National Nuclear Regulator (NNR) & South African Nuclear Energy Corporation (NECSA) on their 2013 Strategic Plans

Energy

29 April 2013
Chairperson: Mr SJ Njikelana (ANC)
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Meeting Summary

The National Nuclear Regulator (NNR) in assessing its risks, said that financial viability and sustainability was one of the specific areas of risk that required keen monitoring as NNR faced insufficient funding due to the diminishing state allocation that was coupled with delays in the approval and gazetting of authorisation fees; difficulties in economic conditions and non-payment of authorisation fees by some authorisation holders. A revised financial model would assist in alleviating this risk once approved by the executive authority. This model proposed a state contribution of 32% and operator fees of 68%

Key projects were the Steam Generator Replacement (SGR) for the Koeberg plant; early engagement on the nuclear expansion program to take care of all regulatory issues; R12 million upgrade of the Emergency Control Centre; R24 million  refurbishment of its laboratory to allow for independent analysis and verification capacity; continued implementation of the Self Assessment Tool (SAT).

The NNR Annual Performance Plan for 2013/14 identified performance indicators for each strategic objective. Total expenditure for 2013/14 would be R168 million which was an increase from last year’s R149 million. The bulk of the total expense would be to employee salaries and goods and services – there would be no surplus for the financial year as NNR was expecting to use all the budget allocation.

The Committee raised questions on the value of assets vis-à-vis the acquisition of assets, shortage of skills, governance of the Board, self assessment, its funding model, clarification on the Tudor Shaft, the Public Participation Forum and the filling of the position of Chief Executive Officer.

The South African Nuclear Energy Corporation (NECSA) explained that the Corporate Plan was aligned to the National Development Plan. NECSA had embarked on several key infrastructure projects including the manufacturing of fuel for SAFARI, the manufacturing plant for low enriched uranium, the SAFARI-2 research reactor project which had slowed down due to a need for the optimization of the program. Other key projects included preparations for a pressurized water reactor fuel component manufacturing facility. In its preparatory work for this, cooperation was ongoing with countries such as Russia, France and South Korea. NECSA was playing a role in the field of raw material beneficiation through the utilisation of uranium in a better way. Government supported the Ketlaphela project to manufacture active pharmaceutical ingredients for antiretroviral treatment of HIV/AIDS. This would be implemented in partnership by Pelchem, the IDC and the Swiss company Lonza.

The NECSA Group revenue for 2012/13 was R1.66 billion. The NTP Radioisotopes (Pty) Limited, the SAFARI-1 Reactor and the NECSA MTR Fuel Department managed to maintain the NECSA Group in a strong position in the radioisotope market. NECSA had established a subsidiary of NTP in Belgium to enable NECSA sell and participate in the European environment.

NECSA was working on implementing Pelchem’s strategy for growth and sustainability to ensure that its revenue increased from R203 million for 2013/14 to R376 million by 2016/17. NECSA was assessing the viability of future nuclear fuel cycle services for the beneficiation of uranium in South Africa with results expected soon.

Looking at risks, NECSA said that growing financial constraints had been experienced and the fixed cost base had increased at a higher rate than the government grant and self-generated income. It faced ageing equipment and infrastructure production plant availability. There were also business sustainability challenges and extremely tough global market conditions were experienced by both the NTP Group and the Pelchem Group. NECSA total income for 2013/14 would see sales contribute 68% with the Government grant at 25% and dropping. NECSA was planning to spend R148 million which would decrease from 2014/15 to 2016/17. NECSA was looking to increasing external sales revenue to R391 million in 2013/14 and R458 million by 2016/17.

The Committee raised questions about safety measures for uranium and harmful emissions from the Pelindaba smelter, the Ketlaphela project, the ageing infrastructure, measures for nuclear safety breaches, if Government's R500 million allocation to NECSA was value for money, research on Thorium 100, and the loss of skills. 

Meeting report

National Nuclear Regulator (NNR) Strategic Plan 2013-2018
Mr Thabo Tselane, NNR Acting Chief Executive Officer, in presenting the Strategic Plan overview, explained NNR’s vision, mandate, and functions. Key amongst government priority plans that the NNR had considered in its strategic planning process was the Industrial Policy Action Path (IPAP), the New Growth Path (NGP) and the Performance Evaluation Framework. NNR would adhere to the NGP through advancement of the transformation agenda by capacitating and employing young nuclear scientists and engineers from previously disadvantaged groups. NNR had partnered with South African Young Nuclear Professional Society to ensure that in the awareness drive to demystify nuclear energy, they were part and parcel of the process. . The NNR’s contribution with regards to IPAP would be in ensuring a safe and responsible implementation of the action plan, particularly in operations that potentially pose nuclear and radioactive waste hazards.

The NNR’s Strategic Outcome Oriented Goals were: an effective regulatory oversight and framework to assure nuclear safety and security; strengthening stakeholder relations and enhancement of the corporate image; creation of a high performance culture; ensuring financial viability and sustainability of the organisation; developing and maintaining sound organisational infrastructure; enhancement of good governance; and ensuring effective human capital management. These seven goals had been clustered into four areas: customer and stakeholder perspective; finance perspective; internal processes perspective; and learning and growth perspective.

An organogram was provided of the current NNR structure which consisted of an interim chief executive officer, four senior managers and other managers supporting the executive committee.

In its risk assessment, organisational risk level was determined to be at level 3, a level that was higher than what was anticipated. Financial viability and sustainability was one of the specific areas of risk that required keen monitoring as NNR faced insufficient funding due to the diminishing state allocation that was coupled with delays in the approval and gazetting of authorisation fees; difficulties in economic conditions and non-payment of authorisation fees by some authorisation holders. A revised financial model would assist in alleviating this risk once approved by the executive authority.

Key projects that the NNR was focusing on were:
▪ Steam Generator Replacement (SGR) for the Koeberg plant. Eskom was in the process of replacing 16 steam generators with three in each unit and the thermal power uprate (TPU) by 10% – this would require resources from Eskom and the regulator.
▪ In terms of the nuclear expansion program, early engagement was needed to ensure that all the regulatory issues were taken care of.
▪ Following the Fukushima Daiichi nuclear disaster incident in Japan, there was need for a properly resourced emergency control centre to address such incidents. It was as a result of this development that the NNR was allocated R12 million by the Department of Energy to upgrade the emergency control centre and in the upgrading process NNR considered the international space, best practice and the International Atomic Energy Agency (IAEA).
▪ NNR was planning on refurbishing its laboratory to allow for independent analysis and verification capacity. R24 million was allocated for this project and completion was expected in the current financial year (2013/2014).
▪ Continued implementation of the Self Assessment Tool (SAT): the NNR had found it necessary to review its regulations and the IAEA self assessment tool to allow for a robust and predictable regulatory framework.

Annual Performance Plan 2013/14
Mr Tselane outlined the performance indicators for each strategic objective, which included:
▪ The NNR needed to process all the applications for nuclear authorisations in a timely and accurate manner. A public participation process had been included in all the processes that required issuance of nuclear authorisations (mining facilities were now included) and the public participation process had affected the response time moving the target from 90 to 180 days.
▪ NNR had also increased its compliance assurance inspections to 348 in total which meant 58 inspections for the Nuclear Power Plants, 118 for the Nuclear Technology and Waste Products and 172 for the Naturally Occurring Radioactive Material. The increased audits would give a clear indication of the level of safety in the nuclear power plants. Non-compliance with the conditions of authorisation by the holders would lead to closure of facilities if necessary.
▪ NNR would ensure that holders have an effective emergency preparedness plan – emergency exercises were done annually at the Koeberg plant. There would be a testing of the upgraded emergency control centre to determine if it would respond as expected in case of any emergency. Real time data would be received from the operations at the emergency control centre and it would be interfaced with the emergency response centres at Eskom, the City of Cape Town and Madibeng. NNR had implemented an action plan with regards to the self assessment tool program relating to nuclear safety.  80% of the implementation plan was to be completed by the 4th quarter.
▪ NNR would be doing 29 nuclear security inspections in line with the implementation of the nuclear security strategy an increase from the previous five inspections - this would ensure that the facilities adhere to the best standards. NNR had published the Nuclear Security Regulations for the first time and these would be accessible online with time. There would be continued reviews and assessments.
▪ The completion of the NNR laboratory at the end of the year would enable NNR to do 60 – 80% of all the verification for purposes of protecting the people and the environment.
▪ In a bid to strengthen stakeholder relations and improve public perception of the NNR, there was partnership with Women in Nuclear and the South African Young Nuclear Professionals that was considered to be key in demystifying nuclear and promoting awareness on nuclear safety.
▪ In terms of improving NNR quality of work and effectiveness through compliance with national and international obligations as prescribed by the NNR Act. NNR was a signatory to the Convention on Nuclear Safety and the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management, in addition to being a member of the IAEA Nuclear Safety Committee, Nuclear Safety Standards Committee, Transport Safety Standards Committee, Radioactive Waste Standards Committee, among other Committees. Participation in these Committees would enable NNR to develop safety standard benchmarks to international practice - this would also allow for improvement where there were gaps, as well as contributing to the nuclear safety regime.
▪ The NNR had developed a funding model that would ensure that the NNR continued to remain a financially viable entity. The funding model that was with the executive authority was based on the principle of cost recovery. The NNR would also work on improving and maintaining an effective system of internal controls that would result in an unqualified audit report. NNR’s risk profile necessitated the compilation of a comprehensive fraud and risk management plan. The target was the implementation of all the controls by the end of the financial year.
▪ The NNR would also see to develop and maintain independent and effective government structures with a target of achieving 100% level of compliance to governance requirements at the end of the financial year. In developing and maintaining sound organisational infrastructure, the NNR would work on the implementation of the electronic content management program with a target of achieving 100% in the 4th quarter of the 2013/14. The electronic content management system would be completed in July – August 2013 and it would allow for the accessibility of documents and tracking of what the NNR has been doing.
▪ The performance culture in the organisation had been identified as one of the NNR’s key strategic initiative and to this end, a business excellence model was developed incorporating both the quality and performance systems. This would help in keeping people to the performance targets they commit themselves to. In striving to achieve the strategic objective of becoming an employer of choice, NNR would aim to achieve 80% average employee satisfaction level through assessments that would inform NNR of areas that require improvement.

Speaking on the budget, the Acting CEO said that NNR’s total expenditure for 2013/14 would be R168 million which was an increase from last year’s R148 million. The bulk of the total expense would be for employee salaries and goods and services. There would be no surplus for the financial year as NNR was expecting to use all the allocated resources.

The authorisation fee of the regulator had been growing at an average of 4% over the past four years and income from this was expected to increase from R102 million in 2012/13 to R141 million by 2015/16 at an average rate of 12% per year. The draft funding model proposed a State contribution of 32% for the regulator’s operations with industry contributing 68%. It was also disclosed that the declining government contribution had threatened the continuous operations of the regulator. The lack of funding was projected to grow by an average of 2%. The NNR had since received R12 million for the upgrading of the Emergency Control Centre, and an additional R17 million to refurbish NNR’s dilapidated Cape Town offices. NNR was able to move its headquarters to the new building during the past financial year which resulted in savings on rental costs. The process of purchasing the building was completed and the NNR was servicing the bond acquired to finance the property.

Discussion
Mr J Smalle (DA) speaking on the budget considerations, sought clarity on the jump in the value of assets from R23 million to R137 million that was not reflected in the acquisition of assets. No provision had been made on sales by market establishment in the funding model. Although there was mention of highly qualified skill leaving NNR, there were no details about the areas faced with shortages. How would the retention strategy address this? How many inspectors did NNR have and were they on site?

Mr L Greyling (ID,) in terms of Board governance, asked for progress on the filling of the civil society representation on the NNR Board and had civil society nominated anyone to sit on the Board? On self assessment in compliance with the IAEA requirements and the building of public confidence, the way to do this was by coming clean with the public in terms of the self assessment report that had not yet been released. The public needed to know the issues identified in the report that had to be addressed before embarking on a major nuclear build program. Would the operators (state-owned entities like Eskom and NECSA) be able to provide funding under the new funding model and would this not lead to increased costs in electricity prices. What was Eskom’s take on the new funding model? What was the NNR’s budget for the proposed nuclear expansion?

Ms B Tinto (ANC), referring to safety and protection, said that NNR had informed the Committee that there were 17 mines that had more than a limited dose exposure. What were NNR’s plans about this? She wanted clarification on the Tudor Shaft and what was happening to the people. More clarity was needed on the Public Participation Forum.

Ms N Mathibela (ANC) asked that besides Women in Nuclear and the Public Participation Forum, had Greenpeace been involved? Would the R12 million and the R24 million be enough?

Ms B Ferguson (COPE) asked if there was a mechanism in place to address the skills losses – was there a retention policy in place? What measures were in place to address the viability of NNR as a going concern? More details were required on the funding model. What drive would NNR put in place to ensure that the broader industry understood regulations and regulated practices? What was the forecast expense for updating to the new technology?

Mr S Mayatula (ANC) said that in terms of the policy discussion’s potential of impacting on the NNR’s capacitation once approved, as indicated on page 10 of the Strategic Plan, the Committee was interested to know where it could be of assistance. Would the early engagement on the licencing of the new nuclear power station and its commencement in 2012 go ahead and what would it take? Concerning the loss of two electrical engineers by NNR was there a possibility of getting others? How could Parliament assist with regards to the amendment of the NNR Act?

Mr Tshepo Mofokeng, Deputy Board Chairperson, responded that the term of the old NNR Board ended on 30 November 2012 and the NNR Board came in on 1 December 2012. The Board had representatives from labour, civil society, government and independent members. There were currently no vacancies on the new Board because it was duly constituted in accordance with the provisions of the NNR Act. In terms of the bond that was secured by NNR for purposes of its relocation, this would be reflected in the financials in July 2013 after the completion of the audit exercise.

On the sufficiency of the NNR budget, the Deputy Chairperson said that it was not enough, adding that it was not possible to know the regulator's budget needs until the build program was finalised. This would make it possible for the NNR to know the scope of its regulation as it would be able to determine the activity of the licence holder and how much would be required to carry out its regulatory activities. The R12 million for the Emergency Control Centre was not enough but it was relevant for the start of the program and capacity and activities would be increased progressively, which would call for more funds. The new funding model would enable the NNR to cover the bulk of its expenses and recruit the skills that it needed.

On loss of the two electrical engineers, the Acting CEO said that these engineers were working on a key project migrating analogue to digital as associated with nuclear power plants for the future. Leaving the project at 25% created a concern that NNR addressed through support from technical support organisations. The NNR had a talent management framework in place that considered the whole chain of talent management right from recruitment to retention with bias towards the young, women and people with disabilities. NNR was in partnership with universities producing scientists through an internship programme that would address the issue of ageing scientists.
 
The Committee was informed that the NNR had sufficient inspectors for the nuclear power plants and the NECSA facilities. It did not promote the idea of resident inspectors because it sought to avoid complacency in the performance of their jobs. The inspections planned were based on the current capacity of the NNR in the inspection department including the financials. Nuclear security was a new area and given its importance, the NNR had developed the Nuclear Security Regulations that would determine how inspections would be conducted. The operators would not be taken by surprise as they would be informed of inspections and the requirements of the regulations.

The IAEA self assessment was applicable to all regulators worldwide and the results were made public. A National Action Plan was developed and it included the Department of Health – there was also an inward looking action plan that was focusing on the nuclear regulator. Regulations were developed based on the National Action Plan including policy papers and guidance documents. The guidance documents were uploaded on the NNR website and were not a secret. The regulations would be gazetted and members of the public would be able to access them.

Responding to the question on the 17 mines, the Acting CEO said that these mines were classified as special case mines following inspection because of their potential to exceed the dose limits set although they had not yet exceeded them. There were strict compliance controls in place such as engineering controls and administrative controls (movement of people from highly concentrated areas to low concentration areas as per projection graph changes). The main aim was to ensure that the people working in those areas were not exceeding the dose limit. Inspections were based on the projections and not the actuals.

The NNR had public safety information forums for the Koeberg Nuclear Power Station, NECSA facilities and Vaalputs. There were no such forums for the mining environment and that is where the challenge of the Tudor Shaft came in. NNR had since then partnered with Women in Nuclear and South African Young Nuclear Professionals who had visited 60 areas last year creating awareness of nuclear safety culture – priority would now be given to the mining areas. NNR had also established a forum for engaging NGOs four times a year in Gauteng, Cape Town, Pelindaba and Vaalputs - responding to questions directly within NNR’s mandate with the exception of policy issues that require Government responses.

In terms of the cost of the nuclear build, Mr  Tselane said that the NNR was an implementation body and that policies were made by Government. NNR was simply regulating existing facilities and anyone that wanted to build would have to comply with the policies in place. Speaking on the Tudor Shaft, he said that the NNR was still stuck due to the court order – there were unrealistic demands from the NGOs.

Mr S Radebe (ANC) asked when the position of the CEO would be filled. He also wanted to know how much had been budgeted for the control system so that the Committee could follow up.

The Acting CEO replied that there had been a review of the plan and the Department of Energy had provided the R12 million to refurbish the emergency control and response system. More nuclear plants would call for upgrading.

The Deputy Board Chairperson noted that the Board had made a submission to the Minister on the CEO position and that the person to fill this position would be announced in time.

The Chairperson requested Members to put any further questions to NNR in writing through the Committee Secretary. NNR would be invited in future to give an update on the Tudor Shaft mine.

South African Nuclear Energy Corporation (NECSA) Group Corporate Plan 2013/14 - 2015/16
Mr Phumzile Tshelane, NECSA CEO, said the Group Corporate Plan was aligned to Government Programme of Action, the National Development Plan and in particular its priority areas. He outlined in detail how it was doing this: For the priority areas of providing quality health care and an economy that would create more jobs and improve the quality of education, training and innovation, NECSA’s NTP Radioisotopes subsidiary played a significant role in providing radioisotopes for medical applications while Pelchem provided chemicals for industrial work in key areas. Apprentices were trained by the NECSA Skills Development Centre (442 people were trained during 2012/13, 33 pre-tests were done in the Decentralised Trade Test Centre (DTTC), 246 trade test preparation and 232 artisans trade test).

In the NECSA Bursary Programme, the Graduate-in-training programme had 11 students, 15 undergraduates and five postgraduates for 2012/13; the internship programme had 36 students for 2012/13 while 62 for 2012/13 post-graduates and post-doctoral fellows were supported with research projects at NECSA.

In terms of infrastructure expansion, NECSA had embarked on several key infrastructure projects including the manufacturing of fuel for SAFARI, the manufacturing plant for low enriched uranium, the SAFARI-2 research reactor project which had slowed down due to a need for the optimization of the program. Concerning the transitioning to a low-carbon economy, NECSA was assisting South Africa to prepare itself for a carbon constrained future through nuclear energy. With regards to South Africa's presence in the region and the world, NECSA produced work that was of a global nature especially the sterile insect technique and the sealed high activity radioactive sources that were being exported into the rest of Africa and South America.

The CEO referred to the Government’s Programme of Action on health outcomes and the improvement of life expectancy, NECSA’s technology in the medical area contributed to therapy in the diagnosis of cancer and tuberculosis that was sometimes associated with HIV. NECSA’s subsidiaries (NTP and Pelchem) product sales on the world market were contributing to South Africa’s balance of payments in line with the Government outcome of decent employment through inclusive economic growth. For details on Government’s outcome on skills, environmental protection, see the presentation document.

The CEO said that in its alignment with IPAP 2013/14-2015/16, the Government supported Ketlaphela project (to manufacture active pharmaceutical ingredients for antiretroviral treatment of patients with HIV/AIDS) would be implemented in partnership between Pelchem, the IDC and Swiss company Lonza. NECSA was participating in the Nuclear Energy Sub-working Group on skills, localization and industrialization which was tasked with the development of localization strategies and plans to support the local industry.

The CEO in addressing its alignment with the Strategic Integrated Projects (SIPs) said that for SIP 4 dealing with economic opportunity, NECSA was the second largest employer of high level skills (2000 employees). On higher education infrastructure (SIP14), NECSA provided research platforms to scientists and engineers from a cross-section of sectors. For SIP 10 on electricity expansion, NECSA’s SAFARI-2 project was being optimized to ensure that NECSA could support future Government plans.

NECSA's achievements
NECSA Group revenue for 2011/12 including grants and investment income was R1.64 billion while the forecast group revenue for 2012/13 was R1.66 billion. NTP Radioisotopes (Pty) Limited, the SAFARI-1 Reactor and the NECSA MTR Fuel Department managed to maintain the NECSA Group in a strong position in the radioisotope market. The NECSA Research and Development division continued to improve and grow with 17 innovation disclosures and much higher figures were expected in the future.

NECSA had donated a PET-CT scanner to Tygerberg Hospital to assist with oncology diagnosis. There was ongoing collaborative work with Steve Biko Academic Hospital and the University of Pretoria on prostate cancer imaging and tuberculosis. Other achievements included feasibility studies for the re-establishment of the nuclear fuel cycle programmes in South Africa; the accreditation of the Nuclear Skills Development Centre by various Sector Education and Training Agencies (SETAs) and the recognition of the Decentralised Trade Test Centre that would lead to an increase in the through-put of training of critical skills within NECSA.

NECSA contributed to a range of policy making and public participation processes in addition to participation in national and international collaborative programmes in the field of nuclear research and development and Generation IV nuclear energy systems. NECSA’s Visitor Centre continued to play a significant role in demystifying nuclear science to the public.

International collaboration
NECSA was working with the IAEA in the establishment of the Comprehensive Test Ban Treaty Organisation Radionuclide Monitoring Station in the Western Cape. This would allow for the monitoring of activities in nuclear tests. NECSA had established a subsidiary of NTP in Belgium to enable NECSA sell and participate in the European environment.

Key Objectives
The CEO said that the NECSA Group planned to establish the Nuclear Manufacturing Centre as a viable entity as one its objectives. The Manufacturing Centre was already operational with optimisation to ensure that it was free standing with no dependence on Government grants. NECSA was working on implementing Pelchem’s strategy for growth and sustainability to ensure that its revenue increased from R203 million to R376 million by 2016/17. NECSA was assessing the viability of future nuclear fuel cycle services for the beneficiation of uranium in South Africa with results expected in the near future.

Key objectives in radiation science and applications cluster included: maintenance of full operational capability of SAFARI-1 and the implementation of the reactor’s ageing programme; continue with the feasibility study on a multipurpose research reactor to replace SAFARI-1 at the end of its operational lifetime – the growth of NTP was based on this and other processes. NECSA planned to grow NTP Group income from R952 million (2012/13 forecast) to R1,563.9 million by 2016/17.

Key objectives for NECSA as host of the nuclear programmes cluster, it planned on increasing its research, development and innovation outputs but this would be done within NECSA’s safety culture. It also aimed at a reduced but sustainable salary bill within existing funding constraints (included recruiting and retaining skilled individuals). It would work at maintaining its ageing infrastructure at a suitable level.

Management priorities for near term included: obtaining early shareholder support for key strategic projects; raising the performance of Research and Development, the Nuclear Manufacturing Centre, NURAD, the NTP Group and Pelchem Group; increasing the awareness of NECSA research and production outputs and the positive impact thereof; finding sustainable funding models for the expansion and enhanced viability of NECSA subsidiaries.

NECSA would be expanding Research and Development collaboration with iThemba Labs in the Western Cape and more collaboration would be continued with other partners. NECSA was working on a programme with other universities in the world to allow for fellowships in these institutions. NECSA was strengthening its project management and system engineering capabilities as well as the business development capabilities. In terms of skills development and transformation, NECSA was advancing employment equity but in an environment of low recruitment achievement of employment equity would not be as expected. The optimisation and efficiency of all NECSA resources was NECSA’s primary focus.

Key risks
The CEO said growing financial constraints had been experienced by NECSA Corporation and the fixed cost base had increased at a higher rate than the government grant and self-generated income. There was ageing equipment and infrastructure and less production plant availability. There were business sustainability challenges and extremely tough global market conditions experienced by both the NTP Group and Pelchem Group.

Critical success factors
These were: improved sustainability of NECSA; expansion of efforts to access research based and other grants from the Department of Science and Technology and its entities; obtaining external funding for commercial projects; optimise the business relationship between NTP and its subsidiaries to ensure that the required growth and profitability targets were achieved within an appropriate governance framework; and external direct investment in Pelchem which was vital for its future development and sustainability.

Budget
The CEO presented the NECSA Group total income for 2013/14, saying that sales would contribute 68% with the Government grant at 25% and dropping. NECSA needed to focus on sales otherwise it would not be sustainable. The NECSA Group expenditure for 2013/14 showed 42% would be spent on personnel, general and other expenses was 24%, manufacturing expenses was 22% and consultant fees 1%.

In terms of the NECSA Group capital expenditure for 2013/14, NECSA was planning to spend R148 million which would decrease over the next two years. From a per company basis, the Corporation was the highest contributor, followed by NTP Radioisotopes and Pelchem. NECSA would be asking for section 54(2)(d) approvals from the executive authority for Capex in accordance with the Public Finance Management Act for some of its capital projects such as the LEU Fuel and Target Plate Manufacturing Facility; SAFARI-2; and HEU Recovery from NTP Tailings.

Human Resources
Mr Daniel Moagi, Group Executive: Human Resources, said that the new NECSA Board was busy refining the NECSA Strategy that would inform the implementation of the new organisational structure, stabilisation of the human resource environment, transformation and the implementation of the business plan for the Nuclear Learning Academy as the key priorities for the financial year.

Other human resource development priorities included: increasing the ratios of technical staff in regard to support staff; increasing the number of Previously Disadvantaged Individuals (PDIs) technical staff; increasing the number of researchers with Masters and PhD degrees – NECSA was losing a lot of young people and so there was need to ensure that there was enough capacity to replace them; establishing a nuclear education and training unit within the NECSA Learning Academy; establishment of an advance manufacturing skills welding centre of excellence; and launching the Radiation Protection Training Centre – this would be established in the next two months. Mr Moagi said that achieving the targets for the appointment of Black Professionals and Technical Staff would be a challenge as NECSA was not heavily recruiting.

Predetermined Objectives and Key Performance Indicators
The CEO said NECSA was looking to increasing the external sales revenue from R330 million in 2012/13 to R391 million in the 2013/14 and R458 million by 2016/17. NECSA was aiming at increasing its research outputs from 36 in 2012/13 to 55 by 2016/17. The targeted increase in innovation disclosures was was 23 in 2016/17 from 15 in 2012/13. NECSA was looking at achieving 100% execution in its Decontamination and Decommissioning programme and 55% Black technical staff composition by 2016/17.  

Discussion
Ms N Mathibela (ANC) asked for an outline of NECSA’s key safety measures with regards to uranium and the harmful emissions from the proposed Pelindaba smelter. Was the HIV/AIDS problem solved in light of Ketlaphela project? What measures were in place to rectify its ageing infrastructure? More clarity was needed on the beneficiation of uranium.

Mr S Radebe (ANC) asked for progress on NECSA’s measures with regards to Nuclear Safety Security breaches. What were the details of 'Personnel and related expenditure'? What was the reason for the reduction of graduates (graduates-in-training scheme) when there was a scarcity and why were there no safety and security learnerships in 2013/14? Although there was an increase in the number of Previously Disadvantaged Individuals, this was a small margin – how would the gap be closed?

Mr L Greyling (ID) wanted clarification on the progress in the Ketlaphela project involving the Swiss company Lonza for the manufacture of ARVs. Although NECSA had some commercial operations, its financial viability was dependent on government grants to the tune of R500 million a year. Was NECSA worthwhile and were the objectives being pursued national objectives? NECSA could play an important role in expanding its operations in the training of artisans given the scope of buildings at its plants – more money could be generated from the SETAs.

Mr J Smalle (DA) asked where the baseline was in terms of the Government support of 25%. Was 3% spent on maintenance and repair efficient, given the number of shut downs at some of the buildings? There was need for clarity as to why the spending on Gammatec was decreasing. Thorium 100 was a radioactive element better than uranium – what was NECSA’s research and involvement in pursuing this?

Ms B Ferguson (COPE) asked for clarity on NECSA’s income and the government grant. What was the short term plan to ensure that NECSA was appropriately skilled – was there a retention plan and if so, what was it? What kind of education and public participation was in place to create awareness of safety programs and more so about the uranium smelter?

Ms B Tinto (ANC) was concerned with the decreases in training while there was a shortage of skills. There should be more training.

The Chairperson asked why there was a loss of skills and to whom? How did the Generation IV technology relate to the PBR fuel technology? Why was NECSA so confident on the expenditure decrease? He hoped that NECSA’s localisation policy would still be in line with Broad-Based Black Economic Empowerment. What role would the pressurised water reactor play in the nuclear build programme?

The CEO in response to the questions said that the pressurised water reactor was the technology currently being used at Koeberg and it would be used for any the nuclear plants that South Africa builds. With regards to the decrease in expenditure, he was referring to the capital expenditure of selected projects in the MTEF period and not the annual expenditure. Less money would be spent in future on the programs that were presently receiving much focus.

The CEO replied, in terms of the Generation IV technology, that NECSA along with PBMR and Eskom were working on the PBMR project with NECSA taking charge of the fuel development project. Expertise had been developed in handling coated-fuels technology within NECSA. The PBMR fuel development labs were currently in NECSA and there was a process of transferring the decontaminating and decommissioning of these from PBMR to NECSA. Decommissioning was limited to what would not be used – there was a potential of re-using this technology within NECSA.

Thorium 100 was a potential fuel that could not be ignored. NECSA was going collaborate with the University of North West and companies that were pursuing this. With regards to NECSA losing skills, the CEO said that young people followed trends. The resignations in NECSA were as a result of uncertainty and some had moved overseas. However, some had reapplied to join NECSA.

On the safety of the smelter, NECSA decontaminated buildings, equipment and vessels but in some material, there was remnant contamination. Such material could not be given to the scrap metal merchant because of the remnant radiation. The role of the smelter was to dispose of such material while safeguarding the safety of the public.

In terms of the radioisotopes and the Ketlaphela project, the CEO said that this was not the end of HIV because the disease was a multifaceted one, driven more by infection than by the ability to treat. NECSA could only apply some of the solutions in the treatment. In responding to the ageing infrastructure and 3% maintenance expense, the CEO said at one point NECSA sites had 8000 people which meant full untilisation but currently there were 2000 and so the maintenance level could not be the same. The financial resources were not enough and so only critical infrastructure was being maintained highly.

NECSA had not asked for permission from the executive authority with regards to the beneficiation of uranium but feasibility studies were ongoing. Security breaches happened in other countries like the US. South Africa had not had a recent breach and R13 million was allocated to upgrade security around the facilities.

The CEO, in answer to the progress with Pelchem and Lonza on the Ketlaphela project, said that this was a NECSA initiative. However control had moved from NECSA to the Department of Science and Technology because it was a science and technology project. NECSA’s stake holding in the project was 10% and it did not control the progress of the project. Lonza was funding the project.

On whether R500 million was value for money, the CEO said that was value for money but more was needed although NECSA was not expecting any in the short term. He added that in terms of the 25% from the Government, he did not know where the line was because this was determined by what NECSA wanted to do and what the State wanted to achieve. A decline of state funding to zero would leave certain activities unattended to by NECSA.

Mr Moagi, in response to the human resource questions, said personnel and related expenses included amongst others: recruitment, overtime and standby allowances. With regards to the loss of skills, NECSA lost staff due to uncertainty. Until December 2012, NECSA’s standpoint had been that there would be zero salary increment for the entire staff because of fear of contravening the PMFA Act by spending what it did not have – and there was a price to pay. NECSA had to find ways of bringing in young talent which explained the internships that were increasing due to partnerships with other institutions.

With regards to safety and security learnerships, these were not funded from the NECSA fiscus but rather by the SETAs. There was no indication whether the relevant SETA was going to provide any funding for the current financial year hence the explanation as to why there would be learnerships. Should the funds come through, then the figure would change to reflect the number of learnerships. The CEO added that although NECSA had been unable to raise funds, it was spending real time to ensure that the interns were properly trained.

The Chairperson read out to the Committee Members a revised Committee Report on the Independent System and Market Operator Bill 0B9-2012] with recommendations to the National Assembly. [The report was not circulated to persons that were not Committee Members]. The Bill would be considered by the National Council of Provinces before being brought back to the National Assembly.

The meeting was adjourned
 

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