Legislation Plan, Mining Qualification Authority; National Electricity Regulator: briefing

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Mineral Resources and Energy

30 October 2002
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Meeting Summary

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Meeting report

30 October 2002

Chairperson: Mr MT Goniwe

Documents handed out
Legislative development plan - 30 October 2002
Presentation by Mining Qualification Authority
Overview of the National Electricity Regulator and its business activities

The Department's legislative programme was outlined. The Mining Qualification Authority spoke on its responsibilities and challenges in meeting the need for a vigorous skill development programme in the mining sector. The National Electricity Regulator
reported on the issues facing it such as Eskom's application for a tariff increase and the need for the creation of a single regulatory body in respect of supply and the consumption of electricity in the whole of the SADC region.

Legislative development plan
The Director General, Adv. Sandile Nogxina, briefed the committee about the Department's legislation plan . He touched on the developments with regards to a wide range of Bills currently being formulated and reasons why these Bills had been delayed. He looked at their projections for 2003.

The Chair referred to the Minerals and Petroleum Resources Development Bill. Implementation of this Bill had to be deferred until the completion of the Money Bill and the Mining Titles Registration Bill. The Committee should at some point be briefed on the Charter. He congratulated the Department on the work they did on this document. The Chair had informed the Minister that the Committee had to be briefed on the Charter. However, the Minister had stated that such a briefing would not be prudent at that stage since the market was sensitive at that time. Due to losses suffered in the mining sector, government had decided to market the document abroad first. The Chair had agreed, saying that the Committee did not want to disadvantage the mining sector in any way.

Mr I Davidson (DP) had a problem with the fact that the international community was briefed on the document before Parliament. The Committee would have handled the information sensitively. Because the Committee had assisted in the formation of the document they should have been briefed before the international community as a matter of principle.

The Chair responded that he, too, had felt this way, but that the arguments by the Minister had convinced him of the need for the international marketing campaign.

Mr Davidson asked what the concerns of the State Law Advisor had been with regard to the Petroleum Products Amendment Bill.

Adv Nogxina stated that the amendment was supposed to introduce far-reaching changes to the existing legislation. It translated the White Paper into law. It was decided that instead of "tinkering" with existing legislation it would perhaps be better to just translate the policy into law.

Mr Davidson stated that the Committee had made proposals to the ESI and EDI on the issue of restructuring. They had not, however, been given the opportunity to interrogate the final proposals. The process seems to be going on without the Committee being kept abreast of changes.

Adv Nogxina pointed out that the Department had in fact briefed the Committee on these two pieces of legislation. However, since then the Department had decided to combine the two processes and deal with them concurrently. The Department will return to brief the Committee on the status of these Bills in further detail at a later stage.

Mining Qualification Authority
Dr Menzi Mthwecu (CEO of Mining Qualification Authority) explained to the Committee the role and responsibilities of the MQA in shaping policy in the mining industry and more specifically in labour relations. Their vision was to make a contribution to the transformation of the mining sector and skills development. The role of the MQA is to identify what skills were scare and were needed in the mining sector. Further it develops standards and levels of qualifications in the mining sector. It is responsible for disbursing grants to companies involved in skills development programmes. The MQA will monitor and accredit Skills Training Providers. In conclusion the challenges it faced in meet these social plans were outlined [see document].

Mr Lucas (IFP) concurred with Dr Mthwecu that skills development was pivotal in the mining sector. However he was concerned with the future of the people undergoing skill development training - were they guaranteed employment after going through training?

Mr Oliphant (ANC) wanted some clarity on the impact of the skills development in the labour market and whether the learners had achieved any results out of these programmes.

Mr Goniwe (Chairperson) was concerned about gender imbalances reflected in the MQA board structures. He also wanted to find out about the accessibility of the bursary schemes provided by MQA and whether MQA had met the targets set out by the Charter.

Mr Mthwecu (MQA) responded to these questions saying that MQA had embarked on a pilot project beginning in the Eastern Cape looking at making a better life for previously disadvantaged groups in the mining sector. The impact of the skills development training in the labour market, he said, seemed to show an immense increase in productivity in the mining sector. However they were not yet in a position to conclusively say they were satisfied about the progress made in that regard.

Mr Nkosi (MQA) said that MQA learnership-programmes were geared towards training for transformation in order to ensure representation of HDI employees at all levels in the mining sector. On the question of women representation on MQA's executive committees, Mr Nkosi was of the view that gender representation in the labour market was a global concern. Hence South Africa was not the only country facing this problem. However there was still an urgent need to balance representation in the workplace. He conceded that presently the main focus of the MQA was to ensure that the infrastructure was in place in the mining sector to meet the targets set out by the Charter.

Mr Mthwecu (MQA) informed the committee that the funds that are not claimed by companies involved in skills development become discretionary funds for MQA and can be channelled to other programmes. On whether MQA was meeting the targets set out by the Mining Charter, the MQA board was going to meet in due course to deliberate on ways of meeting those targets

National Electricity Regulator
Dr Mkhwanazi (CEO: NER) focused mainly on the role of the NER in regulating the supply and consumption of electricity in the SADC region and beyond. In South Africa, the responsibilities of the NER included protecting customers interests, setting prices and tariffs as well as standards of service and supply. NER has been trying to lower the costs of electricity while at the same time ensure a good sustainable service. NER was still on the path of creating a utility regulation in South Africa and SADC. Touching on the NER's business and budget plans for 2003 & 2004, they are planning to increase their communication and consultation budgets as well as an increased budget allocation for regional and continental initiatives. In considering the application by Eskom for a price increase they would consider first the socio-economic issues prevailing in the country. Then NER would supplement those findings with the 'rate of return' methodology. This methodology for determining price increase will use benchmark numbers from other international companies similar to Eskom and they will then set a rate of return that would be a reasonable profitable for Eskom. Price increases would be slotted for January 2003 and concurrently National Government would pilot a LifeLine Tariff to minimise the costs of electricity for low wage earners.

Mr Davison (DP) wanted to know whether the proposed amalgamation of electricity regulators by the Minister was going to work. Secondly he asked for clarity on the proposed methodology for determining price increases for Eskom.

Mr Oliphant (ANC) asked if Dr Mkhwanazi could elaborate on the status of the electrification fund. Secondly was NER with its budget capacity ready to meet the challenges of the NEPAD?

Ms Cindi (ANC) asked about the costs of using cleaner energies while at the same time keeping sustainable development in place.

Dr Mkhwanazi (MQA) informed the committee that a substantial part of their budget came from the levies they charge from energy suppliers and some of the funds were provided for through the Gas Act. Regarding regulators, Dr Mkhwanazi was of the view that there was a need for a single energy regulator because previously there was much duplication this was very costly.

Mr Godfrey conceded that there was a need for the committee to deliberate on the levies imposed on different energy suppliers because there could be lots of inherent conflict that could emerge out of the aforementioned levies.

It was noted that NER's role was to regulate natural monopoly by energy suppliers and that the proposed methodology for determining price increase was an international benchmark methodology. This methodology was aimed at assessing the high risks of the business.

Dr Mkhwanazi (MQA) noted that NER was no longer regulating the electrification fund. NER had handed over its responsibilities in that regard to the National Regulatory Committee. NER was now part of this committee. On NER's budget capacity to deal with NEPAD, he said that NER was ready to meet such challenges as NER had long been a leading regulator in Africa and had represented the continent at the World Bank on many accessions. Hence NER was ready to partake on a journey to support economic investment and infrastructure development throughout the continent. He added that the NER was currently spearheading the formation of a legislative regulatory framework in the continent for the purposes of creating certainty and stability in energy supply.

Responding to the question on the use of cleaner energies, he noted that there was currently no country surviving on the use of these energies such as soalr energy and wind energy. The use of such energies was a long term goal. Eskom at the moment should focus on complying with International Cleaning Programmes.

The meeting was adjourned.


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