Energy Budgetary Review and Recommendations Report (BRRR): consideration and adoption

Energy

07 November 2011
Chairperson: Mr S Njikelana (ANC)
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Meeting Summary

The Committee adopted its Budgetary Review and Recommendations Report with minor corrections of typographical errors and in line with new report provisions set by the National Assembly. Members were satisfied with the contents of the Report and how it had been compiled though they felt that there was need for improvement especially on detail.

After adoption, a Member of the Congress of the People said that there were substantive errors in the Report. It was wrong to imply that the Government did not have a strategy to manage nuclear waste.  A Member of the Democratic Alliance said that the Report seemed to overlook policy on funding capital projects.

The Chairperson said that the Committee had already ran out of time to submit the Report formally and  suggested that for future reports the Committee would consider enlisting the services of an external expert to look at the Report before submitting it to Parliament and the Department.

Meeting report

Chairperson's introduction
The Chairperson briefed the Committee on his visit to the climate change preparatory summit in London and the correlation between departments of energy and environmental affairs in other countries. The Budgetary Review and Recommendations Report (BRRR) was part of the new approach of conducting oversight and informed by the Section 32 Report, the Sate of the Nation Address, Department’s Strategic Plan, Department’s Annual Report, outcomes of the Financial and Fiscal Commission, and an overview from the National Planning Commission. Efforts had been made to ensure that Members obtained the BRRR in time for them to assess the contents before endorsing it. He urged Members to keep their notes on oversight and study tours to aid the Committee during its oversight sessions. He told Members to look out for areas that needed improvement in the BRRR, especially the conclusion, to ensure that it was in line with the requirements of the Speaker of the National Assembly, as the document would be used as a roadmap for the Committee’s engagements with the Department until October next year. He then invited comments from the Members.

Discussion
Ms N Mathibela (ANC) observed that the BRRR had recommended that the Development Bank of Southern Africa (DSSA) in conjunction with partners in the Darling Wind Project should submit to Parliament  a report on challenges by the middle of November. She asked if this was still possible. 


The Chairperson had heard that the DBSA had this report already and he maintained that this report should be presented this year.

Members agreed to have the report submitted at the end of this term.

The Chairperson agreed, failing which the report must be submitted in the first term of next year

Mr E Lucas (IFP) expressed his gratitude for the job the Chairperson had done in compiling the BRRR and moved for the acceptance of the BRRR.

The Chairperson agreed that he had taken a lot of time on the BRRR and to ensure that it was factual, as it was a parliamentary document. He said that he had suggested acronyms on the BRRR but the National Assembly had recommended that all names be written in full.

Ms B Tinto (ANC) observed that there was another acronym on page 35 for State-Owned Enterprises (SOEs). On the second page of the BRRR she wanted clarity on “to conduct oversight on behalf of the National Assembly, over the minister of Energy to ensure executive accountability…”

The Chairperson said that he had written “ministry” but the National Assembly recommended that the expression should be Minister. He thanked Ms Tinto for the observation.

Ms Tinto moved for the Committee to adopt the BRRR.

Mr D Ross (DA) thanked the Chairperson for the BRRR, as it was comprehensive and offered clear guidelines as a roadmap of the Committee’s future engagements and highlighted how issues could be improved in the future. Commenting on one of the priorities of energy security on page 5 of the BRRR, he sought clarity on the funding of building new bulk infrastructure, adding the BRRR lacked detail on how the Department intended to keep tariffs low. He seconded the adoption of the BRRR saying it was comprehensive and a valuable document going forward.

The Chairperson thanked Members and said the Committee had adopted the BRRR. He said the BRRR would be subjected to grammatical corrections, and adjustments on time-frames with particular regard to the Darling Project, and would be submitted to the National Assembly. It was urgent that the BRRR be submitted because the Committee had already entered the first month of the new budget phase. The Committee’s future business would be informed by the BRRR. He informed the Committee that in future meetings the Committee would be working on issues of phase one of the budget cycle including: analysing the Section 32 report for the 2nd quarter, conducting oversight informed by the Committee Secretary and the researcher on areas of focus (mid tern review) and evaluating the strategic plan. The Secretary was tasked to inform the Department on the areas of focus. He said that the Committee’s business in phase 1-5 would be guided by the contents of the BRRR. He added that the BRRR should indicate time-frames for the Department’s projects to help during oversight functions. The concerns raised by Mr Ross should be noted in future to improve on recommendations.


Mr P Dexter (COPE) wanted the Committee to note his concerns even though it had already adopted the BRRR in his absence. The BRRR contained major typographical mistakes and errors of substance.

Mr J Selau (ANC) said that Mr Dexter had lost the opportunity to voice his concern.

Mr Dexter said that the BRRR did not address the issue of overall strategic coherence of the Department to drive its programmes. Referring to page 35 on a recommendation for “….the Ministry of Energy to address the need of a comprehensive waste management system …”  he argued that the BRRR implied that the country did not has a radioactive system when it had one. He said it was wrong to say that the Government did not have a strategy to manage nuclear waste.

Mr Lucas said the problem was that no one knew how to deal with radioactive waste

Mr Dexter interjected saying that was what people were doing all over the world

Mr Lucas continued his argument saying that there was no decision on the future of the waste and he had been worrying about this ongoing concern.

The Chairperson called Members to order. 

Mr Dexter said that the BRRR implied that there was no system in place for waste management which was not true, but conceded that if the expression was meant to say that the system was deficient he would agree. He said it not advisable to submit a BRRR which said something untrue about the Government. He also raised a concern on the issue of the Central Energy Fund (CEF), arguing the BRRR recommended a comprehensive restructuring programme but lacked detail on the recommendations made by the Committee on reviews and proposals which should be taken into account before the restructuring process begin.

The Chairperson agreed that Members should analyse the concerns raised by Mr Dexter. Commenting on the last issue he recommended that the Committee should look at the review process as part of a comprehensive restructuring programme. He said the Committee would not allow CEF to restructure without adopting necessary recommendations for restructuring. On radioactive waste he said that he was aware that the system existed but the emphasis was on the comprehensive nature of the programme. He added that the system would now be addressed through public – private partnerships, universities and other stakeholders. He said that if Mr Dexter was worried about the wording it could be changed.

Mr Selau said that Mr Dexter was correct in his proposition. His argument was not against the process but that the existence of the radioactive system should be included.

The Chairperson replied that Mr Dexter’s observations were valuable as they addressed some of the issues highlighted in the BRRR on page 32.He said that the Committee would be sure to take the suggestion in taken into consideration as it touched on the concern whether the Department had strategic coherence and capacity to drive its projects.

Mr Dexter explained that the energy issue cut across many departments to the extent that the Minister‘s advisor had to admit at one point that the system was not clear-cut. There was need for it to be implicitly and clearly stated in the BRRR.

Mr S Motau (DA) said that Mr Dexter was right in advocating for clarity on the matter as the country already had a radioactive system in place.

The Chairperson agreed saying he had taken the point into account.


Mr Ross said that the BRRR seemed to overlook policy on funding capital projects. He proposed that the Committee should look into formulating a policy that looked at challenges in funding huge capital projects and should interact with Eskom and the National Energy Regulator of South Africa (NERSA) in view of the new- built programme.

The Chairperson asked to what extent the matter fell within the purview of the Department of Energy and was not part of fiscal policy.

Mr Ross replied that it was possible because NERSA was reporting to the Department of Energy

The Chairperson said he was not convinced with the answer and invited Members to analyse the issue. He referred to a recommendation on p 33 of the BRRR which said the “. …Minister of Energy should address the challenges in the distribution of energy, which he said addressed the matter. Also, he said that the Committee could be overlapping on National Treasury’s domain in terms of how capital projects were funded. Be cause of the uncertainty surrounding the issue the Committee could stick to the point whenever addressing capital projects in energy. He however said the issue of funding projects was one area the Committee would look into, as it was becoming an area of great concern. 

 
He asked Members to consider in the meantime at what stage the Committee should share the BRRR with the Department. He said the BRRR had already been submitted to the Department through the Deputy Speaker’s Office but suggested that it be shared with the Department so that it could respond, though he was not sure at what stage. He also suggested that in the future the Committee would consider soliciting expert testimony to improve on quality and structure of the BRRR as an effective tool for oversight. The expert would link the BRRR with the Department’s Annual Report as Parliament had provisions for Committees to seek external guidance on reports.

Mr Selau asked which of the above suggestions would take precedence: sharing the BRRR with the Department or enlisting the services of an external expert before submitting the BRRR. He proposed that seeking advice should come first as there was no concrete document yet in place.

The Chairperson accepted the point but asked how it was possible logistically.

Mr Motau agreed with Mr Selau‘s proposition, but logistically it was not possible; however, it could be used going forward for oversight.

The Chairperson said the Committee had already run out of time to submit the BRRR formally and proposed enlisting the service of an expert next year.

The Chairperson hoped that the BRRR would help the Committee in its future oversight functions over the Department. The Committee was preoccupied with some issues and tended to overlook other issues of particular importance such as nuclear and skills development in the energy sector. The BRRR would help the Committee to move systematically and would be used in conjunction with the Committee’s strategic plan.

The meeting was adjourned.



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