National Energy Regulator Bill: Department briefing

Meeting report

ECONOMIC AND FOREIGN AFFAIRS SELECT COMMITTEE
16 September 2004
NATIONAL ENERGY REGULATOR BILL: DEPARTMENT BRIEFING

Acting Chairperson: Ms P Themba (ANC)[Mpumalanga)

Document handed out:
Department of Minerals and Energy presentation on the National Energy Regulator Bill

Relevant Document:
National Energy Regulator Bill [B 9B-2004]

SUMMARY
The Committee was briefed by the Department of Minerals and Energy on the National Energy Regulator Bill. The Bill had been referred to the Committee by the National Assembly in terms of Section 75(1) of the Constitution. Among other matters, the Committee discussed the future translation of the Bill into other official languages; the composition of the regulator; the role of the CEO versus that of the other Regulators; the future of the principal Acts which had been amalgamated by the Bill and the meaning of the terms "dishonesty" and "conflict of interest".

MINUTES
The Chairperson said that Members should note that they would only be briefed by the Department on the Bill and the discussion would take place at a later date.

Department of Minerals and Energy presentation on the National Energy Regulator Bill
Mr N Gumede (Chief Director: Hydrocarbons) took the Committee through the presentation, noting that it should be borne in mind that this Bill does not propose a new Act but simply amalgamates already existing Acts. This is the reason why public hearings were never held. The rationale to amalgamate the regulatory bodies created by the Electricity Act, the Gas Act and the Petroleum Pipelines Act into a single Multi-Sector Regulator came after the Cabinet raised concerns, amongst others, with regard to the proliferation of state entities and South Africa's shortage in skilled regulators. Going through the Bill's structure, he said that Members should bear in mind that there are some changes that were effected by the Portfolio Committee on Minerals and Energy and other relevant stakeholders to the original Bill tabled before Parliament (see presentation).

Discussion
Mr D Gamede (ANC)[KwaZulu-Natal] appreciated the fact that the Bill has been translated in Zulu, but nonetheless asked whether the Department intends to translate it into other official languages as well.

Mr Gumede responded in the affirmative, noting that it is required that a Bill should go through Parliament written in one official language and translated into another one. It should however be noted that this process does not necessarily prohibit a future translation of the Bill into other official languages.

Mr Gamede (ANC), being concerned that the part-time regulators may outvote the full-time regulators on crucial issues, notwithstanding the fact that the latter deal with the day to day business of the entity, asked for the rationale in having part-time regulators in the majority.

In his response, Mr Gumede acknowledged such a possibility but however contended that having non-executive regulators in the majority would balance the Regulator and give it more independence. He said the power that full-time Members usually enjoy over part-time ones should not be overlooked, noting that they could easily decide to manipulate information. In order to ensure that those who run the day-to-day business of the entity are held accountable, it is necessary to have more "outsiders" in the board to "interrogate" the executive actions.

Mr J Sibiya (ANC)[Limpopo], viewing the CEO as an accounting officer, asked whether the Bill exempted the CEO from accounting responsibilities as the other three full-time regulators would not be reporting to the CEO but to the Regulator.

Mr Gumede responded that since the National Energy Regulator would not be a company but a simple regulator, its CEO would only be responsible for the entity's secretariat and nothing more. He noted that the responsibility to implement the law would lie with the Regulator itself and as a juristic institution would be the accounting officer and not just one individual.

Mr Gamede (ANC), recognising that the National Energy Regulator would not be a company but an amalgamation of the three energy regulators, asked what would happen to the present National Electricity Regulator which is a company.

Mr Gumede said that it should be noted that the National Electricity Regulator was established to be a regulator, notwithstanding the fact that it was created and operated as a company. With that in mind, it became necessary for the legislature to intervene to ensure that decisions and regulation of the entity is done by people with a ministerial political mandate and not the secretariat who happen to be just mere professionals. Therefore all the assets and liabilities of this old structure would have to be transferred to the new entity, which would operate as a juristic entity and not a company.

The Chair asked about the status of the three Acts after being amalgamated into the National Energy Regulator Bill.

Mr Gumede responded that the Bill does not necessarily repeal the existing Acts in their entirety but only those aspects of the Acts which deal with the establishment of the regulating authority of these entities. This therefore means that the essence of the Acts, themselves, still remain intact and in operation.

Mr D Mkono (ANC)[Eastern Cape] asked how the regulator would deal with those aspects that were not covered in the Bill such as health and safety after noting that the Bill only covered administrative aspects of the regulatory authority.

In response, Mr Gumede said it should be borne in mind that the Bill creates an economic regulator and nothing more, just like in the case of the Competition Commission. This therefore means all those aspects not covered in the Bill would be dealt with by other Acts such as the Occupational Health and Safety Act.

As the Bill does not define the term "dishonesty", Mr Gamede (ANC) asked the Department to elaborate.

Mr A Kinley (State Law Advisor) referred the Committee to the provisions of Clause 6(1)(c) and (d) which deals with two scenarios, noting that the first is most important in this regard. This deals with the exclusion of someone to be a regulator if s/he has, during the last ten years, been convicted of a crime involving dishonesty, such as theft, robbery, fraud and their statutory versions as defined by South African courts.

Mr Z Kolweni (ANC)[North-West] asked the Department to explain what is meant when it is said that a Member should terminate conflicts of interest.

Mr Gumede responded that the provisions of Clause 6(3) are very explicit on this matter since no one should be allowed to benefit from the same industry in which s/he is a board Member as that could amount to a conflict of interest. Hence the law requires someone who has been appointed as a part-time Member to declare such interest while a full-time Member is required to terminate the interest upon appointment.

Mr Kolweni (ANC) asked whether there would be any cost implications in the implementation of the Bill.

Mr Gumede responded that the Bill would definitely reduce the cost of regulation as one body would administer all energy regulation.

The Chair noted that there were no further question or comments from the Members and took the opportunity to thank the Department for its presentation noting that it would assist Members in preparation for deliberations on the Bill.

The meeting was adjourned.