Committee Report on Department of Energy Budget

Energy

05 May 2015
Chairperson: Mr F Majola (ANC)
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Meeting Summary

The Portfolio Committee on Energy considered Budget Vote No.26 of the Department of Energy. Various amendments were made to the report, with a focus on an analysis of the performance of the Department of Energy (DoE) during the 2014/15 financial year. For example “In terms of delivery of policies and legislation, the Department had planned to table the Integrated Energy Plan (IEP) before Cabinet. The strategy was expected to outline the requisite process, systems and structures that would lead to the development of a comprehensive IEP. The first phase of a national integrated energy modelling system, which is required to provide statistical analysis for the IEP was scheduled for completion by May 2011, and the second phase was planned for completion by 2013/14. The 2014 deadline was not met as the completed document has not yet been published.” In addition “With regard to electrification, in the first quarter of 2011/12, the Department committed to introduce the Independent System and Market Operator (ISMO) Bill to Parliament. ISMO provided a framework for independent power producers’ participation. The ISMO Bill was to be complimented by the Electricity Regulation Act Amendment Bill, with the objective to address the powers and functions of the ISMO, amongst others. The ISMO Bill introduced into Parliament and was deliberated upon in the Committee and submitted to the House for Adoption. It was not adopted in the 4th Parliament.”

Under Programme 5 (Nuclear Energy) the DoE was supposed to have made the National Radioactive Waste Disposal Institute fully operational with a funding model during the 2014/15 financial year. This was not achieved. Further “legislation affecting this programme was still outstanding e.g. the National Nuclear Regulatory Amendment Bill and Nuclear Energy Amendment Bill, among others.” Under Programme 6 (Clean Energy), the DoE had “committed to continue to implement the energy efficiency programme for industrial and domestic sector in line with the IRP for the achievement of the 2015 national target of 12 per cent. The extent to which the Department has progressed in achieving the 12 per cent was unclear due to the absence of monitoring and evaluation tools.”

Members paid specific attention to recommendation 17, restructuring of the CEF in part or in whole. The further process of restructuring CEF was ongoing and there seemed to be no real progress in this regard. Members indicated that PetroSA needed to be looked at as a whole, restructuring was not the correct word to use; stronger interventions were needed for PetroSA. However some opposition Members raised concerns that there were huge problems with CEF and the statement contained in the report was very broad. Other recommendations which the Committee paid specific attention to were recommendation 13, which dealt with the rollout of the National Electrification programme and addressing issues around cooperative governance. Members of the opposition however indicated that there needed to be a legislative framework put in place for the DoE to deal with issues around cooperative governance, currently the DoE was not mandated to deal with issues of local governance and cooperative governance.

The report was adopted with amendments.

Meeting report

The Chairperson asked the Content Advisor to read to read through the report.

Report of the Portfolio Committee on Energy on the Strategic Plan 2015 – 2020 and Budget Vote No. 26 of the Department of Energy, Dated 5 May 2015
Dr Pradish Rampersadh, Content Advisor: Portfolio Committee on Energy, read through the report. The error under the DoE’s number of funded and unfunded posts was corrected; there were 620 funded posts and 227 unfunded posts within the DoE. Members had also indicated that there be an analysis of the performance of the DoE during the previous financial year. With this regard sections were incorporated throughout the report on the DoE’s performance during the 2014/15 financial year. For example “In terms of delivery of policies and legislation, the Department had planned to table the Integrated Energy Plan (IEP) before Cabinet. The strategy was expected to outline the requisite process, systems and structures that would lead to the development of a comprehensive IEP. The first phase of a national integrated energy modelling system, which is required to provide statistical analysis for the IEP, was scheduled for completion by May 2011, and the second phase was planned for completion by 2013/14. The 2014 deadline was not met as the completed document has not yet been published.” In addition “With regard to electrification, in the first quarter of 2011/12, the Department committed to introduce the Independent System and Market Operator (ISMO) Bill to Parliament. ISMO provides a framework for independent power producers’ participation. The ISMO Bill was to be complimented by the Electricity Regulation Act Amendment Bill, with the objective to address the powers and functions of the ISMO, amongst others. The ISMO Bill introduced into Parliament and was deliberated upon in the Committee and submitted to the House for Adoption. It was not adopted in the 4th Parliament.”

Under Programme 5 (Nuclear Energy) the DoE was supposed to have made the National Radioactive Waste Disposal Institute fully operational with a funding model during the 2014/15 financial year. This was not achieved. Further “legislation affecting this programme was still outstanding e.g. the National Nuclear Regulatory Amendment Bill and Nuclear Energy Amendment Bill, among others.” Under Programme 6 (Clean Energy), the DoE had “committed to continue to implement the energy efficiency programme for industrial and domestic sector in line with the IRP for the achievement of the 2015 national target of 12 per cent. The extent to which the Department has progressed in achieving the 12 per cent was unclear due to the absence of monitoring and evaluation tools.”

The Committee also made a number of recommendations that support the Budget Vote 26: Energy.

Discussion
Mr G Mackay (DA) asked whether recommendation 17, restructuring of the Central Energy Fund (CEF); was a new addition or was it there previously? He asked for clarification of that recommendation.

Mr M Matlala (ANC) reminded Members that there were issues raised around timeframes during previous discussions; why was no mention made on timeframes in the report? President Zuma raised serious recommendations during his State of the Nation Address concerning energy matters and these needed to be part of the report, together with those made in the National Development Plan.

Ms T Mahambehlala (ANC) referred to recommendation 3, appointment of the Director-General. The Committee had agreed that the Minister would report on the issue. The matter has therefore been discussed and should be removed from the list of recommendations. The Minister during the last meeting with the Committee indicated that the appointment of the Director-General was with State Security for security clearance. On recommendation 5, establishment of an Energy Efficiency Champion for South Africa to enhance monitoring and co-ordination of all activities, she said the Minister had already agreed to this recommendation. The budget for Clean Energy had been significantly reduced; would the Committee be making recommendations in this regard?

Mr P Van Dalen (DA) expressed concern that timeframes were missing from the report; adding timeframes to the work of the DoE would make it easier for the Committee to hold the DoE accountable. He suggested that the DoE be given a three-month timeframe to implement some of the recommendations made.

The Chairperson said due to time constraints all changes Members wanted to make needed to be reasonable and simple so they could be included in the draft report that would be adopted before the meeting adjourns. He agreed with the point on timeframes; however this was a matter that needed more discussion and the point would therefore not be factored into the report. There was not enough time to assess the point.

Dr Rampersadh responded that the issue of timeframes was a recommendation of the budget vote for the DoE, the budget vote was an annual presentation. The Committee has made the following statement, “the Minister of Energy is requested within the current financial year”, and the only reference was therefore within the current financial year. On the restructuring of CEF, CEF reported to the Portfolio Committee on Energy and two entities reported to it; one being the PetroSA. The further process of restructuring CEF was ongoing and there seemed to be no real progress in this regard. Recommendation 17 spoke to the restructuring of CEF in part or in whole. The issues raised by the President during his SONA and those raised in the NDP would be incorporated into the report. He agreed that recommendation 3 could be removed because it had already been dealt with. The DoE was requested to establish an Energy Champion for South Africa, the DoE was yet to discuss progress in this regard as well as its design.

Mr Arico Kotze, Committee Secretary: Portfolio Committee on Energy, reported that after the meeting with the DoE on the 14 April 2015 the DoE responded to a number of questions and concerns raised by Members in writing. The Committee has received these responses.

Mr Rampersadh said on reviewing of the budget on Clean Energy the DoE has sent through responses in writing to the Committee on the matter. The DoE had a window period of three months to give feedback to the Committee. This could still be included as a recommendation by the Committee.

The Chairperson said the recommendation on the Energy Efficiency Champion should be reworded to provide more clarity. He referred to recommendation 17 and agreed there were potential areas of restructuring within CEF, however Members needed to focus on the outstanding restructuring. On timeframes, he said the Committee could only insist on the current financial year.

Mr Mackay said Members could agree to a generalised statement on the NDP, but this point should be prioritised as one of the first points. With regard to outstanding legislation and policy documents he was worried that the Committee was not making a strong statement on the Integrated Resource Plan (IRP). On energy efficiency, Ms Mahambehlala had advocated for a much stronger solution around energy efficiency, an investigation was not enough. The Committee needed a legislative framework to determine who was responsible for energy efficiency and who had enforcement ability. Currently the DoE has indicated that energy efficiency fell across a number of departments and this was a terrible answer. The DoE should rather come to the Committee with a solution on how a coordinated body responsible for energy efficiency could be established. The Committee was not doing enough around energy efficiency due to lack of coordination within the energy sector. There needed to be a regulated environment with a coordinated mechanism. On recommendation 16, the DoE should be providing quarterly feedback to the Committee.

Ms L Makhubele-Mashele (ANC) apologised for arriving late, she was also a Member of the Portfolio Committee on Tourism and both meetings were sitting at the same time. She agreed with Mr Mackay that the current IRP needed to be updated.

The Chairperson said he understood the rationale that there needed to be an arching legislation relating to energy efficiency, however this was not the only piece of legislation that was outstanding.

Mr Rampersadh said the Integrated Energy Plan was presented as a draft document to the Committee during the fourth Parliament and was currently going through the processes.

Ms Mahambehlala said Mr Mackay’s recommendation was speaking to the IRP which needed to be updated not knowing there was a draft Integrated Energy Plan in place. Members of the current Parliament have not seen the IEP and they needed to be given copies of the plan.

Mr Rampersadh referred to recommendation 13, which indicated that emphasis should be placed on the roll out of the National Electrification programme and address challenges as identified including issues of co-operative governance. When addressing this topic the Committee found that the DoE had experienced issues of co-operative governance, especially with regard to local government and national government coordination.

Mr Mackay asked how the DoE would be able to deal with issues of local government. These fell outside the mandate of the DoE. The DoE needed a legislative mandate and framework to do this.

The Chairperson said because the matter was in the report the Committee could call SALGA in for a meeting to reflect on these issues.

Ms Mahambehlala referred to recommendation 17 and asked about the proposed restructuring of CEF and its subsidiary companies; one of the subsidiaries was PetroSA. PetroSA needed to be looked at as a whole, restructuring was not the correct word to use; stronger interventions were needed for PetroSA.

Mr Mackay said PetroSA needed to be removed as a whole.

Ms Z Faku (ANC) said Ms Mahambehlala was not referring to removing PetroSA as a whole; rather the Committee could use words like “major restructuring”.

Ms Makhubele-Mashele said only those companies within CEF that were not performing should be isolated and have its mandates relooked at.

The Chairperson suggested that the wording used include issues around outstanding restructuring, ongoing restructuring and the review of CEF. This would give the Committee a broader mandate to work with.

Mr Van Dalen said in the fourth Parliament there was an investigation done on all of CEF’s subsidiaries; it would therefore assist the Committee to get the recommendations from this investigation.

Mr Mackay said he was not comfortable with the statement on CEF, there were huge problems with CEF and the statement contained in the report was very broad.

The Chairperson said the Committee would invite CEF for a more detailed engagement, however putting the issue in the report was still important to enable the Committee to pursue CEF further.

Mr Mackay said the Committee needed to deal with two distinct ideas; first, was the outstanding restructuring of CEF completed. Secondly, any future restructuring was expedited. These were two separate ideas.  CEF needed to finish the work it was supposed to be doing, the restructuring was part of the 2008 Energy Act and it still was not completed.

The Chairperson said this was the most difficult recommendation because of how it was formulated. It was possible to separate the points to include completing outstanding restructuring and expediting any future restructuring.

Ms Mahambehlala said the Committee was not in a position to predict future restructuring because such a point has not yet been discussed. She proposed the recommendation include that the “outstanding and outgoing restructuring of CEF and the review of its subsidiary companies are expedited to meet future demand.” The restructuring was on CEF and not its subsidiaries. The Committee should stop being reluctant on addressing some of the issues within CEF.

Mr Mackay agreed with Ms Mahambehlala that the restructuring of CEF as a company was needed and also the review of its subsidiaries. CEF needed to be restructured because it was not optimal and its subsidiaries needed to be reviewed to better understand why legislation was delayed.

The report was adopted with the amendments.

The meeting was adjourned.

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