Transnet Portfolio Committee Presentation May 2006 Procurement Divisions

Transnet Portfolio Committee Presentation May 2006

Procurement • Divisions currently use their own standards for collecting data and reporting • Waiting for finalisation of codes of good practice on BBBEE before systematising the collection of information • Also considering use of verification agencies services

Disposal of Non Core Assets - Selection Criteria • Qualification Criteria – BEE (Black Empowered – 25%+1) – Compliance (legal, tax, company, governance) – Access to funding • Ranking Criteria – Profile & Background – Financial & Technical – BBBEE 20% 50% 30%

Disposal of Non Core - Handling BBBEE • The recommendation is that acquiring parties must all be at least Black Empowered (25% + 1 equity owned or more) – Black influenced = 15% + 1 – Black empowered = 25% + 1 – Black owned = 50% + 1 • All the acquiring parties must have a formal plan to address the other areas of the BBBEE scorecard • All the acquiring parties should score at least 40% on the BBBEE scorecard as per the Code of Good Practice • Transnet may have to allow a sale of convertible securities as a disposal option

HIV/AIDS • Transnet Lifestyle Management Programme (TLMP) – Programme targets ‘life style’ diseases such as hyper tension, diabetes and HIV/Aids – Prevention Strategies » Comprehensive communication and outreach programme in each business unit » Distribution of condoms » Voluntary testing and counseling – Medical Intervention » Funding of ARVs and other medication and treatments • Using a recent actuarial study commissioned in SAPO and extrapolated for the group, there is an estimated 11% incidence of HIV/AIDS amongst Transnet employees • Approximately 30% of employees do not have medical aid deductions through the payroll • The TLMP is targeted at this group of employees but is voluntary in nature with a take up rate of about 1% • On average R 10 000 per employee per annum is spent through the TLMP

Social Plan Agreement • Pre-retrenchment awareness campaign • Social Plan Centres – fixed and mobile • Employees will receive their fund benefits and payout process speeded up • Retrenchment – 2 weeks for every completed year Pro rata service bonus • Medical benefit equivalent to 1 year company contribution

Social Plan Agreement • Retrenchees offered compulsory financial counseling services to the value of R 800 through a professional counselor • Personal counseling services to the value of R 1000 also offered through a professional counselor • All retrenchees will be offered opportunity to undergo training to the value of R 5000 • After care services option • Funeral benefits available for 12 months after termination • Assistance with home loans and accommodation • Transnet Development Agency

Corruption Incidence and Strategies • Transnet has adopted a Risk Enterprise Wide (ERM) approach that is supported by a comprehensive fraud prevention plan, which was included as part of the Corporate Plan; • The are 12 key initiatives identified in fraud prevention plan which Transnet will be focusing on, some of which includes the following: – Code of Ethics; – Surprise audits; – Fraud Tip-off Line; – Staff vetting; and – Training, to mention a few. • Across Transnet on average the are 40 disputes a month, of which approximately 25 employees are dismissed; • 3 employees were dismissed for fraud in the housing and 31 are still going through the disciplinary process.

Matters Arising from the Committees report of November 2005

Matters Arising General Commentary • The committee’s approach to considering annual reports is guided by 2 documents: – An operational plan for the national Assembly on legislative oversight through annual reports (Reports commissioned by the speaker of parliament) and – National Treasury’s Guidelines for legislative oversight through Annual Reports • Overall the committee feels that annual reports should be more user friendly and in some cases briefer Actions • Noted • Matter will addressed in presenting the next Annual report – To properly consider the annual reports the committee needs to be fully acquainted with the strategic/business/corporate plan for the previous financial year, – The budgets allocated for these plans, – The annual reports and – The relationship between these documents • The presentations to the committee need to be much more pointed in setting out – – The measurable objectives decided on, The deadlines set, The budgets allocated and The progress achieved in the form of tables or other accessible and easy to follow means

Matters Arising continued…. Transnet Specific Commentary • • Committee is concerned about pending job losses and is going to monitor job losses much more closely; With respect to the sale of non core assets, the BEE targets should be broad based and the committee will be monitoring this ; Committee view that there is not enough focus on the contribution of SOEs to the 2 nd economy; Committee view that SOEs should report in greater detail on incidents of corruption, how they are dealt with and their corruption prevention strategies ; Wherever possible, labour intensive construction methods should be used ; The committee will seek to pay particular attention to Spoornet and feels that greater attention should be paid to increasing the general freight volumes by more than the 2 million tons proposed over the next few years ; Luggage theft at SAA will be keenly monitored. Actions • The restructuring and transformation of Transnet is not intended to result in job losses; • Covered in the presentation; • Matter to be elevated to the Department; • Covered in the Presentation; • Noted.

Matters Arising continued…. DPE Commentary Specific to Transnet Action • Other DPE concerns include: – Private sector participation in the ports sector • Matter is being addressed as part of our planning process – PSP in the Spoornet branch lines, Blue Train and core network operations • Matter is being addressed as part of our planning process – Separation of SAA from Transnet • Matter being address under project blue sky – Establishment and monitoring of operational benchmarks • High level operational benchmarks are incorporated in the corporate plan