DPE Property Project

1. DPE Property Project Presentation to the Parliamentary Portfolio Committee on Public Enterprises 21 June 2006

2. Overview of Presentation • Background • Process • Non-core Property breakdown by SOE • Geographical spread of SOE non-core properties • Properties for Sale: B-BBEE Guidelines • Promoting B-BBEE • Promoting Local Benefit • Properties for Development • Property Development Process • Property Development Vehicle

3. Background • DPE sole shareholder for 7 SOE. • SOE are in a process of focusing on core business, divesting themselves of assets and enterprises that are non-core. • Property project identifies optimal ways to dispose of non-core property. • Non-core property holdings have been classified as either commercial or non-commercial properties. • Properties for development can optimise value for SOE and promote socio-economic development impact. Disposal to Government Property Portfolio Core Non-Commercial Housing Non-core Sale Commercial Development

4. Process • Cabinet Memo on the framework for the disposal of non-core property has been approved. • Submission of Cab Memo on B-BBEE guidelines for consideration. • PFMA • Approval granted for Transnet’s non-core list. • Partial PFMA approval granted to Denel. • Transactions will be subject to approval by the Minister in terms of S54(2). • Properties for Sale • Competitive process with a set of clearly defined steps in the transaction process. • B-BBEE Guidelines apply. • Local benefits.

5. Process • Disposal to government and consultation with government departments: • Bilateral with Department of Housing is underway. • Bilateral with Department of Education is imminent. • Discussions with Land Affairs have started. • Once disposals to government departments have been finalised, SOE packaging will proceed followed by disposal to the public. • Provincial roadshows and communication strategy to raise awareness of the disposals process to alert people to potential purchasing opportunities at a local level. • Properties for development to be developed under auspices of SPV.

6. Non-Core Property Share by SOE

7. Spread of SOE Non-Core Properties

8. Properties for Sale: B-BBEE Guidelines • Originally, collaborated with DPW on a Joint Disposal Strategy and B-BBEE Guidelines, but resubmission of latest Cab Memo focuses on B-BBEE Guidelines which are applicable to SOE only. • B-BBEE guidelines are based on the dti Codes of Good Practice and the Property Sector Charter. • Applicable to properties for sale. • Replicability of these guidelines for properties for development yet to be determined.

9. Promoting B-BBEE through Disposals

10. Promoting B-BBEE • Overall target: • A minimum of 70% of all asset disposals by value (other than those for transfer or housing) by each SOE must be to entities with a BBBEE status of at least Level 4, i.e. entities with scorecard points equal to and above 65%. • BEE thresholds have been set for different property values. • DPE considers that local benefit and economic development are functional criteria against which bids should be measured - these have been built into the adjudication criteria. • Each SOE should report quarterly to the DPE on performance against the targets, based on the BBBEE status table.

11. Properties for Development • JOHANNESBURG: Newtown North Precinct Spatial development framework and business case complete, possible JV • JOHANNESBURG: International Airport Property strategy complete, land transactions with ACSA in process • JOHANNESBURG: Kaserne / City-Deep Inland Port Scoping study completed • DURBAN: Non-port related sites Victoria Embankment and NMR development projects underway • EAST LONDON CBD Development framework completed, land transfer to District council and Buffalo City Development Agency under consideration • PORT ELIZABETH: Harbour Business case for relocation and harbour development completed, Transnet capital projects reviewing decision by end July 06. • CAPE TOWN: Culemborg Black-River Properties for development identified, negotiations on development framework and bulk infrastructure underway.

12. Construction of improvements Property in current transport use zoning, improvements & infrastructure to support historic use Property Development Process MARKETING SALES LEASING ADVERTISING DEVELOPED PROPERTY TO END USER BRICKS MORTOR CONSTRUCTION ELECTRIC SEWERAGE WATER ROADS STORM TELECOM Provision of infrastructure services Market research Town Planning Viability study Rezone Survey Context Precinct Plan Develop framework PROFESSION FEES PROJECT MANAGE LAND ENABLE COSTS Acquisition of alternative land use rights development rights to support mixed alternative land use PROPERTY HOLDING COST MANAGE FEE

13. Newtown North Precinct PMG note: map not included, please email info@pmg.org.za

14. JOHANNESBURG AIRPORT LAND HOLDINGS ACSA PMG note: map not included, please email info@pmg.org.za

15. JOHANNESBURG INTERNATIONAL AIRPORT PMG note: map not included, please email info@pmg.org.za

16. JOHANNESBURG INTERNATIONAL AIRPORT PMG note: map not included, please email info@pmg.org.za

17. Johannesburg Kaserne / City Deep PMG note: map not included, please email info@pmg.org.za

18. PMG note: map not included, please email info@pmg.org.za 2608 Container Data.doc

19. Container Growth Demand Container throughput to double in 10 years CSIR for City of Johannesburg Economic Development Unit, June 2004

20. Projected Demand for Land CSIR for City of Johannesburg Economic Development Unit, June 2004

21. Schematic of Corridor Proposal: Sentra Rand Marshalling yard, Future Inter-modal Terminal GAUTENG MAPUTO PRETCON KOMATIPOORT Proposal: Diesel shuttle rail service, Sentra Rand - City Deep WITBANK Non Electrified SENTRARAND Electrified 3 KV DC CITY DEEP ERMELO Coal-link export line, dual electrified 25KVA AC, also carries general freight Proposal: City Deep Inter-modal upgrade and re-planning. RICHARDS BAY Non- Electrified Durban Gauteng Road Freight Service Congestion, road safety and environmental issues Door to door transit time 2 days Future Road freight terminal Electrified 3KV DC KZN Inland Terminal – e.g. Cato Ridge Durban Gauteng Spoornet mainline service Dual Electrified 3 KV DC Current - Approx 25 to 30 trains per day in each direction. 5 to 7 Container trains per day in each direction.Operating at less than 40% of theoretical capacity IMEX Intermodal service, 1100 wagons, 247 000 teu’s pa = average 6,4 day wagon turnaround, 5 to 8 day container transit time Proposed- long trains to Sentra rand then short block train diesel loco shuttle to Kaserne and city deep – direct to terminals DURBAN DURBAN PORT Proposed -Block train Spoornet service to inland port, shuttle diesel rail service to Durban Port. Decreased Spoornet wagon turnaround, decreased costs BAYHEAD

22. KC-D Action Plan • Improve operational efficiencies by 2014 - reduce wagon turnaround time from 6 to 2 days. • Design rail operating system and layout of KC-D block train marshalling and dispatch yard to service container terminals and warehousing facilities. • Identify container terminals for possible concession, development and service provision. • Undertake internal high level layout design and establish potential viability and industrial land value. • Identify town planning, infrastructure and service requirement to maximise land values and operational efficiencies. • Programme phasing of rail service improvement, system upgrading, marketing and development.

23. PMG note: map not included, please email info@pmg.org.za

24. Durban • Joint NPA-eThekwini call for proposals on Victoria Embankment. • Project preparation and excision of NMR site from Spoornet as part of City Sports Precinct for 2010.

25. East London CBD PMG note: map not included, please email info@pmg.org.za

26. East London CBD PMG note: map not included, please email info@pmg.org.za

27. Port of Port Elizabeth PMG note: map not included, please email info@pmg.org.za

28. Port Elizabeth: Manganese Ore & Fuel Reservoir PMG note: map not included, please email info@pmg.org.za

29. Port Elizabeth PMG note: map not included, please email info@pmg.org.za

30. Port Elizabeth Development Site PMG note: map not included, please email info@pmg.org.za

31. Transport Corridor approaching Cape Town CAPE TOWN Transnet property PMG note: map not included, please email info@pmg.org.za

32. Transport Corridor approaching Cape Town PMG note: map not included, please email info@pmg.org.za

33. Transport Corridor leaving Cape Town PMG note: map not included, please email info@pmg.org.za

34. Culemborg Development Proposal PMG note: map not included, please email info@pmg.org.za

35. Transport Infrastructure Requirements PMG note: map not included, please email info@pmg.org.za

36. Property Development Vehicle • The coordinated development of the key property projects needs overall coordination under a single property development vehicle. • A model has been designed and is under consideration. • Key functions to be performed: • Asset management • Development management • Property management • Compliance management

37. Property Development Vehicle Guiding principles that have informed the proposed institutional arrangements: • Decision making must be fair, transparent and certain • The proposed institutional arrangements must: • Set out defined reporting lines and governance structure. • Be commercially viable and sustainable. • Ensure public sector oversight, participation and representation. • Avoid duplication of capacity by utilising existing public sector SOE capacities. • Contribute to transformation of the property sector.