Parliament rejects Infraco

By Paul Vecchiatto, ITWeb Cape Town correspondent

Johannesburg, 03 Aug 2007

The Department of Public Enterprises (DPE) has been put on notice that it must present a more compelling case for Infraco's establishment than it has, by the chairman of Parliament's public enterprises committee Yunus Carrim.

"I cannot believe cabinet and two senior government ministers, Ivy [Matsepe-Casaburri] and Alec [Erwin], have approved the establishment of Infraco on the case that has been presented here. I believe there is a far more compelling case for Infraco, but we are not seeing it here," Carrim told the joint sitting of the parliamentary committees on public enterprises and communications yesterday.

Carrim's comments were prompted by national signal distributor Sentech's presentation during the second day of the public hearings into the Broadband Infraco Bill, the draft law that would eventually govern the creation of a new state-owned enterprise, which has the aim of reducing the country's broadband costs.

What is the point of having two state-owned enterprises with a large overlap? We, as Parliament, cannot accept that.
Yunus Carrim, chairman of Parliament's public enterprises committee

During Sentech's presentation, CEO Frans Lindeque pointed out that Sentech was constrained by its narrow mandate from government, limiting it to only rolling out wireless infrastructure and its inability to raise its own capital because of its listing under Section 3 of the Public Finance Management Act (PFMA).

The DPE wants Infraco to be placed under Section 2 of the PFMA in order to give it a large degree of autonomy to raise the necessary finance from the capital markets for its projects. These include the laying of two three-terabit undersea cables, one to Brazil and one to Europe.

Unacceptable

Sentech, which is a state-owned enterprise, but falls under the control of the Department of Communications, also stated that, in terms of licensing Infraco, the regulator, namely ICASA, can only give it a certain licence, such as an Electronic Communications Network Services licence, but not state what technology it may or may not use. This is a policy, or business decision that has to be made by government.

"In terms of Infraco getting Transtel's assets, it also gets the teleport [satellite station] that belongs in those assets, and this means it can also start offering broadcasting services," Lindeque noted.

Carrim did not accept DPE deputy director-general for legal affairs Sandra Coetzee's answer that it was her department's policy that Infraco would only be rolling out cables, while Sentech would be responsible for wireless.

"What is the point of having two state-owned enterprises with a large overlap? We, as Parliament, cannot accept that," he said.

Carrim gave the DPE until the next round of public hearings on 22 August to come up with a "compelling case".

Coetzee answered: "The department will rise to the challenge."