Observations and Recommendations by the Portfolio Committee on Energy concerning 2010 Budgetary Review and Recommendation Report, 2011 Budget vote Report & oversight visits and study tours reports

Energy

18 October 2011
Chairperson: Mr S Njikelana (ANC)
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Meeting Summary

The Committee Secretary tabled a single document highlighting the Committee’s recommendations concerning its 2010 Budgetary Review and Recommendation Report and the Department of Energy’s budget vote for 2011. The document also included observations and suggestions raised by Members during various oversight visits and study tours. Members expressed concern that their input had not been captured properly-the information reflected in the document was either incomplete or incorrect. They also complained that the report was poorly written and needed to be redrafted. They requested the Committee Secretary to work together with his predecessors as well as the Committee Researcher to improve the document.

 

Meeting report

Observations and Recommendations by the Portfolio Committee on Energy
2010 Budgetary Review and Recommendation Report (BRRR)
Mr Arico Kotze, Committee Secretary, read out the recommendations proposed by the Committee in its 2010 BRRR for the Department of Energy.

Some of the recommendations included the following:

•The Department of Energy should closely monitor its expenses and carefully implement cost containment measures to avoid over spending on the allocated budget for Programme 1.•The Committee on Appropriations should look at ways to align reporting cycles and engage with Department of Cooperative Governance and Traditional Affairs to align and synchronise national, provincial and local spheres of government planning, budgeting and implementation of programmes. This systemic governance issue is impeding planning and implementation of programmes and should be seriously looked at and joint committee meeting between Portfolio Committee on Cooperative Government and Traditional Affairs and Portfolio Committee on Energy need to be convened to examine this matter.
•The unfunded departmental activities to the amount of R203 million should be funded by National Treasury because commitments have already been made by Government i.e. World Cup Guarantees, Clean Energy Operations, International affiliations, accommodation, establishment of SANEDI and electrification internship programme and the Department has also made commitments. However, the Department must take cognisance and address under-spending that was experienced in the 2009/10 financial year.

The Chairperson noted that there some ambiguities in the sentences (from bullet 3 onwards) and urged that these be redrafted. On the last bullet point, he added that the Committee would have a crucial role to play in ensuring that the Department paid more attention to the campaign of energy saving lifestyle.

Oversight Visit to Koeberg Power Station, Darling Wind Energy Farm
The document highlighted the following 2 recommendations:

•There was a need to target public representatives in terms of raising awareness as these public representatives would in turn communicate with people on the ground.

•The Committee would engage the department in order to ensure that something is done to avail more funds that would be dedicated towards public education around nuclear programmes in the country.


The Chairperson expressed unhappiness that only two points were mentioned. This was not an accurate reflection of the input given by Members during the visit.

Mr K Moloto (ANC) added that there were a number of issues raised by the community, that had no been captured in the report.

Mr S Motau (ANC) shared the same sentiments adding that Koeberg Power Station gave the Committee a comprehensive report which was not reflected in the report presented by Mr Kotze.

Mr Kotze replied that he would consult his predecessors regarding the outstanding information.

The Chairperson felt that the Committee Secretary should provide the Committee with a quarterly review of its activities.

Oversight Visit to Atlantis
Some of the findings and recommendations from this oversight visit included the following:

•For a project of this magnitude to succeed, it was critical for the Department of Human Settlements to play a pivotal role in collaboration with the Department of Energy.

•A pilot project of this nature could be replicated to the rest of the country if its implementation became a success.

•The concerns raised by Muntu Industries representatives were noted. However, the Committee requested a more detailed report spelling out the challenges faced in order for the committee to intervene.

•A joint briefing with other relevant Committees such as Human Settlements and Water and Environmental Affairs needed to be called to share information about the Witsand project, and how they could participate in ensuring that some of the challenges raised could be addressed.


Mr Motau and the Chairperson expressed similar sentiments- that the points listed were vague and did not clearly express what was articulated by Members.

Oversight Visit to PetroSA and CEF The Committee underlined the following during the visit to PetroSA: •The Committee recommended that PetroSA should do more in terms of training and proving opportunities for work to local citizens.
•The Committee would engage the Department of energy to determine why the strategic stock kept by SFF for security during crisis was only meant to cover the country for 21 days.
•The Committee would set aside time to visit the Saldanha Bay facilities where the country's strategic stock was being kept by SFF

•PetroSA was urged to do more in terms of increasing numbers of employees who go through the centre of excellency.

 

Members noted the following during their visit to the Central Energy Fund (CEF):

•Procurement details were missing or not addressed to the satisfaction of the Committee. This was the case with a number of CEF affiliates which made presentations.

•The Committee expressed disappointment with the CEF's Chief Executive Officers conduct during the entire oversight visit. It was felt that the CEO acted untowardly by choosing not be a part of the CEF officials without giving reasons for his absence.

•Staff turnover levels seemed to be alarmingly high. Committee concerned about a number of mangers in acting capacity and whether that did not affect efficiency.

•Concern raised over a large number of projects that were terminated after investing substantial amount of resources. CEF requested to clarify its strategy regarding its taking of decisions to embark on projects and how they conduct their feasibility studies.

•The Committee was concerned about the delays in obtaining the section 54 approval. An explanation would be needed as to why obtaining the approval from the national treasury was difficult.

 

Mr Moloto suggested that heading be amended to PetroSA and Strategic Fuel Fund Association (SFF). He added that the recommendations should be included under the same heading

Study Tour to Mozambique
The Committee made the following recommendations and observations:

•The Committee did not manage to visit SASOL gas project, therefore, the objective of was not realised. This was an area which still needed attention.

•The Committee also did not visit the Mozambican energy entities which are driving alternative and renewable energy projects in the Country.

The delegation, therefore, recommended that a further study tour needed to be undertaken on the gas pipeline and visit to state owned enterprises driving energy projects.

•Drawing lessons from the study, it was obvious that Mozambique was endowed with hydrological resources. Therefore, the Committee recommended further engagements with Mozambique counterpart in order to scale up and exploring possibilities of Mini-Hydro Power Stations to supply South Africa with renewable energy.

•The Department of Energy, Trade and Industry and Eskom to engage and further ascertain Pierlite on the benefits that can be harnessed from their street lights saving technologies.


Mr Tinto suggested that on the third bullet point, the word “hydrological” be amended to hydro-power. The last two bullet point be made as recommendations

Study Tour to France
The made the following conclusions and recommendations from the study tour to France:

•Nuclear Energy: was the only proven option with the capacity to produce vastly expanded supplies of clean electricity on a global scale with no carbon dioxide or other greenhouse gas emissions. Wind, hydro and solar energy could do the same but on a smaller scale.

•Operational Safety: Technological advancements at nuclear power plants, together with a global nuclear safety culture, greatly mitigated the risks and hazards associated with nuclear power generation such as the infamous Chernobyl accident of 1986.

•Cost Reduction: With regard to costs, the industry's steady reductions in both operational and capital costs would result in nuclear power emerging as the most cost-effective source of energy. These benefits may occur even without any negative impact to the environment.

•Waste Management: Waste management posses a challenge. While there was technology to process the dangerous waste, there was no industrial solution as yet on how the waste could be disposed of. At the time of the visit, storing waste in recyclable canisters seems to be the only alternative. A strong compromise favours deep geological repositories as a safe and affordable means of achieving long-term storage of nuclear waste.

•Concern of nuclear arms and terrorism: A new public concern, over and above radioactivity is terrorism and nuclear armament. Facts must be presented, common sense must be used and public education was required in order to overcome these exaggerated concerns.

•Clean electricity from renewables, that is, solar, wind, biomass and geothermal power, deserved strong support. Government should consider investing heavily in these forms of energy in the long run in order to embrace viable energy mix.

•Today, governments around the world are embracing nuclear power as fundamental to their strategies of national energy security and global environmental responsibility.

 

On the bullet point three, Mr Motau and the Chairperson suggested that, the sentence “These benefits may occur even without any negative impact to the environment” be deleted completely citing its vagueness.

Mr Moloto and Mr Motau expressed unhappiness about the bullet point five citing that the point reflected did not represent those raised by the Committee.

Members criticised the Committee Researcher, Mr Sydney Mphephu, for not ensuring that the reports were of a better quality.

Study Tour to Ghana
These were some of the observations raised during the oversight visit to Ghana:

•Localisation of manufacturing of solar PVs and other RETs to create jobs and best practices on this can be drawn from Canada.
•Consideration of urban waste as a source of energy.
•Renewable Energy Technology should be developed in line with conventional grid infrastructure.
•Patents of Renewable Energy Technologies should be looked at as it hampers knowledge transfer and capacity building.

The Chairperson suggested the first bullet point be restructured.

Study Tour to Lesotho
The following findings were catalogued:

•Power generated from hydro was considered cleaner as it had no carbon emissions and other green house gases.

•In an effort to diversify energy mix in South Africa and ensuring energy security, Muela Hydropower station was a model for South Africa. Therefore, feasibility in this regard should be facilitated to determine hydropower potential across the Country.

•Given that South Africa was not well endowed with water and most of the rivers dry up in winter, mini hydropower stations of 10 MW are ideal to be generated by Independent Power Producers (IPP).

•Enabling policy framework such as Renewable Feed in Tariffs (REFIT) and other incentives should be sped to encourage greater uptake of renewable energy in South Africa.


Mr Motau commented that it was a good study for the Committee.

The Chairperson suggested that the 1st and 2nd bullet points be placed as recommendations. It was anticipated that the Department would brief the Committee with regards to the last bullet point.

Mr Motau urged that the last bullet point be kept as it is.

Budget Vote
Having considered the strategic plan of the Department of Energy and budget vote 29, the Portfolio Committee on Energy recommended the following:

•That energy efficiency projects should gain much needed momentum and should be clearly visible in the programmes of the Department.

•That the Department should aggressively promote energy saving initiatives, including the review of the current institutional arrangements to accommodate that need. Currently this is an effort which only falls under ESKOM.

•That the amendments to the Petroleum Products Act (PPA) need to be fast tracked because during the Liquid Fuels Charter's public hearings the PPA was found to have been impeding the transformation of Historically Disadvantaged Individuals (HDls).

•That the Department considers the release the reviewed white paper on renewable energy for comments.


Mr Motau suggested that the heading should be written clearer as Budget Vote 29 of 2011, otherwise it would create confusion.

The meeting was adjourned.

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