Deputy Minister Dikobe Ben Martins Budget Vote speech
Honourable Chairperson
Honourable Members
Honourable Minister Brown and other esteemed Ministers and Deputy Ministers present;
Chairperson of the Portfolio Committee
Director-General of the Department
Chairpersons and Board Members of State-Owned Companies
Chief Executives and Senior Managers of State-Owned Companies
Distinguish Guests
Ladies and Gentlemen
Good afternoon, happy Africa Day!
The Department of Public Enterprises oversees six State-Owned Companies: namely, Alexkor, Denel, the South African Forestry Company Limited, Eskom, South African Express Airways and Transnet.
The state-owned companies form an integral part of the South African economy and their performance has a direct impact on the economy’s competitiveness and performance.
As a shareholder Ministry, acting on behalf of Government, the Ministry ensures that the Department carries out its mandate to ensure that State-Owned Companies under its remit are focused on prioritised outcomes.
The Department’s strategic objectives thus include amongst others the following:
- the promotion of the independent financial sustainability of State-Owned Companies; and the commercial viability of their operations;
- the promotion of transformation in their value chain and their suppliers to actualise broad based black economic empowerment through the creation of jobs, skills development and inclusive growth;
- the creation of an enabling policy, regulatory and operating environment for state-owned companies.
Whilst we share the ministerial responsibilities in a collegial manner, Minister Brown has entrusted the shareholder oversight of Denel, SAFCOL and Alexkor to me.
Alexkor:
Is a diamond mining company operating primarily in Alexander Bay and the greater Namaqualand region. Its operations include both marine and land mining.
During the current financial year, the Department completed a desktop study on the Richtersveld Diamond Deposit. This study confirmed it is possible to extend the life of the Alexkor Pooling and Sharing Joint Venture beyond its current estimated ten-year life span.
Alexkor experienced operational challenges during the 2016/17 financial year. It did not meet its carat production target set for the year under review.
However, its diamond revenue increased from R386.5 million in 2015/16 to R758 million in 2016/17.
Additional economic opportunities for the community of Richtersveld and its environs are expected, as mining operations expand in the next two to three years.
Denel
With regard to Denel the Portfolio Committee at its meeting of 24 May 2017 resolved to hold a meeting at the earliest opportunity with the Board of Denel and officials of National Treasury to resolve issues pertaining to Denel Asia.
Pursuant to the resignation of the former Group Chief Executive Officer and Chief Financial Officer in 2015, the Denel Board has finalised the recruitment process for both positions and made recommendations to the Minister.
Denel continues to grow its revenue. Its acquisition of Land Systems South Africa will in all likelihood enhance its capability to design and manufacture multi-purpose armoured vehicles that will enable it to compete in lucrative international markets.
Furthermore, according to a report in hand, the development of the Small African Regional Aircraft (SARA) is proceeding according to plan.
Denel’s Aerostructures’ delivery on the Airbus A400M contract continues with on-time and on-specification deliveries.
With regard to corporate social investment, Denel’s Physical Science and Mathematics outreach programme to schools in indigent communities continue to yield excellent results, as the 2016 matriculant results in the Free State province attest for example.
The South African Forestry Company LTD:
A cursory fact sheet of the Southern African Forestry Company Limited reveals that it manages and develops commercial forests. Its activities include timber harvesting and processing.
During the 2015/16 financial year the Department conducted a review of SAFCOL’s financial position.
SAFCOL has a sound balance sheet that can support its capital expenditure programme over the medium term.
The changes in the company’s executive committee had a negative impact on it.
The Board of SAFCOL was reminded by the Ministry of its responsibility to speed up the process of employing a Chief Executive Officer.
Except for Denel, all the state-owned companies under the remit of the Department of Public Enterprises are established in terms of their own enabling legislation which sets out the purpose, mandate and objectives for which they were founded. All these state-owned companies are incorporated as companies in accordance with the provisions of the Companies Act, 2008.
The responsibilities of the Ministry and the Department are to ensure effective shareholder oversight of these state-owned companies, by ensuring continuous alignment between shareholder strategic intent and the objectives of the state-owned companies.
The objectives of the Department are, through state-owned companies, to meet South Africa’s goals of reducing unemployment, fighting poverty, ensuring that the economy grows and that the objectives of the National Development Plan are met. The challenge however, is to achieve this without the let and hindrance of private or public sector corruption.
The Ministry and Department further have a duty of supporting state-owned companies to deliver on their shareholder compacts and corporate plans.
The conundrum of the able career public servant Mr Brian Molefe’s exit and return at Eskom has starkly foregrounded the need for the Ministry and the Department to sharpen their approach to shareholder oversight.
Furthermore, the vexed matter concerning Tegeta, a company associated with the Gupta family was also raised in the meeting of the Portfolio Committee addressed by the Minister of Public Enterprises and the Chairperson and Board Members of Eskom on Tuesday, 23 May 2017.
The Standing Committee on Public Accounts (SCOPA) will on the 30th May 2017 consider the Price Waterhouse Coopers report on the supply of coal to Eskom by Tegeta.
Fairness, transparency and justice demand full disclosure on this matter, namely, that the veil covering coal purchases be lifted to expose all the names of the companies, the terms and nature of their contracts; the volumes they supplied and the monetary payment they received for it, since 1994 be revealed.
It is alleged that some of these companies received one-to-three-year contracts, while others were awarded thirty-to-forty five-year contracts.
It is not for me to speculate which companies received short-term contracts and which where granted long term contracts. The facts will speak for themself.
In conclusion, I believe that it is fitting that we endeavour to give meaning and effect to the words of ANC president Oliver Tambo who said:
“We have a vision of South Africa in which black and white shall live and work together as equals in conditions of peace and prosperity”
I thank you.
