The South African state is being stripped of its assets

In response to a Democratic Alliance (DA) parliamentary question, the Minister of Communications has revealed that Telkom lost approximately R1.3 billion in 2009, due to the theft of copper cable.

A copy of the reply follows below.

This reply is part of a series of questions posed by the DA to the government, on this issue. In response to questions about Transnet and Eskom, the Minister of Public Enterprises revealed that copper bale theft cost Eskom R71.7 million in 2009 (including replacement and security costs) and Transnet R158 million. This brings the total cost incurred between the three public entities in this regard to approximately R1.5 billion. This figure has increased every year, for the last three years.

Telkom is responsible for 85% of the total (because telecommunications makes far bigger use of copper cabling) and it is quite apparent that the problem is getting significantly worse. The Telkom figure of R1.3 billion represents a 39% increase from 2008 and almost double the amount for 2007 (R674 million).

It is quite apparent that, despite repeated and detailed security plans, as well as a massive media drive to dissuade people from stealing copper cable the problem is not being arrested; indeed it is growing. The consequence is that the state is being stripped of its assets and its ability to deliver services to citizens being undermined. The reasons for this are varied and diverse, no doubt poverty plays a prominent role but a significant part of the problem is organised crime and the deliberate sabotage of state property. In this regard, the government must accept some responsibility.

Of the three, Eskom's figures have a broader context which needs to be taken into account. Indeed, in 2004/05 Eskom also lost R71 million. So, if one takes inflation into account, Eskom has managed to turn the tide somewhat. It still has work to do, but clearly it is doing something right. For example, Eskom has made use an internal investigation system in conjunction with private security companies. The utilisation of internal Eskom staff has been useful in that the staff have a vested interest in the protection of the cables, whereas private security companies do not necessarily care. Telkom and Transnet, in comparison, have continued to use only private security companies.

Further, Eskom sits on the Non-Ferrous Metal Combating Committing and works well with the police via this institution. Transnet and Telkom, however, do not give this committee the requisite support.  

They would do well to take a leaf out of Eskom's book.

TELKOM REPLY:

I have been advised by Telkom as follows:

Telkom, as a listed company, is very active in addressing any area of loss and will continue to explore ways of protecting its network against the scourge of cable theft.

1. During the following years Telkom has experienced losses due to cable theft:

These numbers are estimates and based on certain assumptions.

Telkom does not have accurate information available for 2004/5 and 2005/6 financial years.

2. Yes.

(a) The decision to use outside vendors was to get better services. The vendors have intelligence capacity and are specialised in curbing cable theft. The decision to use vendors has also assisted the Telkom Group to efficiently manage limited internal resources. 

The outside vendors have always been working with the Telkom Network Protection Services. It is only the nature of their operations that has changed from reactive patrol to proactive operation. They look at the total network.

(b) Companies that have been contracted to deliver these services include the following:

•  Royal Security (responsible for armed response)
•  Enlightened (responsible for armed response)
• Sidas (responsible for armed response)
•  Radio Surveillance Security Services (responsible for monitoring)

3. There has been positive impact in some regions. It is important to note that the impact of curbing copper theft varies from region to region.

4.  In 2008/9 Telkom introduced an agreement that penalties are payable by companies who have failed to meet the (percentage) reduction in theft incidents and costs.    The table below reflects the impact reduction in the regions.

1. (a)  The security measures put in place by the Telkom Group have been effective bearing in mind that there have been increases in copper cable prices and contractor fees.

(b) The current contract with the security vendors expires in September 2009.  Telkom is currently busy with a business decision that will best suite its strategy going forward.

ESKOM REPLY:

(a) Table 1: indicates annual cost of cable theft from Eskom in each of the past five years.

(2)(a-b) The protection of copper cables is outsourced in order to enhance the existing physical conventional guarding and other security measures in place. Names of company that is providing security services at Eskom is Combined Private Investigations cc.

 (3) This integrated approach has contributed positively towards reducing losses as indicated in the table above.

(4)(a-b) The parameters of non-performance and redress measures are specified in the contracts entered into with each service provider and the necessary steps are taken in the event of such incidences. To date, contracts have not been terminated due to non-performance. 

(5) The Department does not specify security measures for SOE, however, the SOE are encouraged to develop their own systems to combat incidents such as cable theft.

TRANSNET REPLY:

(b) Table 2: indicates annual cost of cable theft from Transnet in each of the past five years.

* The amounts in this column are the cost of security of the entire cable network and not only the stolen portion. The business loss due to the cable theft represents a greater monetary loss than the actual replacement cost of the cable. Furthermore, the security cost covers the cost of protecting other assets.

 (2)(a-b)The protection of copper cables is outsourced in order to enhance the existing physical conventional guarding and other security measures in place. Names of companies that are providing security services at Transnet cannot be made public for commercial reasons and to protect the companies involved and their modus operandi from the crime syndicates which operate in South Africa.

(3) This integrated approach has contributed positively towards reducing losses as indicated in the table above. However, the impact varies from place to place - the biggest challenge is in the Gauteng Central Region, where more sophisticated methods are used in cable theft.

 (4) (a-b) The parameters of non-performance and redress measures are specified in the contracts/ MOA (Memorandum of Agreement) entered into with each service provider and the necessary steps are taken in the event of such incidences. The MOA also makes provision to claim direct losses should the contractor be found to be negligent, and ultimately, to terminate services of contractors due to breach of signed agreements. Transnet does not intend to terminate the outsourcing of this function; however, incompetent contractors could have their contracts terminated for non-performance.

 (5) The department does not specify security measures for SOE, however, SOE are encouraged to develop their own systems to combat incidents such as cable theft.

Statement issued by Pieter van Dalen, MP, Democratic Alliance shadow minister of public enterprises, August 28 2009

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