Nuclear Skills: Department of Energy, Nuclear Energy Corporation of South Africa & National Nuclear Regulator (NNR) briefings; Liquid Petroleum Gas Pricing update

Energy

19 April 2010
Chairperson: Ms E Thabethe (ANC)
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Meeting Summary

Three entities briefed the Committee on nuclear skills in South Africa. The Department of Energy outlined four possible demand analysis scenarios. The most ambitious scenario, with a fleet of new nuclear plants envisaged, would require 100 postgraduate students per annum, and 200 to 400 professionals. That need would taper off after 2024. The nuclear skills training initiatives were outlined, and these included, on the part of Department of Energy, an external bursary programme, internships, and a Contract Energy Officer programme. In respect of initiatives from the industry, it was noted that all entities had bursary programmes, internships and leadership development projects. For artisan training, the sector partnered with the South African Institute of Welders. South Africa made use of the International Atomic Energy Agency skills development opportunities. A joint venture, ARECSA, had been established between French company Ariva and the Nuclear Energy Corporation of South Africa (Necsa) for skills development funding.

The Nuclear Energy Corporation of South Africa (Necsa) briefing emphasised that the nuclear workforce was ageing, with a lack of skills transfer taking place. Not enough young people were attracted to the nuclear field. The downsizing of the Pebble Bed Modular Reactor (PBMR) project affected general growth, and discouraged young people from entering the industry. The industry needed big projects to attract young professionals. The most direly-needed skills were nuclear and other engineers, and scientists. Necsa offered bursaries and there were internships offered by the Department of Science and Technology. The Necsa mentorship and coaching programme (the Madala programme), had been launched to enable retired experts to mentor young people. Necsa had also established the Nuclear Skills Development Centre. Research Chairs were funded by Department of Science and Technology and the National Research Foundation and there was a masters’ postgraduate programme. Top scientists and engineers would be absorbed from PBMR.

The National Nuclear Regulator (NNR) briefing dealt with the staff complement of the NNR, according to its race profile, gender and age. Ageing was a challenge, with 22% of technical staff above 50, and holding critical positions. Organisationally, there was an appropriate demographic blend of colour, but this was not apparent in skilled and technical positions. Initiatives included the Talent Management Forum, the Accelerated Growth Development Programme, bursary programmes, ARECSA, the International Atomic Energy Agency (IAEA) exchange programmes, and the Women in Nuclear schools outreach project. Skills development had to be taken back to science subjects in the school system. Succession planning had to be managed.

Members remarked that older people could still contribute much, both through bringing skills to projects and through the transfer of skills to young people, but the point was taken that this must be balanced against the need to bring young people in, and that older people should not be regarded as indispensable while younger people did not get opportunities to enter the profession. There was general concern about the downsizing of PBMR, not only because it implied possible retrenchment, but also posed the risk of losing nuclear skills to other industries and countries. Members questioned whether the decline in the numbers of skills after 2024 implied that people would be trained, but would then not be able to be employed, and whether the nuclear industry would be able to retain skills in South Africa, particularly in light of this being a global industry. Members enquired about the success of the mentorship programme. Some expressed concern about a perceived lack of momentum, reluctance to tackle big projects, delays, and a lack of strategic intent. Members questioned the bursary schemes, and whether the interventions applied to all provinces. They were concerned that nuclear energy still did not appear to be regarded as a core priority. Further questions address skills poaching across entities, achievement of employment equity, and the worldwide problem of relative funding to the nuclear regulator and operator.  

The National Nuclear Regulator gave an update on the pricing in regard to Liquid Petroleum Gas (LPG), including the power of the Minister to confirm prices, a review of the LPG licensing regime, pricing according to zones, and the de-linking of LPG pricing from that of petrol. Members expressed their concerns that zonal pricing would cause LPG to be more expensive in far-flung rural areas, and whether transport would take care of those challenges, as well as whether this would remain a cheaper alternative to electricity. The Chairperson questioned the possibility that PetroSA may take over the project, since she regarded it as rightfully within the Department of Energy’s domain.

Meeting report

Nuclear Skills Briefing: Department of Energy (DoE)briefing
Ms A (Thabang) Audat, Director, Department of Energy (DoE), set out the current nuclear skills status in the country. The DoE employed 12 people, and the new structure would have 60. The National Energy Council of South Africa (Necsa) employed 1900, the Eskom nuclear cluster employed 1800; The National Nuclear Regulator (NNR) employed 92, and the Pebble-bed Modular Reactor (PBMR), currently undergoing restructuring, employed 850.

Ms Audat took the Portfolio Committee through four demand analysis scenarios in regard to nuclear power. Scenario 1 assumed only the current programme, with no growth. In terms of this scenario, 50 students would be needed, and 150 professionals would have to join the various entities. Scenario 2 was based on the expectation of activity in the following 10 years. That would require 100 postgraduate students, and 200 professionals.

Scenario 3 foresaw the building of one nuclear power station. 100 postgraduate students would be needed, and 100 to 200 professionals. Scenario 4 was a fleet scenario, with 2 nuclear power stations being added per year. For that, 100 postgraduates would be needed every year, and 200 to 400 professionals. The need for skills would decrease as from 2024.

DoE initiatives included an External Bursary programme funded to R300 000 per year; an Internship programme, and a Contract Energy Officer programme.

With regard to initiatives by industry, Ms Audat pointed out that all entities had internal and external bursary programmes, internships and leadership development programmes. A Nuclear Skills Development Centre was operational at Necsa. Necsa was also establishing the National Nuclear Security Centre to train nuclear protection personnel. The South Africa Nuclear Human Asset Programme (SANHARP) was a bursary programme sponsoring grade 10 to post-graduate level. SANHARP also established research chairs at UP and NWU.

For artisan training, the sector had partnered with the SA institute of welders. South Africa continued to use the International Atomic Energy Agency (IAEA) skills development opportunities. ARECSA had been established between Ariva and Necsa to access skills development funding.

National Energy Council South Africa (Necsa) briefing
Mr Dan Moagi, Executive Manager, Necsa, said that the Necsa briefing would be complementary to that of the DoE.

With regard to the government policy on human resource development, he said that nuclear energy was to be used as part of South Africa’s diversification of primary energy sources. Nuclear energy should contribute to economic growth and technology development in South Africa. Government would encourage the development of institutional arrangements for the development of human resources to manage a nuclear infrastructure.

Under key strategic issues and challenges, Mr Moagi noted that the existing workforce was ageing. This fact held predominance over race and gender. The nuclear knowledge base was shrinking due to a lack of knowledge transfer to a younger generation. The nuclear skills set was specific, and not enough young skilled and professional people were being attracted. The downsizing of PBMR affected the growth of the industry and discouraged young people from entering the industry. The life cycle of nuclear projects was characterised by long time horizons, and it was not possible to fast-track young people.

The industry needed to invest in big projects to attract young professionals. Skills retention challenges revolved around the retention of existing skills during the long period in which a plant was operating, especially when facilities were at the end of a life cycle, with no new facilities foreseen in the near future.

The main stakeholders in the industry were Eskom, PBMR, NNR, Necsa and iThemba Laboratories. The highest priority rating in terms of skills requirements, was for engineers with nuclear certification, other engineers, and scientists.

Under Human Resource Development (HRD) interventions, Mr Moagi listed SANHARP; the Nuclear Industry Association of South Africa (NIASA); ARECSA; Necsa bursary programmes, and the internships offered by the Department of Science and Technology (DST), the National Research Foundation (NRF) and Necsa. To assist with knowledge and skills transfer, the Necsa Mentorship and Coaching Programme (Madala programme) had been launched. Retired nuclear experts acted as mentors in that programme. Necsa also ran the Nuclear Skills Development Centre.

Mr Moagi also referred to the DST/NRF Research Chairs Programme, and the Master students programme. Top scientists and engineers would be absorbed from PBMR.

Mr Rob Adam, Chief Executive Officer, Necsa, announced that two beneficiaries of the HRD interventions were sitting in that very meeting, one being Ms Audat, who had presented the DoE briefing. Both were young, black and female. The Members applauded their achievements.

National Nuclear Regulator briefing
Mr Joe Mwase, Strategy Executive, National Nuclear Regulator, set out the staff complement of the NNR, according to race profile, gender and age. Among senior managers, 85% were black, and of these, 28% were female. For managers, the figures were 70% black, of whom 30% were female. For Professionals/specialists categories, there were 69% black, of whom 29% were female. Among administration and semi-skilled staff, 63% were black, of whom 72% were female.

With regard to crucial technical skills, Mr Mwase pointed out that there were no Africans in the Koeberg programme department. Africans had little opportunity to acquire reactor technology competencies at the NNR. That inhibited the pace of development. The leadership of Koeberg were moving into retirement. The question was whether there was an adequate succession plan. 83% of the Regulation of Natural Resources (RENS) Department were African. The female population of the Technical Division was not sufficiently representative. It currently stood at 39%.

Mr Mwase proceeded to an age analysis. 22% of the staff in technical positions were above the age of 50, and held critical positions. 20 potential successors had been identified, 11 of whom could succeed within 1 to 2 years.

The general picture was that there was an appropriate blend of colour across the organisations, but blacks were lacking in critical skills and technical areas.

Human resource development initiatives included the Talent Management Forum to identify skills and the talent to match, and the Accelerated Growth and Development programme. Mr Mwase listed a bursary programme, funded to approximately R500 000 per annum; ARECSA participation; IAEA and international exchange programmes; the SA Young Nuclear Science Professionals, and the Women in Nuclear, a schools outreach project.

For the future, the skills development pipeline had to be explored, going back to science subjects in the schooling system, and targeting Nuclear programme channeling. Nuclear facility inter-poaching had to be addressed through standardised renumeration systems. Succession planning had to be managed, and bilateral agreements exploited.

Discussion
Mr E Lucas (IFP) referred to ageing as a skills challenge. He said that age was relative, and that older people still had nuclear skills that could be utilised. Every effort had to be made to transfer such skills and knowledge.

Mr Mwase conceded that skills of older people were valuable, but that fact had to be balanced against broader development objectives. The scope of skill had to be diversified and broadened. Expertise had to be shared and the skills profile had to be diversified. It was not acceptable to have a situation where some people become indispensable, to the detriment of others. Old skills formed a targeted basis, and he agreed that there had to be a transference of skills.

Mr Lucas remarked, with regard to the Pebble-bed Modular Reactor (PBMR) project, that money spent had gone a long way. He asked if the project would be closed down, and whether top PBMR scientists would be absorbed elsewhere. He cautioned against a shutdown. He could foresee that another country may well develop the industry further and eventually sell it back to South Africa.

Mr S Motau (DA) also asked about absorption, asking where the PBMR scientists could be absorbed, and into what other facilities.

Ms Audat replied that the Department was part of a Ministerial Committee that steered PBMR. There was not clarity as yet about PBMR statistics.

Mr J Selau (ANC) noted that in terms of Scenario 4 presented by the Department, there would be a drastic increase in the need for skilled people, until 2030, when the need would taper off. That meant that there would be more skilled people at that time than were needed. He asked what would happen to such surplus people. All the presentations for that day, pointed towards a scarcity of nuclear skills, which could be retained through good pay. However, the further scenario implied retrenchment. If the PBMR were to be closed or reduced, it would be a case of “training and throw away”.

Ms Audat replied that in the demand analysis scenarios, numbers were not cumulative. Skills would be needed at the different stages of planning, construction, maintenance and waste management. A spectrum of skills would be required.

Ms N Mathibela (ANC) added that 850 people were currently employed by PBMR, which was currently being restructured. Some of those people would be retrenched. Absorption from PBMR would have to be a top priority.

Mr Moagi responded that references to retrenchment were based on an incorrect reading. The need for new people would in fact begin to diminish beyond 2020. Existing people would, however, remain in their jobs.

A Necsa delegate remarked that Necsa and ESKOM could absorb people.

Mr Mwase added that if PBMR was downscaled, people would be employed back into programmes. If it were to be closed, there would still be skills redeployment.

Mr Adam said that in regard to the PBMR, management was still in negotiations with labour unions. No numbers were cast in stone. The 75% that was outlined related to the minimum number of staff required to deliver on the NGMP project, which was a design project. PBMR was classed as an internal project. Current funding was from the US Department of Energy. Staff needed for that project had to be identified. However there was currently no support from the fiscus.

Ms N Mabedla (ANC) asked if skilled people could be encouraged to remain in South Africa.

Mr Adam responded that with the PBMR in trouble, 75% of 850 people could disappear. Work in the nuclear field was going on in other countries, and so at that very moment some of the best local people could be receiving offers from countries such as China.

Mr Adam noted that the Nuclear Energy Act had been worked out to apply in a labour relations context. Engineering, for example, was a “boom and bust” profession. There was a large global infrastructure that would employ many engineers on large projects, and then lay them off. The Energy sector had laid off engineers, and they did well elsewhere. The nuclear environment was highly regulated and exact. A nuclear professional could move around, whereas it was not so easy to penetrate the nuclear environment from the outside.

The Chairperson remarked that a broader discussion was needed. It had been a sad moment when downsizing of the allowance for nuclear engineers occurred.

Mr D Ross (DA) asked about skills transfer. He remarked that it was not easy to encourage professionals to stay in the industry.

The Chairperson asked how much the Madala Programme had done to assist transformation.

A Necsa delegate replied that 84 people had gone through the Madala mentorship programme. Experienced and skilled people acted as mentors to train new people. Learners had to submit portfolios of work done. It was possible to replicate skills. ARECSA, which was a joint effort by a French entity, Ariva, and Necsa, had provided in-service training to 252 people. Skills needs were identified to inform the process. The Nuclear Skills Development Centre had trained 420 highly skilled artisans like welders who could work on nuclear reactors. There were research chairs for 15 people in Pretoria, and 35 in KZN. Some employees were professors and supervisors at Northwest University, where 14 students were in the masters’ programme.

Mr Motau asked how the bursary scheme was doing.

Ms Audat replied that bursaries and mentorship were funded to the tune of R200 000 per year. Six students were currently involved. Two would finish in the current year, one as Masters student, and the other as a mechanical engineer. The other four were currently in their second or third year.

The Necsa delegate added that there were 13 undergraduate and 23 postgraduate students in the Necsa bursary programme. There were 20 learners in an intern programme.

Mr Motau appreciated the spelling out of programmes, but asked what was actually being done, and implemented. He asked whether an action plan would be presented to the Portfolio Committee so that plans could be fast tracked, and what Parliament could do to help.

Mr D Ross (DA) noted that the nuclear project lacked momentum. He asked what was causing the delay, and what Parliament could do. He questioned if there was a strategic intent.

Mr Adam replied that the peculiar funding structure of nuclear projects had to be considered. Nuclear projects were very cost effective over the lifetime of the project, but money was initially needed up front. Big nuclear operators like France and the USA paid off nuclear projects over a period of 20 years. After 20 years, money from old plants would effectively be financing new builds. Equity was more expensive than debt, but debt could not be obtained locally. Hundreds of billions of dollars were involved. Once established, there would be a balance sheet as support, but in South Africa, with Koeberg as the only existing plant, there were problems.

Mr Adam remarked, with regard to big projects tackled, that Necsa was poised for ambitious action on plans for nuclear fuel, if Eksom gave the go-ahead. It had gone to National Treasury for preparatory funding. No decision about programmes had been reached there, but other countries already anticipated the plan. Necsa had attended a summit in the United States, also attended by the President. The summit had covered a range of parallel industries. During meetings on the margins of the summit, Necsa and the NTP had made a bid for the supply of radio-active isotopes to the United States. He remarked that success bred success. There would be growth in that direction, although it was not as big as the nuclear power programme.

Mr Ross said that he had noted that it would take about ten years to build a nuclear plant.

Ms Audat responded that ten years represented the entire time that elapsed from the initial decision to build a plant. Contract negotiations continued until the end. There could be delays while decisions were being reached. The Inter-Ministerial Committee on Energy did part of the IRP work.

Mr Moagi added that there was a consultation process under way to conclude an integrated resource plan. After June of the current year, the needs would be known. There would be more momentum when the IRP came in.

Ms Mathibela asked about the training of prospects from Grade 10 level, and the progress made with that programme. She was concerned that it would be confined only to Gauteng.

Ms Audat replied that the programme would run at the Dinaledi schools, so that it would be spread out over all the provinces.

The Chairperson remarked that nuclear energy did not have the status of a core priority. In the energy mix policy, more was invested in other programmes. She continued that in the previous year’s Annual Report, mention had been made that the NNR was suffering a loss of personnel to Necsa, because they were attracted by better salaries at the latter institution. She enquired if that was still the case.

Mr Adam replied that fuel staff had been moved from Necsa to PBMR. If that programme went ahead, the fuel division would disappear. There had only been a transfer of high level skills. Necsa had also provided personnel who had moved to the NNR. It was a healthy skills transfer, but it had to be managed. The NNR had pushed up licencing fees. Jobs could not be defined.

Mr Moagi agreed that the situation had to be managed. People had not moved because of the financial situation, although he agreed that salaries between entities had to be stabilised.

The Chairperson asked why the Departmental regulator was less funded than the operator.

Mr Ompi Aphane, Deputy Director General: Electricity, Nuclear and Clean Energy, DOE,  replied that the relative funding accorded to the regulator and the operator was a worldwide problem. Regulators were generally smaller and less resourced. This situation was not peculiar to South Africa. He agreed, however, that better salaries were needed.

The Chairperson referred to the statement by Mr Moagi that employment equity related to scarce skills, and was not present in the nuclear field. She asked why that was so.

Mr Aphane answered that there was an Employment Equity Act, but South African conditions had to be contended with. It was difficult to attract young black technicians.

Liquid Petroleum Gas (LPG) retail pricing: National Nuclear Regulator’s briefing
Advocate Boyce Mkhize, Chief Executive Officer, National Nuclear Regulator, presented the update of the regulation of Liquid Petroleum  Gas (LPG). The Minister had been empowered to set the price, which would vary according to zones. The LPG licensing regime was under review. The LPG task team was to be reconvened. There would be a maximum refinery gate price review, with a report in the following quarter. There would be direct pricing, petrol would not be used as proxy. PetroSA was assessing the results of pilot studies, and would decide whether or not to take over on completion.

Discussion
The Chairperson asked Adv Mkhize to elaborate on price setting.

Adv Mkhize replied that mathematical formulae would be used as working rules. The State Law Advisor had determined that the price itself would be part of regulation, with the Minister acting to confirm prices.

The Chairperson remarked that it was confusing, since the Minister also had the power to regulate.

Mr Lucas remarked that pricing was highly important. Pricing according to zone meant that prices would be higher in rural areas far removed from industrial centres.

Mr Mothau agreed with the de-linking of LPG prices from those of petrol.

Ms Mathibela remarked that the LPG project had been launched to protect rural people against high electricity rates, but now there was uncertainty about the situation. She questioned how this would be explained to those living in rural villages, particularly if LPG turned out to be more expensive than electricity.

Adv Mkhize responded that the maximum refinery gate price was under review, and that LPG prices were de-linked to petrol, on account of a public outcry over prices. He assured the Committee that even with zonal pricing, LPG would still be a cheaper alternative. The LPG would be sold in Durban at the maximum refinery gate price and transported in bulk by tankers everywhere. There would not be costly transportation of individual cylinders over long distances.

The Chairperson remarked that it seemed as the Department was asking PetroSA to take over the LPG project, and she asked why this was so, as it appeared to be an initiative of the Department.

Adv Mkhize responded that PetroSA was being asked to look at the pilot assessment and decide whether it had the capacity to handle LPG. The terms of reference indicated that LPG was not just a commissioned project.

The Chairperson persisted that this matter should remain within the Department. However, she was satisfied with the progress made on the matter.

The meeting was adjourned.

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