Gas Amendment Bill: DMRE response to public submissions

Meeting report

The Chairperson said that the Committee had received the first briefing by the Department on the Gas Amendment Bill on 26 May 2021. An advert had then published for the public to submit written submissions, and the closing date was 30 July 2021. After the closing date, 19 submissions were received, of which 16 requested further elaboration through oral submissions. Only 15 oral submissions were made between 30 June and 3 December 2021. The purpose of the meeting was to hear from the Department whether any reconsiderations, review or enhancement on their initial submission of the draft Bill had been made after receiving public submissions.

DMRE responses to public submissions on the Gas Amendment Bill
Ms Stella Mamogale, Director: Mining and Mineral Policy, Department of Mineral Resources and Energy (DMRE), briefed the Committee on the DMRE’s response to the public submission proposals on the Gas Amendment Bill. The Department had received 19 submissions from the stakeholders. The submissions comprised of comments on specific provisions of the Bill and general comments that addressed, amongst others, issues of climate change and environmental concerns.

On Section 1(b), it was proposed that the definition of chief executive officer be retained. The Department responded that Sections 3-14 of the current Act, except Section 4, had been deleted as this Bill was no longer establishing the energy regulator. On Section 1(g), the concern was why the definition of distribution excluded “eligible customers,” and the Department supported this. On Section 1(i), the concern was why it was said that the Minister would determine the threshold for qualifying customers in the definition of “eligible customers,” and the Department supported this.

On Section 1(k), the proposal was that the definition of “gas” should contain a reference to the relevant provisions of the National Energy Act. The Department responded that including the Integrated Energy Plan (IEP), the Integrated Resource Plan (IRP) and the Integrated Gas Development Plan would not serve any purpose to the definition as it should be given an ordinary meaning as defined in the Bill. On Section 1(p), it was proposed that the definition of “liquefaction” should include “for the purposes of transportation of such liquefied gas as LNG”. The Department responded by saying that this would limit the definition, as the intention was to give the ordinary meaning of the words.

On Section 1z(C), it was proposed that the definition of “reticulation” should include “by municipality to end consumer,” and the Department supported this. On Section 1z(G), it was proposed that the definition of “storage” should not be restricted to fixed infrastructure, and the Department supported this. On Section 4(1)(i), the comment was to enhance the section to adequately provide the National Energy Regulator of South Africa (NERSA) with powers to conduct market inquiries. The Department responded that empowering NERSA with a mandate to conduct market inquiries in the gas sector was more of taking away the power of the Competition Commission, as entrenched in Chapter 4A of the Competition Act.

On Section 21(1)(j), the comment was that the Bill did not define unreasonable or excessive prices, and the Department supported this and would provide the definition. On Section 22A(1), the comment was that the concept of granting exclusivity for geographic areas would simply create a monopoly. The Department responded that exclusivity would allow the investor to recoup their return on investment. On Section 22(B), the proposal was that a “free trade” concept should be allowed to flourish to develop the market effectively. The Department responded that the gas industry was still developing, and once it was fully matured, it could liberalise the market.

On Section 25(1)(c), the comment was that the new licence must be applied for and issued in terms of this Act's requirements. The Department responded that the Bill provides that a notice should be given to the Energy Regulator and this would not be treated as just a transfer of a licence. On Section 26(4), it was proposed the clause be deleted, and the Department did not agree with the proposal. On Section 26(5), the comment was that the Bill should provide for an independent judicial authority. The Department responded that it intended to ensure that non-compliance was deterred.

On Section 27, it was proposed that the current position under the Gas Act be retained such that NERSA may revoke a licence only on application to the High Court. The Department responded that the process to the High Court would come at a huge cost and may take longer. On Section 28B, the comment was that the section was discouraging fair competition in the market. The Department responded that the procurement process would be in line with the Public Finance Management Act (PFMA) and Section 217(1) of the Constitution, which emphasises the principles of fairness, equity, transparency, competitiveness and cost-effectiveness.

On Section 28B(11), it was unclear if the provision was intended to set transmission and regasification infrastructure aside for government-owned entities. The Department responded with Section 28B(2)(b) -- that transmission and regasification facilities were not set aside for government-owned entities only. On Section 29A, a provision was made for an obligation on all applicants for rights and licences under the Bill to make available the full application to interested and affected parties automatically. The Department responded that there was a provision like that in Section 29A.

On Section 31(1), the comment was that it was unclear how the Gas Act took preference over rights conferred by other legislation. The Department responded that the Minister would consult with the relevant Department (s) on any matter that was outside his jurisdiction. On Section 34(3)(g), there was a comment to include “regasification” facilities in Section 34(3)(g), and the Department supported this. The new provisions recommended were that NERSA proposes the new provisions in the Bill, new Section 21A; new Section 23A; new Section 25A; and new paragraph (iA) after Section 34(3)(i) under Clause 30 of the Bill Section 34(3)(g). The Department had noted and supported these provisions.

The following were the general comments. Considering that the Gas Master Plan may adversely affect the environment, society and climate resilience, it demands an overarching evaluation of its environmental and climate change-related implications. The Department responded that any development of pipelines recommended in the Plan would comply with the necessary environmental legislation, including the Strategic Environment Assessment (SEA). It was recommended that a provision be included in the Bill that sets general principles for public participation and investigation of socio-economic and socio-ecological implications. The Department responded that the socio-economic investigations on the Bill had been through the Socio-Economic Impact Assessment (SEIAs) process administered by the Department of Planning, Monitoring and Evaluation (DPME).

The public needed to be assured that relevant hazard identification and specialist risk assessments had been considered. The Department’s response was to refer to Section 18(d), which states that “when considering an application for a licence by the Energy Regulator, gas facilities need to comply with applicable health, safety or environmental legislation.” The assumption that this Bill could provide environmentally sustainable development needed to be supported by evidence. The Department responded that the extent of the gas contained in the draft IRP was within the imposed emissions reduction trajectory.

(See presentation for detail)

Discussion

Mr K Mileham (DA) recalled numerous submissions were made during the Portfolio Committee public participation process. Had the Department taken those submissions into account and adequately responded to all submissions? About the amendments that the Department was supporting, when would the Committee receive an updated version of the Bill?

The Chairperson asked for clarity on what the Department meant by “the threshold should be prescribed by the Minister in the regulations” in Section 1(i)’s response by the Department.

Prof C Msimang (IFP) said that he wondered why it was desirable that both the Minister and the regulator were authorised to make regulations. Would there always be clarity as to which regulations must be made by the Minister or the regulator?

The Chairperson replied to Prof Msimang that the Committee was not yet at the desirability stage of the process.

Ms Mamogale said that the Department had responded to all the oral submissions to Parliament, but the presentation did not cover all of them and the Department had submitted a comprehensive report to Parliament. It was still going to consult with the state law advisor on the Bill on the comments supported and how they would be factored into the Bill, and the Committee would guide the timeframe once the engagements had been finalised.

On the Chairperson’s question, the concern was that it was currently read that the Minister would determine the qualifying threshold. The Department had noted that it should be read as prescribed, meaning that that would be prescribed in the regulations. Prescribed meant by regulation because once the Bill was accepted, regulations needed to be developed regarding new things prescribed.

The Chairperson said that regarding procedure, the Department was expected to respond to written submissions and the issue of public hearings. What had been raised was a matter for the Portfolio Committee to ascertain what the Department would have said. The Committee would then shift their own thinking when they deliberate on the Bill to go beyond the written submissions.

Mr Mileham said that his hand had been raised on the other question and asked which was the updated draft of the Bill. It was premature to have the meeting on Tuesday on the desirability of the Bill without having the updated version of the Bill. The proposal was that the DMRE should conclude their discussion with the state law advisor, submit the updated version of the Bill and then the motion of desirability could be adopted.

Ms Mamogale replied that since the Bill was in front of the Committee, the Committee could make any changes they wanted, as the a-list and delist were done by the Committee and not the Department. On Tuesday, when the Committee deliberates on desirability of the Bill, any changes to the Bill would be done by the Committee thereafter.

Adv Frank Jenkins, Senior Parliamentary Legal Adviser, said that after due deliberations, there must be an adoption of desirability, which was related to whether the principles and need for the Bill were accepted. When looking at the concept of the Bill, the Committee must find a way to decide whether it is desirable to proceed or not. The deliberations on the details of the Bill would come after that process had been completed. In practical terms, there would be compliance with the rules if the Committee decided on the motion of desirability before going into the clause by clause and details of amending provisions.

The Chairperson said that the first step was to get someone to confirm and move the minutes as a true reflection of what had transpired. Thereafter, the Committee could deliberate on the report as a true reflection of what had transpired.

 Mr M Mahlaule (ANC) said that the Bill existed already and its desirability was already there. The issue was the desirability of what had been said and changed. The Committee would deal with the nitty-gritty, but it should not be difficult to deal with the issue of desirability because it was already a Bill.

The Chairperson said that Mr Mahlaule was simplifying the matter in a complicated way, and what was being said was that this was an existing Act and the Bill was amending the existing Act. The question was that the Committee had to deliberate whether there was a need to deal with the proposed amendment to the existing Act. He agreed with Mr Mileham’s suggestion for the updated version of the Bill to be given to the Committee to speed up the process. However, that did not change the actual process.

Adoption of outstanding minutes

The Committee considered its outstanding minutes of 1, 3, 6, and 13 May. There were no matters raised, and the minutes were adopted.

The meeting was adjourned.