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  1. Select Committee on Labour and Public Enterprises 7 March 2012 Presentation on DPE’s Strategic Plan 2012/13 – 2016/17 1 CONFIDENTIAL

  2. Table of Contents • Context • Key Achievements and budget expenditure against current year Strategic Plan (2011/12) • Progress against Outcome 6 and Minister’s Delivery Agreement • Strategic Plan 2012/13 : Priorities, Budgets, Structure and HR statistics • Risks • Challenges facing the Department • Assistance from the Committee • Annexure : Programme Specific Key Outputs and Progress Report 2 CONFIDENTIAL

  3. Evolution of the Department and corresponding mandates • The Department of Public Enterprises was established in early 1990s as the office for privitisation. • In late 1990s, the emphasis shifted to halting and reversing the privatisation policy in favour of developing SOC as sustainable entities delivering on specific strategic economic mandates. • From early 2000 to the current period, there has been a more formal articulation of a strategic perspective on SOC, as levers for directing the economy towards higher growth and employment rates, through investment, industrialisation and transformation. • This evolution has informed the mandate and expansion of the DPE’s shareholder oversight function, on behalf of the State. • Whilst the DPE’s shareholder oversight role is well-established, it has to now respond to the expanded role of SOC in infrastructure development via the massive infrastructure investment programmes of Eskom and Transnet. • Evolution of the DPE will be informed by the President Review Committee on State Owned Enterprises (PRC). 3 CONFIDENTIAL

  4. The DPE has successfully developed and implemented a Shareholder management and governance model. Performance Monitoring & Evaluation DPE reviews SOC performance (Treasury Regulation 29.3) Isibuko Dashboard Minister issues Investor Briefs to SOC Boards on emerging SOC performance trends, highlighting need for corrective action in event of any deviation from agreed key performance areas and indicators. SOC AGMs. SOC reporting to Parliament (PFMA Sec 65). 4 CONFIDENTIAL

  5. The Shareholder has distinct responsibilities… Shareholder Responsibility • Shareholder owns shares, not enterprise assets. • These shares give the shareholder specific rights and powers: • Shareholder Minister to appoint all directors after Cabinet approval - executive directors appointedupon recommendation from Board. • Approval of significant & material transactions. • Issuing of a strategic intent statement. • Conclusion of binding shareholder compact. • Access information to monitor and evaluate performance. • Enforce accountability and take remedial action. • Production of good practice notes. 5 CONFIDENTIAL

  6. …as distinct from the Board and Management…. Board and Management Responsibility • Responsible for ensuring the financial sustainability of the company through coherent utilisation of company’s assets • Responsibility for development and implementation of the strategy: • Development of strategic and business plans and subsidiary plans. (financial, risk management, operational, marketing, etc). • Appointment of management and staff. • Management of all aspect of operations. • Development of detailed company policies (e.g. remuneration, procurement, etc) within guidelines defined by practice notes and implementation of company practice in adherence to the policy. 6 CONFIDENTIAL

  7. Whilst the DPE Shareholder oversight role is well-established, there is still much scope for improvement. In the period ahead, we will focus on: • Consolidating the Shareholder Management Model. • Shifting of emphasis to ensure that SOC drive investment, growth and employment. • Overseeing the strategic, financial and operational turnaround of challenged SOC. 7 CONFIDENTIAL

  8. Current strategic context for the Department • The current prioritisation of infrastructure expansion for growth and employment creation and the role of DPE’s SOC, especially the infrastructure SOC (Eskom, Transnet and Broadband Infraco) will challenge and shape the future trajectory of the Department. • We will be challenged in new ways in respect of the capacity to oversee the investment programmes and its intended impacts i.e. industrialisation, job creation, skills development, etc both from a Shareholder perspective as well as from an SOC performance perspective. • In parallel, South Africa faces significant economic development challenges: • A relative decline in manufacturing capabilities and output since the 1970s and associated loss of employment. • A continued over-whelming dependence on commodity exports, leaving the country vulnerable to the commodity cycle. • A negative current account balance that is driven by manufactured imports, many of which are required by the SOC build programmes. • A market structure and business culture that is associated with key sectors of the economy extracting rents, rather than investing in the future. • Racially skewed economic ownership and management structure and income distribution. How will the DPE respond? 8 CONFIDENTIAL

  9. In this context, the DPE has revised its Vision to the following….. “To drive investment, productivity and transformation in its portfolio of State Owned Companies (SOC), their customers and their suppliers to unlock growth, drive industrialisation, create jobs and develop skills.” We have undertaken an organisational review process which resulted in the development of a new organizational model and functional structure in line with our strategic objectives. Concurrently, a new Strategic Plan for the Department has been developed and describes in detail the objectives and work the DPE will undertake in the period 2012-2016, guided by the overarching policy and strategic direction and priorities of Government, as articulated in the New Growth Path, the draft National Development Plan, and the recent State of the Nation Address by President Jacob Zuma. 9 CONFIDENTIAL

  10. Key Achievements and Budget Expenditure against current year Strategic Plan 10 CONFIDENTIAL

  11. Overview of key achievements • The DPE’s shareholder oversight role and model has become well-established and has continued to be implemented as intended to a large extent, although there are major challenges and much still to be achieved. • For example: • all our SOC conclude Shareholder Compacts, submit Corporate Plans, quarterly reports (as required by statutes), hold Annual General Meetings, and prepare Annual Reports. • Development of frameworks/guidelines for shareholder management to strengthen coherence, discipline and consistency in our Shareholder oversight of SOC. • The focus of the DPE oversight has been on corporate governance (Board and key management appointments), planning (including infrastructure investment planning) and financial sustainability and operational indicators as as economic /developmental impact (jobs, skills, youth, B-BBEE, supplier development, environment/climate change). 11 CONFIDENTIAL

  12. Programme Specific Highlights • Appointment of new Minister, Deputy Minister and Director-General in 2010. • Development of a new Vision for the Department and enhanced Mission. • The DPE has received an unqualified audit for seven consecutive years. • The Minister demonstrated the Activist Shareholder approach to our oversight. • Appointment of Eskom Board, Transnet Board, Broadband Infraco Board and Denel Board and Chief Executive • Development and implementation of a Logical Planning, Monitoring and Evaluation Framework - an annual chronological cycle of tasks and events that links national strategic priorities to SOC delivery and ensures effective shareholder oversight management and achievement of desired strategic outcomes and objectives by the SOC. • Competitive Supplier Development Programme • Eskom & Transnet produced 5 yr Supplier Development Plans. Development of next generation Supplier Development Plans at an advanced stage. • Extensive procurement capability training undertaken. • Supplier Benchmarking Programme developed, with UNIDO. • Cross-cutting Initiatives • A policy for Programmatic and Transactional Procurements was developed, as was a strategy and business plan for a Centre of Excellence for complex capital procurements with supported interventions defined for the locomotive fleet procurement. 12 CONFIDENTIAL

  13. SOC Specific Highlights • Energy • The Department was instrumental in securing Cabinet support for the funding support package of an additional R174 billion in Government Guarantees bringing the total Government support to R350 billion.  This will enable Eskom to deliver on the build programme. • Broadband • Construction & Maintenance Agreement and Supplier Contract Agreement for the West African Cable System (WACS) was signed on 8 April 2009. • Infraco launched its commercial offering at pricing 10% below market levels in November 2010. • Defence • A Framework for the resolution of Denel Saab Aerostructures was developed. • A roll-over of guarantees amounting to R1.85b was secured as interim support to Denel. • Mining • The Richtersveld Community and Alexkor entered into a Pooling and Sharing Joint Venture on 7 April 2011 with the Richtersveld Mining Company on a 51%/49% profit share respectively. • Funding for obligations arising from the Deeds of Settlement acquired and additional funding being explored for new business ventures. 13 CONFIDENTIAL

  14. SOC Specific Highlights • Forestry • The Department initiated work on SAFCOL’s future role for consultation with other stakeholders, to ensure enhanced financial and commercial viability and developmental contribution in light of the role SAFCOL can play in rural development. • Transport • Major Competitive Supplier Development Plan (CSDP) contract between Transnet and General Electric (GE) was signed in June 2010. 90 of the 100 locomotives to be built in South Africa. Transnet received the first two diesel electric locomotives from the GE transaction in February 2011. • SAA approved the Airbus transaction and took delivery of the first A330-200 aircraft in February 2011. Please refer to the Annexure at the end of the presentation for a detailed progress report. 14 CONFIDENTIAL

  15. Budget allocation for 2011/12 and expenditure to 31 January 2012 Overview of Departmental Expenditure – 31 January 2012 • SUMMARY • Voted funds for the year 2011/12 R 230 231 000 • Rollovers received R 3 378 000 • Add: Additional Compensation of Employees R 3 478 000 • Transfer funds received R 116 255 000 • Voted funds for the year 2011/12 R 353 342 000 • Less: Expenditure from 1.04.2011 – 31.01.2012 R 297 337 069 • Less: Commitments as at 31.01.2012 R 13 385 804 • Remaining funds R 42 619 127 15 CONFIDENTIAL

  16. Explanatory notes regarding budget expenditure as at 31 January 2012 • The department has spent 84.15% of its budget. The standard item expenditure is as follows: • Compensation of Employees: An amount of R 19 million remains unspent under this item. The underspending is due to vacant posts mainly at MMS and SMS level. • It is estimated that an amount of R4.5 million will remain unspent under this item after salaries are paid for February and March. • Goods and Services: The expenditure under this item is R 58.2 million. If commitments (orders placed) are taken into consideration, 76.04% of the total budget has been spent. An amount of R 22.5 million remains unspent under this item, however if projections from units for projects still underway amounting to R8.6 million are taken into account in addition to normal operational expenditure ,it is estimated that this figure will be considerably reduced. • Transfer Payments: The transfer payments influence the overall expenditure of the Department as they comprise 44.4% of the total budget. The transfer payment to PBMR of R 40 million was disbursed in May 2011 and the payment to Denel of R 116.2 million was disbursed in December 2011. • R 721 897 under the economic classification for Transfer to Households is a provision for gifts, donations and sponsorships. • Capital Expenditure: The expenditure under this item amounts to R 1.8 million, which is 82.05% of the total budget for capital expenditure. If commitments are taken into consideration, 82.35% of the budget has been spent. 16 CONFIDENTIAL

  17. Minister’s Service Delivery Agreement Outcome 6 : An Efficient, Competitive and Responsive Economic Infrastructure Network 17 CONFIDENTIAL

  18. Outcome 6 : An Efficient, Competitive and Responsive Economic Infrastructure Network The Department is focused on achieving the outputs and sub-outputs linked to Outcome 6 and those contained in the Minister’s Service Delivery Agreement. These are: • improving the delivery and maintenance of infrastructure and monitoring the rollout of the Transnet’s and Eskom’s build programmes; • achieving policy and regulatory clarity in sectors in which the state owned enterprises operate; • improving the operational efficiencies of the state owned enterprises, particularly in relation to the reliable delivery of rail and ports services and the reliable generation, distribution and transmission of electricity; • and developing operational indicators for each of the required sub-outputs identified as part of the delivery agreement. Where necessary, these will be included in the Shareholder Compacts concluded between the Boards of the SOC and the Minister. 18 CONFIDENTIAL

  19. Outcome 6 : Progress to date (1) • Improving competition and regulation • Work on the Rail Policy and Rail Act has progressed to the finalisation of a draft green paper, now under industry stakeholder consultation. • A Private Sector Participation (PSP) framework has been developed to address private sector participation in rail. • Generation, distribution and transmission of energy • Legislation for the creation of and Independent Electricity System Operator (ISMO) was introduced in Parliament by the Department of Energy and it is expected to be promulgated during 2012. • Following the Minister’s directive, Eskom has ring-fenced the System and Market Operator (SMO) unit. The implementation plan to establish the SMO as a subsidiary is being finalised. • Approximately 248 000 households were electrified during the period from November 2010 to November 2011, and 3 655 homes were connected to off-grid solar systems. 19 CONFIDENTIAL

  20. Outcome 6 : Progress to date (2) • Generation, distribution and transmission of energy Eskom build programme (as end of 2011) • Medupi is 35% complete, with 56.9% of the budget having being spent. • Kusile is 17% complete, with 30% of the budget having being spent. • Ingula is 41% complete, with 54.3% of the budget having being spent. • The Return to Service program is 93.5% complete, with 89% of the budget having being spent. • Transmission projects are more than 70% complete, with 70.4% of the budget having being spent. • Regarding the development and implementation of Coal Haulage Road-to-Rail Logistics for Eskom’s fleet of coal-fired power stations, a Cooperation Agreement between Eskom and Transnet has been signed by both parties in November 2011. The resulting Haulage Agreement details the routes and sources of coal to be transported to Eskom powers stations. 20 CONFIDENTIAL

  21. Outcome 6 : Progress to date (3) • Logistics: road, rail and ports • With regard to increasing the market share of total freight from a 177 mtpa baseline to rail, to an annualised 250 mtpa by 2014, 178 mt was achieved in 2010/11. Up to December 2011, 148mt was recorded and Transnet is on track to achieve 206mt by the end of the 2011/12 financial year. • With regard to productivity improvements at the Durban container terminal (DCT), an average of 24.8 crane moves per hour was achieved in 2010/11, from 21 crane moves/hour in 2009/10, in line with the target of 25 crane moves/hour for that year. • Transnet’s build projects are generally on track. Two container berths at the Ngqura port have been completed and an additional two will be completed by March 2012. 875 000 containers have been handled at Ngqura since it opened in October 2009, and the additional two berths will improve capacity to 800 000 containers per annum. • The National Multi Products Pipeline (NMPP) 24 inch trunk line for petroleum products from Durban to Jameson Park was completed and commissioned in January 2012. • Three rail branchline opportunities for private sector concession in 2012/13 have been identified and there has been consultation with KZN, Northern Cape, and Free State Provinces in this regard. 21 CONFIDENTIAL

  22. Outcome 6 : Progress to date (4) • Information and communication technology • Following the establishment of Broadband Infraco, wholesale broadband prices have dropped by about 73%. • As part of its mandate to increase access to broadband services, Broadband Infraco has access to 18 Points of Presence (POPs), of which 5 are open access sites in the main centres. • Sentech and Broadband Infraco have also commenced with the Broadband Plan for the Kwazulu-Natal Province Pilot project, and site surveys on three districts are complete. 22 CONFIDENTIAL

  23. 2012/2016 Strategic Plan Priorities, Budget, Organisational Structure and HR Statistics 23 CONFIDENTIAL

  24. Programme 1: Administration Priority Areas Continuous performance improvement to ensure delivery of the Department’s strategic goals. Effective talent management and attraction and retention of key skills. Consistent and clear messaging on Government’s intent for SOC. Implementation and improvement of appropriate policies, processes, procedures, time-lines and co-ordination and management of outcomes-based reporting. 24 CONFIDENTIAL

  25. Priority Areas Provide legal services to the Department and support oversight of SOC as well as developing affective corporate governance and shareholder management services on an ongoing basis. Facilitate effective monitoring of corporate governance and compliance indicators within the Department as well as the SOC via the Isibuko Dashboard on a quarterly basis. Monitor and assess the impact of various legislation on SOC and alerting them to changes and possible risks where detected. Repeal of the Aventura Resorts Act: This will be initiated once the process to wind up and deregister Aventura is completed. Programme 2: Legal and Governance 25 CONFIDENTIAL

  26. Programme 3 : Portfolio Management and Strategic Partnerships The sub-programmes in this Programme are as follows: • Energy and Broadband Enterprises – Includes Eskom, Pebble Bed Modular Reactor (PBMR) and Broadband Infraco. • Manufacturing Enterprises- Includes Denel, Alexkor and South African Forestry Company (SAFCOL). • Transport Enterprises - Includes South African Airways (SAA), South African Express (SAX) and Transnet Limited. • Economic Impact and Policy Alignment – aligns SOC with overarching government economic, social and environmental policies. • Strategic Partnerships – aims to ensure SOC commercial sustainability and attainment of desired strategic outcomes and objectives by SOC. 26 CONFIDENTIAL

  27. Energy and Broadband Enterprises Priority Areas Effective shareholder oversight of Eskom and Broadband Infraco. Support Eskom in ensuring security of electricity supply. Reduce dependence on the fiscus by monitoring cost escalations, delivery schedule (time) and quality of the build programme and developing innovative funding mechanisms. Implementation of the PBMR care and maintenance programme. Support Broadband Infraco’s efforts towards increased access to broadband. 27 CONFIDENTIAL

  28. Manufacturing Enterprises • Priority Areas - DENEL • Effective shareholder oversight of Denel. • Definition of Denel’s future role and strategic mandate with associated Turnaround Plan. • Denel/defence industry support framework . • Review of the progress of the 2008 Denel End State Cabinet recommendations. • Denel Aerostructures business sustainability. • Priority Areas - ALEXKOR • Effective shareholder oversight of Alexkor. • Re-direction of Alexkor’s commercial focus and sustainability. • Alexkor Board Review. • Oversight of Richtersveld Deed of Settlement implementation. 28 CONFIDENTIAL

  29. Manufacturing Enterprises • Priority Areas - SAFCOL • Effective shareholder oversight of SAFCOL. • Definition of role and institutional form for SAFCOL. • Maximising current processing assets. • Transfer of Minority Shares. • KLF land claims Settlement Model. • Enhanced Developmental Contribution. 29 CONFIDENTIAL

  30. Transport Enterprises • Priority Areas - Transnet • Effective shareholder oversight of Transnet. • Ensure the contribution of Transnet to achieving an efficient, competitive and responsive infrastructure (output 3 of outcome 6) – As per Minister’s performance agreement. • Develop National Corridor Performance Measurement (NCPM) tools and indicators. • Improve investment in transport infrastructure. • Development of a long term integrated transport infrastructure network plan. • Priority Areas - SAA and SAX • Effective shareholder oversight of SAA and SAX. • Strengthen financial and liquidity position of SAA and SAX to ensure sustainability of the airlines. • Further development and implementation of the African Aviation Strategy. 30 CONFIDENTIAL

  31. Economic Impact and Policy Alignment The sub-programmes in this Programme are as follows: Environmental Policy Alignment - oversees alignment and implementation of SOC strategically important developments (SIDs) with special focus on the Eskom and Transnet Build Programmes. Oversight of SOC alignment with Climate Change Policy and with ‘Green Economy’ strategies. Economic Policy Alignment - will focus on appropriate macro-economic modeling and research to enhance the links between industrial policy, macro-economic policy and the role of the SOC. Economic modeling will be outsourced to relevant institutions to determine the impact of SOC investment and operations on the economy, including the impact on customers and suppliers. Transformation, Skills and Youth Development - will focus on the provision of scarce and critical skills by the SOC in support of the National Skills Agenda and the New Growth Path as well as optimizing the SOC skills training facilities through National Skills Funding, amongst others. Transformation and Youth Development areas will form new areas for incorporation into SOC Shareholder Compacts. This includes overseeing the alignment and implementation of SOC transformation agenda in support of national policies and the New Growth Path Framework, with focus on: job creation; youth development, and development of targeted groups (i.e. women, people with disabilities, co-operatives, etc); Broad-Based Black Economic Empowerment (B-BBEE), Employment Equity (EE) and disposal of non-core property. 31 CONFIDENTIAL

  32. Economic Impact and Policy Alignment • Priority Areas • Oversee processes to conduct macro-economic modelling, research and impact evaluation and ensure SOC contribute to New Growth Path. • Supervise processes to enhance and advance alignment between national industrial policy, macro-economic policy and the role of SOC and monitor implementation. • Oversee alignment and the provision of scarce and critical skills by SOC and their suppliers in support of the National Skills Agenda and the New Growth Path. • Facilitate partnerships for artisan and technician development to optimise SOC training facilities by increasing the number of artisan learners for the national pool. • Oversee processes to ensure that SOC comply with the environmental laws and climate change mitigation measures, while supporting SOC business needs. 32 CONFIDENTIAL

  33. Strategic Partnerships Focus Areas Identification and oversight of major investment projects that go beyond SOC balance sheet capacity. Secure funding for major investment projects that go beyond SOC balance sheet capacity. Leveraging SOC procurement programmes to drive industrialisation and create jobs. 33 CONFIDENTIAL

  34. DPE Budget – Appropriation per Programme Over the medium term, expenditure is expected to decrease from R353.3 million to R223.2 million, at an average annual rate of 14.2 per cent, as a result of a reduction in transfer payments to State Owned Companies. Spending on Compensation of Employees is expected to increase to R118.1 million over the medium term, at an average annual rate of 5.7 per cent, due to adjustments for improved conditions of service and an increase in the Department’s staff complement. As a result, expenditure on goods and services is also expected to increase to R102.4 million in 2014/15, at an average annual rate of 2.8 per cent to provide support to the larger personnel establishment . In addition to the above, payments for financial assets amounting to R1.05 billion in 2012/13 are allocated to Denel (R700 million) and Alexkor (350 million) in 2012/13. 34 CONFIDENTIAL

  35. DPE Budget – Appropriation per Economic Classification 35 CONFIDENTIAL

  36. DPE Budget – Summary of Transfer payments and Payment for Financial Assets to State Owned Companies *The allocation of R350 million to Alexkor to address liabilities in terms of the Deed of Settlement and other obligations as well as R700 million to Denel to re-capitalise Denel Aerostructures in 2012/13 are classified as Payments for Financial assets in the Economic Classification on the Standard Chart of Accounts. R116.3 million was allocated and paid to Denel in 2011/12 in respect of an indemnity claim granted to Denel Aerostructures. R40 million was allocated and paid to the PBMR in 2011/12 for the statutory requirement for decommissioning and dismantling the fuel development laboratory. 36 CONFIDENTIAL

  37. The Department undertook an organisational review process which resulted in the development of a new organizational model and functional structure in line with our strategic objectives. Minister Public Enterprises Deputy Minister Public Enterprises Director-General Public Enterprises Programme2: Legal & Governance Programme 1: Administration Programme 3: Portfolio Management And Strategic Partnerships Economic Impact and Policy Alignment Strategic Partnerships Energy and Broadband Enterprises Manufacturing Enterprises Transport Enterprises 37 CONFIDENTIAL

  38. DPE statistics as at 1 March 2012 Total establishment as at 31 April 2011 Filled posts as at 01 April2011 Interns appointed Graduate Development Programme 186 163 19 6 Total establishment as at 1 March 2012 Filled posts as at 1 March 2012 Vacancies as at 1 March 2012 Interviews in progress 189 171 18 Interviews: 13 Advertised : 3 To be advertised: 2 Total new appointments (01/04/11-01/03/12) 26 16 5 5 Level 13 – 16 Level 9 - 12 Level 1 - 8 10 7 2 1 Total exits (01/04/11-01/03/12) Level 13-16 (7 Resignations) Level 9 -12 (1 Resignation, 1 Transfer) Level 1 -8 (1 Dismissal) Vacancy Rate as at 1 March 2012 9.52% Public Sector Vacancy Rate as at 1 March 2012 : 22% (overall status) Public Sector Turnover Rate as at 31 March 2011: 18 % (overall status) 6.13% Turnover Rate as at 1 March 2012 10 Exits ÷ 163 (Total exits divided by Filled posts as at 1 April 2011) 38 CONFIDENTIAL

  39. Employment Equity Targets - as at 1 March 2012 Statistics SA (mid-year population estimates) Statistics SA (mid-year population estimates) African Indian Coloured White Disability F M F M F M F M DPSA Target Target 39.2% 40.3% 1.3%  1.2% 4.5% 4.4% 4.7% 4.5% 2% Achieved % Actual 43.27% 74 40.35% 69 2.33% 4  1.75% 3 3.50% 6 2.33% 4 5.26% 9  1.16% 2 3.50% 6 39 CONFIDENTIAL

  40. Top strategic risks identified in DPE (1) 40 CONFIDENTIAL

  41. Top strategic risks identified in DPE (2) 41 CONFIDENTIAL

  42. Challenges facing the Department • Legislative framework supportive of DPE’s specific shareholder mandate/role requires clarification. • Challenges with skills attraction and retention. • Technical staff capacity constraints means that current resources need to stretch further. • Budgetary constraints. • Interdepartmental co-ordination and alignment on mandates of SOC requires strengthening. • Impact of recession on SOC. • Established corporate governance frameworks for Shareholder oversight and actual practices of SOC outcomes against these frameworks has been varied e.g.  • boardroom disputes (between Boards and Management) • procurement practices, including. for major capital investments • financial accounting practices • remuneration practices. 42 CONFIDENTIAL

  43. How the Select Committee can assist the Department? • Adequate notice for presentations and briefings in order to assist with proper planning and execution of functions and duties. This will assist the department with efficient use of resources given current constraints. • Clear and specific requirements for reporting will result in improved preparation and a common understanding of expectations. • Assist the Department to secure additional funding for its operations. • Participation and engagement in the DPE’s annual Parliamentary Learning Programme to provide insight into the sector and key issues of relevance to NCOP. • Engaging counterpart Committees and Departments that are critical to securing a conducive policy and regulatory environment for SOC. • Regular engagement on issues of mutual interest affecting the SOC. 43 CONFIDENTIAL


  45. Annexure:Audited Programme Specific Key Outputs and Progress Report to date 45 CONFIDENTIAL

  46. Programme 2 : Energy & Broadband Enterprises 46 CONFIDENTIAL

  47. Progress Report • Completed. Process was initiated and concluded successfully. • Funding model for the Eskom Build has been concluded. A proposal for funding the IRP is currently being concluded between Eskom and DPE for the Minister’s approval. • Procurement and delivery of new build tracked on quarterly basis. Delivery currently on schedule, despite significant risks. • 8.2 million tonnes of Coal is targeted to be moved by rail by end of March 2012, a Cooperation Agreement between Eskom and Transnet has been concluded. Haulage Agreement detailing the routes will be concluded soon. • A ring-fenced System and Market Operator Unit (SMO) unit within Eskom is in place, and the significant work has been done to move this unit to a subsidiary of Eskom as part of the transition to ISMO (Independent System and Market Operator). Energy (Eskom) Targeted output • Appointment of CEO and Chairman in 2009. • Funding model for the Generation Capacity Expansion (Build) programme to ensure security of supply. • Monitoring the Implementation of the Eskom Infrastructure Build Programme. • Ensuring the development and implementation of Coal Haulage Road-to-Rail Logistics for Eskom’s fleet of coal-fired power stations. • Creation of regulatory and institutional structures for the introduction of viable Independent Power Producers (IPP) and the start of the process for the participation of IPPs in 2010. 47 CONFIDENTIAL

  48. Targeted Output Progress Report • Quarterly assessments completed. • Ongoing quarterly assessment and project to be completed by mid 2012. • Compact concluded and signed, despite a delay in the process towards finalisation. Broadband (Broadband Infraco) Targeted output 2009/10 • Quarterly assessment of the completion of planned capital programmes and roll-out of the National Long Distance Network. • Monitoring of the construction of the West African Cable System (WACS) project. • Shareholder Compact with Broadband Infraco. 48 CONFIDENTIAL

  49. Progress Report • PBMR has been granted a PFMA exemption from submitting corporate plans, shareholder compacts and quarterly reports due to the company’s transition to “care and maintenance” in 2010. • Monthly meetings being held and progress on the rationalisation is being monitored. Nuclear (PBMR) Targeted output • Oversight of PBMR. • PBMR’s Rationalisation. 49 CONFIDENTIAL

  50. Programme 3 : Legal and Governance 50 CONFIDENTIAL