Independent Electricity Management Operator Bill: Department of Public Enterprises and Eskom response

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Mineral Resources and Energy

24 June 2020
Chairperson: Mr K Magaxa (ANC), and Mr S Luzipo (ANC)
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Meeting Summary

Video: JM: Prtflio Comttee on Minral Rsrces and Enrgy/Prtflio Comttee on Pblc Entrprses, 24/06/2020
Audio: Independent Electricity Management Operator Bill: Department of Public Enterprises and Eskom response

The purpose of the meeting was for the Joint Committee to hear the responses of the Department of Public Enterprises (DPE) and Eskom to the tabled Independent Electricity Management Operator Bill (IEMO Bill) – a Private Member’s Bill.

Eskom sent an apology for not being able to attend the meeting. It said it did not have sufficient time to prepare an adequate response. The Department said it had alternatives to propose, however, it was not sufficiently prepared to provide a cogent response formally, to the Committee.

The Committee noted apologies were issued in advance to the Department but not to the Committee.

The DA said the lack of readiness is unacceptable considering the Bill was tabled at the end of 2019 and was cited by both Parliament and the Committee for at least six months.

The IFP said Members on more than one Committee sent apologies to other committee meetings, knowing the discussion on the IEMO Bill to be important, and agreed the lack of readiness is unacceptable.

The Committee said apologies must come in advance in the future so as not to leave Members in a difficult position.

The ANC recalled the President’s announcement in the State of the Nation Address, where the President spoke of the unbundling of Eskom, which is an attempt to restructure Eskom. This process is unfolding presently, as the Committee on Public Enterprises was recently briefed on the process. It will involve an unbundling into three entities. The introduction of this Bill is a destructive, political manoeuvre by the DA with the intention of privatising Eskom. Despite the President announcing the unbundling as an assurance to the nation, Eskom will remain a State-Owned Entity. Reading the Bill suggests another direction which involves placing Eskom in private hands. The Committee must bear in mind this is a political manoeuvre by one political interest group to drive the economy of this country in a particular direction.

The Portfolio Committee on Public Enterprises agreed to reconvene the meeting with the Portfolio Committee on Mineral Resources and Energy, saying the Department and Eskom must be ready to present.

Meeting report

The Portfolio Committee on Public Enterprises and the Portfolio Committee on Mineral Resources and Energy met in a joint session. Co-Chairperson, Mr K Magaxa (ANC) welcomed Co-Chairperson, Mr S Luzipo (ANC) and said the joint meeting is intended to canvas a briefing by the Department of Public Enterprises (DPE), and Eskom, on its responses to the Independent Electricity Management Operator (IEMO) Bill – introduced by a Member of Parliament.

The Committee Secretary said the Acting Director-General (ADG) of the Department of Public Enterprises, Mr Kgathatso Tlhakudi, is connecting to the meeting. The Ministers of both Public Enterprises and Mineral Resources and Energy are at a Cabinet meeting, and the Deputy Minister has something else to attend to. Both Ministers sent apologies. The Directors-General (DGs) of both Departments are present.

Mr Tlhakudi asked if the apology from Eskom was noted. He said an observer is at the meeting for the delegates who could not attend.

Chairperson Magaxa noted the apologies. He asked the Committee to proceed to the third item on the agenda, which is for the Chairperson of the Portfolio Committee on Mineral Resources and Energy to outline the purpose of the meeting.

Chairperson Luzipo said he is struggling to hear and asked Committee Members to mute microphones. For the Portfolio Committee on Mineral Resources and Energy, the meeting is a response to a Private Member’s Bill, proposed by Ms N Mazzone (DA), under the name of the IEMO Bill.

The Portfolio Committee on Mineral Resources and Energy deliberated and concluded it is necessary for the drafter of the Bill to appear before it, followed by the Department, to provide its response.

Subsequently, the Chairpersons of the two Committees met. At an operational level, the matter affects Public Enterprises. The overall policy lies with the Department of Mineral Resources and Energy. The latter Committee decided, hearing from the Committee on Public Enterprises, through the Department of Public Enterprises, and possibly also hearing from Eskom, will be beneficial to the Committee in its deliberations. Giving these two stakeholders an opportunity to comment means when the Committee on Mineral Resources and Energy takes an overall decision on what to recommend or comments on a way forward, it will have deliberated with its colleagues, who also have a direct interest in what the Bill contains.

At present, the Portfolio Committee on Mineral Resources and Energy has not made any decisions. This is because it wants to hear the thoughts of its sister Committee. It will be nice for written presentations to be made by the DPE, and Eskom when present. The guidelines of Parliament require a presentation to be received at least 24 hours before the meeting. But this matter is left for the Committee on Public Enterprises to deal with. There is nothing in law which precludes a Committee from conferring with another parliamentary Committee with an interest in a matter. There is also not any law which compels any Committee to confer before making any decision. This invitation was merely a parliamentary courtesy extended to the Committee on Public Enterprises. This invitation will not stop the Committee on Mineral Resources and Energy making a decision at the appropriate time.

Chairperson Magaxa said since Eskom is not present, it cannot speak. He asked the ADG of DPE to present.

Department of Public Enterprises Request for Deferral

Mr Tlhakudi reiterated the Eskom apology. Both the Chief Executive Officer (CEO) and the Board could not be present because of prior commitments at the same time, and insufficient time to prepare for this meeting.

DPE wants to suggest alternatives to the Bill, in the way of reforming the electricity supply industry, but for the benefit of everyone. It requested a future date to be able to present more fully as it is not presently in a position to put forward its views in a formal way to the Committee. DPE already released a roadmap on the reform of the electricity supply industry, of which Eskom is a significant portion. DPE is of the view that what government has set out to do is set out very clearly in the roadmap. At a later date, it will say more. In the meantime, the ADG asked for more time while remaining cognisant of the timelines Chairperson Luzipo referred to regarding when his Committee would like to address the matter.

Chairperson Magaxa noted this comment.

Discussion

Mr K Mileham (DA) referred to the Department saying it is not ready. Eskom is not present because of not having adequate time to prepare for the meeting. This is a matter of concern. Committee Members from two Committees are present to hear the responses from DPE and Eskom, and yet these role players are not present because of not being prepared. He said this is unacceptable.

Mr S Gumede (ANC) said it must be understood, the Committee is just buck-passing the situation if the Committee expects both Eskom and the Department to respond. He said his difficulty is in the Committee talking about the IEMO Bill, when both parties are not prepared to do so. If either party is against the Bill, this is the opportunity to speak against it. Parties may rather suggest views in a way to empower the Committee to take a decision. He said the parties are caught up in a tough position, deciding to come before Parliament or not, and present a negative view of the IEMO Bill.

If it was acceptable in Parliament, the author of the IEMO Bill would have come before the Committee to present before the Committee takes a decision. However, this is not appropriate. As much as he respects the comments of Chairperson Luzipo, in this kind of a situation, the Departments cannot be blamed, including Eskom, especially when the Department and Eskom gave reasons for not being present.

Chairperson Magaxa asked if anyone else wants to speak apart from Mr Mileham, who just spoke and was requesting to speak again. The Chairperson said he was looking to hear other views.

Mr Mileham asked if he could please correct the misconception.

Chairperson Magaxa asked what the misconception is.

Mr Mileham said the Bill was tabled in Parliament at the end of 2019 and was put out for public comment. The Department of Mineral Resources and Energy responded on the Bill to the Portfolio Committee on Mineral Resources and Energy. Eskom and the DPE have been citing the Bill for at least six months. Therefore, to say it is unable to respond when invited to a joint Portfolio Committee meeting is unacceptable. If the Committee wants the author of the Bill to present, this can be arranged. However, the purpose of this meeting is to garner responses from the Departments and from Eskom. A meeting with the Bill’s author can be arranged.

Ms V Malinga (ANC) raised a point of order.

Chairperson Magaxa asked what the point of order is.

Ms Malinga said Mr Mileham is a Member of the Portfolio Committee on Mineral Resources and Energy, which is present by invitation only. He cannot say he can get the author, unless he is trying to tell the Committee something else.

Mr Mileham said this is not a point of order and he said his point is that he can organise for the author to appear. This is not to instruct the Committee, but is merely an offer he is making. He said the DPE and Eskom cited the Bill for at least six months and he knew the Department of Mineral Resources and Energy is ready to present, because it did so already for the Portfolio Committee on Mineral Resources and Energy. The failure to present by DPE and Eskom is unacceptable.

Chairperson Luzipo said the purpose of the meeting is to give the DPE an opportunity to respond.

The DPE may be ready or not, the Department of Mineral Resources and Energy can continue. Although the Committee may sit and argue about who is right and wrong, this will not assist the Portfolio Committee on Mineral Resources and Energy. As to how the Committee on Public Enterprises manages its affairs, he asked role players to deal with its own issues about the state of readiness of DPE and Eskom.

The Department of Mineral Resources and Energy must accept its slot on Tuesday. DPEs request for a future date is made to the Portfolio Committee on Public Enterprises. It is up to the Committee on Public Enterprises to grant this date or not. If there is a further request from the Committee on Public Enterprises to meet with the Committee on Mineral Resources and Energy, the latter Committee can deal with it on its own. The Chairperson said, in his own opinion, the meeting must be adjourned until such time as the Committee on Public Enterprises can meet with DPE and Eskom and formulate its views. This is so as not to have the Department of Mineral Resources and Energy opening its discussion before all parties are ready. He said he has no doubt the Department of Mineral Resources has a right to present. However, the matter is left to the Portfolio Committee on Public Enterprises. It must decide with its Department and the entity concerned, regarding its readiness to present, before reverting back to the Portfolio Committee on Mineral Energy and Resources.

Chairperson Magaxa appreciated this suggestion, saying it is helpful.

Ms J Mkhwanazi (ANC) said the Committee gives DPE and Eskom a timeline within which to present as these entities are not ready. She suggested giving these bodies a week, within which it ought to provide the Committee with presentations. Her understanding of what Chairperson Luzipo said, since it does not interrupt the process with the Department of Mineral Energy and Resources, the Committee must give DPE and Eskom more time before presenting.

Mr E Buthelezi (IFP) said he is partly covered by Chairperson Luzipo. However, apologies must be received in advance to allow the Chairperson to decide if the meeting must proceed. The Department was alerted to the issue well in advance and yet the Committee is only just now hearing of it – this must be noted as a Committee. It cannot be brushed aside as if it is not a problem. Had the Committee known well in advance, the Chairperson could have decided if the meeting sits or not

Mr S Kula (ANC) agreed with Chairperson Luzipo regarding the Portfolio Committee of Public Enterprises finalising the issue with DPE and Eskom. It can then approach the Committee of Mineral Resources and Energy with a date for receiving responses.

Mr M Nxumalo (IFP) introduced himself as the Deputy President of the IFP. He said he did not think it is correct, when the Committee invites a Department and entity to come and present, for it not to be prepared and not to give notice of its apology well in advance. Some Members sent apologies to other meetings, where the Member is part of more than one Committee, knowing the discussion on the IEMO Bill to be very important. He said he wanted to hear the perspective of DPE on the Bill but the Members are now stuck between a rock and a hard place, with there not being a way for the Committee to continue. It is not correct. The DPE and Eskom had time to discuss the lack of readiness, yet the Committee only heard of it this morning. He agreed with Mr Mileham in saying it is unacceptable that the Department and Eskom are not prepared. He said some action must be taken.

Ms O Maotwe (EFF) said the impact of the IEMO Bill must not be underestimated. It can have a massive impact on both Eskom and on the country. The Committee is not here to rubberstamp the Bill as a means of pushing paper and getting it out of the Committee’s hands. It is not a secret that this was a DA Bill as it was tabled by Ms Mazzone. The Committee must sit and engage robustly, rather than merely rubberstamp the Bill. When DPE discloses it is not ready, the ADG is not to be blamed, but rather the Minister is the one who has to account and direct his people to be before the Committee. Therefore, the Committee finds itself in the position where the Minister is not present, the Department is not fully present, and Eskom, who has the subject matter expertise in the field, is also not present.  The ADG has at least suggested alternatives available to be presented. She proposed Eskom be given a chance to counter the Bill. She said out of the counter discussion, and the robust discussion which follows, the Committee will be able to come up with something significant. She suggested the meeting be re-arranged, the Bill be read, and alternatives suggested, then to have the meeting reconvened with all parties on board.

Ms J Tshabalala (ANC) welcomed the interdepartmental collaborative spirit of the Committee, extending its hand to the sister oversight Committee on Public Enterprises, in the spirit of good governance. She said the situation the Committees finds itself in is unforeseen. The meeting is an important part of the consultation on the Bill itself. Since DPE is a shareholder Eskom reports to, the Committee is meant to oversee its functioning. Since this is a policy matter, the Committee would have liked an Executive Member with responsibility to come and present on matters of policy in this instance. For this reason, and because Eskom is not present, she said she will second a resolution to have both Departments, Eskom, and the relevant Executive Members meet at a later date.

She also begged the indulgence of the Department of Mineral Resources so that the Committee could continue to engage with the Department on the Bill. She asked the Committee to write to the Department to express its unhappiness as well as to arrange a meeting where all parties are available.

Chairperson Magaxa said the meeting will close on this note and gives DPE and everyone who is supposed to present its perspectives to the Joint Committee in due course, time to adequately prepare. The Committee must be mindful, Ms Maotwe is correct in saying the Bill cannot be taken for granted as it has many implications on the direction and economy of the country.

He recalled the President’s announcement in the State of the Nation Address, where he spoke of the unbundling of Eskom, which is an attempt to restructure Eskom. This process is unfolding presently, as the Committee on Public Enterprises was recently briefed on the process. It will involve an unbundling into three entities. He said he sees the introduction of this Bill as a destructive, political manoeuvre by the DA with the intention of privatising Eskom, despite the President announcing the unbundling as an assurance to the nation, Eskom will remain a State-Owned Entity. He said if one reads the Bill, it suggests another direction which involves placing Eskom in private hands. 

When the Committee meets, it must bear in mind this is a political manoeuvre by one political interest group to drive the economy of this country in a particular direction. Although the Departments and Eskom are pressurised to appear before it, the Bill and deliberations around it are not neutral. It is not just a group with the same intentions as the rest of the country but is clearly an attempt made with the intention of directing ideology.

Mr G Cachalia (DA) interjected and raised the point of order.

Ms Maotwe interrupted and asked the Chairperson why he is allowing Mr Cachalia to speak over him as Chairperson, when the rest of the Committee is silenced for doing the same.

Chairperson Magaxa said Mr Cachalia is raising a point of order.

Mr Cachalia said the Chairperson’s comments are out of line, as the Chairperson is positing a point of view, which he is not supposed to do. He said the Bill must be looked at and interrogated by the Committee, but for the Chairperson to put a spin on it is unacceptable.

Chairperson Magaxa said he is the Chairperson but he is not ideologically neutral, unfortunately. He said Mr Cachalia himself, and anyone else on the Committee, is also not ideologically neutral, nor is any Member of the Committee expected to be.

Mr Kula said Mr Cachalia did not raise a point of order. He said the Chairperson should ignore Mr Cachalia so he can wrap up.

Chairperson Magaxa said he gave Members sufficient time to engage on the matter.

Mr Kula agreed and said he must make his closing remarks and ignore Mr Cachalia as there is nothing special about him and that he does not respect him, but only has respect for his parents.

Mr Cachalia said this statement is out of order in itself.

Mr Kula said Mr Cachalia is out of order in himself.

The Chairperson said that on this vibrant note, the meeting is adjourned.

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