Portfolio Committee on Energy Strategic Plan and Annual Performance Plan

Energy

23 June 2015
Chairperson: Mr F Majola (ANC)
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Meeting Summary

The Portfolio Committee met to deliberate on the Energy Strategic Plan 2015/16-2019/20 and Annual Performance Plan (APP), focusing on a number of challenges that had been experienced by the Department of Energy (DoE). These included generation capacity, distribution infrastructure, poor access to energy, and volatility of petroleum prices. Other challenges included ageing energy infrastructure, the escalating cost of energy and budget baseline reductions.

The Department had identified seven key priority areas to focus on in the implementation of the strategic plan and APP. These mainly involved electricity supply, petroleum and gas infrastructure, and effective and efficient energy utilisation. The Department would also be giving priority to policy and legislation, oversight of State-Owned Entities (SOEs), and targeted training between the Department and sector SOEs. The DoE’s activities embraced administration, energy policy and planning, petroleum and petroleum products regulation, energy programmes and projects, nuclear energy and clean energy.

Some of the five-year targets for energy policy and planning focused on the Electronic Regulation Amendment Bill and National Energy Regulation Bill being introduced for consideration and supporting their promulgation, if approved by Cabinet and Parliament. In the area of regulation of petroleum and petroleum products, the aim was to ensure there was compliance in monitoring and enforcement, and the issuing of enforcement notices where inspections indicated non-compliance. The five-year target for energy programmes and projects was focused on ensuring there was access to electricity by households, with the objective of connecting 1 089 000 rural households to the grid by March 2019 -- 75% of the 1 452 000 total grid target. There would also be non-grid connections to a total of 115 000 households by March 2019, of which 88 250 (75%) would be in the rural areas.

An overview of the budget was also given, showing that an overall budget of R7.48 billion had been allocated for the Department for 2015/16, of which R6.98 billion was earmarked for transfer payments to public entities, municipalities and other implementing institutions. It was important to highlight that about 76.51% of the allocated budget would be going to the Integrated National Electrification Programme (INEP), followed by 7.76% to the Nuclear Energy Corporation of South Africa (NECSA).

The Committee outlined its strategic objectives. It planned to enhance Parliament’s oversight and accountability over the work of the Executive to ensure implementation of the objectives of the Medium Term Strategic Framework (MTSF). There would be more co-operation and collaboration with other spheres of government on matters of common interest in order to ensure sound inter-governmental relations. Public participation in the processes of Parliament would be enhanced to realise participatory democracy through the implementation of the public involvement model by 2019. To enhance parliamentary international engagement and co-operation, it was planned to take a total of three international study tours and produce a report on the visits, including observations and recommendations. It also intended to strengthen the ability of Parliament to exercise its legislative power through consolidation and implementation of integrated legislative processes by 2019.

The Committee had identified risks that could impact on the achievement of its strategic plan. These included delays in receiving draft legislation or other documents to be tabled, unforeseen complexities and contentious aspects within draft legislation, a changing parliamentary programme and budget constraints. Additional risks included the timely submission of documentation and information required by the Committee, while international factors influencing progress in energy development in South Africa could affect the planned outcomes of the Committee.

Members expressed disappointed that the presentation did not touch on the international agreements that had been signed by the Minister and processed by Cabinet. These agreements should have been referred to the Committee for consideration in order to present a report to the National Assembly. They also wanted more information on the Independent System and Market Operator (ISMO) Bill, and whether this Bill had been stalled. Members said the Committee still needed to thoroughly deliberate on the ISMO Bill in order to make any possible amendments. They wanted to know whether it was possible for the international study tours to be funded outside the budget of Parliament. 

Meeting report

Briefing by the Content Advisor

Mr Pradish Rampersadh, Portfolio Committee Content Advisor, said that the presentation would focus on the overview of the Department’s strategic plan for 2015/16 to 2019/20 and the annual performance plan (APP). The DoE had been established in 2009 after the split of the Department of Minerals and Energy into two ministries. The Department had been experiencing a number of challenges. These included generation capacity, distribution infrastructure, poor access to energy and volatility of petroleum prices. The other additional challenges comprised of an ageing energy infrastructure, the cost of energy and budget baseline reductions. The Department had identified seven key priority areas to focus on in the implementation of the strategic plan and APP. These mainly involved electricity supply, petroleum and gas infrastructure, and effective and efficient energy utilisation. The Department would also give priority to policy and legislation, State-Owned Entities (SOEs) oversight, and targeted training between the Department and sector SOEs.

The DoE was made up of the following programmes:

  • Programme 1: Administration
  • Programme 2: Energy policy and Planning
  • Programme 3: Petroleum and Petroleum Products Regulation
  • Programme 4: Energy Programme and Projects
  • Programme 5: Nuclear energy
  • Programme 6: Clean energy

Programme 2 aimed to ensure evidence-based planning, policy setting and investment in the energy sector through supply and demand-side management options and increased competition through regulation. The five-year target in programme 2 focused mainly on the Electronic Regulation Amendment Bill and National Energy Regulation Bill introduced for consideration, and supporting their promulgation if approved by the Cabinet and Parliament. The Department also planned to develop a national coal policy with regulations that would include a strategy to secure coal supply and that was aligned with the Mining Beneficiation Action Plan by 2016.

Mr Rampersadh said that the purpose of programme 3 was to manage the regulation of petroleum products to ensure optimum and orderly functioning of the petroleum industry, to achieve government’s developmental goals. The five-year target for programme 3 was to ensure there was compliance in monitoring and enforcement in the petroleum sector, and enforcement notices should be issued in 90% of the cases where there was non-compliance. A target of 1 200 retail site compliance inspections would be conducted.

Programme 4 aimed to manage, coordinate and monitor programmes and projects focused on access to energy. The five-year target of programme 4 was focused on ensuring there was access to electricity by households, and the target was to connect to 1 089 000 rural households to the grid by March 2019 (75% of the 1 452 000 total grid target). There would also be non-grid connections to a total of 115 000 households by March 2019, of which 88 250 (75%) were in the rural areas. There would also be a concerted effort to enhance programmes and project management by developing a coherent project management business process, and the development of rural energy centres. The Department would focus on monitoring the energy infrastructure development by ensuring there was a quarterly progress report on the number of successfully implemented projects and monitoring and reporting on the Solar Water Heating (SWH) quantity installed. It was important to determine the amount of energy to be saved by the rollout of SWH as well as the training conducted with the National Solar Water Heating Programme (NSWHP) pending the availability of resources.

Mr Rampersadh said the purpose of programme 5 was to manage the South African nuclear energy industry and control nuclear material in terms of international obligations, nuclear legislation and policies, to ensure the safe and peaceful use of nuclear energy. The five-year target for programme 5 was to improve nuclear security with the amendment of both the promulgation of the National Nuclear Regulation Act, 1999 (Act No.47) and the promulgation of the Radioactive Waste Management Fund Bill. The Department aimed to strengthen the control of nuclear material management by ensuring that 70% of authorisation applications were processed within an eight-week time period, and 20 nuclear security compliances submitted to the relevant decision-making structures. There would be a need to increase nuclear awareness by targeted 31 public awareness campaigns and community outreach events to be held. This was important, as it ensured compliance with international nuclear obligations by developing, maintaining and implementing an appropriate statutory framework on an on-going basis.

He said that the purpose of programme 6 was to manage and facilitate the development and implementation of clean and renewable energy initiatives, Energy Efficiency and Demand Side Management (EEDSM) initiatives, as well as to coordinate climate change initiatives within the energy sector. The five-year targets for programme 6 were to coordinate and monitor the implementation of energy-related climate change responses and measure environmental compliance. The Department planned to develop renewable energy to 42% (12 800 MW) by 2030 and develop the import of 6% (2 600 MW) of hydropower by 2030. The Department was also planning to develop a nuclear new build programme roadmap based on Integrated Resource Plan (IRP) 2010-30 and the implementation of the optimised programme plan. It was important to prioritise implementation of the nuclear localisation strategy (if approved) and then the submission to Cabinet for approval of the implementation plan to support the Nuclear Fuel Complex (NFC) strategy.

The Department had been allocated R7.48 billion for 2015/16 financial year, and had earmarked R6.98 billion for transfer payments to public entities, municipalities and other implementing institutions, which was equivalent to 93.35% of the Department’s total budget. The remaining budget of R498 million was for operational expenditure, inclusive of transfer payments in respect of retirement benefits and Skills Education Training Authorities (SETA) contributions. This had been the trend of the budget for the past five years. It was important to highlight that about 76.51% of the budget would be going to the Integrated National Electrification Programme (INEP), followed by 7.76% for the Nuclear Energy Corporation of South Africa (NECSA).

Portfolio Committee on Energy Five Year Strategic Plan and APP

Mr Rampersadh indicated that the vision of the Committee was to be a vibrant and effective Portfolio Committee that legislated and conducted oversight over the implementation over the departmental programmes and related entities to improve service delivery, achieve universal access to electricity and a transformed energy sector. The strategic objectives of the Committee included tracking and monitoring the process of tabling of legislation and policies, processing the legislation as and when received, and overseeing the implementation of the Five Point Plan. The Committee was also mandated to oversee that electricity distribution challenges were addressed, and the restructuring of the electricity industry. The Committee would also play an imperative role in overseeing the implementation of Energy Efficiency (EE) measures, and developments with regard to oil and gas in Operation Phakisa.

The strategic objective 1 of the Committee focused on enhancing Parliament’s oversight and accountability over the work of the Executive, to ensure implementation of the objectives of the medium term strategic framework (MTSF). The plan here was to assist and improve the DoE’s and SOE’s capacity and funding, and the target was to have one set of recommendations in each financial year from the Committee for the next five years. The Committee was targeting to have four reports in each financial year for the next five years on the recommendations made in the monitoring of progress in the electrification programme.

The focus on the strategic objective 2 was on co-operation and collaboration with other spheres of government on matters of common interest so as to ensure sound inter-governmental relations. The plan was to oversee the implementation of the Five Point Plan, and the target was to have one set of recommendations in each financial year for the next five years. The Committee would also be responsible to oversee the broadening of the energy mix by producing four reports with recommendations in each financial year.

The strategic objective 3 prioritised on enhancing public awareness of the processes of Parliament, to realise participatory democracy through the implementation of the public involvement model by 2019. The plan here was to oversee the effective implementation of the solar water heater programme, and the Committee was targeting to have four reports in each financial year for the next five years. The Committee was also planning to have two oversight visits in order to gain first-hand experience and engage with stakeholders. The strategic objective 4 prioritised on enhancing Parliamentary international engagement and co-operation, and the plan here was to take a total of three international study tours and produce a report on visits, including observations and recommendations as applicable. The strategic objective 5 focused on enhancing the ability of Parliament to exercise its legislative power through consolidation and implementation of integrated legislative processes by 2019. The Committee would be required to produce at least one report on the set of recommendations on the tracking of submissions via either quarterly or annual presentations. There would be at least seven tablings of legislation and policies to be submitted to Cabinet this year and five reports on legislation and policies to be deliberated in the 2016/17 financial year.

The Committee had identified a number of risks that may impact the achievement of its strategic plan and APP and these included:

  • Delays in receiving draft legislation or other documents to be tabled;
  • Unforeseen complexities and contentious aspects within draft legislation;
  • Changing parliamentary programme;
  • Budget constraints;
  • Timely submission of documentation and information required by the Committee;
  • International factors that may affect progress in energy development in South Africa may affect the planned outcomes of the Committee;
  • The Committee would endeavour to manage the impacts of these risks by monitoring developments in its programmes accordingly.

The estimated budget for committee meetings in 2015/16 was R118050.00 and expected to be reduced to R150000.00 in 2017/18 financial year. The estimated budget for oversight visits in 2015/16 as R416589.00 and increased to R700000.00 in 2017/18. The total estimated budget for the operation of the Committee in 2015/16 was R888639.00 and expected to increase to R2070000.00 in 2017/18 financial year. 

Discussion

Ms T Mahambehlala (ANC) said it was concerning that the Committee did not get a briefing on the international agreements that had been signed by the Minister and then processed by Cabinet. She wanted to know whether there was any particular reason why the Committee could also not get a briefing on the Independent System and Market Operator (ISMO) Bill.

Mr M Dlamini (EFF) expressed concern about the fact that the presentation did not seem to empower the Committee, as the Committee was mostly responsible to oversee the work of the Department without playing a more influential role in policy decisions.

Mr R Mavunda (ANC) mentioned that it was indeed concerning that the presentation did not touch on the international agreements that had been signed by the Minister and processed by Cabinet on 11 June 2015. These agreements should have been referred to the Committee for consideration so as present a report to the National Assembly (NA). The Committee should be made aware of the legal status of these international agreements and the timelines for the processing of these agreements before the end of the term. What was the legal opinion that referred to the nature of these international agreements? He suggested that the Committee should deliberate on the decision to be made on the way forward regarding these outstanding agreements.

Mr Rampersadh responded that the Executive could not demand the Minister to do a particular task but could only make some recommendations because of the separation of powers, as this was even stipulated in the Constitution. He apologised that the Committee could not be provided with information on the ISMO Bill which had now been changed to the NISMO Bill and promised that information regarding this Bill would be provided to the Committee including the proposed amendments to the Bill. It was still to be submitted to Cabinet in July 2015 and then submitted to Parliament in July 2016 -- this was according to the information that had been presented by the Minister.

Ms Mahambehlale said she was now confused and wanted to know which Bill was to be submitted to Parliament.

Mr Sivuyile Maboda, Portfolio Committee’s Researcher, responded that the ISMO Bill had been changed to the NISMO Bill and was the one to be submitted to Cabinet and Parliament for further consideration.

The Chairperson suggested that the Committee should be provided with documents regarding the Bill and the amendments that were still to be made. The Committee would need to thoroughly deliberate on the Bill so as to make any possible amendments. He clarified that the ISMO Bill had now been changed to NISMO Bill.

Adoption of the Committee Programme

Ms Mahambehlala wanted to get more information on the statement that had been made by the National Treasury (NT) that the Committee would not be able to perform any international study tour this year as the Committee still needed to do an international study tour to the nuclear power station in Turkey.

The Chairperson said that the Committee had put out an international study tour plan but it had been noted that this was overambitious and the Committee had been told that there would be only one study tour in this year, and it was possible that there could be configuration of one or two study tours considering the amount of work that was still to be done by the Committee. The Committee had had a discussion with the Office of the House Chair on the whole question of international study tours, as it was also managing requests from other committees for additional study tours. There should be a discussion on whether the stipulated limit on the number of international study tours was based on the limits of funding from Parliament and if there was a possibility for the study tours to be funded outside Parliament.

Mr Rampersadh added that indeed the Committee would need to do a study tour on the nuclear power station in Turkey, as this would ensure that the country learnt from the international best practice on nuclear power stations.

Ms Mahambehlala asked if there was any particular reason why there had been no allocated budget for international study tours in the 2016/17 financial year, as the allocated budget was reflected only in 2017/18. It was impossible not to have an allocated budget for international tours in 2016/17, as the Committee still needed to undertake a number of study tours in the next financial year.

The Chairperson requested the Department to respond to the question on the agreement that had not been tabled to the Committee, as Members needed to make a decision on how to proceed with the matter.

Mr Rampersadh responded that these different agreements had been signed, together with five international agreements, and submitted to Parliament on 11 June 2015.

The Chairperson decided that the Committee needed to pause with the adoption of the Committee programme and the strategic plan and APP, as it still needed to consult the Parliamentary law advisors in order to deliberate on the matter of a legal opinion on the international agreement. The contention was on the fact that these international agreements had been tabled in Parliament without the consideration of the Committee. It was also not clear whether these agreements had been tabled to the National Council of Provinces (NCOP) or the National Assembly.

The meeting was adjourned.

 

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