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Radebe: Parliamentary Media Briefing (20/02/2003)

20th February 2003

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Date: 20/02/2003
Source: Ministry of Public Enterprises
Title: Radebe: Parliamentary Media Briefing, February 2003


CABINET ECONOMICS CLUSTER PARLIAMENTARY MEDIA BRIEFING, THE BY MINISTER OF PUBLIC ENTERPRISES, MR JEFF RADEBE, MP, AND ACTING MINISTER OF TRANSPORT, Cape Town, 20 February 2003

Members of the Media are aware that Minister of Transport Dullah Omar is unable to be with us today for medical reasons. I would like to take this opportunity to wish him a speedy recovery and to convey our warmth and support to him and his family during this difficult time.

For the purposes of this media briefing I will refer to the activities of both the Department of Public Enterprises and the National Department of Transport in the tasks that the President identified in his State of the Nation address for their areas of respective responsibility.

If I may begin with SOE restructuring issues.

The flagship operation of the moment, as we well know, is the successful initial public offering of Telkom on the Johannesburg Securities exchange on 4 March and on the NYSE on 7 March 2003. The preparatory work is complete and the IPO Office in the DPE is monitoring closely these final days of registration period until 24 February. On that day, registration closes and the IPO period closes. Trading begins on 4 March, and we expect that the final price and the allocation of shares will take place on 24 March 2003.

The road shows to market the IPO internationally are in their final stages - the DG and CEO return today from New York. Commentary in newspapers indicates that there is keen interest in the way in which the SA Government has chosen to embark on its first IPO, particularly in relation to the Khulisa offer and the inclusion of the 2% employees share option captured under the Diabo trust. Likewise the widespread education campaign that has seen the IPO team cross the length and breadth of South Africa explaining the risks and opportunities offered by share participation has been an exciting and interesting campaign. I am sure that we will have much to reflect upon in a few months from now about the nature of the whole IPO process.

The restructuring of the Transport Sector steams ahead, or should I say powers along! Cabinet is about to consider the task team's proposals to merge Metrorail and SARCC and later on Shosholoza Meyl. We will finalise the work around the future of the low-density lines, particularly to make sure that they continue to contribute to local economic development both now and in the future. These lines will NOT be closed in any ad hoc fashion and local communities will be consulted widely on any decisions that are taken, including on how they will improve their sustainability.

The President also indicated that the concession of the Durban Container Terminal shall proceed forthwith. I am pleased to indicate that the concession architecture is in its final stage of development and will serve before Cabinet shortly. This has been a complex and consultative process, considering a wide range of jealously guarded interests in the ports terrain. Most of these have been incorporated, but others have been adjusted to achieve more common goals.

Let me emphasise that the choice of ports concession over other modes of restructuring is not an idea plucked out of nowhere. It is a logical consequence of the White Paper on National Commercial Ports Policy that adopts the landlord port authority model for SA. This is an appropriate instrument for safeguarding public ownership, introducing private initiative and investment as well as providing a vehicle for achieving wider ownership in ports sector, and carries the of much improved operating performance.

I do not wish to pre-empt the debates, discussion or any possible amendments to the National Ports Authority Bill that is currently before Parliament. Obviously we will look hard at Parliament's conclusions and I am sure that we will have a solid piece of legislation at the end of the process of public consultation. The Bill is a critical element in turning our ports around to the efficient and world-class operations they need to be.

In the electricity sector we are moving forward quite rapidly with the consolidation of planning around the introduction of competition in the generation sector through divesture of 30% of Generation, made up of 10% BEE and 20% outside investment that could include partnerships or joint ventures with BEE entities as well. The transmission grid will remain under the authority and control of a separate state entity to ensure non-discriminatory access to the grid by all registered generators and distribution companies. The fact remains, our surplus power capacities are running out rapidly at the same time that demand for power, not only here but also in Africa generally, is on the rise. We have to be prepared to deal with the massive investment needs of power infrastructure NOW. We cannot afford to wait.

Lat year I indicated that SOEs would be making significant investment in capital works and infrastructure projects. That process will be accelerated this year. The significant improvements in the lending capacity of SOEs, as well as much-improved internal audit and financial management of their own financial investment portfolios has meant that the debt burden of Transnet in particular, and the borrowing ratings of SOEs has either remained the same or has improved. These improvements are a direct product of the restructuring process undertaken by government.

Thus, in this regard significant SOE investment is in store for ports, rail, road and telecommunications in the 2003/2004 FY. I will provide further details in my own budget vote in April but the initial indications are that Telkom and Transnet will invest around R7 billion each. Eskom's investment estimates are not finalised yet.

If I may turn now more directly to TRANSPORT related matters.

A great deal of the challenge to transport in South Africa relates to the issue of safety on the road, on rail and in the air. The critical issues I wish to highlight relate to road and rail safety. Arrive Alive is but one of the projects that form part of "The Road to Safety" Strategy. It is a vehicle, which the national and provincial Departments of Transport; as well as participating metropolitan and local authorities use to reduce accidents on our roads. Much has been said about the festive season. I would like to indicate that the provinces and the national department are currently finalising an extensive analysis of the whole of the Arrive Alive campaign for 2002/03, and not only the festive period. We will release the results of that analysis in due course.

The Road Accident Fund Commission of Inquiry has recommended that a primary source of funding of the road accident benefits scheme should be a flat-rate levy on fuel (petrol and diesel) purchased for use on land. Full exemptions should be retained in respect of fuel purchased for use by railway trains and ships.

As regards the CREDIT CARD FORMAT LICENCE CONVERSION PROCESS, let me emphasise that we are on course to process all the applications received for the conversion of identity document licences to the new credit card licences. The deadline for conversion remains, I repeat REMAINS, the 28 February 2003.

We call up all those who have not converted to do so without delay. There is only one, very limited group of people who have an extended deadline: those who have licenses from the former TBVC states and self-governing territories. Their deadline has been extended to September 1, 2003 in recognition of the chaos that reigned in those areas.

With reference to the TAXI RECAPITALISATION process, after intense consultation with the industry and other stakeholders Government and SANTACO agreed on a minimum of 25,1% equity ownership of the Electronic management System (EMS) for SANTACO, which has been prescribed by DTI in the Best and Final Offer (BAFO) letter. In addition, on 30 January 2003, Government met with the short-listed EMS bidders during which they were informed of Government's intention to request a 25,1% equity ownership for SANTACO, and the bidders were requested to respond to Governments proposal

Six bidders have been short listed for the production of new taxi vehicles. The Best-and-Final-Offer (BAFO)-notification letter was issued at the end of January 2003, informing the short listed bidders to prepare themselves for the BAFO process.

The BAFO-instruction letter to short listed NTV-bidders would be sent out to manufacturers. Bidders would be month to respond to the BAFO letter giving new guarantees.

In the meantime, it is critical to note that the BAFO negotiations covering technical, empowerment, administration and financial issues will take approximately 2 months ending May 2003. Following this process, it is envisaged that the first vehicles will be rolled-out towards the end of June 2003.

The Cabinet has approved a five-year holding strategy for the development of infrastructure, which will prevent further deterioration of our roads network. The holding strategy will also address areas where the need is most critical. An amount of R30 billion has been made available for the implementation of this strategy.

John Ross Highway is the main link road between Richards Bay the port and industrial area and Empangeni and the interior. The Highway links the major residential and business districts of Richards Bay, Empangeni and Esikhaweni. The road is characterised by a high percentage, in excess of 70%, daily commuters.

John Ross highway developments are in a very advance stage, the project will start as soon as possible.

Spoornet's focus of future investment in infrastructure is on renewal and where appropriate capacity expansion, as the existing available infrastructure network capacity exceeds current demand. Significant parts of infrastructure, namely signalling and electrification infrastructure, are reaching the end of their design life spans. Renewal should concentrate on the application of new technologies that prove to be cheaper, more effective and more efficient. Planned investment expenditures for the next 20 years are approximately R1 billion per annum to address the estimated backlog of R12 billion.

The long-distance passenger rail business (Shosholoza Meyl) requires R450 million to refurbish coaches that are on average 25 years old. It is subsidised at R175 million per annum by Spoornet.

The SARCC started upgrading 236 coaches as from September 2001 with the ultimate final upgrade delivered in September 2003. To date more than 88 coaches have been upgraded at a cost of more than 240 Million. The overall cost to upgrade the total fleet of commuter coaches is R900. Million.

The King Shaka International Airport approaches reality. The Department of finance and KZN are evaluating the tender applications and will present to Technical Committee for endorsement and ACSA should be informed of the feasibility study and requested to co-operate in the matter.

Issued by Ministry of Public Enterprises
20 February 2003
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