Presentation to the
Portfolio Committee on
Public Enterprises
Presenter:
Venue:
Date:
Malixole Gantsho
Cape Town
19 August 2002
Restructuring Status Report: Portfolio Committee August 2002
Page 1
DPE - Background
• The Office for Public Enterprises was originally established in
1994 as a Schedule two organisation. At the time the primary
objective of the Office was to champion and direct the
restructuring of State Owned Enterprises (SOEs) to ensure
optimum economic and development impact.
• On 25 July 1995 the Ministry of Public Enterprises, issued a
"Discussion Document by the GNU on the Consultative and
Implementation Framework for the Restructuring of State
Assets".
• HSBC was government’s overall restructuring adviser from
October 1996 to October 1999, with various advisors’
involvement at a specific transaction level.
• Their mandate allowed various government departments to
draw heavily (transfer skills) on their expertise and resources at
a fee.
Restructuring Status Report: Portfolio Committee August 2002 Page 2
DPE - Background
• At a Government “Lekgotla” in November 1999, a decision was
taken to accelerate the restructuring of State Owned
Enterprises (SOEs).
• In 1999 the Minister of Public Enterprises made a
representation for the upgrading and re-designation of the
Department of Public Enterprises as a schedule I National
department, from being a schedule III Office.
• This necessitated the need to source sector specific skills in
energy, telecommunications, defence and the transport sector.
• Furthermore, the department also focused on non-core assets
and specialist services where transaction are managed within
the restructuring programme of the department.
• In August 2000 Government through the Department of Public
Enterprises unveiled its restructuring of state owned enterprises
framework – Policy Framework: Accelerated Agenda for the
Restructuring of State Owned Enterprises
• This framework forms the basis of the South African
Government’s restructuring programme.
Restructuring Status Report: Portfolio Committee August 2002 Page 3
DPE - Vision
•
The Department feels that it is important to have one common,
shared understanding of where it is going as an organisation.
That a clear vision would provide the rallying cry and spirit of
camaraderie needed in order to enable it to deliver on its
mandate. The Department has formulated the following
organisational vision to guide it through the next four years:
“Restructured SOEs in a globally competitive environment promoting
economic growth and a better life for all”.
New Vision (confirmed):
Restructured State Owned Enterprises, in a globally competitive
environment, promoting economic growth and a better life for all.
Restructuring Status Report: Portfolio Committee August 2002 Page 4
DPE - Mission
•
The vision can only be accomplished if it is translated into
actions that people can engage in and having done so can be
measured in terms of how well their efforts contributed towards
achieving the vision. Therefore the next level of operation of the
vision is the mission. The Department has formulated the
following organisational mission to guide it through the next four
years
“To direct and manage the accelerated restructuring of SOEs to maximise
shareholder value”.
New Mission (revised):
Maximize shareholder value, to support the achievement of economic
and social objectives of Government.
Restructuring Status Report: Portfolio Committee August 2002 Page 5
DPE’s Mandate
•
•
•
•
•
•
•
•
•
Accelerate the restructuring agenda of SOEs
Maximising shareholder value
Promoting macro-economic growth and competition
Promote wider participation in the economy (IPOs retail offer for
HDIs) and restructuring (BEE)
Mobilise private capital and expertise
Ensure that SOEs are efficient, competitive and promote
service delivery
Monitor and measure performance
Contribute to lower public sector borrowing
Mitigate country risk associated with implicit contingent
liabilities and also those that are explicit (guarantees)
Restructuring Status Report: Portfolio Committee August 2002 Page 6
Social and Economic Impact
Internal to the firm,
industry or sector
Broader economic
impacts
Social impacts
Enhancing efficiency and
effectiveness of state
enterprises
Reducing the public
sector borrowing
requirement
Ensuring wider
participation in the South
African economy
Accessing globally
competitive technology
Attracting foreign direct
investment and portfolio
inflows
Mitigating possible
negative social impacts
arising from restructuring
Creating effective market
structures in the sectors
currently dominated by
state owned enterprises
Mobilising private sector
capital and expertise
Financing growth and the Promote sustainable
requirements for industrial employment, either
competitiveness
directly or indirectly,
through improvements in
the economy
Restructuring Status Report: Portfolio Committee August 2002 Page 7
INSTITUTIONAL FRAMEWORK
INSTITUTIONAL FRAMEWORK
Cabinet
Cabinet Committee
for Investment Employment
NFA
NEDLAC
Ministers Subcommittee
on Restructuring of SOEs
Cabinet Office:
Administration
Other
D-G Cluster
Policy Unit
Technical Teams
"Oversight"
DPE
Secretariat Support
Oversight Committee
Convened by DPE
Restructuring Status Report: Portfolio Committee August 2002 Page 8
PARLIAMENT
DPE Organisational Chart
Sivi Gounden
Director-General
Jeff Radebe
Minister
Ike Nxedlana
Chief Financial
Officer
Finanical
Management
Nonkululeko Msomi
Chief Director
Performance
Monitoring &
Benchmarking
Malixole Gantsho
DDG
Restructuring
Moretlo Mokuele
Chief Director
Corporate
Services
Eugene Mokeyane
Nthabiseng Seperepere
DDG
Director
IPO Office Alternative Service Delivery
Restructuring Status Report: Portfolio Committee August 2002 Page 9
Executive Summary - Biography
Jeffrey Radebe, MP, Minister of Public Enterprises
Minister Radebe is the political head of the Department of Public
Enterprises. He holds advanced international law degrees and
was an awarded an honorary Doctrate in Humane Letters by
University of Chicago.
His development and thinking is insipired by writings of progressive
thinkers like Karl Marx, Angela Davis, Albert Luthuli.He is
currently serving his second term as a cabinet Minister, and was
previously Minister of Public Works. His long standing political
history and activism in liberation struggle of our country
contributed in his vision and commitment to the cause of the
people. It is this experience that inspire his work in his current
potfolio in ensuring that the plight of State Enterprises
contributes to the socio- economic developments in our society.
Restructuring Status Report: Portfolio Committee August 2002 Page 10
Dr Sivi Gounden – Director General
Dr Sivi Gounden
In April 1999, he was appointed Director
General of the newly established Department of
Public Enterprises. He holds a PhD –
Engeneering from Univesity of Natal. He has
extensive experience in developmental projects
through public sector procurement. His previous
position at Department of Public Works saw him
introducing the concept of Public Private
Partnership for Public sector procurement and
he also contributed to government’s green paper
on Public Sector Procurement in 1996.
Restructuring Status Report: Portfolio Committee August 2002 Page 11
BACKGROUND OVERVIEW
“WHY RESTRUCTURING”
• Macro- economic benefits – reduction of Government’s
borrowing requirement, contingent liabilities (guarantees) and
lower interest rates
• Ensure wider active participation in the South African economy
• Enhancing dynamism & competitiveness thereby enhancing the
efficiency of the various SOEs
• Unlocking Private Sector – led growth
• Free resources for social services and infrastructure spending
• Consumers to benefit from lower prices and higher quality
services brought by expanded competition
• A catalyst for Foreign Direct Investment (FDI) a.k.a “brick and
mortar”
• Accessing globally competitive technology
• Development of Capital Markets
Restructuring Status Report: Portfolio Committee August 2002 Page 12
Forms of Restructuring
•
•
•
•
•
•
•
•
Concessions (BOT)
Strategic Equity Partner (SEP)
Strategic Management Partner (SMP)
Public Private Partnership (PPP)
Privatisation (Full or Partial)
Securitisation
Equity Linked Products (Convertibles)
Floatation of SOEs (Initial and Secondary)
Restructuring Status Report: Portfolio Committee August 2002 Page 13
Overview of Restructuring 2001-2002
Government remains strongly committed to restructuring
of state owned enterprises as an integral part of our
economic and social transformation.
Commitments Made to the Portfolio Committee Last Year
•
2002/2003 represents acceleration in the implementation of SOE
restructuring.
•
Need for the alignment of Portfolio Committee program with
Departmental program to ensure constructive engagement prior to
implementation.
•
Commitment to avail Ministry and Departmental resources to support
Portfolio Committee program.
Restructuring Status Report: Portfolio Committee August 2002 Page 14
Overview of Restructuring 2001-2002
Commitments Made to the Portfolio Committee Last Year (Cont)
•
Finalization of sectoral policies.
•
Finalisation of critical legislation
•
Interaction with organised labour on restructuring initiative
•
Careful review of current shareholder compacts and development of
future shareholder compacts 2002/2002 represents acceleration in the
implementation of SOE restructuring
Restructuring Status Report: Portfolio Committee August 2002 Page 15
Overview of Restructuring 2001-2002
Progress Made 2001 – 2002
•
Significant progress was made in key sectoral polices, such as
telecommunications, energy, mining and ports. These policies and
legal frameworks lay the basis for accelerated restructuring this year
and beyond.
•
Last year saw also a concentrated emphasis on non-core assets, such
as Aventura, Alexcor, and Air Chefs.
•
Significant progress was made also in developing a culture of
corporate governance in SOEs through strengthening of boards,
conclusion of shareholder compacts, and a framework for managing
shareholder interests.
Restructuring Status Report: Portfolio Committee August 2002 Page 16
Overview of Restructuring 2001-2002
Progress Made 2001 –2002 (continued)
•
Significant progress was made in key sectoral polices, such as
telecommunications, energy, mining and ports. These policies and
legal frameworks lay the basis for accelerated restructuring this year
and beyond.
•
Last year saw also a concentrated emphasis on non-core assets, such
as Aventura, Alexcor, and Air Chefs.
•
Significant progress was made also in developing a culture of
corporate governance in SOEs through strengthening of boards,
conclusion of shareholder compacts, and a framework for managing
shareholder interests.
Restructuring Status Report: Portfolio Committee August 2002 Page 17
Overview of Restructuring 2001-2002
Progress Made 2001 –2002 (continued)
•
We have clearly demonstrated our commitment to engage and consult
with all relevant stakeholders to build consensus and support for
restructuring initiatives.
•
We have strengthened the functioning of the NFA, which has seen
greater participation by labor in the development of restructuring
models for energy, (rail) transport and defense.
•
DPE and SOEs have continually provided briefings to the portfolio and
select committees to ensure a common understanding of restructuring
challenges and for Parliament to effectively fulfill its oversight role.
Restructuring Status Report: Portfolio Committee August 2002 Page 18
Overview of Restructuring 2001-2002
Progress Made – 2001 2002 (continued)
•
We have continued to enhance our internal capacity to manage
the complex challenges of restructuring.
•
For the past financial year, the Department achieved an unqualified
audit report, which reflects prudent financial management systems and
controls, in compliance with the PFMA.
•
In spite of major difficulties and challenges in 2001, including volatile
financial markets and a global economic slowdown, especially in
airline and telecom sectors, government’s restructuring program
remains on track and moving ahead.
Restructuring Status Report: Portfolio Committee August 2002 Page 19
Key Challenges 2002-2003
•
•
•
•
•
Continue to make a meaningful contribution to government’s
macroeconomic objectives
Continuous engagement with labor
Unfavorable market conditions
Communicating restructuring program to the wider South African
community
Achieving meaningful Black Economic Empowerment
Restructuring Status Report: Portfolio Committee August 2002 Page 20
KEY PROJECTS FOR 2002 - 2003
•
•
•
•
•
•
•
•
Restructuring
Initial Public Offering (IPO)
Performance Monitoring
Strategic Analysis
Alternative Service Delivery
Communications
International Relations
Finance
• Non-Core Restructuring
• Summary of Challenges and Proposed Way
Forward
Restructuring Status Report: Portfolio Committee August 2002 Page 21
Restructuring of State Owned Enterprises
Overview
• Introduction
• Energy
• Telecommunications
• M-Cell
• Second National Operator (SNO)
• Defence
• Transport
• Forestry
• Mining – Alexkor
• Aventura
• Non-Core Restructuring
Restructuring Status Report: Portfolio Committee August 2002 Page 22
Introduction
Purpose Statement of Restructuring Branch
“To co-ordinate development and accelerate the execution of restructuring plans for
state owned enterprises in line with the Department’s vision”
Key Objectives
* Coordinate, Develop and Implement Restructuring and Transaction Plans
* Promote Wider Economic Participation In the SA Economy
* Realize Proceeds from Restructuring Transactions
* Enhance Global Competitiveness of SOEs
* Promote Long Term Sustainable Employment
* Ensure Stakeholder Support for Restructuring Plans
* Safeguard the Integrity and Transparency of the Restructuring Process
Key Functions and Activities
•
•
Support services; Legal Services; Financial Modeling and Risk Analysis; Projects
and Transaction Management;
Sectors: Energy; Mining; Hotels and Resorts; Defence; Forestry;
Telecommunications; Non-Core Assets
Core Values
Honesty/integrity; Trust; Professionalism; Teamwork; Respect; Commitment;;
Transparency; Accountability; Effectiveness/efficiency; Discipline.
Restructuring Status Report: Portfolio Committee August 2002 Page 23
Energy Sector
Global Trends
The electricity sector of most countries in the world are being
driven by:
 The desire to improve allocative and operational efficiencies
 The desire to widen customer choice
 Technological change
 Financing needs and markets
 Environmental pressures
 The particular needs of the country
Restructuring Status Report: Portfolio Committee August 2002 Page 24
Energy Sector
(cont.)
Progress to Date
2002
•
Incorporation of Eskom as a company in terms of the Eskom Conversion
Act - Act No. 13 of 2001
•
Appointment of new Board of Directors by end of 2001.
•
Generation, Transmission and Distribution set up as operating divisions,
as a result of the Act
•
Ongoing restructuring of the Eskom Enterprises of Eskom - process of
identifying a SEP for Rotek underway to complete 2002
•
Technical team comprised of DPE, DME, DPLG, NER, Eskom, SALGA
set up and submitted recommendations on key issues regarding
restructuring of the energy sector.
Restructuring Status Report: Portfolio Committee August 2002 Page 25
Energy Sector (Cont.)
2002 – 2003
•
Implement Generation, Transmission and Distribution as
wholly owned subsidiaries of Eskom
•
Ringfencing of Distribution Business: Distribution moves out of
Eskom Holdings into a separate EDI holdings company
(Dependent on EDI process led by DME). Legal
documentation setting up EDI Holdings in process of cabinet
approval
•
Commence commissioning and sale of 10% of Eskom’s
capacity with BEE focus. Introduction of 20% SEP stake to
commence, with focus of foreign direct investment .
•
Further planning and development of the market structure will
be dependent on prevailing conditions
•
This is subject to the development of an appropriate regulatory
framework and market rules being in place.
•
Multi Market Model is currently being developed
Restructuring Status Report: Portfolio Committee August 2002 Page 26
Telecommunications Sector
(cont.)
M-Cell
• Our objectives are
– to encourage the development of a strong local
telecommunications sector with strong growth prospects
and high quality service, and
– to maximise value through an efficient and orderly sale
process
• The disposal of Transnet’s stake in M-Cell is an important
part of the programme of restructuring of Government
ownership in the telecommunications sector
• In July 2000 Government sold 75 million shares to Johnnic
Communications @ R33 per share resulting in Transnet
holding 24% of M-Cell
• The detailed preparatory work is now complete for the next
phase of the disposal to be implemented
Restructuring Status Report: Portfolio Committee August 2002 Page 27
Telecommunications Sector
(cont.)
M-Cell
• On 30 May 2001 Request for Proposal (RFP) and other
transaction documents to suitable potential bidders issued
• In January 2002 the 20% Transnet M.Cell stake was
“monetized” , for 18 months and taken by Ice Finance BV, a
Dutch company, yielding USD 475 Million. JP Morgan
facilitated the transaction.
• Payments have since been transferred to Transnet bank
account by Ice Finance BV Transnet will benefit from the
economic performance of these shares during the 18 months
but have hedged against poor performance
• Process of identification of buyer of the 20% stake is
ongoing, with intention to dispose in the 2002/2003 financial
year.
• Government is committed to sell its strategic stake in M-Cell
at a price that reflects the true market value of the stock
• Different options are now being considered.
Restructuring Status Report: Portfolio Committee August 2002 Page 28
Telkom IPO Report - Introduction
SNO
• It has been agreed that there will be a 30% set aside for Eskom
(Esi-tel) and Transnet (Transtel) in the SNO
• DPE has facilitated that Esi-tel and Transtel” participation in the
SNO by making recommendations as to the value added that
these entities will bring to the SNO
• SOE partners set data rooms in preparation for due diligences
• Esi-tel and Transtel will be able to begin operations once the
licence is issued
Restructuring Status Report: Portfolio Committee August 2002 Page 29
Defence Sector
Denel
• BAE Systems invited to become SEP in Denel on the basis
of the complementary fit between the two broad based
defence groups. Negotiations are at an advanced stage with
BAE Systems to acquire significant minority stake in Denel
• Turbomeca of France invited to become a SEP for Denel's
Airmotive division and acquire a majority stake .
• Negotiations currently underway with both SEPs with regard
to shareholders agreements and transaction documents.
• On basis that acceptable commercial terms are reached,
aim is to complete both transactions by end March 2002.
• Heads of agreement with Turbomaca signed 25 Feb 2002
Restructuring Status Report: Portfolio Committee August 2002 Page 30
Transport Sector
(cont.)
Transnet End State
•
Government and Transnet’s management are currently of the view
that Transnet should remain a holding company and position itself as
an integrated transport infrastructure and logistics company.
•
A Cabinet decision on the Transnet end state is expected before end
March 2002. This will clarify the future of its divisions and
subsidiaries, give direction to finalization of Transnet restructuring
plans and help to coordinate concurrent restructuring projects.
Restructuring Status Report: Portfolio Committee August 2002 Page 31
Transport Sector
(cont.)
Spoornet
• Establishment of Rail Safety Regulator including legislation by
end of calendar year – DoT (provisional)
• Adoption by Government of a restructuring model for Spoornet’s
freight business in December 2001
• Spoornet to be run as an integrated freight company on an
extended rail network
• Internal restructuring and efficiency improvements to be
implemented
• Options for Orex to be reviewed
• Shadow incorporation of division to be performed – to establish
accountability and address cross-subsidization audit trails and
impact
Restructuring Status Report: Portfolio Committee August 2002 Page 32
Transport Sector
(cont.)
Ports
•
Draft Establishment and separation from Transnet of National Ports
Authority and Port Operations Division ( 2002)
• Establishment of Ports Regulator (March 2002) – NDoT
(provisional)
• 3 year tariff reform process started December 2001
• Concession of some port operations to commence after
enabling legislation has been finalised (Mid-2002) Ports policy
•
•
•
was finalised in January 2002 and is has served before Cabinet. DOT
has been expected to publish this as far back as May 2002
This will be followed by new Ports legislation – NDoT
Consideration is being made to the fast tracking of the Durban
Container Terminal concession, due to congestions at this port.
An Economic Impact Study is underway for the development of a
concession architecture and framework on the basis of which this
concession will take place
Restructuring Status Report: Portfolio Committee August 2002 Page 33
Transport Sector
(cont.)
Petronet
•
•
•
•
•
Technical analysis on restructuring model for Petronet was completed
in November 2001
Implementation of policy framework for regulation of liquid fuel
pipelines (March 2002) – DME (provisional)
DME engaged in finalizing liquid fuel industry framework
Legislation for regulator (March 20010) - DME (provisional)
Establish liquid fuel pipelines regulator (June 2002) – DME
(provisional)
Restructuring Status Report: Portfolio Committee August 2002 Page 34
Transport Sector
(cont.)
SAA
•
•
•
•
Decision taken to reacquire SairGroup 20% stake
Transnet has finalized negotiations and reacquire the Group’s
20% stake in SAA at a significant discount translating to over R
1billion gain for the Group. Price for reacquisition had been
agreed to in terms of the original shareholders agreement.
Global market conditions in the airline industry and the financial
standing of SAA will determine the timing of the decision to either
to list SAA or sell minority stake to an SEP, or any other option.
A Government Task Team has been set up to review and consider
different options for the restructuring of SAA as well as a merger
of SAA and SA Express, and possibly SA Airlink
Restructuring Status Report: Portfolio Committee August 2002 Page 35
Forestry Sector
Achievements / Progress to Date
KwaZulu-Natal Transaction
•
•
•
Legal Agreements signed by SAFCOL and Purchasing Consortium.
The sale was finalized and Assets were transferred in October 1, 2001.
Sale Value was R100 million
Eastern Cape North Transaction
•
•
Sale and transfer of assets to purchaser was concluded in August 2001
Sale Value was R 17 million
Restructuring Status Report: Portfolio Committee August 2002 Page 36
Forestry Sector
(cont.)
Future Plans
Northern Forest Transaction Package
•
•
•
•
•
•
•
The Timetable for the Transaction is confirmed.
The Invitation to Offer was available to the three preferred bidders on
July 6, 2001
Formal bids received 14 September 2001
Cabinet approved two preferred bidders in November 2001
Negotiations with the bidders are underway
The allegations of impropriety against a DPE official are being
investigated by the PSC
Pending these investigations, sale of shares and transfer of assets is
anticipated before end of 2002 fiscal year
Restructuring Status Report: Portfolio Committee August 2002 Page 37
Forestry Sector
(cont.)
Future Plans
Southern and Western Cape land conversion
•
•
•
•
•
•
Cabinet has approved the conversion of 45,000ha of Safcol
unsustainable forestry assets to other uses over a 20 yr period
7000ha immediately available for distribution
This includes 4642ha earmarked for conservation, 1170ha for
agriculture and other options including housing 312ha
Over the period to 2005, 12556ha will be available for conservation
and 2499ha for agriculture
This process is a major step in the ensuring that uneconomic forestry
forestry assets are transferred to and for the benefit of the people of
SA.
Advisors have been appointed.
Restructuring Status Report: Portfolio Committee August 2002 Page 38
Forestry Sector
(cont.)
Future Plans
Southern and Western Cape - SEP
•
•
Safcol is in negotiations with Steinhoff regarding the formation of a JV
between the two parties to increase the capacity and technology of the
Safcol sawmill
This will involve a major capital investment from Steinhoff and
downstream employment opportunities in this area
Restructuring Status Report: Portfolio Committee August 2002 Page 39
Alexkor - Mining Sector
• Act introduced and passed by Parliament
• Act removes restrictions imposed on government when
desiring to dispose its shareholding in Alexkor
• Cabinet decision taken to dispose of 30% of Alexkor stake to
an SEP with BEE and international marketing exposure to add
value.
• 10 % Namaqualand community stake (in Trust) set aside.
• Process in place to introduce SEP by 4th Q 2002
• Task team in place composed of DPE, Alexkor to accelerate
transaction. Terms of reference for advisors and issue of RFP
done. Advisors appointed. Expression of interest process and
prequalification of bidders complete. Final bids to be invited
before end of September. Transaction process to introduce
SEP and BEE to be completed Feb 2003
• Retrenchment process in Alexkor halted and Alexkor agreed
to look at alternative means to carry on with current work
force up to final introduction of SEP later this year
• Some employees will engaged in the shallow water contract
to avoid permanent displacement.
Restructuring Status Report: Portfolio Committee August 2002 Page 40
Aventura – Hotel and Leisure
•
•
•
•
•
•
•
Government owns number of hotel and leisure resorts
In 1999 appointed a management contractor to turn Aventura around
with a view to dispose as going entity.
Recently Cabinet resolved to dispose of all Aventura resorts either in
single entities or groups.
Process of Phase 1 disposal of the non-viable resorts in place for
completion anticipated in March 2002.
Finalization of disposal of two of the three non viable resorts nearing
completion before end of March 2002. The 3rd unit is still awaiting offer.
Government guarantee issued to Aventura to cater for period up to
disposal of all business units
Phase 2 entails disposal of the rest of Aventura by 2002 calendar year.
Currently bids are being considered for some resorts.
Restructuring Status Report: Portfolio Committee August 2002 Page 41
Other Assets Disposals
Apron Services
•
New mandate from Cabinet will be requested :
Sale of 51% inclusive of BEE
SEP to come with BEE before end of 2002
Air Chefs
•
•
•
Non binding bids received
SAA have been approved as purchasers of Air Chef
Transaction finalized
Transnet Housing and Eskom Finance
•
•
•
Consolidation of these entities feasibility study approved
Transaction advisors to be appointed before end January 2002
Study to be finalized before end August 2002
• Other Assets
The Department is in the process of identifying all Non-core assets
and projects to be considered for restructuring. The following have
been earmarked for a speedy restructuring programme:
 Government Printers;  Autopax;  Transmed;  Marine Data
Systems;  SASRIA;  Government Printers; Arivia.Kom; SABC; Post
Office/Post Bank
Restructuring Status Report: Portfolio Committee August 2002 Page 42
PROPOSED WAY FORWARD - RESTRUCTURING
•
Develop and execute a plan to bring labour back on board
•
Develop a clear end state options for each restructuring project. No two
restructuring projects are the same.
•
Develop a clear terms of reference for each advisor
•
DPE should appoint a team to audit advisors on:
– Legitimate roles for BEE and skills transfer
– Promising senior staff but allocating junior staff when the project is sold
– Scope Management
– Quality of Deliverables
•
Develop from Spoornet and Portnet a template to use on Eskom to develop a
restructuring plan
•
Exert tighter control on SOE management to execute the Departments
restructuring mandate
•
Execute regular strategy forum sessions to discuss project issues
•
Execute regular internal and external communication
Restructuring Status Report: Portfolio Committee August 2002 Page 43
Telkom IPO Report
• Introduction………………………………..
• Regulatory regime ………………….……
• Governance and other shareholder
matters ……………………………………
• Telkom IPO budget ………………………
• Syndicate structure …………………….
• Telkom matters ……………….…………
• Targets ……………………………………
Restructuring Status Report: Portfolio Committee August 2002 Page 44
Telkom IPO Report - Introduction
Telkom IPO
• We are ready for the planned listing of Telkom during this
financial year (subject to market conditions)
• The Legislative amendments have been published and the
process is finalized
• The Regulatory provisions have been developed and ICASA
has indicated that it will be published in time.
• Negotiations with Thintana have progressing well and
should be concluded soon
• Since the transaction process commenced, market
conditions in the sector has continued to slide, depressing
the price even further
• The telkom IPO is scheduled to proceed in ernest in the 3rd
–4th Q of 2002.
Restructuring Status Report: Portfolio Committee August 2002 Page 45
Telkom IPO Report - Introduction
Telkom IPO
•The Company preparations for the listing are at an advanced
stage
•Listing Venues are JSE (primary) and NYSE or LSE
(secondary)
•The size of the offering will be finalised shortly
•IPO will be the largest telecoms listing on JSE
•We will also launch the largest Black retail offering in South
Africa which will be preceded by an unprecedented education
campaign of significant scale to highlight the benefits of share
ownership to historically disadvantaged South Africans
Restructuring Status Report: Portfolio Committee August 2002 Page 46
Telkom IPO Report
REGULATORY REGIME
1.
Second National Operator (“SNO”) process
STATUS
The process of licensing the SNO is to be undertaken in 3 phases.
RECOMMENDED STRATEGY
If the SNO process and the additional substantive regulatory issues discussed below
are unresolved at the time of the IPO, the assumptions in Telkom’s business plan,
and subsequently by the analysts and investment community, will be significantly more
conservative. Consequently, there will be a reduction in demand and a significant
discount in the IPO valuation when Telkom is compared to its peers and to previously
considered valuations.
Restructuring Status Report: Portfolio Committee August 2002 Page 47
Telkom IPO Report
2.
·
2001.
.
2001.
·
·
Regulation: fees and charges in the PSTN
STATUS
Telkom has been subject to a tariff regulation from 7 May 1997 untill 7 May
2000.
Term of this regulation was extended by a further 18 months to November 7,
Telkom filed its current tariff proposal with ICASA on 14 November 2001. The
Minister of Communications signed the new tariff regulation on 26 November
Regulation will remain in force for 18 months from 26 November 2001 or until such
time as a new regulation is promulgated. Telkom contesting this regulation.
Telkom indicated both Telkom and ICASA have requested a postponement of the
next court date. Telkom wish to prepare an application to set aside the entire
regulation.
RECOMMENDED STRATEGY
The settlement of the tariff structure is now subject to a court timetable, which is
inherently uncontrollable.
Restructuring Status Report: Portfolio Committee August 2002 Page 48
Telkom IPO Report
3.
Carrier pre-selection
STATUS
· Based on discussions with ICASA, this regulation will only be issued in Q3 2003.
· DoC have indicated that they will discuss with ICASA the possibility of accelerating the
regulation to ahead of the IPO.
RECOMMENDED STRATEGY
· Do whatever is possible to reduce the regulatory uncertainty by accelerating the
regulation, notwithstanding that the discount resulting from the tariff dispute and the SNO
process may significantly outweigh the discount resulting from uncertainty regarding
carrier pre-selection.
· Be prepared to proceed with the IPO without this regulation in place.
Restructuring Status Report: Portfolio Committee August 2002 Page 49
Telkom IPO Report
4.
Facilities sharing
STATUS
ICASA/DoC intend to finalise and issue this regulation in Q1 2002.
RECOMMENDED STRATEGY
Continue to monitor progress.
5.
Number portability
STATUS
Based on discussion with ICASA and DoC, this regulation will only be issued in
2005
RECOMMENDED STRATEGY
· The JGCs are comfortable that investors will not need additional information in
relation to the introduction of number portability in 2005.
· Telkom has not disagreed with this position.
Restructuring Status Report: Portfolio Committee August 2002 Page 50
Telkom IPO Report
6.
Regulatory accounting and revision to Interconnect
Guidelines
STATUS
PriceWaterhouseCoopers are engaged to assist with the drafting of this
regulation. ICASA/DoC intend to finalise these by May/June 2002
RECOMMENDED STRATEGY
Ensure that timing of finalisation of these processes does not conflict directly with
offer / listing / stabilisation period
Restructuring Status Report: Portfolio Committee August 2002 Page 51
Telkom IPO Report
7.
Sentech licence
·
.
·
·
STATUS
Sentech license was gazetted for public comment on 20 December 01
Hearings are scheduled for 10 February.
DoC has indicated that it has no current intentions to introduce an SEP
into Sentech. However, at that time, a Sentech/DoC workshop was
scheduled for 26 January 2002. DoC indicated that Sentech may request
the introduction of an SEP at that time.
The introduction of an SEP would significantly change the
competitive landscape for both Telkom and investors.
RECOMMENDED STRATEGY
• Continue to monitor progress. License needs finalisation.
Restructuring Status Report: Portfolio Committee August 2002 Page 52
Telkom IPO Report
8.
SMME’s
STATUS
ICASA and DoC have issued a regulation on how to apply for a SMME licence
as opposed to issuing individual ITAs by area. ICASA has listed 8 areas for
consideration. Further areas to be considered thereafter.
RECOMMENDED STRATEGY
Continue to monitor process.
9.
Amendments to Telkom’s licence
STATUS
DoC has indicated that it believes Telkom will not have any further Universal
Service Obligations in relation to its existing licence. New licences to Telkom (e.g.
fixed-mobile, 1800 MHz, UMPCS (3rd generation)) will have associated USO.
RECOMMENDED STRATEGY
Obtain greater clarity as to the possibility of the introduction of further USOs to
Telkom’s existing licence.
Restructuring Status Report: Portfolio Committee August 2002 Page 53
Telkom IPO Report
10.



GOVERNANCE
STATUS
Broad agreement has been reached between Government and Thintana on
the key issues.
The Independent Committee of the Board of Telkom continues to dispute the
acceptability of the exclusive authority of the Operating Committee and the
veto rights of shareholders at Board level. There also appears to be significant
unresolved matters between Thintana and the Board in relation to the
Strategic Services Agreement.
The JSE will, prima facie, share the concerns of the Board in relation to the
Operating Committee and the veto rights of shareholders. The Board has in
the past represented their concerns to the JSE, although they since agreed with
Thintana not to approach the JSE again until agreement had been reached.
Restructuring Status Report: Portfolio Committee August 2002 Page 54
Telkom IPO Report
GOVERNANCE (continues)
RECOMMENDED STRATEGY
 A final governance structure is a necessity at the time of the analysts presentation
(mid-May for a July pricing and mid-August for an October pricing).
 Given the current intentions, it will require significant time for the Board and
shareholders to negotiate an acceptable governance structure with the JSE. It may
be that current intentions are entirely unacceptable to the JSE.
 Therefore, if a July offering is to be achievable, there is a requirement to accelerate the
process to finalise the proposed governance structure by early March 2002, to give a
reasonable minimum period of two months in which to engage the JSE. This structure
should include substantially advanced and agreed Articles and Strategic Services
Agreement, together with the related Shareholders Agreement.
Restructuring Status Report: Portfolio Committee August 2002 Page 55
Telkom IPO Report
11.
OTHER SHAREHOLDER MATTERS
STATUS
·
20% cap on IPO falls away after May 2002.
·
Broad agreement between shareholders on other key IPO related
matters.
.
Telkom had elevated the cost sharing discussions to the level of the
shareholder negotiations.
.
Today, agreement at Joint IPO Steering Committee to elevate it to
Board level and not shareholders.
Restructuring Status Report: Portfolio Committee August 2002 Page 56
Telkom IPO Report
12.
·
·
TELKOM IPO BUDGET
STATUS
Approval required to rollover unused portion of current funds into the 2002/03
fiscal year and an additional budget of approximately R47m will be required to
extend third parties contracts and accommodate exchange rate movements.
Consideration is currently underway to balance Government’s social objectives
in relation to the IPO with currently available funds (assuming a full roll-over and
amount to extend third party contracts). Further funding would allow these objectives
to be more fully achieved.
RECOMMENDED STRATEGY
· National Treasury to release additional funding when there is a definitive decision on the
timing of pricing.
· Negotiation to take place with Telkom with respect to establishing cost sharing principles.
Restructuring Status Report: Portfolio Committee August 2002 Page 57
Telkom IPO Report
13.
SYNDICATE STRUCTURE
STATUS
Initial paper on mechanics of syndicate structure presented. Cabinet memorandum on
syndicate structure prepared and submitted to IPO Office which requests that the IPO Office
is enabled to undertake the syndicate selection process.
RECOMMENDED STRATEGY
Government to revert with position to the JGCs at appropriate timing.
14.
TELKOM MATTERS : SCENARIO PLAN / PROSPECTUS
STATUS
Telkom intends to prepare a draft scenario plan by mid March, to be discussed by the
board by the end of April.
It is intended to submit the first draft of the prospectus to the SEC before end March, as it
is necessary to have audited financials within the last twelve months at the time of
submission.
RECOMMENDED STRATEGY
None
Restructuring Status Report: Portfolio Committee August 2002 Page 58
Telkom IPO Report
15.
•
•
•
•
•
•
•
•
•
TARGETS
Complete SEP negotiations- 1Q ‘02
Develop business plan of Telkom and Vodacom- 1Q ’02
Launch the media and education campaign - 1Q ’02
Roll out communication strategy on the IPO - 1Q ‘02
Offering and listing of Telkom shares– 3Q ’02
Obtain approval to proceed with the ACSA transaction – Q1 ’02 with the aim of listing
2003 / 2004
Monitor development of company and industry performance to prepare SAA for listing
2004
Hold discussion to explore SEP / IPO options arising from Arivia.kom business model –
Q1 ’02
Monitor the introduction of an SEP in Alexkor with the aim of listing in 2004
Restructuring Status Report: Portfolio Committee August 2002 Page 59
PERFORMANCE
MONITORING AND
BENCHMARKING
REPORT
Restructuring Status Report: Portfolio Committee August 2002
Page 60
CONTENTS
•
•
•
•
•
•
•
•
•
Introduction
Objectives for the 2001-2002 financial year
Projects undertaken during the 2001-2002 financial year
Achievements to-date
Objectives for the 2002-2003 financial year
Projects planned for the 2002-2003 financial year
The Unit’s medium-term objectives for the next four years
The Unit’s long –term objectives for the next ten years
Post-restructuring model
Restructuring Status Report: Portfolio Committee August 2002 Page 61
INTRODUCTION
•
Government, as a shareholder in state owned enterprises (“SOE’s) , seeks to
protect and maximize the benefits of its investments in the SOE’s.
•
This can be achieved by monitoring the overall performance of SOE’s within
their environments and benchmarking the said performance with other
companies whether public or private, locally and internationally.
•
Performance Monitoring and Benchmarking Unit is intended to and undertakes
the function of safeguarding the shareholder interests in SOE’s.
•
It is, however, the Government’s intention to consolidate its whole shareholding
interests in public entities and manage it under one Business Unit /Department
in order to avoid the current fragmentation in the management of the
shareholding interests.
•
To give effect to the intention of Government, the government shareholding
model is currently being developed by the Unit.
Restructuring Status Report: Portfolio Committee August 2002 Page 62
OBJECTIVES FOR 2001-2002
• In line with the Departmental Business Plan, the Branch had set
for itself the following objectives for the abovementioned period:
• Monitor and interrogate the financial performance of SOE’s with
a view to holding SOE leadership accountable for performance.
• Monitor, implement and advocate improved corporate
governance ensuring improved ethics and probity in SOE’s.
• Manage healthy relations between the shareholder and SOE’s.
• Monitor broader socio-economic indicators of SOE’s including
empowerment strategies.
• Be the State's custodian for the portfolio of SOE’s and advise
government of SOE performance and progress towards
established targets and indicators.
• Develop a database of relevant benchmarks and SOE
information to entrench a performance mindset in the SOE’s.
Restructuring Status Report: Portfolio Committee August 2002 Page 63
PROJECTS DURING 2001-2002
•
Development of a financial model as an instrument and a framework to
measure the financial performance of the SOE’s.
•
Develop a shareholder compact for each SOE as an instrument to give
effect to good governance in SOE’s.
•
Undertake an “AS IS” corporate governance audit in SOE’s and within
the shareholder to ascertain the status of compliance with corporate
governance principles as set out in the Corporate Governance
Protocol for Public Entities and in the King Reports.
•
Develop a Web-based database system of SOE’s and other Public
Entities.
•
Develop a shareholding model within which government shareholding
will be consolidated and managed.
•
Advocate good corporate governance within the various structures of
government through presentations, discussions and providing advice.
Restructuring Status Report: Portfolio Committee August 2002 Page 64
ACHIEVEMENTS FOR 2001-2002
•
The financial evaluation model to evaluate the SOE’s financial
performance has been developed and communicated to the SOE’s to
prepare for its implementation.
•
Concerns of the SOE’s are currently being factored into the model in
order to ensure the smooth operationalization of the evaluation model.
•
The financial reports of the SOE’s such as Eskom, Transnet, Denel
and Safcol have been or are in the process of being tabled to Cabinet.
•
All efforts are being put on Alexkor and Aventura to finalize their
financial statements.
•
The financial statements have been interrogated and reported in the
progress reports to Cabinet.
Restructuring Status Report: Portfolio Committee August 2002 Page 65
ACHIEVEMENTS FOR 2001-2002 (Continued)
•
Shareholder compacts have been signed with Transnet, Eskom and is
in the process of being signed with Denel.
•
The process of operationalizing the shareholder compacts is currently
under way.
•
The revision of the Protocol on Corporate Governance for use in the
Public Entities is under way, and the first draft is out for comment.
•
The following Boards have been restructured successfully:
– Transnet;
– SAA;
– Safcol;
– Aventura
– Eskom
Restructuring Status Report: Portfolio Committee August 2002 Page 66
ACHIEVEMENTS OF FOR 2001-2002 (Continued)
•
The challenges in Aventura called for the board to be restructured
before the annual general meeting. The new Aventura Board is now in
place and therefore the disposal strategy as approved by Cabinet is
under way.
•
The government “Shareholding end-state/ model” has been developed
albeit a draft document for consideration at this stage.
•
An audit of compliance with corporate governance in SOE’s is in the
second phase whilst the third and the final phases are to be completed
soon. The objective of the audit is to determine the status of the SOE’s
compliance with the principles of good governance as spelt out in the
Protocol and the King Report.
•
The report of this audit will assist the Department and the SOE’s to
develop intervention measures where shortfalls have been identified.
Restructuring Status Report: Portfolio Committee August 2002 Page 67
ACHIEVEMENTS FOR 2001 – 2002 (Continued)
ESKOM:
•
All systems are now in place to incorporate Eskom Holdings Limited
and to form the board of Eskom Holdings accordingly.
•
The Memorandum and Articles have been published in the
Government Gazette for public comment, submitted to Cabinet for
noting and circulated to key stakeholders for comments.
•
The final document has been tabled in Parliament.
•
The process of appointing a Board of Eskom Holdings, which replaced
the Electricity Council, is complete.
Restructuring Status Report: Portfolio Committee August 2002 Page 68
ACHIEVEMENTS FOR 2001 – 2002 (Continued)
AVENTURA
•
Whilst offers have been received for three business units of Aventura,
which were ear-marked for short term disposal, namely, Christiana,
Aldam and Bloemfontein, only two offers have been accepted.
•
These offers relate to Aldam and Bloemfontein whilst additional
information is being considered for Christiana.
•
•
The disposal process of the three business units finalized
Disposal process for the rest underway.
Restructuring Status Report: Portfolio Committee August 2002 Page 69
OBJECTIVES FOR 2002-2003
•
One of the Department’s mandates is to serve as custodian of
Government’s shareholding interests in SOEs which entails a
responsibility to:
- Monitor and interrogate the financial performance of SOE’s with a
view to holding SOE leadership accountable for performance
- Monitor, implement and advocate improved corporate governance
ensuring improved ethics and probity in SOE’s
- Manage healthy relations between the shareholder and SOE’s
- Monitor broader socio-economic indicators of SOE’s including
empowerment strategies
- Be the State's custodian for the portfolio of SOE’s and advise
government of SOE performance and progress towards established
targets and indicators
- Develop and monitoring a database of relevant benchmarks and
SOE information to entrench a performance mindset in the SOE’s.
Restructuring Status Report: Portfolio Committee August 2002 Page 70
PROJECTS PLANNED FOR 2002-2003
•
In order to achieve the objectives that the Department has set itself in
terms of its role as a shareholder in SOEs, the following are some of
the projects which have been planned for the year:
– The revision of 1997 Protocol on Corporate Governance and
alignment thereof with the King Report II and the PFMA.
– The development of an Investment map of SOE’s.
– Research on Socio Economic and other best practice and
benchmarks for each SOE as well as the development of a
database for the said benchmarks.
– Conduct second phase of the Post restructuring model DPE endstate.
– Awareness of SOE web-based database to all SOE’s resulting in
the population of the said database.
– Conduct Director’s training.
Restructuring Status Report: Portfolio Committee August 2002 Page 71
PROJECTS PLANNED FOR 2002-2003 (Continued)
ALEXKOR:
•
In order to prepare Alexkor for restructuring, it has been necessary to
create capacity within the Board.
•
The Board appointment process is already underway with the final
appointment being targeted for Alexkor’s AGM.
•
A full capacity Board will be able to deal with the current dynamics that
Alexkor faces in a pre-restructuring environment.
•
Legislation is already in place to give effect to the restructuring as
approved by Cabinet.
Restructuring Status Report: Portfolio Committee August 2002 Page 72
MEDIUM TERM-OBJECTIVES
2002 – 2004
•
The Department’s strategic objectives for the medium-term 2002 –
2004 include the following:
-
Safeguarding of government’s shareholding interests in State
Owned Enterprises, thus serving as a “holding company”.
-
Provide advice to shareholder on performance of its investment
and continued ownership, on a holistic and integrated basis.
-
Ensure efficient performance and maximum return on investment
through rigorous performance monitoring and evaluation.
Restructuring Status Report: Portfolio Committee August 2002 Page 73
MEDIUM TERM-OBJECTIVES (Continued)
2002 – 2004
•
Entrench a culture of and promote good corporate governance, probity
and business ethics in terms of best practices within SOEs.
•
Monitor and evaluate socio-economic performance and “organizational
health” of SOEs within established frameworks.
•
Develop and implement intervention measures within framework of
relevant acceptable benchmarks, to enhance value.
•
Provide inputs and insights on impact of DPE Programmes and
restructuring.
Restructuring Status Report: Portfolio Committee August 2002 Page 74
MEDIUM TERM-OBJECTIVE (Continued)
2002 – 2004
•
Monitor and interrogate the financial performance of SOE’s with a view
to holding SOE leadership accountable for performance.
•
Continuously monitoring the succession planning in SOEs to ensure
that the shareholder is positioned to replace executives management
should a need arise.
•
Manage healthy relations between shareholder and SOEs.
•
To provide building blocks for the proposed post-restructuring model in
the form of creating capacity and marketing the concept.
•
Finalizing the post restructuring model for approval by Cabinet.
Restructuring Status Report: Portfolio Committee August 2002 Page 75
MEDIUM TERM-OBJECTIVES (Continued)
2002 – 2004
•
Approved economic, investment and integrated risk management
strategies;
•
Approval and implementation of relevant databases for the SOE’s;
Restructuring Status Report: Portfolio Committee August 2002 Page 76
LONG-TERM OBJECTIVES (the the next 10 years)
POST –RESTRUCTURING MODEL:
•
Shareholding of SOE’s is held by various Government Departments
and there is a necessity to consolidate governments approach with a
view to enhance shareholder value.
•
The rationale for the development of a Post-Restructuring Model is
based on the understanding that government will continue to own a
stake in SOE’s in varying proportions, and as such, will continue to
have a significant interest in how its shareholding is managed and of
ensuring that its socio-economic objectives are met.
Restructuring Status Report: Portfolio Committee August 2002 Page 77
POST –RESTRUCTURING MODEL (the next 10 years)
•
The current position is that government shareholding is held and
managed by various departments within government with different and
wide ranging objectives resulting in the fragmentation of approaches
thereby undermining the maximum benefits that could be derived from
consolidated government shareholding in SOE’s.
•
It is within this context that government shareholding interest in SOE’s
has to be consolidated and managed by one entity.
•
Any Restructuring that will invariably be executed post 2004 will have
to be identified through a performance evaluation process.This entails
monitoring the performance of SOE’s in the following areas: Corporate Governance.
Financial performance.
Risk analysis identification, monitoring and management.
Socio Economic and Environmental risk performance of SOE’s.
Identifying investment and business development opportunities
for SOE’s.
Restructuring Status Report: Portfolio Committee August 2002 Page 78
Programme of the Strategic Analysis Unit
A.THE EMPLOYMENT PROJECT
•
Funded by USAID
•
•
Discussion with Consultant Haroon Borat and USAID (funders)
have to make slight changes to the Terms of Reference.
•
We have supplied him with data but would need month of February to
assess it relevance to the study and also to clean it up.
On the 3rd week of March he will be coming back to us with his first
tae on employment trends.
•
•
In April he will be simulate and give us an alternate job re-allocation
strategy.
•
The report will be ready in the first two weeks of May.
Restructuring Status Report: Portfolio Committee August 2002 Page 79
Programme of the Strategic Analysis
(Cont.)
B.POLICY FRAMEWORK REVIEW
•Collating inputs into policy review from different Units.
•Most inputs do not respond to the policy review.
•Will re-orientate questioning for Units to be self critical brutally honest
about where policy hinders them.
•Refocus people towards looking at the framework, identifying what they
should action from it and then tell us whether they are achieving this or
are inhibited by policy.
•Most of the inputs are about progress in their Units and they do not
interrogate the policy framework.
• Process will be over
latest Mid-May
Restructuring Status Report: Portfolio Committee August 2002
Page 80
Programme of the Strategic Analysis
(Cont.)
C:The EMPLOYEE SHARE OWNERSHIP
PROGRAMME
(ESOP).
•Terms of reference approved by DG
•Awaiting for finance from USAID next financial year.
•Implement ESOPs in the various SOEs and will cover the
following issues:
•A review of international best practices of ESOPs and the
applicability of such models to the South African
• Operational models for implementing ESOPs successfully in
South Africa with special emphasis on design to evaluate the
following:
Restructuring Status Report: Portfolio Committee August 2002 Page 81
Programme of the Strategic Analysis
(Cont.)
Funding e.g. credit and/or discounting of shares to ensure
affordability
The criteria used to determine eligible employee in the process
and allocation of shares
The vesting period for shares
Effective participation of employees in the management of an
enterprise once they have shares. This could be done by giving
employees voting shares (role of unions)
Restructuring Status Report: Portfolio Committee August 2002 Page 82
Programme of the Strategic Analysis (Cont.)
D: DEVELOPMENTAL RESPONSIBILTIES OF THE SOE’S
•The study will look at whether the developmental demands of the
country and of the continent (NEPAD) can be fulfilled by the SOE
without resorting to Government underwrites on their project.
•Concern has been raised from the outset that some of them cannot
balance their books – let alone engage in developmental issues.
Restructuring Status Report: Portfolio Committee August 2002 Page 83
Programme of the Strategic Analysis (Cont.)
The possibility of co-operative ownership and management buy-outs
for broad based empowerment
Taxation issues
Conditions for sale of shares: Incentives for keeping shares for longer
period and to safeguard against reselling to minority shareholders while
at the same time ensuring liquidity of shares
•Education
•Project will be finished Three months after commencement.
Restructuring Status Report: Portfolio Committee August 2002 Page 84
ALTERNATIVE
SERVICE
DELIVERY
Restructuring Status Report: Portfolio Committee August 2002
Page 85
ASD PROGRAMME
 KEY STRATEGIC
PROJECTS
 Public Sector Procurement
and Black Economic
Empowerment
 ASD International
Benchmarking
 KEY STRATEGIES
(IMPLEMENTATION)

Operational Framework;
Operational Guidelines and
Procedures; Supply/Support
Strategy; Reporting; Monitoring
and Evaluation Models

Programme Conceptualisation;
and

Comparative Study/Strategies
on ASD practices
Restructuring Status Report: Portfolio Committee August 2002 Page 86
KEY ACTIONS 2002/03
•
Development and implementation of the Procurement Operational
Framework for the SOEs;
•
Launching of the Reporting, Monitoring and Evaluation System
(Electronic);
•
International Benchmarking of ASD with international best practices
•
Development and implementation of restructuring BEE approach
within the National Strategy Framework (DTI)
Restructuring Status Report: Portfolio Committee August 2002 Page 87
Overview
Three broad constituencies whose support is needed:
1.
Government, supports the restructuring programme
2.
Business, supports privatization, understanding superficial
3.
General Public, the historically disadvantaged groups, the most
important constituency for DPE.
Restructuring Status Report: Portfolio Committee August 2002 Page 88
Role of Communications
To set the agenda with regard to how restructuring is talked about.
Control the flow and content of information to the media and through
the media to key constituencies;
Build understanding and support for the restructuring program and
Explain the mission and contribution of the DPE.
Restructuring Status Report: Portfolio Committee August 2002 Page 89
Proactive Communications
•
Bi-weekly communications meetings with DPE managers.
•
Restructuring Update, quarterly newsletter-format
•
publication. (priority program).
•
Monthly briefing sessions, with print and electronic media, and
parliamentarians.
•
DPE website to be redesigned, and made more accessible
•
Information/education materials to be produced
Restructuring Status Report: Portfolio Committee August 2002 Page 90
Public Education
Awareness and opinion surveys.
• The first will provide baseline data and help focus messages.
• The second will demonstrate increased public understanding
and acceptance of the government’s restructuring programme
• An outreach programmed, series of meetings in all nine
provinces.
• Briefing sessions with local and regional media, to give
background to understand the restructuring programmed.
• Community radio call-in shows in which DPE managers can
address developments/issues in local vernacular.
Restructuring Status Report: Portfolio Committee August 2002 Page 91
Messages
Should be consistent and repeated frequently in speeches,
documents, press releases…
For government:
Restructuring is not privatization, but rather the
rationalization and redeployment of state assets.
For Business and labour:
Supports empowerment objectives by and helps build
strong black businesses that are essential for stable and
sustainable growth.
For the public:
Uses the resources of the state to improve the quality of
life for all.
Restructuring Status Report: Portfolio Committee August 2002 Page 92
Transaction Support
Strategic planning.
Messaging.
Positioning.
Organizing road shows and presentations.
Preparing information materials and
Organizing media coverage.
Restructuring Status Report: Portfolio Committee August 2002 Page 93
Services
Advice on communication strategy
Daily monitoring of news coverage
Writing/editing speeches, brochures…
Press conferences, media interviews….
Restructuring Status Report: Portfolio Committee August 2002 Page 94
Staffing
Immediate recruitment of two additional
professional staff.
One administrative assistant and one secretary.
Restructuring Status Report: Portfolio Committee August 2002 Page 95
INTERNATIONAL
RELATIONS
Restructuring Status Report: Portfolio Committee August 2002
Page 96
International Relations
•
INTERNATIONAL RELATIONS AND RURAL DEVELOPMENT
– INTERNATIONAL RELATIONS
Action plan for this year is already focused in the international
market without excluding other regions.
RURAL DEVELOPMENT
Up to the present the Unit have been planning how to take this
project forward. In this regard:
• It has clarified the role of the Department in the Free State
which the Minister is the Nodal Champion.
• It has identified a project with ESKOM that can be used as the
Pilot project in which involve other SOEs as way of managing
and coordinating the involvement in the rural development
project (that Ms Msibi is attending)
– NEPAD
At present DPE have not involved NEPAD programme and or its
structures. This challenge was identified and discussed at the
EXCO meeting on the 28th January 2002. It was agreed that the
DG would write a letter to Professor Nkuhlu indicating the role of
the department
and the need to involve the department in this
Restructuring Status Report: Portfolio Committee August 2002 Page 97
relevant projects
FINANCIAL
MANAGEMENT
Restructuring Status Report: Portfolio Committee August 2002
Page 98
CONTENTS
Budget 2001-02
Budget 2002-03
Budget Control
The way Forward
Restructuring Status Report: Portfolio Committee August 2002 Page 99
BUDGET 2001-02
Expenditure status of the Department for the
2001-02 financial year is as follows:
R’000
Original Budget
R 129 622
Total Adjustments
R 164 000
Total Available Funds
R 293 622
Expenditure to 31 Dec 2001
Projections (Jan to March)
Total Estimated Expenditure
R 163 742
R 69 738
R 233 480
Possible Rollovers
Savings
Total savings
R 44 800
R 15 342
R 60 142
Restructuring Status Report: Portfolio Committee August 2002 Page 100
Reasons for saving:
* Personnel Expenditure – vacant posts not yet
filled
* Inventories – stocks were delayed due to the
vacant posts
* Professional and special Services – Funds were
requested to be rolled over for the Telkom
IPO and projects delayed due to the
problems encountered within the STB.
Restructuring Status Report: Portfolio Committee August 2002 Page 101
BUDGET 2002-03
PROGRAMMES
R’000
Administration
25 615
Restructuring of State Owned Enterprises
16 198
Restructuring (2A)
11 500
Initial Public Offering
Office (2B)
4 698
Performance Monitoring and Strategic
Analysis
11 305
Performance Monitoring and
Benchmarking (3A)
7 368
Strategic Analysis (3B)
3 937
Alternative Service Delivery
2 159
DEPARTMENTAL TOTAL
Restructuring Status Report: Portfolio Committee August 2002 Page 102
55 277
BUDGET CONTROL
a)
Training programmes and workshops
b)
Distribution of Budget programme
c)
Strict control on monthly expenditure
d)
Program managers accountable to take corrective actions.
THE WAY FORWARD
•
Create awareness of rules and regulations
•
Improve service delivery
•
Training and workshops – PFMA, Treasury Regulation and
Departmental instructions
4.
Stricter control over payments (this could result in a 5 year
imprisonment)
Restructuring Status Report: Portfolio Committee August 2002 Page 103
CORPORATE
SERVICES
Restructuring Status Report: Portfolio Committee August 2002
Page 104
Plans for the Year 2002/03 – Corporate
Services
Organizational Performance Management System:
•
•
The new Organizational Performance Management System will be
operational from the beginning of the 2002/03 financial year.
Corporate Services will maintain the system and provided support to
the entire Department.
Preparations for the implementation of the system are on track and the
data required (which includes the Business Plan and Performance
Agreements for all Senior managers) will be signed off by the DG and
the Minister in the middle of March.
Human Resources:
•
•
Corporate Services will continue to provide support to the Department
towards the acquisition of appropriate skills, and ensure that vacant
posts that are funded are filled as early as possible in the financial
year.
An effort will be made to towards ensuring the attainment of
Employment Equity targets. Current progress is satisfactory, although
representation of People with Disabilities is still a challenge.
Restructuring Status Report: Portfolio Committee August 2002 Page 105
Plans for the Year 2002/03 – Corporate
Services
Skills Development:
•
Support on skills development will continue.
Other support:
•
•
Plans have been developed for improving support and services
provided in other areas like IT and Special Programmes.
A project on the introduction an Electronic Document Management
System is under way and it is envisaged that a package will be
purchased from the current year’s budget and implement the system in
the next financial year.
Restructuring Status Report: Portfolio Committee August 2002 Page 106