Department Response to Public Comments on National Energy Bill

Meeting report

Mr Nhlanhla Gumede, Deputy Director General: Hydrocarbons and Energy Planning, presented the DME’s response to stakeholder comments. He noted that it was not his intention to respond to detail but rather to facilitate engagement. He admitted that better engagement prior to the parliamentary process would have been useful. The only new change in the introduced Bill was the deletion of an advisory committee and the addition of an energy modeling competency. The point was however made that during the 2003/2004 process on the draft Bill there had been extensive engagement. He maintained that the wording in the introduced Bill had been improved a great deal and that there had been no dramatic departure from what had been originally contained in the 2004 draft Bill.

He noted that most of the submissions had been very useful. There had however been a misunderstanding about energy security, that is, the role of energy modeling and planning. He emphasized that energy modeling and planning remained a function of the DME. Key stakeholders did not understand that energy planning was policy making. Planning was about choices and therefore planning was no different from policy choices when strategies were developed. The Bill had been withdrawn in 2006 in order to effect changes to it. Fuel shortages at the time had meant that there was a need for a shift in focus.

The focus now was largely on energy security. The Bill did not intend replacing other pieces of legislation. The Bill was essentially forward looking and about the future. Mr Gumede said that the energy security framework was the premise of the DME’s operations. The framework was such that energy security was impacted upon by a host of factors such as energy research, demand management, diversity of supply, local production, and foreign policy. The briefing on the Bill had been illustrative of the energy security framework. He said that the issue was about affordability but people tended to think it was about price tariffs. He noted that it was not about setting tariffs. Affordability was not about setting tariffs.

Mr Gumede continued by providing the Committee with a breakdown of the energy legislative value chain. The chain consisted of the formulation of policy which led to draft legislation. Thereafter the legislation was operationalised and implemented. The last step would be to review the policy and legislation. The Committee was given a systematic breakdown of each step.

Mr Gumede then pointed out what the role was of the DME and the National Energy Regulator of SA (NERSA) in the value chain. The policy formulation and drafting of legislation was a DME function. The operationalisation of legislation was a once off step and was largely outsourced to consultants. He noted that entities were often created for the specific implementation of legislation and that NERSA sometimes played a role in implementation.

He explained that NERSA had been created from three separate laws: the Electricity Regulation Act, Gas Act and Petroleum Pipelines Act. The intention had been to truncate all entities that had been created for the purposes of regulation. NERSA would take over regulation of all three Acts. The specific functions of NERSA in terms of each Act were listed. NERSA could therefore only act within the scope of these functions. He provided a schematic diagram of an energy regulation map in order to identify NERSA’s role in regulation. NERSA’s role essentially started at transformation and continued into logistics and wholesaling.

Mr Gumede said that many comments received had alluded to the fact that the energy space was big and that the role of agencies like NERSA would overlap. He emphasized that there was no overlap and that the functions of agencies like NERSA were very specific. Specific mention was made that planning in as far as electricity was concerned was a government function and not a NERSA function.

Mr Gumede proceeded with specific comments made by stakeholders and what the DME’s response to those comments were. NERSA, ESKOM, Paraffin Safety Association of SA, ERC, Energy Intensive Users Group, Petrosa, Sustainable Energy Africa, Chamber of Mines, SA National Energy Research Institute, SA Renewable Energy Working Group, For a Safe Tomorrow, Earthlife, COSATU and NUM were stakeholders whose comments the DME had responded (see DME response document).

Mr Gumede said that prior to the commencement of this meeting, there had been a working group sitting made up of members of the Committee, the DME and Nedlac. Nedlac had wished to comment on the Bill and a document containing such comments would be submitted in due course. He made the point that there was no specific requirement that Bills needed to pass through Nedlac.

The Chair asked Nedlac if it had any comments that it wished to make.

Mr Herbert Mkhize (Nedlac Executive Director) said that any labour legislation or legislation calling for socio-economic policy change had to be tabled in Nedlac. He pointed out that protocols were in place and that four government departments served on Nedlac. The DME was however not one of those departments.

The Chair stated that socio-economic policy change was broad. Mr Ncgobo felt it better if Nedlac themselves identified the Bills they wished to comment on. The Chair said that a mechanism to facilitate the process was needed.

Mr Mkhize agreed.

Mr Gumede also agreed that such a mechanism was needed as the intention was to obtain as much stakeholder input as possible. He noted that the next step would be to find a way of incorporating the inputs of the Nedlac report.

Mr Mkhize said that the report would be finalized by 6 August 2008 and would be forwarded to the DME and the Committee. He noted that Nedlac and the DME had already agreed upon what changes had to be effected to the Bill.

The Chair noted that the process could go forward once the report from Nedlac had been received.

Mr Mathlaba (ANC) noted that the DME had stated that there had been extensive consultation on the draft Bill in 2004. He asked whether it was correct to say that the consultations that had taken place at present was on work done in 2004. Or was it markedly different and hence the need for public hearings. He also pointed out that the Committee had not been privy to the Nedlac submission that had been made to the DME. He felt that consultation with Nedlac should have been done prior to the Bill coming to Parliament.

Mr Gumede responded that if the DME could have done the consultation process differently to what it had done, it would have. This was besides the fact that the changes to the Bill were not that substantial. It would have been preferable not to have used the parliamentary process for the stakeholder consultation process. He reiterated that the changes to the Bill from what it had been previously had not been that substantial. The intention of DME had always been to consult with stakeholders as widely as possible. If the DME could, it would.

Mr Gumede referred to the submission made by Nedlac and said that the comments were not that different from those that were made by other stakeholders. He pointed out that most of the stakeholders that had made comments were members of Nedlac. However, there were comments received that were different from that of Nedlac. The awaited Nedlac report would therefore hold no real surprises. If however there were significant changes called for in the Bill by the Nedlac report, the Committee would have to deal with the matter.

The Chair referred to the committee programme and said that Committee meetings had been scheduled for 6 and 7 August 2008.

Ms B Tinto (ANC) suggested that the Committee postpone meetings up until the following week so that members could have the opportunity to peruse the Nedlac report properly.

The Committee agreed.

The meeting was adjourned.