Mineral Resources & Energy Budgetary Review Recommendations Report; 3rd term Committee Programme

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Mineral Resources and Energy

16 October 2019
Chairperson: Mr S Luzipo (ANC)
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Meeting Summary

Available here once adopted: BRRR 2019 

The Committee considered drafts of the Budgetary Review and Recommendations Reports (BRRR) for the Departments of Mineral Resources (Vote 29) and Energy (Vote 26), and the Committee Third Term Programme.

While considering the BRRR for the Department of Mineral Resources, the Committee proposed adding a stronger and more definite recommendation to urgently address inefficiency in mineral rights administration, including a deadline.

While considering the BRRR for the Department of Energy, the Committee proposed adding a strong condemnation of the widespread lack of respect for the finality of the Auditor-General’s findings on the Department and its entities. The Committee proposed several additions recommending that the Department and its entities should submit plans and policies to address various management and operational challenges.

The BRRRs would be adopted next week.

While considering its Third Term Programme, the Committee proposed, among other matters, that the Department brief it on several international matters, combining two tax briefings into a single meeting, and to seek advice from the parliamentary legal advisor on a request to involve the Committee in a dispute connected to the sale of Optimum and Koornfontein coal mines.

Meeting report

The Chairperson accepted apologies from Mr S Kulu (ANC), Mr M Nxumalo (IFP) and Mr M Zungula (ATM). He said the Committee would only consider the draft Budgetary Review and Recommendation Report (BRRR) today, and it would be adopted next week. The Committee was in charge of almost 20 departmental entities and the Chairperson hoped this number could be reduced. There was an uneven level of development and accountability among the entities.

BRRR of the Department of Mineral Resources (Vote 29)

Page 6: Ms C Philips (DA) asked if the 4 000 jobs created were new jobs, or if it was a net gain of 4000 jobs in the sector?

The Chairperson confirmed that it referred to new jobs.

Page 8: Mr M Mahlaule (ANC) noted an error. The percentage of performance targets met should be 67, not 76.

Page 10-11: Mr K Mileham (DA) said the Committee should note the lack of transparency and efficiency in mineral rights administration. It was already described as “pending” in the recommendations of the 2018 BRRR. He suggested inserting a recommendation that the Department submit a plan for addressing this problem within six months. He also noted the apparent absence of any mention of the legislative agenda. Could something from the legislative programme not be included in the BRRR?

The Chairperson suggested putting something in the observations section of the BRRR, as the main body was not supposed to contain material that was not presented to or discussed by the Committee. He agreed with the need to include a deadline, and he noted that the BRRR should also mention the Mine Health and Safety Amendment Bill.

Page 17: Mr Mahlaule said the BRRR should mention the matter of funding for the Council for Geoscience (CGS) to be upgraded in line with its status as a National Key Point, in addition to funding for it to carry out its mandate.

Page 19: Mr Mileham wondered how the BRRR could recommend that something be submitted by July 2019, several months in the past.

The Chairperson explained that it was a procedural formality.

BRRR of the Department of Energy (Vote 26)

Page 16 and 25: Mr Mahlaule pointed out there was nothing about the location of the new refinery, and on page 25, a decision on the location was mentioned as part of the Department’s Annual Performance Plan, even though it was already decided that the refinery would be in Richards Bay.

The Chairperson’s understanding of the Minister’s view was that the BRRR needed to allow for the possibility of an investor wanting to use a different location. He asked for this to be confirmed with the Minister.

Page 17: Mr Mileham said the BRRR should mention the Committee’s discussion of the risk associated with the Department’s reliance on a single country, Saudi Arabia, for a high percentage (44%) of its crude oil.

Page 22: The Chairperson said the BRRR should reflect that the South African Nuclear Energy Corporation (NECSA) did not submit or table on time for the second consecutive year. Even though they had been granted an extension by the Minister of resources and energy, there needed to be a strong motivation.

Mr M Wolmarans (ANC) agreed, adding that the BRRR should also reflect that the Committee was not consulted about the extension granted to NECSA.

Ms V Malinga (ANC) added that a stern warning that continued non-submission was unacceptable should also be included.

The Chairperson agreed. He suggested the National Energy Regulator of South Africa (NERSA), on the other hand, should be applauded for receiving its sixth consecutive clean audit.

Page 22: The Chairperson said that the dispute between the Department and the Auditor-General of South Africa (AGSA) needed to be stated more clearly. The BRRR should reflect i) the AGSA made repeated adverse findings against the Department, ii) the Department challenged AGSA’s findings, and c) the Department has sought an alternative audit opinion, despite the fact that the Minister declared that the AGSA remains the final authority on audits.

Ms Malinga said that an example needed to be made of officials who waste their time and the Department’s resources in these kinds of disputes.

The Chairperson agreed this should be included in the recommendations.

Mr Mileham added that it created a precedent for entities to dispute AGSA’s findings.

The Chairperson said the BRRR should mention the Committee’s concern about Eskom challenging NERSA in court. In general, entities resorting to court challenges against its regulators could not be tolerated. The BRRR should recommend that officials who challenge the AGSA’s findings should be condemned strongly. It should also recommend that the Minister develop an integration plan (for the new, combined Department Of Mineral Resources and Energy) that indicated how it would avoid carrying over the problems that led to the adverse audit findings of the two old departments.

Page 23: Mr Wolmarans said that a comment about the expected outcome of the court challenge should be removed.

Mr Mileham said that although the Department had managed to spend most of its budget, it had only achieved 32% of its key performance indicators. The BRRR should reflect that the Department’s management and administration had been poor.

Mr Mileham said that the BRRR should show that the Department had failed to adopt and review the Integrated Resource Plan (IRP) on a regular basis.

Page 25: Ms Malinga said that the BRRR should reflect the Committee’s concern about the finances of the Central Energy Fund (CEF) and its subsidiaries.

Mr Luzipo added that the management structure at CEF seemed to be highly unstable. A strong recommendation was required.

Page 25: Mr Mileham said that the BRRR should mention the concern expressed by the Committee about the low feedstock supply and poor financial outlook of PetroSA.

Page 26: Mr Mileham said that NECSA should be included in the list of entities that needed to submit turnaround strategies.

Mr Mahlaule was not sure if this would be appropriate from a legal point of view.

The Chairperson asked the Committee Secretary to check if there would be any legal problem.

Page 27: Mr Mileham suggested adding a timeframe for regular review to the recommendation to expedite finalisation of the Integrated Resource Plan (IRP) for electricity. He also suggested adding a recommendation to develop a policy on the country’s strategic fuel reserves, and to review the licensing and procurement model for independent Power Producers (IPPs).

The Chairperson expressed satisfaction that the Committee seemed to be in agreement with the content of the BRRR.

The BRRRs would be adopted the following week.

Consideration of the Draft Committee Third Term Programme

The Chairperson said the Committee needed to engage with the House Chairperson about its workload, but noted that for now, the Committee may have to do work outside its normal schedule, such as on Friday. He proposed that the two tax briefings, on 25 and 26 November 2019, could be combined into a single meeting on 26 November 2019. Responding to a letter from Mr Mileham, he suggested the Department brief the Committee on its international matters, in particular the South Sudan oil deal, the Inga dam project in the Democratic Republic of the Congo and the reliance on Saudi Arabian oil imports. He also received a request to discuss women and youth in mining, to coincide with the 16 Days of Activism that would begin on 25 November 2019. He said that it would probably require a full day to adopt a backlog of minutes, and he suggested doing it on 30 October 2019.

The Chairperson said the Speaker of the National Assembly had forwarded the Committee a letter from a branch secretary of the National Union of Mineworkerss (NUM), Mr Richard Mguzulu requesting that the Speaker intervene to rescue Optimum and Koornfontein mines. The mines, which had been under business administration since February 2018, were supposed to have been sold, but Eskom was obstructing the sale, the letter said. Ministers Mr Gwede Mantashe and Mr Pravin Gordhan had been unable to assist and the Speaker asked the Committee to (i) determine whether it could offer any assistance, and (ii) to inform Mr Mguzulu of this, noting that the National Assembly could not get involved in a business transaction.

Mr Mileham suggested the Committee be cautious and should engage with a parliamentary law advisor on this matter.

The Chairperson agreed.

Mr Mahlaule proposed including a visit to Lily mine with the oversight visit focussing on illegal mining in the Free State, Limpopo, Gauteng and Mpumalanga.

The Chairperson agreed that the Committee could not ignore Lily mine, but insisted the visit would need to be substantive.

The meeting was adjourned.


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