Independent Electricity Management Operator Bill [B14-2019]: briefing

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Mineral Resources and Energy

03 December 2019
Chairperson: Mr S Luzipo (ANC)
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Meeting Summary

The Committee was briefed on the Independent Electricity Management Operator Bill [B14-2019] which is a Private Member's Bill submitted by Member of Parliament, Ms Natasha Mazzone.

The Independent Electricity Management Operator (IEMO) Bill intends to enter into a public-private partnership and unbundle Eskom into three entities that will belong to an umbrella private company known as IEMO. IEMO was developed on the foundation laid by the Independent System and Market Operator (ISMO) Bill introduced in 2012 but later withdrawn in 2014. The IEMO Board would be managed by 10 directors, five will be appointed by the Minister and five appointed by shareholders. The Ministerial appointees will constitute the chairperson, deputy chairperson, chief financial officer and two directors. The shareholder appointees will constitute an electrical engineering expert, financial expert, economics expert, environment expert and a legal expert.

Ms Mazzone said that an independent power operator such as IEMO is necessary because it will open the electricity generation market to Independent Power Producers (IPPs). IPPs will take the risk of electricity generation while IEMO will pay only for delivered electricity and ensure a stable supply of electricity.

The advantage of allowing IPPs is that the co-generation of electricity will not require government guarantees, as is the case with Eskom. IPPs may offer lowered tariffs compared to what Eskom currently offers. IEMO assists in allowing IPPs to generate electricity efficiently and minimise costs to the consumer.

Some members were not in support of the IEMO Bill, suggesting that the Bill promotes privatisation of the national energy supplier. Members who disagreed with the proposed IEMO Bill expressed these concerns:
- The IEMO will be a private company that will privatise and unbundle Eskom;
- It will perform a state function as a private company;
- It disregards the recovery roadmap proposed by the Department and other efforts to recover Eskom;
- It will require loan guarantees from the State despite it being a private company;
- They were not convinced that competition will reduce prices for consumers.

It was suggested that the Committee receive a briefing from the National Treasury Public Private Partnership (PPP) Unit on public-private partnerships.

The Chairperson said the Department of Mineral Resources and Energy response to the Bill was needed to gain consensus on the merits and demerits of IEMO Bill, before the Committee can decide on a motion of desirability for the Bill.

Meeting report

The Chairperson welcomed and congratulated Ms Natasha Mazzone on her new role as the Chief Whip for the Democratic Alliance (DA) and commended it for appointing a female Chief Whip. The Chairperson confirmed that this meeting marks the last official meeting for the year. Although it has been challenging to chair the Committee, he equally noted that it was a pleasure to work with the members of the Committee. Apologies were noted from the Minister who was attending a Cabinet meeting.

The Chairperson said that Independent Electricity Management Operator Bill was a Private Member's Bill submitted by Ms Mazzone. The Chairperson had granted the Department permission to respond to the Bill and the Department response will be submitted later. A Department representative was present at the meeting and he would relay the outcome of this briefing to the Department.

Independent Electricity Management Operator Bill [B14-2019]: briefing
Ms Mazzone thanked the Chairperson for his kind words of encouragement on her promotion. She expressed her patriotism to South Africa and the need to collectively find solutions to recover Eskom. She pleaded with Members to put their political ideologies aside when engaging with the Bill. Ms Mazzone said this because she noted with concern the possibility of a national shutdown of the power utility, and the national security issues this could have on the country.

Ms Mazzone noted that at the time of drafting the Bill, she had served as the Shadow Minister for the Department of Public Enterprises for eight years and has learnt immensely. She introduced her colleague, Mr Marius Victor, DA Director of Legislation. She had worked with him, the State Law Advisor and the Parliamentary Legal Advisors to draft this Bill. The Bill has been certified as consistent with existing legislation and the Constitution. She had a copy of the certificate of compliance which Members could peruse. Should the Bill pass the motion of desirability, the Parliamentary Legal Advisors would advise that certain clauses be redrafted to conform to legislative drafting practices of Parliament. She emphasised that she is open to redrafting the Bill if Members have suggested inputs that they think the Bill should cover.

Ms Mazzone stated that Eskom Holdings is the monopoly of South Africa’s electricity supply. It controls the production, transmission and retail of electricity supply in South Africa. The Independent Electricity Management Operator (IEMO) intends to unbundle Eskom into manageable entities in line with national government policies. It was developed on the foundation laid by the Independent System and Market Operator (ISMO) Bill introduced in 2012. However, this Bill was mysteriously withdrawn in 2014, despite being approved by the Portfolio Committee on Energy and the National Assembly in 2013.

Ms Mazzone explained that IEMO is based on a two-pronged approach. Firstly, IEMO will require independence, where the generation and distribution of electricity are separated. Secondly the electricity and management focus will require a separate entity governing the buying and selling of electricity that does not have a stake in production. This is because Eskom is not able to fund substantial generation capacity increases, without imposing steep electricity increases to the detriment of the end-user (consumer). Imposing steep increases on electricity will affect the South African economy negatively.

Ms Mazzone highlighted that an independent power operator such as IEMO is necessary because it will open the electricity generation market to Independent Power Producers (IPPs). IPPs will take the risk of electricity generation while IEMO will pay only for delivered electricity and ensuring that there is a stable supply of electricity. Another advantage of allowing IPPs is that the co-generation of electricity will not require government guarantees, as is the case with Eskom. IPPs may offer lowered tariffs compared to what Eskom currently offers. The IEMO assists in allowing IPPs to generate electricity efficiently and minimise costs to the consumer.

The object of the IEMO Bill is to establish IEMO as a juristic person and it will be constituted as a private company that is governed in terms of a public-private partnership. Its function will be to ensure the safe, secure and efficient operation of the integrated power system and trading electricity at wholesale level. The intention is to empower IEMO as a buyer of electricity from a variety of IPPs in a transparent manner that promotes efficiency. The dispatch of electricity from IPPs will be governed by the Electricity Regulation Act and allow municipalities to purchase electricity directly from electricity generators in certain circumstances.

The functions of IEMO, set out in section 6 of the Bill are:
• To manage the electricity system in an efficient manner that ensures financial viability;
• Act as a trader of electricity in line with Government policy;
• Prepare appropriate input and participate in planning of electricity supply and transmission requirements;
• Take responsibility for the establishment, practice and maintenance of the integrated power system;
• Ensure the efficient dispatch and distribution within the integrated power system.

Ms Mazzone referred Members to the current structure of Eskom and compared it to the proposed structure of IEMO. Unlike Eskom which controlled the production, transmission and retail of electricity, IEMO will facilitate the planning, and act as single buyer and wholesaler. Electricity will be generated by Eskom Generation, IPPs and imports. The transmission of electricity will be done by cable networks (and this can go directly to metros to cut out the middle man). The retail of electricity will be provided by large consumers, distributors and municipalities.

Ms Mazzone said that the structure of IEMO would be as a private company known as the Independent Electricity Management Operator (Pty) Ltd. However, IEMO will not be a State-Owned Enterprise (SOE) neither will it function entirely as an ordinary private company but will have similar characteristics to those of the Reserve Bank. There will be safeguards. Firstly, the shareholding of the company will be limited, meaning that the state may not own shares, and the number and price of shares will be set. The rationale behind this structure is to ensure an operator that will represent the interest of both government and the private sector.

The impact of the proposed IEMO structure is in the way its Board is constituted. The Board will be managed by 10 directors, five of which will be appointed by the Minister and five appointed by shareholders. The Ministerial appointees will constitute the chairperson, deputy chairperson, chief financial officer and two directors. The shareholder appointees will constitute an electrical engineering expert, financial expert, economics expert, environment expert and a legal expert. The responsibilities of the board will be to give effect to the IEMO corporate plan so that it achieves its targets. The board will also act as an accounting authority and take decisions on behalf of IEMO and provide guidance to the chief executive officer. The board will also have to immediately notify the Minister of any matter that materially affects the achievement of the objectives, financial targets and functioning of IEMO.

Ms Mazzone took Members through the staff complement of IEMO. For the appointment of the CEO and CFO, the board must invite applications for these positions through advertisement. The board must appoint candidates with relevant experience suitable for IEMO’s objective, in consultation with the Minister. The CEO and CFO will serve as executive members of the board and will be subjected to an annual performance agreement that the Portfolio Committee must have access to. The CEO may be appointed for a period of five years and may be reappointed for a second term. The remuneration package of both positions will be approved by the Minister with approval from the Minister of Finance.

Ms Mazzone noted how one of state capture’s consequences was that the executive and board members’ performance agreements were not known. Eskom set low targets that were pegged to inflated bonuses for the executive and board.

Ms Mazzone said that the board, in consultation with the Minister may terminate the employment of the CFO and the CEO in instance of misconduct and for failing to perform duties. During investigation proceedings of misconduct, the board may suspend the CEO and the CFO. The CEO and CFO may resign by written notice of at least 30 days to the board chairperson. An acting CEO or CFO may be appointed after resignation or suspension and will have all the necessary powers to perform the duties.

The CEO may enter into an agreement with a person for performance of specific duties with recruitment policies approved by the board. She has been asked what would happen to Eskom employees and are measures in place to prevent immense job losses. All Eskom employees will be transferred to the employ of IEMO and some may be transferred or seconded to IEMO from the public service  in terms of the Public Service Act.

Ms Mazzone explained the funding and financial accounting of IEMO against the context of state capture. She stated that the State may grant loan guarantees to IEMO from money made available by Parliament. IEMO may pay interest on a loan at a rate determined by the Minister in agreement with the Minister of Finance. In terms of funding, IEMO must, within 30 days of each financial year, submit its business plan and financial plan for the following year and this must be approved by the Minister. However, the first business plan and financial plan must be submitted within 90 days from the date of the company’s incorporation. Business and financial plans must include projects and operational costs, planned performance indicators and statements with estimated income and expenditure for the financial year.

Ms Mazzone said the funds and assets of IEMO may consist of the assets and rights of Eskom that will be transferred to IEMO; funds from the performance of its day-to-day business; and shareholder contributions.  The normal costs of IEMO must be recovered from tariffs and fees, charges permitted through the legislation. IEMO may not dispose of its assets without the approval of the Minister and the Minister of Finance. IEMO may refuse to provide part of its services to a customer until the customer has paid its outstanding fees.

Ms Mazzone said that metropolitan municipalities will be allowed to purchase electricity directly from a generator. However, the metro must be competent, proficient and innovative in the management and maintenance of its electricity reticulation. It must have a clean financial audit in its preceding year and the electricity must be procured transparently and openly through a competitive bidding process. IEMO can charge metros a fee for using any of its infrastructure to transmit electricity from a generator as a qualifying metro. This will help metros in cutting out the middleman and make it cheaper for the end users, who are the South African public and business, to access electricity.

On the transitional provisions, Ms Mazzone said that the Minister may determine the date of transfer from Eskom to IEMO, in consultation with the Cabinet. IEMO must enter into an agreement with Eskom for the execution of the functions. The agreement must be finalised within three months from the incorporation date. A notice with the date of when assets will be transferred must be published by the Minister in the Government Gazette. During this time, Eskom must compile a list of assets and liabilities to be transferred to IEMO, which the IEMO board must deliberate on. Once the agreement between Eskom and IEMO is finalised, the Minister must determine by notice in the gazette, when the assets and liabilities will be transferred to IEMO. By publishing the asset and liability transfer in the Government Gazette, it would have gone through a process of parliamentary muster to ensure transparency and accountability. In addition, it ensures that all the assets available to IEMO can be used to optimise power supply.

In her closing remarks, Ms Mazzone said that the IEMO Bill is the first proposed Bill to rationalise Eskom. She appealed to the Committee to consider this Bill, and emphasised the responsibility that legislators have in addressing the wellbeing of South Africans.

The Chairperson thanked Ms Mazzone for her presentation. He welcomed the Parliamentary Legal Advisor present in the meeting. Members were to ask questions and there would be a response after each question.

Mr M Mahlaule (ANC) welcomed the presentation. The establishment of IEMO as a private company is problematic. The notion that competition will thrive under a privatised power operating structure is not true. The IEMO Bill needs to be juxtaposed with other pieces of legislation, including the roadmap previously proposed by the Department of Public Enterprises to unbundle Eskom Holdings into three entities. The three unbundled entities – power generation entity, transmission entity and retail entity – would compete with one another but still belong to Eskom Holdings, and still improve efficiency and profitability. He expressed his reservations at establishing a private company to perform a function and mandate of the state. The roadmap strategy by the Department of Public Enterprises, to unbundle Eskom tackles all these issues without privatising the power operator.

Mr Mahlaule found it unbelievable that IEMO can recover and reduce customer charges. He asked if IEMO chooses its customers and if it uses its discretion to decide which municipalities it will work with. The relationship between the Minister and the shareholders is not explained clearly in the IEMO Bill. He proclaimed that the IEMO Bill should not be supported as it goes against the mandate of the State, particularly that private entities cannot perform a function of the state. Cabinet should rather reconsider the ISMO Bill instead of the IEMO Bill. Or, that the IEMO Bill is amended and aligned so that it speaks to ISMO and the Eskom roadmap proposal by the Department of Public Enterprises.

Ms Mazzone said that she understands Mr Mahlaule’s concerns. She already knew that there would be resistance to the IEMO Bill based on many of the Committee Members’ political ideology. She emphasised that competition is necessary in a growing economy and that where there is no competition there is price fixing and price increases that are set beyond the affordability levels of many South Africans who live below the poverty line. One cannot deny that competition brings prices down and that there needs to be a pragmatic way in which Eskom is recovered. It cannot be denied that Eskom had 13 different roadmaps presented by various boards and that these roadmaps resulted in state capture. Kusile and Medupi Power Station are a few examples of incomplete projects by Eskom, all of which had an over-inflated middle management staff complement that did not yield any returns. Although numerous charges were laid against officials who managed Eskom, the power supplier has not recovered. It must be accepted that Eskom is bankrupt as it has accumulated debt amounting to more than R420 billion, that it will never be able to pay back unless it is bailed-out by the South African public.

To stress the dire state of Eskom, Ms Mazzone emphasised that the country does not have a secure energy supply and argued that Eskom Holdings cannot be the umbrella holding company that would generate electricity, because it is bankrupt. Although IEMO will be identified as a private company, it is not going to operate entirely as a private company because the State and the Minister will be involved in the decision-making processes of IEMO, thus still meeting the provision to fulfil the mandate and function of the State.

Mr Mthenjane raised a point of order. He felt uncomfortable with Ms Mazzone’s statement that she pre-empted that some Committee Members would resist the IEMO Bill because of differing political ideology.

The Chairperson clarified what Ms Mazzone meant and confirmed that she raised a qualified political statement. She was merely communicating that she was conscious of Members’ political ideologies and with this consideration, still had to propose IEMO to Members.

Ms Mazzone stated that she had read the ANC manifesto, and this made her understand the party’s political ideology on energy supply. Despite the political differences in ideology and perspective, she is convicted that the IEMO Bill is a good Bill but could be improved. She pleaded with the Committee to not refute or disregard the Bill on the basis that it was presented by the DA, but rather that the Committee engage in negotiations to ensure that the Bill is improved and implemented. She handed over to Mr Victor to clarify how metropolitan municipalities can access electricity with the provisions in the IEMO Bill.

Mr Marius Victor, DA Director of Legislation, replied about the concern that IEMO can be selective of its municipal customers. IEMO cannot selective about which municipal customer it will work with. Clause 37 of the IEMO Bill does not exclude customers. The IEMO Bill selects who can supply electricity but it does not restrict itself to whom it sells electricity. On the selective inclusion of metropolitan municipalities as suppliers, he explained that the Minister had said that he would prefer if metros had the right to source electricity directly from a supplier. He also noted that metropolitan municipalities will be used as a pilot for implementing IEMO and ensuring that it is ready for national roll-out.

Mr Mahlaule responded to Mr Victor’s comment about the Minister allowing metropolitan municipalities to source electricity directly from a supplier. Although he understands the Minister, the Committee is allowed to disagree with the Minister. The Committee can propose a different view to that of the Minister. He said that he is also open to engagement on how the Bill can be improved.

Mr Mileham raised a point of order. Mr Mahlaule cannot say the Committee has taken a stance or position on the IEMO Bill, when such a position has not been determined.

The Chairperson said that he noted Mr Mileham’s statement but he will correct and provide clarification on some of the matters raised, in his closing remarks at the end of the meeting.

Ms Mazzone thanked Mr Mahlaule for considering further discussion on improving the Bill and found this fruitful.

Mr V Zungula (ATM) welcomed the presentation. The provision of energy is a basic need for South Africans. However, he felt that it is problematic for Eskom to be privatised, yet the funding and loan will come from the state. This benefits the IPPs and not the state. If Eskom received a 60% majority shareholding of the IPPs, it would ensure that the state also benefits. The greatest concern is that the IEMO Bill intends to shut down Eskom in its entirety, and have it replaced by IPPs which will privatise the supply of electricity. He made an example of poor and unemployed residents in Soweto who were forced to pay for electricity that they could not afford. The IEMO Bill cannot be supported in its current form because the majority of South Africans are likely to not afford electricity provided by an IPP.

Ms Mazzone said that state-owned enterprises are problematic as there is ample evidence that suggests that they do not always act in the best interests of citizens. She recalled how in Orlando East in Soweto Eskom had installed private meters in households that left residents with less electricity than they had purchased. Eskom did not even inform community members how the new meters worked and where they could purchase units. When an Eskom official was asked to account, the official could not explain why households received less electricity than they had purchased and why the meters did not work. This left the residents of Soweto to rely on illegal electricity connections. One has witnessed first-hand how state-owned enterprises can create dire problems for poor South Africans. She requested the Committee read the report from the Department of Public Enterprises that provides an account of what happened in Soweto and the damning allegations on Eskom’s dealing with residents of Soweto. The report is available in Parliament's Papers. IEMO presented an alternative that will ensure that poor citizens will receive a basic grant for electricity and an affordable electricity supply.

Mr Victor took Members through the various sources of funding. The State will also be a funder, and IEMO can rely on it for loan guarantees to reinforce the special relationship that the State has with IEMO. Its normal costs will be collected through tariffs, fees and charges from customers. IEMO tariff applications must be made to NERSA and it will still have to comply with existing regulations.

Mr S Kula (ANC) said that it is disturbing that the presentation of the IEMO Bill acts as if there are no plans to unbundle Eskom. The IEMO Bill posits as though it is the only available solution to fixing Eskom, as if the recovery roadmap and the ISMO Bill were not developed.

There should be a concern about Ms Mazzone’s intentions to want to unbundle and privatise Eskom. He disagreed with her assertion that competition reduces prices. Price fixing takes place on a grand scale in the private sector. The IEMO does not guarantee that price fixing will not take place. The IEMO Bill would not benefit the people of South Africa, but it will benefit IPPs. Private companies cannot be funded by the State. He agreed with Mr Mahlaule that the ISMO Bill, the recovery roadmap and IEMO should be jointly discussed to decide how Eskom will be unbundled. He questioned which government policies IEMO complies with because he was not convinced that the IEMO Bill complies with any government policy.

Mr Mileham (DA) requested a point of privilege and asked that Mr Kula speak away from the microphone, as he was too loud.

Mr Kula responded to Mr Mileham's request with sarcasm, saying he was not aware that some Committee Members had a licence to be loud, as he recalls instances when other Members were loud but were not reprimanded. He asked what role subsidiaries such as Reutech will play in the unbundling of Eskom.

The Chairperson urged Members to be considerate in the meeting. He is appointed as a chairperson, not a facilitator of disputes. He asked Members to assist him in making it easier to chair the meetings.

Ms Mazzone replied that unbundling Eskom’s monopoly is key to ensuring a secure energy supply. The power supplier has accumulated over R420 billion worth of debt and the company is bankrupt. Eskom cannot pay staff, cannot purchase coal, cannot maintain power stations, and it cannot provide a consistent energy supply. Eskom was used to pay the looters of state capture, and there is enough evidence that suggests that Eskom is broken. Parliament conducted an inquiry into state capture at Eskom and some officials have been arrested because they were implicated in state capture. Eskom is not the only state-owned enterprise that the State has tried to bail-out in the hopes that it will self-rectify.

She asked the Committee what they feared about private-public partnerships when other countries rely on such partnerships for service delivery. In response to Mr Kula’s question on which government policies or legislation are relied on for IEMO, she noted that the Bill makes mention of several pieces of legislation, one of them being National Energy Regulator Act (NERA). The National Energy Regulator of South Africa (NERSA) would prevent price fixing of electricity if the power supply is unbundled and privatised. She did not believe it was fair for South Africans not to be able to choose if they want to use solar, coal, wind or other available sources of energy. South Africans should have the right to choose their own source of energy.

Mr Victor responded to the concern that the state appeared to fund IPPs and said that he like any other citizen would share the same concern. However,  although at face-value it seems as though the State will fund IPPs, he explained that IEMO will not function entirely as a private company. He reassured the Committee that government intervention is strongly entrenched in the IEMO Bill. He provided the Committee with examples. The State will be able to appoint the IEMO Board, it will approve strategy and make decisions about IEMO, and the Minister will be empowered to make decisions at IEMO, in line with how public-private partnerships operate.

Ms C Phillips (DA) supported the proposal to privatise Eskom. Countries that encouraged privatisation have improved economic growth, increased employment rates and reduced poverty. IPPs create opportunities for South Africans to produce their own power and create jobs. If the Bill is passed, she asked if the Competition Commission will have authority in dealing with price fixing. She asked how local entrepreneurs will be allowed to participate in being power suppliers and if studies are available on how IPPs function in other countries.

Mr Mahlaule raised a point of order that his views cannot be likened to the decisions taken during Apartheid. He felt that Ms Phillips cast aspersions on the views of other Members on IPPs and privatising Eskom, which he considered unfair. Ms Phillips must accept that other Members will have differing views to hers.

The Chairperson urged Members of the Committee to exercise patience and tolerance to one another. Ms Phillips statement was merely stating her opinion on the matter. He asked Members to stick to questions of clarity about the briefing. He will deal with issues arising at the end of the meeting.

Ms Mazzone replied that NERSA and the Competition Commission would ensure that price fixing does not occur. The incentive with having privatised electricity supply is that different generators such as solar, wind and coal can all feed into the power grid. International and local companies have shown interest in providing electricity for South Africa. Other incentives include job creation. The competition generated in privatised energy supply will drive prices down and this will cut out the middleman and reduce costs in the long term.

Mr Mthenjane said he welcomed the presentation on the IEMO Bill. However, he agreed with other Committee Members who stated that the IEMO Bill is an attempt to increase the stake of IPPs in South Africa. Although he agreed that Eskom is bankrupt because of state capture, there are possible solutions to recovering Eskom without privatising it. He asked what Ms Mazzone meant when she stated that IEMO is not entirely a private company. He argued for a nationalisation of resources, instead of privatisation.

Ms Mazzone replied that the Committee does not represent the State. The Committee represents Parliament and voters. The State is represented by the Executive, and in this instance the Minister represents the State. She does not represent the State but is driven by the interest of voters. Different political parties will have different political ideologies, which will often result in clashes. She told Mr Mthenjane that she finds his political ideology and his regard of her as a neo-liberal as offensive. She reminded him of public enterprises such as Denel, South African Airways (SAA), South African Express, and Eskom that are bankrupt because they have been nationalised. Government has allowed these companies to become bankrupt because it allowed state capture to happen, and this reduced her belief in the government. This is also why she believes that public-private partnerships are a better alternative to keeping state-owned enterprises accountable. She said that she is not neo-liberal, but rather a proponent of classical liberalism, in that she believes in the right of choice and freedom to vote. The reason Eskom succeeded under the apartheid government, was because it only supplied electricity to five million white South Africans and marginalised supply to the majority of black South Africans. However the ANC government could have restructured and expanded Eskom post-apartheid, to meet the energy needs of 55 million South Africans. Government chose instead to use public enterprises as a means for state capture. Nationalisation cannot be the answer to improving the lives of poor South Africans, when the government opts for state capture instead of providing housing, health care and other basic services to South Africans.

Ms Malinga acknowledged the presentation and expressed her confusion with Ms Mazzone’s statements. The DA was formed from the National Party that governed during apartheid.

Ms Mazzone raised a point of order and said that the National Party joined the ANC. The DA is not founded on the principles of the National Party.

The Chairperson requested Ms Mazzone to manage his meeting as the Chairperson.

Ms Malinga acknowledged Ms Mazzone’s eight years as Shadow Minister for the Department of Public Enterprises but noted that Eskom’s problems are not only recent to the era of state capture. She asked why Ms Mazzone did not forward the issues of Eskom earlier during her tenure as Shadow Minister of Public Enterprises. Ms Malinga said state capture dates back to the apartheid era when black South Africans were not supplied with electricity. She questioned the role of the Integrated Resource Plan (IRP) and IPPs in the supply of energy and what the role of the Department would be if the IEMO Bill is passed. She argued why the roadmap to unbundle Eskom is not considered first prior to exploring other solutions to recover Eskom.

The Chairperson appealed to Members not to be accusatory. He urged Members to speak to the content of the Bill, and not politicise the Bill that need to be substantively debated. He allowed Ms Mazzone to respond.

Ms Mazzone said that when the Committee deliberates on the proposed IEMO Bill, Mr Victor and she will leave the meeting to prevent undue influence and a conflict of interest. She volunteered to send Ms Malinga all transcripts of speeches she has presented to Parliament on the Eskom challenges. She was nominated as a change maker for her work on Eskom.

Ms Malinga interjected and said that she did not request Ms Mazzone’s curriculum vitae.

The Chairperson reprimanded Ms Malinga and clarified what Ms Mazzone’s statement meant. The Chairperson requested Ms Mazzone to continue.

Ms Mazzone thanked the Chairperson for protection.

Mr Mthenjane interjected. He felt that Ms Mazzone’s comment rendered the Committee useless because Committee Members are newly appointed.

The Chairperson requested Mr Mthenjane to allow Ms Mazzone to speak. He urged Members to understand the context in which Ms Mazzone is raising her statements. Ms Mazzone did not disregard any of the newly appointed Committee Members.

Ms Mazzone said that she was merely answering the question about what she had done to respond to Eskom issues during her eight-year tenure as Shadow Minister of Public Enterprises. Her intentions were not to confuse Ms Malinga. She confirmed that IEMO will function as a public-private partnership.

Mr Mileham said that there is confusion on what a public-private partnership is and suggested that National Treasury’s Public Private Partnership Unit explain to Members what this constitutes, its functions and the role of government and private parties and how it applies in the context of Eskom.

Ms Malinga raised a point of order, and stated that Mr Mileham cannot cast aspersions that imply that Committee Members do not understand public-private partnerships.

The Chairperson clarified to Ms Malinga that Mr Mileham merely proposed that the Committee familiarises itself with the functions of private-public partnerships. The Chairperson said that Members are at liberty to reject Mr Mileham’s proposal.

Mr Mthenjane said that Mr Mileham behaves as if he is not a Committee member when suggesting that other Members should attend a National Treasury presentation that explains public-private partnerships.

Mr Mileham asked what technological advancements will be put forward to improve the grid because the current grid is old and outdated. There is a need to discuss the ISMO Bill, and whether there are intentions to resuscitate it. One of the challenges experienced in Soweto, in particular, is that the municipality is not responsible for the distribution of its own electricity. This makes it difficult for the municipality to recover its R16 million debt owed to Eskom because it cannot recover fees from residents. He sought clarity on how the IEMO Bill can resolve issues similar to that of Soweto.

Ms Mazzone replied that the grid must go through an upgrade as it is a national asset which is still in good condition. The IEMO Bill will ensure that the grid remains a national asset because the sovereignty of a country is determined by the safety of its grid. The ISMO Bill was tabled in 2012 and debated until it was suddenly withdrawn in 2014. The ISMO Bill lapsed as a result and therefore no longer exists. The IEMO Bill relied on the principle of the ISMO Bill to provide a recovery strategy for the power utility of South Africa.

Mr Victor stated that if Eskom were to no longer sell to an end user, then municipalities would take charge of the distribution of electricity to the end user. This would be easier because the municipalities have the infrastructure to collect revenue from end users and it already exists.

The Chairperson said that the Committee is not ready to have further discussion, because it still has not gained consensus on the IEMO Bill. As such the Committee cannot take a decision on the IEMO Bill. He felt that the Department of Mineral Resources and Energy should have been invited to assist the Committee in making its decision. He was reluctant to pre-empt whether the Bill is desirable or not and this decision would have to be debated in the National Assembly. The Chairperson said that it would have to confirm with Parliament if the IEMO Bill will require public participation and debate. He noted said that Committee Members who have an interest in attending a National Treasury public-private partnership presentation must indicate this to the Chairperson and he would allow this.

The Chairperson said that the Committee cannot take a decision yet, and asked if the Committee can be provided with the opportunity to probe and ask for more information that can inform its decision to approve or reject the IEMO Bill. The Chairperson appealed to Members to do everything as politicians who are cognisant that these are highly contentious issues but urged that the people must be served.

The Chairperson requested Members go through the minutes and corrections.

Mr Mahlaule asked whether a guest presenter from a political party can raise a point of order, and asked the Chairperson to confirm this in the Rules.

The Chairperson adjourned the meeting and wished the Committee Members well for the festive season.

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