Public Enterprises Committee Business Plan; Department’s Jurisdiction on Energy Matters

Meeting report

PUBLIC ENTERPRISES PORTFOLIO COMMITTEE
18 August 2004
COMMITTEE BUSINESS PLAN; DEPARTMENT’S JURISDICTION ON ENERGY MATTERS

Chairperson: Mr B Martins (ANC)

Documents handed out:
Committee Budget Summary
Committee Business Plan 2005-2006
Detailed Committee Account Plan (not available at meeting)

SUMMARY
The Committee’s ‘Business Plan 2005-2006’ and the ‘Budget Summary’ were discussed. Members were invited to send the Chairperson amendments, which would be discussed at the next meeting. The Chairperson was unhappy with the ‘Detailed Account Plan’ which was sent back for re-writing.

The Department of Public Enterprises (DPE) engaged Members about its jurisdiction in energy matters The Department of Minerals and Energy was held responsible for drawing up the plans for South Africa’s energy supply, while DPE was responsible for ensuring that ESKOM, a government-owned public entity, complied with these plans.

MINUTES
The Chairperson read through the first draft of the Committee’s Business Plan for 2005-2006. He said they did not have the technical expertise to write the five-year plan. To write an effective plan, the Department needed to tell the Committee what their plans were for the next five years. It was agreed that amendments to the plan would be submitted to the Chairperson by 24 August 2004 at 12pm. These would be discussed at the meeting on 25 August 2004.

Mr S Manie (ANC) said that in the business plan the guiding principles needed to be dealing with poverty and unemployment.

Mr H Bekker (IFP) said there needed to be an indication from Parliament on what was expected from the business plan. He suggested that there should be three different budgetary categories. There needed to be a total figure given so that they could work towards this. It was much more difficult as they were not given broad outlines.

The Chairperson said he would raise these points at the Chairpersons’ Forum.

The Chairperson read out the Budget Summary. With regard to foreign study tours there was a need to visit countries similar to South Africa. All committees did not have the same budgetary requirements. At the moment committees were given roughly the same budget.

The Chairperson said that the Detailed Account Plan was a very difficult document. The Chairperson did not sanction this document. The document was not in sequence according to political priorities. The Chairperson had complained to the authors of the document but was ignored. The inclusion of a category ‘Entertainment for MPs’ of R25000 reinforced the negative image of Parliament. This category actually related to ‘Catering for 40 Portfolio Committee Meetings’. He also was unhappy at the category ‘Adverts’ when this actually should have been ‘Advertisements for 4 public hearings’ The Detailed Account Plan was sent back for rewriting.

Mr S Manie endorsed the sentiments concerning categorisation. He wanted to clarify what the four workshops would consist of. He asked whether they should have workshops with State-owned enterprises (SOEs). With regards to item 9 on the budget summary ‘gifts’, there were often times when people would request meetings with the Chairperson. There needed to be a category allowing some discretion that would allow for informal meetings. The allowance needed to be larger and should be increased to R5000-R10000.

The Chairperson said that there would be technical workshops. The plan was for experts to brief Members on technical aspects. The category for gifts could be increased to R4000.

Mr Bekker said that from experience that most of these costs for gifts came from the Chairperson’s own pocket. He supported the increase to R10000.

Department of Public Enterprises jurisdiction in energy matters
The Chairperson outlined the outstanding questions arising from a Workshop on the Department of Public Enterprises that had been held the previous week but which was closed to the public:
Why was the DPE leading the process on the Independent Power Producers (IPP) when this was a restructuring issue? It was also unclear why one department was leading certain policy initiatives. The issues of policy and regulation that were inexplicably linked to restructuring were unresolved. The issue of how cooperation between departments could be ensured was also still outstanding.

Ms C Appollis (DPE Acting Chief Director: Governance) explained the reason why the Department of Minerals and Energy (DME) led the IPP Process. The policy departments were responsible for the overall restructuring. DPE’s responsibility was the restructuring of the SOE itself. With regards to energy the DME would lead the restructuring process of the sector as a whole. The DPE would focus on the impact this would have on ESKOM and how ESKOM needed to be restructured to fit into this new model. For that reason the DME was leading the IPP process. DPE’s responsibility would be ESKOM. The restructuring of the sector as a whole would be the DME’s responsibility.

The Chairperson sought clarity with regards to the Committee’s responsibilities and asked the Department to continue to focus on the example of energy.

Mr I Davidson (DA) said that from his understanding of the Department’s explanation and taking ESKOM as an example, if the DME carried out an investigation into the future energy supply of the country and decided that 30% of ESKOM needed to be floated, the implementation of this policy would be handed over to DPE. He asked whether the execution of taking ESKOM to the market would lie with DPE.

Ms Appolis said that DME would design the energy supply plans for South Africa. DPE would supply the input with regards to the responsibility of ESKOM in achieving those future needs.

Mr J Mahlungu (DPE Director: Energy and Telecoms) said that the DME was charged with the responsibility by Cabinet to restructure. The DME had the responsibility to ensure South Africa had sufficient power. DPE only becomes involved if ESKOM is to be partly sold to accommodate the IPP creation process

Mr Manie wanted to check that the role of DME was to look at the macro issue of whether there was sufficient energy for the country. While they had the final say as far as these issues were concerned, the actual detail of what happens within ESKOM would fall under DPE’s control.

Mr Manhunga replied that his understanding was accurate. The overall energy sector matters were DME’s issues. The DPE dealt with the day to day operation of ESKOM. If they wanted to invest in the Democratic Republic of the Congo they needed DPE approval. DME was concerned with the macro issues.

Ms Appollis said that the responsibility to ensure that ESKOM complies with the policies was DPE’s.

The Chairperson said that it was interesting that the DME was formulating policy but the DPE was charged with monitoring the actual implementation.

Mr Davidson disagreed with the Department’s interpretation.

The Chairperson suggested that there was a need to have a joint meeting with DME to clarify their respective roles.

Mr Manie said that they needed to be clear on each department’s roles. A workshop with independent legal experts was needed to clarify where their responsibility ended. The report would be presented to Parliament and the respective responsibilities would be clear.

The Chairperson said that they needed a better grasp of their corresponding roles. A workshop should be held in early February. When he was involved with local government, in every third week of February, the Deputy Minister, Minister and Director General would meet with the Committee and tell them of their plans for the year. A week later the Committee would shape their programme around this. This had proven to be very productive for local government. The proposal for a meeting every February to shape the Committee’s plans would be raised with the Minister. There needed to be closer links with the other Committees. It was difficult for the DME to shape policy when they did not monitor implementation. Similarly it was difficult for the DPE to monitor ESKOM without knowing policy.

Mr S Manie said that SOEs should tell the Committee how they were complying with policy. Macro and internal policies should be distinguished.

Ms Appollis said the performances of SOEs should be focused on more keenly. SOEs had historically been a burden on the economy. How they were performing and whether they were in line with overall policy objectives needs to be monitored. The DPE’s mandate of responsibility had grown.

Mr Davidson said there was a need to interact with other Committees. There was a need to look beyond what we have and focus at where we should be looking. He did not know whether the responsibility for the Post Office should lie solely with the Department of Communications. There should be interaction with respect to this body. In terms of broad criteria he wanted to know what the Department should be looking at with regards to the Post Office.

The Chairperson said that the Department had a big portfolio and only the current three SOEs should be looked at for the moment. There was a need to keep within their capacity. They should not become too ambitious.

Mr Manhungu said that there was a system in place. Unless there was a handle on policy then it would be difficult. On the SOEs boards there needed to be government appointed directors. In some key strategic positions they might need to be involved in decisions.

Mr Manie asked who owned the shares in the SOEs. If the DPE were the shareholders then the responsibility lay with the Committee and the Department. It was better to perform a weak role than to perform no role at all. It was better to know the full picture of what needed to be done than not know what needed to be done.

Ms Appollis said that in all SOEs the government was named as the shareholder. The government rather than the Department held the shares. A parastatal was an agent of the government and the budget was the responsibility of the government. New terminology had started to be used and a parastatal was beginning to be referred to as a public entity. This terminology added to the general confusion. With regards to appointment to the board, the CEOs would make recommendations to the Minister. While it was rare for the Minister to refuse the board’s recommendation he had the power to do so.

Mr Manie said that the criteria for appointments needed to be defined. He raised the possibility of Members or the Chairperson forming part of a panel to identify individuals. Political function should be brought into this process.

Ms Appollis said that the Companies Act regulated corporate entities. Board appointments were a sensitive issue. Non-Executive Directors who made up the majority of the boards were political appointments. Executive Directors who made up the minority were catered for by terms of employment. The primary interest of the board member must be the company. There should be no conflict of interest between the company and the blocks of interests represented. Independent directors who applied decisions in the best interests of the company may be needed. People who would rigorously interrogate the company decisions were required. The confusion over who had what mandate needed to be cleared up.

Mr Davidson said that the issue of the South African Post Office had to be looked at in detail.

The Chairperson asked if Members wanted any additions to the agenda of the next meeting. The Meeting was adjourned.