14 June 2004
Honourable
Speaker/ Deputy Speaker
Chairperson
Honourable Members of Parliament
Minister Alec Erwin
Ladies and Gentlemen:
Minister Alec Erwin Congratulations on your appointment as Minister of Public Enterprises, I wish you success in your Portfolio and look forward to working with you.
The past ten years show how far we have travelled and how far we still have to travel, to move our country forward decisively towards the eradication of poverty and underdevelopment and to achieve further and visible advances with regard to the improvement of the quality of life of all South Africans.
The past decade of democracy further shows how far we still have to travel, firstly: to ensure that the public sector discharges its responsibilities to South Africans as a critical player in the process of the growth, reconstruction and development of South Africa and secondly to focus on raising skills levels within the public sector, and ensure a clear understanding of the developmental tasks of democratic South Africa.
The contribution, performance, and restructuring of public enterprises, is the aspect of Governments development policy for which the DPE is responsible. Among the Department of Public Enterprises' many challenges is the need to align itself fully with the developmental requirements of South Africa's growing economy and to keep its finances in good order, driven by efficiency and motivated by a deep commitment to reducing poverty and strengthening the economy.
In line with the resolutions of the African National Congress' 51st National Conference, in Stellenbosch, State Owned Enterprises must meet the developmental goals of South Africa, in particular through improving access to basic services and to accelerate carrying out programmes directed at job creation and poverty alleviation. It is thus important that the shareholder covenants and contracts appropriately reflect the specific mandates of the State Owned Enterprises and their alignment to broader government objectives.
The strategic framework of the Department of Public Enterprises is thus informed by its mandate of managing the restructuring process and shareholder management of State Owned Enterprises, which includes the monitoring of the State Owned Enterprise's, financial, economic and social performance, in pursuit of the government mission which is a better life for all South Africans.
It is in this light that the Ad Hoc Committee on Public Enterprises recognizes the grave responsibility of its oversight role.
I now turn to discuss some issues raised by this mandate, with reference to State Owned Enterprises.
Eskom
A cursory look at Eskom reveals that it supplies over 95 percent of South Africa's electricity. Over the past ten years is has brought electricity to three million homes in South Africa. In addition to improving the quality of life of millions of South Africans, the electrification programme has had the spin-off and spin-on of creating small, medium and micro-enterprises within disadvantaged and poor working class communities.
But backlogs unfortunately continue, particularly in rural areas and special challenges continue to face the department with the growth of informal settlements in urban areas.
Furthermore, it is also anticipated that Eskom might start running out of capacity from the year 2007. There is thus a need for more capacity to support the growth in demand, in order to avoid the severe financial implications and a shortage of supply in South Africa. As President Mbeki stated in his address to the First Joint Sitting of The Third Democratic Parliament on May 21, 2004, a tender for the provision of new generating capacity to provide for the growing energy needs from 2008, will be issued publicly in December and should be awarded in the first half of 2005. Further, in pursuance of the objectives of the New Economic Plan for Africa's Development (NEPAD), State Owned Enterprises also promote development programmes beyond South Africa's borders. In this regard, Eskom Enterprise operates in over 30 African countries covering generation, transmission and distribution sectors across the continent.
Transnet
Transnet: divisions have spread their operations into Africa as well. Spoornet: will increase its freight capacity by 30 percent over the next 5 years, while the Rail Commuter Corporation is investing R220m this financial year to improve commuter transport and safety.
Denel
With reference to Denel it is worth noting that the South African Defence Related Industries (SADRI) dual-use and spin-off technologies are being successfully employed in the civilian and paramilitary environment. And that the South African Defence Related Industries are a significant earner of foreign exchange, earning approximately R2.5 billion per year. Further, still in the context of NEPAD, South Africa continues to promote a policy of commonality and inter operability of equipment.
In our interaction with neighboring states:
It is of the utmost importance that SOE's conduct their business in Africa with the utmost probity and irreproachable ethics. In countries where they operate, they must continue to promote employment, help develop Small, Medium, and Micro Enterprises, procure goods and services and work with communities at all times to secure their well being. In essence, they must integrate commercial viability and returns on investment with the need to encourage sustainable development towards the upliftment of regional economies.
II) The second area to which I wish to turn is the restructuring of ports, to bring in new investment and to lower the costs of moving imports and exports. The question might be asked, as to why ports are important. The short answer is that the ports are important because they are regional gateways to international trade. They are the entry and exit points for a nation's imports and exports. A port may be a maritime gateway (sea port), a river, a lake, a road, rail or air gateway. Most ports are multi modal in that they serve as the combined gateway for several forms of transport, most typically maritime (passenger and cargo vessels), road and rail.
The Durban Container Terminal is the largest container terminal in the southern hemisphere. Its location is very crucial because it enables the terminal to facilitate trade routes linking North and South America with the Middle East, India, Asia and Australia. The South African Ports Operations (SAPO) has ordered three high tech cranes worth R180m to boost productivity at the Durban Container Terminal (DCT), Africa's busiest port. This is welcome news, in view of the numerous newspaper reports that appeared in the past, about major congestion problems at the Durban Port. The three cranes will substantially contribute to improving the vessel turn around time and also contribute to eliminating delays at the Durban Container Terminal.
With regard to the other ports, the following key points are relevant: East London:
The 25 million dredging and deepening of East London's harbour will enable larger car carriers to call at East London, on an average of two times per month to meet the growing demand for services.
Richards Bay
The Richards Bay coal terminal is undergoing a R2.4 billion expansion.
The Coega Industrial Development Zone Work is progressing well on the R3.2 billion Coega Port. The Coega Industrial Development Zone is already open and the first ship will be able to dock at the new Coega Port by September next year.
III) Trade Unions
The last important issue I wish to turn to is that of the trade union movement. Government, as we will recall, has chosen the path of open public processes whereby openness and transparency are maintained to ensure that trade unions, as the representatives of the workers and also as one of the stakeholders, contribute meaningfully to the development, ownership and implementation of the restructuring programme.
A process should therefore be established and agreed on between government and trade unions in regard to the restructuring of State Owned Enterprises. This will ensure that employment, representitivity in employment, skills development and empowerment are promoted during the process of restructuring.
There is thus a need for Government and Labour to continually share and discuss strategies and policies that have an impact on the restructuring of SOE's.
Furthermore, although issues of transformation are dealt with at an enterprise level, however, where job losses are concerned, there is a need for Government to intervene and address such issues. The intervention should obviously be channeled through structures that include management and trade unions.
In conclusion, I thank you all for the courtesy of listening to me.