Workshop on Capacity in the Energy Sector

Meeting report

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This Report is a Contact Natural Resource Information Service
Taking Parliament to People, and People to Parliament
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The aim of this report is to summarise the main events at the meeting and identify the key role players. This report is not a verbatim transcript of proceedings.

MINERALS AND ENERGY PORTFOLIO COMMITTEE
4 September 2001
WORKSHOP ON CAPACITY IN THE ENERGY SECTOR

Chairperson: Mr D Nkosi

Documents handed out:
Research and Developmental Contribution to Policy Development (CSIR)
Presentation to Parliamentary Portfolio Committee on Minerals and Energy (Energy Sector Education Training Authority)
Energy Regulation (National Energy Regulator)
Human Resource Development Relating to the Nuclear Energy Council of South Africa (NECSA)
Future of Capacity Building in the Energy Sector - A Policy Analyst Viewpoint (Energy Development Research Council, University of Cape Town)
Increasing the Skills Pool in Southern Africa Petroleum Business (Vukani Petroleum and Energy Institute)
Workshop on Capacity in the Energy Sector – Outline
Capacity Building Workshop (Engen)
Energy Branch Capacity Building Projects (Department of Minerals and Energy)
[E-mail [email protected] for Documents]

SUMMARY
A workshop was organized for the Portfolio Committee on Minerals and Energy on capacity building in the energy sector. Presentations were made by academics, government departments and other parties. The workshop focused on increasing capacity within the South African energy sector and on the various programmes the different institutions had adopted in this regard. These programmes ranged from skills development and training through to empowerment and employment equity. Committee Members were given opportunities to comment and ask questions.

MINUTES
The Chairperson opened the meeting and invited the various presenters to proceed with their presentations.

Capacity Building Workshop
Mr Wright, Manager of Strategic Planning, Engen, stated that Engen’s vision was to be the leading integrated oil company in Africa and to be the supplier and partner of choice for government, communities, suppliers and employees.

Mr Wright defined capacity building as an integral part of empowerment and transformation. He pointed out that Engen had been using ownership, employment equity, skills development and procurement as part of their empowerment and transformation model. Engen’s internal target was to have a staff profile reflecting 50% of economically active persons in South Africa by the end of 2004. Mr Wright also highlighted that capacity building aspects involved traditional and new approaches applied both internally and externally. He stated that Engen’s internal culture promoted empowerment, employment equity, and career planning.

Mr Wright continued stating that Engen had entered innovative projects with other partners as they saw a need for industry capacity building locally and throughout Africa. Engen had provided seed money to launch the Vukani Petroleum and Energy Institute and had developed teams to assist "BEE SMMEs" to develop and enhance the skills needed to run their businesses. He continued by saying that Engen was a company with its origins in South Africa and that it was interested in participating in policy development focusing primarily on liquid fuels. Engen wished to explore a mechanism that could enable its competencies in the liquid fuel sector to be made available to the Committee, provided however that no conflict of interest arose. He said that this approach would allow Engen to make a more direct contribution to policy development. Mr Wright concluded stating that Engen believed they could provide access to international best practice, an independent view and an environment in which other stakeholders would be encouraged to participate constructively.

Mr D. Nkosi commented on the presentation stating that important issues in terms of funding were been raised. However, he stated that presently there was no official mechanism informing the Committee of funding being generated by companies within the sector.

Ms N. Mtsweni (ANC) asked Mr Wright if Engen publicised their bursary information to students.

Mr Wright responded by stating that they have the website where they publish the bursary
information or alternatively that students could apply through Cape Town or their regional
offices in Park Town.

Mr S.Mongwaketsi (ANC) asked if Engen assisted petrol attendants in gaining relevant
knowledge and training that could assist them in taking up employment in other sectors. He
also asked if Engen issued out any certificates of approval to the petrol attendants.

Mr Wright stated that he was not sure about the training that the petrol attendants received
got because he was not working directly with the service stations but he believed that there
was basic training offered. He was not sure if certificates were offered to petrol attendants but
would seek clarity on the issue.

Energy Branch Capacity Building Projects
Ms K. Lisa, Director of Renewable Energy, Department of Minerals and Energy (DME), proceeded by clarifying the history of the Energy Branch. She stated that the National Energy Council had been incorporated into DME in April 1992 and that it became the Energy Branch in 1997. The Energy Branch had a proposed new structure that consisted of five directorates known as Hydrocarbons, Electricity, Nuclear, Energy planning, and Economics and had increased its staff complement from 47 to 110 members. She stated that an Intern Programme, comprising of nine interns, had commenced with the aim of implementing the proposed new structure. Ms Lisa said that the Energy Branch was receiving assistance from Malaysia and various other institutions. Petronas had seconded a person to work on the Gas Masterplan for South Africa. Danced had similarly provided funding for ten persons to work on energy efficiency and the environment and Norad provided assistance by seconding persons to work on liquid fuels issues. Ms Lisa also mentioned that the Energy Branch had a strategy to empower historically disadvantaged South Africans in the petroleum sector and that this was essential given the fact that energy and the energy infrastructure was the backbone of the economy. She concluded by confirming that Energy Branch was geared to do capacity building and that several projects were already underway.

Mr J. Nash (ANC) asked Ms Lisa if there were still vacancies that needed to be filled.

Ms Lisa responded by stating that as the Energy Branch’s programmes expanded so would the employment opportunities.

Research and Developmental Contribution To Policy Development
Ms L. Mmutlana, Manager of Integrated Projects, CSIR, introduced her presentation by defining the goal of CSIR as to promote the development and use of energy through technological innovation in South Africa, Africa and selected international markets. Ms Mmutlana pointed out that the Minister of Mineral and Energy Affairs had expressed the need for the CSIR to play an important role in providing input during decision-making processes and information on the impact of various energy sources. Ms Mmutlana mentioned other areas where CSIR could add value in the energy sector. These were identified as strategic decision support in policy formulation and proactive planning technologies through modeling and simulation of energy systems, energy efficiency, energy and the environment, renewable energy and energy for rural development. Ms Mmutlana concluded stating that there were insufficient rural development funds and that the CSIR could play a more effective role in both policy and strategy formulation.

The Chairperson raised a concern that the presentation had focused on increasing co-ordination but that the lack of capacity within the industry could have a negative impact on this.

Mr Nash queried whether CSIR met with other organisations and departments to discuss and coordinate their efforts.

Ms Mmutlana responded stating that a CSIR representative had been to meet with Cabinet and they were awaiting feedback in this regard. She concluded stating that the CSIR were meeting with DME and the National Electricity Regulator regularly, and that they would shortly be meeting with Eskom.

Presentation to Parliamentary Portfolio Committee on Minerals and Energy
Mr S. Mapaya, from the Energy Sector Education Training Authority (ESETA), opened his presentation by pointing out that the Skill Development Act of 1999, the Skill Development Levies Act of 1999 and the SAQA Act of 1999 had given ESETA a mandate to develop a sector skills plan and establish quality assurance in education and training. Mr Mapaya mentioned that ESETA ensured that: the energy sector received quality education and training; providers were accredited; sector skill plans were developed and workplace skill plans were accepted or rejected. He also pointed out that ESETA had established regional committees and three regional offices with the aim of decentralising the education training development function. Mr Mapaya emphasized the need for ESETA and the DME to update regularly up-date each other on developments and to work together on identified projects. Examples he put forward in conclusion were the Danida Capacity Building Project and Energisation of Rural Areas.

Ms Mtsweni raised a concern that only those provinces in which regional offices had been established, would receive any benefit.

Mr Mapaya responded by stating that ESETA planned to establish regional offices in the other provinces in the future but that their present focus was the three provinces in which offices had already been established.

Mr Nkosi mentioned that the Committee would organise another workshop at which ESETA could elaborate on its activities relating to capacity building in the energy sector.

Future Of Capacity Building In The Energy Sector – A Policy Analyst Viewpoint
Mr H. Trollip, Postgraduate Director of the Energy and Development Studies Programme, University of Cape Town (UCT), addressed the Committee on the future of capacity building in the energy sector. He proceeded by stating that the country required capacity in the energy sector to improve the contribution of the petroleum sector to economic and development in South Africa. He pointed out that the capacity that was presently missing was policy analysis. Policy analysis meant using data and information on the energy sector to consider and determine overall social and economic goals. According to Mr Trollip, policy analysis did not mean discussions held in forums such as workshops, parliamentary portfolio committees or the media. This amounted to the debate. He went on to discuss the Norad Project and stated that it would produce the analysis to support policy development in the South African petroleum sector. This project would furthermore develop a pool of black and female South Africans with the analytical skills necessary for staffing the DME and other relevant institutions in the future. The Norad Project, which had been frozen in July 2000 but reopened in October 2000, was presently operating under DME’s micro-management. Mr Trollip stated that they had training courses in relation to energy policy and economics and had about 90 students presently enrolled. Ten further students were presently enrolled for their Masters Degree run by UCT. Mr Trollip concluded by stating that good policy analysis was the result of a process of open criticism, review and appropriate sustainable institutional capacity.
Mr G. Oliphant (A.N.C.) asked Mr Trollip what is the future of the Norad Project.
Mr Trollip responded by saying that although there was very little work presently approved he stated that there was little possibility of the project being frozen again.

Mr Mongwaketsi what amount of the R7m given to the project just prior to it being frozen in July 2000, was remaining.

Mr Trollip stated that about half of the R7m remained.

Increasing the Skills Pool in Southern Africa Petroleum Business
Mr V. Madlingozi, CEO of Vukani Petroleum Energy Institute, opened his presentation with an introduction of the Vukani Petroleum Energy Institute. He stated that Vukani was a worldwide corporate university that focused on the petroleum and energy sector. He said that the institute started in 1997 with Engen in the forefront. It was officially launched as an independent institute for the whole industry, in September 2000.

He stated that the key objectives of the Vukani Institute were the provision of: learning resource for petroleum, petrochemicals, gas and power generation for Africa; solutions to the energy needs of Africa in the 21^st century; resources for future partners; and a network of intellectual capital by consortium partnerships. He outlined the philosophy of Vukani as the establishment of the institute for the people of South Africa, placing them on a learning continuum from Adult Basic Education Training to Doctorate level.

Mr Madlingozi outlined the key teaching principles of the institute as succession planning, organisational performance, 80% of learning to occur within the work place, learners’ managers to be involved in facilitating and enhancing learning and all learning to be based on desired competence outcomes. He stated that Vukani offered courses under three programmes. He listed these as the Short Courses, the Executive Leadership Development Programmes and the Vukani Graduate Programme. He listed the partners of Vukani as the College for Petroleum Studies in Oxford, the Port Elizabeth Technikon, Morgan University Alliance, Saten in Canada, University of Port Elizabeth, the University of Technology and Petroleum in Malaysia and the French Institute of Petroleum.

The Chairperson commented that formalising experience through the issuing of qualification documentation was something that was not yet happening in South Africa.

Mr Oliphant, referring to the Minister’s announcement last year, asked whether Vukani had formed a partnership with Engen by sourcing 25% of its shareholding. He also wanted to know whether the studies offered by the Institute were offered only to oil managers or were they accessible to everyone who had an interest in them.

Mr Madlingozi responded by stating that Vukani was not a party to the 25% empowerment deal. Regarding the second question, he stated that people in the petroleum industry had attended the courses after having been identified by their companies. People who had just completed their university and technical studies were also eligible to attend.

Ms Mtsweni asked whether it was possible to design the structure of the courses in a flexible manner so that they could be presented to fit the schedules of Committee Members. She also wanted to know what impacts Vukani had made a year after its establishment.

Mr Madlingozi responded that it was difficult to change the current structure of the presentation of the courses because of the difficulty in coordinating the diaries of the course presenters who have other international commitments. He however said that an internet-based learning option, that included occasional group sessions, could accommodate participants who had busy schedules.

Energy Regulation
Dr S. Khoza, General Manager, National Energy Regulator (NER), began her presentation by stating that her input would examine and explore proposals on the issue of energy sector regulation in South Africa. She defined "regulation" as a process established by law that restricted or controlled some specific decisions made by an affected institution or body. She stated that regulation was about control of a business or sector of the economy for national gain. She offered some reasons why regulation was important. On economic grounds she argued that regulation was necessary to ensure that firms carried out their businesses efficiently and effectively. From a legal perspective she explained that regulation was important to ensure public safety and state expropriation rights. Regulations further allowed for the meeting of social objectives. She outlined the scope of regulation as covering: prices and tariffs; standards of service; quality of supply; health; environmental and safety standards; social and national objectives. Dr Khoza mentioned that the duties of regulators affected: prices; tariffs; rights of supply; quality of supply; safety standards; levels of service; entry of competitors; rules on capital investment; approvals of investment and rights of expropriation. Dr Khoza suggested a number of regulatory options. These included self- regulation, stakeholder regulation, state regulation and independent regulation. She proceeded to discuss the various options for regulating an industry and explained that regulation could be industry specific, sector specific or multi-sector. She also informed the Committee on the current regulatory structure in the South African energy sector. She stated that the electricity industry was regulated by the NER, the nuclear energy industry by the National Nuclear Regulator (NNR) and the liquid energy industry by the DME. The renewable sources industry however remained largely unregulated while the gas-coal industry was currently not regulated by any agency. Dr Khoza continued to discuss the advantages and disadvantages of combining regulators. She suggested that the advantages of combining regulators were that: resources would be shared; the risks of industry coverage, political capture and economic distortions would be reduced; and the blurring of industry boundaries would be dealt with effectively. The disadvantages she offered for a combined regulator were that: there would be a lack of industry specific expertise; all eggs would be placed in one basket; and that this option would only be appropriate for small economies.

In conclusion Dr Khoza suggested that regulation of the energy sector in South Africa was important as it provided certainty, contributed to a positive investment climate and promoted economic efficiency. She argued that the South African situation warranted the harmonization of regulatory models. She also reported that the National Electricity Regulator board had argued that it was the appropriate body to establish a single well-resourced regulator for the energy sector in South Africa.

The Chairman asked what programmes were in place at the NER to improve capacity and why the NER was accepting new responsibilities that were outside its immediate scope and done without defined budgets.

Mr Louw (ANC) asked how the NER came to the figures regarding the extent to which it should be financially and staff resourced by the government. He also wanted to know what the NER proposed as the best model for a regulatory structure in South Africa.

Dr Khoza responded by saying that she found it difficult to answer the Chairperson’s first question but that the NER found it difficult not to respond positively to the Minister’s requests for assistance on policy issues. In response to Mr Louw, she said that the NER had done an international bench marking exercise where they had determined what resources other regulators of a similar size needed, to fulfill their responsibilities effectively. She concluded by stating that the NER Board proposed the establishment of a single energy sector board for South Africa.

Human Resource Development Relating to the Nuclear Energy Council of South Africa (NECSA)

Mr M. Damane, acting Chief Executive Officer, NECSA, opened his presentation by stating that the development of human resources was an imperative thrust firmly embedded in NECSA’s vision to become a leading organisation which added value, on a sustainable basis, to the economic and social well being of citizens of South Africa. He also mentioned that NECSA saw human resource development in the energy industry to be linked to the expansion of the technology base in South Africa, enhancing the quality of life of people, enhancing the competitiveness of the nation and contributing to a national system of innovation that would ensure that South Africa was up to speed with global change. He outlined NECSA’s human resource strategy as a twofold approach. The internal focus of the strategy aimed at training and equipping employees to add value to NECSA whilst simultaneously enhancing the self worth and motivation of individuals. The external focus of the project aimed at training and educating neighbouring communities through various initiatives. Mr Damane went on to describe each of the initiatives in turn many of which focused on empowering and training persons from certain designated race groups.

The Young Professionals Development Programme, launched in collaboration with local universities, aimed at developing young NECSA staff in management, business and technological fields. The Mentorship Programme involved senior managers mentoring eighty protégées from designated groups. The NECSA Bursary Scheme entailed the education of sixty-five university and technikon students in the field of engineering, science and business management at an annual cost of R2.1m. Seventy percent of these students were from the race-designated group. The Pelindaba Skills Institute Trust, a 6700m² training centre, was managed by NECSA at a cost of R3.2m a year. The centre provided tertiary, technical and life skills training programmes for learner technicians and artisans, aimed at previously disadvantaged youth from rural and urban communities. NECSA also offered free mathematics and science tutorial assistance to secondary school students from around Pretoria at the Attridgeville Edu Centre. The MARST Programme, a formal alliance between NECSA and the University of the North West, provided on site lectures to MSc students by NECSA staff members and provided practical experience in the field of applied radiation technology. Twenty-five students had embarked on this programme. The Marshall Skills Programme was a one-year project launched in 1998, with the Premiers of the Eastern Cape and North West Provinces, and aimed at training 150 former marshals at the Pelindaba Skills Institute. The learners had obtained new skills in mechanical, motor, electrical, welding, plate work, food-technology and security areas. The Brits Training and Entrepreneurial Programme catered for the jobless people from the designated groups in the Brits area and the aim of the project was to empower the jobless with literacy and entrepreneurship skills. This programme had successfully trained more than 900 jobless people. The Ikageng Nursery School catered for the children of farm workers around Broederstroom and NECSA has purchased and donated a vehicle to the school to be used in the transportation of children between their homes and the school. NECSA was furthermore a key partner in the Sowetan Nation Building Project that focused on primary school teachers and teacher trainees. The aim of this project was to empower them to dispel the myth that surrounds mathematics and science to young people from the disadvantaged communities. NECSA furthermore acted as the national coordinator of the IAEA/AFRA Training Initiative. NECSA also occupied a designated seat on the Africa board of IAEA and was also on the board of the African Co-operative Agreement on Nuclear Science and Technology (AFRA). Mr Damane pointed out that the aim of the project was to provide support, training and development of human resources to African states in the field of nuclear science and technology. He concluded by stating that NECSA provided training workshops and lectures to members in the fields of nuclear science, radiation and technology aimed at socio-economic development.

The Chairperson asked what were the core activities of NECSA and which programmes specifically aimed at improving capacity at NECSA.

Mr Damane responded by stating that the Nuclear Energy Act talked about a nuclear energy industry but there was very little being done in this regard at NECSA. He added that the nuclear industry was going through a difficult period because a lot of money had been invested to build a nuclear energy plant to supply Eskom, but Eskom had reneged on the deal. The plant had had to be sold at a loss to the industry and the country.

Mr S. Louw (ANC) noted that the presentation was interesting and positive considering the negative report about nuclear energy in the press, especially on the issue of nuclear waste. He also stated that he found the news of the closure of Pelindaba disturbing and asked if there was no way of raising funds from the oil industry, to ensure its continuation.

Mr Damane stated that he felt it would be difficult to get funding from oil companies as they were the competition.

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Appendix 1