Committee Report on Department of Energy budget; Second Term Committee Programme

Energy

21 April 2015
Chairperson: Mr F Majola (ANC)
Share this page:

Meeting Summary

The Committee met to consider its report on the budget of the Department of Energy (vote no 26) and outstanding minutes.

The Committee’s Content Advisor quickly took the Committee through the presentation of the report placing emphasis on the conclusions and recommendations of the Committee. The report consisted of two parts, the first part being the background, challenges and budget analysis while the second and most important part considered the observations, findings, conclusions and recommendations.

The 5 point plan, the substantial budget reductions and the establishment of an energy efficiency champion were three recommendations that the Committee still needed further discussion on. The recommendations suggested that the issue of unfunded posts be rectified as this was critical to the Department’s functioning and an energy champion be established to repair the fragmented energy space.

The minutes of 14 October 2014, 15 October 2014, 17 October 2014, 21 October 2014, 28 October 2014, 24 February 2015, 03 March 2015 and 17 March 2015 were all adopted without any amendments and the minutes of 04 November 2014 and 10 March 2015 were adopted with recommendations. The Chairperson asked the Committee secretary to not keep too many minutes. Another recommendation from a Committee Member was that the minutes be adopted on a weekly basis. 

Meeting report

Consideration of Committee Budget Vote Report

With the permission of the Chairperson, Mr Pradesh Rampersadh, Content Advisor to the Portfolio Committee on Energy, asked to scan through the initial part of the report placing emphasis on the latter part which dealt with the conclusions and recommendations of the Portfolio Committee. The initial report consisted of two parts, the background and also some of the challenges as identified by the Department of energy, moving towards budget analysis, focusing on a few points from that part of the report. The most important part of the report considered the observation and findings then moved to conclusions and recommendations.

The objectives of the report were to describe and analyse the budget of the Department over the 2015/16 financial year, to conclude on implications and make recommendations thereto. Section 2 of the report gave a brief overview as was presented by the Department. It was established in May 2009 from the outcome of the Department of energy and mineral resources. The Department’s aims were to formulate energy policies, regulatory frameworks, legislation and implementation to ensure energy security and the promotion of environmentally friendly energy carriers. The key mandate of the Department was to assess the affordability and liability of reliable energy for all. There are a few entities that report to them, the National Energy Development Institute (NEDI), the National Nuclear Regulator, the national energy regulator of South Africa (NERSA), South Africa Nuclear Energy Corporation (SANEC), Central Energy Fund (CEF) and the national radioactive waste-disposal institute

The Department indicated that its organisational structure was as follows: There were seven branches. Energy planning for clean energy was to ensure evidence based policy planning to ensure decisions in the energy sector. They had petroleum and petroleum regulations known as the regulation of petroleum and petroleum products to ensure optimum and ordinary functioning of petroleum industry and achieve the government’s developmental goals. Energy programmes and projects which managed to monitor and coordinate programmes which focused on access to energy. Nuclear energy controlled nuclear material in terms of international obligation and make legislation on policies to ensure the safe and peaceful use of nuclear energy. Corporate services supported the DoE and government in compliance so as to ensure compliance by the DoE and finally, the financial management services which supplied the financial management, accounting and supply chain management services to the DoE.

In moving forward, an important issue was the unfunded posts in the Department. The total number of posts approved by the DoE was 847 of which 630 were funded posts leaving 227 unfunded positions.

The Department highlighted the following challenges in the energy sector;

  • generation capacity
  • distribution infrastructure
  • cost of energy
  • volatility of petroleum product prices
  • ageing infrastructure
  • barriers to new technology entrance
  • energy efficiency
  • demands and management measures
  • access to energy
  • economic transformation
  • budget baseline deductions

The Department identified the following as key priorities;

  • electricity supply
  • effective and efficient energy utilization
  • policy and legislation
  • state owned entity oversight
  • targeted training for both the Department and the sector SOE
  • communication 

The next part of the report dealt with the budget, the overall highlight of the budget and the figures as they increased marginally from 7.4 Billion to 13.48 Billion approximately. There were some highlights within the budget where there appeared to be substantial changes, those changes were highlighted so as to note the changes instead of going over every line of the report. The Department consisted of 6 programmes, administration, petroleum and petroleum products regulation, electrification program, project management, nuclear energy and clean energy. Each programme had a sub-programme except for programme 4.

Going into detail of the particular programmes starting with Administration, there had been 5 budget reductions from 270 million to 242 million. Programme 2 energy policy and planning, the budget for the programme had been reduced from 57.6 million from the previous financial year to 45.1 million in the year under review.

Mr Rampersadh commented on policy planning and analysis, pointing out a reduction from 3.5 million to 1.5 million that did not seem to be a concern but pointed to the fact that a substantial amount of legislation could be expected to go the Department’s way throughout the current financial year. The petroleum and petroleum products regulation budget also saw a reduction from 84 million to 74 million.

All those programmes had seen reductions quite deeply, what was important, stating the estimates of the national, it reports that 8.9 million has been approved budget reductions over the medium-term will be expected in the petroleum compliance, monitoring and enforcement due to unfilled posts. That seems to be the reason for that, because almost the entire 8.9 million was taken out due to unfilled position.

Discussion

Mr M Mackay (DA) having looked at the totals presented noted that the totals did not align. Was this a typo or was it because table 1 was projected figures and the other table the actual figures?  

Mr Sivuyile Maboda, Researcher, Portfolio Committee on Energy, agreed with Mr Mackay that the figures did not add up with the overall budget of 2014/15 financial year due to the treasury reporting structure. The estimates for the 2014/15 financial year were revised but the actual programme figures were not revised so that was a methodological issue.

Mr Mackay asked if the Department could get the total of the actual figures.

Mr R Mavunda (ANC) asked about the total number of posts on organisational structure, there are 847 posts, funded 630 and unfunded 227, after calculations there are 857 instead of 847.

Mr Rampersadh replied that he would go back and rectify that mistake on the document

Mr P van Delan (DA) considering the discussions held on a previous meeting on targets reached on the allocated budget and a budget that was cut. He asked if there was any way of including targets that were not reached so as to see what the effect of the budget cuts were in the Department. Was that not the place of the report or was there disconnection between the two?

Ms T Mahambehlala (ANC) asked for clarity around stakeholder participation, a component the Department spoke too much about and the reasoning behind the unfunded posts. Which posts were being referred to when mentioning the 227 posts? It was said the contract the Department had with Eskom was terminated, was the money transferred although the contract was terminated? Ageing infrastructure has been a challenge ever since she joined the Committee and no strategy had been presented, this seemed to be a continuous problem. On the budget reductions, what was the balance of costs and what would happen to the under-spending? Would they be incorporated to the budget or just go away?     

The Chairperson asked for clarification for those questions and suggested that the Committee allow for the whole report to be presented and then after the completion of minutes, questions could be asked because some of the questions spoke to what was on the report.

Mr Rampersadh noted that the questions were part of the observations and findings. There was no clarification on what those questions raised but it was important to look into the observations and findings. He did not want to speak on for the Department but thought it was important that this be incorporated on the report and the Department gave their official response.

The Chairperson asked Committee members if it would be appropriate that direct clarification be sought from the Department on matters that are not clear on the report. This was to get clarity so that preparations could be made to sit with the Department to get direct responses before finalising the report.

Mr Arico Kotze, the Committee Secretary added that the report be adopted prior the debate on the 12th of May. If the Department could be present the following week then the policy could be adopted prior the 12th of May 2015.  

The Chairperson noted that if part of what the Committee did after the meeting was preparing to call the Department to ask questions, the same day the Department provided clarity the Committee should be able to adopt the report and pull off the date of the 12th.

Mr Rampersadh noted that it was very rare that the comments by the Committee came to factor in the observations and findings.

In conclusion of the report, the Portfolio Committee on Energy continued to fulfil its constitutional mandate with regards to parliamentary laws in conducting the oversight of the function of the Department of energy to ensure compliance with legislation and policy requirements.

Having considered the budget vote of the Department of Energy, the Committee recommended that the House supports the budget vote and further recommended the following recommendations.

The Minister of Energy for the current financial year was required to;

  • Conduct a thorough assessment of the Department to establish whether the Department was correctly funded to deliver on all areas that require the attention for energy resources in South Africa
  • Address the issue of unfunded posts within the Department of energy to ensure the Department is correctly staffed to fulfil its mandate
  • Expatiate the appointment of the director general to ensure the effective operation of the Department
  • Expatiate the delivery of the various pieces of legislation and policy documents that were still outstanding, these included the new draft integrated energy plan and integrated resource plan which were critical energy plans in South Africa
  • Monitor and direct energy efficiency initiatives and development capacity. Energy efficiency program initiatives are pragmatic research that needs to be explored, in this regard the establishment of the energy efficiency champion for South Africa was needed that monitors and coordinate all activities in this area
  • Investigate mechanisms to speed up the delivery of the integrated energy champion especially in rural areas
  • Develop a strategy to address the transformation challenges against the Department of energy sector and include an implementation timetable
  • Expatiate the delivery on the gas utilization master-plan to ensure greater penetration of gas in the economy
  •  Focus on the development of key and critical skills in  the various sectors of energy including amongst others engineering, nuclear, renewable energy and electricity distribution
  • Ensure security of electricity supply in the short term was being made a priority in conjunction with the various stakeholders
  • It is further required that the portfolio Committee on energy be updated on a quarterly basis on developments with regards to the 5 point plan
  • Place emphasis on solar water heater programme and the revised roll-out strategy, the Department envisages 1 million units to be rolled out in 2020. Challenges included local content, the involvement of all spheres of government and all these were factored into the strategy
  • Place emphasis on the roll-out of the national electrification and address the challenges as identified that include the issue of cooperative governance.
  • Present a plan to address the backlog on the distribution infrastructure in South Africa, the plan should also clearly define the roll-out including national, Eskom, provincial and local government.
  • Provide regular feedback to the portfolio Committee on energy on the current and proposed new built programmes to allow the Committee to conduct robust oversight in the sector
  • Ensure that strategic plans of entities were aligned with the objectives of the DoE and the entities themselves were correctly funded to meet those objectives
  • Ensure that the National Energy Regulator of South Africa (NERSA) has the requisite skill and resources to be able to manage the new nuclear built programme
  • Assess the legislative framework of NERSA and that of the National Nuclear Regulator to ensure that they have power to do their duties
  • Ensure the national radioactive waste-disposal institute remains operational as soon as possible

These were the recommendations of the Portfolio Committee on Energy to the minister of energy with regard to the observation and findings of the Committee. Thank you

The Chairperson particularly wanted to look at that list of recommendations

Mr van Delan recommended that the Minister be tasked with setting achievable outcomes based targets. There was a disjuncture between the targets and the outcomes of the budget presented to the Committee. It was the Committee’s role as oversight to ensure that when agreeing on the budget, set targets for the budget were met. The Minister should be responsible for ensuring that targets are outcomes based so that the Committee did not sit with the same problem it sat with this year  

Ms Mahambehlala said the issue of the Director General (DG) was stuck due to security clearance which was beyond the Minister’s control, how was she going to expatiate the appointment of the DG? The 5 point plan had an embargo, how would the Committee receive quarterly reports? She suggested that the finding which spoke of the establishment of an energy champion also be made a recommendation. The Committee should support and rally behind to ensure that it was achieved otherwise there would remain a fragmented energy face in South Africa. 

The Chairperson asked if there were any additional questions or comments.

Mr Mavunda asked what the 205 was on programme 6 – clean energy.

Mr Rampersadh responded that it actually was a typo, the figure was meant to be 2015/16.

The Chairperson asked if there were any comments or clarifications.

Mr Rampersadh replied that the Committee had to decide if the conservative approach used when making recommendations needed to be changed for a more direct approach. The recommendation that the Minister should expedite the appointment of the DG should be retracted. The recommendation on the 5 point plant was put as a general recommendation with the ideology that when that moved and the Committee wished to effect changes. The establishment of the energy efficiency champion was stated indirectly, it was put across as a general statement in the recommendations.

The Chairperson asked if the Committee was able to make concrete suggestions with regards to the comments considered. Were there any other comments having received clarification to the extent that changes could be made and the report was in a position to be revised for the next meeting. Were there any suggestions to be considered so as to step off the report? Some of the proposed changes were already noted, they would be incorporated on a new draft for presentation on the next meeting.

Ms Mahambehlala asked how the Committee would achieve its quest on renewable energy with the substantial budget reductions on renewable energy. Was there an embargo on meeting with cabinet leaders and raising the issue of a 39.4 million budget reduction? When speaking of nuclear energy, the resources should speak to that and have a balance. The Committee should look at that because nothing has been done on renewable energy implementation.

The Chairperson agreed that the Committee should support the recommendation of an energy efficiency champion. The overall reduction on the budget on clean energy was very substantial and very serious in the context of what the Committee wanted to do in the future, something needed to be done. What can be done? Certain mechanisms at the Committee’s disposal could be considered from now until the adoption of the report. The reasons behind the previous year’s discussion were to set up a budget office so that parliament could engage more intelligently in the budget process and effect change in a well-considered manner.    

Mr Mackay said this could be done. The Chairperson and the Committee could vote against the budget. The Committee and the Department could express its unhappiness about the budget and demand the budget be revised.

The Chairperson responded that issue raised was not for the Committee’s benefit but rather parliament as whole and the question of how to deal with the budget.

Mr Mackay said the budget could be rejected.

Mr van Delan stated that once the budget has been received it could be moved around the Department but it could not be made more or less. Should the budget be moved from one program to the other and that program does not reach its targets, blame is inherent. 

The Chairperson said the law allows parliament to change and reject the budget if it wants to as Mr Mackay has suggested.

Mr Mackay said NEDI has an energy efficiency Department, should they not be considered the energy champions and fund appropriately to perform such a mandate 

Ms Mahambehlala replied that the establishment of a new energy efficiency champion was important as the previous champion had already been given a chance and failed to deliver on the targets.

The Chairperson said there were key issues the Committee still needed to apply their minds to, the budget reduction on clean energy and what needed to be done with the energy efficiency champion. There were reports in the past on who the energy efficiency champion should be. He heard there was an embargo on the 5 point plan, what was going to be done in the plan?

Mr Mackay said it was going to be a very short discussion.

Ms Mahambehlala said the Committee did not even know what the 5 point plan was.

The Chairperson responded that the embargo on the 5 point plan would be lifted by those who placed it.

Mr Mackay stated that the 5 point plan and the budget of the Department were not aligned.

The Chairperson replied that they will not be aligned because that was not the Committee’s plan.

Mr Mackay said the budget should be a priority. The budget should be here and the 5 point plan here, the gap between the two where is it going to come from?

The Chairperson asked if the alignment of the 5 point plan and the budget could be discussed on the next meeting when the Department was present and could explain. Assuming there were three questions not yet finalised, could the Committee proceed? Was that a report that the Committee was prepared to advance with for the week after next.

Mr Mackay responded that the Committee could not bind itself. The working document covered a lot of the key issues. The document could be ready be ready for adoption if a few of the discussion on what was discussed could be added. The Committee reserved its right like it did on the previous report.

The Chairperson said was helpful. He understood the general line.

Mr J Esterhuizen (IFP) agreed that the document did cover a lot of the main issues. The issue of the energy efficiency champion was also tied to accountability.

The Chairperson noted that there were three outstanding issues at the moment and the Committee could raise any further concerns between the time and the next meeting. The Committee could step off the working document.

Second Term Committee Programme

The Chairperson noted that the Committee had a big meeting on Tuesday the 28th and the following Tuesday was to be the 5th of May, a week before the budget vote. The 5th was cutting too close, if something were to happen the Committee could not act accordingly. He suggested that on Wednesday the 29th of April at 13:00, the Committee meet to discuss the outstanding issues.

Adoption of Committee minutes

Ms Mahambehlala asked what had happened to Ms N Louw (EFF) because ever since they came back from Germany, she was never seen again in the Committee.

Mr Kotze responded that Ms Louw had been replaced but the request had not yet been received to make it official, a new member would be joining the Committee. The register had not yet been updated because the transfer was not official 

The Chairperson asked for the adoption of the Committee minutes of the 14 October 2014.

The following sets of minutes were adopted:

14 October 2014

Ms Mahambehlala moved for the adoption of minutes.

Mr Matlala seconded the motion.

The minutes were adopted without any amendments.

15 October 2014

Mr Mackay moved for the adoption of the minutes.

Mr Mavunda seconded the motion.

The minutes were adopted without any amendments.

17 October 2014

Mr Mavunda moved for the adoption of the minutes.

Mr Esterhuizen seconded the motion.

The minutes were adopted without any amendments.

21 October 2014

Mr Mavunda moved for the adoption of the minutes.

Ms Mahambehlala seconded the adoption.

The minutes were adopted without any amendments.

28 October 2014

Mr Matlala moved for the adoption of the minutes.

Mr Esterhuizen seconded the motion.

The minutes were adopted without any amendments.

04 November 2014

Mr Mavunda moved for the adoption of the minutes.

Mr Esterhuizen seconded the motion.

Ms Mahambehlala suggested that it would be correct to highlight somewhere in the minutes that the contributions made by the Ambassador.

Mr Esterhuizen noted an error on the cover page that needed to be corrected on attendance by Committee Members and the apologies.

The minutes were adopted with amendments.

24 February 2015

Mr Mackay moved for the adoption of the minutes.

Mr Mavunda seconded the motion.

The minutes were adopted without amendments.

03 March 2015

Mr Mackay moved for the adoption of the minutes.

Ms Mahambehlala seconded the motion.

The minutes were adopted without any amendments.

10 March 2015

Ms Mahambehlala noted that there was an embargo. The Department presented the 5 point plan to address the energy crisis but what was said on there when we requested the report that was not written down, it must be written down and we did not get that report on 5 point plan until the deputy president announces on the role of the Department of energy and the Department of renewable energy and public enterprise. The minutes did present a true reflection of what happened on the day.

Mr Mackay agreed that was not an accurate reflection of the minutes.

Ms Mahambehlala moved for the adoption of the minutes with amendments.

Mr Matlala seconded the motion.

The minutes were adopted with amendments.

Mr Mavunda suggested that the recording of minutes reflect everything that had transpired during the meeting.

The Chairperson said the approach to the writing of minutes would not be changed.

17 March 2015

Mr Mackay said bullet point 10 was in contradiction of the Minister’s statement, the Department was confused and the statement did not accurately reflect what transpired on the day. It was either the Department was wrong or the comment was wrong.

Mr Delan moved for the adoption of the minutes.

Mr Esterhuizen seconded the motion.

The minutes were adopted without amendments.

Mr Mackay suggested that it would helpful if the Committee minutes could be adopted weekly.

The Chairperson agreed that the minutes be received every week and asked the Committee for any other concerns before the conclusion of the meeting.

Ms Mahambehlala said Business Day reported grossly on the meeting with the Minister.

Mr Mackay replied that the Committee should not involve itself with how the media conducts its business.

The Chairperson said there should be clarity on what transpired in Committee meetings. The Committee could not limit the way reporters write but good relationships could be inspired to avoid misinterpretation of Committee dealings.

The meeting was adjourned.

 

   

Share this page: