National Energy Bill: public hearings

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Mineral Resources and Energy

31 July 2008
Chairperson: Mr E Ngcobo (ANC) and Acting Chairperson: Mr O Monareng (ANC)
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Meeting Summary

Submissions were presented by the following interest groups: the Energy Intensive Users Group, Sustainable Energy Africa, the Centre for Applied Legal Studies together with Earthlife Africa Johannesburg and the National Union of Mineworkers (NUM) together with Cosatu. The EIUG pledged their support for the Bill but complained that the Bill made no provision for stakeholder input into energy policy formulation or energy planning. They also saw the National Energy Modelling and Information Agency as unnecessary and expensive.

Sustainable Energy Africa raised their concerns about the Bill not prioritising the needs of the people and access to information. Earthlife Africa and the Centre for Applied Legal Studies very much objected to the Bill on the basis that it would never be effectively implemented if the Bill did not detail exactly how it would go about developing renewable energy sources, since the cost of electricity generation currently did not consider the external cost to the people and the environment. They considered the Bill stemmed from a commercial and rather short-sighted approach rather than a people and environment-led approach. Resources were dwindling at an alarming rate and this made financing the development of renewable energy sources imperative and should be enshrined in the Bill. Emotions ran fairly high during the presentations of Earthlife Africa and the Centre for Applied Legal Studies since umbrage was taken to the accusations that the Bill did not consider the fate and needs of the “poorest of the poor”.

The objections brought forward by NUM centred round the inadequacies of Eskom to meet energy needs and the squandering of twenty billion for nuclear technology which thus far had gone nowhere and which instead should have been used to provide real energy solutions to a country suffering from the crippling effects of energy blackouts. Cosatu objected to the establishment of the agencies proposed in the Bill, stating that such strategic and vital functions should be managed from within government. 

Meeting report

Energy Intensive Users Group (EIUG) submission
Mr Ian Langridge, EIUG Deputy Chairperson, said that EIUG, an association of thirty five of South Africa’s largest energy users that consumed over 40% of the total electricity produced in South Africa, saw the Bill as a strategic pillar for the economic development of South Africa. However, they noted with concern that the Bill made no provision for stakeholder input into energy policy formulation or energy planning.

There was no mention of the National Energy Regulator of South Africa (NERSA), in the Bill, which one would have expected as they have a role in collecting energy data so that they can judge whether any application is in the public interest. Additionally, EIUG did not see the need for a separate (and presumably, expensive) National Energy Modelling and Information Agency (NEMIA).

They supported the concept of integrated energy planning, but recommended that the Bill make provision for suitable structures to be enabled, and that private stakeholder input be sought on this. In addition, the Master Plan should also account for economic development. These comments were followed up with specific proposals for amendments.

Mr J Combrink (ANC) asked for clarity about the inclusion of the Ministry of Transport.

Mr Langridge said with the taxi recapitalization programme, the proportion of diesel to petrol usage would change from 50/50 to 60/40, which would have a significant impact on industry in the supply of diesel and petrol. The Ministry of Transport was therefore a stakeholder. The working group should look at the effects of this fuel variation.

Mr Monareng asked whether NERSA was redundant.

Mr Langridge said NERSA should be unaffected by politics and should be a regulatory body. There were cross border components involved. NERSA needed to collect and audit data and could not do so if it did not have a proper audit trail.

Mr Monareng said the role of regulation would remain with NERSA although there could be some overlap.  Strategic planning and coordination of energy security were still subject to rules laid down by NERSA.

Mr Langridge said that impartial institutes like StatsSA should gather raw data. The Energy Security Model was a good model. Presently three sets of data were being gathered whereas only one was required.

Mr Monareng said other legislation already addressed National Energy Security for the future. The Bill was simply an interface of all other Bills and legislation on gas, oil and electricity. The Bill brought them all together.

Mr Langridge said that the Bill should not replace or cancel the good of previous legislation.

Mr Monareng said that it reinforced these.

Mr Langridge said the stakeholders were concerned about highlighting the gaps.

Mr Ngcobo said in the previous days they had dealt with the definition of “energy” and the confusion around “crude oil”. The definition of energy was all encompassing. He thanked the EIUG for their submission.

Sustainable Energy Africa (SEA) submission
Mr Sivuyile Maboda, SEA Project Coordinator, explained that they were a non-profit organisation that promoted sustainable energy development, with a particular focus on city energy planning in South Africa and Southern Africa. He said the objectives of the Bill did not directly speak to issues of poverty, environment and access.

Ms Megan Euston Brown, SEA Project Manager, said they welcomed the clause which provided for the universal access to energy as a constitutional right in Clause 5(1). They asked for the insertion of the words “energy services” in this clause. Section 5(2)(b) should be changed to refer to the “equitable sharing of resources among all residents of South Africa”.

The Bill stated that an optimisation model would be used. This considered only one scenario. It was suggested that other scenarios also be included in the Bill. Energy green houses should be a vital part of the ongoing task of housing the nation and the Department needed to play a role in this. The Bill should provide for access to information of energy in the cities and similarly the energy welfare of people living in informal settlements should be gathered and made available. Referring to Chapter 4 of the Bill on Integrated Energy Planning, Ms Euston Brown said that the approach should be more demand based and that the Master Plan should be made clear as per the 2004 draft Bill. They welcomed the establishment of the two new institutions of SANEDI and NEMIA, but were concerned about capacitating them adequately.

Mr Monareng said the Bill clearly stated its objective to provide uninterrupted supply to the Republic, whether, rich or poor. Despite the discussion around providing for the poor, it had to be remembered that theirs was a capitalistic model of government.

Mr Ngobo appealed to members to attend public hearings from the beginning of the process. Issues around modelling had been discussed already. The Bill did not want to go into detail in this regard as it would have to stand for a long time. There were many different kinds of scenario models.

Mr Monareng said informal settlements were not recognised by the law and as such could not really be accounted for in the provision of energy welfare. When such an area was taken on, various basic services had to be established.

Mr Ngcobo said cities had abused their mandate. This would have to be looked at again.

Ms Euston Brown said while the Bill unequivocally stated its intention to provide uninterrupted energy supply to the Republic, the primary determinant should be the needs of the people. This did not exclude energy security. There should be real emphasis on development. The question of informal settlements was a complex one and, while they were not legal, they were still a reality and the government should have information in this regard. Cities may be abusing their power but they accounted for almost 50% of energy usage in the country. These sites should be managed through liaison between the national entities and the cities. This should be stated in the Bill.

Mr Molefe (ANC) commented that developed countries could afford the luxury of looking after the environment.

Ms N Mathibela (ANC) asked if the references to informal settlements also took into account those living close to water and the risks of flooding.

Ms Euston Brown said that there were external costs to both humans and the environment when it came to unsustainable forms of energy and that usually the poor suffered these effects the most, since they were in a more vulnerable position. This measurement of externalities should be taken seriously and energy sources which could provide heat and mobility, had to be created. The problem was complex and the modelling agency should do this by considering all the variables and by aiming for equity in the distribution of those resources. The government had led with a substantial electrification programme, but there were still many whose needs had not been met in this regard. Information was needed to look at other sources of energy.

Mr Monareng said it was always the government’s aim to reach the poor.

Dr R Rabinowitz (IFP) asked whether information was available on the comparative costs of alternative forms of energy. She said it was sometimes difficult to change the mindset of people when it came to changing their energy-using habits.

Mr Ngcobo said the Bill aimed to enhance three things: human and finance capital and technology. These would go a long way towards alleviating poverty. The Bill was far reaching and progressive.

Ms Euston Brown said information on the availability of choices should be made available and that NEMIA could provide this information. The field of energy was a rapidly changing landscape. High energy users as well as low energy users might be resistant to new forms of energy, but government could mainstream such changes.

Centre for Applied Legal Studies and Earthlife Africa Johannesburg submission
Ms Kgomotso Lekalakala said the ELA acknowledged the objective set by the Bill, but was concerned that it seemed profit-driven rather than considering the needs of the people and specifically the needs of the poor. The affordable access to energy should be a primary aim of the Bill and the provision of safe substitutes for coal and paraffin should be included in this endeavour. This also included the provision of adequate housing and environmental protection as a right for all citizens. The risk of fires from the burning of wood and paraffin presented real risks and dangers which affected many and had which had not been addressed specifically in the Bill. She said ELA would like to see that RDP houses were constructed with a choice of alternate energy sources, as electricity was currently the only choice. The National Energy Modelling and Information Agency (NEMIA) should analyse the risks to health that current forms of energy were causing. The reference to market-related salaries should be taken out of the Bill, as well as the inclusion of oil and electricity representatives onto the board.

She said the Bill was not explicit enough on how exactly it would provide affordable energy sources. She said the Constitution stated the right for a protected environment and the protection of the environment should remain a priority in any endeavour. Citizens had a right to heating and housing which was safe and affordable. These basic rights were part of a country that called itself democratic and was working towards positive development. The composition of the board of SANEDI was a cause for concern as the self interest of the oil industry could only be served by allowing representatives from this industry onto the board.

Mr Monareng said objections should concentrate on specifics in the Bill. The loaded statements made were a direct indictment on Members of Parliament in claiming that they did not have the primary interest of the poor at heart.

Mr Ngcobo said the Bill embraced everyone and took the needs of the poor to the front.

Mr Combrink (ANC) said that the Bill had aimed at bringing all interest groups in the sector together. He did not understand then how they could possibly exclude representatives of the mineral and oil industries. He commented that electricity in its current form was still the cheapest. Solar power was not and therefore could not be installed in every house. Skills were going overseas because of more lucrative packages and therefore the clause referring to paying market-related salaries had attempted to obviate this to some extent.

Mr Molefe said the presentation made by the Department had made it clear that poverty alleviation and provision of energy at affordable prices were a priority. It was unfortunate that the presenters had not been present at this presentation.

Ms Mathibela (ANC) asked for suggestions in providing energy for the poor as electricity was still the cheapest.

Dr R Rabinowitz (IFP) said she sympathised with the perspectives put forward and asked for substantial ways to support the environment in cost effective ways. She asked who would take up the function of developing sustainable energy needs if they did away with SANEDI. She commented that it was not practical to state specific targets in the Bill as these would change over time. She asked what suggestions could be made about the building of environmentally and energy friendly houses.
Mr Ngcobo said several issues had already been dealt with the previous day, such as that of paraffin, the definition of energy efficiency and the matter of SANEDI versus SANERI. The matter of the board composition had also been addressed at length. He said it did not help matters when submissions were made in an emotional or militant style and that this was typical of single interest groups and quite understandable. He accepted that the points made were valid and repeated his appeal to attend all the hearings in order to gain a more informed perspective. Information provided by the DME had clearly mapped out the interfaces between the various pieces of legislation.

Mr Monareng said that the National Energy Bill could not include the possibility of providing every household with a choice of preferable energy sources as the current budget for providing houses with energy had already gone up from R15 000 to R20 000. He said the ANC had resolved to practice a policy of  “Batho Pele” which meant “people first”. They practised a bottom up approach.

Ms Lekalakala said she took offence to the lack of respect she had been shown by members. She had not been afforded access to the information that Mr Ngcobo had referred to, otherwise they might have been better prepared. Neither did it dissolve the remaining needs of people on the ground and the concerns they had with regard to the practical implementation of the Bill. Citizens had the right to make a presentation and to be heard. The current form of electricity may seem to be the cheapest at present, but no account had been taken of the methods used to generate this form of electricity, whether through coal or nuclear power and the external costs that these methods carried with them. The Bill of Rights clearly stated that each act or policy should be to the benefit of the people. The people were currently struggling with a 45% rate of unemployment and many other forms of deprivation, which meant they were not in a position to access a host of services.

Mr Tristen Taylor, Energy Policy Officer: Earthlife Africa, questioned the need for the proposed agencies as the modelling belonged within the ambit of the Department. The Bill gave sweeping powers to the Minister, and as per section 6(1)(b), to do so even outside the parameters of this sector. The strategic stockpiling of oil for even two days was costing the country, and consequently the taxpayer, huge amounts of money and the government seemed dead set on privatisation of functions which belonged squarely within the responsibilities of the Department. The coal and oil industries were similarly single interest groups who had only their own benefit at heart and therefore could not be given voting powers. This indicated a blatant and simple conflict of interest. Input from these industries should be allowed but no more than that.

Regarding the repeated claims that electricity was still the cheapest from of energy available, Mr Taylor stated that in a relatively short period of time the increase in the cost of fossil fuels would make renewable energy sources comparatively cheap and that it was incredibly short sighted not to take cognisance of this fact and to take appropriate action. The DME had delayed a commission investigating this very issue for no apparent reason. Furthermore, if the externalized cost of electricity were to be factored into the cost of electricity, the actual cost of this source of energy would be double what it is perceived as presently. He said the White Paper had been largely ignored and unless it became law of the land this would continue. Regarding the point made on deleting statements made in the Bill on paying market-related salaries, he said such details did not belong in a Bill for actual legislation.

Mr Taylor said that the establishment of agencies were seen by many as a so-called “parachute” for ANC politicians to land up in if the coming elections found them without employment. While this might not be true, the perception nonetheless did not create a favourable attitude towards the creation of further agencies. The DME would not give them a copy of the draft Bill and they had only three weeks to compile their objections once the Bill had been introduced into Parliament. This had been insufficient time since they had to consult with various community-based organizations. It was their contention that the right to housing should go hand in hand with the right to electricity and while there was a free-based electricity system at present it did not take into regard the universal right to a clean environment as a result of the methods currently being used to generate that electricity. There certainly were renewable energy sources available and on the horizon to take over from the dirty and essentially unsustainable fossil fuelled power being used at present. While they were not robust enough at present to take over the entire power grid, a plan should be made and targets should be set in order to make them so, by a schedule of methodical and determined development. A target of 15% of the power grid by 2020 and 50% by 2050 were attainable, if, and only if, these goals were stated and detailed in the Bill. Until these considerations were included in the Bill, it was their contention that the government was setting foot on a deluded path. Resources were dwindling at an alarming rate and minerals like zinc were barely available on the open market. Oil would reach a price of $200 in the foreseeable future, which would drag the prices of coal and other resources up with it. This made financing the development of renewable energy sources imperative and should be enshrined in the Bill. He stated that they did not really represent a single-interest group, since they were a pro-poor and pro-environment group.

Mr Monareng said that the Committee would read the document presented by Mr Taylor and apologized for any offence caused and asked if they could put aside personal emotions in favour of the more important issues at hand.

Mr Ngcobo said that certain procedures had to prevail. Public hearings had to be advertised in the media a month beforehand. The relevant documents had been distributed. The Bill of Rights did not override these procedures. The environment represented a single interest group with perceived conceptions that Parliament was not listening. The Bill clearly stated its aim to develop an economically viable renewable energy through emphasis on human capital, finance capital and technology, of which the latter was the most important. Progress had been made in this field in dealing with radioactive materials and much progress also on the limiting of carbon emissions in the burning of fossil fuels. There was no telling what the future developments in technology could achieve in these industries. A nuclear power station in Birmingham had been decommissioned and had been made completely non-radioactive. The Bill was versatile enough to respond to the changing times.

Mr S Louw (ANC) asked for more clarity on the statement made regarding a parachute for ANC members.

Adv H Schmidt (DA) said that the Bill was an overarching structure which would provide for adaption of the necessary entities underneath. He had not yet seen a renewable energy source which could come close to providing for the needs of the country, as the recent tenders showed that a mere 5000 Mega Watts could possibly be provided for by renewable energy sources.

Mr Taylor said that this was a perception out there, which was not necessarily true. He said that access to information might pose a problem since certain information regarding energy would be commercial and already the forward pricing of Eskom was inaccessible information. He said the Centre for Applied Legal Studies did not really challenge the objectives of the Bill but felt the details to be inappropriate and that the Bill was destined to fail on implementation, which could be construed as the government not really caring for the masses.

National Union of Mineworkers (NUM) and Cosatu.submission
The Treasurer of NUM, Derek Elbrecht, referred to the White Paper of 1998, which had not dealt with critical outstanding issues and which had been withdrawn through pressure in 2006. He said that when the Bill was tabled in 2008 it had not been through a sufficient process of consultation in the sector. He then turned to what he referred to as the perceived energy crisis in the country. The so-called bolt incident at the Koeberg Power Station had highlighted this crisis resulting in rolling blackouts, with several far reaching and negative consequences such as a negative effect on economy growth. A positive effect was the realization of a disintegrating energy sector in the country. When Unit 1 had to shut down recently, however, we did not experience the same extreme results. Mr Elbrecht questioned how it was possible to have maintained almost uninterrupted supply during the highest consumption months of June and July this year when during the summer months the interruptions in supply were chronic. He asked what had changed to bring about this state of affairs. He could not understand how managers and political decision-makers in this sector, who were learned and experienced, could have failed to predict the increase in supply demand over the last few years and had allowed the near crash of the national power grid in January 2008. Black Friday would be remembered in the mining sector and had resulted in some 5000 mineworkers losing jobs over a period of five days. The loss of these jobs had repercussions on families in the rural areas who were dependent on the income of those mineworkers. The construction sector had been negatively affected as well. Mr Elbrecht said Eskom had displayed poor leadership and planning in assuring energy supply. The government continued to support a proven redundant technology. An amount of R6 billion rand had been allocated to the development of a Nuclear Pebble Reactor and costs had escalated to R20 billion. There was still no proof that this technology worked and the similar development of reactors elsewhere had shown hopelessly overrun budgets. He said that we needed to exploit our resources like wind, sun, coal and biomass through turnkey solutions. The government had to scrap the Pebble Bed Modular Reactor (PBMR) project.

Mr Fred Gona from Cosatu said that the White Paper of 1998 reflected macro-economic policies in alignment with GEAR. This position marked a shift from the RDP policy of 1994 and was a fundamental ideological shift in term of development of energy and its commercialization. A policy review was needed. The current system of providing free basic electricity was insufficient as it only provided 50kw per month. This did not address the issue of poverty. The amount should be doubled at least. Cosatu was adamantly opposed to the proposed establishment of further entities, which if similar to Eskom and NERSA, would only turn to profit making agendas. He said NERSA should be answerable to government. The money squandered on the PBMR project could have been used to provide housing. The state should intervene and take over these functions and other existing agencies should reintegrate with the government. The NEMIA should also be a function of government. Policies regarding renewable energy sources should be the responsibility of the DME and not universities. He said fourteen years of democracy had seen the rise of poverty and unemployment. He stated that there was a crisis between DME and the Department of Public Enterprises (DPE) at present.

Mr Ngcobo said SANERI would incorporate into SANEDI. He asked for the information on budget overruns. He said a recent announcement by the German institute NULICH, which was a nuclear research centre in Germany stated that the nuclear pebble technology had failed and was being dissolved into another institute. He asked what information Cosatu could provide regarding the situation between DME and DPE. He said the Bill must enshrine the right of the poor to have access to energy.

Mr Gona said the competition between DME and DPE was based on conflicting policy directions. Eskom took full advantage of this situation and referred to whichever department when it suited them. The DME was responsible for the development of policy for energy and yet the DPE was deeply involved in policy planning for nuclear based energy. One needed the alignment of public entities.

Mr Elbrect showed a slide on budget overruns which revealed percentages from 2005 and 300% overrun on projects for nuclear pebble reactors in countries like Japan and Sweden. Another slide showed that industry paid the least for their energy consumption and that households and the agricultural sector subsidized this sector. Transport was almost paying double for their energy needs.

The meeting was adjourned.

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