The Portfolio Committee on Environmental Affairs was briefed by its legal advisors on the legal options available to it regarding the National Environmental Management (NEM) Amendment Laws Bill. It was decided that, based on the discussions the Committee had with the Chief State Law Advisor, the Parliamentary Law Advisor, the Minister and Director-General of the Department of Environmental Affairs (DEA), the Committee would proceed with the Bill, excluding the proposed addition to the Bill of the Natural Resources Management Agency.
The second briefing was by the DEA on the waste tyre collection and recycling programme. Over 3 000 dealers were currently serviced. These had been inherited from the database of the Recycling and Economic Development Initiative of South Africa (Redisa). The ongoing registration of dealers was under way. Currently, the Waste Bureau could not service all the dealers due a lack of capacity for collection, storage and processing. The Committee was warned about the energy-intensive nature of recycling, the expensive processing equipment involved, and the need to establish the market demand before producing products.
Members felt that what was missing from the presentation was a breakdown of the financials. The DEA had been allocated R200 million by Treasury, which was supposed to cater for the establishment of the Waste Bureau, as well as its operation. Was the allocation sufficient to carry out the operation? The Committee understood that having taken over a system, the Bureau would experience some teething problems with regard its establishment, but indicated that the drop in the collection rate of used tyres from 63% in 2016, to 35% in 2017, was a serious cause for concern. Tyres which were not being processed and taken elsewhere were causing environmental hazards. Fundamentally, the programme was about addressing environmental concerns.
The third briefing was by the South African Weather Service (SAWS), responding to issues raised by whistle-blowers. These included accusations of board interference in the appointment of a senior executive, whose salary had also been upgraded after taking office, and that the SAWS radar contract was not properly constituted. Based on the responses and comments of the Committee Members and the SAWS’ board members, the Chairperson ruled that the board had to respond in detail to the allegations at a Committee meeting scheduled for next week.
Opening remarks by Chairperson
The Chairperson welcomed everyone to the meeting, and said discussions had already taken place between the Chairperson and the Parliamentary Legal Advisors on the options available to the Committee regarding the National Environmental Management (NEM) Amendment Laws Bill (B14-2107).
There had been apologies, but only from Mr Z Makhubele (ANC), Mr R Purdon (DA), who would join the meeting later, and Ms Barbara Thomson, Deputy Minister of the Department of Environmental Affairs (DEA). It was important for the Committee to find out whether the Members were still willing to serve on the Committee, because some had not been available for some time. It affected the work of the Committee when a quorum was needed. Ms Edna Molewa, the Minister of the DEA, would join the meeting later.
Legal options available to Committee regarding NEM Amendment Laws Bill
Mr Kweta Mongameli, Senior State Law Adviser: Office of the Chief State Law Advisor, commenced by reminding the Committee that the DEA had made a full briefing to the Committee on the legal Bill. During the briefing, the DEA had introduced the amendment to the establishment of the Natural Resources Management Agency. This proposal was not contained in the original version of the Bill. The State Law Advisor had received an instruction from the Committee that the DEA, the Parliamentary Law Advisor and the State Law Advisor should meet and discuss the issue and advise the Committee on the way forward, because the proposed amendment seemed to affect the Rules of the National Assembly. There was a problem in that the proposed amendments were substantial in nature. As such, Rule 286 of the Rules of the National Assembly was applicable in this matter.
In terms of the Rule 286 of the Rules of the National Assembly, if during the rule deliberation there was a proposal that sought to extend -- not ‘change’ -- the subject of the Bill, then the Portfolio Committee should seek permission from the National Assembly in order to get permission to do so. In terms of the proposals of the DEA, they were substantial in nature and they extended the subject matter of the Bill itself. Since the Bill was being reviewed in Parliament, if the Committee accepted the new proposals, in order to avoid any chaotic approach, the Committee should seek permission from the National Assembly in order to move forward with the Bill. The problem was that, in terms of the normal processes, the Portfolio Committee was meant to publish the Bill, have public hearings, and receive oral and written submissions from the public on the contents of the Bill. During this process, the DEA was responding to the hearings and also making its own proposals based on the public submissions. The DEA could make this proposal to the Portfolio Committee. At that point, the public would not have been aware of the new Agency that was supposed to be established.
If the Committee received permission from the House, it would have to republish the Bill so that the public could comment on the new Agency that was sought to be established by the DEA. This would be the normal process that would avoid any chaotic approach to the matter. According to the Constitution, Parliament had to engage with the public. The Rules of the National Assembly also stated that the Committee had to publish the Bill, especially if the subject matter of the Bill had been extended. This was the legal position at the moment.
The Chairperson said the Committee had been in contact with the DEA -- both Minister Molewa and the Director-General, Ms Nosipho Ngcaba -- to determine what would be the best way forward in this matter. It was agreed that the Committee would proceed with the Bill, excluding the proposed addition to the Bill, namely, the Natural Resources Management Agency.
The Chairperson proceeded to read directly from the letter from Minister Molewa to the Committee to this effect. It stated: “…I am advised that the Portfolio Committee at the workshop supported in principle the proposed amendment regarding the establishment of the Natural Resources Management Agency as a specialised implementing agency to be responsible for implementing the natural resources management programmes. However, I am further advised that the Portfolio Committee had reservations about the procedures set up in the Rules of the National Assembly regarding the inclusion of the proposed text in the NEMLA Bill. The Chief State Law Advisor has since advised that it is possible to include the provision in the current Bill, but that the Committee would have to seek approval of the National Assembly. If the National Assembly approves the introduction of the new provision, the Bill with the new provisions included would have to be published for public comment for a second time. In light of the above, I request that the Committee proceed and consider the current Bill as introduced.”
The Chairperson concluded that, in line with the advice of Minister Molewa, the Committee should proceed to schedule the public hearings on the Bill, excluding the introduction of the Natural Resources Management Agency. From the presentation of Dr Guy Preston, Deputy Director-General: Environmental Programmes (DEA), it had been very clear that the Agency would have been very useful to have in managing the environmental programme in the DEA. Because of the stated issues, it was good that the DEA decided to proceed with the Bill, as it was quite urgent.
The Committee Members agreed to proceed with the Bill and publish the intention of the Committee to conduct public hearings, after which the Bill would be processed. Since Parliament’s budget had been severely cut, the Committee hoped that there would be funds to advertise and proceed with the Bill. When the Committee came back in the next term, the Committee would go full out with the public hearings and see if the entire process could be finalised before the end of the second term, at least by June.
He commented that the Marine Spatial Planning Bill, that had been approved, was also yet to be processed. There were a few issues which Minister Molewa had asked to be reappraised. These issues concerned decision-making around the Ministerial Committee. This would be addressed next week.
DEA on Waste Tyre Collection and Recycling Programme
The Chairperson said that the Committee was very worried about the Waste Tyre Collection and Recycling Programme. This was one of the recycling plans which seemed to be collapsing, and it had been the first one that was successful. The Committee would like to know what the problem was.
He asked how and why Ms Ngcaba was performing the roles of Director-General and the Accounting Authority for the Waste Bureau.
Ms Ngcaba responded that in terms of the former NEMA Waste Act, provisions had been made for entities to be established. However, in terms of listings with Treasury, entities often had to be stand-alone entities with a board. At this point in time, the Waste Bureau was not a listed public entity with National Treasury. While it was an arrangement that was possible, it was not comfortable.
The Chairperson asked whether there had been legal advice regarding this arrangement.
Ms Ngcaba confirmed that, as per the Waste Act, if a Chief Executive Officer had not been appointed, the Director-General had to serve as the Accounting Authority.
The Chairperson said that a way must be found of legally clarifying this arrangement. A situation where there was a confusion of roles -- between that of Director-General and the Accounting Officer --had to be avoided.
Ms Ngcaba asked that Ms Linda Garlipp, Chief-Directorate: Law Reform and Appeals (DEA), and Mr Ishaam Abader, Deputy Director General: Legal, Authorisations, Compliance and Enforcement (DEA), to give legal clarity in this regard.
Mr Ishaam Abader, Deputy Director General: Legal, Authorisations, Compliance and Enforcement (DEA), clarified that in section 34 A, there was a comprehensive response. He read from section 34A (subsection 3) to give legal clarity.
The Chairperson asked whether the Act supposed that there was no Bureau at present, in which case the functions would be vested with the Director-General. While the Bureau was functional, it did not have a board.
Ms Ngcaba responded that that Bureau was not fully functional as yet.
The Chairperson nevertheless asked for an opinion regarding the said arrangement. This would ideally be ready in the next two weeks.
Ms Nolwazi Tetyana, Specialist Advisor: Waste Bureau, said that there would be two presentations. The first presentation was an overarching presentation. The second dealt with the operations, waste recycling and the waste recycling technologies.
Waste Tyre Collection and Recycling
Ms Tetyana explained the waste tyre management process flow. After a tyre was discarded, it was collected either through micro-collectors or dealers, or other collection points. A primary transporter took the collected tyres to the depot, from where they were transported by a secondary transporter to the processors or holding depots.
She described the make-up of the dealers within the network:
- Over 3 000 dealers were currently serviced. These had been inherited from the database of the Recycling and Economic Development Initiative of South Africa (Redisa);
- Redisa serviced only the more than 3 000 dealers;
- The ongoing registration of dealers was under way;
- Currently, the Waste Bureau could not service all the dealers due a lack of capacity for collection, storage and processing.
She showed a table specifying the number of micro collectors and depots per province (See slide 6) and a table giving the number of primary and secondary transporters per province was clarified (See slide 7).
Ms Tetyana provided a breakdown of the depot operators, depot landlords and the regional coordinators of the respective provinces (See slide 8). When the operations of Redisa were taken over by the Waste Bureau, the DEA had discovered that the landlords that existed were mostly not black. The DEA wanted to change the black economic empowerment (BEE) profile of the landlords. A tender had been put out, which was just concluded, where the DEA sought black-owned storage facilities.
She commented on the table which gave a breakdown of the various depots across the country, with the respective storage capacities. Most of the depots were full or nearly full. What had contributed to this was that full depots had been inherited from Redisa, and there was a prohibition of exports. The DEA did not have much processing capacity, which it was working towards increasing. Part of the reason why a land tender had been conducted was to increase the DEA’s storage capacity. The DEA wanted to manage the risks associated with full depots.
As far as storage was concerned the government had no option but to service the industry and remove waste tyres from dealers. Depots had to be operated for the receipt and despatch of waste tyres. Therefore, the Waste Bureau had contracted depot operators. Moreover, the DEA had already acknowledged liability for managing waste tyres.
The Committee was referred to a table that indicated the number processors that were registered and active, and the level of demand per province (See slide 11). The distribution of processors showed that three registered and active processors in KwaZulu-Natal (KZN) were taking up the largest quantity, with a total of 660 tons of demand. However, the demand was not that great at the moment.
Collections, delivery and processing of waste tyres
Ms Tetyana gave a breakdown of the collection of waste tyres per province and collection point type since operations began in October 2017. The most tyres were collected in the Western Cape (4 301 tons) and Gauteng (5 013 tons), and most came from tyre dealers (14 006 tons). Micro-collectors and micro-depots contributed 3.6% of total collections.
While deliveries to processors amounted to 11 911 tons, a significant quantity were delivered to other depots to create space, due to the limited processing capacity (5 282 tons). The majority of tyre processing was in cement kilns (5 071 tons) and tyre crumbing operations (3 861 tons).
The volume of waste tyre processing by the Waste Bureau was compared to that of Redisa over a three month period. The Redisa data for the period January to March 2017 amounted to 10 051 tons of tyres that were processed, while the Waste Bureau data for the period October to December 2017 amounted to 11 911 tons of tyres that were processed. As such, the Waste Bureau volumes processed exceeded those processed by Redisa for the three-month periods compared.
Ms Tetyana reflected on the changes, and the rationale for the changes, brought to operations by the Waste Bureau, especially the value chain, including the depot landlords, micro depots, micro collectors, processors, transporters, and depot operators. For example, insofar as land depot landlords were concerned, the Waste Bureau intended to improve the BEE profile so as to ensure greater participation by black-owned companies.
She said that because the DEA realised the limitations of the Waste Bureau’s processing capacity, it had put out a tender where it was looking for pre-processing equipment. The Waste Bureau still required more capacity
The Waste Bureau’s structure comprised a board of directors, a chief operating officer, a senior executive manager and a chief financial officer.
Ms Tetyana presented the proposals for the KZN oversight visit, and outlined what KZN looked like in terms of operations and the service providers which the DEA had contracted. The visit and proposed itinerary would cover all four depots and three processors, as well as a few dealers, while the transporters could be met at depots. Protective personal equipment would be arranged for Committee Members. The Waste Bureau would set up the visits and a proposed Itinerary would be submitted.
Waste Tyre Processing
Dr Velaphi Msimang, Executive Manager: Business Development, DEA, emphasised that the take away message from the presentation was that in order to turn waste into wealth, one had to understand the market dynamics and have an appreciation of the technological challenges of processors.
Processing technologies fell into three categories -- re-use, recycling and recovery. With re-use solutions, for example, there were various applications, including the use of waste tyres for playground material and retainer walls. A tyre was a very highly engineered product, with various components, which required a deeper understanding of the technological challenges of the processors. There were various energy intensive processes involved in manufacturing a tyre. This was the background to the challenges that confronted processors in order to take a tyre apart and put together products that could be used in the market.
The recycling industry could be divided into three categories -- shredding, crumbing, and pyrolysis. All used energy and required expensive machinery to degrade a product of human and natural ingenuity.
Dr Msimang emphasised that the market was very tricky for recycling processors. One had to understand and start with the market to which one wanted to supply a solution, and then go back to the technology that had to be deployed in order to satisfy the needs and values of the market. An understanding of the market would take one back to the technologies and methods that had to be applied to satisfy the needs of the market. Moreover, these technologies produced products which competed with products produced from natural rubber. These natural products might be cheaper than the products from the recycling processors. This was a significant challenge for processors if they were to remain sustainable.
Dr Msimang presented the basic structure of a crumbing plant, and said these were very expensive processors that took a lot of energy. The types of products that these processors produced also determined the kind of market they were going to supply. Rubberised asphalt was useful for long-lasting, safe (non-skid) and quiet roads. However, the problem was that roads were not built all the time so there was a reduced market for rubberised asphalt.
Pyrolysis was a very energy-intensive process which required high temperatures to disaggregate tyres into various components. Among the key attributes of pyrolysis technology was that there was little commercial experience worldwide; most plants were demonstration scale; and there were different types of technology that yielded different quality products. Since pyrolysis attempted to reverse the tyre manufacturing process, it was a capital and energy intensive process with low margins.
Another category of processors were recovery solutions in the form of cement kilns. In general, cement kilns’ production costs were highly impacted by their thermal energy costs, which amounted to 50% of the production costs.
The key ‘takes-aways’ of the various categories of processors were that they were very capital and energy intensive processors, and there were very specific market requirements. Research on the market had to be performed upfront. Competition from virgin markets was a significant challenge.
The Chairperson interjected that while this information was appreciated, the key purpose of the Committee was to know why the Waste Bureau was confronted with challenges.
Waste Bureau vs Redisa Approach
Mr Andile Mvinjelwa, Senior Executive Manager: Extended Producer Responsibility, DEA, furnished an operations perspective on waste tyre processing. To ensure continuity, the Waste Bureau had contracted with Redisa processors, both of which focused on tyre derived fuel (TDF), crumbing, pyrolysis, and re-use industries. In addition, while Redisa also delivered waste tyre products for processing in export markets, export processing was now allowed only after approval by Minister Molewa. Finally, not all Redisa processors were contracted with the Bureau. Yet, despite supplying fewer processors, average local processing volumes had increased.
He referred the Committee to a table which described the processors per processing technology type. While tyre-derived fuel amounted to 46.7%, crumbing amounted to 32.4%, pyrolysis to 13% and re-use to 7.9% of the distributions. In terms of the current processing distribution per waste hierarchy, recovery was 46.6%, re-use was 7.9% and recycling was 45.4%.
There were three challenges with processing capacity:
- There was a lack of processing capacity, which created bottlenecks, resulting in full depots and poor service to collection points such as tyre dealers.
- Processing capacity was currently concentrated in certain provinces. This led to high long haul transportation costs in provinces without processing capacity.
- Plant availability was also a challenge and downtime disrupted deliveries to processors, again creating a bottleneck.
Mr Mvinjelwa outlined three actions to improve processing capacity. Firstly, the current processors were encouraged to increase tyre consumption. Secondly, the Waste Bureau was speaking to non-participating plants of cement companies to start using tyres for fuel. Thirdly, there were various tenders for processing capacity currently and in the offing, which prioritised the distribution of processing capacity around country and a movement up the waste hierarchy.
Mr Obed Baloyi, Acting Deputy-Director General: Chemicals and Waste Management, DEA, said that his office was responsible for the policy and regulations side of the Waste Bureau. The Redisa plan had been developed under the waste tyre regulations. In the amendments, the responsibility for developing integrated industrial waste from tyres was taken completely out of the regulations. When Redisa was managing the tyres, there were tyres that were exported out of the country. There was now a prohibition on the export of tyres from South Africa, unless authorised by the Minister. Minister Molewa had published a section 28 calling for the tyre plans to be submitted. The DEA, together with the Waste Bureau, was looking into the evaluation of the plans that had been received. Once they were evaluated, the DEA would report back to the Committee.
The Chairperson observed that what was missing from the presentation was a breakdown of the financials. The DEA had been allocated R200 million by Treasury, which was supposed to cater for the establishment of the Waste Bureau, as well as its operation. Was the allocation sufficient to carry out the operation? Redisa was collecting up to R600 million from industry. What was the staffing method and procedure that was used when employees were recruited? Were departmental procedures used in the recruitment process? The board, as the Committee knews, did not exist for now. This meant that the responsibility for appointing, which was supposed to be by the board, was now being done by the DEA. What was the level of remuneration, and who determined the level?
Ms J Steenkamp (DA) commented that, based on the presentation, it seemed as if the Waste Bureau was not trying to do anything different compared to Redisa. What had Redisa done to avoid the challenges which confronted the Waste Bureau at present, such as the concentrations in certain provinces, bottlenecks etc.? Since the DEA was creating entire landfills, did this mean -- based on the premise that the Bureau should begin with the Market -- that there was a lack of demand from the market? What were the Waste Bureau’s plans to fix this? Why was the Waste Bureau asking for more funding? Was there any intension by the Bureau to continue to manage the operations of the waste tyre industry? If so, had a proposal been submitted to Minister Molewa? It could be possible for the Waste Bureau to play its oversight role effectively if it continued to be in control of operations. The existing understanding of the Waste Bureau was that it would be completely different from Redisa in this respect.
What were the anticipated timeframes of the Waste Bureau for the appointment of the industry managers? How sustainable were the changes to the network participants’ remuneration into the future? Bearing in mind the uncollected tyres since 2012, what was the Waste Bureau doing about the Off the Road (OTR) tyre backlog? It felt like a norm was being created for every successor, including the Waste Bureau, to start from scratch. Doing away with the existing property networks and setting up a new one must be massively expensive. While BEE must be promoted, it was concerning that, rather than incorporating everyone, the previous property networks were being done away with. If the Waste Bureau was to lead by example in the future, Klerksoord, which was at 80% to capacity, was a depot being used that was non-compliant with the regulations.
By way of conclusion, on 12 October 2017, the DEA had given a briefing in which it gave the Committee an assurance on maintaining and even exceeding the standards of 70% of tyres produced in the tyre programme. What was the rate that had been achieved since 2018 under the management of the Bureau? How far was the DEA in filling the key corporate positions, and could it provide timelines to this effect? When would the Waste Bureau have a board? While the DEA had informed the Committee the transitional phase would be between three months and a year, tenders had been advertised for five-year generations? Had the mandate changed?
The Chairperson reminded Ms Steenkamp that the Committee was meant to finalise the NEMLA bill, which would address the question concerning the board and ensure there was legislation making provision for it.
Mr Z Xalisa (EFF) asked how many dealers inherited from Redisa were currently being serviced? Which were not registered and had no active depot? Why were the depot operations mainly white-owned? What types of raw materials were used in the manufacturing of tyres? What types of pyrolysis technologies were available? How much would it cost to build the machinery used for recycling, and what percentage of the degrading was done by the machinery in question?
The Chairperson commented that during December 2017, he had been inundated with a lot of queries and complaints from some of the people involved in the network, such as tyre pickers and depot workers, to the effect that they were not getting paid. Based on the letters which had been received, the impression was that the system was collapsing and that the depots were an environmental disaster waiting to happen. There were allegations that the depots were full beyond capacity and that nothing was being collected. Based on the presentations, there seemed to be a different state of affairs. Could the DEA give the Committee reassurances that everything was in order or whether there were problems with regard to the collapse of the system?
Furthermore, did the DEA have a sense of the percentage of tyres that got collected and entered into the system of recycling in relation to those that got produced? At the last briefing, the DEA had stated that it collected approximately 70%. Was that percentage still the same, or was it less? Given that the intention was to divert, were there not many tyres that nevertheless ended up in the landfill sites?
Concerning the issue of finances, there may need to be a follow-up when the quarterly reports were discussed. There was a need for certainty around the financial arrangements, such as what system was in place for receiving invoices, processing them, and ultimately getting paid. Who did the payment, the DEA or the Waste Bureau?
Ms Ngcaba confirmed that all the procurement processes were departmental processes. The payments to all participants were made through the Post Office. National Treasury had given the DEA approval to use the Post Office to make payments. The DEA had anticipated that there would be teething problems. The system of Redisa was not available for the DEA to use. The DEA had had to work out its own arrangements. Based on reports, most of the participants had been paid on time. If there were specific cases where this was not the case, this would have to be looked into.
The R200 million allocation by National Treasury had been informed by the fact that a plan was in place for instalments to be made to Redisa over a four to five year period, during which they were meant to provide a layout for the industry. It had been assumed that, with the infrastructure that already existed, the R200 million would be a sufficient investment until there was a preferred business case. As to how much in the future the DEA would be able to access from the funds that were collected by SARS was going to depend on the business case that would be presented to National Treasury, and on the waste plans. However, what was collected by SARS would not necessarily be transferred over, since ring-fencing was not possible. Currently, the DEA was working on the basis of the R200 million allocation. The DEA was also paying the micro-collectors, the transporters and processors through the funds that were available.
On the recruitment of staff, departmental processes were followed. The pay scales were in the domain of contracted staff, who were not in the permanent establishment of the DEA. Once the Bureau was established, these staff would be transferred. The pay scales were determined on the basis of the pay scales study that had been undertaken by an independent service provider for the DEA, as part of the business case for the Waste Bureau. The pay scales, remuneration structure and the business case would be made available to the Committee.
The Chairperson interjected and asked whether the recruitment was done by the DEA.
Ms Ngcaba affirmed that recruitment was done by the DEA. The positions had been advertised in the national newspapers and the process had been run through the DEA system, since staff to run this process were not available in the Waste Bureau. At the moment, the DEA’s Chief Financial Officer, Ms Esther Makau, was responsible for the accounting until there was a CFO for the Waste Bureau.
The executive positions -- CEO, CFO and Chief Operating Officer (COO) -- were awaiting approval by the Cabinet. It was the same system that applied to other entities. During the meeting in October 2017, Minister Molewa had spoken of the need for a smooth transition. Therefore, the participants in the Redisa plan had played a role in the Waste Bureau. The participants from Redisa had had to obtain approval from National Treasury. The DEA made a submission to Treasury, which had given the advice that it could contract any entity that had been in the system for up to a year, such as micro-processors. However, the process had to be opened up. The conditions of the contract under Redisa had to be reappraised in order to build continuity into the process, and also to have an open process for all transporters, micro-processors etc. In the process of opening up, targets had to be corrected by bringing in BEE participation and also micro-collectors being officially appointed.
The operation under the Bureau was to enable the transition and provide continuity, while. implementing measures to correct what was not legally compliant both administratively and from an environmental outcomes point of view. The DEA had contracted for three to five years. Those contracted would be transferred to the Bureau once it was fully established. The new plan ensured that the staff would have to take into consideration what already existed in terms of the waste stream.
Regarding the infrastructure investments, whenever there was a problem in any one of the waste streams, the Bureau was empowered to intervene for the benefit of the public. The question was whether the infrastructure investments should belong to a private party or remain a public good. In the Redisa agreement, there were many loopholes. These had to be improved upon in the new administration going forward.
The Chairperson asked whether it was possible for the DEA to comment on the request for a deviation.
Ms Ngcaba reminded the Chairperson that in the DEA’s quarterly targets, it had what was called its coordinated integrated permitting system (CIPS). As part of the “One Environment System,” it was said that the environmental authorisation process had to be automated as a sector, and provinces had been linked through the Ministers and Members of Executive Council (MINMEC) more than five years ago to implement a national system. The State Information Technology Agency (SITA) had helped the DEA to design the system. The DEA had reached a point where it had had numerous extensions of the SITA system, some of which were not functional. The DEA was asking for a deviation to get another service provider to deliver the CIPS through the DEA. Treasury had convened a meeting between the DEA and SITA at which it had been discussed how the DEA should proceed. SITA had requested a two-month extension. After two months, the DEA would have to see if it could get approval to proceed through another service provider.
The Chairperson asked whether the DEA could not procure it through the normal procurement process.
Ms Ngcaba responded that the SITA legislation compelled the DEA to use them.
Ms Linda Garlipp, Chief-Directorate: Law Reform and Appeals (DEA), said that the DEA had inserted a provision in the Waste Tyre Regulations, 2017 (Regulation 12) which made provision for the event where a waste tyre plan expired, was withdrawn or terminated. In such circumstances, the Waste Management Bureau could step in and take over the functions, and then all the participants that were registered with the waste tyre management plan, upon the expiry, withdrawal or termination, would in the interim be regarded as being registered with the Waste Management Bureau. This was an interim arrangement until a new plan was in place.
Ms Mamogala Musekene, Chief Directorate: Waste and Municipal Support, DEA, said the formulation of the diversion had been based on the challenges facing the market through manufacturing and importation. A percentage had been worked out, based on the wear and tear of the tyres. The diversion that had been reflected as part of the performance review had not disclosed the exports, since they were not allowed, and this had distorted the recyclables.
The Chairperson repeated the question concerning the percentage of the tyres which were produced, and whether there were excess tyres finding their way to the landfill sites or the streets, for example. This was fundamental to the success of the programme itself.
Mr Mvinjelwa answered that Redisa’s production percentage had shown a downward trend of 55% for November 2015 to November 2016, and 49% for December 2016 to May 2017. For the Waste Bureau, the percentage production was 63% in 2015, dropping to 55% in 2016, and then to 35% from October 2017 to December 2017. It had to be borne in mind that the Waste Bureau had not been expecting any tyres, and that it had started in October 2017. Therefore, it could not be expected to operate at full-scale as yet.
The Chairperson noted the downward trend in the percentage production of the Waste Bureau.
Mr Mvinjelwa said that this percentage was expected to increase. As the developers which went into contracts with the DEA increased, so would the demand increase.
The Chairperson responded that the numbers suggested that the initiative was collapsing from what it used to be. If the production percentage was 35%, what was happening to the rest of the tyres that were not collected? Where did the other 65% go? The Committee had previously been informed that the diversion percentage was 70%. Where had that percentage come from?
Mr Mvinjelwa acknowledged that the diversion percentage had declined from 63% in 2015, to 55% in 2016 and then to 49% in 2017. It was difficult for the DEA to say where the tyres that had not been diverted had gone. The focus of the DEA had been to increase the processing capacity, to create space at the depots, and to increase capacity for collections. If the processing capacity was declining or when the depots were full, everything was at risk of coming to a standstill as a result.
The Chairperson said that the Committee would draw its own conclusions, based on the presentations and answers from the DEA.
Ms Tetyana said that the DEA was currently servicing 3 000 dealers, and all the provinces had depots. In answer to the query as to why the depots were mainly white-owned, she gave a breakdown of the ownership structure of the respective depots, indicating that there were some white and some black-owned depots. Through the tenders, there were attempts to improve upon the BEE profile of the ownership structure of the depots.
As to whether the mandate of the Waste Bureau had changed, in that it had been employing participants for five years and was now issuing tenders for longer periods, the reason why the land tender was for five years was because the landlords that the DEA was contracting invested certain capital in respect of the depots. It was not really worthwhile for them if the term period was short. The same would apply to processors, since processing was a very capital intensive process. As an investor, a longer period was needed in order to commence.
Regarding what the Waste Bureau was doing about the OTR tyre backlog, the projects at the Anglo mine involving downsizing activities had been resuscitated. The shred which was derived from this activity was being supplied to a processor on the East Rand, thereby contracting more processing capacity.
Ms Mamosa Afrika, Acting Chief Director-General: Waste and Local Government, confirmed that Klerkoord was non-compliant with the regulations, but it had a fence as of yesterday.
The Bureau had data for 2018. This information would be forwarded to the Committee with immediate effect.
Dr Msimang responded to questions about the market, and said the Bureau had recently conducted a market study. It was important to think of the initiative in terms a ‘supply and demand’ picture. Currently, there was a lot of supply, but no off-takers on the other side. There was a suspicion that there was a small market, but it was a crowded market. The products which emanated from the processors competed with products from other industries, such as the oil industry. To ensure the sustainability of the industry, on needed to match the demand with supply. This was going to be a journey in terms of the initiative. The quality of the product had to be up to what the market required, which also determined the price. At present, the government was pushing products into the market, but the market did not necessarily want the products from the processors. Pyrolysis was currently on a demonstration scale, not commercial. It was difficult to determine the price of the technologies, which could vary. It depended on the quality of the product.
Ms Ngcaba agreed with Ms Steenkamp that the re-use of tyres was an area which the Bureau must reappraise. All the reports showed that in trying to maintain continuity from Redisa, there were gaps. These challenges derived from the fact that there was limited investment in the technologies to process a product that was required by the market. Currently, there was pyrolysis technology which operated on a small scale in the provision of some of the products. There was a need to go further. There was a definite challenge to get processing capacity. This had been the case during Redisa. A key issue was whether Minister Molewa should be asked to continue with the exports. This had been one of the arguments against the approach by Redisa.
Finally, the DEA would come back with a legal opinion, and it could confirm that from the time the contracts were signed, payments had been made on time. There had been a problem when Redisa was paying depot operators upfront. The Waste Bureau had changed this approach, and according to Treasury guidelines, paid only for what was provided. This was where the issue of non-payments had arisen.
The Chairperson asked whether the case was over, and whether there had been any appeals.
Mr Abader indicated that an appeal had been granted in the case. The court had given the appellants the authority to appeal only one aspect, but had now granted an opportunity to appeal the entire judgment. The DEA was still waiting for a date from the Supreme Court of Appeal. As soon as the date was known, the Committee would be informed.
The Chairperson asked if the court dismissed that case, whether it might complicate the whole process.
Mr Abader responded that it could complicate the process. It was in a sense ‘academic.’ The waste plan had been withdrawn, and Redisa could not operate under the terms of the current plan. The Waste Bureau had taken over the functions in terms of the active regulations.
Ms Ngcaba added that the complication was that the setup of the equipment had not been transferred to either the Bureau or any other person. If the Bureau worked with some of the depots which Redisa had provided, it could not be said that the Bureau operated them legally, because they were under the ownership of Redisa. This was the confusion, especially around assets.
The Chairperson asked that the Committee be briefed once the legal processes had been concluded. At some point, there had been an argument that the plant that had been approved was not time-framed. It was supposed to be in perpetuity. This was a bit strange. A full briefing was needed on the outcome of the process involving the Supreme Court of Appeal.
By way of conclusion, the Committee understood that, having taken over a system, the Bureau would experience some teething problems with regard to its establishment. The Committee was not happy that the collection rate was dropping -- from 63% in 2016, to 35% in 2017. This was a serious cause for concern. Tyres which were not being processed and taken elsewhere were causing environmental hazards. Fundamentally, the programme was about addressing environmental concerns. It did not have a business model. The idea was to get the tyres off the landfill sites. The Bureau should never deviate from the fundamental goal of the introduction of the Waste Bureau.
When looking at the independent power producers (IPPs), there had been an expectation that there should be an increase in the targets. The hope was that there was not a further decline and that, at some point, the trend would be arrested. The DEA must answer to why the Committee had been given the figure of a 70% collection rate. South Africa was one of the few countries that had this type of programme, where tyres were collected and recycled. The Bureau must be fully staffed to that it had sufficient capacity.
The idea was not that the Bureau should manage the actual plan -- it was to oversee this process. This process, at the end of the day, must be driven by entrepreneurship. Private sector participation in the whole programme was very important. The Committee needed to get a sense of the finances of the Bureau, whether they were going to increase or decrease. Government was not getting the full benefit of the introduction of the plastic levy. The money was going into other priorities. Yet the idea had been that the levy should be reinvested into the Waste Bureau. With the financial information, there would be a sense as to what else had to be done. While funds were not normally ring-fenced, it was not the original intention to get money from the tyres to fund something else.
South African Weather Service: Response to concerns raised by whistle blowers
The Chairperson said that the Committee had received a letter from an anonymous person making certain allegations against the South African Weather Service (SAWS) about governance issues. The Committee felt that since the contents of the letter contained serious allegations, the proper thing to do was put them to the board and management and request a response. The responses had arrived only today, and the Committee had not had a chance to go through them.
Ms Ngcaba said that she had been asked by Minister Molewa to advise that the Minister had received the letter from the Committee. She had said that she would not like to commit to a response for fear of misleading the Committee, as she had not had time to investigate the facts. The allegations required proper investigation, and the Minister wanted the DEA officials who were attending the meeting to listen to the explanations about the governance and internal processes. There still had to be an interim investigation.
The Chairperson responded that the requests of Minister Molewa had been noted. When the Committee received the letter, it had felt that it needed an urgent briefing on it.
Mr Rowan Nicholls, Board member: SAWS, said he agreed with the previous comment that SAWS should be given some time to get back to the Committee on specifics. There had been two places in the letter where the appointment of senior people had been spoken about. He had been part of one the processes, which fell under finance. Those particular matters had ended in coming to the board, and certain of the facts which related to the allegations had been reported to the board, and there were answers to those matters. The board had made the decision after ensuring that the correct processes had been undertaken. If it eventually came out that those processes needed to be investigated, that would happen, and if any further information was needed, it would be provided.
The other matter which had come to the fore was the radar contract. This contract had been a long time in coming – eight to nine years. The findings regarding the radar contract needed to be divided into two areas. There was a intention to have the whole contract investigated, based on the fact that it was not correctly constituted. The allegation in the letter was not related to this aspect. The allegation that was made related specifically to a guarantee, whereby the provider would not be given the money related to the guarantee until the contract had been completed, and that the repair maintenance related to the installation was eventually completed.
What SAWS was doing now was to investigate this particular aspect. A professional investigation firm had been employed to investigate these particular allegations and to get a result on the matter. The person who was responsible for this investigation had resigned from the board, and unfortunately one of the staff members had been suspended for the moment.
Regarding the land issue, the lease had reached finalisation and SAWS had had to find alternative premises. It had gone through this particular process. SAWS owned a piece of land and was attempting to develop it. This was in SAWS’s one and three-year plan. Funds had been made available by Treasury to proceed. However, this initiative had been shelved until it became a viable proposition.
Concerning the tenure, the board had formed a sub-committee to look into any issues that had arisen. The next step to happen would be reported back to the board from the sub-committee.
By way of conclusion, anything that was required from the Committee could be provided by the board of SAWS.
The Chairperson asked why Ms Ntsoaki Mngomezulu, Chairperson of the SAWS board, was not present.
Mr Jerry Lengoasa, Chief Executive Officer: SAWS, responded that the chairperson had apologised that she could not attend.
The Chairperson said that the Committee had not received an apology from the SAWS chairperson.
Adv Portia Matsane, Company Secretary: SAWS, presented the reasons for the chairperson’s absence.
The Chairperson reiterated that apologies had to come in writing. When a department official was unable to come, he or she had to write a formal letter. If the chairperson was not available, then another member of the board had to be delegated, such as the deputy-chairperson. The reasons that had been presented were not sufficient. The SAWS chairperson was putting the Committee in a difficult situation. It seemed as if she did not respect the Committee or Parliament, and it was inexplicable that she was still in office, given the recommendations of the Committee in the past. It was important that her personal assistant send a letter communicating the apology of the Chairperson. The Committee was noting the contempt that the chairperson was giving the Committee and Parliament. The Committee would not continue to complain. The Committee would send a letter to express its disgust at how she was treating the Committee without apologising.
Mr Lengoasa said that the board had received two documents, one of which had been an email. The board was yet to establish the identity of the individual who had sent the email. This was one of the investigations which the board was undertaking.
The Chairperson asked what the purpose of the investigation would be. Was it to determine the identity of the person making the allegations?
Mr Lengoasa affirmed that it was intended to determine the source of the allegations.
The Chairperson queried whether the person in question would be treated as a whistle-blower. The letter from the Committee to the board concerning the allegations had stated that the letter was received from a whistle-blower. When information from a whistle-blower was considered, it was not necessary to pursue the identity of the person. It was about dealing with the issues that had been raised. Clearly, the person would like to remain anonymous.
Mr Lengoasa agreed with the Chairperson. However, the challenge was that while the issues that were mentioned were real, the nuancing of the issues was not. From the CEO’s perspective, the board would like to engage, but an invisible party was difficult to address, especially on issues of administration, processes, etc. Apparently it was the tendency of certain parties within SAWS to raise organisational issues which were outside of the forum of SAWS, and using the same email address.
The Chairperson agreed that there was the possibility that these emails attempted to cast aspersions. However, this concern had to be balanced against the desired anonymity of the person making the allegations. The law protected whistle-blowers. The Committee’s interest was in knowing whether the issues raised were correct or incorrect.
Mr Lengoasa said that the original email containing the allegations had been forwarded to the CEO by the Chairperson of the board, Ms Mngomezulu. There had been a few allegations. Firstly, there were allegations around the appointment of Ms Julia Mphafudi, the current Executive: Corporate and Regulatory Services. It was alleged the appointment process had not followed due process. SAWS had a recruitment policy, which had been revised in 2017. This specified all the steps that had to be taken in the recruitment and placement process, including advertising, interviews, psychometric assessments and placements at the end of the process. This process had been followed in the recruitment of the executive.
Secondly, concerning emoluments, when the person in question arrived at the organization to commence duty in December of 2016, she had raised the issue that her package was below the earnings that she had at her previous employer, and had informed SAWS in writing of this fact. The improved offer had been approved by the then interim CEO, Dr Linda Makuleni, in January 2017. The total figure was R200 000. The email alleged a higher amount of R400 000. In addition to this adjustment, there was an inflationary adjustment that applied to all staff as was approved by the board. In the view of the board, there was nothing untoward, based on the available information, as to why her salary had been adjusted.
The Chairperson interjected that, in his understanding, there were two issues – the employment and the salary. The CEO was asked to formulate a summarised response to these two issues.
Mr Lengoasa spoke again about the recruitment process of SAWS. One of the requirements of the SAWS’ recruitment process was that all information must be disclosed. The board was satisfied that in the interviewing process all the information that was pertinent to her previous employer was disclosed to the board, including a disclosure agreement that was made to the previous employer. The processes with the previous employer had been concluded in June 2016. She had been employed the SAWS in December of 2016.
The Chairperson suggested that there was no longer a case to be answered.
Mr Lengoasa agreed.
The Chairperson raised the concern that, while there were a series of allegations, SAWS’ written response had been inadequate in terms of detail, and asked whether this was the case because the board had not been given sufficient time to respond. Was this what the board was satisfied with? The Committee had expected that the response would be detailed, as the accusations had also been detailed.
He read the accusations in the letter which, among others, alluded to the fact that the appointee in her previous job, had received a verdict from the disciplinary committee that was of a serious nature. It had also been described as such by the former employer. The SAWS’ board had had the responsibility to make a judgment as to whether the charges were serious or not. Although the allegation was serious, the response to the allegation by the board was a ‘one-liner.’
Mr Lengoasa agreed with the Chairperson, reiterating that this was where the difficulty was in respect of the seeming anonymity of the letter. There was a board process of recruitment. The process had been followed. It was not possible to go back to the process and infer what the board’s view had been at the time of the process.
The Chairperson responded, however, that at least the CEO could give the Committee information about that process.
Mr Lengoasa answered that this was precisely what the board was attempting to do. There had been a recruitment process. The position had been advertised. SAWS’s recruitment process required that information was made available to the board, among others, and the position relative to the previous employer. This information had been made available to the board.
The Chairperson interrupted that this information had not been made available in SAWS’s response to the allegations of the whistle-blower.
Mr Lengoasa commented that in the second document of the response to the Chairperson’s letter, there had been a disclosure which the board had addressed. There was an agreement between the accused and her previous employer which had been disclosed to SAWS.
In the letter that the Chairperson had addressed to Minister Molewa, in response to points one and two, it was indicated that once the board was involved in the appointment processes of the Executive of SAWS, the policy had been followed in the appointment of the accused. All pertinent information relative to Ms Mphafudi’s previous employer had been disclosed to the panel, including a non-disclosure agreement between her and previous employer.
Ms Judy Beaumont, Deputy-Director General: Oceans and Coasts (DEA), said that there had been two documents. The Chairperson of the board had received a copy of the verbatim email. The board had also received a letter from the Chairperson of the Portfolio Committee on Environmental Affairs, which had been a slightly revised version of the original letter. The board had responded partly to the email and the letter. This could be consolidated into one single response.
The board had started with the email. It had then received the Chairperson’s letter last Friday. Given the fact that it had been quite a tight timeframe, the effort in responding was to be as thorough as the board could be in the time available. Minister Molewa had requested time to go into detail, where that detail was necessary. It would be helpful for the Committee to indicate where the additional detail may be necessary.
The Chairperson said that the matter was clearer, based on that explanation. Nevertheless, the responses to the letter had also been very summarised.
He asked the Committee Members whether the Committee should proceed, or whether SAWS’s board should be given the opportunity to prepare a more comprehensive response. There was an email that made detailed allegations, saying somebody who had not been on the original short-list, had been included later; that this person had been interviewed; the performance was sub-standard etc. These amounted to very serious allegations. The response, in light of these allegations, was completely inadequate in terms of detail. The response did not rebut the allegations with evidence.
Based on the responses and comments of the Committee Members and the SAWS board members, the Chairperson ruled after reading the allegations, that:
- The board had been involved in the recruitment of Ms Mphafudi;
- Some of the board members had insisted that Ms Mphafudi be included in the short-list of the candidates, specifically Mr David Lefutso.
- She had duly been included in the short-list and interviewed, and had become one of the two candidates recommended for psychometric tests;
- Authoritative accounts said that Ms Mphafudi’s psychometric test results were very poor, and had established that she required much development;
- On the other hand, the board had ignored a highly qualified candidate and the results of the psychometric tests, and had forged ahead in appointing her in the context that other candidates were linked to Dr Makuleni.
- The board must respond in detail to the issues that were part of the allegations, and could even make available the results of the psychometric tests to confirm what was being alleged was not true.
Mr R Purdon (DA) added that the Chairperson had left out the most serious allegation, specifically that the accused had been engaged in ‘less than honest activities.’
The Chairperson said that once the board gave a comprehensive response, the veracity of the accusations could be determined. Otherwise, the impression was that something was being hidden. The records of the appointment should be made available.
The Chairperson recommended an adjournment of the meeting, which would reconvene next week.
Ms Beaumont repeated that the timeframe to respond had not contributed to its lack of detail.
The Chairperson agreed, saying that this disclaimer should have been stated from the outset. In its response, the SAWS board should put the Committee at ease that there was nothing untoward in these allegations.
The meeting was postponed to Tuesday 20 March.