Nuclear Energy Corporation of SA & National Nuclear Regulator on their 2013/14 Annual Reports


17 October 2014
Chairperson: Mr F Majola (ANC)
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Meeting Summary

The National Nuclear Regulator (NNR) presented its Annual Report for 2013/14 and cited some of its main achievements. In this year, there had been an increase, comparatively, in the number of targets fully achieved, to 82.6%, and NNR aimed to raise this to 85% in the coming year. NNR had achieved an unqualified, clean audit report for the first time in ten years. It was noted that NNR was gaining reputation as an internationally recognised regulator, with a number of partnerships across the globe, and had a firm presence in the region. It had implemented large-scale HR programmes to strengthen the HR management including increasing the staff complement and skill levels. There were no nuclear occurrences in this year, and more stringent safety requirements had been introduced. The SAFARI-1 research reactor was highlighted, which had a lifespan to 2030. Several capital projects, including replacement of Koeberg reactors, were under way and NNR was preparing itself for new nuclear procurement, although the point was made strongly that government needed to keep it fully advised of policies and upcoming proposals. Its financial situation was sound, it had raised a bond to purchase a building and its regulatory capacity was rowing. The funding model was a combination of revenue from grants and licensing, but some of the comparative funding models and the proposals that had been made to National Treasury were outlined. There was, however, a problem in that National Treasury, for both NNR and NECSA, had wrongly assumed that funding set aside represented a real surplus, instead of recognising that it was ring-fenced for capital projects, and on this basis had cut funding. If this was not reversed, NNR would be unable to achieve its mandate. It was keeping up to date on IT. Other challenges included the need to procure equipment from overseas, which caused delays and was hindered by exchange volatility. There was some mismatch because the Department of Health was responsible for monitoring medical nuclear waste and this was a function that should be transferred to NNR. Members asked about the staffing and the risk of staff being poached, asked about succession planning, emergency control, and the strategy for the legacy sites. They asked if government should not be strengthening the regulatory capacity, called for updated International Atomic Energy Agency reports, which would inform the Committee about the capacity and readiness for nuclear procurement, asked what the ideal budget and staff complement would be, as well as the legislative amendments needed, and asked for detail on an abandoned uranium mine in Phalaborwa,as well as requesting more detail on the irregular expenditure, and a breakdown on salaries and increases. More clarity was also requested on what minor incidents had entailed. It was noted that the Public Information Forum was now running.

The Nuclear Energy Corporation of South Africa (NECSA) gave a brief report, noting that it too had achieved an unqualified audit report. NECSA was trying to demystify the topic of nuclear energy use for the public. It was, like NNR, very concerned at the proposal to cut funding. Members asked how many women were in training programmes, and were placed in jobs by NECSA, and wanted to know where it sourced its researchers and with which universities it worked. More detail was requested on the plasma to waste energy projects, and one Member asked why government funding to NECSA was justified, and what core business it carried out to the direct benefit of the public. Further explanations were provided on the situation at Pelchem and the loss of a cell at NTP, which had not in fact caused damage. Members were interested in what was being done about nuclear waste, its future plans, and developments in nuclear forensics and pharmaceuticals. It was also asked how it would prevent irregular spending.  

Meeting report

National Nuclear Regulator (NNR): Annual Report 2013/14 briefing
Dr Bismark Tyobeka, Chief Executive Officer, National Nuclear Regulator, reminded the Members that the National Nuclear Regulator (NNR or the Regulator) was an independent world class regulator, which aimed to ensure safety and protection against nuclear damage and abuse. The Committee was reminded of the alues, key functions and mission statement of the NNR (see attached presentation for details).

The NNR annual performance was discussed. In the financial year (FY) 2013/2014, the NNR achieved 82.6% of the targets, compared to the 2012/13 financial year, where it had achieved 81%. It aimed to fully achieve 85% of targets in the following financial year. However, in quarter 3 of the 2013/14 year, there had been a decline, but it assured the Committee that this would improve to better overall compliance in the year.
Some of the most notable highlights were given. The NNR conducted peer reviews to Ghana, Kenya, Botswana and Mauritius during the FY. South Africa has hosted a number of workshops and hubs on behalf of the International Atomic Energy Agency (IAEA) and had worked in partnership with a number of countries during 2013/2014. It was a great step forward, as the world recognised the NNR’s expertise in moving and handling nuclear material. There were no nuclear occurrences in South Africa during the last year. It was specifically mentioned that after the Japanese disaster, Koeberg was instructed to follow more stringent international safety requirements. However, there was a clean slate for occupational exposures at Koeberg during the year.

He specifically also highlighted the SAFARI-1 research reactor, which would have an operational lifespan until 2030.

The NNR had been researching best practices for HR management and there had been an extensive review of HR processes during the year. The NNR had embarked on an expensive re-categorisation process to allocate personnel to correct positions within the body.

A number of capital projects were under way, including the replacement of the Koeberg reactors.

Mr Dakalo Netshivhazwaulu, Chief Financial Officer, NNR, stated that the NNR had raised a bond to purchase a building, and its financial situation was very solid, with a low liability base. The regulatory capacity was growing. The current funding model was based on government grant fees and licensing fees. The government fees were R35 million in 2011/2012 and R31million in 2013/2014. National Treasury was planning to reduce this to R10 million in the next two years. This was a major problem, given the need to grow and replace capital expenditure and skills, especially in light of the new plans for an additional nuclear reactor in South Africa.

Mr Jeff Lever, Director, NNR board, addressed the auditing procedures covering risk and performance. IT was highlighted as a hurdle that needed to be dealt with. A proposal for a paperless system had been made and was being pursued, as information processes were vital within the regulator. The main performance drivers were good. The NNR obtained a clean audit report, the first time in ten years.

Dr Tyobeka continued by setting out the challenges to the NNR. NNR needed to procure overseas equipment, but that led to delays in capital project completions. The exchange rate volatility and weakness of the rand often led to budget overruns. The NNR had appointed a professional Project Manager to oversee all projects to free up scientists to complete their work. The government needed to keep NNR informed about all the details regarding future nuclear projects, as NNR has the final say on if and when these would be built. The government was talking about nuclear expansion, but at the same time National Treasury was talking about cutting the NNR budget, and this, as Dr Tyobeka pointed out, was contradictory and untenable. Currently, the Department of Health monitored medical nuclear waste and the NNR monitored all other nuclear waste, leading to a breakdown in communication and responsibility between the two organisations. Mr Tyobeka stressed that responsibility for the medical nuclear area should be ceded to the NNR, and this was something currently in the process, with the Department of Health.

Mr M Matlala requested clarity on the vacant company secretary position and the mention of the poaching of scientists, asking if such "poaching" was really happening. He also asked what steps had been taken to ensure succession planning.

Dr Tyobeka responded that the company secretary position had been filled and integrated. Whilst there had not yet been any "poaching" of the scientists, the NNR was aware of the risk and predicted that this would happen in the near future. There was a small pool of talent in the nuclear field and the NNR needed to look at competitive market related salary incentives, in order to keep the talent. In relation to succession planning, he noted that the NNR was a lean organisation and its talent needed to be valued. When a senior manager resigned, the junior personnel provided information and input to the successors.

Mr Matlala asked for an update on the legacy sites, especially in regard to mining and housing.

Dr Tyobeka said that a complete strategy was developed for the legacy sites, and that was awaiting approval by the board.

Mr Matlala asked what measures had been taken to establish emergency control.

Dr Tyobeka said that for the emergency control, detection points would be established across the country at the nuclear hot spots and these points would detect plumes at all at risk areas, which would then be reported back to the NNR emergency centre. Centre for Scientific and Industrial Research (CSIR) was being contracted for the equipment.

Mr L Greyling (DA) asked whether the government should be strengthening regulatory capacity, rather than reducing it. He stated that the Committee sometimes felt like it was "flying blind", noted that the IAEA report was outstanding and urged that it needed to be provided to the Committee. The report would inform the Committee whether South Africa had the capacity and infrastructure to embark on this kind of nuclear procurement.

Dr Tyobeka agreed that indeed South Africa should be strengthening regulatory capacity. The IAEA report was available and would be made accessible to the Committee.

Mr Greyling asked what kind of budget and staff size the NNR would need to handle the procurement.

Dr Tyobeka responded that the NNR board had approved 43 new positions, however staff size and budget depended on how many nuclear plants the country wanted. A nuclear power plant needed a lot of skills, including design and layout. The funding model was a new ball game for the NNR. The NNR had managed to secure funding for a number of new staff. The NNR was also planning a Centre of Excellence for nuclear regulation in Mafikeng, collaborating with other universities to provide home-grown skills. The NNR was looking at working with other departments, including Department of Science and Technology, to increase skills capacity.

Mr Greyling noted that there was an abandoned uranium mine in Phalaborwa where high nuclear readings were apparently measured, and wanted to know what had been done about that.

Dr Tyobeka said that the NNR's legacy strategy would handle the derelict areas, including Phalaborwa, but unfortunately he did not know much about this specific case.

Mr Greyling wondered also if South Africa should be looking at any other legislative changes to carve out further key responsibilities of the NNR.

Dr Tyobeka said that there were drafts of new legislation to spell out new responsibilities for the NNR, including the process to cede more power to the NNR.

Ms E Louw (EFF) also asked about the staffing issues and wanted to know when the staff complement would be filled. She wondered what particular challenges would be posed to the NNR, should its budget be cut by National Treasury.

Dr Tyobeka responded that the staff increases had been submitted to the board and have been approved. The staffing complement was critical. The budget cut was an erroneous decision by National Treasury, which saw reserves mentioned on the financial statements as extra cash available. These reserves were in fact ring-fenced amounts for capital projects, and it was clear that there had been a mistake in their interpretation. He confirmed that any budget cut would damage the ability of the NNR to perform its duty.

Ms Louw wondered if South Africa was ready for nuclear procurement.

Dr Tyobeka believed that NNR would be ready, as long as it was kept fully informed

Ms Z Faku (ANC) asked what kind of funding model the NNR would like to see. She asked for an explanation of the fruitless expenditure.

Dr Tyobeka answered that the budget had been approved. However, by way of comparison, he cited that in the USA, 90% of the budget for energy was provided by the government and 10% from licence fees. In Russia, 100% of the funding came from government. The NNR proposed a model whereby 68% was provided by operators and 32% from government. However, National Treasury blocked this idea.

Mr Netshivhazwaulu indicated that industry related courses were the expenditure shown on the financial statements.

Ms Faku asked what issues the NNR faced in relation to safety aspects.

Mr G Mackay (DA) asked about minor nuclear occurrences and what these entailed. He said that the Committee needed a more specific breakdown of these nuclear occurrences.

Mr Tyobeka answered that minor occurrences were minor breaches of regulations, which were not related to any safety issues. The NNR sent out a strong directive to operators if this occurred. The nuclear stock was not growing.

Mr Mackay also added that the Committee needed a breakdown on the salary expenditure, and, in relation to the increases mentioned, wanted to know how much represented salary increases, and how much was for new staff.

Mr Netshivhazwaulu stated that the Executive and senior staff got CPI increases. Middle staff got CPI plus 0.5% and lower paid staff got CPI plus 1%. The growth in staff accounted for around 10% of the salary growth, and future growth was projected to be around 10% of the salary budget.

Mr Mackay asked if the nuclear stock was growing, to which Mr Tyobeka responded that it was not.

Mr Gino Moonsamy, Communications stakeholder for the NNR, then stated that the Public Information Forum was now up and running. It provided an important link between the regulator and public. There was a Koeberg forum, an Eskom forum and Nuclear Energy Commission of South Africa (NECSA) also had a forum. The Forum invited local municipalities and public to attend. The activities included discussing emergency exercises.

Mr Lever stated that it was not a simple matter to move people from Koeberg to a new plant – because different skills were needed for different plants and the NNR did not currently have the skill set for a new plant, which was the reason for it to increase its staff complement and was behind the request for a substantive budget.

Nuclear Energy Corporation of South Africa (NECSA): 2013/14 Annual Report presentation
Mr Phumzile Tshelane, Chief Executive Officer, Nuclear Energy Corporation of South Africa, firstly reminded the Committee of the key values, functions and mission statement (see attached presentation for full details).  He noted that the highlight of the year was the unqualified audit report for NECSA. NECSA was trying to demystify the topic of nuclear energy use for the public. It was very concerned that the National Treasury was looking to cut NECSA’s funding. This related to another misunderstanding on the true nature of the cash reserves that appeared on the financial statements (similar to NNR), and again, he wanted to emphasise that this in fact represented funding that was ring fenced for other projects.

In answer to a statement that the Chair of the Risk Committee was not available to present his report, because he was attending and presenting at another committee meeting on that day, Mr Mackay said that the reason was unacceptable as schedules were given in advance. He urged that this should not happen again.


Ms Faku asked how many women were in training programmes and placed into jobs by NECSA.

Mr D Mavunda (ANC) asked whether NECSA had an internship programme.

Mr Tshelane replied that there was very close to 100% placement into jobs. He could not provide the number of women offhand, but promised to provide it later to the Committee.

Mr Mavunda asked why it was considered that a Level 3 BEE accreditation was more important than level 4.

Mr Tshelane responded that Level 3 was better than level 4, as the ultimate target was level 1.

Ms Matlala congratulated NECSA on a clean audit for 2013/2014.  She requested clarity regarding the report from NECSA on plasma waste to energy, asking whether this would also generate energy, and how far this technology had developed. Of the 775 workers that were trained by NECSA, she asked what percentage were in the job market.

Mr Tshelane responded that that with regards to plasma to waste energy, NECSA was looking for a demonstration model and sites. This project would be rolled out but it would not be rolled out untested.

Mr Tshelane confirmed again, in regard to the training programme, that almost all the participants were placed into jobs.

Mr Greyling commented that part of NECSA's operation were commercial, but that the other half was funded by the government, and it cost half a billion rands from the fiscus to fund operations. He wondered if the contribution from the fiscus was really necessary and what core component of NECSA was in the interest of tax payers.

Mr Tshelane stated that there was a large amount of research and development (R&D) on behalf of the state which did not generate income. These projects required state funding. NECSA provided national safeguards and hosted activities for the government, and all of this required funding. He explained that at Pelchem there was no incident as such. He explained that Pelchem developed 25 products, both cosmetic and industrial products. The economies of scale were very poor in South Africa, due to the market size, and this company was losing money, which was the reason for needing state support in the R&D section.

Mr Greyling wanted more detail on the NTP incident.

Mr Tshelane noted that at NTP, there had been loss of a cell, due to a window that cracked, but since then there had been an upgrade to the technology and it was much more efficient, and should negate these types of incidents.

Mr Mackay asked what the main issues were regarding nuclear incidents. He asked what was to be done about nuclear waste. He also asked for the justification for the existence of NECSA and when it thought that it might become fully involved in the nuclear programme.

Mr Tshelane stated that the safety level of NECSA was very high. The NTP incident had the potential to be dangerous, but it turned out to be safe, and was dealt with and rectified. NECSA was the only entity able to handle nuclear waste in the country. The nuclear material in South Africa was not growing. He noted that the amount of the budget required for decontamination would be approved by Cabinet. NECSA was involved in backward integration of fluorspar and forward integration of NTP, so NECSA was not banking all its growth on the nuclear roll-out. NECSA would be busy in the manufacturing process, along with the roll-out of the programme, and was thus a vital cog in South Africa.

Ms Louw asked about the future plan time frames, and asked with which universities NECSA was linked, and how it was keeping up research and researchers at NECSA.

Mr Tshelane stated that NECSA was working with the North West University, University of Johannesburg, the Mafikeng University, Pretoria University, Wits University and University of Cape Town. He stated that the surplus of graduates in this field was consumed by NECSA, so it was able to "cherry-pick" the researchers.

Ms T Mahambehlala (ANC) asked what was happening in regard to nuclear forensics, and what was happening on the pharmaceutical side.

Mr Tshelane believed that NECSA would be likely to get funding in the future for nuclear forensics. With regard to ARVs and the pharmaceutical angle, NECSA was taking a back seat and the Industrial Development Corporation was running this programme. 

Ms Mahambehlala asked what NECSA was doing about the reports of irregular expenditure.

Mr Tshelane reported that NECSA had processes and controls to prevent this from happening again. For future tenders, only companies with up to date tax clearance certificates would be used.

The meeting was adjourned.

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