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PUBLIC ENTERPRISES 2007-2010 STRATEGIC PLAN AND FINANCIAL OVERVIEW 10 MAY 2007

PUBLIC ENTERPRISES 2007-2010 STRATEGIC PLAN AND FINANCIAL OVERVIEW 10 MAY 2007. C ontents. The department’s strategy is located within the broader developmental objectives of government Developmental alignment Departmental strategy Mandate, vision and mission

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PUBLIC ENTERPRISES 2007-2010 STRATEGIC PLAN AND FINANCIAL OVERVIEW 10 MAY 2007

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  1. PUBLIC ENTERPRISES 2007-2010 STRATEGIC PLAN AND FINANCIAL OVERVIEW 10 MAY 2007

  2. Contents The department’s strategy is located within the broader developmental objectives of government • Developmental alignment • Departmental strategy • Mandate, vision and mission • Key achievements & changes to structure • Priority areas and planned activities 2

  3. Political mandate Objectives set in May 2004 • Halve poverty from about one third of households in 2004 to less than one-sixth of households by 2014 • Halve unemployment from about 30% in 2004 to lower than 15% by 2014 • This requires growth averaging over 5% between 2004 and 2014 • The objective we set was to average >4.5% growth up to 2009 and >6% growth after 2010 (Presidency, 2005) ASGISA interventions • Infrastructure programmes • Sector investment strategies • Education and skills • 2nd economy & SMME interventions • Macro-economic issues • Public administration issues / delivery 3 3

  4. DPE’s contribution • Strengthening SOE and departmental governance and administration systems • Management of SOE for reliable, cost-effective, commercially viable logistics infrastructure and services • Delivery efficiency • Lower production costs • Improved competitiveness • Support the creation of cutting-edge, technologically driven industries for long-term growth (Infraco, PBMR, DENEL) • Attraction and development of a world-class skills base • Overseeing an accelerated infrastructure investment programme • Increase capital formation in a fiscally sustainable manner • Strengthen local supplier capabilities • Crowd in private sector investment • Contribute to local economic development and job creation 4 4

  5. THE DPE STRATEGY 5

  6. Mandate of the department • The key objective of the Department of Public Enterprises is to provide effective shareholder management to nine SOE (Transnet, Eskom, Denel, SAA, Safcol, Alexkor, PBMR, Infraco and SAX), to support and promote economic efficiency, competitiveness and growth for a better life for South Africans in particular and the African continent in general • A critical task to effect this, is aligning SOE business strategies with Sector department policies and regulatory authorities, whilst ensuring that SOE are sustainable businesses 6

  7. Vision of the department Our vision is to have SOE that: • are efficiently managed, meeting domestic and international industry operational benchmarks • play a role in the industry that ensures an optimal allocation of responsibilities between the public and private sector • undertake investment programmes that provide the necessary capacity to accommodate faster economic growth • implement their investment programmes in such a manner that the national economy is strengthened in a sustainable way • Contribute to advancing the infrastructure objectives in NEPAD 7

  8. Mission of the department Our mission is to provide SOE with: • clear mandates • simple, implementable governance systems • effective performance Management 8

  9. Key commitments in 2006 • Implement an effective shareholder management system • Ensure the implementation of the infrastructure investment programme • Strengthen SOE balance sheets • Leverage the SOE’s Capex programme to “catalyse” economic activity 9 9

  10. Key achievements for 2006 • Internal amendments to the structure to • Allow greater sector focus • Enhance oversight of SOE activity • Legislative and policy directives • Transnet Pension Fund Amendment Bill processed • South African Airways Bill processed • Infraco and South African Express Bills submitted to Cabinet • Consultation on Shareholder management framework (including transaction guidelines) • SAFCOL restructuring proposal developed and submitted to Cabinet • Build programme • Investment dashboard developed • Quarterly reports submitted to the Portfolio Committee and placed on website • Competitive Supplier Development Programme Concept Document approved by Cabinet - Bootcamp conducted with procurement managers 10 10

  11. Changes to DPE structure • The ENE for 2007/2010 indicates a move away from a specialisation based structure to a sector based structure, with specialists incorporated in each SOE team. • Energy, Mining and Broadband: Programme 2 (formerly ARM) • Manufacturing Enterprises: Programme 4 (formerly CSS) • Transport Enterprises: Programme 5 (used CFT DDG post) Subsequently Infraco was moved to Manufacturing and PBMR to Energy –this will be reflected in business plans and the adjustment estimates • Given the volume and risk attached to legal and transactions issues we retained Legal, Governance and Secretariat as a specialist function and incorporated the Risk function into this unit: Programme 3 • Joint Projects Facility is no longer a sub-programme and is now Programme 6. 11 11

  12. ORGANISATIONAL STRUCTURE Minister Public Enterprises Director General DDG Energy, Mining and Broadband Enterprises James Theledi Coordinator Joint Project Facility Katherine Venier DDG Legal, Governance Risk& Secretariat Sandra Coetzee DDG Manufacturing Enterprises Litha Mcwabeni DDG Transport Enterprises Andrew Shaw Chief Operations Officer (COO) Director Internal Audit Chief Financial Officer (CFO) 12 12

  13. DPE BUDGET Adjustments as per 25 April 2007 included (Programme 4) 13 13

  14. DPE Statisticsas at 16 April 2007

  15. PRIORITY AREAS AND PLANNED ACTIVITIESPROGRAMMES 15

  16. Programme 1: Administration

  17. Programme 1: Administration • Management and Administration • Purpose: Responsible for the overall direction and management of the Ministry and the department and provision of administrative support services to the department. • Measurable objective: • To provide strategic direction and leadership • To provide support services to enable the department to deliver on its organisational objectives in an environment where the human capital within DPE is both motivated and empowered • To improve the quality of corporate governance and performance monitoring systems by ensuring that appropriate policies, processes and procedures are developed and implemented within DPE • Sub-programmes: Ministry, Office of the Director-General, and Corporate Services. Corporate services include strategy and business planning, human capital, information technology, communications, finance, security services, legal counsel and internal audit.

  18. Programme 1: Administration • Goods and Services in this programme have increased due to the centralisation of equipment contracts, Telephones, Stationery, Recruitment advertising, and all software licences. In addition remuneration of interns has been centralised to the Administration budget and not allocated to the business units. • Sub-programmes • Minister • Management • Corporate Services • Property Management

  19. Programme 2: EMBE Energy, Mining and Broadband Infrastructure Purpose: align corporate strategies of Eskom, Alexkor and Infraco with government’s strategic intent and monitor their performance Sub-programmes: Energy–monitor Eskom’s performance: Build Programme, Generation, Transmission and Distribution. Mining–oversight of the turnaround of Alexkor with a particular focus on the settlement negotiations and the separation of ABT from ABM. Broadband–establish Infraco, monitor the commissioning of the full service network and provide overarching shareholder management.

  20. Programme 2:EMBE

  21. Programme 2:EMBE

  22. Programme 2:EMBE

  23. Programme 2:EMBE

  24. Programme 2:EMBE • The final transfer payment for the Diabo Trust, as well as allocations made during the adjustments for Alexkor (R82,1m) and InfraCo (R627m) are reflected in the 2006/07 budget. No allocation has been made for these entities in the coming year. The functions and funds in the Risk Management sub-programme, which previously resided in this programme, have been moved to Programme 3 : Legal Governance and Risk. • Sub-programmes • Management • ICT Sector : Broadband - InfraCo • Mining Sector - Alexkor • Energy Sector - Eskom

  25. Programme 3:LGRS Legal, Governance, Risk and Secretariat (LGRS) Purpose: To provide effective legal services, corporate governance systems, risk management frameworks and secretariat services to the department and SOE Sub-programmes: Legal-internal legal services and oversight support to SOE. Legal also provides legal support for all commercial transactions involving the Department, including, but not limited to the establishment of SOE. Governance-develops effective corporate governance and shareholder management systems for SOE Risk Management-proactively identifies, manages and monitors significant risks related to the SOE and their activities as well as across SOE. Secretariat-provides advisory and Secretariat services to the department and the economic and employment cluster

  26. Programme 3:LGRS

  27. Programme 3:LGRS

  28. Programme 3:LGRS

  29. Programme 3:LGRS • The increase in budget under Compensation of Employees and Goods and Services for the coming year, is due to the Risk Management function having been shifted from Programme 2 to this Programme, as well as the need to outsource capacity to meet the output target for the coming year. The transfer reflected in 06/07 was in respect of settlement of a claim as well as Regional Service Council Levies which has now been discontinued. • Sub-programme • Management • Legal and Litigation • Governance and Secretariat • Risk Management

  30. Programme 4:Manufacturing Purpose: to analyze SOE strategies against government’s strategic intent as well as SOE financial and operational performance monitoring and benchmarking. In addition, the unit needs to develop proposals around how the SOE can play a catalytic role in the development of the associated manufacturing cluster. Sub-programmes Denel: Denel’s key strategic role is to supply South Africa’s armed forces with defence capabilities and to stimulate the transference of advanced manufacturing capabilities to the defence sector. The DPE’s role is to exercise shareholder oversight and add value to Denel’s restructuring and its contribution to advanced manufacturing. SAFCOL: Monitor the company’s activities, which include forestry management, timber harvesting, timber processing and related activities, both domestically and internationally; and oversee its restructuring PBMR: Support the acceleration of pebble-bed technology and the production of reactors within Eskom; and facilitate the development of an appropriate shareholder management agreement

  31. Programme 4:Manufacturing

  32. Programme 4:Manufacturing

  33. Programme 4:Manufacturing

  34. Programme 4:Manufacturing

  35. Programme 4:Manufacturing • Goods and Services increase slightly in order to accommodate the need to outsource capacity to meet the output targets for the coming year. • Sub-programme • Management • Forestry Sector - SAFCOL • Nuclear Sector – PBMR (R1,323,573,000) approved 25 April 2007 • Defence Sector – Denel (R933,000,000)

  36. Programme 5:Transport Purpose: To ensure that the strategy, investment plans, commercial philosophy and operational performance are aligned with government’s strategic intent for these enterprises. Sub-programmes Transnet: provide oversight over the capital expansion programme and its transformation into a focused freight transport company and the effective operation of its business units namely Spoornet, Petronet, SA Port Operations and the National Ports Authority. South African Airways (SAA): Monitor SAA’s transformation into a commercially successful national carrier that will contribute to the development of trade and tourism domestically and on the rest of Africa. South African Express (SAX): Oversee the establishment of SAX as a stand alone entity and support is operational efficiency

  37. Programme 5:Transport

  38. Programme 5:Transport

  39. Programme 5:Transport • This unit was previously a sub-programme in Programme 4. The historical figures related to the work in the transport sector for this unit have been aggregated accordingly for 06/07. The increase in the budget for this unit is to establish a fully operational unit with sufficient capacity to deal with the new SOE in the aviation industry. • Sub-programme • Management • Transport Sector - Transnet • Aviation Sector – South African Airways and South African Express

  40. Programme 6: JPF Purpose: Toenable the development of projects that leverage the assets, activities and/or capabilities of the SOE to the benefit of the SOE and the economy as a whole. Sub-programmes: Aerostructures Industry will examine the opportunities the SOE build programme offers to develop an aerostructures industry in South Africa. Rest of Africa aims to develop infrastructure projects in key countries in Africa. A project between South Africa and Belarus will bring Belarussian capabilities in earth moving and defence related industries to SA while providing business opportunities for SA firms in that country. The project aims to sign 2-4 Joint Venture agreements by 2009.

  41. Programme 6: JPF Competitive Supplier Development Programme is responsible for finding innovative ways to leverage SOE procurement spend so as to build local world-class manufacturing capabilities to supply our SOE with capital goods in their build programme. The programme also involves co-ordinating industry support measures across government involving DTI, DST and the IDC and building SOE strategic procurement capability. Energy and Pipelines co-ordinates liquid fuels and gas pipelines planning to ensure there is sufficient pipeline capacity in liquid fuels, natural gas and slurry pipelines to enable growth in the economy. Environmental Issuesdevelops proposals to ensure that the government policy balances the needs of environmental conservation with the need to rapidly build more infrastructure to grow the economy and become globally competitive.

  42. Programme 6: JPF Human Resources and Capacity Building focuses on ensuring that there are sufficient skills in South Africa to meet the requirements of our SOE build programme. Maximising the training infrastructure of our SOE to deliver artisans and technicians needed to build infrastructure, together with Further Education and Training Colleges, is a crucial output for this project. Information Communications Technology seeks to utilise SOE ICT infrastructure to the advantage of our SOE and country as a whole. Developing call centres in rural areas and providing cheap broadband infrastructure for South Africa are two key outputs for this project. Property Project is focused on optimising the value and developmental impacts on non-core properties. The project has established a policy framework for disposals and a set of B-BBEE guidelines to guide the disposal of SOE non-core property. From 2007, the majority of property will be sold in an open and competitive manner. Negotiations are underway for the disposal of property in support of the national housing programme.

  43. Programme 6: JPF

  44. Programme 6: JPF

  45. Programme 6: JPF

  46. Programme 6: JPF • This unit was previously a sub-programme in Programme 4, where the funds were earmarked within the programme. The increase in the budget for this unit is mainly due to additional capacity requirements and outsourcing of technical and specialist expertise required to meet the objectives of the unit. • Sub-programme • Management • Joint Project Facility

  47. THANK YOU 47

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