Energy Portfolio Committee Legacy Report

Energy

19 March 2019
Chairperson: Mr F Majola (ANC)
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Meeting Summary

Find here once available - Legacy Reports 

The Committee Secretary briefed the Committee on the contents and recommendations of the Legacy Report. Activities of the Committee included monitoring of electrification challenges; oversight over SoE governance, including the nuclear and Eskom new build programmes, energy policies, renewable energy, electricity and fuel pricing, and transformation of the energy sector. Oversight of the National Energy Corporation of South Africa (Necsa), the National Nuclear Regulator (NNR) and the National Energy Regulator of South Africa (Nersa) was intensified.

Recommendations included matters of relevance and challenges for the next Parliament to consider. The Department of Energy  (DoE) consistently failed to achieve performance targets. There was a lack of policy making and planning for energy, and Bills and policies were not finalised. The legal status of the Integrated Policy Plan (IPP) office was disputed. The AG had insisted that oversight over SoEs had to be strengthened, concerning key controls and risk management. There was uncertainty over the future of Pelchem, a subsidiary of Necsa. The Central Energy Fund (CEF) group stood in need of rigorous restructuring. Indigenous gas stocks were in serious decline. The court action against the Strategic Fuel Fund (SFF) for the sale of strategic oil stock, had to be concluded. The electricity distribution industry in SA was fragmented. The DoE and its entities had to improve at implementing AG recommendations. The CEF group leaned too heavily on PetroSA, and it was affecting the entire group. Implementation of the solar water heating programme had to be monitored. The Integrated Resource Plan (IRP) for electrification had to be finalised, and there had to be a dialogue about just energy transition.

Members made comments during the readthrough, with emphasis falling on the failure of the DoE to table policies and legislation; the possible hiving off of the Petroleum Agency of South Africa (PASA) and African Exploration; the need for the investigation and court process around SFF oil stock rotation to be concluded; lack of movement with the Grand Inga electricity uptake project; interaction of the PC with nuclear matters; impairment, and the implementation of the solar water heating programme.

Meeting report

Introduction by the Chairperson

The Chairperson welcomed Members to the last meeting of the Committee.

Apologies were read out.

The Chairperson noted that Members had received a first draft of the Legacy Report the previous week, and a second draft the day before. The first part of the report set out the activities and concerns of the Committee during its term, and the last two and a half pages contained recommendations to the Sixth Parliament

Consideration and adoption of the Committee Legacy Report

Summary of Committee activities and concerns

The Committee was taken through the report by Mr Arico Kotze, Committee Secretary. Priorities for 2014/15 included electrification challenges, oversight of SoEs, nuclear new build and Eskom new build. Priorities for 2015/16 included challenges around energy skills development, and nuclear build governance. Priorities for 2016/17 included governance of SoEs, energy policies, renewable energy, and public hearings and meetings held at Sasolburg. For 2018/19, it included Eskom governance, and electricity and fuel pricing. The activities of the Comittee included assessment of service delivery performance annually, and the making of recommendations on the use of resources, going forward, as well as recommendations on the Medium Term Budget Policy Statement (MTBPS). The PC held public hearings on the Integrated Resource Plan, which was finalised during its term. The PC visited Sasolburg for oversight of its social responsibility projects. Challenges in Necsa and the CEF were addressed, and the public was protected from electricity price increases. The Committee provided oversight of solar water heater implementation. There were persistent challenges in Necsa and the CEF. The Committee met on the Grand Inga electricy takeup project, and met with its counterparts in the Norwegian Parliament, on energy matters. A study tour to Germany was undertaken in 2014. In its oversight on nuclear build, the PC had to respond to the court ruling that the nuclear build process had to start afresh. The Committee strengthened oversight of the DoE and the SoEs, and transformation in the energy sector. There was oversight of DoE expenditure, and the Executive organs of State were held accountable. Oversight included the capacity of the DoE to deliver on its mandate, security of electricity supply, the solar water heater programme, and monitoring of the availability and use of gas. A major challenge was the failure of the DoE to table  policies and legislation. Outstanding policies and legislation had to be finalised, as well as the gas master plan. CEF had to be restructured. Necsa had to be correctly positioned, and it had to generate funds. It had to be decided if oil refinery capacity had to be extended.

Ms Z Faku (ANC) opined that the failure of the DoE to table legislation was related to Executive instability. Four Ministers served during the Fifth Parliament.

Mr M Matlala (ANC) insisted that there had to be political intervention in the matter of the hiving off of PASA and AE from Energy to Mineral Resources. Neitherhe DoE Director General nor the Ministers could provide clarity on the matter.

Mr Kotze reminded the PC that the DoE had stated in a previous meeting that due to the coming reconfiguration of the State, the matter had been placed on hold.

Ms Faku remarked that it could not be known if Minerals and Energy could be grouped together.

Ms Mahambehlala remarked that investigation into the rotation of stock by SFF had to be continued by the Sixth Parliament. Litigation related to SoEs had to be highlighted in the recommendations. 80 percent of the energy budget went to Eskom. Eskom had to come into the Energy portfolio.

Mr Matlala remarked that the debate on the Grand Inga electricity project had continued from 2014 until the previous week. There was no movement. He advised that the Sixth parliament undertake a study tour to the DRC, the donor country. The visit to Koeberg was not included in the report. It had to be shown clearly how the Committee interacted with nuclear programmes. He referred to impairment. A sum of R14 billion was involved. It could not be allowed to disappear from the Committee agenda. The Sixth parliament had to be alerted to it.

Ms C Qada (DA) opined that reasons had to be stated for the delay in tabling legislation. Reasons for the poor performance of the solar water heater programme had to be stated.

Ms Faku reiterated that the central reason was the instability of Executive leadership.

Mr Matlala commented that it had to be stated which legislation was not tabled.

Ms Mahambehlala remarked that it was part of the PC responsibilities to pass legislation. Some of the legislation was supposed to have been passed during the term of the Fourth Parliament. The Committee inherited that legislation. She agreed that it had to be listed, so that the next Parliament could be aware of it. The CEF had claimed that the rollout of the solar water heater programme was a DoE responsibility. But the AG findings of irregular expenditure was related to amounts paid for storage.

Mr Kotze noted that challenges and recommendations listed from pages 48 to 50 had already been referred to, but finally there were more detailed recommendations to the next Parliament.

Recommendations

The DoE performed well financially, but it never achieved more than 60 percent of its performance targets. The Department performed disappointingly when it came to energy policy and planning. Bills and policies were not finalised, which was an inditement of DoE leadership. There were policies and Bills that already were supposed to have been submitted during the Fourth Parliament. The legal status of the Integrated Policy Plan (IPP) office was under dispute. It had to be a standalone entity that reported to a nominated department. The AG had advised that oversight over SoEs had to be stronger, as regarded key controls and risk management. Necsa and its subsidiary Pelchem had received disclaimers from the AG. There was uncertainty about the future of Pelchem. The Central Energy Fund (CEF) had to undergo rigorous restructuring. It had started in 2013 but was not yet finalised. It had to be decided whether PetroSA had to increase crude oil processing at cost, through the refinery at Mossel Bay. Indigenous gas stocks were in sharp decline. PetroSA could run out of stock by October 2020. The CEF had taken legal action against the Strategic Fuel Fund (SFF) for the sale of strategic oil stock, which was not yet concluded. Eskom was responsible for 95 percent of electricity generation, but municipalities were responsible for distribution. Excess supply could not work if there was not effective distribution. The electricity distribution industry in South Africa was fragmented. The DoE had to give an update on the status of the various Bills it had to table, and tabling had to be monitored. The DoE and its entities had to report to the NT on a quarterly basis, and had to improve in its implementation of AG recommendations. The CEF leaned heavily on PetroSA, and it was negatively affecting the whole CEF group. A turnaround had to be effected for the whole CEF group. Electricity distribution industry challenges had to be addressed. Implementation of the solar water heater programme had to be monitored, and the Integrated Resource Plan (IRP) for electricity had to be finalised. There had to be a dialogue on just energy transition.

The Chairperson concluded that recommendations had to be consolidated, so that the next Parliament could go to the last section to know what steps to take. There had to be an executive summary at the end. Proofreading could be done, with changes inserted. The report could be adopted with changes. The final draft would be distributed to Members. He asked for a move for adoption with changes.

Mr Matlala asked that photographs of Members be included.

The Chairperson agreed with that.

Ms N Nobanda (ANC) moved for adoption, and Mr Matlala seconded.

The legacy report was adopted with changes.    

Consideration and adoption of minutes

Committee minutes of 12 February (Auditor-General), 26 February (DoE), 5 March (Necsa), 12 March (CEF), and 19 March (legacy report) were considered and adopted without changes.

The Chairperson thanked the Committee for the term, and remarked that although the PC had to deal with issues negative to the portfolio, it was never in the news for the wrong reasons.

The Chairperson adjourned the meeting.

Documents

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