Appropriation Bill & Eskom Debt Relief Bill: National Treasury briefing

Standing Committee on Appropriations

18 April 2023
Chairperson: Mr S Buthelezi (ANC)
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Meeting Summary

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The Standing Committee on Appropriations (the Committee) met virtually with National Treasury for a briefing on the 2023 Appropriation Bill and the 2023 Eskom Debt Relief Bill.

National Treasury reported that the summary of the 2023/24 appropriated funds shows a total appropriated amount of over R 1 trillion. Of this amount, current payments amount to R 261 billion, transfers and subsidies amount to R 793 billion, payments for capital assets amount to 17 billion, and payments for financial assets amount to R 1.9 billion. In terms of allocations by vote, the bulk of the allocations, being 62.9% of the total budget, is appropriated to the Departments of Cooperative Governance, Higher Education, Social Development, Police and Transport which mainly provide for free basic services, student funding, universities, social grants, crime prevention and investigation, and maintenance of the road transport network.

The Committee was informed that key elements of the Bill include proposals that National Treasury advance the amounts as a loan to Eskom on dates determined by the Minister of Finance. The Bill enables the Minister to impose conditions for the conversion of portions of the amount of the loan for each financial year into ordinary shares issued by Eskom to the State. The Bill proposes advances to Eskom which will cover capital and interest payments as they fall due and may only be used for that purpose. Over and above this, for 2025/26 the Bill proposes a debt take-over by the government of R 70 billion of Eskom’s loan portfolio. The Bill requires that NT, in its quarterly reports to parliamentary committees, report on Eskom’s compliance with the conditions and disclose the amounts of the conversion.

In the ensuing discussion, Members focused on: past spending trend; Underspending by departments and key reasons for underspending; Lack of capacity; Funding of vacant posts; Budgets allocations; Resolving Eskom’s unsustainable debt burden through the debt relief arrangement; Difference between loans to State-Owned Entities (SOEs) and bail outs; Research on other energy sources in terms of power generation; Emphasis on renewable energy in light of Eskom plight; Maintaining coal-fired power stations or existing infrastructure and investments in critical transmission and other infrastructure; Capital expenditure undertaken by Eskom; Preventing private sector from taking over renewable energy or electricity generation; Remuneration adjustment condition of Eskom; Monitoring Eskom’s compliance with appropriation conditions; Estimated timeframe for undoing the Eskom crisis; Constrained financial position of Eskom as a result of municipal debts, budget overruns, and lack of cost-effective tariffs; Role of the Minister of Electricity in terms of expenditure-related programmes; Recapitalising South African SOEs; SOEs’ compliance with conditions; Measures to generate more revenue; Loss of revenue due to uncollected taxes; Cost benefit implications of wealth tax; Loss of money through goods and services due to not getting value for money; State of the debt was of all local and/or provincial governments; Irregular expenditure; Measures to address repeat offenders; Exemption of healthcare and police workers from Pay as You Earn (PAYE) and implications thereof; Social grants and social assistance and the sustainability thereof; Challenges faced by the South African Post Office (post office) including retrenchment of workers and grants not being delivered; Impact of post office closure on indigent; Modernising the business model of the post office; Malaria budget; Conditions of amending budget by Parliament; and Proper oversight from National Treasury.

Meeting report

The Chairperson welcomed everyone to the first meeting of the Committee in the second term. The meeting was a follow-up to the budget presented by the Minister of Finance in February 2023, where amongst other bills that he had presented for consideration by Parliament were the 2023 Appropriation Bill and the 2023 Eskom Debt Relief Bill. Today, these were the bills that the Committee would be looking at. These were important bills that the Committee would be considering. The Appropriation Bill divided nationally raised revenue that has been allocated to the national government to the different departments and agencies. The Committee was also dealing with the 2023 Eskom Debt Relief Bill. The Minister of Finance, in his presentation of the budget, spoke about the intervention of the government at Eskom to try and reduce the indebtedness of Eskom and take a portion of the debt from the balance sheet, R 254 billion, to the sovereign debt. Obviously, there was a lot of interest insofar as that was concerned. The Committee would therefore be asking NT to take them through the thinking behind this and what exactly the bill entailed. He asked if there were any apologies before proceeding.

Mr Darrin Arends, Committee Secretary, said that an apology had been received from Ms T Tobias (ANC).

The Chairperson said that he knew Ms Tobias was not feeling well and wished her a speedy recovery.

National Treasury (NT) Briefing

Appropriation Bill

Dr Mampho Modise, DDG: Public Finance, NT, and Ms Gcobisa Magazi, Director: Public Finance, NT presented.  

The key reasons provided by departments for underspending were grouped into green, red, and blue. Green reasons were welcomed and included improvements in the ways departments did business, such as: Cost-containment measures mainly moving to virtual platforms; Savings due to restructuring and implementation of strategies; Lower than anticipated claims; and Specific reasons such as grant efficiency improvements, COVID-19 allocations for vaccines, and leasing of office space. Red reasons were worried about and included: Delays in filling vacant positions; Procurement delays; Delays in implementing strategies planned for; Delays in paying claims; Delays in transferring funds; and Delays in receiving invoices from implementing agents for work completed. The blue reasons pertained only to delays in disbursements of funds due to non-compliance with legislation and conditions.

Promulgation of the 2023 Appropriation Bill is necessary to allow for monthly expenditure above the transitional provisions contained in the Public Finance Management Act 1 of 1999, and to ensure expenditure in accordance with the vote and programme purposes as stated in the Act. The Bill sets out various provisions to govern utilisation of the appropriated funds for 2023/24. The amounts appropriated to each vote are set out in the Schedule to the Bill. The Schedule is divided by vote and by main division within a vote. A purpose is set out for each vote, programme and transfer and subsidy to a national department within a vote. Allocations are categorised by current payments, transfers and subsidies, payments for capital assets, and payments for financial assets.

Key highlights for the 2023 Budget included: Retaining fiscal consolidation strategy; GDP growth of 0.9% expected; Consolidated spending of R 7.08 trillion over the next three years; Social wage of R3.59 trillion (51% of budget); Net increase of R 128.4 billion to non-interest spending; Additional allocations of R 227 billion provided to budget; and Primary surplus in 2022/23 expected to be achieved and narrow consolidated deficit by 2025/26. In Table 1 Spending pressures funded in budget 2023, main budget non-interest spending is increased by R 91 billion in 2023/24 and a total of R 227 billion over the MTEF. In Table 2 Social wage, a significant amount of spending is towards social wage – the bulk of which is towards basic education, social protection, and health. In Table 3 Provisional allocations, the 2023 Budget amounts to R 1.5 billion in 2023/24. These allocations will only be confirmed once certain conditions have been met.

The summary of the 2023/24 appropriated funds shows a total appropriated amount of over R 1 trillion. Of this amount, current payments amount to R 261 billion, transfers and subsidies amount to R 793 billion, payments for capital assets amount to 17 billion, and payments for financial assets amount to R 1.9 billion. In terms of allocations by vote, the bulk of the allocations, being 62.9% of the total budget, is appropriated to the Departments of Cooperative Governance, Higher Education, Social Development, Police and Transport which mainly provide for free basic services, student funding, universities, social grants, crime prevention and investigation, and maintenance of the road transport network.

On the compensation of employees, total compensation spending for national departments amounts to R 179.7 billion in 2023/24. The largest allocations are towards portfolios such as Health, Police, Defence, Justice, and Correctional Services. Peace and Security Departments are labour-intensive; hence a large proportion of their budgets goes to the compensation of employees. On goods and services, Police, Defence, and Correctional Services constitute the highest amounts. Goods and services budgets for Peace and Security departments are proportionate to their budget size and provide for operational expenses. On transfers and subsidies, the bulk of the funds is under the Department of Cooperative Governance which mainly provides for local government equitable share and municipal infrastructure grants. Another large portion of the funds is under the Department of Social Development for social grants.

In summary, the 2023 Appropriation Bill provides for cost pressures funded through a combination of reallocations, reprioritisation and additional funding. Priority is given to interventions associated with the impact of COVIDÔÇÉ19 and to meet urgent service delivery needs. 73.6% of the total budget is for transfers and subsidies – mainly social grants, conditional grants, transfers to public entities, and university subsidies. The largest share of compensation of employees' allocations goes to labour-intensive departments e.g. in the Peace and Security function and Higher Education and Training. Payments for capital assets constitute 1.6% of the total budget and are mainly for indirect grants.

Eskom Debt Relief Bill

Mr Duncan Pieterse, Head: Asset & Liability Management, NT, presented that the 2023 Eskom Debt Relief Bill was tabled to give effect to the announcement of Eskom debt relief arrangement was announced as part of the budget. Resolving Eskom’s unsustainable debt burden unlocks investment and restores fiscal credibility. The reasons why the government proposed a different solution to Eskom’s debt include: Current solution for Eskom’s stranded debt does not sufficiently address Eskom’s underlying solvency or liquidity challenges; R 350 billion of guaranteed debt, which is at risk of default, raises the South African risk premium and cost of borrowing; and Dealing with Eskom’s debt enables much-needed investment in critical transmission and other infrastructure and allows Eskom to prioritise critical maintenance on existing fleet. An optimally designed debt solution, with conditions, can be leveraged to support the structural reform of the electricity sector that will enhance the country’s long-term growth prospects.

Key features of the approach considered various measures to address Eskom’s unsustainable R 423 billion debt burden. The goal is to strengthen the utility’s balance sheet, enabling it to restructure and undertake the investment and maintenance needed to support the security of electricity supply. In the Budget Review 2023, the Minister of Finance announced a debt relief arrangement of R 254 billion over the next three years. This is a balance sheet transaction and not a spending appropriation. The Eskom Debt Relief Bill was tabled to give effect to the debt relief arrangement.

Key elements of the Bill include proposals that NT advance the amounts as a loan to Eskom on dates determined by the Minister of Finance. The Bill enables the Minister to impose conditions for the conversion of portions of the amount of the loan for each financial year into ordinary shares issued by Eskom to the State. The Bill proposes advances to Eskom which will cover capital and interest payments as they fall due and may only be used for that purpose. Over and above this, for 2025/26 the Bill proposes a debt take-over by the government of R 70 billion of Eskom’s loan portfolio. The Bill requires that NT, in its quarterly reports to parliamentary committees, report on Eskom’s compliance with the conditions and disclose the amounts of the conversion.

On the governing features of the Eskom Debt Relief Bill, funds are proposed to be advanced when Eskom’s debt settlements fall due. The proposed advance of funds will take the form of an interest-free subordinated loan, to be settled in Eskom shares rather than cash, allowing Eskom to better manage its liquidity position. Loan advances from the government to Eskom will be conditional on the repayment of pre-identified Eskom debt instruments. Strict conditions have been developed to safeguard public money. The Minister of Finance will, upon compliance, approve that Eskom converts the loan to government-owned equity. Quarterly meetings between NT, the Department of Public Enterprises and Eskom will take place to discuss progress made in achieving conditions. A failure by Eskom to achieve and/or adhere to specific conditions will cause the loan amount from that quarter to be repaid to the National Revenue Fund (NRF). Prior to repayment, the government will offer Eskom one quarter to rectify non-compliance. Government guarantees for Eskom’s debt will reduce as guaranteed debt is settled.

Proposed conditions for debt relief include Eskom’s capital expenditure being restricted to transmission and distribution. Eskom may not use proceeds from the sale of non-core assets for capital and operating needs. No new borrowing will be allowed until the end of the debt-relief period unless written permission is granted by the Minister of Finance. Eskom’s guarantee framework agreement for the R 350 billion facility will reduce in line with NT recommendations. Positive equity balances in Eskom’s derivative contracts cannot be used to structure new debt or loan agreements without the approval of NT. The debt relief can only be used to settle debt and interest payments. Eskom may not implement remuneration adjustments that negatively affect its overall financial position and sustainability.

(See Presentation)

Discussion

The Chairperson thanked NT for the presentation.

Mr O Mathafa (ANC) said that he was going to be very brief. On each presentation, he would raise just one issue. Before he did that, as always, the presentations from NT were welcomed and very informative. As Dr Modise said, the presentations would assist the Committee in identifying those departments that they might want to have further conversations with, and for that, the Committee was always grateful. The first issue on the first presentation, on slide 6, on the past spending trends, that slide looked at key reasons provided by departments for underspending. The Committee welcomed how NT had gone on to even colour-code the reasons. He for one agreed fully with the view that NT raised in terms of reasons that were acceptable and those reasons that required further discussion or further attention. Having said that, he wanted to check if the Committee would be keen to receive a report from the top 10 underspending departments affected by the reasons that were colour-coded red. The reason why he said this, he would prefer that the report should be on measures that were being taken or were going to be taken to remedy the situation. His point was on the basis that if one looked at those reasons as advanced, particularly reason number one of vacancies unfilled, they were repeat reasons that were advanced on every reporting cycle for reasons of underspending.

For him, it was a concern that the Committee lamented the issue of lack of capacity within the public service but yet they had vacancies unfilled and there were no measures advanced to say, “this is how we are going to remedy the situation”. Those measures could be drastic, and they could perhaps be aligned to reforms of saying, “no, we are not filling these vacancies simply because we want to reduce the size of the public service.” If that was the reason, then there had to be measures in implementing those reforms to ensure that budgets are not allocated for vacancies that are not going to be used. So, it was important that the Committee is responded to on that. As a last point to underscore his point, the Committee also heard talks about automation and modernisation of Information Technology (IT) systems to improve efficiency and effectiveness, yet Information and Communications Technology (ICT) programmes were not delivered on time or at all. Hence, he was saying that perhaps the Committee should request a report in writing on the top 10 under-spenders, red reasons, what measures are being implemented to correct these reasons. That was on the first presentation.

The second one was just a comment and he wanted to agree with Mr Pieterse that the new loan to SOEs, for the Committee, was a breath of fresh air. This was because it deviated, but positively, from the conventional way of bailouts where money was just poured into South Africa’s SOEs with no requirement for accountability and with no clear plans in terms of how these funds were going to be used. But if one looked at the presentation that Mr Pieterse had put forward, the amount of takeover or advance of the capital injections was done in a staggered way but equally it attracted conditions that the entity in question had to apply its mind and comply with. The interest advancement also attracted interest, so it did not take away the business-like approach that the entities must ensure that they implement in executing whatever task that they have outlined to be undertaken by these particular allocations.

His last point was that, with these conditions and the interest rate attraction, clearly there were additional responsibilities that were out on the shoulders of the management of these entities. This was what the Committee had always been raising, that when money was advanced there should be conditions, there should be accountability, and there should be monitoring and evaluation for impact. He thought that this approach was in line with what the Committee had been talking about. As such, he wanted to align himself with the view that Mr Pieterse had raised in his presentation that there was a fresh approach in terms of recapitalising South African SOEs. He would pause only on those two items, but the rest of the presentations were welcome. As he was saying, the presentations really added value to the Committee’s work. He appreciated the time allowed for him to participate in this discussion.

Mr A Shaik Emam (NFP) welcomed the presentation. He thought that this morning he wanted to go on a different format. His first question to NT was that he thought that they were in the best position to know and understand the plight of ordinary South Africans. South Africa remained one of the most unequal societies in the world. It was known that when it came to the delivery of services, concerns were being raised again and again in protest action. NT knew the state of the SOEs. What measures is it putting in place given the fact that it knows and understands the plight of South African people that we are required to generate a lot more revenue? When he said this, together with that he wanted to know whether it would be possible for NT to close their offices for a whole week, join the Committee, and let the Committee take them from door to door in some of the central business districts (CBDs) particularly and show them how much money they could generate but are not wanting to generate because they are not putting any measures in place to address some of the challenges faced in the country.

NT was bleeding South African taxpayers, about 15% of them who paid taxes. 95% of foreign nationals in South Africa did not pay taxes and NT did nothing about trying to collect taxes from them. For companies with interests abroad, for short offshore companies, monies were being laundered and there were illicit financial flows. Very little was being done about it. Importantly, he could assure NT that if they went with the Committee for one week, they would see how much revenue it was losing, which would help to solve a lot of South Africa’s problems. He wanted NT to tell him if that was possible so that South Africa did not need to borrow from anybody. That was his first question.

His second question was whether NT could tell him, and he knew that the Chairperson knew where he was going with this one, how much money through goods and services was being lost in South Africa currently because NT was not getting value for money. What measures is NT putting in place? He had written to the NT to request a report on all of the tenders that were issued by municipalities in the last year. He had received a response, and through Corporate Governance as well, that the report was normally on the website. He asked that he be shown which website because he had gone through those local municipality websites and there was absolutely nothing being advertised. Why is NT not making sure that there is compliance with that, yet they knew that the CEO of Supply Chain, many years ago had said that NT was losing up to 40% on not getting value for money? He was making this point because there was so much money available, but it had just been going into the wrong hands and being embezzled. It just needed better management to be able to deal with this, and South Africa would come out the red. That was his other question.

NT seemed to be gloating about the fact that South Africa was now loaning and not bailing out. What was the difference? Does Eskom ever pay anything back? Can NT tell the Committee when Eskom or any of these SOEs had actually complied with the condition? The Committee had repeatedly asked NT about conditions and whether they had been met, and the Committee received a blank from NT. What conditions have Eskom ever been meeting that even if given to them in the form of a loan they were going to meet it? It was still going to be up to the taxpayers eventually because when Eskom does not pay, one knew what would happen – taxpayers were going to have to bear the brunt of it. The other thing was whether NT would be able to tell the Committee what the state of the debt was of all local and/or provincial governments that were also on the boring market which was not reported on – both locally and from international financial institutions, which would perhaps give the Committee a true account of how serious South Africa was insofar as debt was concerned.

Very often politicians were getting blamed for a lot of things, but he also believed that officials in this Department needed to do a lot more. NT knew and understood the challenges that were faced, and they knew the division in politics did not make it easy. But NT was supposed to have a working relationship with the Committee and guide the Committee as to what they could and should do to correct some of this. So, he wanted to plead with NT, insofar as that was concerned, to try and work with the Committee in identifying some of these things. The other thing that he had a concern about was the irregular expenditure. He thought that his colleague was correct. The Committee got this and heard it all the time, and most of these people were repeat offenders. He thought that NT had to admit that what they did not have was the will to do something about it. So, it was business as usual. Insofar as irregular expenditure, because there was a provision to regularise irregular expenditure, it got abused.

He pointed out what NT was asking the Committee to do insofar as Eskom. He had seen another statement the other day, saying that it still had to be done and NT was just consulting insofar as that and asking entities not to show it on their financials. He had to be very honest with NT that he thought that it was quite disappointing that NT, the custodians, was actually telling the people, all South Africa’s SOEs, and others, to go and lie in their financials and not show it or finish it as it was good enough. It was the same thing when NT talked about the compensation of employees and vacancies. NT knew this; it was a fact. He knew that there was not much that NT could do about it as they could just report on it. But the question was what could be done differently now? NT knew all the problems that they had – they were repetitive again and again and again. How and what can NT do to conduct itself differently? He was sure that NT was aware that a lot of money was spent on oversight in the country. All of the departments went on oversight, lived in hotels, whatever it was. Does NT think that they were getting value for money? Because despite all of this so-called oversight that the departments had done, nothing was changing.

The repeat offenders were continuing unabated, laughing all the way, and nothing was being done about them. What does NT believe should be done to be able to change that? He wanted to talk about the issue of Eskom particularly. Does NT honestly believe that the direction the country was going with Eskom, where the emphasis was on renewable energy, was the way to go so that the money that NT was going to be loaning them and/or the bail-out was well spent – as NT had told the Committee that Eskom was in a helpless situation? Does NT think it was well spent? Did they really believe that they would eventually turn Eskom around? Or does NT believe what the Minister of Electricity was now saying, what the Minister of Energy had been saying, that they needed to also continue maintaining but building coal-fired power stations, and simultaneously there was renewable energy where they needed the base coal and the renewable for additional? What did NT think insofar as that was concerned? Because the Committee was getting conflicting statements from the government, NT was at the forefront of it insofar as the resources were concerned, and NT needed to be convinced and convince the Committee that the money that would be given to these people was going to turn it around.

He was not convinced, unless, he believed, base coal continued for now and there was also renewable energy as an additional form of energy supply. That, for him, would be the route to go. However, if NT wanted to remove one extreme at the expense of the other, he believed that they were going to be wasting a lot of money and they were not going to be solving the problem. Lastly, he wanted NT to tell him, and he did not think that they were going to be able to tell him today, how much revenue NT collected from all South African Police Services (SAPS) employees and healthcare workers – tax revenue or PAYE. The reason why he was saying this was because he believed that in light of the services both the healthcare and police provided in this country that they must be exempted from PAYE. They were very poorly paid. He wanted to recommend, and he wanted NT to tell him what the implications of that were, but he would also be guided by how much came in because they were very poorly paid, they were not motivated, and that was why there was so much corruption and looting.

He pointed out the local living conditions of police officers living in shacks, and healthcare workers and looked at what they had done for the country during COVID-19 and how much they had sacrificed. Many countries, and perhaps NT could do some research and tell him, but he had done some research and there were quite a few countries in the world that did not pay tax at all and there were other countries where civil servants did not pay tax. He would like NT to tell him about the implications and whether the country should consider anything of that nature. Lastly, he wanted to say that he knew a lot of emphasis was on social grants, social assistance, and things in the country. Does NT honestly believe that the country is going in the right direction? Will the country be able to sustain this in the long term? Or does NT believe that the country needs a more productive society so that it can have economic growth, more job creation, and give dignity back to people so that they can earn rather than rely on these handouts?

Mr X Qayiso (ANC) thought that Mr Mathafa had covered him when it came to issues of underspending and vacant posts, but he also wanted to bridge further this area of vacant posts. He did not know. The Committee had raised this matter each and every time they had dealt with the appropriations. So, in this matter, he had to be honest with the Committee, it seemed to have slipped out of the control of NT. He wanted to know from NT what this thing was that was difficult to ensure that these departments spent on the funded posts. What is it that is difficult that NT got as a valid reason, which was not acceptable insofar as he was concerned here? This was because this matter had run and rolled over for years. The Committee had been hampering on it and it had created an impression that even when there were negotiations, they would put the reason of “no money”, but then there were vacant posts which were there, funded. It created another impression that they were trying to impress outside there. He just wanted to understand what the main problem actually was that NT was unable to assist these departments despite the fact that on numerous occasions they had been saying that they had engaged these departments.

Secondly, was the issue of the post office. Is there anything that NT is thinking in terms of coming in in that particular situation where the post office was facing serious challenges including retrenchment of workers, grants not being able to be delivered as per the arrangement that had been made? If one looked around, the people that would be most affected were the working class in the rural, outside areas where they travelled long distances to receive their grants. If one went to areas such as QwaQwa for instance, which was very rural, or even in the Eastern Cape, as NT understood the percentage of unemployment and being unable to get transport, for South African people to go there it was now going to even double their burden to now travel to the next town because of the closure of the post office. So, NT could imagine how many South African people were going to suffer under the circumstance where the post office was going to be provisionally liquidated as was being reported. He did not even want to add the worst part of the retrenching of workers who, each one of them, supported a family of five to seven and their relatives. So, the future for them was even more bleak. He just wanted to understand from NT’s perspective view about this matter, whether there was any intervention that was being thought of so that it could rescue the situation. 

Lastly, he just wanted to raise this matter. He knew that the Committee and NT had spoken about it and tried to dismiss it the last time, but it did not augur well with him. There was an attempt by NT in the previous quarter in the public hearing to smuggle out some proposal around the issue related to the malaria budget. He did not even hear, being attacked around here as the Committee dealt with these issues, how that matter had come to the Committee’s attention at that particular moment. He referred to the malaria budget additional proposal, which was so wrongfully made in that platform that the Committee was now wondering when NT operated in this manner since the Minister long pronounced the issue of the budget and that matter was not dealt with by NT. Now, during the process, the matter of malaria just emerged whilst the Committee was dealing with or doing oversight. He just wanted clarity and said that that matter did not augur well with the Committee. 

The Committee Secretary said that the Chairperson had requested Mr Qayiso chair the meeting as he needed to step out for a moment.

Mr N Kwankwa (UDM) aligned himself with what was said by Mr Mathafa earlier, that the Committee appreciated the work that NT has always done in trying to ensure that proper governance systems are put in place at these various entities. One could even see now, when reading through the document, that it was well thought through although one did not agree entirely with some of the proposals. He wanted to make an example. If one was talking about resolving Eskom’s unsustainable debt burden, the very first slide, when it talked about dealing with Eskom’s debt enabled much-needed investment in critical transmission and other infrastructure and allowed Eskom to prioritise critical maintenance on existing infrastructure, there the tacit message that was being sent was that the focus was on transmission, which meant that the government wanted to own the pipeline and not just supply in the medium to long term as what it was concerned about was transmission. Because if one lumped critical infrastructure under other infrastructure, it meant that they came there secondary to the issue when in fact the government should be forward-looking in terms of saying that Eskom should not just focus on fossil fuels.

It was the primary base of electricity generation to say, “how are we going to ensure that Eskom moves into the renewable energy space?” The sum of the investment needed to go into that because he believed that, to a large extent, investing in renewable energy was cheaper than the amount one had to spend in maintaining existing coal-fired power stations and even building new ones if there was such a need. Coal had to remain the base – that was unavoidable for the country – but South Africa needed to be forward-looking. Now, it seemed like what the conditions sought to do was they sought to confine Eskom to coal and not move into the renewable energy space so that all that government is going to end up doing in future is that they are going to be price takers from these renewable energy companies at some point when the country came to their mercy. This was because there is going to come a time when renewable energy companies are going to contribute a significant amount of electricity to the grid, and when that happened the government might not be able to influence the price that it charged to consumers. They might find themselves, as taxpayers, having to subsidise the price of electricity to make it affordable for people.

As much as this measure sought to ensure that it dealt with governance issues, it made it impossible for Eskom to borrow money in future, but he thought that it was not forward-looking in the sense that it said Eskom must be. He suggested it be at a very reasonable rate, something that the country could obviously afford and something that could be introduced gradually, but with a clear strategy going forward. The second issue was that there was a part where it was said that “the goal was to strengthen the utility’s balance, enabling it to restructure and undertake the investment and maintenance needed to support the security of electricity supply”, which was the risk that government was trying to address. Then NT went ahead and said that this was a balance sheet transaction and not a spending appropriation. What difference does it make to us as taxpayers really? He thought that it was a question of semantics if one was a taxpayer. It was quite understandable what NT was trying to do, to say that this was a balance sheet transaction because it sought to reduce the liabilities of Eskom in the balance sheet. However, from the taxpayer NT was still spending money and doling it out to Eskom.

So, for taxpayers it was neither here nor there. NT was giving billions of rands from the national fiscus to Eskom, but he thought that the emphasis should be on the issue made towards the end of the presentation, where it was said that money was not there to finance operational expenses. He thought that instead of using technical language that might confuse people, NT just had to be clear and say that they did not want this to be used to finance operational expenses hence it was a balance sheet transaction and not following the normal route of a bailout where NT doled money to entities in order for them to be able to meet their operational needs. He also could not understand, for example, how it was said that Eskom may not use proceeds from the sale of non-core assets for capital expenses. He understood when NT was saying for operating expenses. One would naturally assume that when an entity sold its non-core assets some of the funding, simply because they were non-core assets, in any event would actually need to help with capital expenditure that Eskom needed.

This was because it was that capital expenditure to deal with the capacity constraints of the entity that was most probably in fact going to help in future as there is more need for energy in South Africa as communities grow and as the economy grows. He thought that NT should be more specific about what kind of capital expenditure should be undertaken by Eskom. If it was intended to increase the energy generation capacity of Eskom, it should actually be allowed to go ahead with it if there was a clear plan of how the sale of non-core assets was going to use for that, so that it stopped relying solely on the taxpayers and NT in order for it to be able to invest in that.

On operating expenses, obviously, he agreed with NT entirely on that score but too much emphasis must not be put on this thing of managing transmission as if something great was being done. It was like a person who celebrated just owning a pipeline and not being able to manage the supply of fuel or having no say or very little say in the supply of fuel. All that they would celebrate is that they had a pipeline that could take fuel from Zimbabwe to Malawi, but what happened to the supply market and how oil is generated or produced, they seemed to want to play no role. This minimalist role that South Africa was taking as a country when it came to energy generation was going to come back to bite us, but it would bite more especially his generation and most probably not the next generation because the effects of it were going to be felt a couple of years from now when ordinary South Africans are not able to afford electricity because most of it is being generated by the private sector.

The other important thing which he thought needed to be emphasised was to say that perhaps because NT was going through its own monitoring of the conditions that had been put in place, the Committee should also do the same thing and monitor Eskom very closely, and make it standard that even if they were coming for budget review and recommendation reports (BRRR) processes that they needed to account for and give a progress report on the conditions that had been attached to some of the financial assistance that had been provided to them. This was because, in any event when there were challenges, it was always Parliament that had to approve these special appropriations. Whether they were not spending appropriation or a balance sheet transaction, ultimately the Committee had to make sure that they took money out of the fiscus and injected it into an entity of the State in order for it to be able to discharge its mandate, let alone the fact that very few of them were able to discharge any socioeconomic mandate besides being a drain on the fiscus.

Mr N Ntlangwini (EFF) fully agreed with Mr Kwankwa on the remuneration adjustment condition of Eskom. She thought that NT was just playing with words there. It should be straightforward to say that there should be known remuneration adjustments. “That or that affects negatively” and all of that was just playing with words. It was yet again Eskom being disingenuous. She wanted to find out whether they had made any provision in terms of looking for other energy sources that South Africa could use in terms of power generation within the country. Because it was clear on the proposal, as Mr Kwankwa had also alluded to, that it seemed that Eskom was being bound only to coal currently. Research had to be done as well about other energy sources that were much cheaper and that could ensure that even a household in Stutterheim got proper electricity without loadshedding for six to eight hours. She wanted to find out if Eskom, anywhere in their budget, had made provision for the research and development of other electric energy sources that could be used within the country.

On the overspending and presentation that NT had said, she told Dr Modise that on the past spending trends there were three colours. She wanted to know about the one in blue if Dr Modise could enlighten her, as she did not hear correctly what it was for because it was quite concerning if there were delays in funds due to compliance with the legislation and conditions. Which departments were they? She thought it would also be good if the Committee could know because they had always spoken about it as the Committee pertaining to the delay in vacancies and so forth. Which departments were the offenders in all of those past spending trends? She asked if the Committee could get a clear indication as to which departments were guilty of all of the reasons that NT had provided there on the underspending. This was because the Committee needed to know which departments were the repeat offenders of this underspending within the departments. If it was anywhere in the presentation, NT could just allude it to her but she did not see it. She asked if the Committee could have that properly stipulated as to which departments were guilty of that.

Mr Z Mlenzana (ANC) welcomed the presentation and said it assisted the Committee to apply its mind given the task of taking a decision regarding this appropriation. Members had hammered the question of underspending and he did not think that he had to go back to it. He supported what Mr Mathafa and other Members had said. He also supported the Acting Chairperson on the question of the South African post office. He thought that when it came to that, the only thing that he could add was, correctly as the Acting Chairperson had said, that they were dealing here with an entity which was actually there to assist the rural poor in particular. He thought that the Committee needed a specific focus on this; they needed a day set aside wherein NT together with the Department of Public Enterprises would take the Committee through it. The Committee could not allow the massive retrenchments that were looming there whilst they would be deterring the ultimate objective of the post office.

Then, coming to Eskom, he focused on the debt relief arrangement. He told Dr Modise that, with due respect, he had gone through the presentation and had also listened to today’s articulation on the presentation. However, he asked if he could be assisted and he told the Acting Chairperson that he was calling this a caption. What is the major intention of NT appropriating R 254 billion to Eskom? If a man on the street had asked him what the major intention was, in a summary form, what would NT say to him? He knew that Eskom had said that this debt relief arrangement was intended to allow Eskom to realise significant goals in response to the electricity crisis, including but not limited to prioritising capital expenditure in transmission and distribution during the debt relief period, and focusing on maintenance of the existing power stations. Put the other way around, not following what Mr Kwankwa was raising, he asked Dr Modise to talk more about the statement that he had just read. Is it costed or will NT continue thumb-sucking? If it was costed, does NT have expenditure trends in place with clear cash flow projections as to what it was that would be happening? If there were such clear cash flow projections, surely there would be estimated timeframes in terms of South Africa undoing the Eskom crisis?

There had to be a full stop. What is the estimated time when there will be a full stop in terms of this energy crisis? As much as this was a statement that he was making, he asked that perhaps he be allowed to make a disclaimer once more that he may not be as knowledgeable as both Eskom and NT were in terms of this one. It was his observation, which was why he was saying he was making a disclaimer. As much as the operational sectors had led to Eskom’s dismal performance, the constrained financial position of the utility was equally a contributing factor. He was now talking about the constrained financial position of Eskom and asked Dr Modise if she could perhaps talk to that. Some of these included the escalating unacceptable municipal debt levels. What was being done about that? The budget overran at Medupi and Kusile power stations. This one had been there since the fourth Parliament if his memory served him well. When he was still with the NCOP in the fourth Parliament, they had been talking about the budget overrunning at Medupi and Kusile power stations and the lack of cost-effective tariffs.

He asked if Dr Modise and NT could talk about some of the aspects which seriously starved Eskom of the necessary financial capital to invest in the generic reliability as far as maintenance was concerned. Even in other stations, because he felt that this was now. He hoped that with time NT would come back where they would explain to the Committee the actual role of the Minister of Electricity in terms of expenditure-related programmes. Is he currently on Eskom’s budget or the President’s budget in terms of operations and all? He asked if that could also be clarified going forward, avoiding a situation where down the line the Committee would be told to remember that this particular expenditure was as a result of the additional minister who was focusing on the Eskom crisis.

The Chairperson raised a question on the first presentation, where on slide 10 Dr Modise had talked about conditions of amending the budget by Parliament. The view was that these conditions did not make it easy for Parliament to do that, especially considering the timeframes of initiating and approving these bills. What is the comment from NT with regard to that view? The second question was that it looked like the question of not raising taxes was a policy and strategic position of NT. Why is it so? Does it mean that NT never even considered the cost-benefit implications of a wealth tax? What is NT’s comment on that one? Thirdly, why are we rushing to attain primary balance with all the challenges that the country was facing? On the Eskom Debt Relief Bill, the first point was what did the R 230 billion standard debt mean? He thought that this question also dovetailed to the question that Mr Mlenzana had raised. In summary form, what does that mean? The second point was that the R 254 billion was advanced as a loan but this would still appear as a debt in the Eskom balance sheet. What difference does it make? Perhaps further clarity would help the Committee understand what this meant. Mr Kwankwa touched on this point as well. The third point was in line with what Mr Shaik Emam had raised. If Eskom did not meet NT’s conditions, shall NT come with another product? Why is this a better arrangement? Does this deal with the moral hazard problem at Eskom which the Committee had been raising for quite some time? Lastly, the understanding was that Eskom was 100% owned by the State. What does the loan conversion to equity mean? How does this one work?

Mr E Marais (DA) wanted to ask the following question regarding the condition, which was that capex must be only for transmission and distribution. However, the biggest issue in South Africa was actually generating capacity right now. He asked NT to just highlight a little bit in their answer in that regard.

Mr Kwankwa apologised and said that there was just one point that he had forgotten to make about the post office. From where he was sitting, he thought that the problem with the post office was not necessarily that they needed to retrench people per se. The government could not continue in these difficult economic times to push for retrenchments of people instead of what they should be doing which was to try to modernise the business model of the post office. What was lacking at the post office was that whenever in future financial support is given to the post office, what should form an integral part of the conditions should be the modernisation of the post office in the long-term turnaround strategy of the post office. This was because the post office serviced the rural masses. The Committee could not be in Parliament representing the poor and then come here and say that it is okay for an entity such as the post office to continue to go on as it is doing currently.

The post office found themselves in the majority of instances even having to rely on expensive methods such as courier service companies and all of that, and most of them were not even able to get Natis documents. There was a post office in an area in the Eastern Cape where he came from, that now people had to go through King William’s Town, which was R 50, to be able to get services from the private sector and still be charged a lot of money, using their social grants in order to access those services, when if one were to consider the fact that the post office was about 15 or 10 kilometers away from his village where he came from. In other words, the Committee, as Mr Mlenzana was saying, probably needed to have a completely different discussion about how to rescue the post office and how to remodel and repackage it into a 21st century business model.

Dr Modise responded to the first question on underspending. She thought that the best way to respond was that NT was now finalising the outcomes for the 2022/23 financial year and it was going to be submitting a full detailed report on 12 May 2023 to Parliament. So, NT would definitely be called to present on the outcomes in fuller detail. On the specific questions, she thought that the reason why some of the reasons were highlighted in blue was not because NT was not worried about the reasons for the underspending. Blue simply meant that NT was working with the municipalities to make sure that they adhered to the Division of Revenue Bill and that once they adhered, most of that money would then be transferred to municipalities. Another reason why it was highlighted blue was just because the municipalities had a different financial year compared to national and provinces, so they would still have another three months to spend the money until June. So, blue meant that it was a problem but there is a plan in place to resolve that problem.

Then, just looking at some of the reasons why there was a high rate of vacancies, she thought, one, it was the policy decision that was taken by the State when they were looking at managing the compensation bill and getting departments to apply through the Department of Public Service and Administration and motivate why they needed to fill the vacancies. That was the first delay. Secondly, she thought that over the past couple of years, the salaries for senior managers in the State had been frozen, so it took twice as long to try and get people in senior management in government compared to previous years. So that was also adding to the delays. However, another one was for departments such as Higher Education. The number of applications that this Department received and had to go through was so significant that that also caused some of the delays. But she thought that in the coming fiscal year, what departments needed to do was to plan ahead and make sure that if they knew that they had large vacancies that they wanted to fill, those processes started earlier in the year rather than at the end of the year. So she thought that with proper planning some of these issues and reasons could be avoided and departments could plan better.

Looking at the timelines on the parliamentary process, she thought that what NT was supposed to emphasise was the fact that Parliament had four months from the start of the financial year to consider the Appropriation Bill. She thought that there was enough time that was allowed by the Money Bill Amendment Procedure and Related Matters Act that gave Parliament or this Committee four months to consider the proposals in the Appropriation Bill and those changes could then be made. So, she thought that it did allow for some time. What tended to happen was that the reason why, for example, NT would ask Parliament to process bills faster would be when there were instances such as COVID-19 where they had to change the manner in which they did budgeting. But in a year that was consistent and there were no shocks in the system, Parliament could definitely then take the four months. Now, to also prevent Parliament or to allow for enough time, what NT had done was they introduced a Second Adjustment Amendment Bill that was much shorter because there the timing was critical that they allocate funds to the post office and South African Airways and the Independent Electoral Commission of South Africa. So, because those transactions were so urgent, NT stripped them out of the Appropriations Bill so that Parliament is at least given four months to deal with the Appropriations Act. She thought that that did provide sufficient time to deal with this.

In terms of the question on the social grants vis-à-vis how NT got the economy to be productive, NT was still working with the different departments to try and see what shape or form the Social Relief of Distress (SRD) grant should take. She thought that from a NT perspective, there was no doubt that they needed the grant and there were people in the South African economy who really needed government support. She thought that what was critical was that this grant should not create dependency. This grant should be a bridge between someone not being employed to employment because what government did not want was to move its active population and make them dependent on grants. However, it would be irresponsible for NT not to consider the fact that while one did not have employment, while the government or the private sector or the economy was gradually growing and creating employment opportunities, how to deal with people who did not have incomes. So, she thought that the manner going forward should be such that it acted as a gap between getting a job or coming out of university to get a job or moving between jobs, rather than creating such a dependency that most people are now dependent on the grant. She thought that the criteria that NT had now put in place to make sure that only the people who deserved the grant received the grant, and the fact that NT was also asking applicants to apply every three months, was to make sure that people who got employment during the course of the year did not unfairly benefit from the continuation of receiving the grant. As she was saying, it was better to have a grant that was bridging a gap rather than to have a grant that created dependency.

On tax collections, the wealth tax, and the primary balance, unfortunately the team that the Committee had today was the team that dealt with expenditure. However, she would liaise with the tax policy team and ask them to send written responses, but most of these would have been discussed in the fiscal framework discussion in Parliament so she could definitely share the information from the tax policy team. She would send it to the Committee Secretary so that at least the Committee was privy to some of the presentations that NT had been doing to the Standing Committee on Finance on the primary balance, wealth tax, and other matters.

Ms Ulrike Britton, Chief Director: Urban Development Infrastructure, NT, thought that, on the post office, it had to be remembered that the post office was kind of facing an existential crisis and had been probably for the last 15 years. So, with the decline in ordinary postal services, which was normal ordinary mail, the post office needed to reposition itself to adapt to this changing environment that it had to now deal with and had since probably 2010 developed a series of turnaround strategies that would allow them to adapt to this changing environment. The post office had not successfully implemented any of those turnaround strategies, and as a result of that what was being seen was a mismatch in revenue because of the decline in these services and the costs continuously increasing. With that meant that the post office needed to have a credible strategy that would allow it to be fit for purpose. In building something that is fit for purpose, what was really needed was an organisation that was lean and efficient so that it is able to compete in an environment where increasing competition was seen from business-to-business operations that now came with e-commerce and the like.

Part of what the post office can do and where is also needed to kind of show some value for money would be around the delivery of services on behalf of the government and being compensated for that in a way where it made financial sense for everybody across the value chain. Now, the R 2.4 billion that was appropriated, which this Committee had approved as part of the Second Adjustment Appropriation Act, did allow for a large component at least and did allow for the post office to implement a turnaround strategy. For example, it realises that it needed to kind of focus on improving its logistics and the automation around its logistics becoming a trust centre that would allow for electronic signatures so that it could deal with document management on behalf of everybody else on how that thing got transferred in the economy.

So the money that was appropriated was not just for paying. There was a large component of what the post office was saying to NT in their strategy, what they were calling the post office of demand or strategy, that was then provided for in there. The conditions that had been set against allocations were so that NT was sure that the post office is able to then deliver on the specific targets that it had set for itself in relation to turning around its operations, which would then allow it to start making profits and then also become the institution that is then fit for what South Africa needed as a society and not just kind of only relevant for its users.

Mr Mark Blecher, Chief Director: Health and Social. Development, NT, said that he did not quite get the question on malaria but there were allocations for malaria within this budget, specifically within the District Health Programmes grant. The allocation proposed to Limpopo was R 65 million, Mpumalanga R 27 million, and KwaZulu-Natal R 16 million. There was also an allocation from the national Department to Mozambique as part of the attempts to rollback malaria because South Africa got quite a lot of imported cases of malaria coming through from Mozambique, and that was about R 28 million that the Department was in collaboration with Mozambique. NT was not aware of any particular problems with those allocations. NT had engaged with the national Department on the malaria allocations and they were seen in the budget documentation in the District Health Programmes grant.

Mr Pieterse responded to some of the questions on the Eskom Debt Relief Bill. There was a question by Mr Shaik Emam about when Eskom complied with the conditions. As Members would be aware, NT reported to the Committee (SCOA) every quarter on Eskom’s compliance with their conditions. The last report was on 15 February 2023 to SCOA, where NT had done a detailed presentation taking the Members through exactly Eskom’s compliance with conditions. Now that there was a new Debt Relief Bill with new conditions, NT would be doing the same thing going forward. NT would be reporting to SCOA every quarter on Eskom’s compliance with conditions. There were a couple of questions on the emphasis on renewable energy and the energy mix. He would answer those as he went along because the conditions of the Debt Relief Bill were really technology neutral in the sense that NT was requesting Eskom to prioritise certain types of capital expenditure. But, of course, NT was not taking a particular view on Eskom’s future build programme beyond the debt relief period because these conditions were really going to be in place for the period of the debt relief, which was the next three years.

He said that Mr Kwankwa had a question on the difference it made to taxpayers as to whether it was a balance sheet transaction or not. He absolutely agreed with the Member. It did make a difference to NT from a fiscal accounting perspective in terms of how they treated it. However, the Member was correct – it did not really make a difference to taxpayers as to whether it was an appropriation or whether it was a balance sheet transaction because it came from the balance sheet. Whether it was debt or taxes, it still came from the same pot. The sort of technical difference was that one could argue that debt was merely deferred taxation, so there was not really a difference there – he agreed with the Member. There was a question also by Mr Kwankwa about the use of the proceeds from the sale of non-core assets. Absolutely. NT agreed that it should not be used for operational needs. What NT was saying was that in fact Eskom should not be allowed to use the funds from the sale of non-core assets for anything, capital, or operations. NT was asking that it be used in order to reduce the debt relief arrangement. Again, that was part of NT’s efforts at ensuring value for money for the public and for the taxpayer. So, any sale of non-core assets that took place had to be used to reduce the debt relief arrangement as opposed to Eskom using it for its own needs.

He said that Mr Kwankwa had also made a point about the conditions – a suggestion that Parliament should be monitoring these conditions very closely and monitoring Eskom very closely. That was definitely supported from NT’s side. He thought that there were various other suggestions made that NT would be taking into account as they finalised this work on their side. Ms Ntlangwini and Mr Shaik Emam had made a point about whether NT’s approach did not inadvertently bind Eskom to coal because NT was saying that Eskom was allowed to spend capex on maintaining the coal fleet but no new greenfield generation. In NT’s view it did not, mainly because, as he had indicated earlier, these conditions were only in place for a period of three years. So, the passage of the Debt Relief Bill while it was in place and the technology decisions made by Eskom thereafter on the generation side, after a three-year period, would not be implicated by this.

He said that Mr Mlenzana had made a point about what the major intention of the Eskom debt relief was and whether one could summarise that in brief terms. He thought that the real issue here was that because of Eskom’s debt challenges and because of the associated liquidity and solvency challenges, they had not been able to spend the funds required on maintenance capital expenditure, investment in transmission, and investment in distribution. Eskom had constrained those budgets and therefore constrained the investment because of their debt challenge and because of their liquidity problem. So the major intention of this debt relief was to allow Eskom to free themselves from the debt burden so that they are able to prioritise that critical capex and in so doing deal with loadshedding. So they were, as a result of the debt relief but also to Mr Mlenzana’s point as a result of the cost-reflective tariffs that they had finally been awarded, in a very different situation from a balance sheet perspective in the 2023/24 financial year and would be able to undertake the necessary investments to resolve loadshedding over time. Was the debt relief arrangement properly costed and annual projections? He confirmed that detailed financial modelling was conducted by NT and Eskom that included detailed cash flow projections that underpinned the decision made insofar as the Eskom debt relief arrangement was concerned.

There were also several questions by the Chairperson around Eskom. The first question was what difference it made now that NT made it a loan. The key difference here was that NT was shifting away from unconditional equity transfers to SOEs, and instead giving them loans, in this case Eskom, that would only be converted into equity when they met the conditions. If they did not meet the conditions, that loan then attracted interest which is payable and which ended up in the NRF. As the Chairperson had said, it was about dealing with the moral hazard issue which was that because SOEs were viewed as being too big to fail they were not run in an efficient and appropriate manner and that then lead to a moral hazard where the State had to bail them out without any efficiency gains in return. NT was structuring this as a loan that only got converted into equity in order to minimise that associated moral hazard. So, if they did not meet the conditions, and that was the other question by the Chairperson, they are given a quarter to rectify the noncompliance, and if they still did not then the loan did not get converted into equity and attracted an interest rate which would be payable to the NRF.

How does the loan-to-equity conversion work since Eskom is 100% owned by the State? All it meant was that there was no impact on the shareholder because Eskom is already 100% owned by the State. It just had to issue additional shares. There was also a final question by Mr Marais about capex for transmission and distribution and what about generation. NT had made the point that Eskom is allowed to invest in capital maintenance of the existing fleet. So, they were allowed to invest in the existing generation fleet because in NT’s view, it was a combination of investment in the existing fleet as well as investments in transmission and distribution that would help them to resolve the loadshedding challenge. That was a view that was of course shared by Eskom, the Department of Public Enterprises, and NT. He thanked Members for all the comments that were made. NT had taken detailed notes here and would certainly take account of it going forward as they worked on the bill and on the conditions.

Mr Qayiso said that NT had made its presentation and had tried its best to go into a discussion on all the areas that Members sought clarity and suggestions that the Committee considered. He thanked NT for the work that they had done before this Committee. He released NT so that the Committee could continue with its agenda.

The Chairperson thanked NT for the presentation. Before NT was released, one thing that the Committee would like to emphasise from their side was that at all times, with the interventions that were talked about, especially with the Eskom Debt Relief Bill, it was very important that there should be proper oversight – first and foremost from NT. However, again, as Parliament, the Committee was saying that it was very important that their ability to play their oversight role was very important. Also, the question of transparency was very important as Eskom has done all of these things. Members of the public would be keeping a watchful eye, but ultimately this intervention should allow Eskom to produce more reliable electricity so that Parliament is able to deal with all the socioeconomic challenges that they were having.

Mr Kwankwa had a request to follow up a bit, perhaps to make an appeal and say that the conditions had to encourage Eskom to make sure that Eskom had an energy mix that the country talked about all the time that did not solely depend on the private sector for renewable energy. He wanted to appeal to NT as finance people and say that perhaps when selling non-core assets, it should be said that 30% of it can be allocated towards whatever and 70% of it must be allocated towards the debt. This was because NT could not put itself in a position where it locked Eskom for three years and said that Eskom could not move into another space, renewable energy, as they just wanted Eskom to focus on coal. By the time the three years expired, Eskom would have been overtaken in the market by other service providers and it would lose an opportunity to enter that market and become a credible and major player in that sector. Eskom had to be encouraged and also provided with financial support within conditions to play in that space so that South Africa is not at the mercy of the private sector when it came to renewable energy for its people.

Mr Shaik Emam said that first of all his concern on this issue of the conditions was from Eskom. He was not sure if NT understood what the real challenges were in Eskom because he did not think anyone seemed to understand. If one looked at the fact that the Minister of Electricity was now talking about there must be coal fire. The President on the other hand was saying that South Africa needed to do away with coal and go to renewable energy and that the emphasis was on renewable energy. Do you not think that NT needs to have a better understanding of what the real challenges are, together with sabotage, crime, skills, and everything? Because if NT was not well-informed, how did they make conditions? Conditions could only come if NT had a good understanding of what Eskom’s problems were and how those problems were going to be resolved. He was not sure what the mixed comments were that the Committee was getting from different role-players. Where did NT fit in this? What is NT’s understanding compared to what the understanding was of the Minister of Electricity or from a government perspective?  The second thing was a whole lot of things that were requested on goods and services and the others. He did not see any of them being responded to. He did not know if it was going to come in writing or not.

Mr Qayiso said that he had asked whether there were any hands for follow-up inputs, and now he saw hands coming up after. The Committee had already released NT and summarised, but then he allowed Members to raise what they wanted to raise. The Committee should look at that in future.

Mr Mlenzana said that he had been covered by Mr Qayiso. The debate that was being raised should be internal, within SCOA, excluding NT. Because now everyone would have different understandings of the articulations of both the President and the Minister of Energy, the Minister of Electricity, and so on. The matter was now closed. The Committee had a group and he told Mr Shaik Emam that perhaps Members could engage in the group outside the meeting so that they could create some understanding.

Consideration and Adoption of Committee Programme and Minutes

Mr Qayiso raised the draft Programme of the Committee for the Second Term of 2023.

The Chairperson said that this was the programme considered by the Management Committee, taking into account a number of things that had been raised before by this Committee. The programme that was presented was mainly about dealing with the issues concerning the two bills. He thought that the Committee Secretary was going to make the slight proposal about Thursday.

The Committee Secretary said that initially the Committee was going to have a meeting on Friday and then the Chairperson proposed that the meeting be shifted to Thursday instead of Friday. Now, the Committee had received a communication stating that there would be no caucus on Thursday but that was from the ANC. He had told the Chairperson that they should put it to the Committee and check whether they should rather meet at 09h00 on Thursday morning or 14h00 on Thursday afternoon.

The Chairperson said that the Committee Secretary and himself had asked for permission to meet in the afternoon on Thursday and that that was given by Parliament. However, they just wanted to check because from their side they were told that because of oversight there would not be caucus from their side. So, they thought to propose to the Committee that it meet in the morning on Thursday rather than wait for the afternoon, which was the only change that they were proposing in this programme.

Ms Ntlangwini did not have a problem because EFF did not have a caucus scheduled yet but she asked that it be moved to 10h00 because of the Programming Committee. She knew that Mr Shaik Emam, Mr Kwankwa, and herself attended the Programming Committee on Thursday and they had a scheduled meeting.

The Chairperson accepted that and did not think the Committee needed to debate it. The proposal was to meet at 10h00 rather than at 09h00 because other Members had an engagement in the morning. He asked that the Committee move on that.

Mr Qayiso agreed.

Mr Mlenzana said that he had read the draft programme but that he would love to have a word from the Chairperson regarding the oversight programme.

The Chairperson thought that the way it stood now if Members looked at this programme, in fact, this week a lot of committees were on oversight, but because the Committee had these two bills that they had to finish and the Money Bills Act was very strict about the times that they had to participate, they were not doing any oversight as they had to come and deal with the bills. That was the constraint that the Committee had, but if there was a space which came up it was something that they could always look at. For now, at least for the second term, it would be seen that each and every day was being taken care of and had something that the Committee was doing. He asked Mr Mlenzana to park that and said that it was something that Members should continue to have at the back of their minds that they had these bills which were very much defined by the Act in that by such and such a time they should be able to finish a particular bill. He requested that the Committee confine itself to this programme as it was at the moment. He said that there was a proposal that the Committee proceed on the basis of this programme as amended both in terms of day and time.

Mr Mlenzana agreed.

The Committee Secretary said that some Members would note that the following week had been set aside as a leave period because of the public holiday. A separate application had been submitted to the offices of the House Chairperson and Chief Whip, requesting permission for the Committee to continue with its work on the Eskom Debt Relief Bill, and the Committee had received such approval. Members just had to be sensitised that the Committee had received approval from the relevant authorities to meet the following week.

Minutes of 14 March 2023 – Morning Session

Mr Qayiso raised the minutes of 14 March 2023 for the morning session.

Mr Mlenzana moved for the adoption of the minutes.

Mr Marais seconded the adoption of the minutes.

Minutes of 14 March 2023 – Afternoon Session

Mr Qayiso person raised the minutes of 14 March 2023 for the afternoon session.

Mr Mlenzana moved for the adoption of the minutes.

The Chairperson seconded the adoption of the minutes.

Minutes of 17 March 2023

Mr Qayiso raised the minutes of 17 March 2023 for the morning session.

Ms Ntlangwini moved for the adoption of the minutes.

Mr Shaik Emam seconded the adoption of the minutes.

Announcement

The Committee Secretary reminded Members about the meeting the following day with the Financial and Fiscal Commission at 09h00, who would also be briefing the Committee on the two bills.

The meeting was adjourned.

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