Basic Fuel Price & measures to address fuel increases: DMRE & AASA briefing; State of refining capacity in SA

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Mineral Resources and Energy

14 April 2021
Chairperson: Mr S Luzipho (ANC)
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Meeting Summary

Video: PC Minerals 14 April 2021 

Audio: Basic Fuel Price & measures to address fuel increases: DMRE & AASA briefing; State of refining capacity in SA

The Committee met on a virtual platform to receive a briefing from the Department of Mineral Resources and Energy and the Automobile Association of South Africa on the Basic Fuel Price and measures to address fuel increases. The Department also briefed the Committee on refining capacity in South Africa.

 

Reference was made to the impact of the rebel insurgency in Mozambique on fuel security in South Africa. The Department stressed that fuel increases were simply corrective measures following the decrease in prices during the Covid-19 pandemic that had been passed on to the consumer by decreasing the pump price. The increases were also a result of the decision by Russia and OPEC to keep the fuel prices at a minimum of $60 a barrel. Other international factors that influenced the basic fuel price included the international crude oil prices, international product supply and demand balances, product inventory levels, geo-politics, Rand/US Dollar exchange rate, international refining margins and also weather patterns in the Northern Hemisphere.

Members asked about the 15% premium on fuel directed to SA due to the situation “at the time’. They asked why were diesel prices not regulated and who determined when diesel would go up in price if it was not regulated. Members were worried about demurrage costs and were concerned that when the power ships with their support ships docked in South African ports, that would further congest the ports, delaying the offloading of fuel ships, thereby increasing demurrage costs. Could the monthly fuel adjustment system that led to radical swings in price not be changed to a quarterly or half-yearly adjustment? Members also expressed concerns about the portion of the fuel levy that went to the Road Accident Fund which was mired in fraud and mismanagement.

The Automobile Association suggested that an analysis of the fuel industry and the phenomenon of petrol price regulations would provide a clearer picture of forces determining where the industry was and where the best prospects for reform might lie. The Road Accident Fund needed urgent intervention and funding for road safety initiatives had to be sharply increased. The Association also called for extensive research on the fuel value chain which informed pricing decisions, better policing, road infrastructure and public transport as well as safer roads and drivers. There was no silver bullet to resolving the issues; the country required a multi-faceted, multi-layered approach.

Members asked if the Association was in discussions with the Department as to how the basic fuel price could be better determined. Did the Automobile Association have a source for information about petrol pricing other than the Central Energy Fund?

The Department of Mineral Resources and Energy suggested that the SA Petroleum Regulatory System was amongst the best in the world, especially compared to other jurisdictions that did not produce oil. If one removed the issue of taxation, South Africa’s fuel prices were much lower than those of its trading partners. The country was dependent on imported oil and increasingly relied on petrol and diesel imports as there was no proven resource in the country, except the gas offshore of the Southern Cape. South Africa had an installed capacity of 520 000 barrels per day in crude oil refineries but the refineries had been built in the 1950s and 1960s. Two crude oil refineries were currently not operational: Astron Refinery in Milnerton had suffered a catastrophic incident which had caused major damage and the Engen Refinery in Durban had experienced a major fire.

Globally petroleum refining was undergoing fundamental changes and the South African refining sector was not immune. Decarbonisation was a major driving factor in strategies of oil majors and at least one other crude oil refinery was likely to close in the country.

Members were concerned that over 40% of refinery capacity was offline and that SA was having to import refined fuels. Was there a cost differential between locally refined fuels versus imported refined products? Section 2(b)(6) of the Petroleum Products Act limited the making of petroleum to natural gas, coal and vegetable matter. Would the legislation be changed to accommodate the developments in technology, such as producing diesel from garbage? Would transformation happen in the sector? Would the necessary skill be developed? Would new industries manufacturing components for renewable energy be supported?

The Committee requested the Secretariat and the Energy Researcher to draft a report on the two presentations and highlight the key areas for the Committee to have a proper discussion on the issues.  

It agreed that the issues Members had raised about the fuel pricing system had to be looked at, maybe even overhauled. A two-pronged process included a consultative meeting, such as a symposium or workshop, to get inputs or people putting heads together was necessary.

Meeting report

Opening remarks
The Chairperson opened the meeting and welcomed Members, officials, parliamentary staff and all on the virtual platform.

He indicated that approval had been granted to the Committee to hold the meeting to discuss the oil pipeline and the fuel hike was an urgent matter. Subsequently, there had been the crisis of insurgency in Mozambique which affected oil and gas. There was also the issue of investment in the pipeline to SA. It had taken the Department a few days to get full information on some of the issues and that had led to him re-scheduling the meeting to the current time. There were still some unknown factors in Mozambique and another meeting would have to be scheduled to discuss those details.

Mr M Wolmarans (ANC) indicated that he would be leaving the meeting for a short time and then returning.

The Chairperson indicated that the meeting would deal with the fuel challenges. It might be a long day.

He mentioned that the presentation from the Automobile Association SA had not been received, as per instructions, 24 hours before the meeting. It had only been received that morning. Members should consider whether they were prepared to allow the presentation to go ahead as they would not have had time to prepare. It was the second item on the agenda and he would deal with the matter when he came to that point.

Briefing by the Department of Minerals Resources and Energy(DMRE): Mineral Resources and Energy Basic Fuel Price (BFP) 
Mr Thabo Mokoena, Director-General, DMRE, introduced the presentation, noting the difficulties that SA faced as a result of not having natural oil reserves.

Mr Mokoena informed the Committee that SA had a well-developed petroleum sector which was run by the private sector, making a contribution of 8% to the GDP. SA had no crude oil reserves.

Mr Tseliso Maqubela, DDG: Petroleum and Petroleum Products Regulation, DMRE, introduced the Senior Manager responsible for fuel who made the presentation.

Mr Robert Maake, Director: Fuel Pricing Mechanism, DMRE, explained that the Basic Fuel Price (BFP) was based on the import parity pricing principle, i.e. what it would cost a South African importer of petrol to buy the petrol from an international refinery, transport the product from that refinery, insure the product against losses at sea and land the product on South African shores. Elements of the BFP included Free-on-Board (FOB) value, freight and average freight rate, insurance, ocean loss, demurrage, cargo dues, coastal storage, stock financing costs.

Price increases currently followed a drop in prices during Covid-19 in 2020 so the current pricing was a corrective action. There was growing strength in the resources market as well as tensions in the Middle East and, finally, Russia and OPEC had decided to cut production to keep the oil price at a minimum of $60 a barrel.

Other international factors that influenced the BFP included the international crude oil prices, international product supply and demand balances, product inventory levels, geo-politics, Rand/US Dollar exchange rate, international refining margins and also weather patterns in the Northern Hemisphere.

Mr Maake reminded Members that a problem with oil coming from Africa was that countries like Nigeria had very, very old technology.

(See Presentation)

Discussion
The Chairperson invited questions and comments.

Mr M Mahlaule (ANC) thanked the DMRE for a well-prepared, well-executed and informative presentation. He referred to the 15% premium directed to SA due to the situation “at the time’. What time was that? What situation was it and how far was the evaluation of the situation? Was it as a result of apartheid?

He had a problem with diesel not being regulated. He had asked about that at the start of the Sixth Parliament. The explanation by the Minister in 2019 was that farmers had been given an exception during apartheid to ensure food security. He did not understand why that was still the case. When prices were changed, who determined when diesel would go up in price if it was not regulated?

Mr K Mileham (DA) appreciated the presentation. On the one side, there was a 15% freight premium which was a hangover from a long time ago and there should be negotiations as that should be taken away as it was an unfair trade factor to charge SA such a premium and on the other, demurrage costs bothered him. Saldanha, Cape Town and Durban were the main ports of entry for oil. He was worried about the power ship, and the one or two other ships that would accompany it, that would dock at Saldanha. That might impact on fuel ships getting into the harbour which would have an impact on demurrage. What was being done?

He expressed concern about the radical swings in price on a monthly basis and suggested that prices should be reviewed on a half-yearly or quarterly basis during which time some fat could be built into the system to address the price swings.  Over 37% of fuel in SA went to government taxes, including the Road Accident Fund (RAF), which was a total disaster and was mired in fraud and mismanagement. In fact, the courts had ruled that the RAF could not pay out claims until it had sorted out its finances. However, the government continued to pump millions of Rand into that organisation.

Mr Mileham stated that the fuel prices were destroying SA’s economy. The current Bill proposed a new structure for a road accident fund but it was unfair and unsustainable to build the cost of accidents into the fuel price. The fuel price was untenable and was destroying the economy. The second accident fund would run parallel to the RAF for many years to come. He believed that it was time for SA to follow best practice and adopt a user pay system rather than charging everyone. The RAF should be built into the vehicle licencing fee.

Ms P Madokwe (EFF) stated that she had found it difficult to prepare having only received the report the night before. She was new to the Committee and needed more time to prepare.

She had heard the challenges but nothing about the way forward. The factors that affected fuel prices were a concern as there were indications that there might be a syndicate in the petrol industry. Had any inroads been made into finding out more about that? She asked about a cap for paraffin as it was used by the poorest of the poor. She also noted that the report on refineries was not looking good and SA might have to rely on imported fuel products. That would also put a strain on fuel and paraffin prices so the country needed a long term plan in terms of how to regulate fuel prices. The month-to-month price changes were also not sustainable.

Mr Mahlaule agreed with Mr Mileham about the Road Accident Fund and basing the levies on fuel was problematic because one would soon have electric vehicles that would not use fuel. The levy was misplaced so was there any thinking about the future of vehicles that would not use fuel?

Mr Maqubela responded to the question of the 15% premium on freight that had been imposed during the time of transition from the sanctions era to the democratic era. Shippers had also added that piracy made it very difficult to send vehicles to the southern tip of Africa so the 15% premium had been retained. The challenge posed by pirates had been immense. The SA navy was still engaged in patrolling the coast to support ships travelling south. Several countries had sent naval vessels to patrol the area and join the fight against the piracy. It seemed that piracy was coming down and if it did, there could be negotiations about the 15% premium that had been imposed.

Regarding diesel, he noted that the White Paper on Energy Policy had indicated that the government would move towards deregulation, systematically mimicking what happens in the market and that had caused the Department’s hesitation in re-regulating diesel. DMRE believed that there should be varying prices for diesel, although the current differences in prices was not quite sufficient. Over 35% of diesel was imported. DMRE did not believe in regulating prices. The wholesale prices of diesel changed and not the pump prices. He personally shopped around for diesel and got the best price at different service stations. Regarding farmers, the fact that diesel was not regulated allowed the big users and industry to negotiate hard for the best prices. If prices were regulated, there would be no room for such negotiations. Regulation in SA needed to be balanced against security of supply and the latter was a critical issue for the Department. DMRE did not want to see shortages of fuel. Currently shortages of fuel were related only to labour unrest and Covid-19 alone had been an unforeseen cause of shortage. The regulation of prices ensures the regular supply of fuels.

Mr Maqubela was adamant that the power ships would play no significant role in the offloading of liquid fuel. The docking of the power ships would have no impact on demurrage because he ports that had been identified did not include Cape Town or Durban, the main ports for offloading fuel. He also believed that if the prices were only adjusted once a quarter of half-annually, the spike might be a lot bigger. When Covid had hit, a decision had been taken to pass every cent of the price drops onto the consumer as that had enabled the cost of business to come down. Passing on all reduction in prices of fuel during Covid had given the Reserve Bank room to drop interest rates.

Taxes on fuel in Europe were about 60% of the cost but he agreed that the issue of the Road Accident Fund had to be looked into, although the RAF was located outside of the Department. He agreed that the introduction of electric vehicles would impact on the room for charging fuel taxes for the RAF. There was a need for a policy re-consideration in that regard.

Mr Maake stated that even if refineries shut down there would be no impact on fuel prices as the BFP was based on import prices. The only concern would be in respect of fuel security. The floating ships would pay its own demurrage but he had no information on that point.

He added that the DDG had clarified the 15% premium charge. The freight was not weighed by the organisation that determined the cost of freight. It was the shippers that weighed the fuel and added the 15% and the Department would have to get information about the actual cost of freighting to SA from the companies that delivered fuel to SA to find out what was happening.

The Chairperson suggested that the Committee could not exhaust the issue in a single session, but he would make a proposal towards the end of the meeting in that regard. He referred to the use of the pipeline and payment to or on behalf of NERSA, etc. Did government pay for the use of the pipeline?

He added that there should be a radical shift in the taxation system. Members needed to think outside of the box. Most of the local or domestic taxes were not located where they should be located and the Department had to look at that issue. He knew the question of alternatives would be raised. It had always been a controversial issue. He did not want to take a political stance but believed that the Department would be able to give guidance on re-shaping the thinking of the Committee.

He recalled the debate about food security related to fuel and managing the taxes. He requested a presentation about the options or possible options, advantages and disadvantages and what could be done.

Lastly, he suggested that the three Members who had had questions should take the issue back to their parties. Referring to the 50% fuel imports from Africa, he was of the view that fuel from Africa should be considered more widely. Could inter-African trade in fuel be advantageous to the country and how could it be enhanced? Would it not be an advantage to African countries? What was the Executive’s view on increased fuel trade within Africa? He would make a recommendation as to how that could be taken forward. Parliament and government could not assess the impact of refiguring of the fuel situation without considering the socio-economic impact.

Mr Mokoena appreciated the guidance from the Chairperson. The African Continental Free Trade Area (AfCFTA) would provide more marketing opportunities and there would be more trade and investment. The Department would internalise the concept and await the Chairperson’s guidance. DMRE had been requested to give an update of the current situation but he understood that it should be looking forward. Some of the issues raised by the Committee were policy issues and there would need to be a considered engagement on those issues. By and large the guidance was welcomed and DMRE understood that it should be more responsive to the current issues.

Mr Maqubela agreed that the Department had to come back to talk about the options. The presentation on refineries that afternoon would begin to look at some of the issues but DMRE also had to look at the area of bio-fuel, especially because of the challenges that the sugar industry was experiencing and also because that would reduce the cost of external payments for fuel.

Mr Maake added that the pipeline was old and operated by Transnet on the basis of a tariff from NERSA. A tariff was paid to NERSA by the oil companies. When oil companies shipped oil, they paid the money paid to Transnet and when they sent their invoices to the Central Energy Fund (CEF), they claimed the amount spent on the pipeline, which was then refunded to the oil companies.

The Chairperson said that there was even more work to be done and there had to be a broader discussion. One could not have different state entities operating in different ways. When things did not go right, the state had to have an over-arching plan.

Presentation by the Automobile Association of SA (AASA)
Mr Willem Groenewald, CEO, AASA, informed the Committee that the AASA operated in the interest of the consumer. 20 % of vehicle users belonged to the AA.

Mr Groenewald quoted Crompton, Sing, Filter & Msimango who said that they were not aware of a body of theory that could adequately explain the phenomenon of petrol price regulation in South Africa and that what would be of considerable benefit would be more detailed analysis of the industry.

He added that such an analysis would provide a clearer picture of forces determining where the industry was and where the best prospects for reform might lie. The impact of unintended consequences and the spaces that they opened up, how those spaces had been exploited, and by whom, historically, might assist in revealing spaces that were currently open and what opportunities those spaces might present.

In conclusion, he said that the role players needed to ask themselves the hard questions about fuel pricing in South Africa. He suggested that such an exercise would require, inter alia:
-An audit of existing protocols and calculations relating to the BFP.
-Extensive research on the fuel value chain which informed decisions.
-Better allocation of funds generated through the GFL and RAF levies.
-Better policing, road infrastructure and public transport.
-Safer roads and drivers, better post-crash intervention and care.
-Better education and awareness campaigns.
-Evidence of good governance in the utilization of funds from the GFL and RAF.
-A better structured, more transparent fuel pricing mechanism, which delivered correct and audited data that the public could rely on, and certainty that taxes collected were being allocated appropriately.

Mr Groenewald said that there was a need for a review or revision of current calculations, including factors which comprised BFP. Reliance on current fuels had to be reduced and public transport had to be reliable, affordable, efficient. The Road Accident Fund needed urgent intervention and funding for road safety initiatives had to be sharply increased and GFL increases had to be halted. The BFP comprised several elements and so, too, did any consideration of how to mitigate rising costs. There was no silver bullet. The country required a multi-faceted, multi-layered approach.

(See Presentation)

Discussion
The Chairperson stated that the presenter’s voice was too soft for Members to comfortably hear what was being said. Fortunately, the presentation had been in front of Members. He asked if Mr Groenewald could raise his voice in responding to questions. He noted that the presentation was a “little bit informative”.

Mr Mileham appreciated the presentation. Was the AASA in discussion with DMRE about the BFP and if not, why not? The DMRE had to urgently review the method of determining the BFP and it should consult organisations such as the ASSA in finding the best model for determining the fuel price because South Africa’s consumers were suffering.

Mr Mahaule asked for the source of the information received by AASA, other than from the CEF. Could AASA get the information if CEF did not exist? Where did AASA get its information? In his presentation, Mr Maake had said that only the Minister had the authority to determine the price based on the formula of CEF. If the AASA relied on CEF for information, why did the Association not acknowledge that fact to the public?

Mr Groenewald replied that AASA was not in discussions with DMRE. The determination of the BFP lay with the Minister and the AASA could not announce or predict prices without data from the CEF which informed the Minister’s decision.

Mr Layton Beard, Public Relations Manager, AASA, said that in every press release on the fuel price information issued by AASA, the CEF was credited as the source of the information. The data was supplied as a consumer service. It was also an education service as no other data was available to the public other than the adjusted prices. It enabled consumers to budget and plan.

The Chairperson noted that AASA had said that no single factor would resolve the fuel pricing issue. AASA had also looked at the automotive industry and the expected developments in the future and the possibilities that might arise if there were an over-reliance on fuel.

He had always argued that it depended on training and mass education in order to reduce carnage on the roads and the cost of claims. He noted the concern about domestic taxation on fuel and the issue was where the domestic taxation should be located. A short-term intervention was to look at what should be done. When a person received a licence, he or she was free to drive from that moment on. He believed there should be some consideration of a period of probation where the person had to go through a rigorous process. There had to be a master plan for road safety. In SA, accidents happened during rain and at night but during that time the testing stations were closed. On a practical level, those were limitations. There was no one factor that would reduce the road accidents. If there was no over-arching plan for SoEs, they would continue to expect government to bail them out. However, the money did not come from the air, but from the taxpayers.

The Chairperson declared that there was a need for ideas to be shared and for some interaction in that regard. One question was how to manage the exchange and dissemination of information. There was an unevenness in the structures. For example, NERSA came to the Committee to discuss tariffs but what was CEF’s role? The regulatory institutions had different ways of operating. One got an impression that CEF was not actively involved in the pricing of fuel.

He said that the Committee had to look into a proper discussion, using information on fuel pricing in the overall value chain as it impacted on investment, mining, etc. and therefore impacted even on unemployment, as the unintended costs had to be mitigated.

The Chairperson noted that the Committee did not agree with everything that AASA had said but AASA had been invited to present as the Committee had heard the voice of the AASA in the fuel sector. No criteria or formula had been used to invite AASA to present but he believed that following the presentation by AASA, other organisations in the field would be in contact with Members.

Mr Mahaule asked why RAF should be privatised.

Mr Groenewald explained that a private entity would be more agile. He thanked the Committee for providing the AASA with the opportunity to share its views.

The Chairperson reiterated that the Committee did not agree with everything but would consider the input.

Presentation by DMRE on the State of Petroleum Refineries in SA
Mr Maqubela said that one needed to be circumspect about raising certain expectations because things were not as easy as they were made out to be. The SA Petroleum Regulatory System was amongst the best in the world. He compared SA to other jurisdictions that did not produce oil. If one removed the issue of taxation, SA was amongst the best. SA’s fuel prices were much lower than those of its trading partners and the regulated prices cushioned the poor. Neighbouring countries that had lower fuel prices did not include taxes in their fuel prices.

He pointed out that the South African economy relied heavily on petroleum and that included power generation. SA was dependent on imported oil and increasingly relied on petrol and diesel imports as there was no proven resource in the country, except the gas offshore of the Southern Cape. The petroleum sector employed about 110 000 people, of whom 70,000 were in petrol stations. The sector had a R360 billion turnover per annum.

South Africa had an installed capacity of 520 000 barrels per day in crude oil refineries, a coal to liquid (CTL) refinery of 150 000 barrels per day and a gas to liquid (GTL) refinery producing 45 000 barrels per day. However, all crude oil refineries had been built in the 1950s and 1960s while the CTL and GTL plants were built in the 1980s. They were all very dated.

The current status of the refineries was that two crude oil refineries were currently not operational: Astron Refinery in Milnerton had suffered a catastrophic event which had caused major damage and the Engen Refinery had had a major fire which had caused extensive damage to the facility. The GTL facility in Mossel Bay was also not operational due to feedstock challenges.

Globally petroleum refining was undergoing fundamental changes and the South African refining sector was not immune. Decarbonisation was a major driving factor in strategies of oil majors and at least one other crude oil refinery was likely to close in SA. One refinery might change ownership but would remain operational. That meant that the import of refined products would increase significantly in the short to medium term.

Mr Maqubela stated that investment in import infrastructure was a no regret option and that all the changes should be used as opportunities to broaden local ownership of petroleum infrastructure.

(See Presentation)

Discussion
The Chairperson called for questions and comments.

Mr Mileham appreciated the informative presentation. He was very concerned that over 40% of refinery capacity was offline and that SA was having to import refined fuels. What he did not know, nor hear in the presentation, was whether there was a cost differential between locally refined fuels versus imported refined products. Which was cheaper?

He said that the presentation hammered home the need for mega-refineries but, around the world, there was an increase in niche refineries for specific products. What was the DMRE doing to encourage industries to build refineries, not for oil or gas, but for other products? Section 2(b)(6) of the Petroleum Products Act limited the making of petroleum to natural gas, coal and vegetable matter. That definition needed to be expanded, especially as technology had developed significantly since the last Amendment in 2003, to allow for the generation of diesel from waste materials and other new technologies.

Ms Madokwe asked about safety in the refineries and fire detection measures. She said that transformation had to happen, especially in terms of refineries and, concurrently, there had to be conversation about investing in renewable energy resources. Even cars were using renewable energies. SA had to look into producing the skills sets needed so that there were enough skills for whatever direction SA took in the fuel industry. An independent research institute was needed, in collaboration with Department of Science and Technology, to look at specific skills needed in the future. That institute should make sure that SA had the skills to implement the new technologies. She added that industries should be established to produce all the components needed for the new technologies.

Mr Maqubela responded to Mr Mileham. In response to the first question on the BFP and import prices, the Department had established that the BFP was adequate, even for imported products, as no player had come to the Department to say that it could not afford to import petroleum products at the current BFP. It was an import parity price. He could confidently say that he did not believe that the consumer would be impacted negatively by an increase in imported refined fuel. However, there was a question of the security of supply and so there was a need for storage.

He added that DMRE had not suggested that there had to be mega-refineries but the Department was interested in that as one option given the move to electric vehicles. A refinery was to be built in Richard’s Bay but the investment capital had been cut by 50% during COVID. The decarbonisation drive and electric vehicles that would be coming in the next decade had to be considered. DMRE would look favourably at the establishment of any refineries in the country. Currently the Department was talking to Anglo and Sasol about a proposal for a hydrogen fuel facility. The companies would make announcements at the right time. The discussions were about the conditions and skills needed for a hydrogen economy. Skills would not be imported. The skills had to be local.

He thanked Mr Mileham for raising his concerns about the legislation and stated that the Department would look into that as it did not want to have an Act that was inhibiting development. Referring to the fires in the refineries, he explained that the fire in Milnerton was, in fact, the result of an explosion and that had led to the fire. Most companies had invested heavily in fire detection equipment but it was a volatile environment. It was still under investigation as it had been a catastrophic incident that had led to the loss of life. He mentioned a much more serious catastrophic incident in Indonesia recently that had led to a large loss of life as an example of the dangers of the chemical environment. There had been no loss of life in the fire in Durban. The Chief Inspector of Machinery was looking into the incidents.

Mr Maqubela stated that the Middle East was building refineries because they had crude oil. Saudi Arabia had invested in a mega refinery as the country had decided not to export just crude oil; they would beneficiate their own oil. Nigeria had taken a similar position. East Asia was a long distance from countries that produced crude oil and hence India and China had built mega-refineries. India had built export refineries, but he believed they would be turned into internal refineries as India’s fuel needs increased.

He said the Mthombo Refinery should have happened and that investment would have paid for itself before electric vehicles came into practice. The difficulty now was that hydrogen was on the horizon and the question was whether the country could sustain a mega-refinery.

Regarding, Maputo, he said that the government continued to engage with the government of Mozambique as that country was critical to SA’s energy security. In all the discussions that DMRE was holding, the need to develop skills was at the forefront. The country also needed local companies to build the components to support the new industry. That was critical as renewables were inevitable. It was a matter of time before there would be no combustibles and the country had to be ready.

Closing remarks
The Chairperson proposed that having received the reports, the Secretariat and the Energy Researcher should draft a report on the two presentations and highlight the key areas for the Committee to have a proper discussion on the issues.  What were the issues that had to be addressed in the near future? For example, such issues as the taxation were short to medium-term. The need for policy and legislative changes were relatively long-term but there were also certain long-term issues such as investment. Some issues might be outside of the ambit of the Committee but it had to look at Road Safety Regulations and the lack of funds for the Road Safety Accident Fund and the lack of safety nets. Safety was a big issue and the matter of drivers’ licences and better training needed to be addressed.

The issues that Members had raised about the fuel pricing system had to be looked at, maybe even overhauled. Diesel should be much more regulated as it was a critical fuel. A structured discussion would provide clarity. It was an urgent issue to be discussed as soon as possible.  A two-pronged process included a consultative meeting, such as a symposium or workshop, to get inputs or people putting heads together was necessary. How could the Committee broaden its views without an extended process but without going as broad and lengthy as a public hearing? Before making a determination and recommendations, the Committee should have heard the views of all significant role players.

He requested that the report on the day’s presentations be circulated to Members in the following week for Members to consider the report before the Committee met to discuss the issues. Thought had to be given to having discussions with other Portfolio Committees. The RAF could be reconsidered together with the Transport Portfolio Committee.

The Chairperson called for the opinion of Members on his suggestions.

Mr Mileham proposed that the Committee should move forwarded as suggested by the Chairperson. His proposal was seconded by Mr Lorimer.

The Chairperson stated that the matter would be dealt with expeditiously. He informed the Committee that on Tuesday 20 April at 9:00 the Committee would address the risks associated with electricity.

He thanked all the Members, the Department and AASA.

The meeting was adjourned.

 

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