State Owned Enterprises (SOE)
26 October 2006
Johannesburg, 26 October 2006 - Minister Alec Erwin and the Department of
Public Enterprises welcomes the allocations announced in the Adjustment
Appropriation Bill made in the Medium Term Budget Policy Statement by the
Minister of Finance yesterday. These adjustments will benefit some of the SOE
under our management and will have even greater benefits for investment in
South Africa at large.
As indicated by the Minister of Finance this is in line with applying the
favourable revenue receipts to expenditures of a capital or institutional
nature. Public sector infrastructure spending is already displaying positive
effects on the economy, with the construction industry growing by 10,7 percent
in the past three years. We would once again repeat the alert signal made
earlier this year that 'the positive impact that the investment spend will have
on the economy cannot be understated' and that local suppliers will need to
accelerate investment, production and efficiency to meet this booming
demand.
The allocations to Denel, 'Infraco' and the Pebble Bed Modular Reactor
(PBMR) allow these important enterprises to continue their activities in a
manner that will have long-term benefits for their respective sectors.
Denel's strategic role is to develop a sustainable Defence Related Industry
(DRI) to supply key strategic defence capabilities to the SANDF and act as a
catalyst for advanced manufacturing in the broader economy.
The local DRI and Denel adds 0,6 % to South Africa's total Gross Domestic
Product (GDP) and contributes 2,1 % toward total formal employment in the
manufacturing industry.
The capital injection into Denel will assist in:
* strengthening the balance sheet
* making working capital available; and
* enabling investment in plant and equipment.
Most importantly, this places the company in a strong position to
participate in international business opportunities.
Government's strategic intent with respect to 'Infraco' is to enable a rapid
increase in broadband availability and thus decrease in the cost of broadband
so as to:
* increase ICT penetration;
* enhance productivity
* introduce a genuinely competitive dynamic in the supply of broadband
bandwidth
* promote innovation in the delivery of ICT value added services
Research by the World Economic Forum suggests that decreasing ICT costs will
increase GDP and labour productivity growth.
With a capital allocation, 'Infraco' is set to boost South Africa's
broadband capacity and it will also provide particular support for the
broadcasting of the 2010 World Cup.
The budget allocation makes it possible to move toward the establishment of
a new State Owned Enterprise and to complete various contractual and regulatory
negotiations. This will also allow more detailed planning with the large
science projects dealt with in the Medium Term Budget Policy Statement (MTBPS)
that are one of the main drivers behind the State securing the key broadband
capacity in the previously Eskom and Transnet systems. This is an important
step in the ongoing preparation of the SKA bid and the development of the South
African National Research Network.
Government's strategic objective in developing the Pebble Bed Modular
Reactor is to:
* develop cutting edge nuclear technology in the context of global increases
in the price of oil and demands for cleaner energy
* position the economy to participate in the fast growing global markets for
nuclear technology
PBMR is uniquely positioned and with the indicated allocation of R6 billion
it will assist in stimulating a broader nuclear related manufacturing industry
in South Africa.
In the case of Alexkor the allocation will allow for the revitalisation of
the enterprise and prepare it for the important role it will play in the
historic settlement with the Richtersveld Community (RVC).
Enquiries:
Ms Gaynor Kast
Ministerial Spokesperson
Cell: 083 271 4350
Issued by: Department of Public Enterprises
26 October 2006
