Committee Report on Department of Energy Budget

Energy

09 May 2017
Chairperson: Mr F Majola (ANC)
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Meeting Summary

Document handed out:
Committee Budget Vote Report No. 26 of the Department of Energy [available once published Tabled Committee Reports]

Members of the Portfolio Committee considered the first draft report on the Budget Vote No 26 of the Department of Energy (DoE) after being briefed on the three main blocks of the report. These covered the general information from the annual performance plan (APP), as presented during the previous Committee session on 2 May; responses to the 2016 budget vote recommendations; and the responses to the 2016 budgetary review recommendations report (BRRR).

The Committee agreed to restrict the number of recommendations to a smaller set of issues to enable the DoE to provide specific and focused answers, as Members had complained about the generality and vagueness of the responses given by the Department. The main issues identified were the status of PetroSA, which was considered a liability for the DoE and the fiscus, the sale of South Africa’s reserve oil stocks, nuclear energy procurement, the installation and repair of solar water heaters, and the finalisation of the Integrated Resource Plan (IRP) and the Integrated Energy Plan (IEP).

Members were asked to consider the option of calling on the DoE to conduct a formal inquiry into the status of PetroSA.

The draft report would be reviewed and modified during the following session next week.

Meeting report

Department of Energy Budget Vote: Draft Report

Mr Arico Kotze, Committee Secretary, presented the first draft of the budget vote draft report to the Committee, reading it out in its entirety to allow Members to make further inputs and recommendations. He explained that the structure of the report was the same as last year, including Members’ comments after the APP presentation and the Department of Energy’s (DoE’s) responses. This year, however, responses from the Minister of Energy were included as well, specifically on the Budget Vote of 2016 and the Budget Review and Recommendations Report (BRRR).

The draft set out the subject of the report, its background and objectives. It also provided the strategic plan and information gathered from the APP presentation. The information on the APP overviewed the Department’s entities’ mandate and regional offices, the outlined goals of the DoE, the policy priorities and a budgetary breakdown for the current financial year.

From the previous meeting, when the Portfolio Committee and the Minister of Energy met publicly for the first time, a set of observations and findings had been outlined. These included aspects regarding the need for more efficiency, effectiveness and responsiveness from the DoE, management and long-term planning on the use and commercialisation of national resources, the challenges faced by the DoE’s entities -- with a focus in PetroSA -- together with key issues such as nuclear procurement, Eskom’s concessions and the finalisation of the Integrated Resource Plan (IRP) and the Integrated Energy Plan (IEP).

The first set of responses provided from the Department were related to the 2016 budget vote (Vote No. 26 of the Department of Energy), followed by the DoE’s answers to recommendations in the 2016 budgetary review and recommendations.

The Chairperson suggested that the meeting covered the reading of the DoE’s answers, and allow Members to insert further recommendations during the Portfolio Committee’s next session.

Mr G Mackay (DA) said the suggestions and observations seemed scattered, and should be grouped in terms of content. He argued that in many of the recommendations’ referencing, some opinions appeared to be unanimous within the Committee, when they were not. For example, the opinion of the Minister that PetroSA would not be privatised had not been seconded by the DA.

The Chairperson suggested the Committee go through the two set of responses provided by the DoE.

Mr Kotze proceeded to read the draft in its entirety for further discussion and contributions from Members.

Discussion

Mr Mackay welcomed the responses from the DoE, and said that many of the comments and recommendations were quite specific, asking for time frames and requesting documents. However, the Department tended to respond with very general answers and without committing to providing documents and milestones. He gave the example of the case of the National Energy Regulator of South Africa’s (Nersa’s) appeal board -- why it was needed, its constitution, the processes of appointment and incompatibilities -- none of which were addressed in the draft. In his opinion, the answers were generally helpful but highly problematic, and difficult to accept in terms of passing the report.

The Chairperson suggested the Committee should focus on the key responses in the report, and acknowledged the change in the DoE’s responsiveness. Part of this generalisation when answering to questions was the bureaucratic nature of government. It was important for other aspects to be introduced, on top of delivered issues such as the public hearings on nuclear energy, and the finalisation of the IRP and IEP. One example of these issues was the installation of 39 000 new solar water heaters, while there were 400 000 existing units that were not working properly and needed to be fixed. The electrification programme was going well, and the so-called load shedding of the future would probably be the result of network and distribution incapacity, and not as much from generation capacity. The Committee needed to engage with the DoE on how to improve the oversight of its different entities.

The Chairperson called for further reports on the status of PetroSA and its recapitalization, and the completion of a full report on the sale of the country’s oil reserves, as promised by the DoE.

Mr Mackay agreed with the Chairperson on the need to focus on the important matters. The problem with PetroSA was greater than it seemed. The entity had become a liability, causing a R16.2 billion loss for the fiscus and the public administration of the country. The recommendations should be restricted to focus on PetroSA, nuclear energy and the IEP and IRP, and these needed to be more specific so that the DoE could not ignore them. He insisted on highlighting the issue of PetroSA, which was challenging the Committee’s oversight mandate.

Mr M Dlamini (EFF) supported the idea of reducing the amount of comments and recommendations for further clarity from the DoE. On top of the proposed topics, he suggested including recommendations on the installation and repair of solar water heaters.

Mr Mackay suggested that the Committee should call on the DoE to conduct an inquiry into PetroSA, as they had failed to answer effectively, and so had the Central Energy Fund (CEF). The Committee needed complete information about the status of the entity through a full investigation, thus forcing a response from the Department, which had been avoiding responding fully on the issue. This should go along with the public hearing on nuclear energy proposed by the Minister during the Committee’s previous meeting.

The Chairperson said he would support such an initiative, though Members should take time to consider the proposition. Regarding the CEF, he referred to the Strategic Fuel Fund (SFF) and the selling of its stocks to a foreign enterprise, for which the DoE had been interrogated during the previous meeting. He said that both PetroSA and the sale of the oil stocks needed further oversight from the Committee.

It was agreed the report would be revised next week.

The meeting was adjourned. 

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