SOEs exploring set-asides for small firms, black industrialists

(Image: GCIS)

Briefing the media after presenting his Budget Vote in Parliament on Monday, Gigaba said state-owned enterprises' procurement spend, which had mushroomed in recent years, should be directed more aggressively at small and medium-sized enterprises and in particular black industrialists.

The department wanted to look at pension funds, such as that run by the Public Investment Corporation (PIC), and aim to put pressure on those companies investing with these funds, to invest in the productive economy.

Gigaba stressed that state-owned enterprises needed to take all manner of risks if the country is to transform the economy.

In this budget vote speech Gigaba said his department would in the next six months make announcements in this regard, including a proposal to set aside a certain amount of state-owned enterprises procurement spend for black-owned suppliers, as well as youth and women owned businesses into the mainstream economy.

State-owned enterprises are expected to invest about R113bn in the next financial year, more than double the R53bn it spent three years ago.

Eskom

Over five years, Eskom is projected to spend over R200bn for the supply of coal and Gigaba said the aim is that by 2018 for the utility to procure over 50% of its coal from emerging black coal miners.

Gigaba has also launched the Black Emerging Miners Strategy to increase black participation and ownership in the coal mining sector.

A key element of the strategy is to establish a mine development fund to provide finance for the development of mines mainly at the early exploration stage.

He expects the fund to start operating by the end of the 2013/14 financial year.

State-owned enterprises are already buying a considerable amount of goods and services from BEE-complaint companies.

In his budget vote speech Gigaba said 83% of Eskom's total procurement spend for 2012/13 of R120bn went to BBBEE compliant companies, against the target of 70%.

As at February 2013, BBBEE spend at Transnet stood at R58bn or 87% of total procurement spend.

Eskom's build projects

Turning to Eskom's build projects, Gigaba said the utility had finalised its build programme and that about 82% of funding has been secured.

This year Eskom will spend about R65bn and R337bn over the next five years to complete Medupi, Ingula and Kusile.

Eskom aims to get the first unit of Medupi to starts delivering power by the end of the year, said Gigaba.

He said over the last financial year, 260MW of generating capacity has been added to the system through returning to service previously mothballed plants and a further 787km of high voltage transmission lines were installed.

Evidence from a survey commissioned by Eskom suggests that efforts at mobilising the population around the energy saving campaign are bearing fruit, in that the level of awareness of the 49M campaign.

Transnet

Turning to Transnet's Market Demand Strategy, Gigaba said over the last year, rail volumes had increased by 5%, and capital invested in the build programme had increased by 30% to just below R30bn.

He said R700m was disbursed in the 2012/13 financial year from the R1bn ports rebates to the exporters of manufactured goods announced last year; and the remaining R300m will be disbursed this year.

Broadband Infraco invested R140m over the last year and has plans to spend over R700m to upgrade technology and improve network performance and reach this financial year.

Gigaba said the Department of Science and Technology had taken up 70% of the capacity associated with Broadband Infraco's investment in WACS in support of the Square Kilometre Array (SKA) project.

South African Airways (SAA)

He said SAA has already begun to implement its turnaround strategy and achieved its cost compression target of R1.3bn for the year ending March 2013.

The department in collaboration with the SAA Board, will be designing a special governance arrangement to ensure that we are able rigorously to monitor progress on the implementation of the strategy.

During the next quarter, SAA will start taking delivery of a fleet of 20 Airbus A320 aircraft, valued in the order of R10bn that form part of a broader fleet replacement plan that aims to address the fuel inefficiency of SAA's current long-haul fleet.

His department has also been working with the SA Express board to address internal control challenges in the airline.

He added that the 2010/11 financial statements were tabled to Parliament on the 25th of April 2013 and the SA Express plans to have all outstanding audits finalised by the end of July.

The department and the SA Express board are working to develop a comprehensive turnaround strategy for the company and had cut R129m in costs in the last financial year.

Denel

He reported that Denel, which recently signed R3.7bn in new, predominantly export order, had returned an unaudited profit of R60m in the 2012/13 financial year, breaking a long stretch of losses.

Denel would be focusing on ensuring the success of the Hoefyster infantry combat vehicle production programme and further positioning the business for collaborative product development opportunities, with a focus on Latin America, Africa, Asia and the Middle East.

SOEs invest in training

State-owned enterprises will invest over R2.8bn in training over the coming year.

Over the last year, more than 16,000 learners were trained in various scarce and critical skills learning programmes within state-owned enterprises that fall under the department.

Eskom also facilitated the training of 5,248 young learners through their key suppliers.

Transnet has secured an amount of R175m from the Department of Higher Education and Training to train an additional 1,000 learners, who will be recruited across provinces over the coming year. This will increase artisan learners at Transnet training facilities to 3,000.