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Archive | Public utilities

Border Management Authority around the corner

SARS role at border posts being clarified ….

In adopting the Border Management Authority (BMA) Bill, Parliament’s Portfolio Committee on Home Affairs agreed with a wording that at all future one-stop border posts, managed and administered by the envisaged agency and reporting to Department of Home Affairs (DHA), were to “facilitate” the collection of customs revenue and fines by SARS staff present.

However, on voting at the time of the meeting, Opposition members would not join in on the adoption of the Bill until the word “facilitate” was more clearly defined and the matter of how SARS would collect and staff a border post was resolved.

Haniff Hoosen, the DA’s Shadow Minister of Economic Development said that whilst they supported the Bill in general and its intentions, they also supported the view of National Treasury that the SARS value chain could not be put at risk until Treasury was satisfied on all points regarding their ability to collect duty on goods and how.

Keeping track

Most customs duty on goods arriving at border controls had already been paid in advance, parliamentarians were told; only 10% being physically collected at SA borders when goods were cleared.

However, with revenue targets very tight under current circumstances both SARS and Treasury have been adamant that it must be a SARS employee who collects any funds at border controls and the same to ensure that advance funds have indeed been paid into the SARS system.

The Bill, which enables the formation of the border authority itself, originally stated that it allowed for the “transfer, assignment and designation of law enforcement functions on the country’s borders and at points of entry to this agency.”

Long road

It was the broad nature of transferring the responsibility customs of collection from SARS to the agency that caused Treasury to block any further progress of the Bill through Parliament, much to the frustration of past Home Affairs Minister, Malusi Gigaba.   It has been two years since the Bill was first published for comment.

DHA have maintained throughout that their objective is to gain tighter control on immigration and improve trading and movement of goods internationally but Treasury has constantly insisted that customs monies and payments fall under their aegis. The relationships between custom duty paid on goods before arrival at a border to Reserve Bank and that which must be paid in passage, or from a bonded warehouse was not a typical DHA task, they said.

Breakthrough

It was eventually agreed by DHA that SARS officials must be taken aboard into the proposed structure and any duties or fines would go direct to SARS and not via the new agency to be created or DHA.

This was considered a major concession on the part of DHA in the light of their 5-year plan to create “one stop” border posts with common warehouses shared by any two countries at control points and run by one single agency. More efficient immigration and better policing at borders with improving passage of goods was their stated aim.

Already one pilot “one stop border post”, or OSBP, has been established by DHA at the main Mozambique border post by mixing SAPS, DHA and SARS functions, as previously reported.

To enable the current Bill, an MOU has been established with SAPS has allowed for the agency to run policing of SA borders in the future but Treasury subsequently baulked at the idea of a similar MOU with SARS regarding collection of customs dues and the ability to levy fines.
Bill adopted

At the last meeting of the relevant committee, Chairperson of the PC Committee on Home Affairs, Lemias Mashile (ANC) noted that in adopting the Bill by majority vote and not by total consensus, this meant the issue could be raised again in the National Council of Provinces when the Bill went for consensus by the NCOP.

Objectives

The Agency’s objectives stated in the Bill include the management of the movement of people crossing South African borders and putting in place “an enabling environment to boost legitimate trade.”

The Agency would also be empowered to co-ordinate activities with other relevant state bodies and will also set up an inter-ministerial committee to handle departmental cross-cutting issues, a border technical committee and an advisory committee, it was said.

Mozambique border

As far as the OSBP established at the Mozambique border was concerned, an original document of intention was signed in September 2007 by both countries. Consensus on all issues was reached between the two covering all the departments affected by cross-border matters.

Parliament was told at the time that the benefit of an OSBP was that goods would be inspected and cleared by the authorities of both countries with only one stop, which would encourage trade. In any country, he explained, there had to be two warehouses established, both bonded and state warehouses.

Bonded and State warehouses

Bonded warehouses which were privately managed and licensed subject to certain conditions, were to allow imported goods to be stored temporarily to defer the payment of customs duties.

Duties and taxes were suspended for an approved period – generally two years but these had to be paid before the goods entered the market or were exported, MPs were told. The licensee bore full responsibility for the duty and taxes payable on the goods.

State warehouses on the other hand, SARS said at the time, were managed by SARS for the safekeeping of uncleared, seized or abandoned goods. They provided a secure environment for the storage of goods in which the State had an interest. Counterfeit and dangerous or hazardous goods were moved to specialised warehouses.

Slow process

MPs noted that it had taken over six years for the Mozambique OSBP to be finalised. SARS said there were many ramifications at international law but added two discussions with Zimbabwe for the same idea had now taken place. It was hoped it would take less time to reach an agreement as lessons had been learnt with the Mozambican experience.

On evasion of and tax, SARS said in answer to a question that losses obviously occurred through customs avoidance and evasion, so it was consequently it was difficult to provide an overall figure on customs duty not being paid, as evasion was evasion. Smuggling of goods such as narcotics, or copper, which could only be quantified based on what had been seized.

The same applied to the Beit Bridge border with Zimbabwe where cigarette smuggling was of serious concern and through Botswana.

In general, it now seems that Home Affairs is to adopt an overall principle of what was referred to as having one set of common warehouses for one-stop declaration, search, VAT payment and vehicle movement with a SARS presence involving one common process for both countries subject to a final wording on the SARS issue before the Bill is submitted for signature.

Previous articles on category subject
Border Authority to get grip on immigration – ParlyReportSA
Mozambique One Stop Border Post almost there – ParlyReportSA

Posted in Finance, economic, Fuel,oil,renewables, Justice, constitutional, Mining, beneficiation, Public utilities, Security,police,defence, Trade & Industry, Transport0 Comments

Barnes prepares SAPO for SASSA

Modernising SAPO a culture change

….. sent to clients 27 February…. Stage by stage, Mark Barnes, Group Chief Executive Officer of South African Post Office (SAPO), appears to be reforming cultures and cleaning out “ten years of decay”, as he put it to the Portfolio Committee on Telecommunications and Postal Services.

“The years 2017 and 2018 could be our years”, he said, “especially if the Cabinet smiles on a SASSA deal. We have the reserves to do this thing.”

Introduced by Minister Siyabonga Cwele, Minister of Telecommunications and Postal Services, on the utility’s presentation on its corporate progress report and prospects for the third quarter, CEO Mark Barnes claimed that SAPO is becoming profitable; is well capitalised and the long-awaited corporatisation process is back on track with many of its labour problems sorted out.

Up and away

When introducing him to new members of the committee, the Minister said that for the last few years SAPO had been facing many challenges, but CEO Barnes, with a new Group Chief Financial Officer, “had put SAPO on the road to recovery”.

Because of its struggles with old systems of the past, digging it out of financial mismanagement and the need to pay urgently its creditors, SAPO was given a cash injection from the State.   The Minister said this was a good decision.  In 2017 SAPO was starting to focus on new businesses, with part of the strategic planning focused on the internet. One of the key goals was corporatisation, the Minister concluded.

New world

Mark Barnes described the position when he took over the reins to save the utility from “self-inflicted suicide” was far worse than was originally thought. He described a process whereby he had to send specialised “swat” teams into each major sorting complex starting with the large Johannesburg complex and eventually to other major towns and cities.

It took months, he said, to “clean up the mess and try to establish order out of chaos”, a good deal of which had been caused by the extended postal strike but mainly poor systems and management disinterest.

The delays caused by basic simple clean-up housekeeping held the initial  financial assessment back whilst the physical clean-up operations, after years of neglect were undertaken, he said.   The “swat” teams eventually established what SAPO assets had and where they were located.

First audit

He said, “I hope this is the last time I refer to ‘the past’ but we are having a mock audit in late January 2017 to establish remaining areas of wasteful expenditure, something that was not even thinkable of last year.”   He said, “The main issue is that SAPO has established an air of confidence and that confidence has reached a point where the rest of the journey becomes a worthwhile investment.”

In answer to criticism from Shadow Minister Cameron MacKenzie (DA) who said that “this SAPO report is being prefaced by the same remarks as before” and who added that it “was the same story of promises made last year but re-hashed”, CEO Barnes made a rebuttal. He retorted that “It is a mistake to take just a superficial look from the outside. Internal organization is being achieved and we haven’t had time to wave flags.”  He gave a long list of what had been achieved.

Heavyweights in saving banking

On savings, Barnes noted that SAPO serviced some 6 million customers with 2,486 outlets and reached out where no established banking services existed. “Compliance is now in place on banking procedures with the SA Reserve Bank  and we are seeking approval to establish the promised SA Postbank Limited with CIPC,  applications being submitted before July 1 2017.”

Postbank’s depositor funds were now standing at R4.9bn, having increased by 128m. Postbank itself had invested R7.3bn, he said.  Payables, Barnes also said, were reduced by R531m and the group met liquidity and solvency standards. The Post Office is backed by a R4.2bn Treasury guarantee.

 An overdraft of R270m had been repaid and R17m had been realized from the sale of pointless property holdings. Rental from existing tenants had increased and a more suitable and less expensive head office was now being targeted. He said he was always trying to get officials out of their old mindset about SAPO and to realize they were in business.

Major cut backs

On the labour front, there were 18,000 less staff this year, Barnes said, “brought about by a process of natural attrition” and it was hoped to transfer a large portion of a “hopelessly overstaffed head office” to operational duties.

If operational revenue failed to provide the necessary improved results in the short term, he said, then a retrenchment programme may have to be negotiated. “It will be tough but that’s how it is. The unions are aware of the long-term planning processes that have been undertaken and the alternatives understood”, he said.

SASSA a target

CEO Barnes expanded on the possibility of SAPO handling all payments of SASSA grants in the light of the volumes of “points of presence which amounted”, he repeated, “to approximately 5,000 counter points  Postbank is also to make an application to government to both handle all government mail business and a submission to SASSA in the very near future as current hiatus evolves.

He said that they had been talking to National Treasury on the savings to the national fiscus that could be gained. It was agreed that it would take much to achieve this possibility but was highly “do-able”.

He said Postbank had sufficient funds of its own to capitalize such a venture with IT networks and training should the security of such a contract be awarded. He commented that ordinary mail had dropped to 50% of original volumes due to the advent of electronic mail.

“This sea change in the way that the world now communicates had found the original management of SAPO completely at a loss on what to do”, he said, “and the decision had  apparently been to do nothing.”

Diversification from snail mail

The plan was now to diversify into courier services probably with a partner and to focus on selling Postbank services at package rates to corporate business.  

So far, four offer attempts had been made to “buy in” as partners, CEO Barnes said, all four of which had been found totally unacceptable.  There had been an obvious attempt in all cases just to acquire Postbank’s extensive national footprint as if a possible merger of interests was a fire sale, in each case contenders having given no consideration to the idea of what “was in it” as a revenue source to Postbank.   All propositions were  rejected out of hand.

Barnes told Parliamentarians, with the Minister still present at the portfolio committee meeting, that e-commerce in the form of public hubs or malls to the SADC area as well as locally will become a major revenue base for SAPO especially in lower income groups.

Generally, on all fronts, 22 significant projects had been approved, CEO Barnes said, with a further 9 in the project stage; 4 projects were in the procurement stage and others in testing and feasibility stages.

Transport more agile

As far as the transport book was concerned, SAPO  had decreased its annual expenditure   by 30% by exercising rationality and purchasing new vehicles cutting down on maintenance and repairs to old vehicles, Savings were also achieved by boosting efficiency with “a more agile logistics mind-set.”

The overall corporate plan forecast is mixed, Barnes said, and whilst revenue has declined significantly on a net basis, which was expected and planned for whilst SAPO re-grouped and cut out unprofitable exercises, it will still meet its corporate plan targets and “looked headed to be back into the black by a small amount in 2016/7”, said Barnes.

When it came to the balance sheet, he remarked SAPO still has an extremely large amount of debt which needs to be paid. However, it was important to note that the entity was now solvent and could pay. It also had liquidity in cash of its own available for development.

The big plan

He told the Committee that the key to SAPO’s future was the corporatisation of the Post Bank, with approval to establish the bank being granted by the SA Reserve Bank in July 2016. Preparations were currently underway to submit for registration in February 2017 as a South African Postbank Limited entity with CIPC.

The Postbank staff, operations and balance sheet will transfer from the Postbank division to the new entity after the incorporation process. The Postbank will allow for broader financial inclusion for all South Africans and it has the capacity to do this, he said.

SAPO, he said, had a relatively sophisticated E-commerce infrastructure with a large footprint which allowed it to facilitate speedy connections and deliveries. This, combined with the ports, vehicles and the access SAPO has at airports could make SAPO the E-commerce hub for Africa.

Ms M Shinn (DA) asked whether anything had been done address the security of IT systems and whether SAPO had the money to recruit and retain cyber-security skills. Cameron MacKenzie asked for more information on the SASSA bid.

Biometrics needed

Outsourcing was now underway and tenders being called for on biometrics, CEO Barnes said, which was the only route to stop fraud, duplicated payments to persons claiming or withdrawing twice under different names; to follow world trends and to get SAPO into the future to serve the nation as it should. Such was necessary if they were to handle the SASSA account which would be a great achievement and was the correct thing to do.

He said that partnerships in the IT sector were very likely to be sought as well as outsourcing, as SAPO, given its size and history, was not going to be able to keep up with the latest developments in the IT sector, nor would SAPO wish to be that expert, he said. Their focus was to get into courier work and banking, not IT. So, partnerships were going to be needed on the right terms.
He said that there had been half-expected problems with the data centre and disaster recovery this year as new equipment was being added to old. Repairs had been undertaken and there were negotiations underway to outsource the work of the data centre.

CEO Barnes said motor vehicles licence renewal processing was up by about R7m transactions in the year but this figure was coming from a very low base.

Money, money, money

In response to the question of when was SAPO likely to return to profitability, he re-confirmed that SAPO expects to start trading profitably during the 2018 financial year.

On complaints from the DA that SAPO still needed help from Treasury, Barnes explained that it was the nature of a turnaround situation not use cash in hand for the wrong things. Working money was one thing but depositor’s funds and reserves were a completely different issue, he said, and these were the security needed for developmental issues to get SAPO off the starting block.

He said whilst corporates have replaced SAPO with other service providers, they are a lot more expensive to hire. “SAPO is a low-cost producer and the only reason people turned to the alternatives is because SAPO became a dysfunctional low cost producer.”
“This is changing”, he said, “and we have to change the corporate customer mindset to show that we can do things again”.
Previous articles on category subject

SAPO – one big bungle at taxpayer’s cost – ParlyReportSA

Posted in Communications, LinkedIn, Public utilities, Trade & Industry0 Comments

PIC comes under pressure to disclose

Unlisted investments of PIC queried….

matjilaWhen asked for information on how the Public Investment Corporation (PIC) had invested its funds, Dr  Daniel Matjila, Chief Executive Officer, told parliamentarians that the most he could do, even with ‘listed’ investments, was to give only names. Any terms and condition of any investment agreement could not be made public. On ‘unlisted’ investments, he held back completely.

He was then formally asked by David Maynier (DA) if the PIC had invested, directly or indirectly, any funds in any Gupta-owned enterprise. He was also asked for details of any financial implications upon the Government Employee Pension Fund (GEPF) and other pension fund assets resulting from the dismissal by the President of former Finance Minister Nene.

Confidentiality

Dr Matjila responded that the fund “could not cross the line of disclosing private information” and the members ofPIC logo.2 the Standing Committee on Finance, before whom he was appearing “should not read into his statements any insinuation that the PIC was protecting information.” He noted that he was totally aware of the fact that the PIC was under investigation for passing funds to the ANC and any such idea “was totally false”.

As far as funds to any Gupta owned business was concerned, Dr Matjila replied that the organisation stood by its earlier answers to the media that it had not invested directly in any Gupta owned enterprise. Following this remark, ANC MPs stood by Dr Matjila and told Opposition members that the PIC could not become “entangled” in such questions which were veiled with gossip and insinuation. It was the word “directly” used by Dr Matjila that caused the question.

Sub-judice

yunus carrimThis point was emphasised by Yunus Carrim, Chairman of the Committee, that most of the questions that were concerning Mr David Maynier should only be dealt with after the investigation of the possibility of ANC funding by the PIC had completed its course. He said that Dr Matjila was bound by circumstances to say nothing.

Present at the standing committee meeting was Deputy Minister of Finance, Mcebisi Jonas, who said the reporting process of h a pension fund to the committee should not get side-tracked with politically motivated questions. Maynier had asked this time about the possibility of “indirect” investments by PIC of any Gupta businesses.

On the issue of the effect of the ‘9/12 issue’, as referred to by Dr Matjila when Nhlanhla Nene was fired, he reported that the impact of this event had caused “significant losses” to the PIC portfolio. The GEPF lost R95bn, the Unemployment Insurance Fund lost R7bn and the Compensation Fund had lost R3bn – all managed by PIC and the event had been most worrying.

However, he said that the performance of all the funds had been subsequently excellent in the sense that recovery was achieved quite quickly – in fact “the recovery represented more than all the PIC funds lost within those two days of crisis.”

Information withheld

David Maynier (DA) remarked that funding was still shrouded in mystery and that he was “extremelydavid maynier uncomfortable” that the PIC would give no information at all on the “unlisted” investments of PIC.

Reporting generally, Dr Matjila said the fund had benchmarked itself and its operations compared favourably with “top private sector investment companies”. The GEP Fund “had shown over five years a 14.3% interest factor compared, he said, to a global median of 9.9% and a local investor median of 10.1%.” It had invested approximately R33.9bn in numerous portfolios aimed to drive transformation and create jobs, he said.

He told parliamentarians that the PIC “had invested approximately R33.9bn in numerous portfolios aimed to drive transformation and create jobs.” He said any risk taking was carefully managed and remained on the conservative side. Furthermore, he assured MPs that PIC did not take any risk that could not be “managed”.

Listed investments growing

Dr Matjila said that for all investments, the total allocation was now R400bn and “partners were always sought that would make positive returns”. ‘Listed’ investments in the last five years had grown from R495bn to R892bn recording a growth factor of 12.5% per annum.

vodacom logoThe PIC always held to principle, he said, that there was always a need for BEE compliant businesses to be considered so that it attracted a portion of government expenditure. ‘Unlisted’ investments, nevertheless, had large share of the market holdings, he said, with roughly R55 billion allocated to this form of investment. The total allocation for PIC investments, including GEPF and UIF, was approximately R400bn.

On investment policy, Dr Matjila said that his team liked to look at partnering with other stakeholders that added value and knowledge to make sure that maximum benefits and input from any arrangement were received.

Downstream SMME outlets

On SMME development, Dr Matjila said that PIC was “in discussion with groups such as Spar and Woolworths to ensure that small business was represented in their current growth patterns.” He said it would seem important for PIC to participate further in the Barclays Africa “sell down”. PIC, he noted, had invested in many international and local companies with assets within South Africa “in order to drive economic growth and increase job creation.”

Dr Matjila turned finally to ‘unlisted’ investments and said PIC had a slate of roughly R55bn to work from. Such investments were usually international, he said, and were not necessarily BEE compliant. David Maynier (DA) asked whether the GEP Fund management was “comfortable with the fact that a confidentiality clause existed on so many investments and the fact that disclosure to Parliament was denied.” Some ANC members also mentioned disquiet on this issue. Maynier said he intended to pursue the issue of non-disclosure of “unlisted” investments further.

Previous articles on category subject
Retirement savings subject of treasury probe – ParlyReport
Treasury calls for “Twin Peak System” with two financial bills – ParlyReportSA

 

Posted in Earlier Stories, Finance, economic, LinkedIn, Public utilities, Special Recent Posts, Trade & Industry0 Comments

PetroSA on the rocks for R14.5bn

Project Apollo plan to save PetroSA…

Sent to clients 6 Oct.…..A team comprising of industry experts is now defining a new strategy to save the PetroSA struggling offshorePetroSA logo gas project on the East Coast.   The experts were not named but the exercise is entitled Project Apollo and reports were given to Parliament that the team has progressed well so far, said controlling body Central Energy Fund.

Despite producing a balance sheet that shows a technical cash profit of R2.5bn in simplistic terms made up of revenue less operating costs, in reality PetroSA is clearly beyond business rescue in proper commercial terms unless it manages to get a bail-out from Treasury to save the troubled entity from written off “impairments” of R14,5bn. But business rescue is on the way it would appear.

R11.7bn of the “impairment” was as a result under performance of its Project Ikhwezi to supply gas onshore to Mossgas.

Reality sets in

The total loss for 2014/5 was in reality R14.6bn after tax.      Project Apollo will now tackle the main cause of the loss at Ikwhezi, options stated as including “the maximisation of a number of upstream initiatives; the utilisation of tail gas; and how the gas-to-liquid refinery itself can be optimised with the new, revised and “limited under-supply of feedstock.”

cef logoThe Central Energy Fund (CFE), acting as the parent body for PetroSA, told Parliament that it is applying for such assistance, PetroSA being flagged by Cabinet some twelve years ago as “South Africa’s new state oil company”. CEF described PetroSA’s performance as merely “disappointing”, which raised the ire of most parliamentarians.

Those present

To add pain to the proceedings for Deputy Minister of Energy, Thembisile Majola, and senior heads of the Department of Energy (DOE) also in attendance together with the full board of CFE represented by new acting Chairman Wilfred Ngubane, the auditor general’s (AG) highly critical findings were read out one by one to MPs of the Portfolio Committee on Energy.

All this resulted in the remark from Opposition member, Gordon Mackay, that PetroSA “instead of becoming afikile majola national oil company had become a national disaster”. Criticism was levelled at both CEF and PetroSA across party lines, Chairman Fikile Majola demanding that Parliament conducts its own forensic audit and investigation into the facts that had led PetroSA to achieve such spectacular losses.

It appears that in the total accounting of the loss of R14.6bn for the year under review, R1.8m was also incurred in the form of non-performance penalties; stolen items of R110,000; over payments in retrenchment packages of some R3m; and R55,000 stock losses. Irregular transactions in contravention of company policy amounted to some R17m, the AG noted.

Lack of industry skills

Although the AG’s report was “unqualified” in terms of correct reporting, lack of management controls and bad investments were identified by the AG as the problem. In fact, acting CEO of PetroSA, Mapula Modipa, clearly inferred that lack of skills generally in the particular industry, lack of background knowledge in the international oil investment world and lack of experience in upstream strategic planning had led PetroSA year after year into its loss situation.

Particularly referring to troublesome investments in Ghana, Equatorial Guinea and continued exploration and production at Ikhwezi resulting in the “impairment”, a sort of write down of assets totalling R11.7bn, reports have been submitted before to the Portfolio Committee on Energy over the last two years. Warnings were given.

However in this meeting the AG’s views on the subject were under discussion and the terminology used by the AG could only be interpreted, as put by MPs, as poor management decision-making, lack of knowledge of the oil industry and the appropriate management skills in that area.

Roughnecks wrestle pipe on a True Company oil drilling rig outside WatfordHowever, over the years going back over previous annual reports for the last five years with forwards by Ministers and Cabinet statements issued over the period, it becomes self-evident that the “drive” to establish PetroSA as a state entity in the fuel and gas industry was politically driven, coupled with (as acting CEO Mapula Modipa had inferred) inexperience in the top echelons.

Still the Mossgas problem onshore

However, self- evident this year were the declining revenues from the wells at sea supplying Mossgas, where it was stated that now one wells had been abandoned, three were in operation and two had yet to be drilled. Project Inkwezi, against a target of 242bn barrels per cubic feet (bcf) only delivered 25 bcf from three wells. A “joint turnaround steering committee” had been formed to help on governance issues, technical performance and the speeding up of decision making. But the bcf is unlikely to change

Part of the new plan has involved of a “head count reduction” and employees had been notified. It was admitted that PetroSA had an obligation to rehabilitate or abandon its offshore and onshore operations costed at R9.3m in terms of the National Environmental Management Act and a funding gap of R9.3m now had to be bridged in the immediate future to pay this further outstanding in terms of the Act.

Further forensic audit

The cross-party call for an independent parliamentary forensic investigation that was made (which included thegordon mackay DA chairperson Fikile Majola as the driver behind the motion) “will hopefully not just result in a blame game”, said Opposition MP Mackay “but get to the bottom of how such an irresponsible number of management decisions with public money took place over so long a period.”

Chairperson Majola (ANC) concluded “This amount of money (R14, 5bn) cannot just be written off without someone being responsible.” He added, “There has appeared much difference between the abilities of technical staff and the technical knowledge of the leaders and decision makers on the board of PetroSA.”

Minister of Energy, Ms Joemat-Pettersson, was again absent from the meeting. However, earlier, in the meeting, the Deputy Minister standing in for her, said “when all is said and done we intend staying in this business”.

Nil from Necsa

necsaA meeting following in the same day, following the CEF presentation, was a report from the Nuclear Energy Corporation (Necsa) which failed to happen because Necsa were unable to produce an annual report or any report, Minister Joemat-Pettersson having obtained an extension of one month to the end of October for the annual report to be ready. Chairperson Majola said that the meeting could not take place without a financial report since oversight of such report was their mandate.

Opposition members complained that not only had Parliament’s time been wasted but that the whole instruction for Necsa to be present “appeared to be a media exercise to show that the governing party was on the ball”.

A litany of problems
The extension for the Annual Report conclusion had been granted to the Minister in terms of the Public Finance Management Act (PMFA), a fact well known, but the media were present in strength in the morning not only for the CEF’s explanation for the PetroSA loss but in the afternoon for Necsa explanation of its loss as a regulatory body, in the light of current media reports on irregularities, staff resignations and dismissals.

Other articles in this category or as background
PetroSA has high hopes with the Chinese – ParlyReportSA
CEF hurt by Mossel Bay losses – ParlyReportSA
Better year for PetroSA with offshore gas potential – ParlyReport

Posted in Energy, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, LinkedIn, Public utilities, Special Recent Posts, Trade & Industry0 Comments

Green Paper on rail transport published

sent to clients 12 October…..

National rail policy mapped out…..

metrorailA Green Paper on South Africa’s National Rail Policy has been published for comment naming the country’s challenges in rail transportation, recommending policy direction and containing broad proposals for the way forward to develop the current rail network.

Gazetted recently, the Green Paper represents work commenced in 2010 and says the document “Seeks to revitalise the local railway industry by means of strategic policy interventions”.   Not only is freight rail included in the proposals but long-distance rail passenger and localised commuter services.

Road dominates at a cost

Minister Peters said in a media statement at the time that railways in South Africa had operated for almost more than a century without a proper overarching policy framework to guide development.   “The railway line and its railway stations have played a pivotal role in the day-to-day lives of communities, especially those in the rural areas, but as far as freight is concerned, 89% of freight is still transported by road and the future of commuter rail conducted on an ad hoc basis”.

roadsThe emphasis of road transport is costing the country millions of rands annually in road maintenance, money that could have been well spent on developing freight rail, she said.

The process

Cabinet last month approved the release of the Green Paper for public consultation. When all is finished, a final White Paper on National Rail Policy will be released to guide and direct development of infrastructure and develop more modern commuter systems. A National Rail Act will be the final result of the White Paper.

These interventions, according to Minister Peters, will reposition both passenger and freight rail for inherent competitiveness by “exploiting rail’s genetic technologies to increase axle load, speed, and train length.“

Lining things up

railway lineWider-gauge technologies are on the cards.   The government has said it is converting 20 000km of track to standard gauge from the narrower Cape gauge. This would bring the network in line with an African Union resolution on the subject and at the same time would boost capacity of goods carried, with longer trains and a reduction in transportation costs.

With both passenger and freight rail falling within its scope, part of the envisaged national transport policy includes involvement by the department of transport (DOT) in the local government sphere to create capabilities to move more passengers by rail with infrastructure, more rail line and technical assistance.

Creating local commuter rail

Secondly, once the localised capacity is in place, DOT says it will be able to appropriate subsidies for urban commuter rail, the management of the mini-systems then being devolved to municipalities themselves.

The Green Paper talks of investment and funding, private sector participation, inter-connection with the sub-Continent, skills planning, investment strategies and the start of a regulatory system.     Part of the master plan at operations level would include a branch line strategy with the private sector involved to improve connection between cities with towns and industrial areas.

Other articles in this category or as background

Transnet improves on road to rail switch – ParlyReportSA

South Africa remains without rail plan – ParlyReportSA

Minister comments on taxi and rail plans – ParlyReportSA

PRASA gets its rail commuter plan started – ParlyReport

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Lack of skills hampering broadband rollout

Broadband for SA needs local tech….

computerSchoolThe lack of IT skills in broadband development in government, especially those responsible for implementation of the new broadband policy in SA as well as technicians in the field, has become a major issue of debate in Parliament recently.

The department of telecommunications and postal services (DTPS) has increased it spend in consultancy services by nearly 400% in the last year according to its presentation documents to the relevant parliamentary portfolio committee.

Also, once again the rationale behind the splitting of the department of telecommunications and postal services (DTPS) away from the department of communications (DOC) was queried in Parliament as “not being in line with world trends” causing delays in implementation plans.

DTPS in long terms will benefit

Both these issues were responded to by the responsible minister, Dr Siyabonga Cwele, who was in attendance when DTPS presented their strategic and annual performance plans to the relevant portfolio committee.

Dr Cwele said that he was far happier to leave DOC concentrating on matters surrounding the SABC and migration to digital TV, leaving his department (DTPS) to pursue the objective of uplifting South Africa into the world of broadband.

Broadband will help all

This objective also fitted into the plan to re-model and reassess what was expected from the South African Post Office (SAPO) and for government to decide, like many other countries had done, where postal services fitted in and how to consolidate on the valuable rural outreach of SAPO in respect of other services required by poorer sections of the community.

What was clearly missing during the meeting was, according to parliamentarians, exact timelines for broadband introduction to schools, health services, government departments and state owned utilities, Dr Cwele being quite clear that DTPS had been mandated to ensure that affordable broadband was available.

Staff needed to do the job

Dr Cwele acknowledged, however, that DTPS was greatly under qualified to achieve this due to lack of technical skills and the department did not have enough capacity to deliver on its mandate, as this was a very technical sector of public services. It was too early to commit to timelines but at this stage they had to build the staff complement to do the job, he noted.

He said that DTPS had to bring highly skilled young people into the organisation considering the internet revolution and the growing need for national broadband services. “We need skills not expensive managers”, he added.

Technicians not paper creators

It was explained, in general, broadband refers to telecommunication in which a wide band of frequencies is available to transmit information at greatly increased speed, the installation of which should bring costs down, South Africa having some of the highest communication cost factors in the world.

Ms Rosey Sekese, DG, DTPS, in presenting her strategic plan, said her immediate  priorities were:

• broadband connectivity focused on radio frequency spectrum
• cyber security
• the cost to communicate
• an Information Communication Technology (ICT) policy review
• a national e-strategy
• a turnaround plan for SAPO

The total budget allocation for the Department was R1.4 billion, a reduction from R2 billion in the previous financial year.

Opposition members wanted to know the criteria that DTPS had used to choose Telkom as the leading agency in the rollout of broadband and whether this was fair competition.

Also, they asked why DTPS had emphasised the roll-out of e-governance in the public service to meet NDP targets as first objective. Rather, they said, the focus should have been on business and industry, the ICT sector in the commerce and industry sectors needing this and who played a far greater role in economic development and job creation.

Telkom has to lead in this..

TelkomMinister Cwele responded that the selection of Telkom as the leading agency in the rollout of broadband was as a result of Telkom having the largest terrestrial fibre network and was also based on cost, as this was a state owned entity.

On business and industry needs, he also said DTPS needed to find a way to work with the private sector that could improve economic growth and he, the deputy minister and the DG had been in constant engagement with the private sector as it was realised that this was essential.

The department would also work together with the department of trade and industry and the department of small business development to create incentives for investment in SMMEs, as they realised that many small companies had been marginalised by slow internet services and limited access to the many international IT developments taking place and additional sea cable services.

Creating certainty

He added that he was perfectly aware of the challenges in the finalisation of a spectrum policy to internetcreate a smooth path for the regulators and he was also aware of the need to create certainty in the telecommunications industry. He acknowledged that DTPS was following closely the experiences of the Western Cape and Gauteng broadband rollout plans.

The minister promised that all critical posts within DTPS would be filled within the next three months. However, opposition members continued to draw attention to the question of the general IT skills shortage and said it was yet another “crisis about to happen”.

DA’s Gordon Mackenzie noted “a dramatic increase in outsourced services from R52.5m in 2014 to R230m in 2015” and said this route only added to the high cost of communications in South Africa.

Other articles in this category or as background
Overhaul of broadband policy underway – ParlyReportSA
Parliament gets final dates for digital TV – ParlyReportSA
More state powers for ICASA proposed – ParlyReportSA

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South Africa remains without rail plan

 Feature article….

Minister Peters fails on rail policy…

dipou Peters2In a written reply to Parliament on the whereabouts of the promised Green Paper on rail policy, transport minister Dipuo Peters told her questioners that such a document which has the intention of outlining South Africa’s rail policy was to be presented to cabinet in November. GCIS statements for cabinet meetings for November and the final cabinet statement in December 2014 made no reference to any such submission having been made – alternatively, the minister might have failed to have it put on the agenda. The country therefore went into Christmas recess once again without an established government policy on both freight and passenger rail transport matters, worrying both industrialists, investors and, not the least, built environment planners.

Just talking together

A draft Green Paper was first submitted to cabinet a year ago but cabinet instructed that more consultation on the proposals was necessary, particularly interchange between the transport and public enterprises departments. The portfolio committee on transport stated that policy on freight rail upgrading and infrastructure development was unclear, plans for commuter and long-distance passenger services confused and no clear picture had emerged on Transnet’s promised policy of structural re-organisation. Subsequent to this, the department set up a national rail policy steering committee to oversee the consultation process and introduce the required changes to policy. It has also divested itself of a number of non-core assets but no clear picture has emerged in statements on the promised policy of giving direction on the privatisation of branch lines.

Since time began…

According to the minister at the time, cabinet’s concerns had also involved the adoption of a standard gauge, private sector participation and economic regulation.  Subsequently, DoT indicated that standard gauge has been selected as the most suitable gauge for the South African rail network and as a result a final revised Green Paper was tabled before the steering committee in October 2014. Nothing has emerged. In the absence of any agreed policy, particularly to meet the proposed idea of rail freight re-assuming its dominant role over road transport in the light of the deteriorating national road picture, a number of developments have indeed taken place with regard to the purchase of diesel and electric train stock, signal systems upgrades and station re-building and passenger coach rolling stock manufacture. Nevertheless, no clear picture has emerged on the road ahead with regard to the freight/road picture, branch line privatisation, commencement dates for full long distance passenger services nor satisfactory plans and targets expressed on domestic commuter rail services.

All said before

Jeremy Cronin, when deputy transport minister, told Parliament in April 2011 that by establishing a local manufacturing base for the new rolling stock, benefits would ensue by creating a substantial number of local jobs. He added that as a result of the redevelopment of rail engineering capacity, skills that have been lost over decades of underinvestment in the local rail engineering industry would be recovered. The then deputy minister also said, “We are currently (2011) in the Green Paper phase with the primary objective of preparing the way for effective stake holder engagement. We are poised to reverse the decline in our critical rail sector that began in the mid-1970s and gathered pace in the late 1980’s.” In April 2015 therefore the country will be the fourth year of waiting for South Africa to outline its rail policy, “a system critically in decline” according to minister Cronin.

Recent update from Maties

A few months ago, a most important paper on rail transport, now in the in the hands of DoT, was published and out into the public domain by Dr Jan Havenga, director: centre for supply chain management, department of logistics, Stellenbosch University, who led a team of transport logistics experts to complete this erudite and informed report. The report is entitled “South Africa’s freight rail reform: a demand-driven perspective” and opens with a definition of government’s responsibilities in rail transport matters. “The role of the government is, primarily, to facilitate the development of a long-term logistics strategy that optimally equilibrates demand and supply through ‘anticipation’ of the market character.” “The definition of a national network of road and rail infrastructure and their intermodal connections will flow from this, presupposing neutrality across modes by taking full account of all relevant social, environmental, economic and land-use factors.” “This ensures that the mix of transport modes reflects their intrinsic efficiency, rather than government policies and regulations that favour one mode over another. The strategy is subsequently enabled by a clearly defined freight policy, a single funding regime for the national network and, lastly, the establishment of appropriate regulatory framework.”

Volume of freight critical

The report notes that “the American Trucking Association (2013) forecasts that intermodal rail will continue to be the fastest-growing freight mode in the next decade. Only the very busiest railway networks, which can exploit the density potential of volume growth, are likely to generate sufficiently high financial returns to attract substantial risk capital in long-term railway infrastructure.” “The Association of American Railroads as well in 2013 also highlights the impact of density on efficiency, revenue and, ultimately, the ability to reinvest.”

Lacking in market intelligence

Dr Havenga says, “The failure of South Africa’s freight railway to capture this market is attributable to a lack of policy direction regarding the role of the two modes (road and rail) in the surface freight transport industry and according to the Development Bank of Southern Africa, caused by the absence of sufficient market intelligence to inform policy.” He goes on to confirm that “one of the key requirements for an efficient national freight transport system is better national coordination based on market-driven approaches.”

Pressing need

“To avoid the ad hoc policy responses of the previous century, which led to sub-optimisation, increasing complexity and decreasing end-user quality, the pressing reform issue for South Africa, therefore, is agreement on the design of an optimal freight logistics network based on a market-driven long-term strategy that holistically addresses the country’s surface freight transport requirements.” Dr. Havenga’s final comment in the report, only a few weeks old, states that South Africa’s freight task is expected to treble over the next 30 years, with further concentration on the long-distance corridors. He points out that the country desperately needs a profit-driven market related core rail network to serve industry and manufacturing, as well as a developmental-driven branch line network to serve rural development. Other articles in this category or as background //parlyreportsa.co.za/transport/minister-comments-taxis-e-tolls-road-rail/ //parlyreportsa.co.za/finance-economic/prasa-gets-its-rail-commuter-plan-started/ //parlyreportsa.co.za/uncategorized/transnet-says-freight-rail-operations-coming-right/ //parlyreportsa.co.za/uncategorized/rail-is-departments-main-focus-in-year-ahead/

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NHI to focus on better nursing, says DoH

Pilot NHI facilities to get IT systems

amotsoalediAn impassioned plea in Parliament by minister of health, Aaron Motsoaledi, when presenting the strategy and annual performance plan of the department health (DoH), that nursing in South Africa should return to “the old days” was received well across party lines during a meeting of the portfolio committee on health.

He said he did not like the current system whereby nurses were trained at university, gaining all their four coloured bars in one learning process before gaining practical experience in the various disciplines. What is going to happen he said, is to encourage a heightened understanding of patient care with more bedside experience during training, This led to a round of vocal support from all parliamentarians in the newly elected committee.

Practical qualifications

Dr Motsoaledi said that many nurses with four bars on their shoulder-tabs often had less practical nursing experience than some who only had one bar, meaning that less experience in the real basics of proper nursing care was becoming prevalent.

Change was now being instituted whereby each specialist phase in knowledge attainment would be coupled with a period of field training experience to gain a bar in order to return nursing to proper holistic care principles. Nursing training was to be returned to a seven year period to incorporate periods of field experience, rather than the current crash course system of four years.

He said to MPs that it was “very difficult to send a new highly qualified nurse on bedpan duties for her first duty.”   He received a strong endorsement of the new approach from a cross spectrum of all members. He told parliamentarians that five public nursing colleges would be accredited to offer nursing qualifications under a new system in 2014/5.

NHI will meet world standards

heathpatientDr Motsoaledi detailed all eight strategic goals of DoH and referred immediately to the national health scheme, the implementation of which he said was not “if” but “when”. South Africa’s NHI would meet international standards and use internationally accepted regulations, he said, but he did not answer directly a member’s question on a date when the pilot would end.

However, he expanded on the fact that the current NHI project, a project which involves 700 public health facilities, would be the subject of new patient registration systems with IT backup and electronic health care data collection.   The revised administration systems would reduce patient waiting time, he said, and in addition a mobile phone data collection and communication system was to be introduced.

He also said it was the intention of DoH to have a functional national pricing commission in place by 2017 in order to regulate health care in the private sector.   DoH would again revise methodology and also legislate for the determination of pharmaceutical dispensing fees.

Dr Motsoaledi told the committee that an Institute of Regulatory Sciences was to be introduced and regulations for the function of an Office of Health Standards Compliance to prescribe norms and standards brought into being.

He was adamant that nearly 4,000 primary health care facilities with functional committees and district hospital boards would be in place by 2018/9 and said that 75% of all primary health care clinics in the 52 health districts would qualify for the international terminology of “ideal” by the same date.

Standards

This involved a clinic or facility passing a test based on a regimen of some 180 standards, from infection control to waiting room facilities.   He was candid enough to say that a major issue was now to control a leaning by both municipalities and local government to build new infrastructure to meet patient demand and NDP targets, rather than maintain and improve existing services which had exactly the same result.

He also wanted to see standards developed countrywide on building costs per square metre since, he complained, a building going up in one province can vary by 100% from another province.   He said DoH had little power to influence the activities of health MECs and wanted to see a list created of “non negotiable items” so that some DoH control could be exercised over municipal budgets and spend.

Overview

His discussion with parliamentarians and his briefing for new MPs roamed over a wide range of health subjects, from female contraception and cancer screening to child health and on the issue of HIV/AIDS, he focused on the need to encourage breast feeding at the expense of formula feeding.    He complained that breast feeding was as low as 8% nationally and wanted to see more, even amongst HIV positive mothers.  He gave outcome figures to support his view.

Dr Motsoaledi spent some time detailing the moves by DoH to introduce more emphasis on preventative health care and education by going to the root of the problem rather than chasing curative health targets, stating that education towards better diets had to become a part of an SA way of life.

He said that for each person who died in South Africa, eight were in hospital and that preventive health care education starting nationally at school age was the only way in his view to reduce poor health in a substantial manner.    A post of an advisor to the deputy minister of health was to be established on this subject and a White Paper on affordable heath care produced.

HIV/AIDS

red_aids_ribbon_hi-resOn the subject of HIV/AIDS, he repeated the statement which he said he had made on a number of occasions to the effect that children born to HIV positive mothers should, by law, be tested for mother-to-child transfer of the disease.   This should happen if child mortality in South Africa was to be tackled successfully, he added.   He did not discuss the constitutional issues involved.

He said the total number of people remaining on ARVs was targeted by DoH at 5.1m for the end of 2018/9, the current figure for 2014/5 being 3m. He added that some 2.4m were currently on the regimen.    DoH targets for HIV tests among the population aged between 15-19 years are targeted at 10m annually, he advised.

TB

On TB control programmes, Dr Motsoaledi said a 79% treatment would be reached for 2014/5 and this was to be targeted at 85% by 2018/9.   The TB defaulter rate was 6% presently and this was to be reduced to 5% over the same period.    He advised that there were over 400,000 TB cases recorded in correctional service facilities and a focus was now to give inmates the correct kind of increased TB and HIV diagnosis and better treatment services.

He emphasised that DoH had to ensure regular TB prevention, screening and treatment carried out by mines by enforcement of compliance regulations for approximately 600,000 miners and employees of associated industries.    He said that DoH was to “heighten” diagnosis and treatment of TB in peri-mining communities “in six districts with a high concentration of mines using DoH TB and HIV mobile units”.

Dr Motsoaledi continued that life expectancy of South Africans had to be raised by 2030 to 70 years, at present being dragged down by HIV/AIDS and TB into the ‘fifties, after having reached 60% at one point recently.

In general, however, there were more people living as well as more people living longer.   The cure rate in Western Cape and Gauteng had now reached 81% but it was slower in other areas, averaging at 74% for the country.    The national target was an 85% cure rate.

Preventable health care

However, on non-communicable diseases, Dr Motsoaledi said that the rise in hypertension numbers was “explosive” and high blood pressure problems were therefore very much part of the preventative health care plan.    5m people were targeted for counsel and screening for high blood pressure in the next four years and a further 5m for raised glucose levels.

Obesity was also a major problem and this was targeted to be reduced by 55% for women and 21% for men in the next four years. This was currently being started with school programmes. There was also a DoH programme in place reduce injury through, accidents and violence by 50% from the high levels of 2010.

Other articles in this category or as background
//parlyreportsa.co.za//health/health-dept-winning-on-hiv-aids-therapy-and-tb/
//parlyreportsa.co.za//uncategorized/competition-commission-promises-health-care-inquiry/
//parlyreportsa.co.za//uncategorized/state-acknowledges-responsibility-to-increase-health-staff/

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