2017/2018 - dpe.gov.za · the National Development Plan as well as the Medium Term Strategic Framework. At ... TNPA Transnet National Ports Authority TOR Terms of Reference TFR Transnet

2017/2018ANNUAL PERFORMANCE PLAN

DEPARTMENT OF PUBLIC ENTERPRISES

1Annual Performance Plan 2017/2018 - Department of Public Enterprises

FOREWORD BY THE MINISTER 2Official sign-off 3Glossary 4

PART A: STRATEGIC OVERVIEW 6

1 Updated Situational Analysis 72 Revisions to legislative and other mandates 123 Overview of Budget and medium-term expenditure framework (MTEF)

estimates 14

PART B: PROGRAMME AND SUBPROGRAMME PLANS 18

4.1 PROGRAMME 1 – ADMINISTRATION AND CORPORATE MANAGEMENT 19

4.2 PROGRAMME 1 – ADMINISTRATION 204.3 PROGRAMME 2 - LEGAL AND GOVERNANCE 244.4 PROGRAMME 3 - PORTFOLIO MANAGEMENT AND STRATEGIC

PARTNERSHIPS 29

4.5 Sub-programme: Energy Enterprises 294.6 Subprogramme: Manufacturing Enterprises 324.7 Subprogramme: Transport Enterprises 374.8 Subprogramme: Economic Impact and Policy Alignment 414.9 Subprogramme: Strategic Partnerships 45

PART C: LINKS TO OTHER PLANS 50

5 LINKS TO LONG-TERM INFRASTRUCTURE AND OTHER CAPITAL PLANS 51

6 CONDITIONAL GRANTS 527 PUBLIC ENTITIES 52

There has been no change to the SOCs overseen by the Department. However, the Department has been tasked to develop the overarching Government Shareholder Oversight Policy. The Policy is intended to optimize the institutional architecture for the management of SOCs including their contribution to the implementation of Government policy.


CONTENTS

2 Department of Public Enterprises - Annual Performance Plan 2017/2018

The Department’s Annual Performance Plan is informed by the strategy of the Department that directly supports the implementation of the commitments outlined in the National Development Plan as well as the Medium Term Strategic Framework. At the centre of the Department’s strategy, is the aim to create the necessary conditions that will allow SOCs to contribute to the developmental objectives.

The Department has implemented a number of changes to its planning approach and these changes have been focused on the following:

• The limited set of projects that will systematically improve the performance of the SOCs

• Aligning the Department’s priorities to the national economic policy framework to enhance institutional alignment

• Reducing the number of compliance-related targets in the APP.

It is pleasure to table the Annual Performance Plan for the Department of Public Enterprises.

Ms Lynne Brown, MP Minister

FOREWORD BY THE MINISTER

MS LYNNE BROWN, MP


It is hereby certified that this Annual Performance Plan was developed by the management of the Department of Public Enterprises under the guidance of Mr Mogokare Richard Seleke, Director-General, and was prepared in line with the current Strategic Plan of the Department of Public Enterprises.

It accurately reflects the performance targets that the Department of Public Enterprises will endeavour to achieve given the resources made available in the budget for the 2015/16 financial year.

OFFICIAL SIGN-OFF

Mr Gcina Hlabisa

Signature: ______________________ Date: 07/03/2017Director: Strategy

Ms Benedicta Mogaladi

Signature: ______________________ Date: 07/03/2017 Chief Financial Officer

Mr Mogokare Richard Seleke

Signature: ______________________ Date: 07/03/2017 Director-General

Approved by: Ms Lynne Brown, MP

Signature: ______________________ Date 08/03/2017 Minister


GLOSSARY

ACSA Airports Company of South AfricaAFDB African Development BankAGM Annual General MeetingAPP Annual Performance Plan BB-BEE Broad Based Black Economic EmpowermentCAPEX Capital ExpenditureCFO Chief Financial OfficerCS Corporate ServicesCSDP Competitive Supplier Development ProgrammeDAFF Department of Agriculture, Forestry and FisheriesDCT Durban Container TerminalDEA Department of Environmental AffairsDG Director-GeneralDDG Deputy Director-GeneralDHET Department of Higher Education and Training DM Deputy MinisterDMR Department of Mineral ResourcesDOC Department of CommunicationsDOD Department of DefenceDOE Department of EnergyDOT Department of TransportDPE Department of Public EnterprisesDRDLR Department of Rural Development & Land Reform

DTI Department of Trade and IndustryDTPS Department of Telecommunications and Postal Services EDI Electricity Distribution IndustryEE Economic EquityEIA Environmental Impact AssessmentsEMP Environmental Management PlanExCo Executive CommitteeFET Further Education and TrainingFMCG Fast Moving Consumer GoodsFOSAD Foundations of Security Analysis and DesignFSN Full Services NetworkGCH Gross Crane Move per hourGFB General Freight BusinessHR Human ResourcesICASA Independent Communications Authority of South Africa - ICT Information and Communication TechnologyIGR Inter-Governmental RelationsIP Intellectual PropertyIPO Initial Public OfferingIPP Independent Power ProducersIRP Integrated Resource PlanISMO Independent System and Market OperatorEIPA Economic Impact Policy Alignment

Below is a glossary of acronyms used in this plan


JV Joint VentureKLF Komatiland ForestsKPI Key Performance IndicatorLTTS Long Term Turnaround StrategyMDS Market Demand Strategy MISS Minimum Information Security StandardsMOU Memorandum of UnderstandingMTEF Medium-Term Expenditure Framework MTSF Medium Term Strategic Framework MYPD Multi- Year Price DeterminationNCPM National Corridor Performance Measurement NDP National Development Plan NEDLAC National Economic Development and Labour CouncilNERSA National Energy RegulatorNGP National Growth PathNT National TreasuryPAIA Promotion of Access to Information ActPBMR Pebble Bed Modula ReactorPICC Presidential Infrastructure Coordination Commission PFMA Public Finance Management ActPPP Public-Private PartnershipsPRC Presidential Review CommitteePSJV Pooling and Sharing Joint Venture

PSP Private Sector ParticipationR&D Research and development RBCT Richard Bay Container Terminal RMC Richtersveld Mining CompanySAA South African AirwaysSAAT South African Airways TechnicalSAFCOL South African Forestry Company LtdSAQA South African Qualification AuthoritySAX South African Express AirwaysSCM Supply Chain ManagementSIP Strategic Integrated Projects SLA Service Level AgreementSOC State Owned Companies SSA State Security AgencyTEU Twenty-foot Equivalent UnitTNPA Transnet National Ports AuthorityTOR Terms of ReferenceTFR Transnet Freight RailWACS West Coast Submarine Cable


PART ASTRATEGIC OVERVIEW


In the second part of 2014, the new administration approved the Medium-Term Strategic Framework (MTSF) that provides the strategic priorities of Government for the period of 2014 to 2019. The MTSF was centred largely on the implementation of key actions contained in the National Development

Plan (NDP) that are essential for the restructuring of the economy and dealing with the triple challenges of unemployment, poverty and inequality.

The 2016/17 financial year represented the mid-term review for the current administration period and it

was necessary for the Department to undertake a comprehensive review of its contribution and that of the SOCs in the portfolio to achieve the outcomes outlined in the NDP and the MTSF.

Figure 1: Mid-Term Review Methodology

1. UPDATED SITUATIONAL ANALYSIS

Outcomes

Mid-Term Review

Quarterly & Annual Performance Monitoring

Res

ults

Cha

in

Outputs

Activities

Inputs


Performance delivery environment

Since the beginning of the current administration period, the Department’s priorities have been designed to support the turnaround of the economy through the rapid rollout of the infrastructure programme, improve the quality of services offered by SOCs as well as the financial sustainability of the portfolio.

The mid-term review focused on assessing the contribution of the Department and the SOCs to the outcomes of the MTSF and the strategic objectives of the Department’s strategy. The mid-term review further tested whether the actions undertaken by the portfolio are contributing to the transformation of the South African economy.

The review showed that progress has been made to achieve the strategic objectives of the Department and that a significant contribution has been made to the realisation of the strategic objectives set out at the beginning of the administration period. The table below shows the progress rating on each objective.

Table 1: Progress on the realisation of the strategic objectives of the Department

Significant progressModerate progress Progress but with challenges

Strategic objective Progress rating 1. Ensure SOCs’ financial sustainability 2. Ensure SOCs maintain commercially viable operations 3. Accelerate capital projects delivery 4. Accelerate the transformation of the South African economy 5. Explore initiatives to support development of small, medium and micro enterprisesSMMEs, cooperatives and as well as rural

and township businesses, including businesses owned by targeted groups 6. Advance the re-industrialisation of the South African economy 7. Accelerate development of skills to support the needs of the economy 8. Develop a strong shareholder 9. Promote alignment and efficiency across the institutional model


The review allowed the Department to assess progress and draw key lessons from the implementation of its strategy, including:

• SOCs in the Department’s portfolio form the backbone of the economy and their performance has a direct impact on the economy’s competitiveness and performance. Creating a supportive and clearer policy environment is essential and the shareholder must strive for this.

• The performance of the Department cannot be divorced from the state of the SOCs in the portfolio and must promote financial sustainability, good governance and operational efficiency.

• The Department has moved from being compliance driven to providing strategic support and direction to the SOCs. This, however, will continue to require the following:

- Boosting the capacity of the Department to

systematically improve the ability of SOCs

to meet or deliver on their mandates. This must be focused on influencing the policy posture in key sectors of the economy.

- Creating monitoring and evaluation systems that will allow the Department to have foresight on events that will have major impact on the contribution of SOCs to Government objectives.

The results of the mid-term review have been used to revise the strategy to ensure that it remains relevant and continues to directly support the implementation of Government programmes. The APP is the execution tool for the strategy of the Department and it’s central to the translation of strategic goals into actions that can be assessed and measured.

Organisational Environment

The Department is currently working on the organisational alignment to ensure that the capacity exists for it to execute its objectives to improve the ability of the SOCs to meet or deliver on their mandates. This is also central to the repositioning

of the Department to become the knowledge hub for the oversight function of the State. The realignment is intended to drive operational efficiency and ensures that the Department is correctly structured to provide support to the SOCs.

The Department will also implement system improvements to enhance the efficiency of the monitoring and evaluation systems. This is important to allow the Department foresight over events that may impact the portfolio and its contribution to Government objectives to deal with the triple challenges of unemployment, poverty and inequality. This will require a shift by the Department from an ‘arm’s length’ planning, monitoring and evaluation role to a more ‘hands-on’ role.

The Department also identified the need to support its SOCs through provincial engagements in tackling service delivery issues, It is envisaged that this new approach will require both an enhancement and expansion of what the Department, through its SOCs, currently does.


ORGANISATIONAL STRUCTURE

Figure 2: The DPE Organisational Design

MinisterPublic Enterprises

Deputy MinisterPublic Enterprises

Director-GeneralPublic Enterprises

Economic Impact andPolicy Alignment

TransportEnterprises

EnergyEnterprise

StrategicPartnerships

ManufacturingEnterprises

Programme 3Portfolio Management and

Strategic Partnerships

Programme 2Legal and

Governance

Programme 1Administration

(Corporate Management)


PROGRAMME 1 - ADMINISTRATION AND CORPORATE MANAGEMENTMinistry Minister

Deputy MinisterManagement Director-General

Corporate ManagementCorporate Services Security and Facilities Management

Information Management and TechnologyChief Financial Officer Chief Financial OfficerHuman Resources Human ResourcesCommunications CommunicationsStrategic Planning, M and E Strategic Planning, Monitoring and

EvaluationIntergovernmental and Stakeholder Relations

Inter-Governmental and Stakeholder Relations

Internal Audit Internal AuditPROGRAMME 2 - LEGAL AND GOVERNANCE

ManagementLegalGovernanceRisk

PROGRAMME 3 - PORTFOLIO MANAGEMENT AND STRATEGIC PARTNERSHIPSEnergy Enterprises

ManagementEskom

Manufacturing EnterprisesManagementDenelAlexkorSouth African Forestry Company Ltd (SAFCOL)

Transport EnterprisesManagementTransnet South African Express Airways

Economic Impact and Policy Alignment

ManagementEnvironmental Policy AlignmentEconomic Policy AlignmentTransformation, Skills and Youth Development

Strategic Partnerships ManagementProject oversightFunding MechanismsSupplier Relationships

OVERVIEW OF PROGRAMMES


The table below lists the SOCs that report to the Minister:

Name of entity Legislative mandate Minister’s financial relationship with the SOCs

Nature of operations

Alexkor Alexkor Limited Act 116 of 1992

Shareholder representative

A diamond mining company that operates primarily in Alexander Bay and the greater Namaqualand area.

Denel None Shareholder representative

A defence company. Although it was established as a private company in terms of the Companies Act of 2008, the Government exercises full control over it.

Eskom Eskom Conversion Act 13 of 2001


Eskom generates, transmits and distributes electricity to industrial, mining, commercial, agricultural and residential customers and redistributors.

South African Forestry Company

Management of State Forests Act 128 of 1992


The South African Forestry Company Limited is the Government’s forestry company. It conducts timber harvesting, timber processing and related activities, both domestically and regionally.

South African Express South African Express Act 34 of 2007


South African Express is a domestic and regional air carrier with a mandate to be an African airline.

Transnet Legal Succession to the South African Transport Services Act 9 of 1989


Transnet is a freight and logistics company responsible for pipelines, ports, and rail transport infrastructure and operations in South Africa.

2. REVISIONS TO LEGISLATIVE AND OTHER MANDATES


As the shareholder Ministry, on behalf of the Government, the Department’s mandate continues to evolve to ensure that SOCs in its portfolio are directed clearly towards prioritised outcomes. This is essential to support the execution of the Government’s policy priorities. An overarching shareholder management process aimed at providing enduring strategic rationale for SOCs underpins this evolution.

Expansion of the role of SOCs within the current economic management framework has required the Department to introduce measures to ensure that SOCs contribute to the following:

• Promotion of economic growth by facilitating development of new industrial capabilities through supplier development and expansion

of local content, particularly in the build programme;

• Expansion of training and skills development programmes to support the Government to develop skills required by the economy;

• Achievement of minimum standards of universal service and affordability for key services such as rail and electricity, and

• The correction of past social injustice.

While there is alignment between SOCs activities, there are still challenges in the shareholder function and how it interfaces with other Government functions, eg policymaking and regulatory functions. This challenge contributes partially to the current

performance of SOCs and their weaknesses. The development of the overarching Government Shareholder Oversight Policy and subsequent legislation for SOCs will begin to address this challenge.

The February 2015 Cabinet lekgotla took a number of resolutions to support the strengthening of SOCs through the implementation of the Presidential Review Committee (PRC) on SOCs. Consequently, the Department will develop legislation on SOCs, which will codify the shareholder function and ensure that there is a clear legislative framework to support the management of SOCs, a clear delineation of roles, and clarity on the required level of private sector involvement in SOCs businesses.


2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20Rand thousand Audited

outcomeAudited outcome

Audited outcome

Adjusted appropriation

Revised estimate

Revised baseline

Revised baseline

Revised baseline

Subprogrammes Ministry 31 342 28 411 28 937 27 778 27 778 28 605 29 447 31 622 Management 9 269 15 152 12 834 11 329 11 329 9 827 10 496 11 446 Corporate Services 27 056 28 075 30 108 35 010 35 010 36 769 38 457 40 944 Chief Financial Officer 11 281 12 578 13 866 16 965 16 965 16 398 17 126 18 266 Human Resources 17 618 23 396 22 167 23 854 23 854 20 999 21 589 23 109 Communications 14 227 16 072 12 014 16 004 16 004 15 047 15 887 16 778 Strategic Planning, Monitoring and Evaluation

4 807 4 377 4 824 4 701 4 701 7 096 7 513 8 027

Intergovernmental Relations 6 711 5 830 5 708 5 119 5 119 4 607 4 818 5 176 Internal Audit 3 743 3 565 5 314 6 062 6 062 6 701 7 210 7 677 Office Accommodation 7 240 8 101 9 988 8 970 8 970 9 419 9 965 10 523 Total 133 294 145 557 145 760 155 792 155 792 155 468 162 508 173 568 Economic classification Current payments 129 632 140 959 137 685 151 840 151 840 151 594 158 405 176 112 Compensation of employees 66 659 73 805 73 461 79 829 79 829 85 377 87 886 94 565 Salaries and wages 66 659 67 642 66 909 73 318 73 318 78 739 81 990 88 221 Social contributions - 6 163 6 552 6 511 6 511 6 638 5 896 6 344 Goods and services 62 973 67 154 64 224 72 011 72 011 66 217 70 519 74 678 Administrative fees 527 1 949 2 326 1 472 1 472 2 298 2 457 2 623 Advertising 4 221 1 207 2 326 1 629 1 629 1 567 1 656 1 748 Minor assets 354 73 224 200 200 12 13 13 Audit costs: External 2 087 2 822 3 559 3 650 3 650 3 400 3 593 3 795 Bursaries: Employees 463 271 724 960 960 1 032 1 091 1 152 Catering: Departmental activities 1 309 713 679 1 201 1 201 1 140 1 216 1 298

3. OVERVIEW OF BUDGET AND MEDIUM-TERM EXPENDITURE FRAMEWORK (MTEF) ESTIMATES


Economic classification (continued)Communication (G&S) 3 220 4 053 3 716 3 649 3 649 4 730 5 000 5 280 Computer services 4 125 4 573 3 731 6 803 6 803 3 746 3 959 4 182 Consultants: Business and advisory services

7 887 16 248 9 366 13 575 13 575 11 461 12 169 12 908



Audited outcome


Revised estimate

Revised baseline

Revised baseline

Revised baseline

Legal services (G&S) - 673 119 1 000 1 000 1 242 1 313 1 386 Contractors 809 2 471 1 978 5 745 5 745 4 433 4 823 4 911 Agency and support/outsourced services

1 361 924 1 659 1 080 1 080 1 441 1 522 1 607

Entertainment 19 4 - 76 76 25 17 18 Fleet services (including government motor transport)

1 149 974 771 1 018 1 018 997 1 062 1 121

Inventory: Clothing material and accessories

25 - 1 - - - - -

Inventory: Materials and supplies 1 45 5 - - - - - Inventory: Medical supplies - - 3 - - - - - Consumable supplies 624 725 356 769 769 732 774 817 Consumables: Stationery, printing and office supplies

2 248 1 482 1 566 1 339 1 339 1 382 1 460 1 542

Operating leases 1 292 1 196 1 223 1 709 1 709 1 248 1 319 1 392 Rental and hiring - 245 367 98 98 15 16 17 Property payments 7 504 8 441 10 196 9 636 9 636 10 259 10 853 11 460 Transport provided: Departmental activity

- 69 3 619 71 71 100 106 112


Travel and subsistence 14 951 11 695 9 240 10 897 10 897 7 447 8 163 8 914 Training and development 1 650 2 602 3 769 1 800 1 800 1 650 1 744 1 841 Operating payments 1 076 1 977 649 3 038 3 038 4 008 4 235 4 472 Venues and facilities 6 071 1 722 2 052 596 596 1 852 1 958 2 067 Transfers and subsidies 318 317 1 714 234 234 10 11 11 Provinces and municipalities 2 - - 1 1 10 11 11 Municipalities 2 - - 1 1 10 11 11 Municipal bank accounts 2 - - 1 1 10 11 11 Households 316 317 1 714 233 233 - - 131 Social benefits 269 221 1 267 36 36 - - - Other transfers to households 47 96 447 197 197 - - -



Audited outcome


Revised estimate

Revised baseline

Revised baseline

Revised baseline

Payments for capital assets 3 249 4 274 6 341 3 718 3 718 3 864 4 092 4 314 Machinery and equipment 2 768 4 192 5 731 3 604 3 604 3 758 3 980 4 196 Transport equipment 747 1 396 1 319 1 350 1 350 - - - Other machinery and equipment 2 021 2 796 4 412 2 254 2 254 3 758 3 980 4 196 Software and other intangible assets 481 82 610 114 114 106 112 118 Payments for financial assets 95 7 20 - - - - - Total 133 294 145 557 145 760 155 792 155 792 155 468 162 508 173 568


Expenditure Trends

The spending focus over the medium term will be on supporting the Department in its oversight role of SOCs by providing administrative support to the Minister, including corporate and human resource services to the Department. The expenditure for programme 1 is expected to increase from R155.5 million in 2017/18 to R173.6 million in 2019/20.This represents an average growth rate of 3.7%, which is mainly a result of annual salary increases. Corporate Services accounts for 23.4% of the total programme budget and it provides support services. Expenditure for goods and services accounts for 41.8% of the total programme budget and includes centralised foreign travel and accommodation costs, centralised computer services and office accommodation. Over the medium term, Cabinet has approved reductions on compensation of employees and goods and services.


PART BPROGRAMME AND SUBPROGRAMME PLANS


4.1 PROGRAMME 1 – ADMINISTRATION AND CORPORATE MANAGEMENT

4.1.1 Purpose of the programme:

Provide strategic leadership management and support services to the Department.

4.1.2 Programme overview:

The programme includes the Ministry, the Office of the Director-General and Support Services. The programme is currently made up of the following subprogrammes: Ministry; Management; Corporate Services; Chief Financial Officer; Human Resources; Communications; Strategic Planning, Monitoring and Evaluation; Intergovernmental and Stakeholder Relations; Internal Audit and Office Accommodation.

Corporate Services is responsible for:

Security and facilities management provides a safe and secure environment and internal administration and facilities services to internal customers.

Information management and technology provides information technology services and applications as strategic tools for business enablement, coupled with comprehensive records management, knowledge management, library and information services.

Office of the Chief Financial Officer provides financial management services to ensure compliance with various legislation, including the Public Finance Management Act, 1999 (Act No 1 of 1999), Public Audit Act, 2004 and Treasury Regulations; and efficient and effective supply chain management services.

Human Resources assists line management to implement operational excellence and developing the human capital potential in the Department.

Communications repositions the DPE as a strong shareholder department; makes the DPE brand relevant and meaningful to ordinary South Africans; impacts media relations and media communication, and improves employee engagement.

Strategic Planning, Monitoring and Evaluation coordinates, manages and oversees outcomes-based performance reporting of the Department; implements performance monitoring and evaluation processes for individual programmes and business units as a mechanism for measuring delivery of strategic objectives, and reports to various stakeholders.

Intergovernmental and Stakeholder Relations is responsible for coordination, support and provision of advice to the Minister, Deputy Minister, Director-General and the Department on matters of intergovernmental, international and stakeholder relations.

Internal Audit provides independent and objective assurance and consulting internal audit services to add value to and improve the Department’s operations, and assists the Department to accomplish its objectives by bringing a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, control and governance processes.


Strategic objective annual targets for 2017/18

4.2.1 Strategic objective annual targets

The Department’s Strategic Plan identifies the optimisation of the organisation’s structure, improving the internal operation processes and facilitating the repositioning of the Department through strengthening of the intergovernmental programme. Specific objectives are:

- Strengthen the delivery capacity of the Department through the optimisation of the structure as well as increased investments in technology;

- Increase engagements between the Department and key stakeholders such as provincial governments, universities, business and civil society, and

- Optimise internal processes to fast track decision-making.

Strategic objectives Audited/actual performance Estimated performance

Medium-term targets

2015/16 2016/17 2017/18 2018/19 2019/20 2020/21Promote the development of a strong shareholder

Business case for the development of a business intelligence system (BIS)

- Implementation of the business case for the BIS

Rollout of the system Rollout of the system Assessment of the impact of the BIS on business performance

Review of business processes


Three key business processes automated




- - Complete long-term scenarios where SOCs operate

Development of SOCs’ long-term plans

Implementation Implementation

4.2 PROGRAMME 1: ADMINISTRATION


4.2.2 Programme performance indicators and annual targets for 2017/18

Performance indicator

Audited/actual performance Estimated performance

Medium-term targets

2015/16 2016/17 2017/18 2018/19 2019/20 2020/21Promote the development of a strong shareholderDevelopment of the BIS

Business case of the BIS completed

- Development of the BIS

Rollout of the system Rollout of the system Rollout of the system

Automation of key business processes


- Automate three business processes to improve operational efficiency

Automate three business processes to improve operational efficiency



Development of long-term scenarios

- Proposal for the development of long-term scenarios

Long-term scenarios developed in the six sectors where SOCs in the Department’s portfolio operate

Develop long-term plans for SOCs

Implementation Implementation


4.2.3 Quarterly targets for Legal and Governance for 2017/18


Reporting period Annual targets Quarterly targets

2017/18 1st 2nd 3rd 4thPromote the development of a strong shareholderDevelopment of the BIS

Annual BIS developed Update the business case based on user requirements

Identify suitable business intelligence system

Design dashboards Test and move to live environment

Automation of key business processes

Annual Three key business processes automated (acquisition, organisational performance planning and monitoring, and contract management)

Standard operating procedures (SOPs) developed for the three key business processes and all workflows approved

System design and Development completed for the three workflows

Testing of the automated environment and user training completed

Automation of the three key business processes

Development of long-term scenarios

Annual Long-term scenarios completed

Presentation of the business case to the CEO’s Forum

Approval of the scope of work

First draft developed Final draft of long-term scenarios submitted to the CEO’s Forum


Expenditure Trends

The spending focus over the medium term will be on supporting the Department to play its oversight role of SOCs by providing administrative support to the Minister, including corporate and human resource services to the Department. The programme will also focus on improving the Department’s efficiency and productivity by reconfiguring its business, which will enable it to carry out its mandate, and put in place a three-year rolling evaluation plan to assess the impact of programmes that have been implemented

by the Department and its SOCs. Thus, over the medium term, the bulk of the programme’s allocation will be spent on compensation of employees, who provide strategic and administrative support to the Department. Spending on this item is projected to grow following the reconfiguration. The number of personnel will not increase significantly, but the expenditure will increase by 5.5% over the medium term.

Expenditure on goods and services will decrease over the medium term as a result of Cabinet budget

reductions, directly linked to reductions in the number of consultants and travel and subsistence expenses. Significant items are consultants and professional services, with the use of consultants providing the specialist expertise required particularly in the transport, manufacturing and energy sectors.


4.3.1 Programme purpose

Provide legal services and corporate governance systems, and facilitate the implementation of all legal aspects of transactions that are strategically important to the Department and SOCs. Ensure alignment with the Government’s strategic intent by, among others, monitoring the performance indicators of SOCs.

4.3.2 Strategic objective annual targets for Legal and Governance for 2017/18

Ensure effective shareholder oversight of SOCs by:• providing ongoing legal services and coordinated governance systems;• facilitating the ongoing implementation of all legal aspects of transactions that are strategically important to the Department and SOCs;• ensuring that financial and operational risk-management processes are embedded throughout the Department as and when required over the medium term;• addressing constraints on SOCs’ contract negotiations and management to improve commercial competence and contribute to economic growth and development;• providing annual assistance in developing and negotiating shareholder compact frameworks in terms of the Public Finance Management Act (1999);• providing ongoing guidance on appropriate delegation frameworks between the boards of SOCs and executive management;• advising the Minister of Public Enterprises on the appointments of boards of directors, including remuneration; preparations for annual general meetings, and

conducting of annual reviews of ownership policies, governance, appointments and the performance of boards and executive management.

4.3.3 Strategic objective annual targets for 2017/18

Strategic objectives Audited/actual performance Estimated performance

Medium-term targets

2015/16 2016/17 2017/18 2018/19 2019/20 2020/21Promote the development of a strong shareholder

SOC stabilisation programme

Draft concept paper on shareholder policy

Develop draft Bill on Shareholder Management

Draft Shareholder Management Bill tabled in Parliament

Adopt ion of Bill into law

None

Completion of the liquidation of Aventura

Bill to repeal the Overvaal Act 127 of 1993 approved by Cabinet

Draft Bill submitted to Cabinet

Draft Bill submitted to Parliament

Draft Bill signed into law

None None

4.3 PROGRAMME 2: LEGAL AND GOVERNANCE


4.3.4 Programme performance indicators and annual targets for 2017/18



Medium-term targets

2015/16 2016/17 2017/18 2018/19 2019/20 2020/21Promote the development of a strong shareholderDevelop shareholder Policy

SOC stabilisation programme

Draft concept paper on shareholder policy

Develop draft Bill on Shareholder Management

Draft Shareholder Management Bill tabled in Parliament

Adoption of Bill into law

None

Completion of the liquidation of Aventurarepeal the Overvaal Act 127 of 1993

Bill to repeal the Overvaal Act 127 of 1993 approved by Cabinet

Draft Bill submitted to Cabinet

Draft Bill submitted to Parliament

Draft Bill signed into law

None None


4.3.5 Quarterly targets for Legal and Governance for 2017/18

Performance indicator Reporting period Annual targets Quarterly targets2017/18 1st 2nd 3rd 4th

Promote the development of a strong shareholderDevelop shareholder policy

Quarterly Develop draft Bill on Shareholder Management

Government shareholder policy submitted to Cabinet

Release of government shareholder policy to the public by the Department

First draft of SOC Bill finalised

Submission of SOC Bill to the cluster

Completion of the liquidation of AventuraRepeal of the Overvaal Act 123 of 1993

Quarterly Draft Bill submitted to Parliament

Obtain Cabinet approval on the Bill

Publication of the Bill in the Government Gazette

Certification of the Bill to Parliament

Presentation of the Bill to Parliament

4.3.6 Reconciling performance targets with the budget and MTEF Expenditure estimates

Table 3: Legal and Governance



Audited outcome


Revised estimate

Revised baseline

Revised baseline

Revised baseline

Subprogrammes Management 3 021 2 879 2 756 3 167 3 167 3 043 3 207 3 442 Legal 12 704 11 703 10 663 13 091 13 091 13 385 13 961 15 024 Governance 7 434 5 731 6 311 9 648 9 648 8 815 9 216 9 859 Total 23 159 20 313 19 730 25 906 25 906 25 243 26 384 28 325


Economic classificationCurrent payments 23 146 20 313 19 730 25 844 25 844 25 243 26 384 28 325 Compensation of employees 15 178 16 834 17 087 20 095 20 095 19 592 20 347 21 893 Salaries and wages 15 178 15 607 15 693 18 375 18 375 17 880 18 537 19 946 Social contributions - 1 227 1 394 1 720 1 720 1 712 1 810 1 948 Goods and services 7 968 3 479 2 643 5 749 5 749 5 651 6 037 6 432 Catering: Departmental activities 46 4 3 19 19 14 14 16 Communication (G&S) 139 124 113 169 169 205 221 235 Consultants: Business and advisory services

2 458 393 612 1 756 1 756 2 443 2 634 2 781

Legal services (G&S) 1 878 1 435 710 2 162 2 162 1 991 2 225 2 405 Contractors 98 - - - - - - - Agency and support/outsourced services

1 197 61 - - - - - -

Entertainment - - - 13 13 14 14 17 Consumable supplies 3 - - 2 2 - - - Consumables: Stationery, printing and office supplies

1 - - - - - - -




Audited outcome


Revised estimate

Revised baseline

Revised baseline

Revised baseline

Operating leases 4 - - - - - - - Travel and subsistence 1 723 1 394 1 171 1 481 1 481 924 864 910 Training and development 156 - - - - - - - Operating payments 34 2 - - - - - - Venues and facilities 231 66 34 147 147 60 65 68 Transfers and subsidies 13 - - 62 62 - - - Households 13 - - 62 62 - - - Other transfers to households 13 - - 62 62 - - - Total 23 159 20 313 19 730 25 906 25 906 25 243 26 384 28 325

4.3.7 Performance and expenditure trends

The spending focus over the medium term will be on increasing the programme’s capacity to provide legal services, and transaction and contract management support, and on facilitating the creation of a legislative framework for the Department’s mandate to ensure compliance with applicable legislation and enhance corporate governance procedures by SOCs. The

expenditure for programme 2 is expected to increase from R25.2 million in 2017/18 to R28.3 million in 2019/20.The Legal and Governance subprogrammes will receive the bulk of the programme’s allocation in the medium term. In line with the laws governing SOCs, the Minister has to exercise care in carrying out these responsibilities. Spending on compensation of employees has increased marginally in the medium term. The decrease in expenditure on goods and

services results from delays in receipt of invoices on outstanding litigations. However, expenditure is likely to increase as outstanding litigations are finalised. In the medium term, Cabinet has approved reductions on compensation of employees and goods and services.


4.4.1 Programme purpose

Align the strategies of SOCs with Government policy and strategy, and monitor and benchmark their financial and operational performance and capital investment plans. Align shareholder oversight with overarching Government economic, social and environmental policies, and build focused strategic partnerships among SOCs, strategic customers, suppliers and financial institutions.

The subprogrammes in this programme are:• Energy and Broadband Enterprises – includes

Eskom • Manufacturing Enterprises – includes Denel,

Alexkor and SAFCOL.• Transport Enterprises – includes South African

Express Airways (SAX) and Transnet.• Economic Impact and Policy Alignment – aligns

SOCs with overarching Government economic, social and environmental policies.

• Strategic Partnerships – ensures that SOCs maintain commercial sustainability and attain desired strategic outcomes and objectives

4.4.2 Strategic objectives

Contribute to enhancing the performance of SOCs by:• approving and evaluating corporate plans to

determine whether the performance of SOCs aligns with agreed key performance indicators, and provide ongoing advice and guidance to their boards;

• monitoring the implementation of corporate plans and shareholder compact targets quarterly, and

• assessing shareholder and enterprise risks and advising boards on concerns quarterly.

4.5 Sub-programme: Energy Enterprises

This subprogramme involves:

Management - the office of the Deputy Director-General, which provides strategic leadership and management of programme personnel.

Eskom – shareholder management and oversight of Eskom’s financial performance.

Strategic objectives/annual targets for Energy Enterprises for 2017/18

• Provide shareholder management and oversight of Eskom, including the generation, transmission and distribution of electricity, with particular emphasis on ensuring the security of supply in the medium term.

• Ensure the legal regulatory compliance of Eskom by ongoing engagement on policies and regulations with stakeholders such as the Department of Energy (DoE), the Department of Environmental Affairs (DEA), the Department of Water and Sanitation and the National Energy Regulator of South Africa (NERSA).

• Reduce Eskom’s dependence on funding from the fiscus by quarterly monitoring of cost escalations for its capital investment programme and operations to roll out the build programme cost-effectively.

• Exercise oversight to ensure that Eskom’s capital investments support local suppliers by monitoring the implementation of the competitive supplier development programme and assessing progress in the company’s quarterly report.

• Support Eskom to address municipal debt challenges to ensure financial sustainability.

4.4 PROGRAMME 3 - PORTFOLIO MANAGEMENT AND STRATEGIC PARTNERSHIPS


Eskom SOC Limited

Support the security of electricity supply by the following ongoing actions:- examining Eskom’s maintenance plans,

operational practices, electricity generation and distribution efficiency, and its reserve margin;

- ensuring that Eskom supplies electricity by monitoring, evaluating and engaging with the company on system security and the new build programme to alleviate constraints;

- facilitating engagement between Eskom and other spheres of government to address municipal debt, and

- monitoring the rollout of the capital investment programme to ensure that it is delivered on time, is of appropriate quality and is within budget.

4.5.1 Strategic objectives and annual targets for Energy Enterprises for 2017/18

Strategic objectives


Medium-term targets

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21Ensure improved and sustainable operations within Eskom

None None Position paper on Eskom’s operational sustainability

Monitor Eskom’s operational performance



None

None None None Report on Eskom’s operating model

None None None

Ensure delivery of Eskom’s Build Programme

None Delivery of Medupi, Kusile, Ingula and Sere Wind Farm

Review and monitor the delivery of the build programme

Monitor the delivery of the build programme (Medupi, Kusile)

Monitor Eskom build programme



Ensure financial sustainability

None Improved Eskom financial metrics and company financial sustainability

None Monitor Eskom initiatives to replace operating costs

Monitor Eskom initiatives to reduce operating costs

None None


4.5.2 Programme performance indicators and annual targets for Energy Enterprises for 2017/18



Medium-term targets

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21Ensure improved and sustainable operations within EskomMonitor Eskom operational performance

None None Position paper on Eskom’s operational sustainability




None

Review of Eskom operating model

None None None Report on Eskom’s operating model

None None None

Ensure delivery of Eskom’s Build ProgrammeProgress report on the delivery of Eskom Capital Programme

None Delivery of Medupi, Kusile, Ingula and Sere Wind Farm

Review and monitor the delivery of the build programme

Monitor the delivery of the build programme (Medupi, Kusile)




Ensure financial sustainabilityReview of Eskom operating cost structure

None Improved Eskom financial metrics and company financial sustainability

None Monitor Eskom to reduce operating costs

Monitor Eskom to reduce operating costs

None None


4.5.3 Quarterlytargetsforfinancialyear2017/18



2017/18 1st 2nd 3rd 4thEnsure improved and sustainable operations in Eskom Monitor Eksom operational performance

Bi-annually Monitor Eskom;s operational performance

None Report on Eskom’s operational sustainability

None Report on Eskom’s operational sustainability

Review of Eskom’s operating model

Bi-annually Report on Eskom’s operating model

None Progress report on operating model

None Final report on operating mode

Ensure delivery of Eskom’s Build ProgrammeProgress report on the delivery of Eskom’s Capital Programme

Quarterly Monitor the delivery of Eskom build programme (Medupi, Kusile)

Report on the progress of the build programme




Ensure SOC independent financial sustainability Review Eskom operating cost structure

Quarterly Monitor Eskom to reduce operating costs

Report on Eskom operating cost structure




4.6 Subprogramme: Manufacturing Enterprises


Management - the office of the Deputy Director-General, which provides strategic leadership and management of programme personnel.

Denel – shareholder management and oversight of Denel’s financial performance and strategy implementation.

Alexkor – shareholder management and oversight of Alexkor, including review of its strategy to enhance financial sustainability, and overseeing implementation of the Richtersveld Deed of Settlement.

SAFCOL- shareholder management and oversight, including forestry management, timber harvesting, timber processing and related activities, both domestically and internationally, as well as oversight of the entity’s restructuring.


Strategic objectives/annual targets for Manufacturing Enterprises for 2017/18

• Ensure continuous alignment between shareholder strategic intent and the objectives of SOCs in the defence, mining and forestry sector by annually reviewing their enterprise strategies and mandates in the context of industry and sectoral policy shifts, and alert their boards and enterprises to material deviations, if any.

• Support SOCs in delivering on the objectives in their shareholder compacts and corporate plans, by benchmarking key performance measures annually and analysing quarterly and annual reports to assess progress.

• Promote collaboration among SOCs to contribute to the achievement of national economic development objectives.

Denel SOC Limited- Ongoing oversight of the development of a

long-term growth strategy to achieve financial stability and the growth of manufacturing export products.

- Leverage off the company’s advances in manufacturing capability through securing work packages in support of the industrialisation drive aligned with the Industrial Policy Action Plan (IPAP) in the medium term.

- Ensure Denel’s ongoing sustainability by monitoring the implementation of the multi-year turnaround plan in the medium term.

Alexkor SOC Limited- Ensure increased diamond production and

promote the financial stability of the Alexkor and Richtersveld Mining Company’s pooling and sharing joint venture by monitoring the implementation of Alexkor’s strategy to promote financial sustainability and monitoring quarterly the joint venture’s turnaround strategy.

- Ensure collaboration and alignment in the medium term between Alexkor and the African Exploration Mining and Finance Corporation through the development of a collaborative model.

SAFCOL- Oversee the implementation of the land restitution

strategy for claims over the Komatiland Forests to ensure meaningful benefits to the successful land claimants in the medium term.

- Oversee the implementation of SAFCOL’s corporate strategy in the medium term.

- Engage with the DRDLR; the Department of Agriculture, Forestry and Fisheries (DAFF); and the Department of Trade and Industry (dti) to ensure the warehousing of SAFCOL shares in the four privatised forestry companies.


4.6.1 Strategic objectives and annual targets for Manufacturing Enterprises for 2017/18



Medium-term targets

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21Promote commercial viability of SOCs’ operations

1.8bn guarantee support



Recommended renewal of Denel’s guarantee

None Reduction of Government guarantees

Reduction of Government guarantees

Position SOCs to support the reindustrialisation of the South African economy

None None None Recommendation of the SAFCOL sawlog allocation model.

Internal processing capacity at SAFCOL South African operations increased




4.6.2 Programme performance indicators and annual targets for Manufacturing Enterprises for 2017/18



Medium-term targets

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21Strategic objective: Promote commercial viability of SOCs’ operationsManage Denel’s reliance on Government guarantees




Recommend renewal of Denel’s Government guarantee.

None None None

Strategic objective: Position SOCs to support the reindustrialisation of the South African economyPromote increase of internal processing capacity of SAFCOL operations.

None None None Recommendation of SAFCOL sawlog allocation model.





4.6.3 Quarterly targets for Manufacturing Enterprises for 2017/18



2017/18 1st 2nd 3rd 4thPromote commercial viability of SOCs’ operationsManage Denel’s reliance on Government guarantees

Annual Recommendation on the renewal of Denel’s Government guarantee.

Review proposal of the guarantee application

Submission to National Treasury of reviewed application with recommendations.

Review National Treasury decision on the application.

None

Strategic objective: Position SOCs to support the reindustrialisation of the South African economyPromote increase f internal processing capacity of SAFCOL South African operations.

Annual Recommendation of SAFCOL sawlog allocation model

None Benchmark SAFCOL’s internal processing capacity.

Consultation with Government stakeholders

Recommendation of SAFCOL sawlog


4.7 Subprogramme: Transport Enterprises


Management – the office of the Deputy Director-General, which provides strategic leadership and management of programme personnel.

Transnet – align the corporate strategies of Transnet with the Government’s strategic intent, and monitor and benchmark financial and operational performance.

SAX – align SAX corporate strategies of with the Government’s strategic intent, and monitor and benchmark financial and operational performance.

Strategic objectives/annual targets for Transport Enterprises for 2017/18

• Align the corporate strategies of Transnet and SAX with the Government’s strategic intent, and monitor and benchmark financial and operational performance by the following ongoing actions:

- ensuring alignment of the corporate strategies of Transnet and SAX with the Government’s strategic intent and ensuring that these companies remain competitive,

financially sustainable and deliver an optimal service to the economy;

- supporting Transnet and SAX in delivering on their objectives by identifying appropriate benchmarks and key performance measures for their shareholder compacts and corporate plans;

- creating an enabling environment for transport enterprises and ensuring an appropriate balance between the enterprises’ interests, stability and developmental objectives by engaging with policy departments and regulators, and

- ensuring effective use of existing logistics infrastructure, planning for the creation of new infrastructure and providing optimal services.

Transnet SOC Limited• Provide oversight on Transnet’s implementation

of the market demand strategy to optimise the economic impact of infrastructure investment on the economy by monitoring the rollout of Transnet’s capital expenditure programme, quarterly and annually, to assess any significant deviations from corporate plans, and potential cost overruns as well as time delays on major capital projects.

• Contribute to the national freight logistics strategy by informing the freight sector on developments and attributes to guide policy such as Government commitment to investment or rail and modal optimisation.

SAX SOC Limited• Ongoing monitoring of and assistance with

the implementation of SAX’s 20/20 Vision and austerity measures.

• Engage with policy departments during the 2017/18 financial year on the strategic direction of policy and regulation in the aviation sector to ensure that new policies take into consideration the mandate and objectives of the airline as determined by the Government.

• Develop a strategic proposal in the 2017/18 financial year for the optimal group structure of state-owned airlines to assist in rationalising and unifying their operations.

• Facilitate the review of commercial arrangements, as and when required during the 2017/18 financial year, to support the financial position of the company and ensure its long-term financial and commercial sustainability.


4.7.1 Strategic objectives and annual targets for Transport Enterprises for 2017/18



Medium-term targets

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21Promote commercial viability of SOCs’ operations

None None None Report on effectiveness of City Deep inland intermodal facility to support road-to-rail migration strategy

None None None

None None Strategic proposal for optimal group structure of State-owned airlines

Review of developed optimal group corporate structure for realignment of State-owned airline assets

Implementation of optimal group corporate structure




4.7.2 Programme performance indicators and annual targets for Transport Enterprises for 2017/18



Medium-term targets

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21Promote commercial viability of SOCs’ operationsAssessment of Transnet’s City Deep inland intermodal facility in relation to road-to-rail migration strategy

None None None Report on effectiveness of City Deep inland intermodal facility to support road-to-rail migration strategy

None None None

Assessment of developed optimal group corporate structure

None None Strategic proposal for optimal group structure of State-owned airlines

Review of developed optimal group corporate structure for realignment of State-owned airline assets





4.7.3 Quarterly targets for Transport Enterprises for 2017/18



2017/18 1st 2nd 3rd 4thPromote commercial viability of SOCs’ operationsAssessment of Transnet’s City Deep inland intermodal facility in relation to road-to-rail migration strategy

Quarterly Report on effectiveness of City Deep inland intermodal facility to support road-to-rail migration strategy

Assessment of performance of inland intermodal facilities

Develop sector specific initiatives to promote road-to-rail migration

Engagement with Transnet on proposed sector specific initiatives to promote road-to-rail migration

Report on effectiveness of City Deep inland intermodal facility to support road-to-rail migration strategy

Assessment of developed optimal group corporate structure

Quarterly Review the developed optimal group corporate structure for realignment of State-owned airline assets

Optimal group corporate structure progress report on stakeholder engagement



Assessment of optimal group corporate structure


4.8 Subprogramme: Economic Impact and Policy Alignment

This subprogramme involves:• Management - the Office of the Deputy Director

General, which provides strategic leadership and management of the programme and special projects (ie property disposal)

• Environmental policy alignment - oversees alignment and implementation of SOC strategically important developments (SIDs), with special focus on Eskom’s and Transnet’s build programmes. Oversight and alignment of the Climate Change Policy Framework for SOCs in support of national policies and the green economy.

• Economic policy alignment - appropriate macroeconomic modelling and research to enhance links between industrial policy, macroeconomic policy and the role of the SOC. Economic modelling will be outsourced to determine the impact of SOC investment and operations on the economy, including the impact on customers and suppliers.

• Transformation - provision of scarce and critical skills by the SOC in support of the national

skills agenda, the New Growth Path (NGP) and the National Development Plan (NDP), and optimsing SOC skills training facilities through funding from the National Skills Fund, among others. The unit’s mandate includes overseeing the alignment and implementation of SOC transformation agenda in support of national policies and the NGP framework, with focus on job creation, development of targeted groups (ie women, people with disabilities, cooperatives etc), participation of designated groups and small and medium enterprises (SMMEs) in the core value chains of SOCs as guided by broad–based black economic empowerment (BBBEE) legislation, the Preferential Procurement Policy Framework Act (PPPFA), Black Industrialists Policy, employment equity (EE) and SMME strategy.

The activities and outputs of this subprogramme entail systematic coordination and partnerships with Government departments whose primary mandate is included in the above and other key stakeholders.

Strategic objectives/annual targets for Economic Impact and Policy Alignment for 2017/18

• Ongoing oversight and supervision of processes to conduct macroeconomic modelling, research

and impact evaluation to ensure that SOCs contribute to economic growth.

• Enhance the alignment of SOCs’ investments and operational activities with national industrial policy, macroeconomic policy and the role of SOCs, and monitor implementation, in 2017/18.

• Oversee processes to ensure that SOCs comply with environmental laws, and optimise the impact of SOCs on the reduction of carbon emissions and the development of a green economy, while supporting the business needs of SOCs.

• Oversee the implementation of SOCs’ economic and social transformation agendas in support of national policies and economic growth, with specific focus on skills development, job creation, procurement/broad-based black economic empowerment, enterprise and supplier development and corporate social investment (CSI) targeted at designated groups.




Medium-term targets

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21Accelerate transformation of the South African economy

None None None Develop enterprise and supplier development (ESD) programme for SMME participation in SOC core value chains

None None None

Position SOCs to support reindustrialisation of South African economy

None Black Industrialists Policy approved by Cabinet

DPE Black Industrialists Programme approved

Six business cases approved for development of black industrialists

Six black industrialists created in key SOC value chains in line with IPAP

Six black industrialists created in SOC value chain in line with IPAP

None

None None Nine high-impact CSI projects launched in rural areas

Stakeholder engagement on criteria for the selection of seven high impact CSI projects

None None None


4.8.1 Programme performance indicators and annual targets for Economic Impact and Policy Alignment for 2017/18



Medium-term targets

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21Accelerate transformation of the South African economyPosition SOCs to support reindustrialisation of the South African economy

None Black Industrialists Policy approved by Cabinet

DPE Black Industrialists Programme approved

Six business cases approved for the development of black industrialists to leverage on SOC procurement and industrial capabilities

Six black industrialists created in key SOC value chains in line with IPAP

Six black industrialists created in SOC value chain in line with IPAP

None

Position SOCs to support reindustrialisation of the South African economyDevelop high-impact CSI projects in rural communities

None None Nine high-impact CSI projects launched in rural areas

Stakeholder engagement on criteria for the selection of seven high-impact CSI projects.

None None None

Develop ESD programme for SMME participation in SOC core value chains

None None None Approved ESD programme for SMME participation in SOCs core value chains

None None None


4.8.2 Quarterly targets for Economic Impact and Policy Alignment for 2017/18



2017/18 1st 2nd 3rd 4thAccelerate transformation of the South African economyDevelop Black Industrialists Programme

Quarterly Six business cases approved for the development of black industrialist to leverage on SOC procurement and industrial capabilities.

Engage dti on submitted DPE/SOC Black Industrialists Programme

Participate in the dti committee for assessment and selection of bankable business cases

Provide quarterly implementation reports on bankable business cases

Provide quarterly implementation reports on bankable business cases

Develop ESD programme for SMME participation in SOC core value chains

Quarterly ESD programme for SMME participation in SOCs core value chains approved

Engage SOCs and relevant stakeholders on available procurement opportunities/challenges for participation of SMMEs in line with set prescripts

Develop an annual calendar on the implementation of the SMME programme in identified sectors in line with the gap analysis study done by the Department of Small Business Development (DSBD)

Monitor implementation of the SMME programme in identified sectors

Monitor implementation of the SMME programme in identified sectors

Develop high-impact CSI projects in rural communities

Quarterly Stakeholder engagement on criteria for and selection of more high-impact CSI projects done

Stakeholder engagement on criteria for and selection of more high-impact CSI projects

Seven identified high-impact projects and implementation plans finalised for approval

Quarterly assessment reports on implementation of identified projects

Quarterly progress reports submitted to Director-General for approval


4.9 Subprogramme: Strategic Partnerships

This subprogramme involves:• Management - the office of the Deputy Director-

General, which provides strategic leadership and management of programme personnel.

• Project oversight - definition of catalytic investments to be driven by DPE and oversight of project implementation from pre-feasibility to completion, including design of compacts.

• Funding mechanisms - development of innovative funding structures and design of associated compacts with partners.

• Strategic relationships - development of overarching procurement leverage policies; oversight of SOC fleet procurement design and implementation, and development and implementation of capability building programmes and institutions.

Strategic objectives/annual targets for Strategic Partnerships for 2017/18

• Oversee catalytic project implementation from pre-feasibility to completion, including design of compacts.

• Implement innovative funding structures and design associated compacts with partners in the medium term.

• Oversee Eskom and Transnet implementation of competitive supplier development programme, and oversee Transnet’s locomotive fleet procurement design and implementation, and development and implementation of its executive leadership programme.



Medium-term targets

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21Ensure SOC financial sustainability

None None Capital structure optimisation strategy developed

Alignment of the investment strategy with the funding strategy and monitor the implementation.

Monitor the implementation of investment strategy and optimum funding

Monitor the implementation of investment strategy and optimum funding

None

Oversee the implementation of infrastructure programmes within SOCs

Infrastructure plan approved by the Presidential Infrastructure Coordination Commission (PICC)

Approval of the business plans and start of implementation

Establishment of executive forum for Strategic Integrated Programmes (SIPs)

Monitor implementation of the SIP (01, 02, 09, 10) and Top 40 priority projects

Quantitative measure on progress achieved on Top 40 priority projects

Comprehensive lesson learnt report on projects

Monitor the implementation of economic infrastructure projects


4.9.1 Programme performance indicators and annual targets for Strategic Partnerships for 2017/18



Medium-term targets

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21Ensure SOC financial sustainabilityDriving investment and optimising funding

Draft Private Sector Participation (PSP) Policy framework

Review of PSP Policy framework

Capital structure optimisation strategy developed

Draft paper on investment and funding developed

Coordination of investment and funding paper

Implementation of investment and funding paper

Implementation of investment and funding paper

Monitoring and implementation of DPE allocated projects from the Top 40 strategic and priority projects

None None Establishment of executive forum for SIPs

Integrated assessment report of the allocated strategic priority projects

Quarterly reports on the implementation of SIPs



4.9.2 Quarterly targets for Strategic Partnerships for 2017/18

Performance indicator Reporting period Annual targets Quarterly targets2017/18 1st 2nd 3rd 4th

Driving investment and optimising funding

Quarterly Draft paper on investment and funding developed

None Consultation on SOC investment needs

Consultation on SOC investment needs

Draft investment and funding paper

Monitoring and implementation of DPE allocated projects from the Top strategic and priority projects

Quarterly Integrated assessment report of the allocated strategic and priority projects

Assessment of the status quo of the allocated strategic and priority projects

Quarterly monitoring and assessment of the allocated projects




4.9.3 Budget and MTEF

Table 4: Portfolio Management and Strategic Partnerships





Revised estimate

Revised baseline

Revised baseline

Revised baseline

Sub-programmes Energy Enterprises 12 919 13 113 23 012 153 17 016 17 016 17 569 16 876 18 097 Manufacturing Enterprises 68 096 77 541 47 193 19 682 19 682 19 886 20 519 21 948 Transport Enterprises 14 985 20 598 18 336 23 018 23 018 19 624 20 208 21 734 Economic Impact and Policy Alignment

9 687 10 677 11 016 13 580 13 580 16 782 17 877 19 122

Strategic Partnerships 7 256 8 253 5 487 12 982 12 982 12 124 12 781 13 720 Total 112 943 130 182 23 094 185 86 278 86 278 85 985 88 261 94 622 Economic classification Current payments 55 662 66 651 60 423 86 251 86 251 85 985 88 261 94 622 Compensation of employees 43 031 50 570 49 429 62 226 62 226 61 971 63 287 68 137 Salaries and wages 43 031 46 673 45 133 56 886 56 886 56 910 57 984 62 486 Social contributions - 3 897 4 296 5 340 5 340 5 061 5 303 5 650 Goods and services 12 631 16 081 10 994 24 025 24 025 24 014 24 974 26 485 Administrative fees 343 206 - - - - - - Advertising 140 214 - - - - - - Minor assets 3 - - - - - - - Catering: Departmental activities 267 46 61 100 100 78 84 89 Communication (G&S) 355 366 336 629 629 724 781 823 Computer services - 1 556 227 - - - - -


Consultants: Business and advisory services

2 565 8 440 4 822 13 018 13 018 17 170 18 062 19 151

Contractors 2 156 61 3 769 3 769 1 351 1 731 1 871 Agency and support/outsourced services

67 - - - - - - -

Entertainment - - - 27 27 36 37 37 Fleet services (including government motor transport)

41 1 - - - - - -

Inventory: Materials and supplies 4 - - - - - - - Inventory: Medical supplies 1 - - - - - - -





Revised estimate

Revised baseline

Revised baseline

Revised baseline

Inventory: Medicine - 1 2 - - - - - Consumable supplies 196 - - 4 4 - - - Consumables: Stationery, printing and office supplies

127 44 - - - - - -

Operating leases 992 - - - - - - - Rental and hiring - 61 - - - - - - Travel and subsistence 6 205 4 556 5 209 6 003 6 003 4 314 3 912 4 126 Training and development 53 - - - - - - - Operating payments 395 4 61 - - - - - Venues and facilities 875 430 252 475 475 341 367 388 Transfers and subsidies 57 281 63 531 33 762 27 27 - - - Public corporations and private enterprises

57 250 63 141 33 106 - - - - -

Public corporations 57 250 63 141 33 106 - - - - -


Other transfers to public corporations 57 250 63 141 33 106 - - - - - Households 31 390 656 27 27 - - - Social benefits 31 390 656 27 27 - - - Payments for financial assets - - 23 000 000 - - - - - Total 112 943 130 182 23 094 185 86 278 86 278 85 985 88 261 94 622

4.9.4 Performance and expenditure trends

The spending focus over the medium term will be on boosting the Department’s capacity to oversee strategic infrastructure projects. This includes training staff and developing new project management tools to improve oversight of the current build programme. Given the need for effective oversight for SOCs, employee compensation increased over the medium term. The increase in the number of personnel from 68 in 2013/14 to 77 in 2017/18 is attributed to additional approved and funded posts

to strengthen the Department’s strategic oversight of infrastructure projects. The Department uses consultants for specialised services in transport, manufacturing, energy and broadband sectors, which, notwithstanding increased internal capacity remains a necessity. Expenditure on consultants is expected to increase over the medium term in line with the strengthening of the oversight function.

In the Energy and Broadband Enterprises and Manufacturing Enterprises subprogrammes, expenditure decreased significantly between 2011/12

and 2014/15 due to once-off recapitalising payments to SOCs. The subprogramme decrease is the result of the transfer of the shareholder oversight function to the Department of Telecommunications and Postal Services. The Denel indemnity claim decreased between 2011/12 and 2014/15.


PART CLINKS TO OTHER PLANS


South Africa has developed an infrastructure plan that is targeted at developing new economic corridors and promoting those existing. This is implemented through SIPs coordinated by the PICC. At the centre of the Infrastructure Plan is the aim to leverage the capacity of SOCs to drive investments that will improve the capacity of the economy, develop supplier industries and directly support employment creation.

Transnet and Eskom have a major role to play in the rollout of the infrastructure programme through their role as appointed coordinators of SIP2 and of SIP1, 9 and 10, respectively. The two organisations actively participate in the various workstreams of the SIPs, namely planning, funding and communication.

Transnet coordinates SIP2, the Durban-Free State-Gauteng Logistics and Industrial Corridor, whose objective is to improve logistics and create better access to markets for firms located along the corridor. Efficient logistics is critical if South Africa is to grow and transform the economy. The country is a very transport-intensive economy and its main centres of economic activity are far apart. It is also far from its main international trading partners. This necessitates that the country’s logistics system be more efficient than the international norm. The Gauteng-Durban corridor is vital to the future of the national economy

and it should be a model of how to strengthen and optimise freight corridors. The corridor handles most of the country’s high-value freight and it is the most strategic corridor to achieve a shift of freight from road to rail by overcoming rail’s main drawback. The corridor is critical in integrating Free State industrial strategy activities.

Eskom is responsible for SIP1, which focuses on unlocking the northern mineral belt, with the Waterberg development as catalyst. The investment programme focuses on investment in rail, water pipelines, energy generation and transmission infrastructure, and will unlock rich mineral resources in Limpopo, resulting in thousands of direct jobs. Mining investments include coal, platinum and other minerals for local use and export, thus rail capacity is being extended to Mpumalanga power stations and, for export, principally via Richards Bay and, in future, Maputo (via Swaziland link).

Eskom also coordinates SIP9, which focuses on electricity generation capacity for economic and social requirements. The Strategic Partnerships Unit oversees the coordination and implementation of this SIP and ensures acceleration of new electricity generation capacity in accordance with the Integrated Resource Plan (IRP) 2010. Eskom’s responsibility extends to SIP10, which focuses on increasing

the transmission network by 50% and distributing electricity to all South Africans, thus supporting economic development.

The capacity expansion and build programmes of Transnet and Eskom form the foundation of the Government’s infrastructure plan. Therefore, their execution is not only important for improving the commercial operation for the SOCs but for the overall functioning of the South African economy. Furthermore, the infrastructure plan is a measure to counter the negative impact of the global economic downturn and to lay the foundation for long-term growth and economic and social development, as outlined in Government policies such as the NGP and IPAP.

These projects are intended to transform South Africa’s economic landscape, create jobs, strengthen delivery of infrastructure services and support the integration of African economies.

5 LINKS TO LONG-TERM INFRASTRUCTURE AND OTHER CAPITAL PLANS


Not applicable

7 PUBLIC ENTITIES

There has been no change to the SOCs overseen by the Department. However, the Department has been tasked to develop the overarching Government Shareholder Oversight Policy. The Policy is intended to optimise the institutional architecture for the management of SOCs, including their contribution to the implementation of Government policy.

6 CONDITIONAL GRANTS


TECHNICAL INDICATORS Indicator Title Business case for the development of a business intelligence system (BIS)Short definition An IT based system that will support the Department to exercise oversight on the financial and operational performance of the

SOCs. Purpose/importance Improve Department’s access to information on SOCs’ performance Source/collection of data Department’s IT systemMethod of calculation Electronically Data limitations None Type of indicator Process indicator Calculation type N/AReporting cycle Quarterly New Indicator Yes. Desired performance Launch of the systemIndicator responsibility DDG: Corporate Management Indicator Title Review of business processesShort definition The review is intended to assess the current business processes and their contribution to the overall efficiency of the

Department. Purpose/importance Improve operational efficiency of the Department through the automation of strategic business processes.Source/collection of data InternalMethod of calculation ManualData limitations NoneType of indicator Process indicator Calculation type N/AReporting cycle Quarterly New Indicator YesDesired performance Automation of 3 business processes.Indicator responsibility DDG Corporate Management

ANNEXURE E


Indicator Title Develop Shareholder PolicyShort definition The Government has tasked the Department with developing a policy that will guide the State’s Investment in the economy. Purpose/importance SOCs reforms have been identified as essential intervention and form part of the Nine-Point Plan. Source/collection of data Engagement with SOCs and relevant policy departmentsMethod of calculation NoneData limitations NoneType of indicator Process indicatorCalculation type NoneReporting cycle Quarterly New Indicator NoDesired performance Draft Shareholder Management Bill Indicator responsibility DDG: LGRIndicator Title Development of long-term scenariosShort definition Development of scenarios within which SOCs are to be used to influence the States investment to realise the developmental state

outcome.Purpose/importance Scenarios for SOCs to drive strategic decision making in the high complex environmentSource/collection of data Engagement with SOCMethod of calculation NoneData limitations NoneType of indicator Process indicatorCalculation type NoneReporting cycle QuarterlyNew indicator NoDesired performance Models to inform the execution of the oversight function in the DPE portfolioIndicator responsibility DDG: CM


Indicator Title Completion of the liquidation of AventuraShort definition The Act was used to establish Aventura as an SOC. In early 2000 Government started divesting in the resorts company and

selling off its assets. The process of liquidating the company has been completed and the Act needs to be repealed to complete the process of divestment by the State

Purpose/importance Complete the divestment process in AventuraSource/collection of data Consultation with external stakeholdersMethod of calculation NoneData limitations NoneType of indicator Process indicatorCalculation type NoneReporting cycle Quarterly New Indicator NoneDesired performance Completion of the liquidation of AventuraIndicator responsibility DDG: LGRIndicator Title Monitor Eskom operational performanceShort definition Monitor Eskom implementation of the turnaround strategy to ensure improved operational performancePurpose/importance Ensure sustainable plant availability to improve reliability of supply Source/collection of data Quarterly reports and monthly engagements with the SOCMethod of calculation NoneData limitations NoneType of indicator Process indicatorCalculation type NoneReporting cycle QuarterlyNew Indicator NoDesired performance Improved energy availability factor (EAF), plant capability load factor (PCLF) and Unplanned capability load factor (UCLF)Indicator responsibility DDG: Energy Enterprises


Indicator Title Progress report on the delivery of Eskom Capital ProgrammeShort definition Department periodic reviews on progress being made on accelerated delivery of the build programme (Medupi, Kusile)Purpose/importance Monitor progress on the delivery of Eskom Capital Programme as one of the MTSF indicatorSource/collection of data Monthly and quarterly reportsMethod of calculation NoneData limitations NoneType of indicator Process indicatorCalculation type NoneReporting cycle QuarterlyNew Indicator NoDesired performance Delivery of Eskom Build programme Indicator responsibility DDG: Energy EnterprisesIndicator Title Review of Eskom operating model Short definition Review Eskom operating model to optimise cost and efficiencyPurpose/importance Ensure both operational and financial efficienciesSource/collection of data Study on Eskom operating modelMethod of calculation NoneData limitations Delays in finalising the study by the service providerType of indicator Process indictorCalculation type NoneReporting cycle BiannuallyNew Indicator NewDesired performance Reviewed operating model for EskomIndicator responsibility DDG: Energy Enterprises Indicator Review of Eskom operating costShort definition Improved Eskom operational efficiency Purpose/importance Deep dive into Eskom cost structureSource/collection of data Study on Eskom’s cost structure


Method of calculation NoneData limitations Delays in finalising the study by the service providerType of indicator Process indicatorCalculation type NoneReporting cycle QuarterlyNew Indicator NoDesired performance Cost optimisation Indicator responsibility DDG: Energy EnterprisesIndicator Title Assessment of Transnet’s City Deep inland intermodal facility in relation to Road-to-Rail migration StrategyShort definition Review of performance of inland terminals and their impact on the Road-to-Rail migrationPurpose/importance Investigate viability of Transnet’s inland Intermodal facilities in support to road to rail migration strategySource/collection of data Site visit, research, SOC reportMethod of calculation NoneData limitations None Type of indicator Process indicatorCalculation type NoneReporting cycle Quarterly New Indicator YesDesired performance Proposal on viability of Transnet’s inland intermodal facilities Indicator responsibility DDG: Transport EnterprisesIndicator Title Reduction of Denel’s reliance on Government guaranteesShort definition Gradually reduce the depency of the company on guarantees and promote its independent financial sustainabilityPurpose/importance Ensures that the reliance of SOCs on Government guarantees is reduced overtime Source/collection of data DenelMethod of calculation NoneData limitations NoneType of indicator Process indicatorCalculation type Level of reduction of guarantees from the 2017/18 base.


Reporting cycle Quarterly New Indicator NewDesired performance Review of medium term guarantee frameworkIndicator responsibility DDG: Manufacturing EnterprisesIndicator Title Percentage of internal processing capacity at SAFCOL South African operationsShort definition Amount of logs processed by SAFCOL Purpose/importance Promote vertical integration and financial sustainability of the company Source/collection of data SAFCOL Processing Operations Method of calculation Level of increased from 2016/17 baseData limitations NoneType of indicator Quantitative indicator Calculation type percentage Reporting cycle Quarterly New Indicator NewDesired performance Increased in logs internally processed Indicator responsibility DDG: Manufacturing Enterprises Indicator Title Assessment of the developed Optimal Group Corporate StructureShort definition A report will be delivered by Bain and Company on the development of an Optimal Corporate Structure for the realignment of

state-owned airlines. The Transport Unit will assess the report in line with the Terms of Reference to ensure that the proposed structure is optimal according to government’s requirements.

Purpose/importance The assessment is conducted to ensure that government’s objectives have been covered in the report in relation to the final structure as identified in the report.

Source/collection of data Bain and Company will provide a report as agreed in the Service Level Agreement. Method of calculation None Data limitations A report may be submitted without a write up. Type of indicator Process indicatorCalculation type None


Reporting cycle QuarterlyNew Indicator NoDesired performance The assessment of the report will assist in guiding government on the final optimal corporate structure to be implemented for the

state-owned airlines. Indicator responsibility DDG: Transport EnterprisesIndicator Title Develop Black Industrialists ProgrammeShort definition The programme is informed by Black industrialist policy approved in 2015 to support black participation in the manufacturing

sectors. The programme will focus on SOCs contribution towards the implementation of the policyPurpose/importance Develop a business case on opportunities that emanates from the SOCs value chainSource/collection of data Consultation with SOCsMethod of calculation NoneData limitations NoneType of indicator Process indicatorCalculation type NoneReporting cycle Quarterly New Indicator NoDesired performance Increase of the number of black owned business who are part of SOCs value chains. Indicator responsibility DDG: EIPAIndicator Title Develop an Enterprise and supplier development(ESD ) programme for SMMEs participation in SOC core value chainsShort definition Programme to facilitate participation of small and medium business in SOCs’ operations. Purpose/importance Promote the implementation of the 30% set aside for small and medium businesses Source/collection of data Internal Method of calculation NoneData limitations NoneType of indicator Process indicatorCalculation type NoneReporting cycle Quarterly New Indicator No


Desired performance Develop programme to promote implementation of the 30% set aside in the SOCs Indicator responsibility DDG: EIPAIndicator Title Develop High Impact CSI Projects in rural communities Short definition CSI projects Purpose/importance Support the development of communities through building of social and economic infrastructure Source/collection of data Engagement with SOCsMethod of calculation NoneData limitations None Type of indicator Process indicatorCalculation type NoneReporting cycle QuarterlyNew Indicator NoDesired performance Improve impact and sustainability of CSI projects funded by SOCs.Indicator responsibility DDG: EIPA

Indicator Title Driving investment and optimising fundingShort definition Approach to increase access of SOCs to developmental and commercial fundingPurpose/importance Improve financial sustainability of SOCs Source/collection of data internal and SOCs annual reports Method of calculation None Data limitations NoneType of indicator Process indicatorCalculation type NoneReporting cycle Quarterly New Indicator NoDesired performance Improved access to competitively priced fundingIndicator responsibility DDG: Strategic Partnerships

Indicator Title Implementation of the DPE allocated projects from the Top 40 strategic & priority projectsShort definition Monitoring the allocated strategic and priority projects. Purpose/importance Fast-track the implementation of the priority economic infrastructure projects. Source/collection of data ineterally, SOCs, PICC Reports Method of calculation NoneData limitations NoneType of indicator Process indicatorCalculation type NoneReporting cycle Quarterly New Indicator NoDesired performance Establishment of the economic infrastructure. Indicator responsibility DDG: Strategic Partnerships


NOTES



DEPARTMENTAL INFORMATION

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Telephone: +27 12 431 1000Fax: +27 086 501 2624E-mail: [email protected]: www.dpe.gov.za

RP73/2017ISBN: 978-0-621-45257-0Title of Publication: Department of Public Enterprises: Annual Performance Plan 2017/2018

DEPARTMENT OF PUBLIC ENTERPRISES

Documents

2017/2018 - dpe.gov.za · the National Development Plan as well as the Medium Term Strategic Framework. At ... TNPA Transnet National Ports Authority TOR Terms of Reference TFR Transnet