Department of Minerals & Energy: Skills Development Programme & Energy Affairs: briefings

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Meeting report

SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS
24 May 2006
DEPARTMENT OF MINERALS & ENERGY: SKILLS DEVELOPMENT PROGRAMME & ENERGY AFFAIRS: BRIEFINGS

Acting Chairperson:
Ms N Ntwanambi (ANC, Western Cape)

Documents Handed Out:
Director Generals Speech
Energy Strategic Plan 2006/7 and DME Skills and Development Program

SUMMARY
The Department of Minerals and Energy briefed the Committee on its skills development programme and general energy affairs. Topics covered included hydrocarbons and energy planning, the creation of a healthier, safer and cleaner environment and the implementation of the radioactive waste management policy and strategy.

Members were concerned about nuclear waste storage, secure electricity supply, the future use of nuclear power in SA and the gender imbalance in the Department’s overseas training programme.

MINUTES
Briefing by the Department of Minerals and Energy (DME)

Adv S Nogxina (Director-General) began by listing the challenges affecting the DME. These related to:
- Unanticipated growth, relative to a lack in infrastructure, which the DME was having trouble coping with.
- Black outs in the Western Cape were another challenge, necessitating assessments of both the internal and external environment in terms of which a focus for the future would be set.
- Oil prices were drastically affecting the energy sector because events in the international arena directly affected South Africa. This was so because South Africa was a price-taker, and so things that occurred in Iran and America would affect crude oil prices, which in turn affected South Africa.

In response to these challenges, the Director General stated that the energy sector must focus on the areas of:
1. Security and diversity of supply. Adv Nogxina argued that the security of energy supply and diversity would play an important role in the Accelerated and Shared Growth Initiative of South Africa (ASGISA). Plans would be put in place to ensure that there were measures to secure energy sources that would take the economy of South Africa into the future where everyone would share the benefits.
2. Hydro carbons and energy planning would also be good because the availability of long term and short term energy sources would be looked at together with other sources of both crude oil and bio energy resources. The plan would show energy sources available and those needed to be developed in the future. This would include looking at the Strategic Policy for both crude oil and petroleum products.

The Director General informed the Committee that the DME’s strategic stock entails the storage of crude oil which has to be beneficiated so that it becomes diesel or petrol before it can be beneficial to South Africa’s economy.

Governance of Cleaner, Healthier and Safer Environment.
To ensure that the governance for an improved environment was improved, the Director General suggested that the use of paraffin as a household energy for the poor be phased out. This was due to the fact that paraffin was the cause of fires which led to many people being left homeless. Alternative, safer and affordable energy sources would have to be made available, which is a challenge the DME would have to overcome.

Implementation of the Radioactive Waste and Management Policy and Strategy
The Radioactive Waste and Management Policy was approved in 2005 with what the Director General called the legitimacy of the public. He said that there was a plan for nuclear waste management because the DME had considered what would happen with regards to safety and management.

In 1999 the White Paper on Energy was adopted, and the DG told the Committee that the government in the past had taken a tentative position on energy, but now was the time for South Africa to clearly state its position with regards to nuclear power becoming a greater source of energy.

Hydrocarbons and Energy Planning
On the subject of hydrocarbons and energy, a five-year plan had been adopted where:
1. The implementation of the Petroleum Amendments Act would take place. The Act requires licensing of the manufacturing, marketing and retail of petroleum products, which in the past where not monitored by the state. In the past it had been self-regulatory, which caused a lot of problems. The Act is now operational and the licensing would begin in July 2006.
2. Low smoke fuels would be introduced to promote a healthier and safer environment.
3. Coal reserves and resources would be assessed and estimated, though it is believed that South Africa still had two hundred years of coal reserves, a reaffirmation of this would still need to be done.
4. A strategic stock policy is high on the agenda because it is important that there is security of supply in order to sustain various needs.
5. Base infrastructure is important to facilitate the plan on the diversification strategy. Gas agreements with Namibia and Mozambique, South Africa’s neighbors will be monitored.

For energy planning, the DMG will focus on the White Paper on Renewable Energy, which was approved by Cabinet in 2003. Fiscal support is being given to capital grants where the Minister of Finance said that there would be up to 40% of tax incentives. In 2005 the Minister’s task team was set up to focus on bio fuels strategy under the auspices of ASGISA, which from different departments would provide a key strategy development, of which each working group would be led by a relevant department. Investment and commercial projects where also being investigated, and would focus on the development of the second economy, as well as the development of an immediate market for bio fuels in the formal economy. Time lines stipulated that this was to be completed by June 2006, and presented to Cabinet in July 2006. October 2006 was the target for final approval.

Adv S Nogxina, when discussing nuclear energy, said that the Pebble Bed Modular Reactor (PBMR) was under the governance of the Department of Public Enterprises. The success of the PBMR would be crucial to ensuring the success of nuclear energy. The PBMR was awaiting a safety report and construction is expected to begin in 2007.

The problem of electricity black outs is due to distribution problems in both general and bulk supply, which mainly falls under municipalities. ESKOM ensured that a recovery plan was in place for winter, hence there being minimum interruption in electricity supply, and the government would also like to regulate electricity so that it can protect the consumers.

A short-term plan for electricity generation is based on ESKOM commissioning 8000 megawatts of electricity in the next six years, and the private sector would build an additional 1000 megawatts of electricity.

Mr T Maqubela, Chief Director: Nuclear (DME) addressed the Committee on nuclear power development. Mr Maqubela informed the Committee that there was sufficient storage available for nuclear waste. Nuclear waste could be reprocessed, stored below the earth surface or above in a facility. (Refer to Energy Strategic Plan 2006/7 and DME Skills and Development Program document).

Skills and Development Programme
In this second part of the DME`s presentation the Director general simply read from the presentation. (Refer to Energy Strategic Plan 2006/7 and DME Skills and Development Program document).

Discussion
Ms Ntwanambi advised the Director General that men must lead in the gender transformation process in order for it to be successful. She asked if DME had any persons acting in positions, and if there were, when they would be filled.

The Director General said that Mr G Mnguni DME Chief Director: Management Services and Skills Development led gender transformation. The acting posts were not available but were temporary positions because the occupants were away on study leave.

Ms M Temba (ANC, Mpumalanga) asked what the tasks to ensure security, supply and diversity were. She also asked about gender equality.

The Director General replied that the white paper decided that diversity of energy sources was the best route for South Africa, while keeping in mind that the country had vast reserves of coal. Agreements where also entered with Mozambique for Pande gas, ensuring security of supply.

Another member of the DME said that the DME’s restructuring was in line with the South African policy framework on gender equality. With regards to SAWIMA, monthly reports from the provinces were being received.

Mr N D Hendrickse (Western Cape) asked the Director General to unpack further the issue concerning penalties in the electricity sector. The DME was also asked if it had taken into consideration the estimated 6% growth in the economy. He also asked how private enterprises were being encouraged to use alternative energy and why there was a slow move towards the use of wind energy.

Adv S Nogxina replied that penalties were in place because the government’s primary interest was to make sure that the consumer was protected. If the government were to allow institutions to do their own thing, consumers might get shortchanged. The 6% economic growth had been taken into account because the DME has been working towards matching 2010 energy demand.. The Director General also included that the government saw itself as a facilitator in the production of bio fuels, hence it was assisting rural communities to grow crops that would be used in the future production of fuel. The introduction of new energy as well as the use of wind energy was slow because it was not feasible for the government to embark on using alternative energy when the technology was too expensive and the cost of converting the energy was also too high. This would hurt the pocket of the ordinary consumer the most, making the project a waste of time and money.

Mr J Sibiya (ANC, Limpopo) asked if the DME had taken note of nuclear disasters such as Chernobyl, and if nuclear power were to be used would SA have to start from scratch. He also asked why Camden power station had been decommissioned and if it would be re-commissioned at any stage.

Mr Maqubela answered that there was sufficient storage available for nuclear waste which was safe, reliable and there was no need for concern because of the quality storage facilities. He also discussed Atlantis power station saying that it would be operational in the winter of 2007 (Refer to Energy Strategic Plan 2006/7 and DME Skills and Development Program document).

Ms Ntwanambi asked the DME about a visit to the Koeberg nuclear power plant. Where was the waste being stored, and what would happen if people were to be resettled in the area where the waste was being taken? She also asked what was being done about asbestosis sufferers, and if anything was owed to them?

The Director General replied that the asbestosis case was the result of a court case where arrangements where made between the premiers of the Northern Cape and Limpopo province. A trust between the two was established in order to precede compensation.

Mr Maqubela said the disposed waste was in an engineered, concrete and reinforced facility. The storage was taking place in stable geology, in a sparsely populated area with minimal rainfall.

Mr Hendrickse asked about the skills development programme, inquiring if the DME had enough funding, if they were able to keep their qualified people, and if the DME had former employees who came back on a minimum four year contract.

The Director General said the Department had received R2.2 billion. The DME had tried to negotiate with the Universities abroad to have student taught in a certain way but the DME feared compromising the standards of the education. The students’ programme was for four years so the DME bound the students to serve the department for a minimum of four years.

Ms Temba asked what criteria were being used to recruit students from other provinces, and how can the DME change the fact that students felt overqualified to work for the DME after they returned from Malaysia.

Adv S Nogxina said that students where recruited from adverts in the newspapers for bursaries. The other challenge of skills leaving the DME was due to private companies striving to reach their equity targets which the government had set for them, and the private companies were willing to pay more than the government could afford so these issues would have to be addressed.

Ms S E Mabe (ANC, Free State) asked why there were 25 males and just 9 females in the programme. Were there no other females interested?

The Director General said that recruitment was based on Matric results and the challenge to this was that some provinces were not performing well causing the imbalance between male and female students. It was the poor Matric results in mathematics and science that prevented the students from qualifying to work for the DME.

The meeting was adjourned.

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