CORPORATE PLAN 2019 / 2020 - Saldanha Bay IDZ Licencing Company www.sbidz.co.za +27 (0) 87 095 0261 - Saldanha Bay Industrial ...

 
CORPORATE PLAN 2019 / 2020 - Saldanha Bay IDZ Licencing Company www.sbidz.co.za +27 (0) 87 095 0261 - Saldanha Bay Industrial ...
CORPORATE
PLAN
2019 / 2020
Saldanha Bay IDZ
Licencing Company

www.sbidz.co.za
+27 (0) 87 095 0261
CORPORATE PLAN 2019 / 2020 - Saldanha Bay IDZ Licencing Company www.sbidz.co.za +27 (0) 87 095 0261 - Saldanha Bay Industrial ...
servicing the needs of africa’s oil and gas sector

50   Annexure A: Technical Indicator Definitions - Saldanha Bay Idz Licencing Company (SOC) Ltd
CORPORATE PLAN 2019 / 2020 - Saldanha Bay IDZ Licencing Company www.sbidz.co.za +27 (0) 87 095 0261 - Saldanha Bay Industrial ...
servicing the needs of africa’s oil and gas sector

     foreword

The Saldanha Bay Industrial Development Zone            marine repair, fabrication, logistics and related
Licencing Company SOC Ltd (SBIDZ-LC) is a               services industry in South Africa.
Schedule 3D Provincial Government Business
Enterprise operating the Saldanha Bay Industrial        In South Africa, SEZ legislation does not
Development Zone (SBIDZ) as part of the South           supersede the mandates of other legislated
African government’s strategic initiative to            entities, thus all SEZs must partner to fulfil their
promote and foster new areas of economic                mandates. The SBIDZ is unique as the first SEZ
growth and development in order to fulfil the           to be designated in a sea port, and so can utilise
vision of the National Development Plan (NDP).          its industrial promotion mandate and enabling
The SBIDZ-LC is responsible for the provision           legislation to partner with the Transnet National
of infrastructure, promotion, management and            Ports Authority to offer a unique value offering to
marketing of the SBIDZ.                                 the market. The SBIDZ further utilises enabling
                                                        tax and SEZ programme legislation to partner
The SBIDZ will be a new open space for upstream         with the National Department of Trade and
oil, gas and marine repair, fabrication, logistics      Industry (the dti) and the South African Revenue
and related servicing. Situated on the West             Service (SARS) to enhance the value offering.
Coast of South Africa, in the largest and deepest
natural port in the Southern Hemisphere, it             In addition to these legislative mandates, the
will operate as a Free Port offering streamlined        SBIDZ is linked to broader national and provincial
customs processes and bespoke facilities and            strategies and policies, including:
services to its tenants and operators.                  •   The National Development Plan and
                                                            National Infrastructure Plan;
The legislative mandate at the highest level            •   The Presidential Infrastructure Coordinating
is derived from the “Industrial Promotion’                  Commission (PICC) rollout programme and
functional area of the Constitution of the                  the National Infrastructure Plan Strategic
Republic of South Africa, 1996 and the ambits of            Infrastructure Project 5 (SIP5);
the Operator Licence conferred to the SBIDZ-LC
                                                        •   The Industrial Policy Action Plan;
in 2013 by the National Government of South
                                                        •   The Medium Term Strategic Framework
Africa. Operationally, the SBIDZ-LC is governed
                                                            2014-2019;
by the Saldanha Bay Industrial Development
Zone Licencing Company Act, 2016 (Western               •   Operation Phakisa: Oceans Economy;
Cape Provincial Act No. 1 of 2016) and regulated        •   The Western Cape Strategic Plan;
by the Special Economic Zone Act (National Act          •   Project Khulisa: Oil and Gas
No. 16 of 2014).
                                                        The SBIDZ Strategic Plan 2015/16 – 2019/20
The mandate of the SBIDZ-LC is to promote and           focuses on strategic outcomes and goals for the
facilitate economic activity and sustainable job        SBIDZ as a whole, within the broader national and
creation in South Africa, and more specifically         provincial strategic context, and is a guideline
at the port of Saldanha Bay. The mandate is             for the first 5 years of the nascent entity since
also sector specific, in accordance with the            it began operating during 2014. The Corporate
conferred Operator Licence: the SBIDZ-LC is             Plan 2019/2020 represents the culmination of
mandated to grow the upstream oil, gas and              the entities’ first 5 years of operations.

                                                                                 Corporate Plan 2019/20        1
CORPORATE PLAN 2019 / 2020 - Saldanha Bay IDZ Licencing Company www.sbidz.co.za +27 (0) 87 095 0261 - Saldanha Bay Industrial ...
servicing the needs of africa’s oil and gas sector

        official sign-off

    It is hereby certified that this Corporate Plan:

    •   Was developed by the management of the SBIDZ-LC, under the guidance of Minister Beverley
        Schäfer, MEC for Economic Opportunities.

    •   Was prepared in line with the current Strategic Plan of the SBIDZ-LC.

    •   Accurately reflects the performance targets, which the SBIDZ-LC will endeavour to achieve, given
        the resources made available in the budget for 2019/2020.

    Herman Boneschans

    Chief Financial Officer                                                Signature:

    Kaashifah Beukes

    Chief Executive Officer (Acting)                                       Signature:

    Johann Stegmann

    Chairperson: Accounting Authority                                      Signature:

    Approved by:

    Beverley Schäfer

    Executive Authority                                                    Signature:

2   Saldanha Bay Idz Licencing Company (SOC) Ltd
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servicing the needs of africa’s oil and gas sector

        contents

List of abreviations / acronyms ............................................................................................................                  4

PART A: STRATEGIC OVERVIEW............................................................                                                                       6
1 Vision .................................................................................................................................................    8
2 Mission ..............................................................................................................................................      8
3 Values ................................................................................................................................................     8
4 Revisions to Legislative and Other Mandates ................................................................................                                8
5 Updated Situational Analysis ..........................................................................................................                     9
     Service Delivery Environment                                                                                                                             9
     5.1 The Performance Delivery Environment ..................................................................................                             15
     5.2 Organisational Environment .....................................................................................................                    18
6 Strategic Outcome Oriented Goals .................................................................................................                         20
  Budget Overview                                                                                                                                            21
7 Overview of 2019/20 Budget ...........................................................................................................                     21
  7.1 Income and Expenditure Estimates .........................................................................................                             21

PART B: PROGRAMME AND SUB-PROGRAMME PLANS ...................... 22
8 Programme 1: Administration ........................................................................................................                       24
  8.1 Strategic Objectives and Annual Targets .................................................................................                              29
  8.2 Performance Indicators and Annual Targets ..........................................................................                                   29
  8.3 Quarterly Targets .......................................................................................................................              29
  8.4 Reconciling Performance Targets with the Budget .................................................................                                      30
9 Programme 2: Operations ...............................................................................................................                    31
  9.1 Strategic Objectives and Annual Targets .................................................................................                              37
  9.2 Performance Indicators and Annual Targets ..........................................................................                                   37
  9.3 Quarterly Targets .......................................................................................................................              38
  9.4 Reconciling Performance Targets with the Budget .................................................................                                      39

PART C: LINKS TO OTHER PLANS ........................................................ 40

ANNEXURE A: Technical Indicator Definitions ................................. 44

                                                                                                                           Corporate Plan 2019/20                 3
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servicing the needs of africa’s oil and gas sector

           List of
           Abbreviations/
           Acronyms

    AGSA           Auditor-General of South Africa
    CCA            Customs Control Area
    CHIETA         Chemical Industries Education and Training Authority
    CSIR           Council for Scientific and Industrial Research
    DEADP          Department of Environmental Affairs and Development Planning
    DEDAT          Department of Economic Development and Tourism
    DLG            Department of Local Government
    DOE            Department of Energy
    DST            Department of Science and Technology
    DTI            Department of Trade and Industry
    EIA            Environmental Impact Assessment
    EIR            Environmental Impact Report
    EoDB           Ease of Doing Business
    E&P            Exploration & Production
    EPZ            Export Processing Zone
    ESSA           Employment Services System of South Africa
    FID            Final Investment Decision
    GCIS           Government Communication and Information System
    GDP            Gross Domestic Product
    IDC            Industrial Development Corporation
    IDP            Industrial Development Plan
    IDZ            Industrial Development Zone
    KPI            Key Performance Indicator
    LNG            Liquefied Natural Gas

General Information
    MDA            Manufacturing Development Act
    MEC            Member of Executive Council
    MERSETA        Manufacturing, Engineering and Related Services Sector Education and Training Authority
    MOA            Memorandum of Agreement
    MOU            Memorandum of Understanding
    MPRDA          Mining & Petroleum Resources Development Amendment
    MTEF           Medium Term Expenditure Framework

4   Saldanha Bay Idz Licencing Company (SOC) Ltd
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servicing the needs of africa’s oil and gas sector

NDA         Non-Disclosure Agreement
O&G         Oil & Gas
OGFZ Onne   Oil & Gas Free Zone Onne
OSSB        Offshore Supply Base
PASA        Petroleum Agency South Africa
PFMA        Public Finance Management Act
PICC        Presidential Infrastructure Coordinating Commission
PPP         Public-Private Partnership
PT          Provincial Treasury
PwC         Pricewaterhouse Coopers
RoFR        Right of First Refusal
RPL         Recognition of Prior Learning
SAIMI       South African International Maritime Institute
SAMREF      South African Marine Research and Exploration Forum
SAOGA       South African Oil and Gas Alliance
SAPS        South African Police Service
SARS        South African Revenue Services
SBIDZ       Saldanha Bay Industrial Development Zone
SBIDZ-LC    Saldanha Bay Industrial Development Zone Licencing Company SOC Ltd
SBM         Saldanha Bay Municipality
SCM         Supply Chain Management
SEZ         Special Economic Zone
SIP5        Strategic Integrated Project 5: Saldanha-Northern Cape Development Corridor
SOC         State Owned Company
TCP         Transnet Capital Projects
TETA        Transport Education and Training Authority
TNPA        Transnet National Ports Authority
TPT         Transnet Ports Terminal
WCDEDAT     Western Cape Department of Economic Development and Tourism
WCDM        West Coast District Municipality
WCG         Western Cape Government

                                                                       Corporate Plan 2019/20   5
servicing the needs of africa’s oil and gas sector

6   Saldanha Bay Idz Licencing Company (SOC) Ltd
servicing the needs of africa’s oil and gas sector

A        STRATEGIC
         OVERVIEW

                        Corporate Plan 2019/20   7
servicing the needs of africa’s oil and gas sector

         PART A:
         STRATEGIC
         OVERVIEW

    1 Vision                                              4 Revisions to Legislative
                                                          and Other Mandates
    To create an enabling environment to promote
    sustainable economic growth and job creation.         Legal Framework
                                                          The IDZ is a component of the “Industrial
    2 Mission                                             Promotion” functional area of concurrent
                                                          National and Provincial legislative competence,
    To make use of the enabling legislation to            as indicated in Schedule 4 of the Constitution
    attract foreign and domestic investment,              of the Republic of South Africa, 1996. The
    initially through four key levers that support        IDZ is governed by the following legislation,
    the development of the upstream oil, gas and          regulations, standards and policy documents:
    marine repair, fabrication, logistics and related
    servicing cluster:                                    National
    • The ease of doing business
    • A competitive environment                           The IDZ programme was gazetted in 1999
    • Supporting Infrastructure                           as an incentive programme under the
    • A free-zone, customs efficiency and reduced         Manufacturing Development Act (Act 187 of
        admin                                             1993). The regulations for the IDZ programme
                                                          were promulgated in 2000. It was published
                                                          in Gazette number 1224 of 1 December 2000,
    3 Values                                              as amended by government notice number
                                                          R1065, published in Gazette number 29320
    The SBIDZ will implement its mandate with a           of 27 October 2006. The overall regulatory
    focus on the following values:                        framework for the IDZ programme comprises of
    Pioneering: We have a shared vision where we          the following legislation:
    believe we shape our own opportunities with           The Manufacturing Development Act as
    what we believe is possible and relentlessly          amended.
    overcoming what others see as not.                    The    IDZ     Regulations    and    subsequent
    Partnership: We work together to grow,                amendments.
    showing mutual respect.                               The Special Economic Zones Act (Act 16 of
                                                          2014).
    Accountability: We take ownership, keeping            Section 21A of the Customs and Excise Act (Act
    ourselves accountable to make the right               91 of 1964), and relevant provisions of the Value-
    decision, taking the right action to deliver to our   Added Tax Act (Act 89 of 1991).
    fellow people, communities, organisations and         Report No. 14 promulgated by the International
    country.                                              Trade Administration Commission in accordance
                                                          with the Customs and Excise Act.
    Sustainability: We want to create an open space
    for empowerment and self-development that             In addition to the legislative mandates, the
    transforms lives, businesses and economies for        SBIDZ is linked to broader national strategies
    the long run.                                         and policies, including:

8   Part A: Strategic Overview - Saldanha Bay Idz Licencing Company (SOC) Ltd
servicing the needs of africa’s oil and gas sector

The National Development Plan and National              (DLG) Infrastructure and Growth Plan working
Infrastructure Plan.                                    group for the Saldanha Bay Municipality and
The Presidential Infrastructure Coordinating            Department of Environmental Affairs and
Commission (PICC) Rollout Programme.                    Development Planning’s (DEADP) Saldanha Bay
The Industrial Policy Action Plan.                      Municipality IDP Support Group.
Medium Term Strategic Framework of 2014-
2019.                                                   Based on the above frameworks, the SBIDZ is
Operation Phakisa.                                      responsible for implementing the Strategic Plan
National Infrastructure Plan (SIP5).                    for the Saldanha Bay IDZ within the Medium
                                                        Term Strategic Framework of 2014-2019,
                                                        supported by the National IDZ/SEZ strategy and
Provincial                                              Western Cape Provincial Infrastructure strategic
The SBIDZ in line with the IDZ Regulations is           planning.
operated by the SBIDZ-LC as designated in the
Government Gazette No. 26988 of 2013, and is            Other
jointly funded and supported by the National            Basic Conditions of Employment Act, 1997 (Act
Department of Trade and Industry (DTI) and              75 of 1997)
the Western Cape Provincial Department of               Employment Equity Act, 1998 (Act 55 of 1998)
Economic Development and Tourism (WCDEDAT)              Labour Relations Act, 1995 (Act 66 of 1995)
The SBIDZ-LC successfully applied to National           Occupational Health and Safety Act, 1993 (Act
Treasury to be listed as a Schedule 3D Provincial       85 of 1993)
Government Business Enterprise, making it               Promotion of Access to Information Act, 2000
further subject to the following legislative            (Act 2 of 2000)
mandates:                                               Promotion of Administrative Justice Act, 2000
                                                        (Act 3 of 2000)
Income Tax Act (Act 58 of 1962).                        The Constitution of South Africa
Preferential Procurement Policy Framework Act           Skills Development Act, 1998 (Act 97 of 1998)
(Act (Act 5 of 2000).                                   Skills Development Levy Act, 1999 (Act 9 of
Public Finance Management Act (Act 1 of 1999)           1999)
and its Regulations.                                    National Treasury Regulation, 2005
Companies Act (Act 71 of 2008) and its                  Provincial Treasury Instruction, 2012
Regulations.                                            National Environmental Management Act, 1998
Saldanha Bay Industrial Development Zone                (Act 107 of 1998)
Licencing Company Act (Act 1 of 2016).                  National Ports Act, 2005 (Act 12 of 2005)
Value-Added Tax Act.
Customs and Excise Act.
Customs Duty Act (Act 30 of 2014).                      5 Updated Situational
Customs Control Act (Act 31 of 2014).                   Analysis
In addition, by virtue of the provincial
Department of Economic Development and                  Service Delivery Environment
Tourism being the overseeing governing                  With the focus indelibly linked to the oil and
body, the SBIDZ is linked to broader provincial         gas commodity markets, it is also necessary
strategies and policies, including the Western          to reflect on how the market has changed and
Cape Infrastructure Framework. Specifically, the        what trends have emerged since the SBIDZ’s
SBIDZ links to Project Khulisa which falls under        inception, and how this has resulted in a shift in
the Provincial Strategic Goal 1, focusing on job        timing and investment focus in the sub-sectors.
creation and opportunities to help improve the
province’s economy.                                     The 2011 Commercial Feasibility Study drew the
                                                        following conclusions:
The SBIDZ has furthermore been brought on               • Logistics and rig repair was considered a
Board the Department of Local Government’s                  short-term investment attraction market

                                                    Part A: Strategic Overview - Corporate Plan 2019/20      9
servicing the needs of africa’s oil and gas sector

         because these sectors had existing               of the world’s oil with an estimated 8% of global
         operations in South Africa.                      untapped proven reserves.
     •   An estimated 40% by type (not volume)
         of oil, gas and maritime fabrication             Africa holds natural gas reserves of 513 trillion
         components could be produced in South            cubic feet (Tcf) with most production occurring
         Africa.                                          in regions with established infrastructure. Large
     •   In the medium-term, additional investment        gas finds and oil potential in East Africa, have
         was expected to be attracted in the areas of     sparked a flurry of exploration activity; it has
         small-scale fabrication and support services     been earmarked as a growth region.
         for offshore exploration activities.
                                                          While logistics continues to be a consistent
     •   In the long-term, new investment was
                                                          targeted market, the majority of the tenants who
         expected to be attracted in fabrication
                                                          have signalled interest in the SBIDZ are based in
         of components/equipment with higher
                                                          the manufacturing and fabrication sector, with
         technology and capital requirements,
                                                          an emerging market focus on vessel fabrication.
         together with longer-term onshore support
         activities for offshore production.              There has been a decline in the number of rigs
     •   And lastly, throughout the short, medium         undergoing repairs and maintenance due to the
         and long-term investment attraction              decline in offshore exploration and production.
         analyses, the ancillary services market was      The key market trends driving the evolving
         expected to continue to grow and develop         investment types are explained in more detail
         in response to demand from the operations        below and are contextualised for both African and
         within the zone.                                 South African oil, gas and maritime markets.

     However, the global energy market has evolved
     over time, and with that has the timing and types    Market Shifts
     of investors the zone attracts within its sector-
     specific focus. The SBIDZ continuously stays         Long-term demographic shifts
     abreast of developments; tracking associated
                                                          Increased population growth in Africa, a rising
     risks to maintain the sustainability of the zone.
                                                          number of middle class with high urbanisation
     Oil prices are expected to hover around $60-         rates have resulted in more disposable incomes.
     70 per barrel for the foreseeable future. The        This has led to growing demand for imported
     international “Lower for longer” effect exerts its   products. Multi-Purpose Vessels (MPVs) play an
     influence on Africa as much as the rest of the       important role in providing capacity to transport
     world. The continent is still considered the next    these goods to customers.
     frontier market in terms of untapped proven
                                                          A mix of cargo (containerised, oil and gas, project
     reserves. In 2016, Africa supplied about 12%
                                                          and conventional cargo) can be transported on
                                                          the same vessel under a single bill-of- lading.
         “Lower for longer” is the catch-                 Many of the oil and gas logistics specialists play
         phrase currently used to describe                a key role in the value chain for specialised cargo
         the indications that crude oil prices            solutions in the oil, gas, energy and project
                                                          sectors. This also includes supply of fuel, refit
         will remain lower than expected for
                                                          containers and water. One of the biggest target
         an extended period of time. A 2017               markets in terms of focus for these types of MPVs
         Wood Mackenzie report based on                   are the river ports in West Africa.
         an industry survey indicated a clear
         consensus that oil prices will remain            Ship and vessel repair - moving from
         in the US$50-60/bbl range in 2017,               rigs to smaller vessels & sustainability
         while more than 75% think it will be
                                                          Overall rig count in Africa has declined from an
         in US$ 60-80/bbl range by 2020.
                                                          annual average of 145 in 2014 to 85 in 2016 - an

10   Part A: Strategic Overview - Saldanha Bay Idz Licencing Company (SOC) Ltd
servicing the needs of africa’s oil and gas sector

indication of a drop in Exploration & Production        Africa is no different from its neighbours. In
(E&P) activities due to oil price declines since        2016, Pricewaterhouse Coopers (PwC) reported
March 2011. Consequently, the number of drilling        an increase from 10% to 25% in the expatriate
vessels requiring services and maintenance              percentage of the workforce. This was partly
in ports across the continent, including South          due to increasing market opportunities and
Africa, has reduced. In many of the traditional         developments in countries such as Uganda,
service and maintenance ports across Africa,            Ghana and Tanzania where skills shortage was
drilling rigs have been cold-stacked.                   highest. The majority (35%) of expatriates hold
                                                        senior and middle management positions,
Rig repair has historically been a high-value,
                                                        followed by specialist technical roles (25%) such
high-economic impact activity to the South
                                                        as drilling supervisors.
African maritime industry. However, the more
reliable growth market is in smaller vessel             South Africa has spent much time and resources
maintenance repair and servicing, such as:              on skills and training programmes focused on
offshore supply vessels; offshore construction          the maritime sector. An increasing number of
vessels; anchor handling tugs; offshore platform        investments by the private sector are including
vessels; military patrol vessels; multi-purpose         skills and training programmes, particularly
vessels (MPVs); and offshore mining vessels.            a focus on providing skilled workforce in
Such projects are typically lower in value than         manufacturing and fabrication activities. As a
drilling rigs, however they are more consistent.        result, less than 10% of the workforce in oil and
                                                        gas projects in South Africa are expatriates.
This could ensure the sustainability of the South
                                                        However, the challenge will be in locating those
African ship repair and vessel fabrication sector.
                                                        skills in Saldanha Bay.
To grow further, the South African market
requires more dedicated infrastructure such
as floating docks, ship-lifts and quaysides for
                                                        Stronger demand for localised
vessel servicing.
                                                        fabrication and manufacturing
                                                        facilities
Key areas of South African expertise in the
sector include: fabrication of military patrol          Traditionally the South African oil, gas and
vessels; servicing and repair to all offshore           maritime sector has seen investments from
support vessels; and fabrication of tugboats            multinationals in the logistics sector, followed by
and specialist vessels such as barges.                  cyclical demand for rig repair and maintenance
                                                        activities.
Investment trends by major offshore fabrication
specialists globally have focused on this vessel        Over the past five years, many companies
serving, repair and fabrication market, with            investing in the South African market have
proposals for floating docks, new infrastructure        focused on establishing a centralised fabrication
and technologies that support this market.              and manufacturing base to support their activities
In the short-term, opportunities to consider            on the African continent. This is partly driven by
projects around the decommissioning of older            the growth in the East African market (European
generation drilling rigs, and re-certification of       companies need a localised base for both West
rigs that have been cold-stacked still exist in         and East Africa), and partly because of recognised
South Africa.                                           and long-standing relationships with reputable
                                                        South African suppliers and service providers.
Skills supply                                           South Africa has many potential competitors
One consequence of rising consumer spending             on the African continent, a few being Namibia,
in developing economies is managing an ageing           Mozambique, Tanzania and Kenya. However,
workforce, and replacing or training specialist         South Africa provides a good location for both
skill-sets. Many developing markets in Africa           the West and East African markets, and is still
have seen a bottleneck in the skills supply in          considered relatively politically and economically
the oil, gas and maritime sector, and South             stable to most African countries. Despite the

                                                     Part A: Strategic Overview - Corporate Plan 2019/20      11
servicing the needs of africa’s oil and gas sector

     recent downgrades by international ratings           the resources to market – resulting in a number
     agencies, South Africa remains an attractive         of viable crude oil pipeline projects. An example
     investment destination within the context for        is the East Africa Crude Oil Pipeline – a 1448km
     the upstream oil, gas and marine industries due      24” diameter pipeline from Hoima to Tanga with
     to the strong financial and business services        $3.5bn committed capital from Total (Total’s
     sector; existing physical infrastructure in terms    second priority project in Africa after Angola).
     of utilities and roads and ports networks;
     recognised strong regulatory environment for         Mozambique’s Area 4 and Area 1 could increase
     doing business; and protection of intellectual       the country’s GDP by 375%, with Final Investment
     property.                                            Decision (FID) for Area 1 (Anadarko-operated)
                                                          planned for 2018, and FID for Area 4 (ENI-
     Many of the companies in the oil and gas services    operated) for 2020/21. In addition, Standard
     sector operates in difficult environments across     Bank estimates that if all regulatory and policy
     the African continent. They look to South Africa     delays are dealt with in East Africa, there are 19
     as a place from which to service their African       projects around natural gas and pipelines that
     operations. In comparison, the decline in oil        could have a combined investment value of
     prices has resulted in reduced infrastructure        $77bn.
     investments and constraints on investments
     (e.g. in terms of finances and movement of           Projects such as these will create a demand for
     capital) on behalf of governments in countries       services industries, and many South African
     such as Angola and Nigeria. These place further      companies already contract to major players
     restrictions on the operating environment            who are certified suppliers to companies such
     where supply constraints in basic services to        as Anadarko and ENI.
     large-scale utilities already exist.
                                                          Sustainable South African maritime
     While the decline in the oil price has resulted in   companies
     investments with reduced capital expenditure
     in the fabrication sector in South Africa over the   In any downturn, there are those who survive
     past two years, the trend still shows an overall     and those who do not. The South African oil,
     increase in the number of companies looking to       gas and maritime market has been no different
     establish their facilities here.                     in the current commodity price cycle. While
                                                          some companies have been unable to diversify
     LNG and crude oil pipelines will drive               and meet the challenges of lower oil prices,
     services demand                                      others have ensured that their businesses have
                                                          remained sustainable.
     BP’s 2017 Energy Outlook Report stated that the
     energy demand for refined crude oil products         Traditionally, South African companies have
     was expected to grow by 30% until 2035 –             been dependent on the international market or
     despite global GDP expected to double in the         value chain for project or contract opportunities
     same outlook period. This demand is expected         in rig repair, logistics, fabrication, and support
     to result in an additional 700,000 bpd of refined    services markets throughout the continent.
     crude which is already under construction or         These companies normally wait for sub-
     in advanced development, though countries            contracting opportunities to come to them,
     should not be considering building new crude oil     rather than actively seeking out projects. Now,
     refineries unless they are in a low cost refinery    as a result of the price pressures and reduced
     area.                                                capital expenditure from lower oil prices,
                                                          many South African companies have pro-
     However, this presents a number of challenges
                                                          actively sought out new business opportunities,
     for regions such as West and East Africa where
                                                          partnerships and joint ventures to sustain their
     there are significant proven reserves of crude
                                                          businesses.
     oil, but the business justification and capital
     requirements for a new refinery are too high.        This will result in more sustainable companies
     Many countries require crude oil pipelines to get    that are better able to ride out the challenges

12   Part A: Strategic Overview - Saldanha Bay Idz Licencing Company (SOC) Ltd
servicing the needs of africa’s oil and gas sector

that a cyclical     commodity-based       services        terms of infrastructure and services for the oil,
industry creates.                                         gas and maritime industry, however very few
                                                          ports in sub-Saharan Africa have purpose-built,
Development policies that spur new                        dedicated oil and gas infrastructure. South Africa
entrants and opportunities                                has also established a reputation as a capable
                                                          services base despite having minimal domestic
The South African Government has embarked                 Exploration & Production (E&P) activities.
on a number of developmental policies that
address unemployment, poverty and equality to             Descriptions on the primary port competitors
promote inclusivity and shared economic growth.           in the oil and gas landscape are included
For example, the Black Industrialists Policy              here for information purposes. Smaller port
is an instrument to enhance transformation                developments and countries in sub-Saharan
and ensure meaningful participation of black              Africa have not been discussed in this report.
people in the mainstream of the South African
economy (BI Policy, 2015). A black industrialist          Namibia
includes co-operatives, incorporated in terms
                                                          Namibia is South Africa’s and Saldanha Bay’s
of the Companies Act (2008), owned by Black
                                                          closest competitor in terms of an operational
South Africans, as defined by the B-BBEE Act,
                                                          services industry for the offshore oil and gas
who: creates and owns value-adding industrial
                                                          industry, particularly the ports of Walvis Bay
capacity; and provides long-term strategic and
                                                          and Luderitz. The Port of Walvis Bay forms
operational leadership to a business. A Black
                                                          part of the city’s larger export processing zone
industrialist can also be a natural person.
                                                          (EPZ) and Namports has established it as an
                                                          investor-friendly business destination. While
Competitive Landscape                                     Walvis Bay has invested in a number of floating
The African oil, gas and maritime market is               docks to service vessels, the main focus of the
complex and there are many determining factors            port remains container volumes and there is no
as to why companies would consider Saldanha               dedicated deep-water repair quay. Proposed
Bay over and above other operational ports on             legislation introduced in 2017 around local
the continent.                                            content and labour laws has also given investors
                                                          pause until the compliance requirements
New developments in the Saldanha Bay                      become clearer.
infrastructure space, particularly those related
to the port infrastructure have the ability to            Nigeria
place the port as a recognised global oil and gas
services hub. These include the development               Nigeria has 12 active export processing zones,
and appointment of an Operator for TNPA’s 20              as well as the Oil & Gas Free Zone Onne (OGFZ
year Offshore Supply Base (OSSB) concession in            Onne), which is a dedicated hub for oil and
April 2018. The OSSB includes 294m of quayside            gas operations and a logistics centre for West
and 20ha or back-of-quay development land.                and Central Africa. OGFZ Onne has established
Future new-build developments such as a new               a sound reputation over the last few years
380m deep-water repair quay (Berth 205) and               and has worked hard to address issues of
a 1,000m finger terminal for marine repair and            corruption and inefficiencies in customs and
fabrication projects (Jetty at Mossgas) in the port       logistics, attracting over 200 companies from 45
will also be relooked by TNPA and the SBIDZ-LC,           countries. Infrastructure includes almost 3km
in response to the market shifts noted above              of quayside space, warehousing, laydown areas
since the advent of the projects in Operation             and office space. Nigeria’s demand for port
Phakisa in 2014.                                          infrastructure and hinterland support for the oil
                                                          and gas sector was established over a number
There are a number of ports across sub-                   of years based on demand from domestic
Saharan Africa that have the ability to compete           offshore E&P activities, as opposed to servicing
with the Port of Saldanha Bay and the SBIDZ in            the region as an oil and gas hub.

                                                      Part A: Strategic Overview - Corporate Plan 2019/20      13
servicing the needs of africa’s oil and gas sector

     Despite this, the biggest challenge is that the          decline in the oil price, have resulted in the
     depth alongside the quay is only 10-12m, which           majority of these projects being cancelled or
     means that the newer generation drilling rigs            suspended.
     are still required to berth at alternative facilities.
     A number of projects to expand the deep-water            The Luanda and Lobito Ports are small and often
     facilities in various ports across Nigeria have          saturated with cargo coming into the country
     either focused on container capacity (e.g. Lagos         waiting to clear customs. The Port of Cabinda
     Free Trade Zone Container Terminal project) or           currently has limited oil and gas activity. Recent
     have been suspended (e.g. Lekki deepsea port             construction on the public-private partnership
     project).                                                (PPP) on the Port of Caio in Cabinda province
                                                              will add some capacity to Angola’s ability to
                                                              service the domestic oil and gas industry, and
     Ghana
                                                              is expected to come online in the first quarter
     Ghana’s Port of Takoradi has been part of                of 2019. Despite the intention of servicing
     the country’s backbone infrastructure with a             the domestic oil and gas industry, the ports
     dedicated oil berth and vessel repair facilities in      main focus will be centred on mining exports,
     a dry dock (798m). The ship repair industry has          commodities and trade. There are no planned
     also seen strong activity over the last decade,          deep-water repair quays for now, despite the
     with main activities such as docking of vessels up       port having deep-water multipurpose terminals.
     to 450 tons, steel works, sand blasting, painting,       Other port infrastructure related to oil, gas and
     machinery, mechanical, hydraulics, propulsion            maritime include dry docks, fabrication yards
     systems,     electrical  equipment,      propeller       and fabrication of offshore platforms and decks.
     repairs and preparing the vessels for class              Local content is also significant, however, the
     certification.                                           ease of doing business factor is a challenge to
                                                              many companies.
     However, possibly the biggest project in West
     Africa to date, is the current construction of           Mozambique
     Tema Port in Ghana. While the port facility will be
     multi-purpose and service a number of different          Mozambique’s domestic natural gas discoveries
     industries and sectors, there are planned dry            have seen the development of the countries ports
     docking facilities and services for offshore oil         expand exponentially to meet the infrastructure
     and gas projects – including those of the Jubilee        demands in previously undeveloped areas. The
     and TEN drilling projects.                               ports of Pemba and Nacala are continuously
                                                              undergoing development to meet the needs
     Ghana has also established a strong reputation
                                                              of the offshore industry. In 2015, construction
     for attracting private sector investment into
                                                              commenced on the Pemba Logistics Base. There
     the economy, and is expected to become a
                                                              are also numerous gas pipeline projects planned
     competitor to South Africa in servicing drilling
                                                              across the country. The Coral FLNG project
     rigs in West African waters in the next few years.
                                                              is one of the biggest natural gas discoveries
     For now however, the demand of services from
                                                              globally – considered a mega-project for 2018
     the domestic drilling programme is sufficient
                                                              in oil and gas.
     to keep the new developments in Tema Port
     occupied.                                                The biggest challenge in Mozambique is the
                                                              continuously changing environment and
     Angola                                                   legislation by the national government and the
                                                              Empresa Nacional de Hidrocarbonetos (ENH).
     Angola is the second biggest producer of oil and
     gas in Africa after Nigeria. Despite numerous            South Africa has the potential to subcontract
     intentions to invest substantial capex into              in the logistics, construction, fabrication and
     port infrastructure, new refinery capacity               service support across the many planned oil
     and pipelines, and the recent changes in the             and gas projects in Mozambique, including the
     political landscape in Angola coupled with the           port developments and Coral FLNG project.

14   Part A: Strategic Overview - Saldanha Bay Idz Licencing Company (SOC) Ltd
servicing the needs of africa’s oil and gas sector

Tanzania                                                 in the future will also supply services to the
                                                         domestic oil and gas market once the discussions
Tanzania is one of the few countries in East Africa      and legislation around the Mining & Petroleum
(apart from Mozambique with a number of proven           Resources Development Amendment (MPRDA)
gas discoveries) that had active Exploration             Bill, 2002 (Act No. 28 of 2002) is finalised.
activities in the past 12 months. Further, the
government in Tanzania has embarked on an                The SBIDZ-LC’s main value proposition in
aggressive investment strategy to build capacity         positioning the SBIDZ in the regional market, is
in the country’s ports infrastructure. The               the ease-of-doing business for investors.
majority of this investment is focused on four
new container and multi-purpose terminals in
Mtwara Port, but there will be added capacity
                                                         5.1 The Performance
to service the regional oil and gas activities           Delivery Environment
even though construction is yet to commence.
Mtwara Port has an oil terminal (Kurasani) with
                                                         Our “go-to market” Value
76,500 m3 storage capacity which is managed by
                                                         Proposition Considerations
Oilcom Tanzania. The aim of this complex is to           The success of the SBIDZ depends to a very
become the destination of choice for companies           large degree on its ability to provide services
seeking storage and distribution of petroleum            and a business environment to the end-user
products in the region.                                  in a manner that exceeds the current available
                                                         offering in the market.
Market Positioning
                                                         Customers in the oil and gas industry are highly
The SBIDZ’s market positioning is a collective           sensitive to quality of services and products,
response to meeting the needs of companies               and the speed and reliability of delivery; but
operating in the sub-sectors in projects across a        significantly less sensitive to price.
number of regions. It is also driven by positioning
                                                         Therefore, the SBIDZ must specifically offer
SBIDZ-LC as an easy-to-do business port
                                                         certainty of delivery of a product or service
coupled with a number of natural and developed
                                                         within set timeframes, and certainty that the
competitive advantages.
                                                         product and service meets the high quality
From a regional target market perspective, the           standards needed for this health, safety and
focus of the SBIDZ has shifted along with the            environmentally conscious industry.
demand in the offshore and onshore oil, gas              This means that a key strategic driver of the
and maritime projects. In 2011, the only market          SBIDZ is the ‘Ease of Doing Business’ approach,
the SBIDZ found feasible was the West African            which ensures that meeting the customer
oil, gas and maritime market. This has shifted           needs is central to all services being offered.
substantially since 2011, with the recent high-          Ultimately, it is this approach which will enable
value upstream and downstream oil and gas                the SBIDZ-LC to migrate to a position of self-
projects in East Africa, the repair and maintenance      sustained commercial viability and leverage that
on passing vessels from regions such as South            business acumen towards achieving sustainable
East Asia to the Gulf of Mexico and North Sea,           economic growth and job creation.
and the key shifts discussed previously.

Projects such as the Hoima-Tanga Crude Oil               Local Macro Economic
Pipeline (Uganda-Tanzania) and the Coral FLNG            Considerations
projects have reached FID. In the case of the
                                                         Saldanha Bay is a critical resource for the
Coral FLNG project, estimates state that the
                                                         sustainable growth and development of the
project could see Mozambique’s GDP grow by
                                                         Western Cape. Contributing 30.7% to GDPR in
over 300% over the next 10 years.
                                                         2015 (Provincial Treasury, MERO 2017), the
The SBIDZ will continue to provide a value               municipality is the largest contributor to the
proposition to the West African market, and              West Coast region’s economy.

                                                  Part A: Strategic Overview - Corporate Plan 2019/20        15
servicing the needs of africa’s oil and gas sector

                                 Saldanha Bay GDPR performance per sector, 2006 - 2017
                                      Contribution 	R million                   Trend				Real GDPR growth (%)
                                      to GDPR (%)     value
      Sector                              2016        2016           2006 - 2016    2013 - 2017   2013   2014   2015   2016   2017e
      Primary sector                       17.4            1 448.4       2.3            5.7       5.2    5.1    0.0    -0.7   18.8
      Agriculture, forestry
      & fishing                            16.9            1 403.0       2.5            5.8       5.4    5.2    0.1    -0.7   19.3
      Mining & quarrying                    0.5             45.4        -1.8            1.2       0.7    4.4    -2.4   -1.9    5.0
      Secondary sector                     27.8            2 313.8       0.7            0.4       1.0    1.0    -0.3   -0.6    0.8
      Manufacturing                        21.5            1 790.0       0.3            0.0       0.3    0.4    -0.6   -1.1    1.1
      Electricity, gas & water              1.2            102.0        -0.8           -0.7       -1.5   -1.2   -1.4   -1.1    1.7
      Construction                          5.1            421.8         4.1            2.6       5.4    4.6    1.8    2.2    -1.0
      Tertiary sector                      54.8            4 559.4       3.0            2.2       3.3    2.9    2.0    2.0     1.1
      Wholesale & retail trade,
      catering & accommodation             14.7            1 222.0       3.3            2.2       3.2    2.4    2.7    2.8    -0.2
      Transport, storage &
      communication                         8.8            734.0        -0.6           -0.8       0.2    1.2    -2.6   -2.1   -0.5
      Finance, insurance, real
      estate & business services           14.8            1 230.0       4.2            3.5       3.7    3.7    3.9    3.3     2.9
      General government                   10.4            863.2         3.6            2.2       4.4    3.6    1.3    1.3     0.3
      Community, social &
      personal services                     6.1            510.2         3.3            2.9       4.8    2.4    2.2    2.6     2.3

      Total Saldanha Bay                   100.0           8 321.7       2.2            2.3       3.0    2.7    1.1    0.9     3.8

     Source: Quantec Research, 2017 (e denotes estimate)

     Looking at the 10-year trend between 2006                                 territory in 2016 due to the severe drought,
     and 2016, manufacturing albeit the largest                                the estimated growth rate for 2017 is a healthy
     contributor to the local economy (21.5%),                                 19.3%.
     saw near negligible growth (0.3%), whilst the
     majority of the tertiary sector and construction                          Considering the job market, agriculture, forestry
     saw the highest average growth rates over                                 and fishing sector contributed the most jobs
     this period, with agriculture, forestry and                               (2016: 17 972; 36.3%), followed by the wholesale
     fishing seeing a good but lower 2.5% over the                             and retail trade, catering and accommodation
     period. (Provincial Treasury, Draft 2018 Socio-                           sector (7 864; 15.9%) and the finance and
     economic Profile: Saldanha Bay Municipality).                             businesses (5 370; 10.8%) sector. Combined,
     However, though growth in the agriculture,                                these three sectors contributed 31 206 or 63.0%
     forestry and fishing sector shrunk into negative                          of the 49 564 jobs in 2016.

16   Part A: Strategic Overview - Saldanha Bay Idz Licencing Company (SOC) Ltd
servicing the needs of africa’s oil and gas sector

                        Saldanha Bay employment growth per sector, 2006 - 2017
                                   Contribution 	Number                   Trend				Employment (net change)
                                   to GDPR (%)    of jobs
 Sector                                2016        2016        2006 - 2016 2013 - 2017e   2013    2014   2015    2016   2017e
 Primary sector                        36.4           18 028     -4 117        1 989      1 806   -413   1 440   -624   -220
 Agriculture, forestry & fishing       36.3           17 972     -4 107        1 990      1 807   -412   1 437   -623   -219
 Mining & quarrying                    0.1             56         -10            -1        -1      -1     3       -1     -1
 Secondary sector                      14.1           7 009       -701          361       108     127    132      61     -67
 Manufacturing                         10.0           4 968       -896          100        72      29    115     -50     -66
 Electricity, gas & water              0.1             72          26            10        2       1      1       3       3
 Construction                          4.0            1 969       169           251        34      97     16     108     -4
 Tertiary sector                       49.5           24 527     6 515         3 327      707     696    802     409     713
 Wholesale & retail trade,
 catering & accommodation              15.9           7 864      2 070         1 382      212     170    384     177     439
 Transport, storage &
 communication                         2.7            1 331       179           -17        28     -47     51     -61     12
 Finance, insurance, real estate
 & business services                   10.8           5 370      1 570          821       180     149    232     127     133
 General government                    9.9            4 912      1 331          172        -3     275     -65    102    -137
 Community, social &
 personal services                     10.2           5 050      1 365          969       290     149    200      64     266

 Total Saldanha Bay                   100.0           49 564     1 697         5 677      2 621   410    2 374   -154    426

Source: Quantec Research, 2018 (e denotes estimate)

Only the agriculture, forestry and fishing (-4 107)                     Cape’s Outeniqua basin, and concerted efforts
and manufacturing (-896) sectors in the Saldanha                        by National Government to address investor
Bay municipal area reported an average decrease                         certainty in legislation pertaining to offshore
in jobs between 2006 and 2016. There were job                           exploration and production, the local economy
losses reported in the agriculture, forestry and                        has a further impetus to address systemic
fishing sector in 2014, 2016 and 2017 due to                            challenges in their structure, productivity and
the severe drought. This is a major cause for                           competiveness.
concern considering the significant contribution
of this sector to the Saldanha Bay economy.                             However, there are clear socio-economic needs,
The sector which reported the largest increase                          as reported in the Provincial Treasury’s draft
in jobs between 2006 and 2016 was wholesale,                            2018 Socio-economic Profile of the Saldanha
retail and trade (2 070), followed by financial                         Bay Municipality, which will impact on the SBIDZ
and business services (1 570), and community                            vision for an industry cluster supported by local,
and social services (1 365).                                            competitive, competent content. The SBIDZ
                                                                        initiative is therefore strongly focused on local
Manufacturing, being the largest contributor                            skills development and enterprise development
to the economy, with 10% of the labour market                           initiatives, in order to support the sustainability
presenting an opportunity to the West Coast                             of the SBIDZ in the longer-term.
to transform its economic positioning with the
SBIDZ. Research indicates stronger correlations                         Local and provincial government have
to successful SEZ programmes when they are                              established a “Whole of Society Approach”
supported by mature and growing tertiary                                (WOSA) that seeks to institutionalise and
sectors in the local economy (Farole, Sharp,                            embed a collaborative approach to service
2017). Further, with the recent announcement of                         delivery within Saldanha. We are part of this
a “game-changing” gas deposit in the Southern                           process and its first forays into dealing with

                                                               Part A: Strategic Overview - Corporate Plan 2019/20              17
servicing the needs of africa’s oil and gas sector

     the complex challenges in Saldanha have born                  and they have distinctive focuses which together
     some fruit. We have also institutionalised                    create a robust management approach.
     this approach through an innovative socio-
     economic cooperative agreement with the                       By using the vehicle of an IDZ to facilitate
     local authority during the previous year in                   sustainable economic growth in the Saldanha
     the pursuit of WOSA. It is imperative that we                 Bay Area, the SBIDZ-LC will enable the required
     develop strategic partnerships, such as this, with            level of infrastructure development and support
     relevant institutions or organisations, because               to capitalise on the uniqueCORPORATE
                                                                                                     value proposition
                                                                                                               PLAN 2019/20
                                                                               SALDANHA BAY IDZ LICENCING COMPANY
                                                                   of an upstream oil, gas and marine repair,       SOC LTD
     if broader social issues are not addressed it
     will directly impact on the long-term success                 fabrication, logistics and related servicing
        5.2      Organisational Environment                        cluster to support the African continent, thus
     and sustainability of the zone. We will leverage
     existing  infrastructure and resources                        ensuring sustainable economic development
                                                to facilitateto ensure
        The SBIDZ-LC’s     specialist team is structured               the   unique
                                                                                for demands
                                                                                    the area,of butsetting
                                                                                                         forupathesizeable
                                                                                                                    SBIDZ
     design   and effectively
        are met    delivery ofand
                               these  projects.Each business not
                                   efficiently.
                                                                         only
                                                                   unit has an executive assigned, and they have
                                                                   contribution to the national GDP of the
        distinctive focuses which together create a robust management approach.
                                                                   country.
     5.2  Organisational
      By using the vehicle of an IDZ to facilitate sustainable economic growth in the Saldanha Bay Area,
                                                           The SBIDZ designated areas includes a
      the SBIDZ-LC will enable the required level of infrastructure development and support to capitalise on
     Environment
      the unique value proposition of an upstream oil, gas component     of repair,
                                                                and marine   the Transnet     National
                                                                                    fabrication, logisticsPorts
                                                                                                           and
                                                             Authority (TNPA)
       related servicing cluster to support the African continent,                Land for
                                                                         thus ensuring        direct access
                                                                                          sustainable         and
                                                                                                       economic
     The  SBIDZ-LC’s    specialist team   is  structured     usage,  governed   by a  Heads  of Agreement   (HoA)
       development not only for the area, but for a sizeable contribution to the national GDP of the country.
     to ensure the unique demands of setting up              between the SBIDZ and TNPA, which will enable
       The  SBIDZ   designated   areas includes  a
     the SBIDZ are met effectively and efficiently.component  of the
                                                             the     Transnet
                                                                  creation     National
                                                                            of the  first Ports Authority
                                                                                          Freeport  within(TNPA)
                                                                                                            South
       Land  for direct access  and usage,   governed
     Each business unit has an executive assigned,    by a Heads  of
                                                             Africa. Agreement   (HoA)   between  the SBIDZ and
        TNPA, which will enable the creation of the first Freeport within South Africa.

       The
     The   SBIDZ-LC
         SBIDZ-LC      is responsible
                   is responsible  for for implementingthe
                                        implementing     theStrategic
                                                             StrategicPlan
                                                                       Planfor
                                                                            forthe
                                                                                theSBIDZ
                                                                                    SBIDZwithin
                                                                                          within the
                                                                                                  the Medium
                                                                                                      Medium
       Term  Strategic Framework   of 2014-2019,   supported   by the National IDZ/SEZ strategy and
     Term Strategic Framework of 2014-2019, supported by the National IDZ/SEZ strategy and Western
                                                                                                      Western
       Cape Provincial Infrastructure strategic planning
     Cape Provincial Infrastructure strategic planning.

18   Part A: Strategic Overview - Saldanha Bay Idz Licencing Company (SOC) Ltd
servicing the needs of africa’s oil and gas sector

                                                         Organogram

                                                 Board & Committees

                                                                                        CEO

                                                              Executive
                                                              Assistant

                                                  COO                                                                                    CFO

                                                              Programme
                                                               Scheduler

 Executive:   Executive:                       Executive:             Executive:               Executive:      Executive:
Development   Stakeholder                     Ease of Doing          Transaction &              Business      Infrastructure
Programmes    Management                        Business           Investor Support           Development

                                              Researcher              Associate:               Associate:    Infrastructure:       Finance Team (4)
 Associate:    Associate:                                            Transaction &              Business    Project Engineer (3)
 Enterprise   Stakeholder
                                               Associate:          Investor Support           Development                             Reporting
Development   Management
                                              Ease of Doing                                                   Infrastructure
                                                Business             Associate:                               $GPLQLVWUDWRU              SCM
                                                                    Estate & Client
                                                                        Liason                                                       $VVRFLDWH
                                                                                                                                     Corporate
                                                                    Receptionist &                                                 Communications
                                                                       Events
                                                                     Coordinator                                                     HR & Payroll
 Associate:
 Contractor                                                        2ɝFH$VVLVWDQW(2)                                              'DWD$GPLQ:HE
Development
                                                                                                                                    &RQWHQW$GPLQ

                                                                                                                                     Receptionist

                                                                                                                                    2ɝFH$VVLVWDQW
                            &OHUN2I:RUNV
                                                                                                                                     /HJDO$GYLVRU
 Associate:
   Skills
                                                                                                                                    IT – Outsourced
Development

                             Project Skills
                                2ɝFHU

                               Skills
                            $GPLQLVWUDWRU

                                                                        Part A: Strategic Overview - Corporate Plan 2019/20                            19
servicing the needs of africa’s oil and gas sector

     6 Strategic Outcome Oriented Goals

       Strategic Outcome             Promote sustainable economic growth and job creation
       Oriented Goal
       Goal Statement                To create an enabling environment to promote sustainable
                                     economic growth and job creation by:
                                     • Facilitating a cumulative contribution to National GDP by
                                        investors within the SBIDZ of R16.133 billion by the end of
                                        the FY 2019/2020
                                     • Facilitating a cumulative contribution to the Western Cape
                                        GDP of investors in the Zone of R13.7 billion by the end of
                                        the FY 2019/2020

     Budget Overview
     High Level Budget: Total

             Description           Audited     Estimated       2019/20        2020/21       2021/22
                                   2017/18      outcome
                                                2018/19
                                     R’000       R’000           R’000         R’000          R’000
     Operational expenditure        46 451         69 615        90 182        100 514       130 527
     Capital expenditure           138 289        156 265       201 169        108 190           773
     TOTAL EXPENDITURE             184 740        225 880       291 351        208 704       131 300

     Staff Compliment

     High Level Budge: Administration

             Description           Audited     Estimated       2019/20        2020/21       2021/22
                                   2017/18      outcome
                                                2018/19
                                     R’000       R’000           R’000         R’000          R’000
     Operational expenditure        17 051         24 612        24 537          26 157       27 603
     Capital expenditure            87 784         24 647           650             686          773
     TOTAL EXPENDITURE             104 835         49 259        25 187          26 843       28 376

     Staff Compliment

     High Level Budget: Operations

             Description           Audited     Estimated       2019/20        2020/21       2021/22
                                   2017/18      outcome
                                                2018/19
                                     R’000       R’000           R’000         R’000          R’000
     Operational expenditure         29 400        45 003        65 645         74 357       102 924
     Capital expenditure             50 505       131 618       200 519        107 504             -
     TOTAL EXPENDITURE               79 905       176 621       266 164        181 861       102 924

     Staff Compliment

20   Part A: Strategic Overview - Saldanha Bay Idz Licencing Company (SOC) Ltd
servicing the needs of africa’s oil and gas sector

7 Overview of 2019/20 Budget

7.1 Income and Expenditure Estimates
  Summary of provincial payments and estimates by economic classification:
                    Saldanha Bay IDZ Licencing Company (SOC) Ltd
                                                              Outcome Estimate   Medium-term estimate

                   Economic classification                    Audited Outcome
                                                                              2019/20 2020/21 2021/22
                           R0’000                             2017/18 2018/19

 Revenue
 	Revenue and interest		                                        1 227    1 039    3 217   23 600 69 000
      Rental revenue		                                              -      199    3 217   23 600 69 000
      Interest		                                                1 227      840        -        -      -
 	Transfers received		 193 102 224 841 301 706 198 642 91 792
      Department of Economic Development and Tourism		 48 156 55 632 74 187 77 566 78 254
      Earmarked conditional grants		                    7 275 12 594      -      -      -
      Working capital		                                     -      - 27 000 13 572 13 538
      Department of Trade and Industry		 50 505 131 618 200 519 107 504                 -
      Other funds		                                        53  1 000      -      -      -
      Special projects		 87 113                               23 997      -      -      -
 	Total revenue		 194 329 225 880 304 923 222 242 160 792
 	Expenditure
  Current expenditure		                                        46 451   69 615   90 182 100 514 130 527
   Compensation of employees 		                                21 525   29 116   33 168 34 993 36 918
      Salary & Wages		                                         21 525   29 116   33 168 34 993 36 918
   Goods and services 		                                       24 926   40 499   57 014 65 521 93 609
      Administrative fees		                                     9 935    2 021    2 288   2 414 2 547
      Advertising		                                             3 136      991    3 019   3 185 3 359
      Minor Assets		                                               80       10       20      21      22
      Audit cost: External		                                      772    1 300    1 500   1 853 1 955
      Catering: Departmental activities		                          73      296      383     404    426
      Communication (G&S)		                                       112      267      170     179    188
      Computer services		                                         799    1 077    1 320   1 393 1 469
      Consultants and professional services		                   3 476    2 165    2 065   2 179 2 299
      Legal services		                                              -      123      180     189    200
      Entertainment		                                               7       81       91      96    102
      Fleet services		                                             38       84       84      88      93
      Consumable supplies		                                        15       26       24      26      27
      Consumable: Stationery,printing and office supplies		       309      509      508     536    565
      Operating leases		                                        3 446    9 832   31 467 38 448 63 638
      Property payments		                                         354    7 308    5 336   5 496 7 209
      Travel and subsistence		                                  2 008    4 056    5 357   5 636 5 946
      Training and development		                                  291    2 284    2 889   3 048 3 216
      Operating payments		                                          -    7 859        -       -       -
      Venues and facilities		                                      75      210      313     330    348
      Rental and hiring		                                           -        -        -       -       -
  Capital Expenditure 		 138 289 156 265 201 169 108 190                                           773
       Machinery and equipment		 671    650     650     686                                        773
       Land 		 87 113                23 997       -       -                                          -
       Bulk Infrastructure		 50 505 131 618 200 519 107 504                                          -
 Total expenditure		 184 740 225 880 291 351 208 704 131 300

                                                Part A: Strategic Overview - Corporate Plan 2019/20       21
servicing the needs of africa’s oil and gas sector

22   Part A: Strategic Overview - Saldanha Bay Idz Licencing Company (SOC) Ltd
servicing the needs of africa’s oil and gas sector

B          PROGRAMME
           AND SUB-
           PROGRAMME
           PLANS
Part A: Strategic Overview - Corporate Plan 2019/20   23
servicing the needs of africa’s oil and gas sector

           PART B:
           PROGRAMME AND
           SUB-PROGRAMME
           PLANS

     The SBIDZ initiative is comprised of the following      Programme Structure
     2 programmes:
                                                             The programme is structured to include the
     •   Administration
                                                             following functions:
     •   Operations                                          • Governance
                                                             • Legal
                                                             • Financial Management
     8 Programme 1:                                          • Human Resource
     Administration                                          • Supply Chain Management
                                                             • Information Technology
     Purpose                                                 • Corporate Communications

     Administration has the overarching objective
     of implementing best practice governance in             Funding
     support of the operations.
                                                             Operations are funded by the Western Cape
     The programme has a complex role due to                 Government, whilst Infrastructure is funded by
     its need to balance the business needs and              the National Government by way of the Special
     requirements of the operations, whilst at the           Economic Zone (SEZ) Fund.
     same time undertaking a crucial governance
                                                             Western Cape Government has also funded the
     function within the Entity, providing a treasury
                                                             purchase of the Saldok land from the IDC.
     function to ensure optimum spending and
     utilisation of financial resources within the           Skills and Enterprise Development are funded
     Entity.                                                 from various sources as it does not form part of
                                                             the formal funding programme.
     Further, the Administration Programme is
     required to be agile and support a world class
     approach to doing business, whilst at the same
     time balancing the legislative requirements of a
     public entity. It is a skill to achieve this balance,
     which is vital to the optimal performance of the
     overall programme.

24   Part B: Programme and Sub-Programme Plans - Saldanha Bay Idz Licencing Company (SOC) Ltd
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