One of the key issues in the negotiations is whether book value or market value a difference of R78m will form the basis of the sale of the properties intended for an integrated human settlement development.

The disposal of the 127 properties would be the first tranche of Propnet’s sale of its noncore assets, mostly situated on the peripheries of city centres. The company has so far identified 607 noncore assets with a book value of R929m for sale, documents submitted to Parliament yesterday showed.

Propnet still has to decide which properties will be donated to the housing department, which, if any, will be sold at book value and/or market value, and which will be developed jointly.

Propnet properties in city centres were regarded as core properties, the document said.

The document indicated that a draft deed of sale had been submitted to the housing department, which still had to complete its valuations.

Transnet and Spoornet will also be disposing of their noncore properties as part of Transnet’s drive to streamline operations and focus on core activities of freight, rail, logistics and port services.

Meanwhile, the public enterprises department has submitted a proposed Transnet Pension Fund Amendment Bill to Parliament’s public enterprises committee.

Based on government’s undertakings to labour, the bill is aimed at ensuring that Transnet employees’ pension fund benefits are not negatively affected by the group’s disposal of noncore assets such as SAA and Metrorail, and the sale of its internal audit division to Ernst & Young.

Public enterprises department chief director Ursula Fikelepi told the committee that government, Transnet and trade unions had agreed that the closed, defined- benefit Transnet Pension Fund (to be renamed the Transport Pension Fund) would be restructured into a multi employer fund in which other state-owned enterprises could participate through their own, ring-fenced sub-funds.

Two sets of rules would govern these funds general rules relating to governance, the allocation of costs and statutory matters; and special rules relating to service, contributions and benefits.

Transnet employees moving out of the group upon the disposal of business would then be able to continue being members of sub-funds of this pension fund and continue to enjoy the same tax benefits.

The separate Transnet Retirement Fund, an open, defined- contribution fund, would remain a Transnet fund. Existing members would be allowed to retain membership on disposal if the new state-owned enterprise agreed to this, but no new employees of state-owned enterprises would be allowed to join a clause to which labour objected.