Committee Report on Department of Energy Strategic and Annual Performance Plan 2013

Energy

06 May 2013
Chairperson: Mr S Njikelana (ANC)
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Meeting Summary

The Chairperson reminded Members that the meeting’s purpose was formally to adopt the Committee’s report on the Department of Energy budget (Vote 29). The report was the Committee’s work, and the meeting was merely meant to formalise the process so that the report could go through the system before the budget vote was tabled on 14 May.

Members recommended that Petroleum Oil and Gas Corporation (PetroSA) come and brief Parliament especially that new information had become available since the entity came to brief the Committee two weeks previously. It appeared that the Central Energy Fund had conducted an investigation into PetroSA, and as a result a number of senior officials had resigned following the preliminary report. The Committee recommended a briefing and report from PetroSA, especially on its international activities.

Members also recommended that the Committee should get regular updates from the Minister on the backlogs regarding the maintenance of the distribution grid. Members should see what progress was being made on the distribution side of electricity in municipalities. Also Members should know what plans there were from the Department to ensure that this issue was addressed.

The Committee also recommended that a workshop be held where the Department and PetroSA could brief the Committee on international commitments and how the oil markets functioned. The Chairperson said that he would apply his mind to the workshop idea.
 

Meeting report

Opening remarks
The Chairperson reminded Members the meeting was intended to formally adopt the budget vote 29 report, on the Department of Energy (DOE) portfolio. The report was the work of the Committee and the meeting was merely meant to formalise the process so that the report could go through the system. The report would be debated on the 14 of May. The report reflected what Members had discussed, but if anyone picked up anything it should be highlighted.

The Chairperson apologised for submitting the recommendations late and said this was so because he had to attend a workshop over the past weekend.

Apologies from Mr K Moloto (ANC) and Ms N Mathibela (ANC) were recorded.

Committee Report on Department of Energy Strategic and Annual Performance Plan 2013
Mr L Greyling (ID) said the Committee needed to have a recommendation around the Petroleum Oil and Gas Corporation (PetroSA) especially that new information had transpired since the entity came to brief the Committee. The Committee could recommend a briefing from PetroSA especially relating to its international activities. The Committee needed a report on this matter.

Mr Greyling also commented that the report did not say much about energy planning. The Committee should get an update and a timeline on energy planning and as well as a review on the Integrated Resource Plan (IRP). There had to be a timeline for that and how the Department fitted into those deadlines.

The Chairperson commented there was no need to hurry, and that the two-page recommendations were issues that the Committee had dealt with. He apologised for those acronyms that were captured incorrectly. He also indicated that in the final report they would be written in full. The South African National Energy Development Institute (SANEDI) drove the programmes at the bottom of page 1 of the recommendations. It was important that, whilst SANEDI got off the ground, the Committee received reports from those programmes. Such programmes were the South African Smart Grid Initiative (SASGI), Renewable Energy Centre of Research and Development (RECORD), SA Carbon Capture and Storage (SACCS), Work for Energy, Centre for Energy Systems Analysis and Research (CESAR), and Green Transport. It was crucial that the Department and its entities reported regularly on key programmes.

Prof S Mayathula (ANC) pointed an error on the last line of page 1 in so far as the date 20 March 2012. It was pointed out that the date ought to be changed to 16 April 2013, when the briefing from the Department was received.

Prof Mayathula also pointed out a reference to the “end of this month” on page 3. It was needed to indicate what month that was. Also on page 4, the verb in the statement that “all funded 560 DoE staff positions are filled by September 2012” ought to be changed to the past tense so as to indicate that this ought to have happened in the previous year.

Mr S Radebe (ANC) concurred and said the activity should have happened last year. The grammar ought to reflect that.

The Chairperson proposed that the sentence be changed to read “was to ensure that all the 560 funded posts were supposed to have been filled by September 2012”.

Mr J Selau (ANC) commented that the sentence on page 4 about “approving organisational structure in this calendar year” needed to state which year.

Prof Mayathula also commented that on page 11, in paragraph 3.6, “current year” should be removed and replaced simply with “financial year 2012/13”.

Mr Greyling commented that the Committee also needed to make a recommendation around getting regular updates from the Minister on the backlogs in the maintenance of the distribution grid. The Members should see what progress was being made on the distribution side of electricity in municipalities. Also Members should know what plans there were from the Department to ensure that this issue was addressed.

The Chairperson asked that the recommendation be made to sound “more crispy”

Mr Greyling said that the Committee should receive an update on initiatives and plans to address challenges in maintenance and distribution.

The Chairperson commented the Committee had had lengthy sessions looking on the distribution industry. He said that the recommendation was indeed correct.

Mr Selau commented said that the President, in his State of the Nation Address (SONA) 2012, was specific on what happened in which provinces in relation to the infrastructure development. The Committee did not seem to be recommending anything on infrastructure development.

The Chairperson pointed that the item had been raised in the recommendations, page 1, bullet 1, sub-bullet 3 regarding Strategic Integrated Projects (SIPs). However, the recommendation could be written in such a detailed manner as to include words “as directed by the President in the SONA 2012”. This gave the Committee an indication as to whether departments were responding to presidential directives. He commented that in this year’s SONA not much was said about the issue. This was important because the infrastructure projects were national but had strong provincial characteristics. As DoE reported to Parliament, it ought to analyse the SIP projects.

Mr Radebe asked if there was a particular reason why the recommendations used the words ‘joint venture’ as opposed to ‘collaboration’.

The Chairperson replied that it would be good to have a global picture as to what was the Department doing with universities. He said that the word ‘collaboration’ sounded fine.

Mr Radebe also commented that the recommendation should also indicate universities and Further Education and Training (FET) colleges.

The Chairperson concurred and said this was ideal, as there was talk to link Sector Education and Training Authorities (SETAs) to FET colleges. This also would allow for monitoring by the Committee.

Mr Greyling commented that the Committee also needed a recommendation on how to deal with the procurement programme. Members should define how the Committee wanted to tackle the issue. He said that he understood that there was a process and that the Committee needed not to get involved now. But at some point Members should be thinking how this matter would be dealt with. This was the biggest issue in the energy sector; if decisions were going to be made around this, the Committee needed to have some process as to how it dealt with the issue.

He recommended that an assessment be done for the International Atomic Energy Agency (IAEA) in terms of South Africa’s embarking on the new process. There was a need for a briefing on that so Members could understand what challenges were there. But also the Committee should get involved in the matter of the IAEA’s study around financial feasibility. The Committee should find a way to get involve and deal with some of these issues.

The Chairperson commented that the Committee ought to look at the three recommendations brought up by Member Greyling. He explained that there had been issues at PetroSA, and that there was a preliminary report by the Central Energy Fund (CEF). A final report would be received either from the Minister or the CEF. There had been resignations and most related to the preliminary report. He requested that the Content Advisor indicate if this was where things were in relation to PetroSA.

The Content Advisor replied that the Committee still awaited an update as promised.

Mr J Smalle (DA) commented if the recommendation was agreed to then there must be a reference in the report that indicated that PetroSA was to report back to the Committee. The issues about downstream and upstream acquisitions that were being made should be shared with the Committee. He said this was the whole issue about studies undertaken on the Mthombo refinery project. He commented that when PetroSA made a presentation on the Mthombo refinery project, there was no mention about the downstream product within SA borders and how the entity hoped to go back. The Committee should at some stage get a report onto this matter.

Mr Greyling commented that it was concerning that PetroSA reported to the Committee about two weeks ago and yet failed to hint to the challenges it faced. The entity did not even mention that a report was being developed on financing. The Committee should investigate far more deeply into PetroSA when performing monitoring; the Committee should get a briefing on all of PetroSA international activities. This was not the first time that money had been wasted by this entity.

The Committee should receive a briefing on the strategic value of PetroSA in oil exploration and gas. The entity was not giving a complete picture; PetroSA was engaged in activities outside of the country, but the question was whether the Committee had sufficiently looked at the deals, for example, in Equatorial Guinea, Ghana, and Egypt. The Committee needed to do a thorough monitoring on how the company conducted itself internationally.

Mr Smalle said that the planned programme of drilling five wells in terms of the Ikhwezi project in the next couple of years, and the deviation on some of the regulations and procedures by PetroSA, clearly indicated that much probing was needed. Deviation was taking place, and hopefully the preliminary report would deal with some of those deviations. This was a state entity, and when a state entity deviated then the Committee needed to understand why.

Mr Selau said that when making a report of this nature, the Committee needed to be careful when deciding on what to include. He agreed that there had to be a thorough monitoring, but only at the correct time. The Committee should get a report on what was happening at PetroSA, including its international activities but that information could not be condensed into this kind of a report.

Ms B Tinto (ANC) concurred and said the Committee could not rely on the Mail & Guardian for information. PetroSA had a responsibility to report to the Committee. And only when such a report was presented to the Committee could it engage on the matter.

The Chairperson said Members should rest assured that he was watching the developments on the matter closely. He reminded the Committee that he made a statement in Parliament; one did not just make statements because he wanted to be seen as nice. He supported the Minister and CEF for having developed a preliminary report on PetroSA. The comment there was limited and was subject to the outcome of the final report. If the Committee wanted to include one or two lines on the matter, it could be included, to the effect that the Minister should, after finalisation of the process, come and share information with the Committee. It should be left as broad as that, and then finer details would be worked out with the Minister.

Mr Greyling said that the recommendations were fine, but the Committee needed to consider a workshop where the Department and PetroSA would brief the Committee on how they conducted themselves overseas, and how the oil markets were. This would help Members understand the kind of environment in which the Department and PetroSA operated.

The Chairperson noted the comment on the workshop. Although the Department had committed on the Integrated Energy Plan (IEP), hopefully Members did not mind having a one-liner to say that the Department should return to brief the Committee on the IEP. Once that IEP draft had gone through Cabinet, it became a public document. But also this should be linked with the Integrated Resource Plan (IRP). The recommendation on regular update on the maintenance of the distribution networks should be included.

The Chairperson said that the Department should report back to the Committee on how it crafted its project management tools. 95 % of DoE’s budget was immediately transferred to entities. The Committee needed to know how DoE was doing in monitoring the budget. He requested that he be allowed some time to apply his mind to the workshop idea.

The meeting was adjourned.
 

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