Pretoria - Public Enterprises Minister Lynne Brown says the next 12 months will be a milestone in the country’s massive build programme.
Briefing reporters ahead of the Department of Public Enterprises (DPE) Budget Vote on Wednesday, the new minister said there will be a special focus on SOEs, like Eskom and Transnet, which are central to the build programme.
Additional power stations and major power lines are being built on a massive scale to meet rising electricity demand in South Africa. Eskom's capacity expansion budget was R385 billion up to 2013, and is expected to grow to more than R1 trillion by 2026. Ultimately, Eskom will double its capacity to 80 000MW by 2026.
Since the programme started in 2005, an additional 4453.5 MW has already been commissioned. The plan is to deliver an additional 16 304 MW in power station capacity by 2017.
“Over the next 12 months, increased focus will be given to the delivery of the current build programme. The synchronisation of Medupi Unit 6 will be concluded by December 2014 and subsequent units are scheduled to come on stream at nine-monthly intervals thereafter.
“All three units of Ingula pumped storage plant are scheduled to be available by the end of 2015,” she told media.
Eskom
Minister Brown said electricity constraints are being taken seriously. To this end, Eskom has committed to contract at least 3 725 MW of renewable energy in the year ahead.
“This is being addressed very seriously and urgently. Ministries are talking to one another. There are critical talks happening between ministries, departments and others to address this issue not as an Eskom problem, but as a national priority.”
She said the electricity parastatal in 2013/14 spent R58.2 billion on capital expenditure. The key achievements of its build programme were the completion of the return to service project of all three targeted power stations - Camden, Grootvlei and Komati. These are now fully operational, adding 3 700 MW generating capacity to the grid.
The first project under the Renewable Energy Independent Power Producers Programme (REIPPP) was connected to the grid in September 2013 and the first IPP was commissioned in November 2013.
A total of 467 MW is currently available to the system from these producers.
Transnet
Transnet has increased its targeted infrastructure expenditure over the seven-year period starting in 2011/12, from R110 billion to just over R312 billion.
“This will address the capacity constraints of our national logistics system,” said Minister Brown.
Over the current medium term expenditure framework (MTEF) period, Transnet will spend R107 billion on its capacity expansion programme. It is projected that jobs supported by Transnet will increase from 368 000 in 2011/12 to 570 000 in 2018/19.
The minister noted that the current environment presents a “major” challenge to the financing of the build and capacity expansion programme.
“It is clear that a sustainable funding framework that is independentof the fiscus is required,” Minister Brown said.
SAA and SA Express
The minister noted that the environment in which SAA and SA Express operate has become ever more challenging, with intensified competition and narrow margins.
“The undercapitalised balance sheets severely constrain the airlines, leading to continued losses. It has become clear to me that simply extending state guarantees to the airlines is an inadequate response to the challenge and that an extraordinary intervention is required to put them on a sustainable path,” she said.
On what such intervention might be, Minister Brown said given the very serious issues confronting SAA and SA Express, she has engaged with both entities.
“I have engaged with them [and] the boards on what the best solution is. Irrespective of what we do, it is a strategic asset and we have to keep the planes flying.”
She said they were looking at the financial sustainability of SAA, and that they will do a study on a different business model that rationalises the two companies and look into its governance issues.
The minster will be attending the SAA Annual General Meeting, where matters will be discussed further in September.
“New acquisitions must not take place now because we are not financially stable. So that’s what I’ve given the companies the instruction to do,” she said.
Previously, SAA had wanted to acquire new aircraft.
SAA CEO Monwabisi Kalawe confirmed that a request for proposal for the acquisition for planes was withdrawn in 2013.
Minister Brown also announced that Broadband Infraco will be transferred to the newly established Department of Telecommunications and Postal Services.
Getting the basics right
The minister said SOEs play a critical role within the development and growth of the country.
“They must get the basics right. Those with a direct interface with citizens and business must deliver quality, affordable and accessible services consistently.
“SOEs must continue to serve as effective, strategic instruments of industrial policy and economic inclusion. This must be as central to their thinking as performing their core business,” she said.
The basics include meetings happening regularly and good values, among others. - SAnews.gov.za
