SA National Energy Development Institute + National Nuclear Regulator on 2016/17 Annual Report

Energy

14 November 2017
Chairperson: Mr F Majola (ANC)
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Meeting Summary

Annual Reports 2016/17
 

The Portfolio Committee on Energy was briefed on the annual reports for 2016-17 of the South African National Energy Development Institute (SANEDI) and the National Nuclear Regulator (NNR).

The Chairperson of SANEDI said that the period from December 2016 had been a time of vigorous change for the organisation, whose mandate was to focus on energy efficiency and applied research. It had recently been given its first clean audit, and she credited her team with this achievement. The entity was concerned that rural energy provision remained expensive, and this was something it could help to address. Its most contentious initiative was the carbon capture and storage (CCS) programme, which involved the continued use of coal, but mitigated the environmental impact by storing carbon dioxide emissions underground. Other programmes included the conversion of waste into energy, the promotion of wind energy, and tax incentives for companies to reduce their carbon emissions. Funding and capacity issues were the major challenges facing the organisation.

Members of the Committee were concerned about the high costs to set up and maintain the carbon capture and storage programme, as well as the environmental risks with CO2 leakages. They were also worried about the potentially negative impact on electricity prices for consumers and the economy at large. Other issues raised were the fact that the CCS programme seemed to commit South Africa to the use of fossil fuels for energy production, and initiatives such as the waste-to-energy programme were being neglected. Members were concerned about the investigation by the State Security Agency (SSA) at SANEDI, arguing that what the SSA was investigating appeared to be a police matter. The process which had led to the appointment of the SANEDI Chairperson was also questioned.

The National Nuclear Regulator reported that its mandate was the protection of society against nuclear damage. It regulated facilities such as reactors, waste management, mineral and mining processing facilities, the transporting of radioactive materials, and vessels powered by nuclear, and had exceeded its performance targets consistently. Highlights for the year under review included the hosting of conferences, community engagement opportunities, and many multilateral engagements aimed at bringing South Africa’s nuclear regulatory framework in line with international standards. They commended the opening of a Centre of Excellence for Nuclear Safety and Security, to deal with the shortage of skills in the organisation. Challenges faced by the organisation included decreases in government grants, ineffective cooperation between government agencies and departments, as well as capacity issues.

 

Meeting report

South African National Energy Development Institute (SANEDI): Annual Report

Dr Ingrid Tufvesson, Chairperson: SANEDI, said that the period from December 2016 had been a time of vigorous change for the organisation. SANEDI had recently been given its first clear audit, and she credited her team with this achievement. Working together and being more focused on the SANEDI mandate was the reason the organisation was where it was today. There was more of a human factor in SANEDI’s presentation itself, which was the reason SANEDI should be working with energy efficiency in the first place.

She said that the organisation had been without a board for ten months. Its mandate was derived from the National Energy Act, and was to conduct energy research and development, and to promote energy efficiency throughout the economy. It had a strong focus on energy research - except for nuclear energy - in accordance with the Act. The organisation’s objective was to focus on applied research, with primary research being undertaken by the Department of Science and Technology (DST) and its agencies. The organisation was in an interesting intersectional position as both a conduit and collaborator with many state agencies. It had played an increasing role in education around energy efficiency.

Mr David Mahuma, Acting Chief Executive Officer (CEO): SANEDI, said the relationship SANEDI had with the Department of Energy (DOE) was legislative. The organisation also worked closely with the DST, as provided for in the National Energy Act, and had a mandate on certain issues. Its primary focus was applied research, taking its cue from some of the research undertaken by the DST and its agencies. He felt their work was incomplete until it was rooted in the programmes of government. The relationship with the Department of Trade and Industry (DTI) could help move from the applied research to the creation of products which would have a meaningful impact on the economy. He also noted the importance of the relationship SANEDI had with the DTI, given that transport could not work without energy. He felt that transport and energy in its current form was not the way it should be in the future, citing the environmental impact of carbon and other greenhouse gas emissions on the environment. The future of transport lay in green and renewable energy, and SANEDI’s role in this could be greatly enhanced.

The biggest challenge lay in the ‘deep’ rural areas, where access was limited and the provision of energy was expensive. Interventions such as developing renewable energy technologies and systems were intended to provide rural areas with energy. SANEDI’s work affected the mandates of municipalities. One of its programmes was linked to the Expanded Public Works Programme (EPWP). The idea was to look at the green economy and the provision of rural areas with green energy and infrastructural development to enhance social development. The Working for Energy programmeme worked very closely with the Department of Public Works (DPW) to create jobs and provide skills training and basic services.

SANEDI’s vision was to be the leading clean energy solutions provider for a low-carbon economy in South Africa. Its mission was to accelerate the implementation of energy research and development, increase energy efficiency and the uptake of renewable energy for the benefit of South Africa. One of their programmes, Carbon Capture and Storage (CCS) revolved around reducing emissions in the use of fossil fuels, namely coal. South Africa had an abundance of coal, and existing resources should be used while dealing with carbon dioxide emissions by burying them in the ground, and trapping them in certain geological structures so the CO2 emissions did not escape.

The presentation focused on SANEDI’s activities across the energy sector. Mr Mahuma commented on the introduction of smart grids into municipalities, enabling utilities to know what happened in their systems. It enabled them to know how to control energy supply and link up with other sources of renewable energy as needed. He felt that this was the future of energy provision. He discussed cleaner mobility, recognising the impact of internal combustion engines on the environment. SANEDI focused on alternative sources of fuel. The goal was to move the country towards electric mobility in both public and private transport. Data and knowledge management was an enabler for constant development and supported the Department with programmes that were being implemented. The renewable energy programme focused on all renewable energy in collaboration with the DST and the Department of Environmental Affairs (DEA).

SANEDI’s Working for Energy programme supplemented the energy sources communities may have. Research showed that when households had electricity, there was initial excitement over government delivery. He cautioned that as ESKOM increased rates above the level of inflation, poor communities would find it difficult to afford energy, and there would be a low utilisation of electricity due to the cost, with communities returning to traditional fuels. The Working for Energy programme looked at clean energy solutions for rural and poor urban areas from the immediate environment. He cited examples of livestock waste being used to produce energy, food waste being converted to biofuel, and the clearing of water waste and alien species as a possible source of existing biomass which could be converted to energy. The programme focused on complementary, alternative energy systems. The energy efficiency component of SANEDI’s work cut across all sectors, and was being promoted at the level of household and industry. Working with the National Treasury, incentives had been created for industry to be energy efficient. A lot of work had been done to ensure this.

Mr Mahuma spoke about the performance information for various programmes. Programmes were structured around two main strategic outcomes – creating an enabling and efficient environment which complied with all statutory requirements, and energy innovation and knowledge and skills for a more environmentally friendly, affordable and efficient energy system. He stressed that sustainability and affordability of systems were key, noting that it was worse when a system was implemented, not well maintained and fell into disuse. Activities were clustered around three main programmes – corporate governance and administration; energy efficiency and applied energy research, and development and innovation. He elaborated on programmes which fell into the last category.

Mr Mahuma provided an update on the CCS programme. The Zululand basin had been identified for a pilot CCS project due to its geology ‘acting like a sponge’ and potentially trapping CO2 emissions in the geological structure. Other offshore and onshore locations had also been identified for future use. A risk assessment plan had been completed which took note of the risk of asphyxiation from carbon dioxide leakages. A business case for continuing CCS had been done because of the current debate around shale gas and fracking. He felt that there was a need to reassess whether the continuation of CCS was necessary, given that the public may see similarities between CCS and fracking. However, there was still a sound business case for continuing CCS. There were technologies for the appraisal of CO2, most of which was emitted from Eskom and Sasol plants. Should CCS continue, there would be a need to find other uses for CO2 such as in the food industry, and SANEDI would need to establish whether the CO2 produced in the plants was suitable. Given the current and proposed carbon taxes, the tax structure did not support large scale CCS but that this was something SANEDI may want to consider in the years to come. He commented that when CCS was brought into a community, there would be a need for awareness and education through career expos, community engagements and workshops. A number of these engagements had already taken place.

With the renewal energy programmes, especially large scale ones, many resources were not adequately utilised for renewable energy -- such as landfill waste and sewage treatment plants -- increasing dependence on ESKOM in the process. Not treating waste was contributing to methane emissions. Collaboration with the DST and others on an innovation roadmap could establish what needed to be done collaboratively. There was collaboration with other programmes, such as the Southern African Solar Thermal Training & Demonstration Initiative (SOLTRAIN) with the Austrian government. In Cape Town, the South African Renewable Energy Technology (SARETEC) facility currently trains people who work with wind turbines as a source of renewable energy. SANEDI collaborates with the United Nations Industrial Development Organisation (UNIDO) on the SWITCH Africa green project. Phase two of the South African Wind Energy Project (SAWEP) had been implemented.

Mr Mahuma elaborated on the success of smart grids, commenting that Eskom often claimed to be in dire financial straits due to non-payment from municipalities, who in turn had problems with non-payment from consumers. The smart grid programme had been implemented in municipalities in dire financial straits. He cited the example of the Naledi municipality where there had been a reduction from 23% to 9% in electricity revenue losses. Treasury was looking at rolling this programme out to other municipalities.

There were 102 energy efficient projects and 12L tax incentives in the system. In the 12L tax incentive programme, 32 projects had been approved, six certificates had been issued and 10 projects were expected to start production during the financial year.

The organisation still faced challenges, such as inadequate funding. There were also human resource (HR) challenges due to many appointments being on a contract basis. He felt that there was not room for SANEDI to get to the level where it would be fully operational. He cited the impact of “Fees Must Fall” campaign on SARETEC, where students had been unable to complete their training programmes. The period in which SANEDI did not have a board had made it difficult for the organisation to honour all its international obligations. There were also challenges in obtaining CCS funding due to governance issues at the time.

Ms Phutanang Motsielwa, Chairperson: Audit and Risk Committee, SANEDI, said that new board members had been appointed on 1 December 2016, and five board committees had been put in place. SANEDI was currently looking at restructuring to ensure that proper structures were in place to support its mandate. She presented the employment equity statistics to the committee.

The organisation had achieved its first clean audit for the financial year ending March 2017. It had been an unqualified audit with no findings. She believed that the plans which had been put in place by the previous board were starting to come together, and expressed the hope that SANEDI would maintain its performance for 2018. She presented the audit outcomes, making special note of holding people accountable for action plans. SANEDI had strived to achieve a change in behaviour among staff through continual training and support. Consequence management procedures had been implemented for non-compliance. Continuous monitoring and reporting had been implemented at board and staff level. The focus areas for the year ahead were information technology (IT) governance and system controls.

Ms Lethabo Manamela, Chief Financial Officer (CFO): SANEDI, said that SANEDI had R302 million in assets, of which R300 million were current assets due to the organisation spending most of its money on research. For every R1 received from National Treasury, SANEDI had been able to get R6 from donors. The full allocation from National Treasury had been spent. Unspent grants made up its accumulated surplus. She said that there had been a decline in donor funding from the previous year due to donors seeing South Africa as more developed. This created challenges in co-funding. Most projects ran in phases, with there being less funding towards the end of a project. She stressed that surpluses were already committed. As soon as agreements were signed, money was spent. SANEDI had started partnering with donor entities and charging management fees for work done on projects. She presented information about the expenses incurred by SANEDI. It had had to look at what expenditure could be cut. 70 percent of employee spending was on technical staff, with the remainder on support staff.

Dr Tufvesson said she had expressed a desire to see better communication between the DoE and SANEDI. The board had built a communication system which had not existed before. There had been previous complaints about non-responsiveness from the DoE, but that relationship had done a 180 degree turn. SANEDI and the DoE were now in close contact with each other and the Department was coming in when called upon. She expressed her appreciation.

She referred to internal challenges. There was an internal investigation involving the State Security Agency (SSA) which she could not provide details about. The incident would have happened in 2016, but had been exposed only in 2017 by the new board. She felt that there was not enough understanding of how much work was being done internally to address the problems. She commented that previous employment processes would not have passed muster in the labour court. She felt that SANEDI deserved credit for coming on board with audits, compliance and labour relations procedures. It had not been easy, and she hoped the hard work and effort would be noted when the Committee addressed the SANEDI board.

Discussion

Mr G Mackay (DA) expressed concern about the State Security Agency investigation, noting that nothing had been said about this in the presentation. The first issue he wished to address was the appointment of the chairperson, given the controversy around her. He requested clarity on who had nominated her, what process had been followed, and whether the position had been advertised. He asked for evidence of the position being advertised. He asked Dr Tufvesson to confirm that she had no commercial interests in the mineral sector, and to clarify her relationship with the Minister of Public Enterprises, as this could be a potential conflict of interest. He asked about her past, present and future association with Sandspirit Energy. He asked the acting Director General if he could confirm whether the Minister of Science and Technology had been consulted in the appointment of Dr Tufvesson, as was required by the National Energy Act. He also asked her to elaborate on her specific qualifications that made her suited for the position.

He also expressed concern about the CSS project, noting that by SANEDI’s own admission, the tax structure made it unworkable. He felt that the concept did not work, describing the UK experience where it had not taken off due to the high expense and lack of private sector involvement. He was worried that it may become an expensive white elephant. He queried the impact of carbon storage on the long-term electricity price, stressing the impact of increasing electricity prices on the economy. He felt that programmes needed to be cost effective, and result in a long-term reduction in electricity costs. An earlier report had stated that South Africa could reduce its carbon emissions through an improved strategy around gas and renewable energy sources, and without CCS. He questioned the wisdom of pursuing CSS, and also queried whether SANEDI’s research had been used in the upcoming Integrated Resource Plan (IRP).

Mr J Esterhuizen (IFP) said that 89% of South Africa’s energy derived from fossil fuels, with 400 000 tonnes of CO2 being emitted every year. In 2010, Minister Peterson had stated that she was looking for expertise and ways to better the energy needs of the country, but nothing had really happened with CO2 emissions. He felt that SANEDI was justifying the continued use of fossil fuels. He expressed concern around the cost of CCS, noting that the equipment alone would cost R10-11 billion. I had not been established which pipelines would be put in place, and this raised concerns around the possibility of a leak. Most pipelines had a lifespan of 20 years and would need to be replaced. He commented that Minister Peterson had established SANEDI as a statutory body and that it would not make decisions, only provide ideas.

He queried whether access to the grids could be provided for independent power producers (IPPs). Not much had changed, and he was concerned that grid planning seemed to be an afterthought. Through smart grids there may be the technology to enable municipalities to update the aged grid, but neither the expertise nor the necessary policy clarity was there. He questioned the relevance 12L -- whether 12L as a tax incentive was worth it to companies. He expressed concern about the financial statement, noting that it was more a projection than an actual budget. A traditional budget should be over three years. The large variances in the budget were unacceptable.

Mr M Matlala (ANC) asked why the board did not meet as frequently as required. Why had six of the 39 applied energy research performance targets not been met? He said that SANEDI had developed 16 HR policies, but asked why the other six were still being finalised. Why were there so many policies, and what were the policies about? He queried the aim of stakeholder feedback and how it was done, as well as who the target audience was.

Dr B Nzimande (ANC) said he was brand new to the Committee, but he had a few issues. He commented that the conversion of waste to energy was not prioritised, although the point had been made that it was not adequate, and wanted clarity on this. He was concerned that as a state-owned entity, SANEDI received most of its funds from donors. By depending on donor funds, SANEDI would end up spending more time applying for money from donors and writing reports. The donor funding could affect the mandate of an organisation. He said that other countries may not have the same priorities. He queried who the donors were and asked if SANEDI cooperated or worked with non-governmental organisations (NGOs) in the energy sector.

Mr G Davis (DA) said that the new integrated resource plan (IRP) was due at the end of the month and asked whether SANEDI had been involved in the research and drafting of the IRP, and to outline their involvement. He asked the Director-General whether the Department was on track to produce the IRP on time and whether it would be tabled before Parliament. He asked what the salaries for the CEO and CFO of SANEDI were, and what performance bonuses were paid to executives. There had been mention of money for pay outs to staff, and he wanted to know how much these were. He was alarmed that expenditure had exceeded revenue, and asked how the shortfall would be funded. He also queried whether SANEDI expected this in the future. He asked for more information about the SSA investigation – who was involved, what it was about and what the timeframe was.

Ms Z Faku (ANC) congratulated SANEDI on its clean audit. She asked for the terms of reference for the business case. She also requested clarity on the guide for the energy distribution industry.

Mr R Mavunda (ANC) said that in the discussion around cleaner fossil fuels, there had been mention of a completed risk assessment, and asked for details. He also queried whether carbon capture had undesirable consequences from which communities would have to suffer.

The Chairperson informed Mr Davis that he would get answers at the following week’s meeting. He asked the acting Director General to deal with the appointment of the SANEDI chairperson and the investigation. He queried why the investigation was with the SSA, and not with the police.

DoE response

Mr Tseliso Maqubela, Acting Director-General: DoE, responding to the question about the Integrated Resource Plan, said that the Department was on track to complete its work. The technical work was almost complete. Policy adjustment work would be expanded upon when the Department briefed the Committee the following week.

Addressing the CCS issue, he said that the DoE’s view was that South Africa had an endowment of coal which supported thousands of jobs, and would support them in the future. Something needed to be done about cleaning the coal. SANEDI’s mandate was to look at CCS and clean coal technology. Until there was an industrial strategy that supported jobs in the renewable energy sector, this approach had to be accelerated.

With regard to the appointment of the SANEDI chairperson, he said that the then chairperson had consulted with the board in 2015 to indicate that their term was ending and that there was a need to appoint a new board. All board appointments went through the Cabinet process, and Cabinet had to concur for board appointments to go through. This board had not been appointed differently. He requested that the question around the investigation of the chairperson be deferred. The Department was aware of an anonymous letter that had been sent which had made several allegations. The matter had been referred for investigation. The Department’s view was that SANEDI needed to focus on energy efficiency as its primary mandate.

The Chairperson called on the SANEDI chairperson to respond. He said that the Acting DG was being too diplomatic, and that he expected clarity at the following meeting.

Dr Tufvesson started by addressing Mr Mackay’s question about the investigation. She said that the new board had been challenged with an anonymous letter which had come from the Minister’s office requesting action. The letter had included a financial matter which fell within the ambit of the finance department and which had exposed itself later. The matter was currently with the police and involved between R1.2 million and R1.5 million which had disappeared. She was unable to speak about the matter, as she had not yet received the report from the SSA. The SANEDI board were waiting for the report to understand the elements of the letter and whether there was any substance to it. The board felt that it was important enough to be looked at. Once SANEDI had the report, it would be handed over to the DoE.

She addressed the concerns about her appointment, saying that it had gone via Cabinet, along with her CV. The issues around her personal life were with the Press Ombudsman and had been taken to court, that Mr Mackay would have to wait for a response.

Dr Tufvesson addressed Mr Matlala’s questions about the HR policies of SANEDI, and elaborated on the history of the organisation. Previously there had been the Central Energy Fund (CEF) and SANERI which were made up only of scientists. The scientists had moved from the CEF, which became SANEDI on its own but it had no policies. SANEDI had continued using the policies of the CEF, but the current board felt that it was inefficient since the size and business of the two entities were not the same. SANEDI had needed to establish a new process of employing people, and that there was no evidence of checking skills or recruitment policies. The organisation could not be held accountable for its own policies in audits, because it did not have them. She stated that this had been an issue in previous audits.

Responding to Dr Nzimande, she told him about a rural primary school which now had enough energy to cook because of biomass from cow dung. While the initial outlay for the biogas plant might seem big, it had made up for its establishment in three years.

She conceded that donors did determine the agenda to a large extent. She felt that having a chairperson with a strong social justice focus had been a positive for SANEDI. The focus was on what was happening to the rural poor and education around food wastage and biofuel. She said it was regulated by the Deputy Minister, who had been supportive of the chairperson of SANEDI, asking operational staff to draw up a checklist to see how much of the donors’ demands met the country’s demands. She felt that if the terms were not in the country’s favour, there needed to be a renegotiation.

She said that the CCS project was heavily supported by Norway, which had the first and largest CCS plant.

Working with NGOs was hard, but SANEDI did try. Her personal concern was that SANEDI was not bringing in young people to educate scientists, since those young people had gone through the lived experience of not having affordable energy, and would then gain the scientific knowledge.

Ms Manamela responded that the CEO and CFO earned R3.8 million and R2.1 million respectively. She said that there was no full board for 2015, and that these figures included two years of performance bonuses. SANEDI was reviewing its remuneration policy, and that would affect remuneration going forward.

Mr Mahuma said that most of SANEDI’s donors were linked to the United Nations. It received assistance from the Danish government in the wind energy sector. It did not work with many NGOs, but had begun working with the World Wildlife Fund (WWF).

He addressed Dr Nzimande’s question about waste to energy, stating that there were initiatives to look at large scale waste to energy programmes. Waste to energy cuts across many sectors, such as waste management and food security.

He addressed the smart grid, mentioning that it was a small element of some of the programmes which were initially intended. Smart grids were focused on controlling information that could be conveyed on existing grids. In future years, grids would be different as rural areas would fit into the existing grid. Every possible energy form would need to be harnessed to strengthen the grid. In future, energy could be produced locally and on site, reducing dependence on big power stations like Koeberg.

He addressed the relevance of 12L, saying that it was an incentive programme with broad benefits in mind and encouraged industry to use less energy. He responded to the question of CCS and the risk to communities by referring to the example of Norway. Responding to the question about pipelines, he said that South Africa had the capacity to deal with pipelines.

He said he would provide written submissions on any other issues.

Mr M Mackay (DA) reiterated that he had asked the chairperson of SANEDI who had nominated her, and what association she had with Sandspirit Energy. He wanted her to answer for the record at the meeting. He asked if she had any current, past or existing commercial interests in the mineral sector. He thanked the Director-General for illuminating part of the process, namely the Cabinet process, in appointing Dr Tufvesson, but asked for clarity on the full process. He had asked what the nomination process was and whether the post had been advertised, and requested proof that this had been done. He requested a date for the completion of the IRP, and asked whether it would be made available to the Committee. There needed to be less pontification about jobs in the coal sector, and more about the impact of CCS on electricity prices, as the electricity price impacted on jobs across the board.

He said that the Director-General had referred to a consultation in 2015, yet the board had been appointed only 12 to 14 months later, and asked for clarity on that process and why the appointment of the board had taken so long. He commented on the investigation, pointing out that Mr Davis’s question had been clear. The committee now had more questions than answers, and he requested a structured answer with more specifics. He also queried why the SSA had been involved, and not the police.

Dr Nzimande expressed concern that the SSA was getting involved in a matter that did not concern them. This may need to be raised in this Committee, among others, or even the Inspector General.

The Chairperson expressed concern about time. He said that there would have to be a very short presentation from the National Nuclear Regulator. He asked the SANEDI delegation to answer questions specifically and clearly, without explanations, as the committee did not have the time. The Committee would have to return to this matter, as he was concerned it would not finish on time. He was concerned with the SSA’s involvement in the investigation, as the intelligence unit in the police department could deal with it. He wanted to close this matter and asked if it could be done quickly so the Committee could move on to the next presentation.

Dr Tufvesson said that any interests of hers were registered in the declaration made to the DoE as a matter of public record, and that she had no interests in energy efficiency-related businesses. The former CEO of SANEDI had called in the SSA rather than the police, and had informed the board after the fact. She asked if there were any other questions.

The Chairperson said that he was chairing the meeting, and that Dr Tufvesson should not ask Members. He felt that the acting DG should have SANEDI attend the following meeting. The issues around pricing, CCS, nuclear research and the IRPs would have to be addressed at the following meeting. He apologised for the fact that Members’ questions had not been fully answered.

The DG said that SANEDI was meant to focus on all other energies except nuclear. He commented on the SSA investigation, and said that it appeared a repeat offender was involved, which was why the SSA was involved. He asked that other issues be dealt with at the following meeting.

The Chairperson said that however far back the SSA’s involvement went, it remained police work.

National Nuclear Regulator (NNR): Annual Report

Mr Bismark Tyobeka, CEO: National Nuclear Regulator (NNR), explained the mandate of the NNR as defined by the NNR Act, which was the protection of society against nuclear damage. The NNR regulated facilities such as reactors, waste management, mineral and mining processing facilities, the transporting of radioactive materials, and vessels powered by nuclear.

There was a high culture of performance in the organisation, which pointed to it consistently exceeding its performance targets. A report the NNR had presented to the International Atomic Energy Agency had been was praised by its international colleagues. It had also hosted the International Radiation Protection Agency (IRPA) conference in March in Cape Town. In conjunction with the DoE and Department of Health, it had hosted an 11-day International Atomic Energy Agency (IAEA) mission to South Africa, which was meant to assess the regulatory framework around nuclear and radiation safety. He stressed that the outcomes of these missions meant a lot for the country and that this was one of the best attended missions. The NNR was firmly in control of its mandate, and had processes which were in line with international safety standards.

Among highlights from the year under review, the NNR had collected R162 million in grants and authorisation fees, an increase of ten percent from the previous year. It had also recently launched its first Centre of Excellence for Nuclear Safety and Security (CNSS). He acknowledged that the CNSS had been established out of a recognition that South Africa was short on skills and that only one university offered nuclear engineering programmes. The aim was to recruit graduates and school them in the mentality of regulating nuclear safety. This was a multi-stakeholder initiative with many partners. The three legs of the CNSS were education, research and technical support.

Mr Tyobeka said that the NRR had continued to review the Nuclear Installation Site Licence (NISL) applications from Duinefontein which had been submitted by Eskom last year. The Duinefontein site had been prioritized, and no fatal flaw had been found in the Thyspunt site so Eskom could resuscitate the application. He praised the establishment of the South African National Dose Register as a considerable milestone in the reporting period. He mentioned ongoing community engagements about the work of the NNR and the risks of nuclear power. He lauded the hosting of the first Nuclear Regulatory Information conference, which had been deemed a huge success. He said that the NNR supported multilateral nuclear safety cooperation, and mentioned the contribution from the European Commission in capacity building.

He elaborated on some of the challenges. He referred to the delayed appointment of the board, saying the piecemeal extension of the previous board’s term had had a negative impact on governance. He expressed concern about the late approval of authorisation fees, which he said occurred almost every year and created problems with planning. In the current financial year, the NNR had informed the DoE of their plans to increase authorisation fees in February, but had received approval only four weeks ago. Working on an assumed budget affected planning in the NNR.

Delays in the finalisation of amendments to the NNR Act were a concern, and he asked the Committee to give this priority so that the organisation could continue its good work. This was important to bring the regulatory framework in line with international standards. He also expressed concern around the harmonisation of regulations, with there being two regulators. International missions had flagged this as a risk, stating that there should be one entity. He felt that the process to merge the two was moving slowly. He then presented the nuclear authorisations for the period under review to the Committee.

Mr Tyobeka presented the findings on occupational exposure to radiation at Koeberg, which had been high in 2015 when Eskom had an outage. Maintenance on the reactor had resulted in more exposure, although there was no serious occupational exposure. He stated that it was the same for the Nuclear Energy Corporation of South Africa (Necsa). He elaborated on an incident which had resulted in a spike in 2016, which was because of an exposed worker who did work for them in Brazil on an international project to help clean up radioactive sources. Although the accident was in Brazil and not under the NNR’s jurisdiction, it had to be reported. He made note of the special case mines which were viewed as high risk, and must be reported on every year. He said that the mines were still being kept in check.

Mr Dakalo Netshivhazwaulu, DFO: NNR, said that non-current assets, relating to the building, had reduced due to depreciation. Current assets had spiked in the previous year due to the late gazetting of authorisation fees. If authorisation fees were not gazetted in time, the NNR used the previous year’s rate, and if authorisation fees were not gazetted, the invoices remained unpaid. There had been an unusual spike in cash and cash equivalents due to capital projects. In the past three years, work had been done on an emergency control centre in Pretoria to detect radioactivity in areas far from Pretoria. Since the project was almost complete, the money allocated kept decreasing.

One of their liabilities was the payment of the bond on their headquarters, which would be settled within five years. The unspent conditional grant was for their Cape Town site office, and the NNR was working hard to secure approval from the Cape Town City Council. There were currently issues around the zoning of the office. He drew attention to the fact that the NNR had employee benefit obligations due to the old order’s defined benefit schemes. There were three active members that the NNR still provided for, as well as 30 pensioners who were on the scheme. The organisation continued to service this liability. Findings on current liabilities were more straightforward. He referred to the 28 percent increase on payables which related to the Koeberg Nuclear Power Plant steam generators replacement project, where an allocation had been made for permanent employees to work on the project.

Regarding the income statement, the CEO had already spoken about the authorisation fees. The government grant had been decreasing, but had shot up in 2017. The increase was not a grant, but rather provision for a nuclear installation site licence application. The NNR’s model of financing was in recovery, and the organisation needed cash flow to fund activities in advance.

He said that there was nothing out of the ordinary in the expense statement. He felt that trading and development had suffered, and stressed the need keep updated with international trends. He touched on creditors’ payment turnaround time, noting significant improvements - dropping from over 30 days to four days in the past few years. He lauded the work of the NNR committee in achieving a fourth successive clean audit.

The Chairperson felt that the report was sufficient, and asked the CEO about the challenges the NNR faced.

Mr Tyobeka said that the first challenge, like SANEDI’s, was that the government grant kept decreasing. The NNR was a small organisation with a big mandate, and that it could not recover the shortfall from licence fees. It was hard for them to meet the level of a mature regulator. He expressed concern about the low staff capacity and said that the NNR had had to rely on international partners. He complained about overlapping mandates, noting that the Department of Mineral Resources had its own mining investigators. He cited the case of mining dumps in Mogale City. It was not the NNR’s duty to flag issues so that other state organs could move on them. He felt that cooperative agreements were not working well, and were causing reputational damage for the NNR.

The Chairperson thanked the CEO for his presentation. He said that he wanted to hear from the NNR on suggestions for progress. He invited them to the following week’s meeting so that the NNR delegation could be asked questions.

The meeting was adjourned. 

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