07.11.2010

More than a minister needed to help fix Transnet, Eskom

 The best of luck to new Minister of Public Enterprises Malusi Gigaba - even Superman would not be able to do much about SA's electricity and rail transport challenges, analysts and industry role players said this week.

Gigaba, a former deputy home affairs minister, was appointed to the position previously held by Barbara Hogan.

The lack of permanent leadership at Transnet and the number of acting board members (acting CEO Chris Wells and executive Vuyo Kahla both announced their imminent departures this week) are issues Gigaba will have to address.

 The best of luck to new Minister of Public Enterprises Malusi Gigaba - even Superman would not be able to do much about SA's electricity and rail transport challenges, analysts and industry role players said this week.

Gigaba, a former deputy home affairs minister, was appointed to the position previously held by Barbara Hogan.

The lack of permanent leadership at Transnet and the number of acting board members (acting CEO Chris Wells and executive Vuyo Kahla both announced their imminent departures this week) are issues Gigaba will have to address.

"Public enterprises is a critical ministry which affects the competitiveness of every business as it deals with logistics, electricity and other key areas, said Guy Harris, facilitator of the manufacturing circle.

"These areas face huge challenges and require strong management and leadership. Business can no longer endure the above-inflation increases in administered prices without further affecting employment."

Inefficient and expensive port and rail capacity, and the cost and unreliability of electricity supply are hampering a number of SA's key sectors. "Even if they have Superman as minister, they won't be able to do much about the current set of circumstances," one London-based mining analyst said.

John Purchase, CEO of the Agriculture Business Chamber, agreed: "It is not to say the changes will bring a turnaround to the state-owned enterprises - the problems are very deep-seated."

While Eskom has secured funding guarantees for its build programme up to 2017, including for the crucial Kusile power station, electricity supply remains a concern.

"The biggest challenge is to try to include third-party power suppliers in the grid," said the analyst. "It seems hardly possible at this stage, but it will help significantly to lessen the pressure."

The new Minister of Labour, Mildred Oliphant, will have to deal with legislation on labour brokers and perform a balancing act between the treasury, which is hoping to announce details on a youth wage subsidy in the February budget statement, and the Department of Economic Development, which seems to be siding with Cosatu in its rebuttal of the subsidy.

Oliphant will also have the disciplinary hearing of suspended director-general Jimmy Manyi to contend with.

"Labour is another key portfolio which will need strong leadership. The focus must be on reducing unemployment, not adding to it," said Harris.

The appointment of Edna Molewa, the former social development minister, to the water and environmental affairs portfolio was welcomed by non-governmental organisations.

Molewa will have to find funding to deal with acid drainage from mines and crumbling water infrastructure, and decrease the huge backlog of water licences for mines - without a number of senior staff members who have been suspended.

Molewa's department has been criticised by mineral resources minister Susan Shabangu for forcing Coal of Africa to shut operations at a mine near the Mapungubwe world heritage site.

"We would hope to see the minister focus her attention not only on the important aspects of water quality and water infrastructure, but fundamentally on the appropriate management of catchments that have the potential to deliver high quantity and quality water supplies," said Morné du Plessis, CEO of the World Wildlife Fund (WWF).

The WWF also wants SA to play a leading global role in securing commitments on CO2 emissions reductions and have an increased focus on sustaining healthy ecosystems.

Of the new appointments, communications minister Roy Padayachie, who replaces the controversial Siphiwe Nyanda, is likely to have the easiest time adjusting to his new role, having served as deputy minister for several years. Padayachie has worked to lower telecommunications costs and liberalise the market.

Padayachie faces sorting out messes in his department, the SABC and Sentech, and providing clarity on the digital TV technology standard.

One of his tasks will be to "continue creating a competitive environment that will drive the market".

To some extent, this will depend on the Icasa Amendment Bill, which in its current form will give the department much more control over the regulator and therefore more power to "manage the market", said Dobek Pater, analyst at Africa Analysis.

"A big focus for the department is to effectively utilise the companies they own in the telecommunications space."

Sentech, the state-owned signal distributor that owns lucrative spectrum that could be used to provide broadband in under-serviced areas, or at a subsidised cost to schools and hospitals, has been hampered for years by a lack of funding.

"Proper measures need to be put in place to ensure it is not hampered by the department, or they must allow Sentech to go to the market and raise commercial funding," said Pater.

Article source: www.timeslive.co.za