Public Enterprises BRRR

Meeting report

The Chairperson opened the virtual meeting, welcomed all present in the meeting and made brief introductory remarks.

Budgetary Review and Recommendation Report of the Portfolio Committee on Public Enterprises

Committee Secretary, Mr Disang Mocumi, took the Committee through its BRRR.

The Chairperson asked Members If there was anything that needed to be added to the report.

Mr S Gumede (ANC) said that the scope of the report was limited in the sense that there are no officials [from the Department present], which is limiting in the sense of Members asking questions. The expectation is to look at the questions, consider the report and adopt the recommendations as they are. Asking questions to the Secretary will, in fact, be a process of recurring questions, as it means this will have to be addressed at a later stage. Outstanding questions must be addressed. He moved on formally adopted the report.

The Chairperson said a Member can seek to remove anything in the report or move for its adoption.

Mr G Cachalia (DA) said that the state in facing extraordinary times as every single one of the entities under the Committee’s oversight is in an extremely parlous state. There are either billons of losses being posted or a considerable degree of sabotage or corruption, theft and considerable evidence of aptitude or mismanagement. Extraordinary times call for extraordinary measures, not for ordinary measures. There is a need for a qualitatively different approach. For decades, it was clear that state-owned enterprises (SOEs) and entities that this Committee exercises oversight on lacks accountability, and there have been much of the same templates, year-after-year. If one plots against this, the achievement of targets and milestones have been significantly at variance with those targets. This reveals that incorrect tools of measurement are being used; another problem is to not set the right targets. Oversight structures are not ensuring that there is the correct consequence management. “If we continue to do the same things in the same way, we will get the same results. We have to change”, he lamented. For the apparent tick-boxing of this particular report, in this extraordinary time, he cannot support it [the Committee report], as these times call for something very different. The fate of these SOEs, not just in their silos, depends on it. “The fate of this very country depends on it because of the impact on our fiscus and the culture of our country and its economic growth, spine and the beating heart of the economy. If we cannot get this right, then we as a Committee are not doing our job”, he added.

Ms J Mkhwanazi (ANC) said that, based on the role of the Committee and that most of what is contained in the BRRR covers the Committee’s discussions and the recommendations, it has covered most of the Committee’s work. She said the highlight for her was point 9.1.8, which was raised and responded to by the Department of Public Enterprises – on timelines and the finalisation of the development of the Shareholder Management Bill.

She said that she supported Mr Gumede in his proposal to adopt the recommendations and the report. She also agreed with Mr Cachalia that extraordinary measures were needed to deal with some issues. The Department should engage the National Treasury on State Capture.

Ms C Maotwe (EFF) said that the report outlines and details the devastating situation. The recommendations, as they are, are not assisting the Committee to move the SOEs out of the state it is in. There must never be recommendations stating that there needs to be timeous reports. If an incident occurs today, the Committee should state that they expect a report in five days. The word “timeously” needs to be defined. For example, issues are reported on Eskom in the media before it is reported to the Committee. She agreed that there needed to be quarterly reports and that the Committee needed to ensure management and control. Eskom has been receiving qualified audit opinions over the past five years. The majority of the comments from the audit is that the information submitted is not materialistic for the auditors to make sense of Eskom’s finances. There are procurement irregularities and wasteful and fruitless expenditure. Consequence management is missing in the report. There must be clear timelines so that people do not occupy offices when they are “messing up”. There is a need to improve the capacitation of the board. “We need to be clear on what we need and what we mean by the capacitation of the board. If we want the board to be appointed based on qualifications and experience, then we should state this, as well as how often lifestyle audits should be done. We should state that this must be done quarterly. I know that Eskom had asked for the phasing in of the AG. I think we need to ensure the AG audits Eskom, as the phasing in of the AG will not assist us. Five years from now, we might not have the same Ministers, and this is a long time for an ailing entity like Eskom”, she remarked. Denel is unable to pay salaries at present. Their management needs to report on this matter. How does the restructuring move Denel forward? There must be annual reviews of all state entities, boards and the CEOs.

Mr N Dlamini (ANC) said that he supported Mr Gumede’s request to adopt the report. He said he would note the comments made by Mr Cachalia with a pinch of salt. “We are not singing from the same hymn. At all times he tries to paint a picture that all is bad with SOEs and ignoring the turnaround as well as the positive efforts that have been made and turning it into a catastrophic situation with all SOEs. Let us agree that some of us will see the glass as half empty, like Mr Cachalia, while in fact, it is half full”, he added. This is a work-in-progress. “We should note the comments from Ms Maotwe in terms of timelines to have a definite timeline, which should not be vague”, he added. He agreed with the proposal to adopt the report.

Mr Gumede said he was of the view that some things in the discussion made sense and some did not. He said the discussion needed to be structured, as good things have been said and some offensive things have also been said. He reiterated his earlier proposal and said his understanding was that, for every financial year, a report of this nature is considered. According to the Department, there is a timeframe of 12 months to execute the recommendations, as stated before the Committee. The recommendation to make timelines more specific does not mean that there are no timeframes. The Committee must look at the necessary interventions at the time. He recommended that the report be adopted, as all previous Members also agreed.

Ms Maotwe said she did not recommend that the report be adopted, and that Mr Gumede should not speak for her.

Mr Gumede said that this was not what she said.

The Chairperson called for order and said the Members should not address each other.

Ms Maotwe asked the Chairperson to allow Members to accept or reject the report officially at the end of the discussion. She stated that she rejected the report.

Mr N Kwankwa (UDM) agreed with Mr Cachalia, and that many of the recommendations in the BRRR’s have, to a large extent, not been implemented. When he looked at the previous recommendations and the Committee’s recommendations, it was the same thing, with the exception of one or two points. He referred to the Legacy Report, which cites the same issues currently being discussed. He did not know if there was a lack of will from the Department to implement the recommendations. He agreed with Ms Maotwe on timelines for recommendations. He also agreed with Mr Gumede that timelines for reporting on certain issues would vary in times. The Department must update the Committee on a quarterly basis. If there is a timeframe for 12 months or longer, some of the recommendations may fall through the cracks. For example, when will the Shareholder Management Bill be finalised? “We need to be clear on what capacitation means. South Africans always look to us when it comes to Eskom and the challenges it faces. The Committee is always the last to know what happens with maintenance issues at Eskom, and comes to hear of it in the media. The Committee needs to be updated on a regular basis in writing. Chances are that only 60% or 70% of the recommendations will be implemented. There is often very little progress over a five-year term”, he said.

Ms M Clarke (DA) said that when comparing the recommendations of last year’s report to the current year, there was very little difference. This says that very little has been done. Contracts between government and SOEs have not been signed yet. “We speak about consequence management all the time in reports and meetings, but no real change occurs”, she said. She would like to know what the appointed Committee by the President has to say about the SOEs, and what their opinions and recommendations are towards ensure SOE’s are dealt with in a positive manner. She lamented that looking at the report depressed her, and she did not think she could support the report.

Ms V Malinga (ANC) expressed that she welcomed and supported the report.

Ms J Tshabalala (ANC) said that the Committee’s role was clear on the BRRRs. The Committee must not act as though it had not engaged with the Department. Members who comment that everything is wrong and nothing else is going well are not being honest. The Committee must reflect. For example, the Committee interacted with Alexkor in May, and the entity has noted many changes. The entity had elections earlier in the year, but where was the Committee? Alexkor has much instability when it comes to marine weather and shallow mining. The Committee must be aware of or be succinctly clear that there are challenges to note.

The report addresses the issues that the Committee has highlighted. Reporting back to the Committee in five days is unrealistic. This would mean that the Department will not do anything. The Committee should consider tracking metrics and discuss this with the Committee Content Advisor and researchers. She supported the adoption of the report, but did not agree with all the amendments, as she did not understand how to agree with amendments by someone who would reject the report.

The Chairperson said the issue was that Members were coming to the Committee with their party politics and not acting as a unified force, and so that recommendations can be easily implemented. There will be different views on state-owned entities, as everyone has adopted different persuasions. Some believe such entities show play a central role in the building of our economy to improve the quality of life for people to continue transformation. “The private sector is failing us by not meeting the basics of transformation such as Black Economic Empowerment”, he said. All state-owned entities have been affected by state capture, which is not the public enterprises corrupting itself, but it is from the private sector. Those in the private sector have oppressed South African’s for many years by the apartheid regime. Denel must be assisted with restructuring, and National Treasury should be involved to fast-track the process for workers to be paid. People must be appointed according to their qualifications. An engineer does not get appointed to run an entity. He said someone could be a doctor by profession, but have the capacity to run an institution. The South African Revenue Services (SARS) should directly audit these entities, as some private companies doing auditing were implicated in corruption with state capture. SARS does not need the assistance of private companies.

He confirmed that the Members have adopted the report.

Ms Maotwe said that the Chairperson should note the rejection of the EFF.

Mr Cachalia said that the DA’s rejection of the report should also be noted.

The Chairperson said that this was obvious, as it was expected from the beginning.

Report of the Portfolio Committee on Public Enterprises on the oversight visit to Eskom (Medupi and Kusile Power Stations) and SAFCOL

Mr Mocumi took the Committee through the report.

The Chairperson asked Members to engage on the report.

Ms Mkhwanazi noted the findings and proposed that Members accept the report and use the findings to monitor the entity.

Mr Cachalia indicated that he was not at the oversight visits.

Ms Maotwe said she had also not attended the oversight visits.

Mr Kwankwa also said he did not attend the oversight visits.

Ms Clarke said that many issues raised were included in the report, but she felt the Department was not always honest in terms of Medupi. She would like the Committee to deal with the recommendations of the report and the technical woes of Eskom at present. The report on the explosion at Medupi as well as its costs, need to be determined, as a rosy picture was painted to the Committee when it had done an oversight visit. The Committee also needs to know how procurement was done, what contractors were appointed and what has transpired after the oversight visit. There should be a joint meeting with Agriculture and Land Reform to see how best to deal with land claims.

Mr Dlamini said that the report was a true reflection of the oversight visit.

Ms R Komane (EFF) agreed that the report was a true reflection of the oversight visit, and suggested that a timeframe be suggested to have a joint meeting with the Department of Agriculture, Rural Development and Land Reform.

Mr Gumede said he had COVID-19 at the time of the oversight visit.

Ms Malinga agreed that the report was a true reflection of the oversights visit and supported its adoption.

Ms Clarke said she felt strongly about [not] endorsing a report without having the true facts. What transpired now and what the Committee was told differs.

Ms Malinga raised a point of order and said it was an oversight report and was based on what the Committee saw at the time and not what was happening now. Members are not undermining or ignoring what is currently happening.

The Chairperson agreed that the report was on what was seen and heard, and not what is perceived.

Mr Dlamini said that the Committee had spoken to the defects and what Eskom was doing to remedy the situation. Eskom explained that not all units were active, and it explained what the cause of load shedding was. He said Eskom was not hiding things from the Committee, as it had alerted the Committee to defects and what it would do to remedy this. The entity did not promise that there would not be adverse effects on the power supply.

The Chairperson said the fire at Medupi had not yet occurred when the oversight visit at Eskom took place.

Mr Cachalia said that the rejections on the Zoom Chat should be noted.

Report of the Portfolio Committee on Public Enterprises on the oversight visit to Transnet

Mr Mocumi took the Committee through the report.

Mr Dlamini said that the report covers what happened at the oversight visit. The Committee was expecting responses in writing, but this was not yet received. He supported the report.

Mr Cachalia agreed with Mr Dlamini.

Ms Maotwe said that the point on who has operating licenses, and that Transnet ports only had sixteen of them, was missing. She did not see that 53% of train cancellations related security issues in the report. She also said long drop toilets were not mentioned in the report.

Mr Gumede said that he was on leave at the time of the oversight visit.

Mr Kwankwa said that he was covered by Mr Dlamini, and he agreed with adopting the report.

Ms Mkhwanazi supported Mr Dlamini’s proposal to adopt the report.

Ms Clarke had to leave the meeting due to a family emergency.

Ms Malinga supported the report with the additions mentioned.

The report was unanimously adopted.

The meeting was adjourned.