Oversight Visit Report to Transnet Port of Durban

This premium content has been made freely available

Public Enterprises

23 March 2022
Chairperson: Mr K Magaxa (ANC)
Share this page:

Meeting Summary

Tabled Committee Reports

The Portfolio Committee on Public Enterprises met on a virtual platform to consider its oversight report to Transnet Port of Durban, a letter from the National Union of Mineworkers (NUM) regarding Eskom, and the second term Committee programme.

The oversight report to Transnet Port of Durban was adopted with amendments. These amendments involved the inclusion of timelines, projections, and budgets. Other amendments included recommendations to assist in remedying the hindrance of Transnet from advancing developmental objectives and a solution to fuel theft issues.

The second term programme was adopted with amendments. It provides for sufficient time to conduct oversight of the seven entities and provides for emphasis on establishing meetings with State-Owned Entities (SOEs) such as Denel, South African Airways (SAA), and Alexkor with the relevant affected committees.

The letter from NUM regarding Eskom was well-received, though concerns were raised over the deferral of obtaining a replacement steam generator, and the capacity and cost implications it may have. The issue of increased salaries for staff at SOEs to boost morale, and retention rates of skilled workers were also raised.

The Committee agreed to meet with Denel at a later date.

Meeting report

Report of the Portfolio Committee on Public Enterprises on the Oversight Visit to Transnet Port of Durban
The Committee Secretary took Members through the report. See the final report here https://pmg.org.za/tabled-committee-report/4873/

Mr N Dlamini (ANC) said the report was a true reflection of the events from the Port of Durban, except it did not mention the Transnet Freight Rail (TFR) was part of the initial plan to visit one of the departments. This could give the impression the Committee did not complete its oversight plans.
It was important to mention TFR in the report as a large portion of revenue for the economy is generated from transporting minerals. A healthy functioning TFR would allow government to maximise on these short-term opportunities. This created a problem for the report as it would also require a visit to the Port of Richards Bay where coal is shipped from.

Mr G Cachalia (DA) asked for timelines, projections, budgets and details of partnerships from all initiatives outlined by Transnet in the oversight visit.

Ms R Komane (EFF) shared the sentiments of Mr Dlamini. She agreed about the projections outlined in the oversight visit were missing from the report.

Ms J Tshabalala (ANC) said the findings of the report asked for immediate attention. The section concerning legislation and the policy impediment which negatively impacted Transnet operational and financial performance must be treated as a matter of urgency.

It should form part of the observations that Transnet is unable to use the Council for Scientific and Industrial Research (CSIR) in the visit directly, as National Treasury (NT) subjects everything to competitive behaviour. This impacted the turnaround time for goods and services.

It also prevented Transnet from advancing developmental objectives and prohibited the entity from fast-tracking the delivery of infrastructure projects in line with government’s economic reconstruction and recovery plan. It should be included in the observation and recommendations.

Ms Tshabalala noted a need to craft interventions to deal with the slow delivery of 1 064 locomotives. Though this was mentioned in the report, she felt it should be highlighted under the observations because the slow delivery of 1 064 locomotives created capacity challenges that continue to limit inroads made by the entity.

As an example, she referred to TFR reaching its maximum capacity, which prevented it from providing the extra support for transporting manganese and iron ore. She recommended Transnet enter into negotiations and employ legal proceedings against companies that fail to deliver on its commitment to rolling stock.

Transnet should capitalise on the high demand for these minerals, which has resulted from the Russian conflict in Ukraine. The aging infrastructure acts as a hindrance. She recommended Transnet engage in collaborative initiatives with the private sector to increase its capacity, market share, and improve its competitiveness in the mining industry.

She supported the report and the remarks of Mr Dlamini on oversight.

The Chairperson said a recommendation should be included to reflect how the Committee must resolve the matter of fuel theft. He said the Committee could meet with the Portfolio Committee on Safety and Security as this issue could end up costing millions of rands.

Mr Dlamini agreed, saying it would be prudent to meet with sister committees. During the oversight visit, Transnet said large amounts of money were put into safety and security using drones, though it was not a core function for Transnet.

Ms Tshabalala agreed with the Chairperson regarding fuel theft and said the pipeline losses from the theft affected revenue. Although Transnet was using costly resolutions such as drones and helicopters, there is a need to include other entities such as the Justice, Crime Prevention and Security (JCPS) Cluster. Pipelines constituted servitude rights, which made it necessary to give clarity on the land rights.

Ms Tshabalala moved for the adoption of the report.

Mr Dlamini seconded the adoption.

The report was adopted with recommendations.

Committee minutes dated 16 March 2022
The Committee Secretary took Members through the minutes.

On preferential procurement, specifically in the area of awarding governing contracts, Ms Tshabalala said Members emphasised NT would exempt entities, including Transnet, from provisions that acted in favour of black-owned businesses. She said the minutes must reflect the current preferential procurement legislation, which aims to promote black economic empowerment, only had minimal success. Members wanted to note the ruling in this instance as it formed part of the recommendations for a meeting to be held with NT to create better mechanisms that would ensure the participation of black businesses in markets.

Ms Tshabalala said a recommendation that reflects the need for all the security committees in the cluster to collaborate to save Denel, must be included. The cluster must work with NT, the Standing Committee on Finance, and the Standing Committee on Appropriations to find strategies to locally support the product. She felt this meeting was important.

The minutes of 16 March 2022 were adopted with amendments.

Second term Committee programme
The Committee Secretary took Members through the programme.

The Chairperson said four opportunities for oversight were listed, though only four days were allocated, despite the far distances between each location. More time must be allocated; at least a week should be sufficient.

Ms O Maotwe (EFF) noted concern regarding the Committee going to the same entity repeatedly, rather than going to South African Airways (SAA), Denel, or South African Express, despite the challenges these entities continue to have. Eskom and TFR were visited regularly and she recommended oversight be conducted over other entities, especially ones appearing in headlines or ones performing well, such as the South African Forestry Company SOC Limited (SAFCOL).

Ms Tshabalala said NT appeared before the Standing Committee on Public Accounts concerning the role played in SAA deals set by the NT Director-General (DG). It was revealed it was not part of the process of disposing of 51% of the government shareholding in SAA as a strategic equity partner in 2021. NT raised concerns regarding some of the terms and conditions agreed to by the preferred partner and the Department of Public Enterprise (DPE).

The Committee should have access to this information and be able to interact with it. The DPE should be called in to understand how the process leading to the appointment of the strategic equity partner unfolded. It is important for Members to be aware of the facts on the matter.

On the Department of Trade, Industry and Competition (DTIC), she said a meeting must be held to discuss the Companies Act. She felt the Act in relation to business rescue was not an area of expertise for the Committee. The Committee said over time, oversight of SOEs were historically left with liquidation when unable to restructure itself in the business rescue process.

She was dissatisfied with this and with the SAA situation, as accountability for financing the business rescue process is important. It did not account for the same departments which give mandates and this should enable it to recover. These entities are rather liquidated and sold. It was important for the Committee to interact with DTIC on this legislation, to understand it when matters are raised and look for ways to have accountability in financing. The Committee must learn from the SAA issue.

Ms Tshabalala said Denel and Alexkor should be incorporated into the oversight visit for a briefing on developments of appointments. She said oversight dates should be looked into.

Mr Dlamini said it is important for the Committee to get a report from Alexkor. Alexkor battled financially because of expenditure concerns. The Committee was aware the entity did not make use of the overhead funds, making it important to understand where the 40% revenue coming from miners is going.

DPE concluded the process of establishing a Board. It appears as though the Chairperson of the Board is also the current Acting Chief Executive Officer (CEO). He asked why this was the case and if it was because of a shortage of people in the market who could act as the Alexkor CEO.

He supported the idea of a visit to Denel but felt issues of procurement were a hindrance to efficiency and created a market for Denel and other SOEs. As an example, he referred to products that were specifically developed for the South African government. These matters have been discussed since the previous year but were not moving forward.

He suggested this get factored into discussions with NT and said it would not help the SOE to lament about the government helping it to procure goods.

Ms Tshabalala moved for the adoption of the second term programme with amendments.

Mr Dlamini seconded the adoption.

Letter from NUM regarding Eskom
The Committee Secretary took Members through the contents of the letter.

Ms Tshabalala said NUM raised concerns regarding the deferral of the steam generator replacement at Unit Two of the Koeberg power plant. She noted concern about the deferral resulting in financial losses for utility, and workers could also be used as scapegoats to defend foreign contracting companies who fail to meet contractual obligations. At the same time, workers at Eskom will continue to suffer meaningless increases.

Management wasted a significant amount of money on questionable decisions.

The Committee witnessed how the overruns caused delays in the completion of the Medupi power station and costs increased to R145 billion. The construction of flats meant to house artisans increased from R260 million to R800 million. The delay of the replacement would hopefully not result in similar increased costs.

Workers must be paid well to boost staff morale. This is important for the sustainability of SOEs. Eskom and Denel are losing many skilled artisans and engineers and this must be addressed, as without these critical skills SOEs will be non-functional.

Mr Dlamini said the letter from NUM raised critical issues which could not be overlooked. He noted an incident reported in the news where a mistake made by someone almost cost lives and a lot of money. He said NUM must be invited on the oversight trip to Koeberg to address any other issues which were not addressed in the letter. The Committee was losing sight of what was currently happening because of being overshadowed by State Capture reports.

The Chairperson agreed and said it must get information from Eskom, Koeberg, and NUM to look into the situation at hand.

It was agreed the Committee would meet with Denel at a later date, to process these matters.  

The meeting was adjourned.

 

Documents

No related documents

Download as PDF

You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.

See detailed instructions for your browser here.

Share this page: