Archive | Public utilities

NECSA says nuclear will come to SA

……may 15 2020……

A damaged NECSA plans its energy future

….. The South African Nuclear Corporation (NECSA), with an employee role beyond its capacity as a result of waiting  for a R750bn nuclear programme which never arrived, might be getting back on track with the possibility of nuclear down the track.  Having lost some extremely valuable and experienced, government is attempting, it seems, to be breathing life into this once highly successful operation nearly destroyed by political interference.

NECSA is a valuable but largely ignored nuclear component in the stable of the now combined  Department of Mineral Resources and Energy (DMRE), an entity which for the last ten years has been subjected to mismanagement, patronage, lack of management appointments and a considerable number of ministerial financial scandals.

After the years of waiting during the Zuma era, NECSA then lost and additional two years with the integration of the departments of mineral resources into energy but appears that DMRE , its parental department, has appointed a new board with new ideas on a NECSA future.

Bigger picture

The DMRE this year presented a plan to Parliament for an estimated budget of R9.3bn for the current financial year, 95% of which will be transferred as usual to its entities.

These will be Council for Geoscience National Energy; the Regulator of South Africa (NERSA), Central Energy Fund (CEF) (including PetroSA and the Strategic Fuel Fund or SFF):  the National Nuclear Regulator’s office(NERSA); NECSA itself; the National Radio-Active Waste Disposal Institute; Mintek and other smaller entities such as the Mine Health and Safety Council, the State Diamond Trader and the Diamond and Precious Metal Regulator.

Parliament therefore had to consider recently the period ahead covering 2020-2024 in the form of the Medium-Term Strategic Frameworks, or projections, for all these DMRE bodies.   This is no mean task in the light that may have suffered from the perambulations, thievery and in some cases, sheer ignorance resulting from the switchback ride of ten successive ANC ministers of energy and and ministers of mining.

Disjointed empire

Himself a  somewhat confusing and at times erratic Minster of Mineral Resources and Energy, Gwede Mantashe  is now trying to put back the combined pieces of the jigsaw representing DMRE into some sort order but until now he seems to have been dealing with the edges and corners pieces of the puzzle but not dealing with the centre section where the working parts are.

Nobody is ever quite sure, it seems, in the case of NECSA, what actually is going on in this somewhat secretive corner of government.    In this area, now that the Zuma myth of the “New Build Nuclear” has been dispelled thanks to a court order to this effect, the re-tasking and consolidation of Minerals Resources and Energy department has been mostly completed.

The magic word

However, the question of nuclear energy has once again arisen, mainly due to a passing comment from the Minister that nuclear was indeed to become at some time part of the energy mix.

Ears pricked up in the environmental lobby camp and energy experts said in aghast that the energy mix after years of debate was now fixed.  One must remember, of course, that the nuclear energy issue never really goes away in the light of Koeberg power station operations in Cape Town and and medical isotopes from Pelindaba, Pretoria.

Half a billion in the red

The NECSA subsidiaries are NTP Radio Isotopes, Pelchem, Pelindaba Enterprises and Safari-1. NECSA overall has suffered cumulative losses of R257.78m in the 2016/17 and 2017/18 financial years and is expected to announce an even larger loss of R294.27m for 2018/19, resulting in cumulative losses of R552.05m for the three-year period.

This was more than evident in NECSA recent presentation to Parliament which, as it turned out, was just an interim report and more of a wish list than anything else.   Nevertheless, the ‘plan’ does indicate a complete change of direction.

SOE problems

In the case of NECSA the return to  “normality” might be a little faster than the other problem child of Department of Mineral Resources and Energy (DMRE),  PetroSA.    Sadly, in NECSA’s case, many excellent scientific brains have gone elsewhere and an opportunity to establish SA excellence in the field of isotopes lost.

The frightful track record of losses came to a head in 2019 when it was stated in the NECSA annual report that “ the significant delay in any new nuclear power plant programme to be undertaken by NECSA had become irrelevant”.  This was established to be for experts hired but never deployed.  “Irregular and wasteful” as the Auditor General put it.

Turnaround plan

The NECSA board filed a report in 2018, signed by former chairperson Dr Rob Adam and former acting CEO Don Robertson, which attempted to return NECSA to its original mandate of to promoting radiation sciences and technology research which included a programme of the retrenchment of valuable staff as part of the process of slimming down.

Both Dr Adam and CEO Robertson then left NECSA having filed the report with new DMRE department but this gathered dust, it appears, since other priories in gas development and Eskom dramas must have occupied the mind of Minister Gwede Mantashe.  However, he subsequently and eventually appointed Ayanda Myoli as acting CEO of NECSA.

In his first attendance at Parliament, 19 May 2020, Myoli  told Parliament that NECSA that for the coming year, NECSA would have a turnover of more than R2bn in the 2020/21 but still carrying a projected net loss of R61m on its shoulders.

Possible profits

Myoli told MPs last week that the key financial objective in the short term was to reduce losses and to rehabilitate the balance sheet to enable it to fund its growth and expansion strategy.  Looking ahead he further told the Portfolio Committee that for year five of the plan ahead, NECSA expected to make R550m in net profit and by 2030, R1.4bn net profit.

Over the next 12 months, he said the group’s objectives included commercial subsidiary NTP Radioisotopes regaining its 20% share in the global market for Molybdenum-99 (Mo-99) medical radioisotopes, lost due a hibernation period when the station at Pelindaba was closed down in terms of UN requirements.   In the future NECSA is to increase its range of medical radioisotopes from three to four, Myoli added and continue support services include irradiating target plates from the SAFARI-1 research reactor.

 Competing with China

Another objective is to re-gear NECSA’s other subsidiary, chemical manufacturer Pelchem, who produce fluorochemicals in competition with China, and increase its revenues by R78m by building the necessary plant to enter the  commercial hydrogen fluoride industry, Myoli said.

With sister subsidiary Mintek, Pelchem would enter the antiretroviral drug market working with “international partners” Myoli then said, aiming to achieve a 35% share in the local ARV market and targeting to earn revenues in excess of  R721m per annum.

Re-entering nuclear

Ayanda Myoli stated that NECSA was not only to be responsible for the recreation of a nuclear fuel cycle in South Africa, protecting and maintaining the Koeberg installation but was proposing a new multi-purpose 2,500 GW nuclear reactor direction for the future.

In questioning NECSA, Kevin Mileham (DA) said he was particularly concerned that Ayanda Myoli had talked about a about 2 500 gigawatts nuclear reactor, small as that maybe compared with previous plans  of past president Jacob Zuma. This would fall, Mileham presumed, under the mysterious Pelindaba Enterprises, which according the, had hardly been mentioned in the framework plan at all for the next period. He asked for confirmation

Conflict on statements

DA’s Mileham said any nuclear reactor did not align with the IRP, which made no provision for 2 500 gigawatts from any new build projected. He said that NECSA must be working off the wrong version of the IRP and said CEO Ayanda Myoli had simply repeated what Minister Mantashe had announced a week ago when he spoke on this to the media. Mileham, as shadow minister of energy for the DA, wanted an official explanation in writing as this was the first time the issue had been raised in Parliament.

CEO Myoli responded that the IRP had delineated what plant ought to be commissioned up to 2030. He said the IRP does not list what goes beyond 2030. He added that even assuming DMRE, on behalf of NECSA, placed contracts in 2024 for any relatively small and supplementary new build nuclear programme, there would be nothing online before around 2030/32, after the current IRP period had expired.

Commenting as an individual, Myoli said that he felt that the current IRP had a weakness in this area  as it now considered inputs in process nine years from now, and for mega projects in energy nine years was absolutely nothing.

Further nuclear questions

Myoli said any ARV’s with Pelchem would be produced under licence from Macleod Pharmaceuticals Limited from India, currently the largest producer and supplier of ARVs and TB pharmaceutical products. Currently, they were awaiting the final concurrence from the Minister of Finance and the Minister of Health on this.

It seems Macleods  it is one of the ten largest pharmas in India owned by Dr Rajendra Agarwal & family producing generics for a range of diseases including asthma, osteoporosis and diabetes.  Agarwal’s older brothers Girdhari Lal Bawri and Banwari Lal Bawri are chairman and joint managing director respectively.

 Wrapping up 

In conclusion, the presentation said that the new strategy was intended to make NECSA “a world leader in nuclear radiation and related technologies and chemicals  by 2030”. The strategy set targets for the next 12 months, the next five years and the next ten years.

Although the meeting time was limited (the main problem with parliamentary virtual meetings) it was quite apparent that by no means had NECSA close to explaining its full programme for the future, nor in fact was it ready to disclose this in detail.

Posted in Energy, Enviro,Water, Finance, economic, Fuel,oil,renewables, Mining, beneficiation, Public utilities, Trade & Industry0 Comments

Hopes pinned on PetroSA comeback

…… may 15 2020…..

CEF outlines plan to save PetroSA

…… In a series of statements to Parliament’s Mining and Energy Portfolio Committee, acting CEO of Central Energy Fund (CEF), Lufuno Makhuba, surprised many with a promise of not only totally restructuring government’s stake in the energy sector but to save ailing oil and gas subsidiary PetroSA with major capital “re-vitalisation”.

He also hinted on plans to enter the fuel retailing industry as a major player, PetroSA currently owning only one fuel station in the Free State.

Pipe plans

Makhuba stated that it would be proposed that “the Transnet fuel pipeline” (which particular one was not named) should fall under the management of CEF with income re-routed accordingly.  The plan also was a request that PetroSA should move towards LNG developments and to execute liquid nitrogen gas (LNG) projects with “strategic partners”.  He also proposed that CEF should receive 25% of the national fuel levy.

In order to breathe new life into PetroSA, Lufuno Makhuba suggested that in addition a proportion of carbon tax funds should be re-directed by Treasury to assist in the “recapitalisation” programme as well as the previously mentioned pipeline income.  He said that CEF would acquire by transfer other state “energy assets” in order to build its portfolio income.

Makhuba told Parliament that the CEF was now “busy reducing operational costs and divesting in unnecessary  buildings” as a holding entity.   The liability on its books of an estimated figure of R8bn mainly arising from the PetroSA Mossel Bay gas to liquid operations would be “dealt with”.

The answer

“Until now”, he commented in his presentation, “CEF had had no operational plan, no strategic direction and has been subjected to a leadership vacuum.”    He said he and his colleagues were at the moment producing the final plan to solve the group’s two most pressing problems – that of restructuring the group so that activities were inter-connected and to provide for the principle that PetroSA becomes “a revenue producing National Oil Company as per its mandate”.

Lufuno said that the new plan would also involve integrating its subsidiaries Strategic Fuel Fund (SFF) and iGas with PetroSA.

Long time coming

Parliament has been demanding a plan during portfolio meetings for PetroSA for over two years, some attempts at doing this being attempted but always they had come before committee with neither Treasury approval or any form of accompanying financial plan. (ParlyReports in 2018/9 refer)  Parliament has rejected all over the months.

Lufuno said that the CEF group was still making an overall loss, and estimated R330m for 2018/9 which was an “improvement” on the R1.4bn net loss reported in the previous year, most of the loss attributable to  PetroSA. However, no actual numbers were  once again presented.

Right into the red

Makhuba, presumably speaking in his dual capacity as financial officer, his previous position at CEF, said the PetroSA deficit “weighs heavily on the group’s earnings and although PetroSA remains in the red, it had nevertheless improved on the losses reported in  previous years.   PetroSA recently suffered an “impairment” on its balance sheet of R14bn.

Matters to be dealt with in the next few weeks include deploying an external refinery team to optimise refinery operations at Mossel Bay. Other tasks include strengthening sales and business development and institute consequence management

Issues and problems at PetroSA are not being taken lightly,” he told his audience of MPs.  “We can’t have poor business performance, quarter on quarter, and not react as has been the case in the past.  The new plan deals with how to hold people to account and what to do with assets.”

Desperate stuff

In what sounded like a business rescue discussion, Monde Mnyande, acting chairman of CEF, (it appears on loan from SA Reserve Bank) said that CEF had established that in deciding what to do there were three options before them . The first was doing nothing at all, other than finding find R25m to finalise PetroSA accounts for the current year,  which option would probably collapse CEF in the process and lead to costing the taxpayer “billions in write offs” .

The second option was restructuring CEF but closing down PetroSA at a cost of some R15bn with the associated cost to the Mossel Bay and Eastern Cape economy.

Just money

The third option was to source R18bn from equity input and re-structure PetroSA with its new management developing a partnership strategy on the basis of new initiatives in the petroleum industry.

Monde Mnyande said that the third option was preferred but there was no intention of asking Treasury for this as a bailout for PetroSA.  What the new CEF board wanted would be the portfolio committee’s support for the restructuring process as described.

As far as PetroSA was concerned,  he said, such restructuring would involve inviting strategic partners to assist them with upgrading refinery operations, divesting from upstream blocks and investing in downstream activities.

Sasol story

Following this, a major case of misunderstanding by the media arose.  During questioning, Cheryl Phillips (DA,) said she knew that PetroSA only had downstream one filling petrol station in the Eastern Cape but asked if there was any plan for PetroSA was to build more petrol stations of its own or acquire such assets from others.  She reminded MPs of the aborted PetroSA deal with Petronas/Engen.

Monde Mnyande replied that he knew such assets did exist on the market at this moment and in particular he was aware that Sasol was selling such assets.  This sort of thing might be an example of the way PetroSA had to go, he said.

Due to misreporting in minutes and the what perhaps was said somewhat indistinctly by Mnyande, a head line emerged in Business Day that PetroSA was already involved in a deal with Sasol.  Mnyande never said this, confirmed by ParlyReport, and a CEF spokesman denied that he did a week later in a statement.

Looking back

Mnyande continued with his time slot stating that one of CEF’s biggest mistakes in the past was to think it could operate alone without the government and DMRE, especially during turbulent times at Mossel Bay. A great number its executives without experience were in acting roles and failed to follow the basic rules, he said.

In answering questions by Kevin Mileham (DA) on the illegal sale of national strategic fuel stocks by the Strategic Fuel Fund four years ago to a large oil trader-consortium, Lufuno Makhuba  replied that the contested sale was the subject of a court case nearing completion, the oil still being retained in storage in South Africa.       Chair Monde Mnyande said a new CEO, who was a woman well known in the industry, would be appointed as CEO for SSF shortly.

Let’s hear more

In general questioning, which is difficult in virtual, Mileham threw cold water at any plans to save PetroSA in the manner suggested since any such idea at the moment could not be loaded on to the taxpayer’s shoulders. However, he said the DA would await developments and finalisation of the plan before responding in full

He asked if, in the process of restructuring, whether it was CEF’s  plan to move the regulatory authority, the Petroleum Agency of South Africa, out of CEF to a new domain. As the meeting timed-out, the chairperson asked Lufuno to respond to Mileham’s question in writing.

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Parliament goes virtual for lockdown


….20 May 2020…

SA first with virtual e-debate

….At the same time as the venerable British Parliament was tackling what seemed to them a totally invasive idea of a virtual e-Parliament, South Africa was simultaneously tackling the same subject as COVID 19 arrived at the shores of Africa.  Immediately, the issue of the consideration of lockdown conditions arose in SA and the question of how Parliament could work with everybody boarded.

Whilst British parliamentarians dithered on the subject and due to the fact that the UK kept social distancing going for a much longer time before their lockdown came into force, South Africa’s virtual website portal went up in an incredibly short time and was first in the world by a few days.

Maak ‘n plan

In comparison, the British virtual system. which is also now also working, only allows for debate in the House of Commons whilst South Africa, in terms of its Constitution, follows proceedings in both the National Assembly and the NCOP and also at committee level as well, with the current joint meetings providing provincial coverage.

The design of the entrance website is pretty similar to the UK portal, the principle being the same but with a British budget, the UK presentation is a good deal slicker.  All the same, the Daily Telegraph complained after the UK launch that all that the voice links in the meetings sounded like Darth Vadar and it was confusing to know who was speaking.

Many players

The beginner’s look of the SA virtual meetings is understandable in the situation.   One can see in SA technicians are having a daily struggle with people using Skype and Zoom connections for the first time, some of whom have little knowledge of the difference between an app and a hard drive.

Most are trying, knowing it all has to happen and it would be best to learn quickly but a certain number of senior politicians still demand studio facilities and a camera.   We shall no doubt look back in years to come and laugh at these early attempts to live a virtual reality life.

48 hours allowed

In South Africa, where the decision to suspend the SA Parliament was a “precautionary measure” in the light of a forthcoming Cabinet decision on how to deal with the pandemic, Parliament’s presiding officers in the form of chief whips and political parties all agreed beforehand on the 17 March that the remaining two days of parliamentary business would be devoted to urgent legislation only.

As a result of this decision, Budget Papers in the form of the Division of Revenue Bill were hustled to the National Assembly for adoption in order that money could flow to the provinces and local government.   A Cabinet meeting followed and the Speaker of the House, who acts for the President in Parliament, was summonsed for a meeting soon after.

Hard facts

The role of Parliament is indispensable for the country to run.   The Constitution demands that Parliament scrutinise and oversee all Executive actions, processes Bills in the  form of legislation, to provide a forum for public consideration of issues and to facilitate public involvement in its legislative and other processes. Such is inviolate, whatever the conditions facing the country.

Realizing that the only way was virtual meetings to consider matters,  Speaker Thandi Modise issued a statement that Parliament would have to “intensify its technological capabilities for a transition to an “e-Parliament”.   She concluded that as a result, a decision had been taken that “Parliament will be able to resume taking advantage of virtual media technology”.

 Into action

The leave period, or recess, for MPs was duly cancelled and parliamentary staff were assigned permits to stay at work.  They used this time for urgent meetings -to assess how Parliament could best resume its proper function under lockdown regulations and deal with the lacuna (i.e. a situation where there is no applicable law to deal with the matter).

It was agreed by the Speaker that priority had to be given in Parliament to virtual meetings that required oversight on COVID-19 matters, bearing in mind the limited number of meetings that could be held at any one time.  It was also agreed that any virtual meetings would be primarily joint meetings based on the government cluster system, i.e. meetings comprising the various representatives from a number of differing committees affected by one subject.

 Order, order

Chief whips were then tasked to adapt parliamentary rules to meet the new conditions. All this had to be based on the procedures, precedents, practices and conventions, which have been developed over the years, known as parliamentary rules.  This was in respect of not only how NA and NCOP virtual plenary meetings were to be run but how debate was to be conducted committee.

Speaker Thandi Modise then confirmed to all political parties that in the planned virtual meetings, members of parliament would have the same powers, privileges and immunity as they have ordinarily in parliamentary proceedings.  Quorum requirements were to be exactly the same she said, and MPs would be entitled to cast their votes either electronically or by voice.

Public participation and access to virtual proceedings had to be made possible, said Modise, “in a manner that is consistent with a participatory and representative democracy, virtual meetings to be live-streamed wherever possible”.

Global comparisons

Despite time limitations Parliament was indeed able to try and benchmark against some other legislatures who were operating as legislatures whilst their countries were fighting against COVID-19. To the surprise of all, little was found.

The prime constitutional constraint in South Africa’s case was that any virtual meetings had to involve both the sittings of the National Assembly and the National Council of Provinces and these had to be seen to be happening if the public wished to observe proceedings, a factor necessary according to the Bill of Rights.   This was overcome by making most meetings “joint” committee meetings of parallel committees from both Houses.

One and only

In the UK, which has no constitution, a parliamentary virtual meeting concept had been designed and planning was six months into happening.  From a standing start, SA Parliament achieved their deadline in about a fortnight.  Australia and New Zealand are still only thinking of going about it and the USA is still fighting about lockdown itself.

Without fanfare, the parliamentary process under the extraordinary conditions began internally in the Cape Town precinct after a very short training period on 20th April, with access being made to the existing  public parliamentary website on the link www.parliament.gov.za/parliament-tv.

 Time will tell

The whole thing seems to work quite well but obviously glitches occur regularly whilst MPs struggle from time to time to find the mute button and some appear if they have just got out of bed.  Already, however, after an initial learning curve, things are changing and before long it will be the way things happen.

At each meeting, provision is made for the parliamentary secretary to log in those MPs present at a virtual meeting, name them, see them, accept apologies and at point count voting if required from those logged in through the  electronic response system.   Minutes are established later through the audio track recorded in the same manner as before. This is quite some procedure to witness in some of the hallowed chambers where the Speaker once wore a wig.

An MP’s presence in any virtual meeting is established through a secure link sent to their email address which also enables counting to be established for the purposes of establishing a quorum, taking decisions on issues or voting on a matter. Links are established on Facebook, Linked-in, Twitter and Instagram, the photography on Facebook on parliamentary issues being quite stunning.

 7 out of 10

In general, the new parliamentary virtual world established is considered by most quite for such a rush and the process will no doubt tide the country through this terrible period in its history.  This aside from any opinion on how well MPs handle their own inputs and deal with difficult question of switching between one another to pose and answer questions.  What you see is what you get.  The result is not always pretty but it is legal.

One advantage is that with so much happening with lights flashing and buttons to worry about, there is little time for any MP to have a quiet slumber.

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Draft climate change strategy in Parliament

…….article June 2019…..

Plan to counter climate change underway…

The inevitability of climate change and the need to plan for its effects on the lives of South Africans is now to be tackled, according to the Department of Environmental Affairs (DEA).  A draft National Climate Change Adaptation Strategy (NCCAS) was published for general comment during parliamentary recess.

This was probably the last public act of past minister of environmental affairs, Nomvula Mokonyane, the baton now having passed to recently appointed Minister Barbara Creecy.  There is probably little room for major directional change as result of public submissions, since the road map to its creation is generally well understood.

Almost final 

Government’s NCCA Strategy, viewed by many as a professional and well written document which includes illustrated graphs and full-colour coded diagrams, is a ten-year plan to be reviewed every five years.  It is to be produced by DEA, the strategy being stated “providing a common vision of climate change adaptation and climate resilience for the country”.

The objective, of course, is the global requirement of achieving the stabilisation of greenhouse gas emissions and limiting temperature increases to 1.5 ° celsius.

The problems

Being a strategy to adapt to a situation and bring about change, the implications for and the effects of climate change upon South Africa are first listed.     Named are such matters as social and societal impact issues, the impact of climate change upon energy planning and economic development generally, and the need for co-ordination arrangements between all spheres of government, SOEs and the private sector.

DEA points out, “The NCCAS not only serves as an adaptation plan but also fulfills South Africa’s commitment to its international obligations as outlined in the Paris Agreement under the United Nations Framework Convention on Climate Change (UNFCCC).”

What it needs

The notice calling for comment says, “The NCCAS focuses on context, strategic focus, the need to reduce vulnerability and build adaptive capacity, early warning systems, adaptation planning, research, governance and legislation and both a finance and an implementation framework.”

The department’s experts have at the same time issued a supporting statement on climate change itself as a subject, which confirms that “worrying” weather patterns are seemingly not about to get any better, increases in annual-average near-surface temperatures are the order of the day and projected to occur over large parts of South Africa, particularly the western interior and northern parts of SA.

Facts evident

The statement adds in the briefing, “Climate zones across South Africa are already shifting and noticeable, ecosystems and landscapes are being degraded, veld fires are becoming more frequent and over-used natural terrestrial and marine systems are under stress.”

It was for these reasons, DEA’s statement concludes that South Africa must take immediate action by planning for climate change and intensifying response to forthcoming impacts, given the extreme weather events that are increasing in the country and which mirror similar changes elsewhere in the world.

No maybe

“Heat wave conditions will be much more likely, the dry spell duration will lengthen slightly, and rainfall intensity is increasing in SA”, says DEA.   The NCCAS warns throughout its presentation that the poor are the most vulnerable to any climate change impact.

Reading between the lines, the NCCAS is no coded message.  It indicates clearly that failure to tackle higher temperatures and unpredictable rainfall could lead to troublesome reactions from poorer sections of the community.  A clear warning is contained in the entire presentation that events being a threat to national security could be the price to pay if no serious counteractions are taken.

DEA says that the NCCAS as proposed will provide “a common reference point for climate change adaptation efforts in South Africa and promote coherence and coordination on climate change adaptation activities between different institutions and levels of government.”

Action will pay off

A positive note is also found in the proposals when it is stated, “The NCCAS is designed to give South Africa an advantage going forward in economic terms”.  It is pointed out that the flip side of adaption to climate change presents many investment opportunities, they claim.  Infrastructural changes are called for, DEA says.

“New funding flows to support adaptation will represent one of the biggest accelerations of development investment since the achievement of democracy in South Africa. The scenarios adopted will provide not only a unique opportunity to both ensure climate resilience but will achieve development aspirations.”

A little “over the top” perhaps, but a carrot that is provided.

The equation

The comment period is until 5 June at which point DEA will consider responses and submit their final strategy plan to Parliament for debate.  Clearly compliance is also seen by DEA as a priority in terms of UNFCCC undertakings made in the Paris Agreement to have such a strategy and plan.

 

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The NCOP: Use it or lose it

……article  20 June 2019…..

COGTA and the National Council of Provinces…..

We now know the names of some of the perpetrators of state capture who started their Machiavellian plans back in 2009, maybe even slightly before that.     It is galling to think that many of those with knowledge of what was going on have occupied parliamentary benches in the National Assembly for much of that period.

Perhaps many were too frightened or career-conscious to speak up.  Or perhaps they were simply instructed by party whips to manoeuvre matters in Parliament away from the truth.

The argument is now put forward by many of the non-whistle-blowers and the partially guilty that they preferred not to imperil the history of the governing party’s “struggle” but rather to await court findings as to their comrades guilt.   In the process, parliamentary rules regarding the oath taken to tell the truth and nothing but the truth have been broken. The good Chief Justice Mogoeng Mogoeng is horrified, quite rightly.

A clue to direction

But this is all well-known and politicians do indeed lie.  However, what should have been spotted earlier, when connecting the dots, is that same the same lack of disclosure and half-truths have been mirrored in the National Council of Provinces (NCOP) which acts as a conduit with the nine provinces.  Here any form oversight on funds has been totally zero.

Most of the MPs on Select Committees are sitting as permanent parliamentarians with about a third of the seats being provided for visiting provincial councillors who have no vote and appear on issues affecting their province. Those from the provinces attend mainly to be briefed on instructions downwards or bring their mandates in agreement upwards.

Nobody talks money

It seems that it is not in the brief of the NCOP to ask any entity on behalf of Parliament what happened to money appropriated or make an oversight call on any issues.   Instead, reconciliations and information on funds allocated on spending made, have to be wrung out of national government departments in the National Assembly by NA portfolio committees at annual report time.

Experts say the need for the NCOP should be completely re-evaluated to find out exactly what its tasking should be in the light of a much-changed South Africa.

Disconnect

By studying state capture in South Africa, one soon realizes it must be, even globally, one of the crimes of the century.  Its execution was made more evil since it has been perpetrated by hideous people upon a new nation, so new that its Constitution was only eight years old when the crime was planned.

Much of the manipulation of funds following was made possible by fact that the SA Constitution outlines an ideal three-tiered government structure dependent on the three pillars –   the government, parliament and the courts – but also it is dependant having an executive with the same morals as Nelson Mandela who with others of his ilk contributed to its making.

The voices of the people and the rights of the people so governed were paramount in the final document that was produced, and structures were outlined accordingly.  The passage of money to support such lofty ideals, however, was not.

Never again

What has been learnt now is that any ability of a state auditor to conduct oversight without the powers to insist on documents and without the ability to impose consequence management on those who should not have been trusted with money in the first place, is a fruitless exercise.

The second lesson learnt is that the total inability of the NCOP to make any useful contribution whatsoever in governance with either communications up the line or instructions down the line, is a non-starter on oversight matters.   In such an environment, state capture has flourished.

For what the NCOP has actually achieved in its twenty-five years, the institution would seem better disbanded since the only product of its enormous expense is to maintain it as a showpiece of the democratic process.  It contributes little more towards provincial and national co-ordination than would an echo-chamber. Without discussing money and being part of any oversight mechanism for Parliament as a whole, its presence seems in itself “fruitless and wasteful expenditure” since the MPs have no mandate to check for “irregular” spending, even if they were qualified to do so.

Slimming down

For the money spent, local government delivery has been a staggering failure with national, provincial and local government operating in three separate silos.  Nobody, it seems, really understands who it is that must actually do the work, rather preferring to be in charge.

Some state that the answer to proper service delivery at the coalface could be answered by changing the Constitution; that too many compromises were made during its negotiation, particularly on issues regarding provincial powers and local government.

Political interference

Both the National Council of Provinces and the South Africa Local Government Association (SALGA) have to be analysed to see whether they cannot be lifted from their sterile position as mere bag carriers and political lackeys of the National Assembly and turned into effective instruments of democracy for the nine provinces and call for oversight from them on issues arising.

With the parliamentary process as it is currently structured, the voices of the people must be made to sound louder that the voice of the party-political whip.    In the NCOP at present, no voices are heard at all.

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IEMO Bill proposes separated power purchasing

…. article June 2019….   

   Eskom to become major energy supplier…

Now tabled is the DA’s plan to create an Independent Electricity Market Operator (IEMO) on a phased basis with the responsibility of centralised purchasing of electricity from both Eskom and independent power producers (IPPs).

The proposal is that the IEMO will carry out its operation duties by dispatching all generation plants into the national grid. In addition to operation, the IEMO Bill also confers ownership of the grid on the IEMO, with Eskom retaining ownership of the generation arm.

Starting grid

The responsibility  for consumer distribution will be under the care of this independent regulatory entity which will be responsible as a centralised agency for the purchase of energy and the registration of IPPs to feed the grid, the enormous system that conveys power across the width and breadth of South Africa.

The national grid is, apparently, like the rest of Eskom infrastructure in need of restorative maintenance and upgrading, funds intended for this purpose having been “diverted” by Eskom personalities now being named, one by one, in the Zondo Commission inquiry.

With Parliament closed at this time and the Portfolio Committee on Public Enterprises not formed, it is the Speaker that will gather comment on the DA Bill now circulated, this for later assimilation.

As far as the IPPs still sitting on the side-lines waiting for action, this is not before time.   All now await to hear how the concept of a Regulator’s office is unpacked and how this office is related to the grid.

 Top gun

The IEMO Bill comes under the name of MP Natasha Mazzone, the DA’s shadow minister of public enterprises.  Opposition Leader, Mmusi Maimane, has been indicating such a move for over six months and has been vocal on the fact that decisions must be made urgently in moving the energy distribution sphere forward since investors have been waiting for far too long.

The Bill was tabled quite soon after President Cyril Ramaphosa’s stated requirement that the concept of splitting up Eskom into three parts will be followed, namely power generation, power supply through the grid, and distribution to customers.

A line-up of six successive energy ministers and a recalcitrant president have reduced the Department of Energy to a shambles.  Maybe Mazzone’s Bill is a possible shaft of light after years of Eskom and Public Enterprises Department having done nothing about IPPs, nor encouraged any form energy diversification.

Motives not clear 

In the meanwhile, Ms Mazzone has always been a vociferous critic of Eskom management for a number of years, describing previous Minister of Public Enterprises, Lynne Brown, as public enemy number one.  She has called for Eskom to be unbundled in the public interest and has been untiring in her attacks on the failure of Eskom to provide continuity of power supply thus damaging SA’s investment potential, she says.

What is not clear is whether this tabling is a move from the DA to attempt to seize the initiative ahead of the Department of Energy (DOE), busy at the moment being absorbed back into the Mining portfolio under new Minister Gwede Mantashe, or whether the ANC might have some inkling of what it needs to progress on the issue of power generation and will accept what is tabled.

Whatever is behind closed doors, the DA have taken the initiative by starting the ball rolling and for IPPs sitting on the side-lines, it is not before time.

Badlands

The partnership of the portfolio of energy and mining, which was broken some ten years ago by Jacob Zuma for reasons never really explained, still sits like unallocated baggage that needs sorting out. The suspected reason is that Zuma wanted Eskom under Brian Molefe in DPE under acolyte past minister Lynne Brown.

What currently is confusing to the industry players is that a slow phased-in process designed to protect Eskom has been proposed by the DA.  Their original proposals called for an immediate break-up to reduce the pain and cost of a lengthy separation process.

It may be that reality has crept in and despite chastising past successive ministers of energy for not producing the  previous idea of an ISMO (Independent Supply Management Operator) Bill to meet the need of IPPs perhaps they are now tempered by the fact that Eskom, whilst a currently an over-indebted business failure, the ship should be righted first, and the system restored.

Better times

Previous chairperson of the Energy Portfolio Committee, Thembisile Fikile Majola – a tough critic of Energy Minister Radebe in the failure of Luthuli House to brief Parliament on energy policy matters – is now Deputy Minister of Mining and Energy.

This appointment by President Ramaphosa, presumably in the light of Majola’s union background, gives further credence to the belief that both he and Mantashe would be a good team to handle coal mining issues from the unions resulting from a breakup and re-sizing and also better equipped to handle the Eskom transformation in terms of integrated energy supplies.

Going ahead

It seems be therefore accepted by the way the Bill is tabled that new IEMO Bill may gain better traction under the aegis of the Portfolio Committee on Public Enterprises, rather than as before under the Portfolio Committee on Energy.   However, Minister Pravin Gordhan has stated on a number of occasions that the Public Enterprises portfolio is only managing SOEs in the interim until all are returned to their appropriate ministries.

The specifics

The Bill came with a notice of intention which states, “This Bill will eliminate Eskom’s effective monopoly on the production of electricity by splitting the entity into two parts. These are Eskom, which will continue to function as an electricity generator and ISMO, which will take ownership and control over the national electricity grid.

The notice states that a Regulator “will serve as the central buyer and distributor of electricity from all electricity generators. It will also seek to allow metropolitan municipalities to purchase electricity directly from IPPs in certain circumstances.”

This is, of course, brings into the frame the critical issue of adopting a business approach to energy distribution.

Business wholesalers

On the subject of independent purchasing of electricity from sources other than Eskom, the proposal further states, “ISMO will be required to purchase power from the generators, including IPPs through power purchase agreements.  IEMO will then sell this power to distributors and large customers at a wholesale tariff.”

The notice concludes, “The IEMO will be expected to include in the wholesale tariff its operational cost in accordance with the approval of the Regulator. The Regulator will regulate the wholesale tariff in terms of the Electricity Regulation Act, 2006 (Act No. 4 of 2006) (ERA).”

Rights to trade

An introduction to the Bill, looking at details of the new structure, states, “The issue of wholesale trading refers to the buying of power from generators at different prices and selling it to large customers and distributors at a wholesale tariff.    The IEMO will also be responsible for the system operation function through dispatch.”

It adds that the IEMO “will undertake dispatch from all generation plants into the national grid except for self-dispatched plants, including but not limited to wind and solar plants”.

Big bang or not

Whatever happens, “big bang” approach or not, a vigorous debate is about to happen.  Many critics, especially the IPPs, have expressed the view that the slow “phasing in” is just another ploy in a drawn-out process to mollify the unions on potential job loss issues by buying time.   Industry players who have dealt with the backlash of the last Eskom strike, say the unions are panicking and creating a problem to be solved in order to be seen by their members at work on their behalf.

But whatever happens, all know that coal will always be, by far, the major contributor to energy with Eskom hopefully learning how to reduce CO2 emissions. The entity will have to pay triple carbon tax rates in the future for failure.  Most industry players also predict that SA’s extensive coal reserves will be switched over in the long term to export led initiatives.

Comments on media also see the exit of Eskom as a distributor being a contribution to the task of reducing Eskom’s ballooning staff complement.

Bold steps required

The costs of a “big bang” separation would, of course, be bound to put irreconcilable pressure on state coffers, say financiers, but more serious energy investors and industry players say there will always be few short-term visitors waiting in the wings and these are the parties who get disappointed.

Energy investment, they say, is based upon long term results and is viewed as thus by big money companies since geology and resources are finite.  In global terms, the situation can always wait until the conditions suit exploitation. It can take fifteen or twenty years to build a gas field of note and build the appropriate infrastructure, they say.

However, the running of Eskom is the short-term issue right now and keep the lights on.  Its survival is the main critical item on South Africa’s balance sheet at the moment.

Posted in Cabinet,Presidential, Electricity, Energy, Enviro,Water, Finance, economic, Land,Agriculture, Public utilities, Trade & Industry0 Comments

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

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