Archive | public works

Parliament updated on SOE finances

…..article dated 25 August 2020……

DPE presents bleak picture…. 

As part of a portfolio committee meeting covering the status of the seven SOEs under the umbrella of the Department of Public Enterprises (DPE), new director general,  Khathatso Tlhakudi,  provided a sombre picture of the current financial malaise within the SA public sector.  However. he ended up on a more positive note with regard to Denel and SAA.    On Eskom, he said,  he would make some comment but as they were reporting on a regular basis to Parliament, he said he would not report in great depth.

On Denel, he commented that he had “a good feeling that acting CEO Talib Sadik would hold the situation until a new CEO was appointed”, saying that “we need Denel for strategic reasons”.  He said that Sadik had the necessary enthusiasm and  drive to hold the fort.

As far as SAA was concerned, DPE “had made good progress with a business rescue plan which had now been approved” which fact  he claimed was “a major milestone after what had happened beforehand”. Now it was just a question if support could be found for the plan.

Outside Eskom

Tlhakudi commented that a good deal of the problem at Eskom, other than the specifics of state capture, was that most of the municipalities were not investing adequately in their distribution networks which he said were “falling apart at the nation’s expense”.

On electricity distribution “much of the problem could be put down to bad town planning”, he said.  “As a result of an inability to provide a proper  “pay as you go” service, informal settlements had simply connected themselves to the network, resulting in overloading and continual damage.”

Another issue was that councils should not just collect rates from communities but had to also invest in those communities. Consumer attitudes had to change, Tlhakudi said. Eskom was not in a position to subsidise non-payment in infrastructure, he said. “Responsible management is called for at community level and consumer attitudes have to change”.  He looked to CoGTA to assist in bring such changes about, as well as  the departments of Human Settlements, Water & Sanitation and Public Works to play their roles more purposefully.

Not all bad

DG Tlhakudi said that an infusion of new thinking had started at DPE.  “New ideas are emerging, he said. Great progress had been made with the ports; business was flowing well through the Maputo Corridor with the export of exporting magnetite; and activities around wine and fresh produce were getting some good numbers, ” he listed.  “The story at Transnet is coming right and the Trade and Industry Committee will be impressed, despite the problems of COVID”.

He concluded that DPE was in the process of finding new ways to intervene and assist timeously in SOE and departmental problems and cut short any drift towards malfeasance and corruption with intervention from the top, on an immediate response basis.

Overview of the SOE seven

In an overview of the DPE portfolio, Ms Jacky Molisane of DPE  took MPs through the sorry picture.

In alphabetical order, she recounted that (1) Alexkor, a diamond mining business and which has been attempting to establish a diamond polishing venture down the line, had reported a loss in the 2019/2020 financial year of R63m. This was in part due to low diamond prices, not helped by corruption at management level at its mine. Its cash reserves will be depleted by September and DPE.  Furthermore, its head office is being wound down.

Denel (2), which had been in the newspapers a lot this month with attempts to save the entity for its strategic value, reported a loss of R1.7bn for the 2019/20, its equity being well below the level of R4bn required as a going concern for investors. This, despite a R1.8bn funding in the year under review.  Ms Molisane said that R576m allocated for the 2020/21 has not been passed on by DPE at this stage, since the impact of COVID-19 had resulted in more strain for Denel, the position now being fluid. An acting CEO was currently holding the fort.

Simple facts

As far as Eskom (3) was concerned, Ms Molisane, giving a short picture, saying the simple facts were that any increase in revenue would purely be mainly reflected as due to increases in electricity tariffs.  Although cash from operations might be increasing, Ms Molisane said, earnings before interest, taxes, depreciation, and depreciation were never going to be sufficient to cover increasing costs.  DPE and the taxpayer, as the shareholder, were not receiving a return on investment and the entity was a serious drain on the economy.

South African Forestry Company (4) had reported a loss of R47m for the year under review, mainly as a result of the decline in revenue and high operating expenses. A fair value adjustment saved the company from worse figures and Safcol badly needs re-investment in its equipment and operations.

South African Airways (5) has been under business rescue since December 2019 due to its declining performance and now the inability to pay its debts as they fall due.   A business rescue plan was approved in July 2020 by all creditors. Various options for raising funds were now being carried with the assistance of RMB as transaction advisor, Ms Molisane said. There was every hope that a partner would be found before 17 September.

Old story, old routes

On SAA, DG Khathatso Tlhakudi added the fact said the Department had brought in “some of the best brains, working together linked around the world to help it implement a plan mainly people who understood the airline industry.” Once a strategy was implemented for SAA, he said, DPE would be looking, first for a feeder network to sustain the airline, and then a decision was to be made as to the best way forward to recover routes.    Right now, “effort is being applied to help SAA out of the situation it found itself in”.

SA Express (6) was placed under business rescue in February 2020, Ms Molisane said, but a credible business plan was not found and liquidators called in.   With little likelihood that any expression of interest will be shown, SA Express could be liquidated at the end of September this year.

Ms Molisane then quickly touched on Transnet (7) where revenue had grown marginally by 3% to R75bn for the 2019/20 year under review but decline in demand is expected for the coming year due to COVID-19 and lockdown circumstances. Revenue at an expected figure of R78bn for 2020/21 therefore looked very unlikely. Given that Transnet would eventually get over the COVID setback, Molisane’s figures indicated a possible break-even point in the near future.

Dartboard

For three quarters of an hour, MPs from across party lines criticised DPE for its handling of a situation over the months preceding, a period in which in their view things had been allowed to get totally out of hand.    It was pointed our , however, by the DPE team that it was the system of government that was at fault as the individual boards ran the SOEs and there was a limit to which DPE could interfere.

Point after point was raised, eventually leading to a relatively sensible overview from Ghalib Cachalia (DA) who calculated that the seven SOEs were the major debt trap that had cumulatively led South Africa into its present sad state, whilst also being the home of state capture. Cachalia told DPE that they had to go about things differently, and very soon.

Action now

With a warning that SA was  “falling off the fiscal cliff”, Cachalia remarked that “tinkering around with balance sheets and expenses was getting the country nowhere” and that some new management concepts “were needed and needed urgently”.  The objectives of DPE were “to lead with vision a stable of state entities that led South Africa into new territory and uplifted the poor”. Quite the reverse was happening, he said.

Sibusiso Gumede (ANC) said the quagmire that DPE found itself in was contributed to by the inability state to intervene at any particular point, having to deal with a balance sheet problem well after the event.        He said, “Whilst it is commendable that DPE itself has shown good performance, it had to start running ‘good’ SOEs as well.  He said, “One cannot have an excellent department running ‘bad’ SOEs and we cannot have business as usual any more’.

Eskom starts internal overhaul – ParlyReportSA

Posted in Agriculture, Electricity, Finance, economic, Mining, beneficiation, Public utilities, public works, Trade & Industry, Transport0 Comments

FFC: budget cuts may worsen service delivery

….article dated 20 July 2020…. 

Balance between needs and cuts required…. 

The Financial and Fiscal Commission (FFC), the independent body which reports to Parliament on intergovernmental financial relations (IGFR) in terms of the Constitution, has told MPs of its deep concern that Minister Mboweni’s budget cuts, announced in the Supplementary Budget Bill, may adversely affect the ability of local government to manage service delivery commitments in the coming year.

FFC manager for fiscal policy, Eddie Rakabe, is also concerned that National Government has not given guidance to provinces and local municipalities on IGFR matters and how they should reprioritise their budgets after having chopped them.

Help down the line

Whilst acknowledging the reasons for the cuts because of the unforeseen pandemic, he called for government to recognise that a delicate balance has to be struck between expenditure reduction and the meeting of basic needs. On top of this, the Minister had asked all parties to switch to zero-budgeting  which may not be understood or implemented properly.

FFC Chairperson, Prof Daniel Plaatjies, acknowledged that an adjustment Budget by Minister Mboweni was necessary to mitigate the downsides of responding to the COVID-19 crisis but FFC’s main point was that in making Budgetary adjustments in such a short period of time, it was going to be extraordinarily difficult for all to produce new frameworks that were growth enhancing.

Not how much but how

Eddie Rakabe told parliamentarians that their comments were somewhat critical in the light of the Minister indicating that about R230bn in expenditure will have to be cut over the next two years which appeared drastic and care had to be exercised.

The FFC advises, he said, that a delicate balance must be struck between expenditure reduction and the meeting of basic needs. He was insistent that as expenditure is reduced, there had to be a plan to ensure that critical social services are not compromised.

The constitutional criteria in any Budget consideration had to be on the basis of spending where the basic rights of people are protected, Rakabe noted.  In this respect, the reprioritisation proposed by the supplementary Budget in the view of FFC complied with this criterion, he said.  However, the FFC was deeply concerned about the absence of a framework to guide provincial reprioritisation as a process — provinces having to do the reprioritisation on their own.

A little left and a little right

FFC agreed with the Parliamentary Budget Office, who had reported in the same meeting beforehand, that it was going to take a lot to get South Africa back to its pre COVID-19 position, which was not very strong in any case and the situation was fraught with the threat of collapse of social security plans.

Eddie Rakabe said, “We agree with the Minister that SA’s sovereign credit rating is a major concern since credit rating downgrades affect government’s ability to meet borrowing requirements and that to raise revenue from tax to meet social needs just because of the overwhelming need to meet debt servicing costs is not correct.

All the same, he said, the proposals needed much more care in application. Conditional grants had to be the main focus and whether there was a complete necessity for each.

 All too fast

FFC recommended that government reconsider the sequencing of the phases for managing the Covid 19 pandemic.    It was essential that capacity of provincial and local government treasuries be strengthened to ensure that they promote spending control and enhance spending effectiveness, they considered.

The FFC acknowledged the zero-based budgeting announcement but Rakabe said that he still remained most concerned about the effectiveness of changing the budget structure and the way things had been done for years so suddenly.  He said time and resources were necessary to “ operationalise zero-based budgeting” properly.

Hamba gahle

He warned that there are “a whole lot of issues that need sorting out before  moving full steam ahead with such a complicated financial concept being endorsed for all levels.

He told MPs of the Finance Standing Committee that in the FFC view, there was a great need to outline more clearly on how the un-allocated R19.6bn for job creation allocation is to work and who gets it needs to be  a lot more explicit.  On the President’s Covid-19 relief package, the divisions between national and provincial allocations were unclear, he commented.

Summation

Managing the fiscus through and beyond the Covid-19 pandemic had to be fleshed out in a lot more detail, Eddie Rakabe concluded.

From the meeting it became clear that whilst the FFC believes that  an increase in tax revenues  immediately was not a feasible policy option to assist local government through the COVID 19 period, the Minister’s announcement that future tax increases of R5bn in 2021/2022 year, R10bn in 2022/2023, R10bn in 2023/2024 and R15bn in 2024/2025 were considered as an acceptable necessary alternative.

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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.

Posted in Agriculture, cabinet, Communications, Defence, Earlier Stories, Energy, Fuel,oil,renewables, Home Page Slider, Justice, constitutional, Police, Public utilities, public works, Security,police,defence, Trade & Industry, Transport0 Comments

Communal Property Bill part of land reform

From Aug/September ParlyReport….

Communal Property Bill posted 7 10 2018

Posted in Agriculture, Cabinet,Presidential, Finance, economic, Justice, constitutional, public works, Special Recent Posts, Trade & Industry0 Comments

2019 to see final debate on land expropriation

Land expropriation no compensation now proposed.. 

sent to clients 8 July 2018….

Parliament is about to debate one of the most loaded issues since its formation under the new democratic dispensation in 1994; that of acquiring without compensation land as part of the current land reform programme.   

Whether President Ramaphosa wanted such a debate before or after elections is not the point anymore. The moment has arrived and Parliament is to consider an EFF motion to consider the proposal. This will maybe force the ANC’s hand in joining the bandwagon and to endorse the “no compensation” approach under defined circumstances.

However, many feel that such a labourious route need not be undertaken to achieve the same end.

Read more..….land reform July

 

Read

Posted in Agriculture, cabinet, Justice, constitutional, public works, Trade & Industry0 Comments

Expropriation Bill grinds on

Expropriation: “public interest” and “property”

3- day précis…sent to clients 2 Nov….. Parties are coming closer during debate in the Portfolio cronin3Committee on Public Works to a slightly watered down Expropriation Bill, with Deputy Minister of Public Works, Jeremy Cronin, leading for the Minister who tabled the Bill before Parliament.

The name of the Bill has not resonated well amongst the international business community in the light of other events in Southern Africa.

Nevertheless, Minister Cronin has stated that eventually such a Bill will succeed, despite the concerns of many parties and that the proposed Bill has no malevolent purpose other than assisting “in the public interest”.

The public interest?

Therein lies the problem in that it remains a state responsibility to decide what the public’s interest is and which “public” is the subject matter of any decision for invoking the legislation.   As is the case with so much legislation at the moment, it is therefore a question of the wording of the Minister’s powers and the definitions of the tools at his or her disposal which is of debate.

Most of the debate earlier had centered around the definition of “property to be expropriated” in the light of the fact that the Bill cannot exceed the powers of the Constitution, wherein the word “property” is also not expanded upon – a number of court precedents arising previously where no final determination was made on the subject.

Calling in the Constitution

At one stage, the Deputy Minister proposed that “property” could be defined as “contemplated in section 25 of the Constitution”, the Deputy Minister considering this a major concession by the Department.  However, Opposition members still claimed that the word “property” could not be used in any piece of legislation without a definition of the term “property” also being listed and also in the knowledge that such terminology could not be contextualized even in terms of the Constitution.

On what could be expropriated, the Deputy Minister presented another alternative wording stating the that “the Minister’s power to expropriate property applies to property which is connected to the provision and management of the accommodation, land and infrastructure needs of an organ of state, in terms of his or her mandate”.

This was not found to be satisfactory either by the Committee since the term “that does not fall within his mandate” was vague and could be determined in any number of ways and open to any kind of interpretation.

The Deputy Minister was advised by senior counsel the way the Constitutional Court defined property land seizureremained “ a moving target”, especially section 25, and also in the Bill of Rights and this matter needed to be looked at again.

New draft for discussion

The Deputy Minister is to return to the next meeting with a further proposal on the definition of property issue which would possibly be part of a “B” version of the Bill, then to be reconsidered in totality by the committee. Such will be ready in a few days.

Another alteration of major importance so far is that a new wording using the expression “disputing party” has used in some cases instead of “claimant”. This is now used to describe “claimants” where they no longer are such in the process of expropriation, particularly in not accepting the amount of compensation offered. This is important, as thus the Bill and the parties will accept that indeed a dispute has occurred.

Two months in debate

At this stage the Bill has had three full days of “clause by clause” debate with more to come, draft clauses flying backwards and forwards, the final to be proposed by the Minister as agreed to and under the guidance of the State Law Advisor representing the State’s last offer of compromise and agreement to change wording and those changes as so far agreed to by the Committee.

Minister Cronin still maintains infrastructure projects are being held up, having to be changed or stopped. He had earlier called upon Eskom to give evidence of this.

There is general agreement that Deputy Minister Jeremy Cronin has bent over backwards with subsequent alterations to meet demands but there still exists amongst Opposition a feeling that ulterior motives exist for the legislation and the legislation is not simply “to assist Eskom buy land for electricity development”, as Minister Cronin first declared.  In the background is the threat of a constitutional challenge but this has dissipated somewhat.

The “E” word

pylonsMuch of the debate has also centered around the issues of “municipal planning” and “powers of municipal mangers” giving credence to Minister Cronin’s views. He has said the word “expropriation” is a loaded expression at this time in Africa’s history and has an unfortunate influence on the necessity for the Bill to proceed.

There is also change, seen by Opposition members as an improvement, which deals with the mediation process which previously allowed the expropriating authority to use the absence of a timeous response to bypass the process of mediation. This is not now the case, the issue of mediation being allowed to proceed under any circumstances should this be required.

Progress

More debate is to follow in subsequent days but a final document will no doubt be voted on by the committee shortly before going to the National Assembly, probably in this session of Parliament. In a meeting subsequently, a “B” version of the Bill was introduced and Chapter 4 on Intentions to Expropriate and Expropriation of Property was completed to the satisfaction of most, leaving the impression that much of the steam about the Bill in general had been reduced.

The issue of the definition of “property”, however, still remains a contentious issue simply because of legal determinations.  On 21 October, to expropriate where there was a mortgage bond was debated at length and satisfaction reached and that notice to the expropriated party and any farm workers or dwellers must be simultaneous before the issue of “just and equitable compensation” is considered.

More serious issues

On 27 October the major issue of debate involved the term of “just and equitable” compensation in the Constitution and how this would be applied to the expropriation process in the Bill.

Also debated was the question of a large community being expropriated and whether water availability, dwelling provision and the needs of a community restored. The Minister explained that the Expropriation Bill per se was about expropriation and the process and not about land reform and for this process there was plenty of legislation already to hand and new legislation planned.

The following week of November, however, should see this matter resolved mid-month providing hecronin current NEHAWU strike action of disturbing meetings does not continue, but whether all will be to the satisfaction of each party has become somewhat academic, it becoming more and more evident that Deputy Minister Cronin, who has handled each stage of the process personally, seems determined, in his patient and determined way, to see this Bill through with the property clause undefined.

Last minute attack

The EFF attempted to delete the whole of chapter 5 on compensation in the Bill as they maintained that the subject matter was expropriation, not compensation at all but such a suggestion was put aside by the chairperson Ben Martins as a political ploy rather than a serious contribution.

Other articles in this category or as background
Expropriation Bill phrases could be re-drafted – ParlyReportSA
Expropriation Bill has now to be faced – ParlyReportSA
Zuma goes for traditional support with expropriation – ParlyReportSA
Expropriation of land stays constitutional – ParlyReportSA
Amended Expropriation Bill returns – ParlyReportSA

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