National Department of Public Works Immovable Asset Management

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National Department of Public WorksImmovable
Asset Management

• Portfolio Committee on Public Works
• 31 August 2005

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CONTENTS

• The status quo
• Improvement initiatives
• GIAMA
• Introduction of user charges
• Asset register
• Proactive disposal programme
• Options analysis
• Service level agreements
• Feedback on specific properties

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STATUS QUO

• Lack of a regulatory framework for immovable
  asset management
• Lack of incentives for departments to utilise
  immovable assets efficiently
• Inadequate budgets for maintenance

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STATUS QUO .cont

• Quality of information on national asset register
  needs to be improved
• Provincial immovable asset registers need to be
  improved
• Planning weaknesses
• Properties left vacant and deteriorating for
  years
• Inadequate analysis before new acquisitions are
  made
• Under-utilisation of existing assets

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GIAMA

• Provides a regulatory framework for national and
  provincial government for managing immovable
  assets
• Introduces uniform, efficient, effective and
  accountable management of immovable assets
• Each organ of State (users and custodians) will
  be required to produce an annual immovable asset
  management plan (AMP) that will form part of the
  annual strategic planning and budgeting process
  of Government

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• AMPs will cover
• Description of assets required based on service
  delivery strategies
• Plans for new acquisitions
• Consideration of non-asset solutions
• Consideration of use of existing assets rather
  than acquiring new assets
• Description of the condition of existing assets
• Plans for maintaining assets
• Plans for disposing of assets no longer required
  for service delivery
• Production of AMPs should result in improved
  planning for, and management of, immovable assets

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• Due to (a) complexity of legislation governing
  Local Government and (b) varying levels of
  autonomy of Public Entities, Draft legislation
  currently under consideration will be applicable
  to National and Provincial Government only.
• Following approval by Cabinet during August 2005,
  draft Bill has now been submitted to State Law
  Advisor for certification
• Bill to be submitted to Parliament during
  September 2005

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INTRODUCTION OF USER CHARGES

• White Paper on Public Works stated that budgets
  related to immovable assets would be devolved and
  user charges introduced
• Proposals for devolution of budgets and
  introduction of user charges from 1 April 2006
  have been drawn up, currently awaiting final
  Treasury approval
• Responsibility for paying municipal property
  rates for provincial properties being devolved to
  provinces from 1 April 2006

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• User charges
• Involves the devolution of budgets to
  departments, but functions will generally remain
  with DPW
• Departments will pay a rental per square metre to
  DPW for state-owned assets which they occupy
• DPW will use the rental revenue to pay property
  rates and for maintenance (DPW becomes a landlord
  for state-owned assets)
• Will result in transparency of budgets (all costs
  associated with a service on that departments
  budget)
• Will create incentives for departments to utilise
  their assets more efficiently
• Proposed that function of paying municipal
  service charges (water and electricity) be
  devolved, as this does not require scarce
  expertise
• Proposals include devolution of both budget and
  function to SAPS for functional assets, subject
  to SAPS meeting certain conditions

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ASSET REGISTER

• DPW has immovable asset register in place for
  national government accommodation-related
  immovable assets
• Provinces are accountable for asset registers for
  provincial assets
• No matters of emphasis on national immovable
  asset register in 2004-2005 audit report
• DPW has agreed with Accountant General on minimum
  information contents of an acceptable immovable
  asset register
• Currently implementing three-year plan to verify
  existing minimum information and collect missing
  minimum information for all assets on the
  national register

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PROACTIVE DISPOSAL PROGRAMME

• Implementing plan to proactively identify and
  dispose of immovable assets no longer required
  for service delivery
• Disposal processes
• Identify possibly redundant assets (regional
  offices, head office, departments, public)
• Carefully check utilisation and analyse potential
  for reallocation for other service delivery
  purposes, including land reform
• Provincial State Land Disposal Committee
• Consent of Minister of Land Affairs
• Approval by Minister of Public Works
• Valuation
• Disposal through open tender, in terms of Supply
  Chain Framework and PPPFA, or gratis transfer to
  province or municipality or other body for land
  reform purposes

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• Progress to date
• Ministerial approvals obtained for initial group
  of 177 properties, which are now in stage 7 and
  are planned to be disposed of by end March 2006
• First group largely consists of residential
  stands
• Submissions for ministerial approvals currently
  being prepared for second group of 114 properties
  (i.e. in stage 5), including 24 foreign
  properties identified by the Department of
  Foreign Affairs for disposal and including
  several large local properties
• Third group of 2000 properties currently in stage
  2
• Estimated revenue from first group of properties
  R12 m second group R350 m
• Department is continuing to endeavour to identify
  and analyse other possibly redundant and
  underutilised properties for disposal /
  reallocation

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OPTIONS ANALYSIS

• No systematic and objective methodology for
  determining optimal acquisition solution, and
  optimal method of procurement (eg lease, PPP,
  purchase)
• DPW and National Treasury recently jointly
  developed a generic options analysis methodology
• Options analysis will be carried out for all
  large acquisitions in future

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SERVICE LEVEL AGREEMENTS (SLA)

• Generic SLA developed in 2004
• To date, only one client department has signed
  the SLA
• SLA currently being revised to reflect GIAMA and
  introduction of user charges
• DPW will seek Treasury approval of revised SLA
  and Treasury Regulation requiring departments to
  sign the revised SLA with DPW

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FEEDBACK ON SPECIFIC PROPERTIES

• Jozini Military Base
• SANDF closed down the Jozini military base in
  2003
• The base was handed over to SAPS to establish a
  police station
• SAPS handed over some of the properties to DPW in
  2004
• Some of the residential properties handed over to
  DPW were illegally occupied
• The municipality has indicated interest in taking
  over the illegally occupied properties, and
  discussions are under way in this regard
• The municipality has also indicated interest in
  taking over other parts of the base, including
  the sports facilities
• The possible transfer of the properties to the
  municipality is complicated by a land claim which
  has been lodged
• DPW regional office is in discussion with the
  provincial Land Claims Commissioner to try to
  resolve this issue
• In the meantime, DPW regional office is
  negotiating with the illegal occupants for them
  to enter into lease agreements

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• Port St John Military Base
• SANDF largely stopped using the base before 1997,
  apart from a single commando unit, which will be
  vacating the base by end August 2005
• DWAF is occupying a small portion of the property
• A school is leasing part of the property from DPW
• Most of the residential properties and some of
  the offices are illegally occupied
• There is a land claim on the property which has
  recently been resolved in favour of the community
• The Land Claims Commissioner is currently having
  the property valued and then it will be
  transferred to the community
• The Municipality has built 500 houses for the
  illegal occupants to be moved to, and this is
  planned once electricity has been installed at
  the houses
• The community is planning to develop the property
  together with the municipality once the transfer
  takes place