Department of Public Enterprises outlines priorities for current financial year

The Department of Public Enterprises on May 12 outlined its Strategic Plan 2020 to 2050 and Annual Performance Plan for 2022/23, and presented this to the Portfolio Committee during a virtual briefing. The department oversees core strategic State-owned companies (SOC).

It has three programmes. The first is responsible for administration and corporate management; the second manages governance assurance and the performance of the country’s SOCs; and the third focuses on business enhancement, transformation and industrialisation. In programme one, targets currently include reducing the vacancy rate to 8% yearly from an 18% baseline.

Programme two includes a sub-programme that will conduct assessments of suitable options to resolve power utility Eskom’s debts. The department will review the 2020 to 2025 Strategic Plan in 2022/23 (the current financial year) to align it with the revised Medium-Term Strategic Framework for 2019 to 2024.

The department has a number of new priorities for the current financial year.   This includes establishing a restructuring office, establishing a centre of excellence for governance and establishing an SOC holding company. There is also a plan to finalise the Government Shareholder Management Bill, develop a strategy on SOCs and develop a framework for shareholder oversight of SOCs with a minority government shareholding.

Given that the department is no longer the main shareholder in some of the SOCs, it is seeking to develop a model to guide government on how to manage minority shareholding. Moreover, priorities include proposed financial options to resolve Eskom’s debt, with the department set to come up with various options that will guide on resolving this. Further, it will look to develop guidelines in seeking strategic equity partners and evaluating shareholding.

The department will also prioritise the revitalisation of Alexkor and Denel; and work on the Eskom roadmap for its unbundling. Priorities for the department also include sourcing ICT expertise; undertaking a skills audit; relocating the department to a new building; and District Development Model implementation. The department will sign three shareholder compacts, with Eskom, the South African Forestry Company and Alexkor.

For Eskom, a sub-programme will monitor implementation of Eskom interventions to increase the energy availability factor to above 70% yearly toward 2024. It would also monitor Eskom to ensure that the 15% reserve margin is achieved. Moreover, the department expects that the implementation of Eskom’s roadmap for its unbundling programme will be finalised by the end of 2022/23 full year.  

There are also other Eskom programmes that will be monitored continuously. Meanwhile, a shareholder compact would also be signed with Transnet. The corporatisation of the National Ports Authority and establishment of a subsidiary of Transnet will be finalised in the 2022/23 financial year, the department indicated.  

The department is also seeking a 10% improvement of rail-friendly commodities moved from road to rail by Transnet Freight Rail, with the 10% targeted improvement to be monitored on a quarterly basis. Private sector participation is also being sought in ports and rail, with 13 transactions to be identified. For South African Airways (SAA), a sub-programme will develop a framework for the proposed shareholder oversight model for SOCs with a minority government shareholding.

With regard to Denel, the department will monitor Denel mapping with the option to restore or preserve the core industrial defence capabilities of four of its divisions. A diagnostic report on the root cause of the challenge of the Badge/Hoefyster contract and the lessons learnt will also be produced. Lastly, the department will monitor the implementation of the Defence and Aerospace Masterplan on a quarterly basis.

Meanwhile, as part of the department’s economic and research modelling under programme three, a sub-programme will monitor the implementation of just energy transition framework on a quarterly basis. Four industry-specific research working papers will be produced quarterly. Looking at the budget, the department’s budget decreased from R23.9-billion in 2022/23 to R310.9-million in 2024/25, owing to substantial allocations made to Eskom, Denel and SAA. 

Excluding payments for financial assets, compensation of employees is the department’s largest cost drive, with spending expected to increase.

Payments for financial assets include R21.9-billion for Eskom in 2022/23 and R.1.8-billion for SAA to settle government guaranteed debt.