Tag Archive | Tshediso Matona

DPE reports on Eskom and it’s utilities to Parliament

Eskom issue raises capitalisation….

The department of public enterprises’s, Tshediso Matona, director general of DPE, clearly indicated that the apparently now solved labour deadlock at the Eskom Medupi power station was seriously occupying minds in DPE when public enterprises director generals were responding to Parliament on state-owned companies (SOCs) in the light of the state of nation address (SONA) recently delivered by President Zuma.

Indications were that the troubled Eskom construction site and the residue of issues arising was and probably still is of greater concern to DPE than issues at such as utilities as SABC and SAA, also reported on.

If the consumer doesn’t pay the lot……

On the recapitalization of SOCs generally, Matona said that if Eskom recapitalisation was not going to come from the tariffs, alternative capitalisation would have to be resorted to. This was also the problem with South African Airways and other SOCs. These companies needed sufficient capitalization to carry out their mandates and it was a matter that involved DPE greatly in their discussions with treasury.

Matona told parliamentarians that focus was being given to the challenges faced by Eskom at the Medupi power station, where work was at one stage completely stopped due to strikes. Mr Matona told the Committee that much had to be done to improve communication lines. Latest news was that Eskom had moved their financial director, Paul O’Flaherty on site.

Complexity of contracts

The minister of public enterprises was coming up with several initiatives to resolve the crises in the long term, said Matona, much of the problem being the complex nature of the projects and the fact that their complexity made them prone to delays.

Dialogue had therefore to be encouraged and he commented that “the minister was playing a major role.”

Main plan is NDP

On general issues, DPE said it was heavily focussed on “articulating the relationship between the National Development Plan (NDP) as instructed in SONA”.  Matona said this did not mean abandoning such other instruments as the New Growth Path and Industrial Policy Action Plan but that the NDP acted as a “vision” for the department and all plans and visions were being integrated.

Other issues discussed by Matona with parliamentarians dealt with the recapitalization of state-owned companies and the development of further broad based black economic empowerment (B-BBEE) initiatives within DPE.

Land restitution

Matona said that there was a need for a complete change of approach with regards to land restitution. The overcoming of current administrative and bureaucratic blockages was a most important item. It was to be dealt with shortly. On the issue of the compliance to 30 day payment of creditors rule, Matona said that this had been particularly successful and DPE was proud of what they achieved.

On the issue of investment programmes, Matona said DPE was setting up a “project management office” in collaboration with the Development Bank of Southern Africa (DBSA) to monitor infrastructure projects. DPE was now to call a supply development summit in March 2013 at which Eskom and Transnet would present their plans in terms of supplier development with DBSA present.

Posted in Electricity, Energy, Finance, economic, Labour, Public utilities, Trade & Industry, Transport0 Comments

Public Enterprises reports on rocky and controversial year

Minister  Malusi Gigaba, introducing the debate on the department of public enterprises (DPE) 2011/12 annual report, said. “We have a dual role as government departments and utilities because we have to build an understanding of why our state public enterprise components do certain things operationally and why they do certain things as a result of government policy.”

He thus indicated that at times the two may be at variance and underlined DPE’s role in harmonising the two.

He said that one of the biggest issues currently was to monitor the oil and gas companies in order to bring together a common strategic picture and obtain a better picture with data of the situation. This was the last time oil and associated products and gas were mentioned in the entire presentation, matters relating to Eskom and SOEs being of main focus.

Minister Gigaba said “Another issue is that we have had to ask certain utilities to go beyond their own plans in order to meet certain national obligations, especially bearing in mind the infrastructure programmes being embarked upon throughout South Africa.”

Minister Gigaba said that human resources issues have been at the forefront especially bearing in mind the lack of skills acknowledged generally as a national issue and in many cases obstructing SOEs from reaching the objectives set.

On objectives and targets, he was referring the measurement processes set out in the DPE annual report now assessed by the department of performance, monitoring and evaluation (DPME).

He commented that the environment on which SOEs are now operating had changed completely and were continuing to evolve almost daily. He also referred to the challenge of cost increases and marketing conditions that accompanied this.

“DPE has worked closely with all SOE’s to ensure accountability and oversight meetings are held at least twice a month”, he assured parliamentarians. “This is a robust programme in terms of meeting DPME requirements and is geared to see how all SOEs are responding to current conditions”.

But he asked that treasury in future consider an enlarged budget for DPE due to its expanded mandate as “change managers”. The total staff complement of DPE is 189 persons.

DG Tshediso Matona placed each of the DPE portfolios activity in the context of the current economic picture, which he said was important to reflect upon before one considered both the delivery service picture, an internal issue, and also matters of concern which were national issues.

Real fixed capital expenditure by the public corporations gathered great momentum during the period under review as Eskom and Transnet accelerated their spending, he said, and which was “further crowding-in private sector investment”.  He was not asked to explain this by MPs.

Capital investment went up to 560bn; most of the increase of 9% over the previous year of R520bn occurring in the fourth quarter.

During the last year DPE focused on oversight practices;  the business of stabilising the SOEs in terms of the changing economic picture;  and looking at funding options – all the time constantly reminding the SOEs that by driving fixed investment they were unlocking economic growth.

Joint project facilities between all SOEs, particularly in the area of common procurement, had been a focus of DPE during the year, and also the issues of skills training and development. Transnet provided some 3,500 engineering-related learners and enrolled 854 new artisan learners. Eskom trained some 5,400 learners, of which 4,200 had an engineering leaning and 1,066 new artisans. SAA enrolled 254 learners, Denel 229 learners, and Infraco, Safcol and SAX had together added 191 learners.

In terms of delivery service agreements and targets, Tshediso Matona said that DPE had “largely delivered on all shareholder management functions, including signing of shareholder compacts, delivery of strategic intents and quarterly reviews as called for under the PMFA.”

Exceptions where delivery did not take place were that a shareholder contract for Infraco was not signed, since the new board stated it required more time to assess the situation and this was agreed to, and a review of South African Express was not completed on time because of a necessary restatement of financials.

In the area of energy and broadband enterprises, Matona said that achievements were the approval of Eskom’s medium term maintenance plan and implementation of the “keep the lights on” programme.  An R350bn government guarantee was confirmed for Eskom and 76% of the funding for the New Build programme is now in hand. At this stage Eskom had added 535Mw of generation capacity for 2011/12 and 631km of transmission lines.

Transnet for 2011/2012 had upped iron ore transits to 1.22m tons and coal to 1.6m.  Overall efficiency was claimed by DG Matona as being up 17% on the previous year. Procurement of rolling stock had started and a consignment of 95 locomotives.

SAA, which came under considerable questioning by MPs, had worsened insofar as the financial position, although five additional African routes to Ndola, Kigali, Bujumbura, Pointe Noire and Cotonou had been launched and SAA saw such Africa routes as a future area of expansion. Additional African services to Zambia, Zimbabwe and the DRC were working out of King Shaka.

Major problems in an overall sense mainly boiled down to rising fuel costs, increased international airport docking facilities and strong competition, parliamentarians were told.

Both Minister Gigaba and DG Matona responded to a barrage of questions on staffing issues at SAA and loss of market share to other airline competitors but such questions were continued out of parliamentary time and are adequately covered in the media. The minister admitted to MPs that he had been caught short by all the resignations on the SAA board and was “flabbergasted” to hear of some of the reasons.

He said the guarantee which was being obtained for SAA for future funding should, in his opinion, come attached with a requirement for a new strategic plan and a plan for a complete overhaul of the airline. A diagnostic overview of SAA is now being obtained, he said. “A consultant’s report, given to us in September, is being incorporated.”

Minister Gigaba added on the subject of SAA,”We need to work around the clock to achieve a better situation and we are addressing the staff to allay their fears. The long term vision and strategy to be produced must include a procurement plan and a network design incorporating more of Africa.

An experienced task team has to be assembled to facilitate a strategy, not try to do it themselves”, he told parliamentarians in conclusion.  He admitted that there had to be a clearer distinction between the SAA board and its management team.

On general DPE issues, key areas where targets were not achieved by the department, said DG Matona, mainly lay in the area of Denel where the defence plan had not been finalised therefore stultifying any progress; Safcol, although the balance sheet had improved; and Transnet where its branch line roll out programme (on freight issues) had been held back.

The Ngqura container terminal position had not developed, neither had a national freight network plan been concluded.  Also, a major issue was the future of Eskom and the IRP2 plan.

Posted in Cabinet,Presidential, Electricity, Energy, Finance, economic, Fuel,oil,renewables, Land,Agriculture, Mining, beneficiation, Public utilities, Trade & Industry, Transport0 Comments


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