1. Presentation to a joint sitting of the Portfolio Committee on Public Enterprises and the Select Committee on Labour and Public Enterprises
Presenter: Minister Jeff Radebe
Venue: Cape Town
Date: 19 March 2003

2. Outline of Presentation
Recap on DPE’s Restructuring Mandate
Achievements in 2002/2003 and planned activities for 2003/2004
Restructuring of SOEs
Performance Monitoring and Strategic Analysis
MTEF Budget Allocations

3. Recap on DPE’s Restructuring Mandate
The primary mandate of DPE is to restructure and transform SOEs so that they can fulfill the requirements of Government’s development agenda in an efficient and sustainable manner.

4. Programme 2: Restructuring of SOEs
Overview
Energy
Telecommunications
- M-Cell
- Telkom IPO
Defence
Transport
Forestry
Restructuring of Non-Strategic /Non Core Assets
Alexkor
Aventura

5. Energy Sector Progress to Date
Incorporation of Eskom as a company in terms of the Eskom Conversion Act - Act No. 13 of 2001
Appointment of Eskom Holdings’ new Board of Directors in 2002.
Work in Progress
Ongoing restructuring of Eskom Enterprises

6. Energy Sector (Cont.) Key Activities for 2003/2004
Complete the Generation Cluster Review Study
Complete the Design of the Multi Market Model and Implement the Market Rules
Improve regulatory frameworks to sustain competitive markets.
Ring fence Transmission appropriately
Finalize BEE participation in Eskom Generation and commence with implementation.
Proceed with 30% disposal of Generation market
Complete the rationalisation of Eskom Enterprises

7. Telecommunications Sector
M-Cell
Progress 2002/2003
19% of M-Cell was disposed of to an SPV comprising of M-Cell Management and Staff for R4.8 billion and the ICE BV Structure was wound down.
Activities for 2003/2004
Detailed preparatory work is currently being finalized to dispose of the remaining 4% of M-Cell shares currently held by Transnet.

8. Telkom IPO 2002/2003 ACHIEVEMENTS
25% of Telkom listed on the JSE and NYSE (ADR) 5 March Proceeds to date: approx R4.1 Billion
Largest mobilisation of ordinary South Africans countrywide through a public education campaign
Largest retail offering ever in South Africa. 127,000 citizens participated in the retail scheme to the total sum of R340 million.
Diabo Trust comprising 2% of Telkom Shares established to ensure the transfer of shares to Telkom employees.
The only significant listing in the Asian, Middle-East and African market, demonstrating SA’s economic resilience

9. Defence Sector
Denel 2002/2003
Turbomeca Africa established from Denel's Airmotive division and 51% stake of Turbomeca [France]
2003/04
Negotiations are at an advanced stage with BAE Systems to acquire 30% stake in Denel
On the basis that acceptable terms are reached, aim to complete transaction within the next 8 weeks.

10. Transport Sector
Rail
The internal restructuring and efficiency improvements at Spoornet are continuing
Shadow incorporation of Spoornet divisions is continuing
Options for Orex are being reviewed, in terms of the development of the iron ore deposits of the Northern Cape
Integration of Passenger Rail, initially the merge of Metrorail and SARCC and later Shosholoza Meyl - process now at stage where a study is complete and Cabinet approval will be sought.

11. Transport Sector (cont.)
Concession of DCT to commence in May 2003 as the first of a series of Port Operation Concessions.
National Ports Authority Bill referred back to Departments. Will return to parliament well before 2 month deadline required by Transport Portfolio Committee.
Establishment of Ports Regulator in the next fiscal year.
3 year tariff reform negotiation process continuing.

12. Transport Sector (cont.)
Aviation and Airports
Re-acquisition of SairGroup’s 20% stake in SAA complete
The incorporation of SA Express into SAA is currently being investigated.
ACSA End-State Model currently under review

13. Forestry Sector Komatiland MTO Amatola
The new bidding process has commenced and it is expected that it will be completed by December 2003.
MTO
The negotiations with the preferred bidder are in process and will be completed by end of June 2003.
Amatola
The finalisation of this transaction is expected by end of June 2003.

14. Alexkor - Mining Sector
Cabinet decision taken to dispose of 51% of Alexkor stake to an SEP with BEE characteristics and international marketing exposure.
10 % Namaqualand community stake (in Trust) set aside.
4 Bidders have submitted final bids
Adjudication process currently underway

15. Aventura 7 Resorts currently disposed of. These are :
Aldam, Bloemfontein, Christiana, Eiland, Kareekloof, Heidelberg and Roodeplaat.
Remaining 8 resorts currently in the process of being sold. These 8 Resorts have Club Privè liabilities, bids are currently in the process of being adjudicated.

16. Transnet Housing and Eskom Finance Company
Other Transactions
Apron Services
51% of Apron Services disposed of to Equity Aviation for R117 million.
Air Chefs
Ownership of Air Chefs now vests with SAA following acquisition of 51% from Transnet and Fedics
Transnet Housing and Eskom Finance Company
Model for disposal has been approved by Cabinet. It is envisaged that the disposal of these 2 entities will be finalised during 2003/04.

17. Performance Monitoring
Achievements for 2002 – 2003
The financial evaluation model to evaluate the SOE’s financial performance has been developed, communicated to the SOE’s and is now at an implementation stage;
Shareholder compacts are in place with Transnet, Eskom and Denel and reporting is in line with these;
The Protocol on Corporate Governance in the Public Sector has been revised, approved and adopted by Cabinet and came into effect from September 2002.
The SOE Boards have been restructured successfully in terms of Government’s Policy for Board Appointments.

18. Performance Monitoring(contd.)
Achievements For
An audit of compliance with corporate governance in SOE’s was completed. Overall all SOEs are compliant with King II and the Protocol on Corporate Governance. Improvement measures such as training and capacity building of directors have been implemented to address the shortcomings identified;
The design of the SOE Database is now complete.
Consistent policy for Affirmative Procurement within SOEs finalised

19. Performance Monitoring (contd.)
Projects Planned For
In order to achieve the objectives that the Department has set itself in terms of its role as a shareholder in SOEs, the following are some of the projects which have been planned for the year:
Finalization of the Remuneration Policy for SOE Boards, including issues of bonus payments to executives;
Completion of an Investment Map of SOE’s;
Research on Socio Economic and other best practice and benchmarks for each SOE, as well as the development of a database for the said benchmarks;
Finalize the post-restructuring proposal for government’s shareholding in SOEs;
Ongoing training and development for current and potential directors;
Implementation of the ESOP Policy for SOEs;
Implementation and monitoring of the affirmative procurement framework at an SOE level;

20. VOTE 09: PUBLIC ENTERPRISES
MTEF ALLOCATIONS for Financial 2003/2004 R
Responsible Minister: Minister of Public Enterprises
Administering Department: Public Enterprises
Accounting officer: Director-General of Public Enterprises
Budget Breakdown per programme reflected on the next slide

21. Budget Breakdown per programme
BUDGETED AMOUNT
2003/04
2002/03
EXPENDITURE 2002/03 as of 13/03/2003
Administration R R R
Restructuring of State
Owned Enterprises R R R
Restructuring R R R
Initial Public Offering R R R
Performance Monitoring
and Strategic Analysis R R R
Performance Monitoring and Benchmarking R R R
Strategic Analysis R R R
DEPARTMENTAL TOTAL R R R

22. Thank You