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PUBLIC ENTERPRISES 2008-2011 STRATEGIC PLAN AND FINANCIAL OVERVIEW 27-29 FEBRUARY 2008

PUBLIC ENTERPRISES 2008-2011 STRATEGIC PLAN AND FINANCIAL OVERVIEW 27-29 FEBRUARY 2008 Ms Portia Molefe Director-General. CONTENTS. Departmental strategy Mandate, vision and mission Key achievements & challenges Priority areas and planned activities . M ANDATE OF THE DEPARTMENT.

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PUBLIC ENTERPRISES 2008-2011 STRATEGIC PLAN AND FINANCIAL OVERVIEW 27-29 FEBRUARY 2008

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  1. PUBLIC ENTERPRISES 2008-2011 STRATEGIC PLAN AND FINANCIAL OVERVIEW 27-29 FEBRUARY 2008 Ms Portia Molefe Director-General

  2. CONTENTS Departmental strategy • Mandate, vision and mission • Key achievements & challenges • Priority areas and planned activities

  3. MANDATE OF THE DEPARTMENT The mandate of the DPE is to ensure alignment of the SOE business strategies with the Sector department policies and regulatory authorities whilst ensuring that SOE are sustainable businesses that provide economic benefit to the country. SOE reporting to the DPE are Alexkor, Broadband Infraco, Denel, Eskom, Pebble Bed Modular Reactor, Safcol, South African Airways, South African Express Airways and Transnet

  4. VISION OF THE DEPARTMENT Our vision is to have SOE that • are efficiently managed, meeting domestic and international industry operational benchmarks • play a role in the industry in which they operate that ensures an optimal allocation of responsibilities between the public and private sector • undertake investment programmes with a “reserve margin” to accommodate faster economic growth • leverage their investment programmes to the benefit of the South African and African economies on a sustainable basis

  5. MISSION OF THE DEPARTMENT Our mission is to :- • Provide SOE with clear mandates • Provide consistent and strategic performance management of SOE • Provide simple and unambiguous governance systems

  6. CORE WORK ELEMENTS The following elements are core to the DPE mandate • Oversight of the SOE against their strategic objectives • Financial and operational • Oversight of the disposal of non-core assets in line with Transaction guidelines • Leverage of all SOE assets for the benefit of the economy • Ensuring that SOE procurement beneficially maximises investment opportunities for SA manufacturers

  7. SOE PERFORMANCE OVER THE PAST YEAR

  8. SOE PERFORMANCE OVER THE PAST YEAR

  9. SOE PERFORMANCE OVER THE PAST YEAR

  10. SOE PERFORMANCE OVER THE PAST YEAR

  11. PERFORMANCE OVER THE PAST YEAR Competitive Supplier Development Programme • Steel sourcing project complete • Procurement capacity building underway in SOE • SOE Supplier Development Programmes being drafted • Established benchmarking working group and formalised relationship with UNIDO and working with Rest of Africa project on benchmarking The SA Power Project • A proposed strategy to leverage the 20-year power build to develop national industry was accepted by the Advisory Committee EIA Support Programme • Working with DEAT, developed a framework for the identification and treatment of Strategically Important Developments ( SIDs)

  12. PERFORMANCE OVER THE PAST YEAR Non-core property disposals • Revised B-BBEE guidelines to align with DTI generic codes • Self-assessment toolkit available on DPE website • Lifted the moratorium on the sale of non-core properties • Property viability study and spatial viability study completed for Rosherville (Eskom) Skills Initiative • The SOE requirement for artisans was collated and communicated to JIPSA. • Established cross-cutting artisan training initiative. • DPE has applied to DoL for the establishment of a Public Enterprise Employment and Skills Development Agency (ESDA). The ESDA will facilitate SETA funded work-place placements for the FET college graduates with SOE suppliers to enable the graduates to obtain Trade Certificates.

  13. PERFORMANCE OVER THE PAST YEAR Legislative • Transnet Pension Fund Amendment Act promulgated • South African Airways, Broadband Infraco and South African Express Bills processed and promulgated • Collaborated with DOC re: amendments to the Electronic Communications Act • Collaborated with DME, DPLG and NT re the EDI and RED Bill • Richtersveld settlement concluded Other key achievements • Collaborated with DoD, DTI and DST on sector strategy for the defence industry • Submitted to cabinet a revised build programme for Eskom • Ports and rail master plan drafted • Monitoring capacity of investment dashboard expanded • Procurement training in Competitive Supplier Development Programme rolled out

  14. PERFORMANCE OVER THE PAST YEAR Risks/challenges • Delays with the finalisation of the Nuclear Policy could delay the implementation of this element of Eskom’s Build Programme • Review of Maintenance practice across all SOE • Balancing the risk of weakened balance sheet against the very large investment programmes • Cost reflective tariffs which are economically more efficient against the inflationary effects and impact on the poor • Skills scarcity and supplies could delay SOE capital/build plans

  15. ORGANISATIONAL STRUCTURE Minister Public Enterprises Special Advisor Director-General Public Enterprises DDG Chief Investment & Portfolio Manager DDG Energy & Broadband Enterprises DDG Legal, Governance, Risk & Transactions DDG Manufacturing Enterprise DDG Transport Enterprise DDG Joint Project Facility OPSCO Chairperson

  16. DPE BUDGET Over the MTEF, expenditure decreases at a rate of 59.1 percent, from R4.6 bn in 2007/08 to R315 m in 2010/11. Transfers to SOE remain high in the first two years of the MTEF with a combined amount of R4.9 bn, of which R3.5 bn is allocated to the PBMR. The Joint Project Facility is subject to an increase in expenditure over the MTEF rising from R14.4 m in 2007/08 to R27 m in 2010/11.

  17. DPE BUDGET continued

  18. DPE BUDGET continued

  19. DPE STATISTICS

  20. Breakdown of Vacant Posts : Levels 13-15

  21. Breakdown of vacant posts : Levels 13-15

  22. Internship Programme

  23. PROGRAMMES PRIORITY AREAS AND PLANNED ACTIVITIES

  24. PROGRAMME 1 ADMINISTRATION • Purpose • Responsible for the overall direction and management of the Ministry and the department and the provision of administrative support services to the department • Priorities for 2008/09 • Process automation • Training and Development • Performance management of staff • Annual risk assessment and audits of DPE • Energy Efficiency Campaign throughout DPE offices • DG’s Office – Chief Investment & Portfolio Management • SOE Investment Dashboard (Integrated infrastructure planning; Financial; Operations; Capital investment programme; Capitalisation; Social Economic ;Risk) • Capitalisation & Dividend policy • Annual rolling (5 year) review • Assessment of SOE restructuring • Significant shareholder transactions

  25. PROGRAMME 1 ADMINISTRATION continued There is very little change to this programme other than an inflationary increase for compensation of employees which includes the remuneration of all 48 interns (26 in 07/08 and 22 in 08/09). Equipment contracts, telephones, stationery, training, recruitment advertising and software licences are centralised to this programme.

  26. PROGRAMME 2ENERGY & BROADBAND ENTERPRISES Purpose • Toalign the corporate strategies of Eskom, PBMR and Broadband Infraco with government’s strategic intent and monitor their performance in respect of financial and operational performance Priorities for 2008/09 • Portfolio Management • Implementation of the National Electricity Emergency Response Plan • Fastrack Geyser Replacement Programme • Capacity Expansion Programme implementation (Generation & Transmission) • Generation Adequacy monitoring • Implementation of Single Buyer Model – monitor Co-gen and IPP implementation • Generation, Transmission & Distribution Infrastructure Maintenance & Refurbishment • Monitoring of Eskom Nuclear Build Programme • Monitoring of progress of International Submarine Cable rollout

  27. PROGRAMME 2ENERGY & BROADBAND ENTERPRISES continued The transfer payment to PBMR decreases from R 2.5 billion in 2007/08 to R1.75 billion in 2008/09. Furthermore a transfer payment of R377 million is allocated to Broadband Infraco in 2008/09. The functions and funds in the Mining sub-programme (Alexkor) which previously resided in this programme, has been moved to Programme 3 : Legal, Governance, Risk and Transactions.

  28. PROGRAMME 4 MANUFACTURING • Purpose • To analyse SOE strategies (Denel, Safcol) against government’s strategic intent, develop proposals around how SOE can play a catalytic role in the development of the manufacturing cluster and monitor and advise on SOE financial and operational performance. • Priorities for 2008/09 • Portfolio Management • Develop Denel end-state in partnership with DoD, National Treasury and Denel • Review of acquisition policy in 2008/09. Facilitating the achievement of the 60% - 70% local defence procurement target over the next 3 years • Establishing DoD/Industry supplier fora by the end of July 2008 to enhance communication and alignment between industry, Armscor and the DoD in defence acquisitions • Assist with the establishment of the Defence Evaluation & Research Institute (DERI) in 2008/09 • Development of a missiles export strategy in 2008/09 to leverage technology and increase access to markets • Establishment of a defence export council by the end of September 2008 to facilitate export marketing support • Provide sector support in KLF disposal

  29. PROGRAMME 4 MANUFACTURING continued There is no significant increase in the operational budget for this Programme. The substantial decrease reflected over the period is due to Denel having received a transfer payment amounting to R 1.155 billion in 2007/08, with no further transfer in 2008/09.

  30. PROGRAMME 5TRANSPORT • Purpose • Oversee the activities of Transnet, SA Airways, SA Express in terms of corporate strategy & structure, operational performance, industry structure, corporate governance and policy, financial and risk management, corporate transactions and benchmarking. Develop proposals on how the SOE can play a catalytic role in the development of the associated manufacturing cluster through leveraging their capital and investment programmes via the Competitive Supplier Development Programme. • Priorities for 2008/09 • Portfolio Management • Port of Ngqura (Coega) PSP • Branchlines position paper • Ports and Rail masterplans approval & implementation • Railway supplier study • Monitor Transnet Build Programme • Monitor New Multi Product Pipeline (NMPP) implementation • Implementation of SAA turnaround • Strategic repositioning of SAA Technical • Optimal commercial relationship between SAA and SAX

  31. PROGRAMME 5TRANSPORT continued The slight decrease in the budget for this Programme is attributed to a reduction in the amount allocated for transfer payments. In 2007/08 an amount of R 744.4 million was allocated to South African Airways (SAA), whereas an amount of R585 million is allocated for South African Express Airways (SAX) in 2008/09. However operational expenditure increases substantially as the department will be sourcing specialist technical expertise to assist with various priority projects in the sector which will be undertaken in the coming year.

  32. PROGRAMME 3LEGAL, GOVERNANCE, RISK AND TRANSACTIONS • Purpose • To provide effective legal services, corporate governance and risk management systems and implementation of legal aspects of strategically important transactions. • Priorities for 2008/09 • South African Government Shareholder Management Legislation • Alexkor Deed of Settlement implementation • Aventura closure • KLF disposal • SOE and Shareholder Risk Assessments • General legal counsel for the Department • Provision of legal support for Shareholder transactions

  33. PROGRAMME 3LEGAL, GOVERNANCE, RISK AND TRANSACTIONS continued Operational expenditure in this programme increases as a result of additional funding for the legal costs for the Alexkor and Safcol transactions. The sub-programme Transactions was created specifically for this purpose. At the same time the transfer payment to Alexkor was shifted from Programme 2 to Programme 3 for oversight of the implementation of the Richtersveld settlement. The historical figures between the Programmes were adjusted accordingly.

  34. PROGRAMME 6JOINT PROJECT FACILITY • Purpose • Identify synergies and co-ordinate and develop cross-cutting projects that leverage the assets, activities and capabilities of the SOE to the benefit of the SOE and the economy as a whole. Priorities • Aerospace: Strategy formulation • Rest of Africa • Implement supplier benchmarking • Joint infrastructure development programme with 2 countries • Autumn School 2008 roll-out • CSDP: finalise Eskom, Transnet, PBMR supplier development plans • Environmental Issues: Finalise guidelines for Strategic Important Developments (SIDs) • Advanced Learning Programme: Module development • Human Resources & Capacity Building: Establishment of the Employment & Skills Development Agency (ESDA) • Property: guide non-core property disposals • SA Power Project: strategy for a globally competitive power cluster to support the build programme

  35. PROGRAMME 6JOINT PROJECT FACILITY continued The overall increase in this Programme is mainly due to additional capacity to meet the objectives of the unit, which includes the commencement of the SA Power Project and the implementation of the Competitive Supplier Development Programme in 2008/09.

  36. THANK YOU

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