Briefing by Department on Budget

Meeting report

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The aim of this report is to summarise the main events at the meeting and identify the key role players. This report is not a verbatim transcript of proceedings.

MINERALS AND ENERGY PORTFOLIO COMMITTEE
27 FEBRUARY 2002
BRIEFING BY DEPARTMENT ON BUDGET

Chairperson: Mr R. Mofokeng

Documents handed out:
2002/03 to 2004/05 MTEF Presentation
Energy Branch - Budget 2002/03
Mineral Development Branch
Mine Health and Safety Branch- Budget METF 2002/03
Mine Health and Safety Inspectorate 2001/02

(Copies of the additional documents which are currently available in electronic format can be requested from the Contact Monitor, Ismail Hoosain, at [email protected])

SUMMARY
The Department briefed the Committee on the Budget. The Committee was also given a breakdown of how the budget affects the various sub-departments within the Department.
The Committee raised concerns on a variety of issues and the Department was able to give responses where they were able.

MINUTES
Budgetary Briefing: 2002 to 2004 MTEF
Adv S. Noxgina, Director General of Minerals and Energy presented the Committee with an overview of the budgetary process, its financial implications and how it impacts upon the vision, challenges and priorities of the Department.
The delegation from the Department was Ms M. Hermanus (Mine Health and Safety), Mr N. Molioi (Minerals Development), Dr R. Crompton(Energy), Ms N. Magubane (Electricity) and Dr. S. De Waal.
Dr Crompton, Mr Moloi and Ms Hermanus had also presented the Committee with an overall picture of their key focus areas within their sub-departments.

Discussion
Mr I Davidson (DP) asked of the R600m that had been allocated to Eskom for electrification, how much had already been spent.

Ms N. Magubane noted that a total of R600m had been allocated towards electrification for last year. She stated that from this amount R25m had been allocated for business planning. The Department had however only used R13m of the R25m. Expertise from within the industry itself was used to develop capacity and in so doing R12m had been saved. In the past huge expenses had been incurred on the use of outside consultants.

Mr Davidson also asked what the total cost of electricity restructuring was.

Ms Magubane pointed out that huge delays had caused the costs to escalate. The process of restructuring was supposed to be complete within 18 months. Ms Magubane had estimated the total cost per annum to be R90m.

Mr Davidson asked why there had been no mention of government's investment in the Pebble Bed Modular Reactor.

Dr S. De Waal stated that government had not made an investment in the project. Eskom, the Industrial Development Corporation and two other private sector investors had funded the project.

Mr Davidson asked what had been the cost of the Electricity Supply Industry restructuring.

Ms Magubane said that figures on cost had not as yet been assimilated.

Ms D. Motubatse (ANC) asked why had the filling of vacancies within the Department not been a priority. She also asked whether regional offices of the Department had gone through restructuring as well.

Mr Noxgina stated that the filling of vacant posts was a priority of the Department. Budgetary constraints had limited the expediency within which posts could be filled. Mr Noxgina stated that he was aware of the problems at regional offices and that plans to restructure them were in the pipeline.

Ms Motubatse asked what portion of the Budget was to be allocated towards Black Economic Empowerment. She also asked whether a task team had been appointed to track the restructuring process.

Mr M. Baloyi (ANC) asked whether Eskom and municipalities had made finances available for electrification besides the R950m that had been allocated by government.

Mr Baloyi remarked that the extent of the Department's involvement in electrification seems to end at the planning stage. He asked what was the Department's involvement in electricity rollout.

Ms Magubane noted that criteria had been set in order to ensure that funds were appropriately spent. The Department was also engaged in evaluating distributors of electricity to ensure that maximum rollouts take place.

Mr M. Mongwaketse (ANC) asked whether Eskom's expenditure on electricity restructuring prior to the Department taking over the process was more or less than the allocated amount of R950m. He also asked whether the Department had lacked the necessary expertise to carry out the restructuring.

Prof I. Mohamed (ANC) asked whether capacity building had been taking place in the Department.

Dr De Waal noted that capacity building was taking place but that funds were limited.

Prof Mohamed asked whether the NNR had problems of capacity given the recent embarrassment to South Africa of not wanting to allow two nuclear ships to enter our territorial waters.

Mr Noxgina reacted that the ships were not allowed to enter South African waters because they had refused to abide by our laws and had further refused the NNR permission to inspect their vessels. There was therefore no lack of capacity on the NNR to perform its functions.

Prof Mohamed asked why Mintek had sold its technologies abroad and why they had not been used by our own industries.

Mr Moloi stated that Mintek was selling its technologies abroad without intervention from government.

Mr B. Bell (DP) was concerned that if R900m was to be spent on electrification with whom would ownership of the infrastructure lie, Eskom or the Department.

Ms Magubane noted that Eskom would hold rights to electrify for a period of five years and thereafter it was to vest in municipalities. Mr Noxgina said that he was unsure as to with whom the ownership of infrastructure would vest.

Ms L. Xingwana (ANC) asked if transformation did take place at lower levels within the Department. She felt that the Eastern Cape was one of the poorest provinces and electrification in rural areas was a dire need.

Ms Magubane stated that vigorous electrification was taking place within the Eastern Cape.

Ms Motubatse was concerned that most of the inspectors on mine health and safety were well in their golden years. She asked whether their advanced ages affected their performances.

Ms Hermanus stated that the Department had to optimize the skills and experience that they had at their disposal. She added that the Department was looking at ways of addressing the issue.

Mr Bell asked if there had been increases in the amount of reported Tuberculosis(TB) cases. He also asked whether AIDS had an impact on the amount of TB cases.

Ms Hermanus stated that the Department had no figures at their disposal on whether AIDS impacted on TB. She however did state that the amount of TB cases had increased.

Mr Davidson asked what forms of capitalization was the Department engaged in.

Mr Moloi said that government had made funds available to small mining operators in order for them to carry out feasibility studies.

Mr Davidson asked if it was correct that the Department hoped to create between 300 000 and 400 000 jobs. He also asked how the Department had hoped to achieve this goal.

Mr Noxgina reacted that task teams had been appointed to address the issue.

Mr E. Lucas (IFP) was concerned about rehabilitation and poverty alleviation.

Mr Noxgina stated that unfortunately rehabilitation had only taken place since 1991 when legislation had come into effect providing for it. He was pleased that polluting companies now had to pay to persons who had suffered as a result of their negligence.

Mr Lucas asked if mines were still experiencing problems with water seapage.

Mr Moloi stated that the Department was addressing concerns in relation to it.

Ms Mtsweni asked what progress was being made to stamp out illegal mining practices.

Mr Moloi pointed out that most illegal small-scale mining practices was due to poverty and unemployment. The Department's approach was therefore not to criminalise these actions but to assist these miners to become legal.

Ms E. Ngaleka (ANC) asked whether funds from the Skills Development Fund were being accessed for training.

Ms Hermanus stated that the Mine Qualifications Authority was accessing funds from the Skills Development Fund.

Mr Mongwaketse asked if the Department was aware of the fact that foreign countries owned mining rights in South Africa.

Mr Moloi stated that the issue was to be dealt with by the Minerals Development Bill.

Mr Mongwaketse asked a follow up question on when did the Department envisage completing the Minerals Development Bill.

Mr Noxgina noted that the Bill had been delayed because all issues pertaining to money had to be removed from the Bill. A separate money bill containing the monetary issues had to be drafted and National Treasury was currently scrutinizing it. It was hoped that both Bills would be tabled in Parliament before the end of March.

Ms Xingwana asked what portion of the Department's budget was being used to uplift women in rural areas.

Mr Moloi noted that initiatives had been put in place to assist women who were involved in mining.

Mr G. Oliphant (ANC) asked what was the process relating to the Black Economic Empowerment (BEE) Charter.

Mr Moloi noted that the Departmnt had finalized the draft BEE. The Minister and the Director General had to still approve it and thereafter industry stakeholders would discuss it.

The Chair made a point that it was difficult to influence the budgetary process as it was only passed on to Parliament once it was already finalized.

The meeting was adjourned.

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