Treasury in June 2006. Commissioning of FSN underway to ensure “lighting up” on 15 th Dec Information Communication Technology Data network rationalisation Suspended until Second Network Operator is operational. ICT team to make a presentation to DG on the implementation plan

29. 29 JOINT PROJECT FACILITY Project name Progress 1 st quarter 1 April – 30 June 06 Progress 2 nd quarter 1 July - 30 Sep 06 Follow-up action SOE Properties SOE non-core property disposals Cabinet approved framework for non-core disposals B-BBEE guidelines for disposals Negotiating sale of SOE non- core properties with government departments, particularly Department of Housing and Department of Education. Disposal policy and B- BBEE guidelines disseminated to SOE. B-BBEE guidelines loaded on DPE website in July. User friendly guide on B- BBEE guidelines to be developed SOE property developments Preliminary negotiations with Development Finance Institutions for the development of non-core properties. Finalisation of model for development and disposal. Rationalisation of non-core properties available for development. Further meetings with Development Finance Institutions to discuss the institutional arrangements and determine the way forward. Further negotiations likely to define the nature of a possible transaction.

30. 30 JOINT PROJECT FACILITY Project nameProgress 1 st quarter 1 April – 30 June 06 Progress 2 nd quarter 1 July - 30 Sep 06 Follow-up action Competitive Supplier Development Program Development of SOE supplier development plans SOE Procurement capacity building Benchmark database of suppliers Development of overarching policy and strategy re supplier development – approach accepted by the Minister and Chair’s forum First phase industry research completed by Wits and focus areas for second phase defined with SOEs. KPIs for the program presented at workshop with SOEs Procurement capacity building program proposal received from UK Procurement Professional Institute and Transnet and Eskom aligning job descriptions with program. Draft cabinet memo written for exclusion from IPP. Pilot supplier benchmarking program launched with Ekurhuleni Work with DTI on NIPP issue and get Cabinet approval on the NIPP issue

31. 31 SUMMARY -Great progress has been made against Medium Term Expenditure Framework (as outlined in the MTSF) -The achievements during the second quarter are a good spring board for the remaining quarters -The department will be working with other national departments to close the processes on Infraco, Electricity distribution, adding further capacity to the electricity distribution, the separation of SAA from Transnet, out of Court settlement with the Richtersveld community, finalising SAFCOL strategy and securing clear policy on PMBR -Completion of the Risk Management Framework and the Shareholding Management model -Complete the standards and framework for quarterly, corporate, annual reports and implement guidelines on Section 54, PFMA applications -Improve co-ordination with other government departments in rolling out the Infrastructure investment and achieving goals as outlined in ASGISA