Environmental Affairs Quarter 3 & 4 performance; Waste tyres diversion from landfill sites

Environment, Forestry and Fisheries

22 May 2018
Chairperson: Mr M Mapulane (ANC)
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Meeting Summary

The Committee received a briefing from the Department of Environmental Affairs (DEA) on its third and fourth quarter performance and expenditure report for the 2017/2018 financial year, as well as a briefing on the targets for the diversion of waste tyres from landfill sites, from the inception of the Recycling and Economic Development Initiative of South Africa (REDISA) to date.

The REDISA integrated industry waste tyre management plan had been approved by the Minister of Environmental Affairs in November 2012, for a period of five years. The objective of the plan was to remediate waste tyres and develop industries and a market for recycled tyre products. It was intended to create employment and develop small, medium and micro-sized enterprises (SMMEs). However, of the targets, it had achieved only 1 435 jobs (20% of the estimated target); 25 depots of the targeted 150 depots; 21 processors of the targeted 50 processors; 121 transporters of the targeted 4 000 transporters; only 18% of the targeted training budget had been used; and only 0.26% of the targeted research budget had been used.

The Waste Management Bureau had been given the responsibility for facilitating, supervising and controlling the management of waste tyres in the interim until a new industry waste tyre management plan is approved. After only six months of implementation, its successes included outperforming REDISA in both collections and recycling, but with far fewer financial resources and less staff - 34  compared to REDISA’s 178; achieving the immediate priority of ensuring waste tyre recycling operations did not collapse upon takeover; and saved jobs and SMME businesses.

Members asked why there had been a massive spike in spending between the third and fourth quarters, and why several targets had not been achieved. The Department was warned not to outsource waste management services, as this was a “source of corruption and faceless consortiums.” When asked to provide details of the litigation relating to the tyre recycling initiative, the DEA said it could not provide details publicly to ensure their legal defence was not compromised. The Committee asked when the DEA would finalise its budget with the Auditor General so that it could table its annual report.

Meeting report

Department of Environmental Affairs: Third and fourth quarter performance

Ms Edna Molewa, Minister: Department of Environmental Affairs, presented the third and fourth quarter results for the 2017/18 financial year. During this period, the DEA had achieved 79% of its targets in Programme 1 (Administration), and partially achieved the remaining 21%. In Programme 2 (legal, authorisations, compliance, and enforcement), it had achieved 92%, while the remaining 8%  were partially achieved. In Programme 3 (oceans and coasts), 81% of targets were achieved, 14% partially achieved, and it had been off target in 5%. Programme 4 (climate change and air quality) saw 76% of targets achieved, with 18% partially achieved and the remaining 6% off target. The fifth programme (biodiversity and conservation) had achieved 73% of targets, while partially achieving the remaining 27%. Programme 6 (environmental programmes) achieved 83% of targets while partially achieving the remaining 17%. The final programme (chemicals and waste management) had achieved 80% of its targets, partially achieved 17%, and was off target with 3%.

Diversion of waste tyres from landfill sites

Ms Nosipho Ngcaba, Director General, DEA, outlined the history of the Recycling and Economic Development Initiative of South Africa (REDISA). REDISA had estimated specific targets that would be achieved during a five-year implementation period. Of the targets, it had achieved only 1 435 jobs (20% of the estimated target); 25 depots of the targeted 150 depots; 21 processors of the targeted 50 processors; 121 transporters of the targeted 4 000 transporters; only 18% of the targeted training budget had been used; and only 0.26% of the targeted research budget had been used.

Mr Shonisani Munzhedzi, Deputy Director General: Biodiversity and Conservation, DEA, said that the National Environmental Management: Waste Act No. 59 of 2008 (NEMWA) regulated waste management in South Africa. S28 (1) empowered the Minister to require a person or category of persons in an industry that generates waste, to prepare and submit an industry waste tyre management plan. In terms of this section, the Minister had called on tyre producers, and any other person or category of persons or industry that generated waste (or, by implication persons who had the support of generators of waste) to submit waste tyre management plans. Regulation 12 of the Waste Tyre Regulations provided for transitional arrangements if a waste tyre management plan expired, was withdrawn or was terminated, and at the time, there existed no other industry waste management plan.

The Waste Management Bureau was responsible for facilitating, supervising and controlling the management of waste tyres in the interim until a new industry waste tyre management plan is approved. The Bureau could issue instructions for the management of waste tyres, and all participants that were registered with the previous waste tyre management plan must in the interim register with the Bureau. All tyre producers were required to submit to the Bureau the same declarations that they submit to the South African Revenue Service (SARS) in respect of the quantity of tyres produced or imported, on a quarterly basis. The Bureau was mandated to establish a waste tyre forum with all affected industry to deal with governance and operational matters pertaining to the management of waste tyres during the interim until a new industry waste tyre management plan was approved.

The cash resources of REDISA stood at R178 547 943 as at 1 June 2017, and were at R82 451 332 as at 30 September 2017, which was the date of provisional liquidation and cessation of operations. All REDISA’s assets were securely stored, except for those being utilised by the Waste Management Bureau as per the interim arrangement. Provided the final liquidation order is upheld by the Supreme Court of Appeal (SCA), the provisional liquidators will then commence disposal of assets and finalising creditors’ claims. The provisional liquidators will, in due course, lodge a liquidation and distribution account with the Master of the High Court in relation to the administration of REDISA.

The successes of the Waste Bureau (WB) when compared to REDISA, after only six months of implementation, include the following:

  • Outperformed REDISA in both collections and recycling, but with far fewer financial resources and less staff - 34 (six when WB took over in October) compared to REDISA’s 178;
  • Achieved goals despite inheriting full depots and not exporting (exports had reduced depot congestion for REDISA);
  • The immediate priority of ensuring waste tyre recycling operations did not collapse upon takeover was achieved;
  • Brought participants on board within a short time and processed payments, using a manual system and within set deadlines;
  • Saved jobs and small, medium and micro enterprise (SMME) businesses;
  • Depot establishment – fast activation of new depots to alleviate full depot constraints;
  • Contingency procurement of pre-processing equipment due to uncertainty regarding the future of REDISA equipment – all done while in compliance with the Public Finance Management Act (PFMA);
  • In addition, also performing non-waste tyre related activities, such as planning for other waste streams.

This had been achieved, despite a myriad of challenges, the most significant of which included:

  • Lack of processing capacity, because it had not been established in all regions that the available processing technologies were unable to cater for all tyre types;
  • Pyrolysis processing was in decline, mainly due to the difficulty in creating sustainable demand for products, the use of cheap small demonstration-scale plants in South Africa, and the poor quality products from these plants, because the pyrolysis process was very difficult to control;
  • Full depots, and having to add more storage capacity to be able to service collection points;
  • Limited retreading results in potentially re-usable tyres being recycled as waste tyres;
  • No information communication technology (ICT) system to manage operations (unable to use REDISA system) – the manual system is cumbersome;
  • Delays in listing.

Regarding non-compliance, the main non-compliances when taking over from REDISA in October had included non-registration with provincial departments, no stormwater management on site, no approved storage plans, and non-compliance with signage requirements.

However, the Department was taking several steps to address these challenges, including:

  • Adding depot space in the short term to facilitate collections;
  • Working with current processors to increase demand;
  • Going on tender for additional processing capacity;
  • Evaluating alternative suitable technologies for processing;
  • Working with industry to develop standards for worn and part worn tyres and retreadable casings;
  • Developing a new ICT system;
  • Evaluating the feasibility of refining oil from pyrolysis current plants to improve product quality;
  • Strict evaluation of technical proposals in the upcoming processing tender to ensure implementation of the right pyrolysis technologies capable of producing good quality products;
  • New pyrolysis plants will take six-12 months to set up.

Discussion

Ms J Steenkamp (DA) enquired about the massive spike and difference in spending for quarters three and four, from R7 620 000 in the third quarter, to R73 537 000 in the fourth quarter. Why had only three out of the 12 targets on waste disposal facilities been achieved, and why did the Department feel that the municipalities were at fault? How would the Department work differently with the municipalities going forward?

Dr Z Luyenge (ANC) cautioned the Department not to fall into the trap of continuing to outsource services that should be done in-house, particularly on waste management, as this was a source of corruption and faceless consortiums. He promised to provide specific details at the next meeting. He asked what the level of mitigation on environmental issues was, and whether municipal support was healthy, and sought more information on the relationship between the Department and local authorities. He inquired how monitoring and evaluation, particularly internal auditing, was performed, and whether there was a vibrant internal auditing department or if the function was outsourced externally.

Mr R Purdon (DA) asked why Programme 1 had been split into two parts. He asked for the details of the criminal cases in Programme 2, and in Programme 3 wanted the details and an outline of Act 70 -- whether it was on research priorities or otherwise. Referring to page 32 on Programme 7 (chemical waste), he requested more details on why and where there had been public participation in the Eastern Cape.

Ms Ngcaba responded that the Committee had been provided with a breakdown of the finances on Programme 7.

Mr Purdon said he did not recall the details of that breakdown, and requested that a short summary be presented.

Mr T Hadebe (DA) asked for an update on the issue with NCS, and wanted to know who was responsible for the approval of the expansion plan and why it had not been approved yet. He asked for a list of the targets in Programme 2, outlining those that had been achieved and those that had not. He wondered whether contentious issues on Export Processing Zones (EPZs) had been brought to the attention of the Minister for a likely political solution. He echoed Mr Purdon’s question on whether the Department outsourced its auditing functions, and if so, to which companies.

The Chairperson enquired how far the Department was in finalising the audit from the Auditor General (AG), so the Department could table its annual report. What had made the negotiations on Marine Protected Areas to be “tough”, and what were the areas of contention? He said that as soon as the Department’s tactical strategy had been approved by the Cabinet, the Committee should be briefed. He wondered how wasteful expenditure was accounted for, and in Programme 4, what the process for appointing a climate change expert was.

DEA’s response

Minister Molewa responded that the Department’s recommendations had already been submitted to Parliament, through the Speaker, on 18 April. Included in those submissions was the Act and the Committee’s discussions.

On Marine Protected Areas, the issue was of national interest, particularly to the private sector companies operating in the areas. Nonetheless, it was crucial to ensure sustainable development and to cater for people as well as the environment, while ensuring that South Africa’s values were implemented. The Department had consulted on the matter and at some point thought that the matter had been settled, but there was currently a need to revisit it. The Minister had had deliberations with Chief Executive Officers (CEO’s) of multinational companies with a stake in the matter, but there had been items that were non-negotiable, and Members should rest assured that the nation’s interests, such as protecting endangered flora and fauna, would always be prioritised.

Regarding Programme 7 (chemical waste), the Department had had deliberations with municipalities, and she gave an assurance that the Department’s functions would not be transferred to municipalities. This challenge was likely to continue, because the Department had no control over the provinces.

The Climate Change Bill had gone through all the internal processes and procedures, and it was hoped that it would pass through Cabinet the following day. It was the Department’s wish to finalise it within the current year. 

The Department had its own internal auditing, control and monitoring processes.

The Minister said she received messages almost daily about court cases opened against the Department, so it would be difficult to provide details on each one of the cases. In the case of on-going litigation, the Department would not be able to provide some details publicly to ensure their legal defence was not compromised.

Ms Judy Beaumont, Deputy Director General: Oceans and Coasts, DEA, said that the Antarctic Strategy sets out South Africa’s strategic objectives in its engagement of Antarctica and the Southern Oceans. The purpose of the strategy was to outline South Africa’s position, as the country was also representing the rest of the African continent owing to its geographical location. South Africa could also facilitate logistical access to Antarctica.

The Chairperson interrupted by saying that the details on the Antarctic Strategy should be discussed only after the strategy had been approved by the Cabinet. He thereby directed that that discussion should be reserved for a future session.

Ms Beaumont continued that South Africa monitored ocean currents on its East and West coasts, as well as fishing activities and trawlers, using satellite technology.

Most of the travel expenses in the third and fourth quarters were for local travel -- R22 million compared to R10 million for international travel. The spike in quarter three and four expenditure was due to waste management, transport, and payments to contractors and subcontractors. Between R6 million and R7 million was spent on monitoring and enforcement.

The screening tool allowed for shortening the time frames on environmental assessments.

The Department did its own internal auditing, as there was a chief internal auditor and his/her staff, but some audits were done externally. This was in line with normal international best practice.

There was a cost to municipalities to apply for environmental licences, as the province was the issuer of the licences, while the DEA was the funder in terms of helping municipalities to make their applications.

The Chairperson commented that the fourth quarter report was comprehensive, but the Committee would still need an annual report to be compiled, and audited financial statements tabled. The Members should also be briefed once the Cabinet had discussed the various issues.

Minister Molewa said that there was a scheduled meeting between herself, the Director General and the Auditor General the following day, to try to resolve some of the outstanding teething troubles. This was in addition to the various hearings in every province on the same day. The Department intended to also meet with the Finance Minister as soon as an appointment was available. The process of appointments to various vacant positions, such as internal audit director, and DDG for climate change and air quality, was ongoing and just awaiting approval.

The Chairperson complimented the delegation on the marked improvement in the quality and detail of the presentations, which was unlike previous sessions at which the Committee had complained about the detail and quality. The Committee could not dwell much on the REDISA issue as it was currently being litigated in the courts. A briefing would be necessary after the court process had been completed. The Committee expected to receive information on the improvements and targets met after the implementation of the various strategies.

Mr Hadebe asked for clarity on what the Minister had meant when she said she would not comment on matters currently before the courts so as not to compromise the cases.

Ms Steenkamp wondered how the Department was unable to pick up on the jobs target falling short ahead of time. She asked for details of the various steps the Department had taken against unlawful actors. How many depots were currently operational, and had the number changed from the 20 in the previous statistics? She inquired whether the waste platform, as prescribed, had been established and when that had been done. She probed what had happened to those tyres that had been collected but not processed, and whether the results presented were purely under the waste programme, or included previous systems as well. Finally, who was developing the new management system, how far was it from being fully operational, and what were the Department’s plans to meet its financial targets?

The Chairperson wondered why it was difficult to get someone, perhaps as a CEO, who would be separate from the DG, who would take responsibility for an established unit so that the DG would not have to do multiple roles and wear different hats. He again cautioned against discussing matters before the courts of law, such as the REDISA issue, to avoid compromising the Department’s legal strategies.

Ms Molewa added that comprehensively answering some of the questions asked would require either delving into matters currently in court, or discussing the strategic plans which were yet to be passed by the Cabinet. As Minister, she had no means to appoint a sub-DG or interim DG. The DG was the accounting officer of the Department. Once the law allowing for the appointment of a sub-DG was in place, the position would immediately be advertised and filled with urgency. Therefore, the sooner the law was put in place, the better for the Department. The Minister, and not the DG, would be the one to appoint the sub-DG.

The legal position of the Department was that they could not do anything with the tyres until the court processes were completed.

The Chairperson summarised the deliberations and announced that there would be a follow-up meeting to clarify some of the matters, particularly after Cabinet approval and the completion of court cases.

The meeting was adjourned.

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