Media Briefing

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Media Briefing
Restructuring of State Owned Enterprises 2002
Presenter Dr. Sivi Gounden Director-General Date
04 December 2002
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Outline of Presentation

• Conceptual Framework / Background
• Proceeds and SOE performance
• Progress on SOE restructuring
• Addressing concerns of Organized Labour

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Social and Economic Impact of Restructuring
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Proceeds from Restructuring

• Since 1997 proceeds to the fiscus - R20 billion
• For the period (2000 2001) proceeds to the
  fiscus - R7.5 billion (SASRIA MCell)
• National Treasury projection for the current year
  is R12 billion.
• Telkom IPO
• Safcol Proceeds
• Alexkor
• Apron Services
• Air Chefs
• Aventura Resorts

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Total Proceeds from Restructuring endeavours
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SOE borrowings as a percentage of SAs External
debt
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Restructuring of SOEs

• Defence
• Transport
• Energy
• Telecommunications
• Forestry
• Mining
• Hotels and Leisure

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Defence Sector

• Denel (Pty) Ltd
• Cabinet approved the acquisition by BAE Systems
  of 30 of Denel Aerospace and Ordnance for R375
  million.
• Government will retain its 70 share in the
  interim.
• We will explore the options for the ESOP, BEE and
  other SEPs including a possible IPO down the
  line.
• Government will also hold a golden share in
  respect of setting clearly defined issues that
  pertain to our national security as well as other
  issues such as size and extent of future
  shareholding.

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Transport Sector

• Rail
• Rail Safety Bill in process of being enacted
  (NDOT).
• Adoption by Government of a restructuring model
  for Spoornet (NFA sectoral signoff secured
  25/2/02).
• Spoornet to be run as an integrated freight
  company on an extended rail network.
• Internal restructuring and efficiency
  improvements to be implemented.
• Options for Orex to be reviewed.
  Inter-departmental process instituted to
  investigate options base case(DPE, DTI DME).
• Shadow incorporation of divisions to be performed
  to establish accountability and address
  cross-subsidisation audit trails and impact.
• Lux Rail

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Transport Sector cont

• Ports
• Ports policy was approved by Cabinet March 2002.
• Incorporation of National Ports Authority and
  Port Operations Division.
• 3 Year tariff reform process started December
  2001.
• Ports restructuring options principles and
  concessioning architecture developed to further
  its multiplier effect role in the economy as well
  as SADC.
• An Economic Impact Study will be performed to
  identify the asset packages
• The Port Regulator and New Ports Act legislation
  is currently under development.
• Completion of all transaction documentation
  expected 31 May 2002

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Fast tracking concessioning ofDurban container
terminal

• Durban port congestion has resulted in the fast
  tracking of concessions for the Durban container
  terminal.
• ITAs will be issued in Q3 2002
• International (Canadian consortium) consultants
  to assist the DPE in developing concession
  architecture and model already at work and
  expected to provide report early next year.

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Energy Sector
ESKOM General

• Incorporation of Eskom as a company in terms of
  the Eskom Conversion Act Act No. 13 of 2001.
• Generation, Transmission, Distribution to be set
  up as independent operating divisions.
• The unregulated businesses, Eskom Enterprises,
  incorporated as a separate subsidiary
• Interaction with organised labour is ongoing.
• 2002 2003 Activities
• Ongoing restructuring of Eskom Enterprises, with
  emphasis on governance issues and internal
  rationalisation

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Energy Sector cont

• Commence process for disposal of 10 of Eskoms
  capacity with BEE focus. Introduction of 20 for
  the Private Sector Participation (PSP) stake to
  commence, subject to the development of an
  appropriate regulatory framework and market rules
  being in place.
• Energy Distribution
• EDI Holdings to be established and Board
  appointed, as soon as outstanding issues are
  resolved between DME and National Treasury.

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Telkom IPO

• IPO will proceed in the 2002/03 fiscal year
• No further comment as a result of SEC
  requirements

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Forestry Sector

• KwaZulu-Natal Transaction
• 75 stake was sold to Siyaqhubeka Consortium for
  R100 million.
• The sale was finalised and assets were
  transferred on October 1, 2001.
• 14 will be made available to Black Farmers, 10
  has been set aside for Community Trust and 9 was
  set aside for ESOP.
• The Community will receive R5,3 million per annum
  in rentals.

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Forestry Sector

• Eastern Cape North Transaction
• Sale and transfer of assets to Singisi Consortium
  including 168 communities was concluded in August
  2001.
• Sale value was R 17 million.
• An additional 10 was set aside for community
  trust and 9 for an ESOP.

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Forestry Sector cont

• Komatiland Forest Package
• Currently going out to rebid
• Western and Southern Cape
• Land Conversion
• Process commenced
• SEP/BEE
• RFP issued
• Preferred SEP/BEE to be determined
• Amatola
• Transaction negotiations in progress

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Mining Sector

• Alexkor Amendment Act promulgated.
• Decision taken to dispose of 51 of Alexkor stake
  to a SEP inclusive of BEE and international
  marketing exposure to add value.
• 10 Namaqualand community stake (in Trust) to be
  set aside.
• Project Plan for transaction implementation
  developed.
• Preparatory work complete - November 2002
• SEP transaction should be finalized February
  2003
• SEP could commence operations shortly thereafter
  

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Hotels and Leisure

• Cabinet resolved to dispose of all Aventura
  resorts either in single entities or groups.
• Disposal of 4 non-strategic resorts concluded,
  (Aldam and Christiana).
• Four resorts currently being disposed off
• Heidelbergkloof ( to be finalized soon)
• Kareenkloof (Finalized)
• Eiland (Finalized)
• Pretoria (Finalized)
• Prospectus and adverts for remaining 8 resorts
  out by Oct 2002
• Disposal of the remaining Aventura resorts by end
  2002 financial year.

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Addressing concerns of Organized Labour

• Engagement with Organized Labour ongoing within
  the context of NFA.
• Different Sector Forums play a critical role in
  facilitating these processes of engagement.
• Expected that there will be Labour resistance in
  the Durban concession process, but DPE continues
  to engage.

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Thank You