Hansard: EPC: Debate on Vote No 29 – Energy

House: National Assembly

Date of Meeting: 21 Jul 2014

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Minutes

UNREVISED HANSARD

EPC – GOOD HOPE CHAMBER

Monday, 21 July 2014 Take: 30

MONDAY, 21 JULY 2014

PROCEEDINGS OF THE EXTENDED PUBLIC COMMITTEE – GOOD HOPE CHAMBER

______________________

Members of the Extended Public Committee met in the Good Hope Chamber at 10:00.

The House Chairperson Ms M G Boroto, as Chairperson, took the Chair and requested members to observe a moment of silence for prayers or meditation.

APPROPRIATION BILL

Debate on Vote No 29 – Energy:

IsiXhosa:

UMphathiswa weSebe lezaMandla: Enkosi kakhulu Mhlalingaphambili

Setswana:

Dumelang bomme le borre.

English:

Hon Deputy Minister, Ambassador Thembisile Majola, chairperson of the portfolio committee, chairperson of the select committee, members of the Portfolio Committee on Energy, Cabinet colleagues, leadership of our trade unions - captains of the industry, acting director-general, senior officials, leadership of our state-owned entities, invited guests, comrades, ladies and gentlemen, I want to greet you in the name of our beloved leader, the late former President Nelson Rolihlahla Mandela, whose birthday we celebrated recently. In the light of this, I ask that we debate this matter not only with the same spirit and intensity with which he fought against injustice, but also with the same degree of humility that Madiba would have shown.

I am pleased to report that the department together with a number of private sector partners heeded the clarion call to clean up for Madiba by visiting the Mamelodi Tateni Community Centre, and the Kido's educare centre in Soweto. Besides cleaning up and painting the facilities, the department was able to install solar water heaters and efficient lighting in each of these venues. One of our agencies, the SA National Energy Development Institute, Sanedi, also announced that they will build a learning centre for preschool children at the children's home.

On 17th June, on the occasion of the first state of the nation address of our fifth democratic administration, President Zuma affirmed the imperatives to address our country's energy challenges in order to create a favourable environment for economic growth and development.

To set the tone, I have to repeat what the President has said. He first recognised the problem in saying that we need to respond decisively to the country's energy constraints in order to create a conducive environment for growth. Furthermore, he said that this situation called for a radical transformation of the energy sector in order to develop a sustainable energy mix comprising coal, solar, wind, hydro, gas, and nuclear energy. The directive is clear. We need no longer debate the matter. Instead, we have to address the matter by tackling the energy constraints in a way that properly balances the many alternatives we have. My task today is showing you how we, as the Ministry and the department, are planning to do so.

We accept the responsibility that our people have placed on the shoulders of the leading party through their vote on 7th May. Our role is to keep the lights on - but not at all costs - and the cars on the road, and we will do our best to ensure this happens. At the same time, I also want to ensure that energy is something that is understood by ordinary people, that it is accessible and affordable, and that we build a national consensus about how we are going to take our country forward. This is in part a problem for the scientists and engineers who are trying to find ways of producing more energy, especially clean energy. But, it is also something that each one of us can help with in our efforts to use energy more efficiently. Therefore, it is not just a challenge for government. It is also a challenge for the private sector, and for the public, and we have to solve it collectively.

That is why - I hope you have noticed - I have already advertised for nominations to an expert panel, which I plan to convene. I hope all interested parties will put forward names of suitable people, with the right expertise, who can help us to bring about the radical economic transformation we desire. This will not be a party-political structure, but rather a true advisory council of experts.

We are committed to the countrywide roll-out of our economic and social infrastructure programme, especially in the energy sector. We see this as a major instrument to catalyse and spur positive economic growth and job creation, which will make a positive difference in the lives of citizens - whether they are living in town, on the grid, or in a rural village getting electricity from alternative off-grid sources.

As a starting point, we have taken steps to ensure that coal supplies to existing and future power stations are secured. We have also set ambitious targets for producing additional cleaner energy and ensuring energy self-sufficiency in the future. We further stated that both traditional and green energy will be expanded to ensure a platform for growth and social inclusion. This will include the use of nuclear power for base-load energy generation, which will be done in a safe and environmentally sustainable manner.

The manifesto of the ruling party states that additional energy will be generated through the completion of large power stations, and that solar and wind power will feed into the electricity grid to increase our generation capacity and promote environmental sustainability. We will intensify work to ensure that further hydroelectric energy will be secured domestically and regionally for our national grid.

During the term of this government, over 1 million homes will be equipped with solar water heaters, ensuring cheaper hot water and lower energy use for more than 7 million South Africans. An additional 1,5 million households will also be connected to energy sources, either through the grid or through nongrid means.

Lastly, the pace of oil and gas exploration - including shale gas exploration - by the state and other players in the industry will be intensified as part of the country's effort to ensure national self-sufficiency and energy security whilst, once more, actively promoting environmental sustainability.

The energy sector has been shown to be an economic game changer globally. For South Africa, energy is the catalyst to revolutionise our economy and drive economic transformation. However, the current global energy situation is faced with many uncertainties. These include complex environmental and climate change matters in which energy is a major player. There are also persistent global economic challenges that we, together with some of our major trade partners, are still facing, whilst the ongoing turmoil in the Middle East and Ukraine are continuing to impact on us. All of these impact on our energy situation and therefore our economy. We need to be responsive to all of these circumstances as we chart the course into the future.

These uncertainties, and how we respond to them, however, remind us that South Africans, as a nation, need to engage in a national dialogue about our energy future. The question is: How do we meet the imperative of ensuring a sustained and secure supply of energy, especially cleaner energy? In taking on this debate, we will continue to build and strengthen relations with SADC within the African continent.

We have just returned from the Brics summit in Brazil, where our relations with these major players were further strengthened, and we will be guided by the experience of these major economies as we move forward. Of course, we will also engage other countries, both in the North and South, which can help us to develop a common perspective on energy.

The department operates in this dynamic global environment. But we must recognise that existing infrastructural constraints, some of which are the result of inadequate infrastructure development planning, make this task a difficult one. Declining budgets, rating downgrades, and the shortage of skills in the energy sector all contribute to rising electricity costs and volatile oil prices, which in turn contribute to the critical energy situation.

These factors, many of which are beyond our control, place severe constraints on our supply chain, and we have to work collectively to address these challenges. Better co-ordinated, seamless interaction with Eskom remains an imperative.

The Department of Energy has made a number of strides since its formal establishment in 2010, and these have contributed to the overall development agenda of our country. I do not wish to repeat the good stories that have already been told, but rather wish to reflect briefly on some of the key areas of work undertaken.

A revised regulatory framework for facilitating the introduction of new generation capacity through Independent Power Producers, IPPs, will be consolidated. This has already culminated in reaching financial closure, and commencing with the construction of 1 000 megawatts of open-cycle gas turbines at Avon in KwaZulu-Natal and Coega in the Eastern Cape, as well as 3 900 megawatts of renewable energy plants based on solar, biomass, hydro, wind, and landfill gas energy sources. It gives me pleasure to indicate that, out of the 28 IPPs approved during window 1, a total of 14 generation plants have been completed, producing more than 600 megawatts of green power for the national grid.

A new household electrification strategy was approved by Cabinet in June 2013 to address electrification backlogs and ensure universal access by 2025. This will be done by means of utilising grid extension, and also by means of nongrid-connected PV solar systems. This is in line with the proposals of the National Development Plan, NDP, for reaching universal access. However, a progressive roll-out programme is being implemented through the new household electrification strategy to reach the target of universal access earlier.

The electrification target for 2013-14 was to grid and electrify 260 000 households. We have achieved a total of 292 714 grid connections, and an additional 14 059 nongrid connections. During the past financial year, a total of 306 773 households received access to electricity for the first time, which is 46 773 connections above target. We have checked these figures. In the main, this is due to good co-operation and support from Eskom, municipalities, metros, and the private sector. In addition to this, a number of substations and lines have been upgraded to further ensure that capacity exists for this expansion.

We implemented a regulatory accounting system for the petroleum sector that is used to determine appropriate margins for petrol at wholesale, retail, secondary storage, and secondary distribution level. It also seeks to introduce transparency into the market as well as root out inefficiencies, cross subsidisation, and uncontrolled costs. This provides certainty to investors with regard to the return on assets throughout the petroleum value chain. I must, however, hasten to add that the roll-out of this system has not been as smooth as we would have expected, considering the fact that the power relations between oil companies and retail companies are continuing to be a challenge. We intend to engage with this matter urgently.

With regard to the development of our gas resources, including regional gas opportunities in neighbouring countries and our own shale gas resources, a draft of the Gas Utilisation Master Plan, Gump, is being finalised. Energy efficiency is at the core of our energy security strategy, given its cost effectiveness, speed of deployment, and job-creation potential. Interventions in respect of the public buildings industry and the residential sectors are pillars in the energy efficiency strategy and action plan that we have recently revised. The completed Energy Efficiency Target Monitoring System provides a platform for quantifying the responsiveness of our energy efficiency efforts.

The discussion document on a regulatory framework for a Maximum Refinery Gate Price for Liquefied Petroleum Gas has been developed with the intention of facilitating the importation of liquefied petroleum gas, LPG, especially during supply constraints in the winter season. The road map for the implementation of the nuclear procurement programme is progressing well, and the department is currently working with sister departments and entities to finalise work in this regard.

I am pleased to announce that for the previous financial year the department was appropriated R6,5 billion and spent 99,6% of this allocated budget. The appropriation for this financial year is R7,4 billion, with 93% of this amount being earmarked for transfer to municipalities and state-owned entities. However, this time we cannot rely on transfers and a clean audit after the transfers. There has to be monitoring and evaluation in respect of the money that has been transferred. We cannot be happy with the transfer alone and then automatically receive a clean audit. It doesn't work that way. We need value for the taxpayers' money. So, it is clear that if the actual delivery of energy is largely in the hands of statutory bodies, such statutory bodies should have good governance and function efficiently and effectively.

The 2014-15 appropriation is 14% higher than the 2013-14 final appropriation. The increased allocation will enable the expansion of the Integrated National Electrification Programme, Inep, to increase the number of households connected to the electricity grid. The Inep therefore receives an allocation of R4,1 billion, with Eskom and municipalities allocated R2,5 billion and R1,6 billion respectively. A further R96 million is allocated to the nongrid electrification programme.

Through Eskom and municipalities, we must improve the implementation of energy efficiency and expand the use of clean energy technologies. We will continue rolling out the solar water heater project, which seeks to make solar water units more affordable. To this end, Eskom will use their R1,6 billion for the installation of more than 200 000 solar water heating units.

On the nuclear front, R850 million has been allocated to the department and its relevant agencies in order to undertake further research and development, especially in relation to safety matters. Regulations for the handling of hazardous materials, in terms of international obligations, and the development of nuclear policies and legislation will be put in place to ensure the peaceful use of nuclear energy in pursuing our international agenda.

In line with the injunctions of the National Development Plan, the department is central to the processes of developing policies and innovative energy strategies to build this economy. We are expected to implement programmes which will ensure that South Africa has a sector that promotes economic growth and development, fosters social equity through expanded access, as well as pursues environmental sustainability.

Our mandate is unambiguous – we will ensure energy security for a growing and job-creating economy. I repeat: we will ensure energy security for a growing and job-creating economy. [Applause.] We have to be unambiguous about what is expected from the Ministry of Energy and the department.

The Energy Master Plan has been developed to crystallise the immediate actions that the department and the entire energy sector will have to take. Undertaking a comprehensive review of the entire sector, where necessary, will bring about structural changes within our department and the sector. I thus want to thank our Deputy Ministers Thabethe and Xasa, and Minister Oliphant who have been really strategic and consistent in supporting the structural changes of this sector.

In doing so, we will be guided by the need for further diversification of our energy mix. Wind and solar energy sources are growing dramatically, especially in the Northern Cape. We have to double our efforts in this regard. Together with imported and locally sourced natural gas, as well as the introduction of 9,6 gigawatts of nuclear power, we will lay the foundations for a new mix of national energy sources. Localisation has to be at the foundation of this development. South Africans can produce locally, and we therefore do not need to rely on imports in creating more jobs. [Applause.]

We are directed at intensifying the Integrated National Electrification Programme in pursuit of universal access. Our Independent Power Producer, IPP, programme will remain another key area of engagement and focus. The IPP programme must also focus on local content, local skills development, and local planning.

We will continue to consult and refine the Independent Suppliers and Market Operators, Ismo, Bill. This will seek to provide a better regulatory environment for power providers. Once it is ready, we will go through an extensive consultative process to bring all stakeholders on board.

Allow me to highlight some of the key programmes and initiatives – and I can see the Independent Suppliers and Market Operators Bill is already causing quite a lot of excitement. [Laughter.] As enjoined by the President in the state of the nation address, my immediate priority is to ensure that the Integrated Energy Plan, IEP, is finalised. This plan must be geared to address the short, medium, and long-term energy requirements. It has to be supported by effective policies, institutions, governance subsystems, and regulation within a competitive market system.

Given the overall global energy challenges, one of the key objectives of the revised Integrated Energy Plan will be to look at multiple and alternative energy sources. South Africa cannot afford to find itself at the mercy of geopolitical developments over which we have no control. Therefore we must find sources that ensure energy security and our country's sovereignty.

It is therefore necessary to reflect on the critical questions that we have identified. These include: improving our efficiency levels; diversifying our energy mix towards a low carbon economy; finalising the nuclear power option; stabilising future electricity tariff increases; and ensuring universal access to modern energy technologies for those without electricity. Furthermore, our energy plan has to address the plight of rural women and youth and lift them out of unemployment.

The introduction of new power stations across a range of technologies is outlined in the Integrated Resource Plan, IRP. We will further engage in the decentralisation of energy provision.

In the period up to 2030, the Integrated Resource Plan makes provision for 9,6 gigawatts from nuclear power, 6,3 gigawatts from coal power, 11,4 gigawatts from renewable energy sources, and 11,0 gigawatts from other generation. The implementation of the plan is well under way. This is evidenced by the IPP Bidding Programme, which has approved the provision of 3,625 megawatts of capacity from Independent Power Producers.

In addition, we have to attract international and local investments, and for that we need about R120 billion. We are confident that this will boost employment and growth, and we know that we can further improve on this.

We have no intention of abandoning the coal option, but we are determined to find cleaner technologies that will reduce the adverse environmental impact associated with greenhouse gas emissions from coal-fired power generation.

Institutionally, we have formed the Carbon Capture and Storage Leadership Forum, which serves a critical role in fast-tracking our technology research efforts in collaboration with other countries. Young people need to develop their research capabilities, and, if need be, we have to send young students abroad or elsewhere on the continent to develop their skills. Our research capacity has to be improved. [Applause.] The SA National Energy Development Institute, Sanedi, which is our state-owned entity responsible for energy research, leads this programme. The Sanedi must increase its intake of learnerships.

You may not be aware that for the past five years, Underground Coal Gasification, UCG, has been under way at Matimba Power Station. This project is aimed at developing the technology needed to exploit our extensive coal reserves in order to produce a form of gas.

Apart from our local research stations, I am sure that Medupi and Kusile Power Stations, representing our technology, are ready for the state-of-the-art carbon capture and storage processes. However, we cannot continue with the burden of not knowing when these projects will be completed. The electrification programme will continue, and our aim is to finalise the first draft of the electrification master plan at the end of this calendar year in order to ensure that universal access can be reached by 2025.

Lastly, I want to mention that I will be thanking all the relevant parties during my concluding remarks. For now, I thank you. [Applause.]

Mr F Z Majola

The Minister of Energy

UNREVISED HANSARD

EPC – GOOD HOPE CHAMBER

Monday, 21 July 2014 Take: 31

Mr F Z MAJOLA: Chairperson, Minister, Deputy Minister, other Ministers and Deputy Ministers present, hon members, ladies and gentlemen, comrades and friends, I hereby rise on behalf of the ANC in support of Budget Vote 9 – Energy.

Hon Chairperson, let me begin by congratulating the hon Tina Joemat-Pettersson on her appointment as the new Minister of Energy. Similarly, I also congratulate the hon Thembisile Majola on her appointment as the new Deputy Minister of Energy.

I dedicate this speech to Chief Albert John Luthuli, the 8th President-General of the ANC, one of the first honoured bearers of the Isitwalandwe/Seaparankwe Award, and Africa's first Nobel Peace Prize Laureate who departed 47 years ago, on 21 July 1967. In his enduring memory and the memory of the legends of others, like our international icon Nelson Rolihlahla Mandela, we have begun our work in this fifth democratic Parliament, and, indeed, in this second phase of our transition, led by the ANC with its enduring inspiration, to ensure that our country moves forward with speed and clarity to realise our overall goal of a national democratic society.

As someone who was born near a small power station not far from the banks of the Vaal River, and lived in a community that was deprived of electricity for many years, I am deeply humbled to stand here as part of those who now have a responsibility with regard to our national energy security and supply in its entirety. This is an enormous responsibility, which I hope we will all carry out to the best or our ability.

Let me state, at the outset, that a week ago the Portfolio Committee on Energy, despite the time constraints we had, pledged its support for this Budget Vote. During his state of the nation address, His Excellency President Jacob Zuma undoubtedly placed energy at the centre of his second democratic administration. [Applause.]

At its 53rd Mangaung Conference, the ANC declared that we are now boldly entering a second, more radical phase of our democratic transition from apartheid and colonialism to a national democratic society. This phase will be characterised by more radical socioeconomic policies. Consequently, we from the ANC come to this fifth democratic Parliament with a single mind to ensure that this radical second phase finds concrete expression in all the work we do here in Parliament.

It is with this mindset that we will approach our work in the energy sector. In articulating the challenges that our economy and country face, President Jacob Zuma said:

This situation calls for a radical transformation of the energy sector, to develop a sustainable energy mix that comprises coal, solar, wind, hydro, gas and nuclear energy.

The ANC's policies are clear. Amongst others, the ANC will pursue the task of building a capable developmental state that intervenes and is capable of leading a process of fundamental social and economic transformation of our society. This policy approach will apply to the transformation of the energy sector.

This is a commitment we have made, and this is a commitment we will keep. During the deliberations of the portfolio committee, we made it clear that the ANC will remain open to constructive engagement and input, but, at the end of the day, it is the ANC that was given an overwhelming mandate to lead our country and its people, on 7th May 2014. [Applause.] Together we must move South Africa forward faster.

There can be no denying that over the past 20 years, especially the past five years, much have been done to bring more energy to our people. Indeed, South Africa is a much better place to live in than it was 20 years ago. This good story applies to the energy sector as well. In less than 20 years, the ANC-led government has extended access to electricity to over 5,8 million households, and thus reduced the percentage of households without electricity from about 50% in 1994 to 14% currently.

At the same time, we are mindful of the very serious energy constraints our economy and country are facing. This is partly, and perhaps largely, because of our successes. Over the past 20 years, the economy has grown threefold, thereby putting immense pressure on our energy supply. Perhaps, faced with challenges of the same nature, our international icon, the late former President Nelson Rolihlahla Mandela, had this to say: "After climbing a hill one only finds that there are many more hills to climb."

As you all know, the energy challenges our country is facing are very serious and require urgent and decisive action. Many of these challenges are immediate, whilst others will confront us in the long term. We have to take action now, but the actions we take today should not compromise the future security and sustainability of our energy supply. In this regard, we agree with one member of this House who says that we have to define the end-state vision for our energy sector.

We have to assist Eskom to keep the lights on. At the same time, we need a concerted national effort to conserve our energy, and work together with our communities. However, whilst communities are encouraged to use solar and gas, demand management is cross-cutting; it should be led by the state and include business as well.

Business must work with labour to improve productivity and co-operation rather than relying on mechanisation, which is a costly substitute for the absorption of labour and may be wasteful from the point of view of our tight energy supply and environmental considerations. We have no option as a country but to move towards less carbon-intensive electricity production by procuring, at least, 20 000 megawatts of renewable energy, as the NDP enjoins.

The fifth ANC administration begins the task of implementing the long-term vision of the nation, the NDP, and the Industrial Policy Action Plan in the midst of a persistently subdued global economic environment. Indeed, by virtue of our economy's deep connection to the global economy, our domestic economy is in turn growing at a subdued rate at the moment.

Thus, this overarching context is emphasising the great urgency of implementing, over the next three years, a range of the R847 billion worth of infrastructure projects - under the National Infrastructure Plan, as outlined in the state of the nation address by President Jacob Zuma - placing it at the centre of our work in the course of this term. The implementation of these projects, in which the energy sector is one of the critical components, will catalyse accelerated growth and development of our economy, whilst transforming the quality of that growth.

We say that the National Infrastructure Plan provides an opportunity for a qualitatively different trajectory of growth because it is intended to lay a foundation for industrialisation and further extension of basic services to our people. Thus, combined with other interventions by the state, it will help the economy to shift away from the entrenched minerals-energy complex, which is largely an extractive and mineral-exporting economy, to a thriving beneficiating industrial base characterised by a sustainable and balanced growth pattern.

As outlined in the state of the nation address, such interventions include measures to address the skewed patterns of ownership and production; the spatial legacies of our apartheid past; and the tendencies of the economy towards inequality, dualism, and marginalisation.

No doubt, these features will not recede automatically, or on their own, as economic growth accelerates. One such feature that must be addressed is the monopoly domination in our economy. This remains an obstacle to the goals of economic transformation as it sets barriers to entry for emerging enterprises. It suppresses competition, and thus builds up inefficiencies and stifles expansion. In our case, the disappointing progress with regard to the implementation of South Africa's Liquid Fuels Charter is a case in point.

In order to drive inclusive growth, create employment opportunities, and transform society, the most important immediate priority that should be addressed is energy. Achieving security of supply with an appropriate mix is primary, and this means that there must be diversification of our energy options to include coal, nuclear, shale gas, renewables, oil, and gas.

To achieve this, requires, among others, resolving a number of issues, including funding. We are confident that the work of the Energy Security Cabinet Subcommittee, which is responsible for oversight, co-ordination, and direction of activities for the energy sector, would be critical in resolving these matters in support of the work of the department and its entities.

The discussion on the structure of the energy industry includes appropriate regulatory and other measures that should be addressed with a view to ensure that our overall priority of energy security is not compromised. Eskom will continue to play a critical role in the future supply of energy, including new energy-generation initiatives. The role of the private sector would have to be addressed in the context of ensuring an appropriate mix.

The Medium-Term Strategic Framework and the department's annual performance plans reflect the alignment of our overarching plans, namely the NDP, IPAP, and NIP. The challenge is in implementation. This requires economic departments that are not just policy and regulatory authorities but that are active agents with the capacity to identify opportunities, challenges, and risks at sectoral level as they arise; ensure a rapid and effective response; and monitor implementation and identify blockages as required.

Within the energy sector, the mandate from the overwhelming majority of the electorate is clear. It says that the ANC-led government should lead the country towards producing more, cleaner energy and promoting energy and self-sufficiency, such that there is domestic security of supply of coal to existing and future power stations.

Both traditional and green energy should be expanded to ensure a platform for growth and social inclusion, including the use of nuclear power for energy generation in a safe and environmentally sustainable manner. Additional energy is generated through the completion of large power stations. Solar and wind power feed into the electricity grid to increase our generation capacity and promote environmental sustainability. Further hydroelectric energy is secured domestically and regionally for the national grid.

A further 1,3 million homes have been installed with solar water heaters, bringing the total to 1,75 million houses, covering more than 7 million South Africans. The pace of oil and gas exploration, including shale gas exploration, by the state and other players in the industry have been intensified as part of the country's effort to ensure national, self-sufficiency and energy security, while promoting environmental sustainability.

I now want to turn to the Department of Energy and the entities that fall under it. The outlined strategic outcomes of the department that we support are as follows: security of supply by ensuring that energy supply is secure and demand is well-managed; infrastructure development by facilitating an efficient, competitive, and responsive energy infrastructure network; regulation and competition certainty by ensuring that there is improved energy regulation and competition in the energy sector; universal access and transformation by ensuring that there is an efficient and diverse energy mix for universal access within a transformed energy sector; environmental assets that are well protected and continually enhanced by cleaner energy technologies; climate change response by implementing policies that adapt to and mitigate the effects of climate change; prudent corporate governance through implementation of good governance practices for effective and efficient service delivery; and alignment of key policies with the objectives of the NDP.

The following are the entities reporting to the department, whose stated work we support: the National Energy Regulator of South Africa; National Nuclear Regulator; SA National Energy Development Institute; SA Nuclear Energy Corporation; Central Energy Fund; and the National Radioactive Waste Disposal Institute - recently established.

The department's key focus areas for 2014-15 that we support are as follows: increasing access to electricity with an additional 265 000 grid connections and 15 000 nongrid installations; increasing momentum on the installation of solar water heating units; finalising the Integrated Energy Plan with more detailed infrastructure plans; addressing maintenance and refurbishment backlogs in the electricity distribution industry; strengthening the liquid fuels industry; and facilitating the process leading to the implementation of decisions taken on the nuclear programme.

Chairperson, having considered the strategic plan and Budget Vote of the Department of Energy, we recommend that the House supports the Budget Vote.

Furthermore, we would like to make some recommendations to the Minister of Energy, which include: conducting an overall assessment of the capacity and funding of the department of energy to establish whether the department is correctly staffed and funded to deliver on all the areas that need attention for energy resource development in South Africa; expediting the delivery of the various pieces of legislation and policy documents that are still outstanding - these include the new draft Integrated Energy Plan and Integrated Resource Plan, which are critical for energy planning in South Africa; focusing on the development of key and critical skills in the various sectors of energy including, amongst others, engineering, nuclear power, renewable sources, and electricity distribution; and ensuring that electricity supply security, in the short term, is a priority for the various stakeholders and government departments in order to develop a mechanism that will prevent load shedding in South Africa.

The committee also recommends that emphasis should be placed on the solar water heater programme. The department has envisaged one million units to be rolled out by 2015. Thus far, only 400 000 have been rolled out. Challenges in this regard include local content, the involvement of all spheres of government, and maintenance of units.

Other recommendations include: placing emphasis on the roll-out of the national electrification programme; finalising the proposed Gas Utilisation Master Plan, Gump, and reporting regularly on its progress to the Portfolio Committee on Energy; ensuring the restructuring of the Central Energy Fund, including its subsidiary companies, and empowering them to meet the future demands of South Africa; ensuring that the National Energy Regulator of South Africa has the requisite skills and resources able to manage the new nuclear build programme ...

The HOUSE CHAIRPERSON (Ms M G BOROTO): Hon Majola, you have one minute left.

Mr F J MAJOLA: Hon Chairperson, there are 13 recommendations that we are making to the Minister, but within the one minute left let me say that, given the enormity of the challenges we are facing, I am sure I speak on behalf of the portfolio committee when I say that we are committed to robust but constructive debate. Together we have to find solutions to the energy challenges we are facing. There should be no room for mudslinging and bickering. As a committee we shall play our oversight role constructively. We shall support the department and various entities to fulfil their mandates. But where there is failure and inefficiency, we will call for action to be taken.

Hon members, our economy is in dire straits. Investors are jittery. Our communities are increasingly restless. The other day I heard ...

The HOUSE CHAIRPERSON (Ms M G BOROTO): Hon Majola, your time has expired.

Mr F J MAJOLA: The ANC supports this Budget Vote. Together we will move South Africa forward. Thank you. [Applause.]

Mr L W Greyling

Mr F Z Majola

UNREVISED HANSARD

EPC – GOOD HOPE CHAMBER

Monday, 21 July 2014 Take: 32

Mr L W GREYLING: Chairperson, hon Minister, Deputy Minister and esteemed colleagues and guests, this is, in fact, my maiden speech as a fully fledged DA Member of Parliament ... [Interjections.] ... and as convention would dictate, I am suppose to make it noncontroversial. It is not my intention to be controversial in any way, but merely to point out how we are going to resolve one of the most important challenges facing this country, namely our protracted energy crisis.

The DA is happy that the ANC-led government has finally recognised that we are in the midst of a major energy crisis, as expressed by the President in his state of the nation address. It's one thing admitting that we are in a crisis, but it is quite another to implement the sustainable solutions that would get us out of it.

As Einstein once said, you cannot solve a problem with the same level of thinking that created it. Unfortunately, that is precisely what I see happening in this instance. So before we talk about solutions, let us first analyse the kind of ANC thinking that contributed to this crisis in the first place.

I have heard a great deal said about the NDP in these Budget Votes, but the manner in which the ANC dealt with the first NDP for the energy sector, namely the energy White Paper of 1998, gives us an indication of where things started to go wrong. This White Paper accurately predicted that we would experience blackouts in 2006 if new energy generation was not brought on stream. In order to create the conditions conducive for this to happen though, the White Paper strongly argued for Eskom's monopoly dominance to be broken through the introduction of a transmission systems operator that would take the transmission grid out of Eskom and place it in a separate independent entity. That was 15 years ago.

The ANC chose to ignore that part of the White Paper, just like it is conveniently ignoring those aspects of the NDP that do not fit snugly with its old outdated ideological thinking. Instead, the ANC-led government prevented Eskom from building any new generating plants while simultaneously refusing to reform the electricity sector in a way that would make it conducive for the private sector to enter this monopolistic market. This illogical approach by the ANC predictably led to the blackouts, which started in 2006, ushering in an electricity crisis that we are continuing to suffer until this day.

Over the past fifteen years, all we have seen from the ANC is what could best be described as a Rocky Horror time warp dance:

It is just a jump to the left

And then a step to the right

With your hands on your hips

You bring your knees in tight

It all looks very impressive until you realise that we have just been dancing in the same spot for the past fifteen years, while the energy sector has fallen apart around us ... I will not take a question. It is a time warp, indeed.

Mr G S RADEBE: Chairperson, on a point of order: Can the hon Greyling show us the dance that he is talking about? [Laughter.]

Mr L W GREYLING: I will show you later. Initially, it was the Regional Electricity Distributors, Reds, policy, which was meant to solve the crisis in municipal distribution. This was abandoned when it was considered unconstitutional, and since then we have seen nothing new from the government to address this burning issue. The backlog in the maintenance of municipal electricity grids has since grown to close on R50 billion, and many municipalities are starting to experience localised blackouts as a result.

Instead of smart grids, we have broken grids, and the situation is only getting worse. Quite simply, we need to rethink the entire institutional structure at municipal level and find noble ways of funding local government differently. The DA therefore welcomes Minister Gordhan opening the broader debate on this in his Budget Vote, but we would also argue that the Division of Revenue Act, Dora, funds must incentivise achieving certain national objectives like energy efficiency and the uptake of renewable energy and solar water heaters. Instead, the Approach to Distribution Assets Management, Adam, programme of the Department of Energy, while responding to an emergency need in municipalities, is simply rewarding the practices of municipalities that have led to an underinvestment in their electricity grids.

Then there was the infamous Independent System and Market Operator, Ismo, Bill, which was supposed to remove the operations of the grid out of Eskom and create a more level playing field for Independent Power Producers. It was first announced in the President's state of the nation address in 2010, debated and passed by the full energy committee in 2013, only to have ministerial interference, preventing it from being debated in the House.

At the time, I was called a pathological liar for simply pointing out what many ANC members said, and, in fact, what the Chief Whip confirmed to me at the time, which was that powerful ministerial interests did not want this Bill to be passed. I am sure I will be called many more things while I continue to speak truth to power. That is precisely what we all have to do, if we truly want to address this energy crisis.

Minister, you need to build a shared consensus around a so-called end-state vision for our electricity sector, something that Minister Brown called for in her budget debate. The DA has a clear vision of what that end state should be, but it will require taking on vested monopoly interests. For the sake of the EFF, I am talking about state monopoly interests and not what you derogatively refer to as white monopoly interests.

Monopoly power must certainly be challenged in our economy, but the biggest and most inefficient monopoly is in our energy sector. Eskom currently accounts for 95% of electricity generation; it owns and operates the country's entire transmission grid and is responsible for about 42% of electricity distribution.

The painful fact is that Eskom's monopoly stranglehold of this sector is holding our whole economy to ransom, and it has become a model of perverse economics. On the one hand, it is encouraging its customers not to consume its product and even paying businesses huge amounts of money not to do so. On the other hand, it is selling large amounts of its product at below the cost of producing it to other customers. In addition, it is paying one of its suppliers vast sums of money for inputs that it cannot even use.

It has also racked up R250 billion in debt with very little to show for it, and now thinks that the answer to its woes is to force the National Energy Regulator of South Africa, Nersa, to hike its electricity prices in order to pay for its enormous inefficiencies. Clearly, this is a huge hole that has been dug for South Africa, and it requires a fresh new approach to solve this crisis. So let me now outline what that approach should be.

In fact, we can see small glimmers of it in the one huge success of this department, namely the Renewable Energy Independent Power Producers Programme. This programme has seen over R150 billion of private investment flowing into the energy sector and the average price of generated electricity falling dramatically over the three bid windows, with each one being massively oversubscribed. In fact, the average price of wind-generated electricity has now fallen to 74c per kilowatt hour, significantly cheaper than what it will finally cost from Medupi, whenever it finally comes on line. It has also only taken two years to construct these plants, and some of them are now already adding electrons to the grid and helping to alleviate our energy crisis.

The success of this programme shows that we have to increase the allocated amounts to it, and we should have been using the South African Renewables Initiative, Sari, that was signed at COP 17 to utilise grant funding from developed countries, to institute a far more ambitious renewable programme. However, we let that fall by the wayside.

Hon Minister, you should also convince your colleague in Land Affairs to change the tenure system in the communal areas so that communities in areas like the Eastern Cape could also benefit from investments into large-scale renewable projects.

The fact is though that this programme is still too small to threaten Eskom's monopoly control and that is probably why it has been allowed to proceed. We now need to see major Independent Power Producer, IPP, procurement programmes for base load energy, especially in the gas sector, along with the long-awaited cogeneration programme that has come close to the 2 500 megawatts it wanted to supply to the grid for many years. A new grid operator must also facilitate wheeling through the grid so that IPPs can contract directly with companies, thereby removing the risk from the state.

Instead, what we see unfolding in the background is more of the ANC's outdated state monopoly thinking in the form of the proposed nuclear build programme. This programme could cost the country upwards of R1 trillion and will push up electricity prices to completely unaffordable levels, which in turn will drive down economic growth and with it electricity demand. We could have the absurd situation whereby after spending vast sums of money on this programme for over ten years of building these nuclear plants, there would no longer be customers willing to buy the energy from them. This is the arms deal and e-toll debacle rolled into one and then magnified by ten.

Almost everyone I speak to, from the business sector to civil society, has huge concerns about this programme, which is, in fact, explicitly outlined in government documents like the Integrated Resource Plan, IRP, update and the NDP. It seems the only person truly in favour of this programme is the President himself. Given the huge potential for corruption in this programme, I suppose it is not difficult to understand why.

However, the DA will not stand by idly and let the ANC dig this country into an even bigger hole than it has already dug in the energy sector. It is time to stop digging, and to embrace a radically different energy future for South Africa.

The DA wholeheartedly agrees with the latest IRP update that states we need a flexible energy policy that gives priority to smaller generation technologies with shorter lead times. This fits with our open-opportunity vision for South Africa. Open up the grid, and give every South African the opportunity to contribute to finding the solutions to our energy crisis.

Instead of big state-controlled build programmes, the DA will radically overhaul the institutional architecture of our energy sector and unleash the dynamism of our households and companies in responding to this crisis. We will make it easier for households and companies to feed power back into the grid, like Cape Town is in the process of doing. We will also change all of our diesel-powered generators over to gas, and ensure that there is a favourable environment for investments to flow into putting in place the needed infrastructure to take advantage of the major gas finds in the Southern African region.

The DA will also replace the Mineral and Petroleum Resources development Act, MPRDA, with legislation that actually makes it attractive to invest in the oil and gas sector. Instead of the broken municipal grids that we have now, the DA will invest in new smart grids that can help us prepare for the uptake of future energy technologies.

Ultimately, the DA will replace our current wholly outdated institutional and infrastructural energy framework with one that is able to take advantage of the major global advances that are being made in the energy field.

The time for dancing around this issue is over as we run the risk of being stuck in an energy paradigm that will render our country uncompetitive. If you are prepared to stop the ANC's time warp dance, and spend the next five years pushing forward significant energy sector reforms that can get us to a more competitive, dynamic, and diverse end state for the sector, then the DA will play its part in helping to overhaul our creaking energy system. I thank you. [Applause.]

Ms N E Louw

Mr L W Greyling

UNREVISED HANSARD

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Monday, 21 July 2014 Take: 33

Ms N E LOUW: Thank you, Chairperson. I think that it will not come as a surprise to the portfolio committee that the EFF does not support this Budget Vote. [Interjections.] Do not get excited. Wait.

The National Energy Act 34 of 2008, among others, mandates the department to ensure that diverse energy resources are available in sustainable quantities and at affordable prices to the South African economy in support of economic growth and poverty alleviation while taking into account environmental management requirements. The department is not moving swiftly to implement the mandate of this Act fully, and therefore economic development and poverty alleviation will remain a pipe dream. What a good story to tell.

This has been the weakness of the ANC-led government for the past 20 years. It has been very difficult for them to enforce and implement legislative and policy mandates of their departments.

President Jacob Zuma has spoken about nuclear energy to be an option as an energy source. We still rely very much on coal to generate electricity, which is not environmentally friendly. The reliance on coal and other environmentally damaging sources of energy is both unprogressive and unsustainable. We need to focus on Hong Kong as a case in point to look at how they have pursued a greener economy. Our energy sector is very unstable and in crisis given the current load shedding, especially during winter.

Allow me to tell a story of an 11-year-old girl who had kidney failure in 2009 and was put on dialysis, and that mainly ... [Interjections.] ... Relax. Chairperson, please protect me.

The HOUSE CHAIRPERSON (Ms M G BOROTO): If you do not respond, you will not have problems. [Laughter.]

Ms N E LOUW: You must stop getting excited. It is because of them that we are here. I was not even implying that it is a rally. If you want a rally, we will make it a rally.

In 2009, this young girl was diagnosed with kidney failure and put on dialysis. Because of load shedding ... This young girl was treated with peritoneal dialysis; it is performed by a machine that cleans the kidneys throughout the night. [Interjections.]

Mr G S RADEBE: Will the member take a question?

Ms N E LOUW: No. Sit down. [Laughter.]

The HOUSE CHAIRPERSON (Ms M G BOROTO): Continue, hon member.

Ms N E LOUW: In 2009, there was load shedding and her stomach was left with two litres of fluid. This young girl was left throughout the night with fluid in her body. The municipality, at the time, was a DA-led municipality, under an ANC-led government; therefore, both of them are to blame. [Interjections.]

The HOUSE CHAIRPERSON (Ms M G BOROTO): Order, hon members!

Ms N E LOUW: This budget is not doing justice to young girls and boys in poor communities who are depending on electricity. The Integrated Electrification Programme, IEP, is not designed to provide adequate electricity to all our people. Twenty years down the line and in the ANC's good story to tell we still have load shedding, and 11% of households are still without electricity. Therefore, the need to allocate an adequate and appropriate budget to the IEP has become a powerful weapon for changing the lives of our poor people. [Interjections.]

The HOUSE CHAIRPERSON (Ms M G BOROTO): Order, hon members!

Ms N E LOUW: Chairperson, with regard to funds, accountability of municipalities and the department remains a challenge. Although the department acknowledges this critical question, how come there are no stringent mechanisms and systems for monitoring and accountability? Merely acknowledging that a problem exists and not acting on it is not progressive at all.

The fact that larger industries are making billions in profits by paying lower tariffs than struggling law-abiding citizens is a very clear indication of what exactly the current regime is thinking of the poorest of the poor in this country ... [Time expired.] I thank you.

The HOUSE CHAIRPERSON (Ms M G BOROTO): Order, hon members! You will realise that the following speaker is the hon Esterhuizen from the IFP, but because of hon Carter's engagement somewhere else, they have agreed to swop. We will now call upon hon Carter, number nine. Thank you.

Ms D Carter

Ms N E Louw

UNREVISED HANSARD

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Monday, 21 July 2014 Take: 33

Ms D CARTER: Chairperson, as everyone has been dedicating speeches, I have decided to dedicate my speech as well to South Africans and to our nation who are really suffering from the lack of energy in this country.

In his state of the nation address, the President referred to the triple challenges of poverty, inequality, and unemployment. Without serious and sustained economic growth, we, as a nation, will be unable to attend to these challenges.

In fact, the President said that we require faster economic growth, acknowledging that the economy has grown below its potential over the last three years. The President noted that the prolonged and, at times, violent strikes, and the shortage of energy were the cause of the slow growth.

For considerable periods of time, experts have warned government of an impending structural shortage, and our government, under the leadership of the ANC, has denied it. The shortages of generating capacity and escalating costs have had a direct impact on our ability to create a growing economy, hurting our country now and into the future.

The completion of Medupi has been delayed and costs have escalated. Has anyone accounted for the mess that we find ourselves in? Has anyone been held accountable? Has anyone accepted any responsibility? Reports indicate further delays. The deadline is supposed to be in December with the first steady output in April next year. However, according to reports in the City Press newspaper, this deadline appears to have been quietly moved to the end of June next year.

Minister, we need to be continually updated regarding the completion of this project. I won't address the issue of Chancellor House and ANC enrichment due to time constraints, save to say that it was deplorable profiteering by the ANC out of their mistakes at the nation's expense!

The President indicated clearly that government will pursue the shale gas option. This is an emotive issue fraught with significant environmental concerns. It is imperative to give urgent attention to providing a sound policy and legislative process. The matter requires significant public consultation.

Chair, another impending crisis is called maintenance, particularly at municipal level. For more than a decade, municipalities have neglected the maintenance of electrical reticulation infrastructure. Recently, the Department of Energy had to once again bail out the capital of KwaZulu-Natal, Pietermaritzburg, with funding to save its ability. It has been painful and it has hurt us.

Without energy, we cannot grow the economy. Without a growing economy, we cannot develop as a nation. Without development, we cannot ensure a better life for all. The vision set out in the NDP needs to be put into goals and timeframes ... [Time expired.] I thank you.

Mr N M Khubisa

Ms D Carter

UNREVISED HANSARD

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Monday, 21 July 2014 Take: 33

Mr N M KHUBISA: Chairperson, the NFP enters into this debate with the understanding that access to electricity is a basic human right, like all other basic human rights, which include housing, water, and sanitation. Therefore, as the NFP we feel that for one to have access to electricity, there should be some kind of co-ordinated and well-integrated service delivery.

It is in this light that the NFP advocates for the revamping of slums and hostels to family units with electricity, water, and sanitation. It is also in this light that the NFP will push vigorously for slum clearance so that those people's dignity is restored and that they get decent housing, water, and electricity.

The NFP welcomes and supports the budget of R7,4 billion for this financial year. It is therefore encouraging to hear that the Department of Energy will strive towards increasing access to electricity with an additional 265 000 grid installations and 15 000 nongrid connections. Most people in rural areas and townships, particularly, have been crying for electricity for years. The Department of Energy still has to tighten measures aimed at monitoring the pace of connecting electricity or installations of solar water heating units, especially, as I have said, in rural areas and townships.

IsiZulu:

Kubuhlungu kabi ukuzwa ukuthi ugesi uphelile ikakhulukazi ngezikhathi zasebusika lapho abantu bewudinga khona kakhulu.

English:

Usually the pace is very slow. It takes ages for installations to occur after the marking of houses. I know that this needs access to water. Strong ties should be forged with the Department of Co-operative Governance and Traditional Affairs in order for people to have access to electricity. Of course, we need to monitor Eskom as well in order for us to know exactly to which department it reports - whether it is to the Department of Public Enterprises or the Department of Energy.

Having said that, and in conclusion, I must say that we also need to educate people to get engaged in engineering services, electrical engineering, nuclear energy, and all other forms of fuel and gas in order for us to have a pool of skills.

Finally, I must say that we need to ensure that we engage a lot of black people in the business of energy, gas, and fuel. This sector has been the monopoly of a few individuals for years. Therefore, as the NFP, we will advocate for more black people to get involved in the business of energy, gas, and fuel. Thank you. [Applause.]

THE DEPUTY MINISTER OF ENERGY

Mr N M Khubisa

UNREVISED HANSARD

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Monday, 21 July 2014 Take: 34

The DEPUTY MINISTER OF ENERGY: Good morning, and thank you, Chairperson. Hon Chairperson, Minister of Energy, Ms Tina Joemat-Pettersson, hon chairperson of the Portfolio Committee for Energy, Mr Fikile Majola, fellow members of the executive, Members of Parliament, acting director-general, senior members of staff, invited guests and stakeholders, I would like to add my voice in thanking the millions of our people who have once again placed their faith and confidence in the ANC. We are humbled and we will not betray their trust. [Applause.]

The ANC-led government has correctly identified energy as an apex priority for the attainment of economic growth in the fight against the triple challenges of unemployment, poverty, and inequality. It is with the overwhelming mandate you have given us that we are here today to outline how we plan to tackle the scourge of joblessness in a very challenging global and economic environment. We do this as part of a larger collective of government across the three spheres. We are cognisant of the fact that we cannot do this alone, and we will work together, hand in glove, with our people and the organised formations of labour, business, and civil society.

The National Development Plan, NDP, has outlined the need for an energy sector that promotes economic growth and development, social equity through expanded access to energy services, and environmental sustainability through concerted efforts to reduce pollution and mitigation of the effects of global climate changes.

The ANC manifesto identified the access to reliable energy supply in all its forms as a priority for this administration. The 2014 state of the nation address of the head of state, President Jacob Zuma, has put energy at the centre of economic development for the country. The right combination of policies and technologies is strategically important to ensure that the links between economic growth, the increasing energy demand, and the associated energy related carbon dioxide emission are managed as we increase our energy generation capacity. It is thus important that our energy policies address issues of energy access, sustainability, affordability, and appropriate quality of services for the end-user. I'll expand on this matter a little later.

The department and the state-owned enterprises and companies for which it is responsible have a mandate, collectively, to ensure that security of energy is not only about the provision of electricity, liquid fuels and gas, but also about sustainable utilisation, affordability, and accessibility for our people, business, and industry. It is with this very clear understanding and appreciation of its urgency that the energy plans developed for the short, medium, and long term need to be supported by effective policies; strong institutions and human resources; effective governance; and a regulatory framework that addresses the critical needs for skilling and skills transfer, youth unemployment, and localisation of energy inputs so as to grow our local industry.

We have been elected on a mandate that prioritised energy security, and our responsibility as the executive is to ensure that the policy trajectory is in keeping with the optimum and efficient energy mix. The roll-out of the renewable energy programme has been applauded in a number of quarters, including here. However, there seems to be a reluctance to embrace the totality of this energy mix that our people have called for.

Coal will continue to be a major source of energy both for liquid fuels and electricity. We are a country blessed with abundant coal reserves. It is imperative that we provide leadership in the cleaning of our coal for energy production. This is a resource we can ill afford not to exploit.

As part of that energy mix, we remain resolute in our belief that the potential for shale gas in the Karoo basin needs to be exploited. This has the potential to create a new industry and associated skills. The need to ensure that it is exploited with great care to the environment cannot be overemphasised. The use of imported gas will continue, and efforts to explore for more gas offshore will be accelerated. We are aware of the major international company whose drilling rig is about to move into place in the Southern Cape, beginning what we believe is an exciting phase for our country.

The infrastructure for liquid fuels has served the country for a number of decades. In addition to the 20-year liquid fuels' plan, the department will conduct a vulnerability assessment of existing fuel imports, manufacturing, and distribution infrastructure. This will be done to test resilience and the ability to respond to various events. The liquid fuel sector has witnessed some changes in the past decade. However, we believe it offers the greatest opportunity for radical economic transformation. In this regard, the department will continue to work closely with the Department of Trade and Industry to identify an approach that will accelerate transformation in this sector. This will further be supported by the Small Business Development Ministry.

State-owned entities are a critical component in the implementation of our energy policies. It is with this in mind that we began a process of ensuring that we work very closely with them in order to provide policy guidance and support where required. Strong, focused, and well-governed entities are required to meet the challenges of energy security in South Africa.

The department is currently engaged in discussions with and providing support to the Central Energy Fund, CEF, group that will finalise their ongoing restructuring process this year. In his state of the nation address the President identified CEF as one of those institutions that will be required to restructure to align with the need to respond to the challenges and opportunities in the energy sector today.

We are acutely aware of the urgency to expedite the finalisation of the Integrated Energy Plan, IEP, and the updated Integrated Resource Plan, IRP. The policy development processes are urgent and necessary for the industry. However, we do ask that you bear with us as we strive to ensure that these policies serve the purpose of providing policy certainty; ensuring energy security; supporting the development of local industries; creating jobs; and transferring skills.

Allow me to reiterate the democratic government's commitment to give concerted attention to energy efficiency. This is the role for each and every one of us. We all need to know how much energy we consume in our households, in our small enterprises, and indeed in each of the major industries as industrial users. Once we know this, we are in a better position to identify where we can make the necessary reductions.

The energy consumption I'm referring to includes electricity, liquid fuels, and natural and petroleum gases. Inefficient appliances need to be discarded or replaced. When purchasing vehicles, fuel efficiency must be a key consideration. The department and the national energy efficiency agency within Sanedi, working with, amongst others, the National Business Initiative, will ensure that energy efficiency programmes touch every facet of our lives. These programmes will include the implementation of the smart grids and energy efficiency tax incentive schemes.

As already alluded to by the Minister, nuclear energy plays an important role in the energy security of our country. Going forward, the nuclear energy company of South Africa will play a pivotal role in the localisation of our nuclear build programme, which is in line with our energy policy and the IRP 2010 in particular. I would like to pause here so as to emphasise the point that we somehow seem to forget or overlook. We have been utilising nuclear to produce energy for decades. In fact, our host city, Cape Town, is basically powered by nuclear energy. We have the requisite expertise and know how to ensure continued safe utilisation of nuclear for power generation.

Regarding the new nuclear build programme, the department is fully cognisant of the fact that providing regulatory oversight over the new nuclear build programme will require a strengthened and better capacitated regulatory body. Together with the National Nuclear Regulator, NNR, the department will ensure that capacity enhancement for both human capital and facilities continue to be the strategic thrust of the regulator over the Medium-Term Expenditure Framework, MTEF, period. Over and above this, the NNR is in discussion with various stakeholders to establish a nuclear and radiation safety centre of expertise to create a pipeline of skills. This centre, which will be housed in one of the local universities, will involve collaboration of the NNR with its international partners as well as local stakeholders. In addition to this, the National Radioactive Waste Disposal Institute, NRWDI, was established in the 2013-14 financial year with a mandate to fulfil the institutional obligation of managing the disposal of radioactive waste on a national scale. The board of the NRWDI is currently working with the department to ensure that it is operational.

The National Energy Regulator of South Africa, Nersa, will be focusing, over the medium term, on improving oversight of the regulated industries by conducting compliance audits and inspection, and ensuring licenses and certain tariffs. Nersa will do the above in order to encourage investments in the sector, new entrants, and improved competition.

If we are to achieve the energy vision as contained in the National Development Plan, NDP, skills development in the energy sector is of critical importance. Given the planned energy infrastructure investments, the country will require substantial investment in technical skills such as engineers, technicians, artisans, and project and programme managers. This is absolutely essential. The department will be engaging with relevant stakeholders in both the public and private sectors to address the above challenges.

In the meantime, we have formed partnerships with the energy and waste sector education and training authority, Seta, as well as the Chemical Industries Seta to increase the scope of energy training in order to meet the skills needed in the energy sector. The critical skills identified are catered for in the approved sector skills plans of the aforementioned Setas.

We plan to leverage the benefits of the massive investment in the energy sector by ensuring that our departmental programmes display a greater degree of responsiveness to the needs of our people, such as the empowerment of women and youth, whether it is through the integrated national electrification programme, the roll-out of solar water heating programmes, the Independent Power Producers programme, or the transformation of the liquid fuel sector. We will continue to strengthen interventions and programmes aimed at capacity-building amongst vulnerable sectors in order to enable their meaningful participation in the energy sector in support of the country's transformation agenda. This is an agenda that guides us on a daily basis.

As part of the Decade for Women, as declared by the African Union, AU, we will expand our involvement in the Southern African Development Community, SADC, region through various programmes which include the planned workshop on clean energy education - an empowerment workshop to be held next month. The objective of the workshop is to include participation and awareness of opportunities in the clean energy sector on our continent. We would urge you to follow these developments because I am convinced that all of you here are very committed to supporting the objectives of the women's month of August.

A month ago, we lost one of our female staff members at the hands of somebody whom she trusted and who was supposed to protect her. The department is following up on the criminal proceedings and giving support to the family that has lost this beloved member. We intend to embark on an awareness campaign for our staff to sensitise them about gender-based violence and abuse. None of us can afford to turn a blind eye when the scourge of gender-based violence continues to afflict our society, communities, and homes.

The socialisation of our young boys and girls is key if we are to break this cycle of violence and build responsible citizens who know their rights and also understand and appreciate that for every right, there are responsibilities. This is an issue that all of us obviously hold dear, and both the Minister and I are very committed to ensure that we create a conducive environment in the department, which will hopefully impact on broader communities and the people that we interact with. Abuse, in whatever form, can never be acceptable. In this particular case, we lost a life, and we continue to lose lives in this country. So, as we are working towards building a better South Africa, our efforts in this regard cannot be divorced from such issues.

The energy programmes require a capable department that is able to respond with the necessary agility. To this end, we will review the structures of the department to ensure that there are requisite skills and abilities to meet the urgent demands imposed by the need for energy security. This will extend to the state-owned entities as they are an important component in the implementation of our policies and plan.

I would like to conclude by saying, that while I've been in this energy portfolio for a very short time and this is the first time I have had the opportunity to address the House, I do believe that as a country we have the commitment and the ability to respond to His Excellency President Jacob Zuma's call for the radical transformation of the energy sector. The Department of Energy and its entities are ready to meet the challenge, and working together we can achieve more. I thank you all on behalf of Team Energy. [Applause.]

Ms T Mahambehlala

The Deputy Minister of Energy

UNREVISED HANSARD

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Monday, 21 July 2014 Take: 35

Ms T MAHAMBEHLALA: Hon Chairperson, hon Minister of Energy Ms Tina Joemat-Pettersson, hon Deputy Minister of Energy Ambassador Thembisile Majola, hon chairperson of the Portfolio Committee on Energy Mr Fikile Majola, Deputy Ministers present, hon Members of Parliament, and invited guests, allow me to greet you.

On Friday 18th July, the world and South Africans in particular from all walks of life celebrated Mandela Day. It was indeed a sombre moment for all of us to celebrate what Madiba stood for on the occasion of his first birthday anniversary since his departure. Mandela and his generation of cadres have left an indelible legacy of selflessness and commitment to the ideals of freedom for all, which we have to preserve and expand at all costs, so that each human being is able to attain his or her full potential without any hindrance.

It was Madiba's generation who proclaimed to the world that freedom in their lifetime was what they would fight for, and indeed they attained that objective. Equally so, they stated in our Reconstruction and Development Programme, the RDP, which is a practical expression of the Freedom Charter, that we must all strive towards a better life for all our people. In that unequivocal statement of a better life for all, it was their strongest belief that indeed South Africa can become a better and just society by providing services and harnessing everyone's full potential without looking at his or her skin colour, gender, class, ethnicity, or geographic location.

Hon members, we are indeed proud that 20 years into our freedom and democracy our country, South Africa, is a much better place than it was before 1994. We can state boldly, without any fear of contradiction, that ours is a society under construction in pursuit of the ideals to which Madiba committed 67 years of his youth and adult life. Others of his generation had also committed years of their lives to these ideals.

As part of the ideal of a better life for all our people, the ANC-led government, since 1994, has implemented a massive electrification programme that has changed and is continuing to change the lives of our people for the better. Today, we have more households that are connected to the electricity grid, compared to what the apartheid government and its predecessors achieved.

As this House gathers to debate how to make South Africa a better place, fewer things rival the provision of energy to our people. This is something that was well understood by the apartheid regime. They knew that, like education, if you deprived a nation of electricity or energy, you deprived a nation of economic viability - deliberately setting back a nation, and setting up some for continuous privilege.

When the ANC-led government leaped forward to create a democratic South Africa, only 67% had electricity. On top of being deprived of their dignity on a daily basis, the majority of South Africans were deliberately plunged into darkness. Democracy has not only brought back the dignity of South Africans, but some have been literally pulled out of the dark. Hon members, in other words, electricity has become far more accessible now than it was before. [Applause.] Over 5,2 million households were connected to the grid between 1994 and 2010 alone.

Our work in this regard is not yet done. We need to continue providing electricity to our communities, efficiently and consistently. Some would respond and say that the only way we can do this is by privatising critical elements within Eskom. This is, of course, reliant on the capitalist principle that the market is the most efficient allocator of resources. This is the case with parties like the DA.

The failure to understand that South Africa is a developmental state informs such asymmetrical suggestions. As the President of the ANC stated on 8th January:

The developmental state should maintain its strategic role in shaping the key sectors of the economy. This means that we need to strengthen the role of state-owned enterprises and agencies in advancing our overarching industrial policy and economic transformation objectives.

South Africans must be vigilant of the demagogues who, time and time again, claim to be paragons of perfection. Lest we forget, in 2011, the very same DA that the hon Maimane leads used the plight of poor people in the Western Cape. I'm not sure if hon Maimane will remember this, because he was then probably not part of the DA as yet. A television advertisement by the DA claimed that they had delivered electricity in Tambo Square informal settlement in Cape Town, only to find that it was "izinyoka" [snakes].

It was the party that abused a vulnerable poor community member, Ntombikayise Lugalo, to peddle lies amongst South Africans that the party had delivered electricity to her house. The ANC's head of campaigns and organisational development at the time, hon Fikile Mbalula, found that the area had not experienced much service delivery from the DA-led City of Cape Town since the party took over from the ANC in 2006.

Shockingly, he also found that the star of the DA's advert was paid with a food voucher, by a white man belonging to the DA, to heap praises on the DA for delivering electricity, in front of the camera, yet she still relied on candles and paraffin. The DA moved swiftly to provide an illegal electricity connection to Lugalo's shack. This is an illegal act that Eskom has often described as the work of "izinyoka" [snakes], which claims many innocent lives, particularly in informal settlements. Under the DA, poor people continue to be used as pawns for cosmetic effect. [Interjections.]

We want to see more cases like Thulamela Municipality in Vhembe, Limpopo. This municipality had an electricity backlog in approximately 27 000 households. The municipality, with the assistance of the Department of Energy, obtained R90 million and completed 4 500 connections in 2012-13, whilst an amount of R70 million was obtained in 2013-14, which resulted in 4 000 connections. In addition, Eskom also completed approximately 6 500 connections at the time, resulting in 15 000 connections being done in two financial years. The overall backlog in the Thulamela Municipality is currently at 12 000, and at this rate we will be completing some of this during this financial year. This is one of the good stories that we should tell. Thank you. [Applause.]

Mr J A Esterhuizen

Ms T Mahambehlala

UNREVISED HANSARD

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Monday, 21 July 2014 Take: 36

Mr J A ESTERHUIZEN: Chair, as the population in South Africa rapidly increases, so does the need to meet the rising energy demand in economical, social, responsible, renewable, and sustainable ways.

The reliance on clean and renewable energy sources could save the country from high carbon volumes and environmental hazards. Coal is at present the greatest and most dominant source of energy, producing 70% of energy in South Africa. The renewable energy sources constitute approximately 8% of energy, which means there is a massive margin for expansion in this area of energy generation, and still a long way to go in ensuring more energy is produced from renewable energy sources.

In his state of the nation address, President Zuma mentioned a new nuclear power station that would contribute 9 000 megawatts of energy. But energy choices made today will fundamentally affect the country's ability to combat climate change and create clean and safe energy for all South Africans.

In addition, one must also take cognisance of the recent statement by the National Union of Mineworkers, NUM, who warned that they do not support any calls to employ nuclear energy as part of the solution for sustainable energy. South Africa's stumbling economy cannot take another knock from unions who are seemingly able to dictate policy to government.

With increasing concern over whether consumers will be able to afford Eskom's ever-rising tariffs, and with only 60% of distributed electricity creating revenue – the rest being lost through illegal connections – Eskom's debt rose by 11% to R16,6 billion. Added to this, is the steadily declining sales trend as more users begin to diversify their energy mix.

Eskom had 14 gas turbines built in the Western Cape as an emergency backup and said that not more than one would be used at a time as this is the most expensive method of energy supply, costing approximately R2,70/KWh compared to an average cost of 59c/KWh. Yet, all 14 are currently in use, contributing to Eskom's huge loss of income.

Eskom appears to be in way over its head. Government will have to intervene and take drastic and immediate action. The warning signs are already there. The Reserve Bank last week revised our growth forecast down to 1,7%, mostly because of the prevailing uncertainty in the energy sector.

Having said all that, the IFP supports this Vote. I thank you.

[Applause.]

Ms C Dudley

Mr J A Esterhuizen

UNREVISED HANSARD

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Monday, 21 July 2014 Take: 36

Mrs C DUDLEY: Chair, when South Africa has a clear development plan and growth is the objective, suggestions that Eskom customers should save electricity are hard to swallow. Finance Minister Pravin Gordhan's reference to South Africa's tight energy supply damaging the economy seems more to the point.

The ACDP welcomes the expansion of renewable energy in the country with the new solar power plant near Kimberley and the 60 turbines at Jeffreys Bay Wind Farm, which is exceeding its 41% capacity factor, and will feed around 460 000 megawatts a year into South Africa's grid. The programme at Jeffreys Bay has raised a lot investor interest. A clearer commitment by government in respect of the long-term scale of renewable energy's procurement programme would help to allay investor uncertainty.

The ACDP commends all concerned on the 47 renewable energy projects concluded in 2012 and 2013, which included the first South African utility scale PV facility in the Northern Cape.

We also commend the City of Cape Town for signing an agreement for the establishment of a pilot plastics-to-oil plant at its Kraaifontein integrated waste management facility. But – and this is a big but – why a foreign firm, when there are local solutions which just require funding? Government support only for the commercialisation of already developed technology is seriously problematic, as many South African investors have come up with innovative solutions to our problems. With sufficient resources to develop, we have more than sufficient sunlight for the delivery of liquefied natural gas, LNG, for our own consumption as well as export, and to extract atmospheric water using solar power to provide for communities in arid areas.

Two years ago, the ACDP was hopeful that government would move on the potential of the gas discovery in the Revuma basin in Mozambique. Gas emits about half the amount of pollution that coal does for the generation of the same amount of electricity, and has an energy feedback for the production of synthetic fuels, This could also serve to decrease South Africa's carbon emissions.

Hon Minister, why does the revised 20-year energy draft plan seem to ignore the Revuma basin? It is the world's fourth-largest known gas deposit, and could solve Eskom's immediate energy crises and avoid the costly construction of a third new coal power station. Surely, a pipeline is the most sensible thing, and it should absolutely be in the IRP.

Another concern is the current status of the new nuclear Bills. There is a need for greater clarity. The ACDP is calling on you, hon Minister, for a full enquiry into the current state of our existing nuclear industry. Koeberg has passed its sell-by date and is being shut down on a regular basis for repairs at huge costs. The department seems to want to extend its life, just as the Safari 1, while nuclear reactors the world over that were built in the same era have officially closed down.

The ACDP will support this Vote in the interests of going forward, despite its many reservations. [Time expired.]

Mr R T Mavunda

Ms C Dudley

UNREVISED HANSARD

EPC – GOOD HOPE CHAMBER

Monday, 21 July 2014 Take: 36

Xitsonga:

Nkul R T MAVUNDA: Ndza khensa muxiximeki Mutshamaxitulu eka nhlengeletano ya siku ra namuntlha. Eka Holobye wa Ndzawulo ya swa Eneji na Xandla xa yena, swirho hinkwaswo ku katsa na Vaholobye lava koteke ku va kona eka siku ra namuntlha, ndzi rhandza ku mi xeweta.

Tshivenda:

Ndi matsheloni.

English:

Hon Chairperson, it gives me great pleasure to address this august House on an important occasion such as this where we debate the energy budget, which the ANC supports.

Hon members will recall that, in 2007, at the ANC's 52nd national conference held at Polokwane, the ANC, among other things, resolved to pursue a programme of economic transformation based on the following pillars: ensuring security of supply of energy sources; and pursuing an energy mix that includes clean and renewable sources to meet the demands of our fast-growing economy.

The ANC took up a leading role in global debates on environmental justice, including participating in the Rio Earth Summit and the 2002 South African-hosted World Summit on Sustainable Development. At these historic forums, the environmental dimensions of the development challenges facing Africa and the countries of the South were debated.

Driven by its sustainable development orientation, the ANC will continue to ensure that the South African economy benefits from the global potential of the renewable energy sector. It will do so through the provision of incentives for investment in renewable energy infrastructure and in human resources energy to ensure that institutions and companies are ready to take full advantage of renewable energy opportunities. Moreover, it will promote the realignment of institutional mechanisms which will fast-track the utilisation of renewable energy so as to mitigate climate change effects.

Hon Minister, it is therefore not unexpected that the ANC's manifesto enjoins the ANC-led government to ensure that solar and wind power feed into the electricity grid to increase South Africa's generation capacity and promote environmental sustainability.

Further to that, the government is obligated to install solar water geysers in 1,3 million homes. The call is therefore made to the department as the implementing organ of state to promote and fulfil the manifesto commitments by enhancing South Africa's energy mix in general and, in particular, by installing solar water heaters.

The Constitution requires government to ensure that national energy resources are adequately tapped and delivered to cater for the needs of the nation and that the production and distribution of energy be sustainable and lead to an improvement in the standard of living of citizens.

Renewable energy that is produced from sustainable natural sources will contribute to sustainable development. It is apt to note, amongst others, that South Africa experiences some of the highest levels of solar radiation in the world. This radiation is available to meet most energy requirements in South Africa.

South Africa recognises that the emission of greenhouse gases such as carbon dioxide from the use of fossil fuels such as coal and petroleum products has led to increasing concerns about global climate change. Given increased opportunities for energy trade, particularly with the Southern African region, government is committed to pursue energy security by encouraging diversity of both supply sources and primary energy carriers. As most are indigenous and naturally available, security of energy supply is thus improved and not disrupted by short-term international crises, as often occurs in relation to petroleum sources.

In my remaining available time, I would like to add to the understanding of some of the members here. The department has established integrated energy centres, IECs, at Ulundi and Mbizana. At these centres members of the community are able to benefit through community projects. These IECs provide access ... The ANC supports the Budget Vote. Thank you. [Time expired.] [Applause.]

Mr G Mackay

Mr R T Mavunda

UNREVISED HANSARD

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Monday, 21 July 2014 Take: 37

Mr G MACKAY: Hon Chairperson, hon Minister, Deputy Minister, and fellow South Africans, it is a great privilege to stand before this House today as a newly elected Member of Parliament, to deliver my maiden speech in the service of the people of our nation. At this time, I am reminded that, despite the vagaries of our past, we are now and will forever be one nation with a single and shared future. I am also cognisant of the overwhelming desire of South Africa's people for their politicians to place partisan interests aside and work together. To that end, hon Minister, I wish to assure you of my unwavering commitment to the country's Constitution, and my sincere desire to work with you in the interests of our people.

House Chairperson, we are not blind. In fact, we are acutely aware that 300 years of colonialism and apartheid have entrenched upon us severe development challenges that are further magnified by economic forces of globalisation. We acknowledge the continuing legacy and intergenerational consequences of colonialism and apartheid. We are intensely aware that undesirable colonial and apartheid patterns of capital accumulation have continued unabated under successive ANC-led governments. We know too, that this is the case in the energy sector, where the ANC has actively defended the status quo, despite this not being in the broader interests of our country or our people.

It is broadly accepted that South Africa has followed a heavily capital and energy-intensive development trajectory, powered almost entirely by the extraction, sale, and use of coal. With its roots in the mineral discoveries of the late 1860s and 1880s, and known as the mineral-energy complex, this development trajectory is a product of the original compromises established between British colonial masters and the country's original industrialists. Along with cheap energy, the colonial and later the apartheid-era state subjected some people to cheap labour. Cheap energy and cheap labour were a boon to South Africa's mines and the narrow industries associated with mining. The social consequences of this state-aided policy were, however, devastating.

In 1996, the Truth and Reconciliation Commission found that the mining industry's involvement with the state in the formulation of oppressive policies and practices that resulted in low labour costs could be described as first-order involvement in apartheid.

Firmly entrenched in this perspective, the DA expresses its concerns about the failure of this and all previous ANC-led governments to shift South Africa's development trajectory towards a broader industrial path in which a diversity of industries and sectors are engaged to compete for capital and appropriately priced energy, but within a framework of fair labour practices.

Yet, the ANC is doing nothing to achieve real structural change in the energy sector. The mineral-energy complex is left untouched as this government refuses to dismantle Eskom's monopoly, or reduce our country's dependence on coal. As such, the continued application of this apartheid-era logic will continue to reverberate across South Africa's economy and society.

With the minutes remaining, let me draw your attention to the some burning issues. Firstly, I call on the Minister to come clean on the extent of the energy crisis affecting the nation. The idea that Kusile and Medupi will mean a return to business as usual ... [Interjections.]

Mr G S RADEBE: Order, Chairperson.

Ms N W A MICHAEL: On a point of order: I wonder if it is parliamentary that the hon member ... [Inaudible.]

The TEMPORARY CHAIRPERSON (Mr B L Mashile): Hon members, let us respect members who are addressing the House for the first time. Let us give them time to address the House. Continue, hon member.

Mr G MACKAY: I call on the Minister to come clean on the extent to which the energy crisis is affecting the nation. The idea that Kusile and Medupi will mean a return to business as usual is for South Africa both troubling as well as misleading.

The Minister's own officials have privately admitted that the 5% growth as promised by His Excellency, the President, is in fact a complete impossibility. As the department knows, but isn't yet saying, there is insufficient energy flow available in the economy to achieve economic growth as promised by the President. It therefore goes without saying that just as 5% economic growth is a white lie of epic proportions so too are the President's promises with regard to jobs. There can be no jobs without sufficient energy to drive economic growth.

Furthermore, I wish to express my concern that South Africa will most likely fail to reach its greenhouse gas emission targets. Let me be clear, we cannot for a moment accept another bout of ANC Aids-styled denialism. Global warming is a fact. Eskom is the world's second largest power utility emitter of carbon dioxide, CO2, globally; this is a fact. Another fact is that Kusile alone will produce 37 million tons of CO2 equivalent emissions annually. Coal emissions continue to have a disastrous effect on the health of our people; this is also a fact.

A recent study by Greenpeace found ... [Interjections.] ... Sorry, hon member, if I may continue ...

A recent study by Greenpeace found that air pollution emissions from Eskom's coal-fired power plants are currently causing an estimated 2 200 premature deaths per year; this includes approximately 200 deaths of young children. The economic costs of this pollution to South Africa's society are R30 billion a year. It is unacceptable that the costs of mining, energy production, and energy-intensive industrial production are externalised while profits are privatised.

As such, the DA welcomes the department's encouragement of renewables, as well as carbon capture and storage technology as solutions to our ever expanding carbon footprint. However, the DA believes that an aggressive uptake of renewables within the energy mix, via the inclusion of Independent Power Producers, will be far more successful in lowering carbon emissions whilst introducing much-needed competition to the energy sector.

An area in which the country can be justifiably proud is the record number of private households that have been included on the national grid. To date, 4 million households have been electrified since 1991.

Although a good story to tell, the story does not seem to be heading for a happy ending. For example, government's ambition to reach universal access by this year, 2014, will not be met. Instead, claims that perhaps in 2021 or 2022, or 2025 as the Minister indicated today, is supposedly a more realistic timeframe. Yet, even this new target seems overly ambitious when one considers that electrification has dropped from approximately 400 000 per annum to 150 000 per annum.

Finally, let me take this opportunity to address the elephant in the room; the proverbial elephant I am referring to is, of course, the hon Minister of Energy. It is a matter of public record that the Public Protector has made adverse findings against the Minister in her previous capacity.

Mr G S RADEBE: Chairperson, on a point of order: Is it parliamentary for the member to refer to Members of Parliament as elephants? [Interjections.]

The TEMPORARY CHAIRPERSON (Mr B L Mashile): Hon member, can you withdraw that remark?

Mr G MACKAY: My statement was about a proverbial elephant and not that the Minister is an elephant. It's anyone's guess ... [Interjections.]

The TEMPORARY CHAIRPERSON (Mr B L Mashile): Order, hon member! Just withdraw it!

Mr G MACKAY: I'll withdraw it. It's anyone's guess as to the President's reasoning in appointing Minister Joemat-Pettersson, especially since the President is yet to apply his mind as to the findings of the Public Protector.

The proposed procurement of additional nuclear capacity, which will constitute the most expensive public tender process in South Africa's history, reflects the magnitude and importance of the decisions to be taken by the Minister of Energy. To you, Minister, I say, South Africa can ill afford another arms deal scandal. As such, I call on the Minister to ensure the highest level of transparency in the procurement process. By this I mean that the Portfolio Committee on Energy actively provides oversight of the tender process ... [Time expired.] Thank you, Chairperson. [Applause.]

Mr M H Matlala

Mr G Mackay

UNREVISED HANSARD

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Monday, 21 July 2014 Take: 38

Mr M H MATLALA: Chairperson, hon Minister, Deputy Minister, hon chairperson of the portfolio committee, hon members of the committee, the acting director-general of the department and his officials, the Deputy Minister of Mineral Resources, and fellow South Africans, good morning. Is it afternoon already? Yes, good afternoon.

Let me start by explaining energy security because it appears that we do not all have the same understanding, which is that energy security includes intervention on both the supply and demand sides. We are not limited to ensuring supply in meeting our objectives. Energy security is defined to include ensuring supply, managing demand, and ensuring appropriate quality of service for the end user. The fourth administration established the Department of Energy in 2009 as a result of splitting the mining and energy portfolios within the former Department of Minerals and Energy. The split allowed for greater focus on energy issues, given the energy challenges in that period that led to major power disruptions.

There was a need to focus on energy security, as mandated by the ruling party, the ANC, through various mechanisms, including policy, legislative and regulatory amendments, forward planning, and implementation plans. Again, I need to point out that the Department of Energy is the policy department, and implementation of various critical interventions is done through Eskom, municipalities, Independent Power Producers, PetroSA, concessionaries, etc. The department is responsible for creating a policy and regulatory environment that is conducive for investment in order to support and grow the economy.

What are the challenges that confront our country? We can summarise them as follows. There is a need to reduce escalating energy prices, be it for electricity or petroleum products, to cushion the adverse impact on the poor. There is also a need to transform the energy sector and bring more historically disadvantaged people into the economic mainstream, over and above increasing access by ordinary South Africans to modern energy carriers.

In the context of Eskom's challenges, there is a need to implement our plans to keep the lights on in the short to medium term. This includes finding a solution to financing the various projects in a way that balances steep electricity tariff increases on the one hand, and, on the other, guards against blackouts and stunted economic growth due to a lack of energy capacity. There is a need to improve energy efficiency and demand-side management. The Deputy Minister mentioned that earlier on. There is a need for short-term power solutions that will assist in meeting demand until Medupi and Kusile are fully operational. There is a need to secure our liquid fuel supply chains, including crude oil supplies, refining, and distribution.

The ANC-led administration is ready to provide solutions to these challenges since it knows what these challenges are. This ANC-led government ensured that a new household electrification strategy was approved by Cabinet in June 2013 to address electrification backlogs and to ensure universal access by 2025. This will be done by means of utilising grid extension, but about 10% of the backlog will be addressed by means of nongrid photovoltaic, PV, solar systems. This is in line with the proposals of the National Development Plan, NDP, for reaching universal access, but the target date set in the NDP is 2030. I think hon Greyling is listening very attentively.

In 2002, the department introduced the first ever industry transformation charter as an effective tool for transformation in the petroleum and liquid fuels industry – the Charter for the South African Petroleum and Liquid Fuels. Ten years later, an assessment of the extent of compliance by the oil industry was commissioned and showed that there was still a long way to go. Radical transformation must happen in this sector. Energy efficiency is at the core of our energy security strategy, given its cost effectiveness, speed of deployment, and job-creation potential. Interventions in the public buildings industry and the residential sector are the pillars in the National Energy Efficiency Strategy and National Energy Efficiency Action Plan produced by the Department of Energy.

Last year, this ANC-led government promulgated the energy efficiency tax incentive system, in terms of which companies can offset their tax payment in proportion to the amount of energy it had saved, which had been independently verified. You are rewarded for saving power, if you do it like that.

The Department of Energy also published the biofuels incentive framework for public comment, in order to facilitate the mandatory blending of ethanol into our liquid fuels. The increased cultivation of energy crops like sorghum and sugar will be coupled with agrarian reform to result in more job opportunities and transformation of the economy. The biofuels framework must be accelerated. Government must finalise the regulatory framework to introduce clean fuels in the petroleum sector. The financing mechanism must be finalised soon in respect of the clean fuels programme to facilitate the necessary investment that refineries need to produce liquid fuels that are more environmentally friendly.

With regard to nuclear energy, the department must work with other government departments to develop a roadmap for the implementation of the nuclear programme. In the meantime, the department must continue to develop the localisation, financing, funding, skills development, and uranium beneficiation strategies to support the new nuclear build programme.

Electrification has more than doubled from 36% of the population in 1994 to 86% of formal housing in 2013. More than 5,8 million households, to date, have access to electricity. This is a very good story to tell, hon Greyling. [Laughter.] This financial year, more funds have been allocated to ensure that bulk electricity infrastructure is in place to ensure that a higher number of new connections can be made in the years to come. We applaud the fact that in the past five years alone, just over 1,1 million new connections were achieved.

Since the Renewable Energy Independent Power Producer Procurement Programme was initiated in March 2010, the Department of Energy has committed to purchase 3 000 megawatts from Independent Power Producers. This programme attracted over R150 billion in foreign direct investment. During the construction phase, just under 13 000 jobs had been created, of which about 7 500 were taken up by the youth, young people of this country. That is the ANC government working for you – working for you! [Applause.]

We are aware of the fact that the department works closely with immediate stakeholders, such as state-owned entities and companies that invest in the energy sector outside this country, as well as all spheres of government to ensure alignment in the areas of political security, and economic understanding of global trends and implications in the energy sector. [Interjections.] Keep quiet! The elders are still speaking. [Laughter.]

Energy security in our country depends, amongst others, on the diversity of supply sources of energy. This is particularly true for gas, crude oil, and nuclear fuel, as well as electricity. [Interjections.] Our country relies on crude oil imports from a number of countries around the world. A significant percentage, about 40%, of our crude oil imports originates from within the African continent.

Government needs to constantly ensure that the countries from which petroleum and petroleum products are sourced continue to view South Africa as a preferred destination for petroleum and, particularly, crude oil. It will therefore be important, in future, to ensure that energy is at the centre of our foreign relations. The Department of Energy must work very closely with the Department of International Relations and Co-operation in this regard. These departments need to continuously identify new partnerships with countries from which we can source energy whilst nurturing existing ones.

The ANC supports this Budget Vote. I thank you. [Applause.]

THE MINISTER OF ENERGY

MR M H MATLALA

UNREVISED HANSARD

EPC – GOOD HOPE CHAMBER

Monday, 21 July 2014 Take: 39

THE MINISTER OF ENERGY: Chairperson, I wish to thank all the members who participated in this debate.

Many matters and challenges were raised to which I believe we, as public representatives of our people, shall be seized with seeking and finding amicable solutions.

Again, I wish to emphasise that energy security and a sustainable supply of energy to our citizens is a collective responsibility. Constructive matters that were raised here will be given the necessary attention in seeking to keep our lights on, our economy productive, our cars on the road, our trains on the rail lines, and our planes in the sky.

The continued focus on Eskom is much welcomed and, in many respects, justifiable. But, Eskom does not report to the Department of Energy. Eskom reports to the Department of Public Enterprises. So, if you direct questions regarding Eskom to the Department of Energy, our standard response will be that Eskom does not report to the Department of Energy.

I need to assure this House and our people that, as government, the departments of Public Enterprises, National Treasury, and Energy are engaging on the challenges relating to Eskom. We realise that it is these three departments, in particular, which should find solutions to those challenges.

I want to thank the Deputy Minister Ambassador Majola, the chairperson and members of the portfolio committee, and the members of the select committee for their guidance. I would like to thank the department's senior officials, the acting director-general in particular, for their continued support in pursuit of the achievement of our goals.

My appreciation is also extended to the state-owned entities and energy sector stakeholders for their invaluable support. I would like to extend my gratitude to Sasol for their support of the consultative fora – which we will continue to have – and we wish to encourage the private sector to assist us in having these consultative fora.

The Gas Utilisation Master Plan, Gump, will assist us in the infrastructure development, which will be necessary to open up the gas market for the residential, commercial, and industrial sectors. These developments herald a new era in the exploitation of this resource. I wish to invite the private sector to prepare for their contribution in this regard.

We will release the outcomes of a gas feasibility study that is being completed in collaboration with Transnet, PetroSA, Eskom, and government. The prospect for gas to replace imported crude oil in the transport sector is very high on government's agenda.

The development of shale gas cannot be dismissed or ignored. On the contrary, we should be learning from others on how best to exploit this resource in the least intrusive and environmentally prudent way.

In October 2013, the Minister of Energy determined 2015 as the date by which crude oil refining companies will have to blend biofuels into petrol and diesel on a mandatory basis. This has provided certainty to the funders of the potential biofuel manufacturers that their product will indeed enter the market through oil companies. Thousands of jobs are expected to be created through the biofuels value chain.

We intend to strengthen the policy and planning capacity within our department so that we indeed have policy certainty. The Electricity Regulation Amendment Bill has to be passed in this cycle and will be passed. The National Energy Regulator Amendment Bill, which will improve the credibility of the decision-making process, has to be passed. The Gas Amendment Bill will promote efficient, competitive, and responsive economic growth and will leverage available gas resources. I ask the members of this committee to assist in the passing of this legislation.

The Independent Systems and Market Operator Bill - which is aimed at assisting with the planning of generation, implementing electricity dispatch, co-ordinating electricity wholesale by generators, and providing for trading of electricity - also needs to be passed.

The support of the portfolio committee is sought to process these critical pieces of legislation and, in so doing, provide further support in our efforts towards a more responsive energy system.

Hon members, Team Energy is energised to move South Africa forward, but we need the private sector, labour, and the public sector to move the energy sector forward. I invite all South Africans to be part of Team Energy.

It is my honour to present before this House the 2014-15 Budget Vote of the Department of Energy. I apologise to those in the overflow room where the connection was erratic. We hope that we will be able to give them a better copy of the budget speech. Chairperson and members of the committee, I thank you. [Applause.]

Debate concluded.

The Committee rose at 12:25.

"sans-s�:�">�r�phing from the masses of our people. Tell no lies. Expose lies whenever they are told. Mask no difficulties, mistakes, failures. Claim no easy victories.

It is within this context that I'm challenging you, hon Shivambu.

Chairperson, I think it is also important for me to assist hon George because I think he is, unfortunately, really displaying a tendency that is still stuck in the 1652 colonial racist white monopoly mentality. [Interjections.] I cannot expect you, hon member, to tell us as the ANC that we have a good story to tell. We have different agendas: you are here to defend white monopoly capital, and I am here to ensure that all South Africans prosper. Therefore, I am not going to be able to engage with you. [Interjections.] [Applause.]

Hon Minister, South Africa has rightly set herself the highest bar of excellence; hence, her mistakes are often magnified. Defying all odds, she has created universal expectations and sometimes even myths. South Africa is the home of the oldest liberation movement in the world, the ANC, which has become synonymous with political miracles.

Two of its Presidents, comrades Dr Nelson Mandela and Chief Albert Luthuli, are Nobel Peace Prize Laureates. Their highest ethical standards, ability to curb temptation associated with power and prestige, ability to conquer centuries of generational colonial racist psychological effects, as well as courage to preach peace and reconciliation in the face of aggression and the most extreme form of social, political, and economic injustice create a legitimate expectation from all fronts abroad and at home for the ANC to excel under the most difficult and often complex conditions.

Under the ANC stewardship, emerged a social contract amidst the devastating economic effects of Natives Land Act, Act 27 of 1913, and the Native Trust and Land Act, Act 18 of 1936. That social contract is the Freedom Charter of 1955, which proclaimed that all people are equal before the law and shall share in the wealth of the country as citizens, without any discrimination based on race and gender. This eventually culminated in the South African Constitution, Act 108 of 1996, hailed as the best in the world. The supreme law of the land demonstrates how far the ANC collective is prepared to make trade-offs in order to achieve lasting peace, prosperity for all, and social and economic justice.

I would like to borrow the words of Simon Critchley's in his book The Faith of the Faithless: Experiments in Political Theology, where he argues about authority of the law. He says:

If the social contract, understood as the coincidence of freedom and equality in the general will, is what breathes life into a legitimate polity, then it is the law that gives that polity motivation and legs to get up and walk.

This brings me to the one-sided narration of the South African story under the ANC in the past 20 years. All books that I have read recently, including the book by Prince Mashele and Mzukisi Qobo, The Fall of the ANC: What Next?, Alex Boraine's book What's Gone Wrong?, and Susan Booysen's The African National Congress and the Regeneration of Political Power, narrate a story that hardly appreciates the ANC's internal battles as it tries to root out corruption in this country. [Interjections.] The ANC has correctly identified corruption as the enemy of prosperity, and the ANC does act when corruption is brought to the fore. It is a difficult thing. [Interjections.]

You also have to understand that corruption is not synonymous with the ANC. [Interjections.] It is not synonymous with the ANC! It is synonymous with the colonial regime that reduced a black African person and coloured, in particular, to nothingness, and objects of wealth creation for white people. They even termed it a cruel necessity. They said "cruel necessity". How can cruelty be necessary?

This is why we are saying that it is in the final analysis the extreme duality of our economy - best described by former President Thabo Mbeki as a first economy, which is brazenly white, and a second economy, which is ashamedly black - that informs the ANC's policy choices, hon George. This is aimed at hon George for saying that we have incoherent policies, because our economic policies cannot ignore the fact that the majority of the people who are black and coloured are trapped in poverty. We cannot compromise public spending. We have to spend publicly. It is therefore disingenuous for anybody to claim that the ANC has incoherent policies.

It is also disingenuous not to acknowledge the effects of the 2009 global financial crisis, and the fact that our economy is contracting, and that the Reserve Bank has revised our forecast to 1,7%. There is a diminished appetite for South Africa as an investment destination of choice amongst the emerging markets. Of course, we agree with that. Hence, we are committing ourselves, as the Standing Committee on Public Accounts, to hold National Treasury and all its entities accountable so that we ensure that this country does not become part of what is termed the "shackled continent" by Robert Guest in his book The Shackled Continent: Africa's Past, Present and Future.

Of course, we are also concerned that South Africa does not appear on the list of the top 20 countries across the globe attracting most interest from western corporations, whilst Nigeria is on top. The continued unstable labour environment in our country is hurting our economy, Minister. [Interjections.] Our recovering economy is imposing an even stricter exercise of fiscal prudence. The decline in company income tax, which accounted for 24,7% in 2007-08, down to 19,8% in the 2012-13 financial year, and personal income tax that has more than quadrupled since the 2008-09 financial year are clear indicators of our economic challenges at hand, and constitute a clear call for us to perform effective oversight, irrespective of our ideological orientation, to ensure that this country, in the end, will emerge as a victor.

Compounding these factors are the complexities of Sars' global operational environment marked by covert tax dodging methods and tactics, such as sophisticated profit shifting practices by multinational companies, and an illicit tobacco trade. As the Standing Committee on Finance, we remain extremely concerned about international credit rating agencies whose downgrading of South Africa's financial institutions leads to high borrowing costs and defies logic, as we've been a stable constitutional democracy since 1994, notwithstanding our own mistakes and weaknesses. In the past 20 years, we have also only had three Ministers of Finance who are and were highly competent and really committed to fiscal prudence. [Interjections.] All of them have actually ensured that we meet our global fiscal commitments whilst ensuring that our agenda of creating a prosperous society is not compromised.

The finance committee has made an undertaking of vigorously scrutinising the effectiveness of Sars' programmes in dealing with these tax evasion practices. I must say, hon Shivambu, the standing committee has made a decision, and I'm not sure if you were there, that it would ensure that Sars acts on recovering revenue from individuals with high net earnings who are evading tax. This even includes the leader of your party who is a tax evader. [Laughing.] [Interjections.] We recommend that he sells all of his Rolex watches because I know that he does have a cell phone; so, he doesn't need a Rolex watch. We also suggest that now that you are wearing red overalls, he no longer needs the red overalls. [Laughter.] We can't afford this deficit in size as a result of an hon member.

Mr N F SHIVAMBU: Chairperson, on a point of order.

The HOUSE CHAIRPERSON (Ms A T Didiza): Hon Khoza, please take your seat. Hon Shivambu?

Mr N F SHIVAMBU: The hon member is making allegations about the leader of the EFF, who is an hon member of this Parliament. She is speaking about Rolex watches ...

The HOUSE CHAIRPERSON (Ms A T DIDIZA): What is the point of order hon Shivambu?

Mr N F SHIVAMBU: The point of order is that she is misleading Parliament about basic things. She is attacking the personality of the leader of the party, and we want to ask her to withdraw the remarks she has just made, please.

The HOUSE CHAIRPERSON (Ms A T Didiza): Hon Shivambu, it is for the Chair to advise the member whether or not to withdraw. Can you please take your seat? I've heard your point of order, and I will make a ruling. Hon Khoza, please continue.

Dr M B KHOZA: Chair, it is an open secret that hon Shivambu himself and hon Malema wear Louis Vuitton shoes; now they are wearing gumboots. They must auction those and pay Sars. [Laughter.] I'm not going to retract.

Mr N F SHIVAMBU: On a point of order, Chair.

The HOUSE CHAIRPERSON (Ms A T Didiza): Hon Khoza ... hon Shivambu, can you take your seat?

Mr N F SHIVAMBU: Alright, but can I raise my point of order first?

The HOUSE CHAIRPERSON (Ms A T Didiza): Can you please take your seat? Hon Khoza, in terms of parliamentary Rules, the statement you have made about hon Malema evading tax has been stated without proof, so I think you need to withdraw those allegations.

Dr M B KHOZA: Madam Chair, I withdraw the statement, but the merits remain. Thank you, Madam Chair.

The HOUSE CHAIRPERSON (Ms A T Didiza): Can you please withdraw it unconditionally?

Dr M B KHOZA: I withdraw, Madam Chair.

The HOUSE CHAIRPERSON (Ms A T Didiza): Thank you, hon Khoza. [Laughter.]

Dr M B KHOZA: Madam Chair, despite all the challenges that we face, it is also very important for us that, as we exercise our financial oversight, we acknowledge the achievements that have been made under the ANC-led government, often conveniently omitted by political commentators and opposition parties in their narration of the past 20 years of freedom.

South Africa is not dependent on foreign aid as is the case on most parts of the African continent. Despite the constraints of international commodity pricing challenges of the first and second economy, and the unstable labour environment, Sars collected over R813 billion during the 2012-13 financial year, which is R71 billion more than the 2011-12 financial year. South Africa's leading service delivery record in housing, the roll-out of electrification, telecommunications, and basic services is amongst the highest in the world, and this is often not said and is often underplayed. [Interjections.]

Chairperson, South Africa injects ... and I want to dispel the myth that says South Africa is encouraging dependency by injecting R120 billion in social grants. In fact, what we are doing under the ANC-led government with this R120 billion is re-injecting it in the economy and, at the same time, alleviating the burden of indignity and the plight of over 15 million trapped in poverty. John F Kennedy - and you are also a neoliberalist - said the following: "If you can't feed the many who don't have, the few who have can't be safe." [Applause.]

Under the ANC-led government, there is transparency and accountability, which we are continuously improving. The ANC-led government is challenged, and most of the time when the ANC-led government is challenged, it listens and makes amends. Our institutions that were established to ensure fiscal prudence, such as the Independent Regulatory Board for Auditors, have been voted number one in the world for four consecutive years. And so has the Auditor-General.

In South Africa, because we also want direct foreign investment, government has an entity called the South African Special Risk Insurance Association, Sasria. It is a government-owned entity which is one of only four in the world that has an insurance product to cover risks associated with political unrests, terrorism, and labour unrests.

Hon Chairperson, we are therefore saying that we are very happy with Sars' plan to modernise. However, we also have a word of caution for Sars. The reason for this is because we are saying whilst they are doing that ...

The HOUSE CHAIRPERSON (Ms A T Didiza): Hon Khoza, you are left with two minutes.

Dr M B KHOZA: Thank you very much, Madam Chair. We are also saying that we have to make sure that government departments honour this 30-day policy because it is not good for our small businesses as engines of growth and economic development to be frustrated by our own government. We welcome what the Gauteng government has done, from what I have seen this morning, by embarking on a campaign to cultivate the township economy by instilling a culture of entrepreneurship in the townships. [Applause.]

With that Madam Chair, the ANC supports the Budget. I thank you. [Applause.]

THE MINISTER OF FINANCE

MR M B KHOZA

UNREVISED HANSARD

EPC – COMMITTEE ROOM E249

Monday, 21 July 2014 Take: 10

The MINISTER OF FINANCE: Chairperson, thank you to all the members who have participated in this debate. Indeed, we will come from different angles when we make our points, which is evident of our democracy and the 20 years of its maturity.

The chairperson of the committee mentions a number of important points. These include: firstly, a focus on the structural reforms that we need to implement, in order to get our economy on the right path; secondly, the issue of synergy between the National Development Plan, NDP, and the Medium-Term Strategy Framework, MTSF, which government is currently working on, as you will see when they table their Medium-Term Strategy Framework; and, thirdly, the utilisation of grants and all the money that is transferred.

As I mentioned earlier, we take this matter of subnational governments quite seriously, because you will find that more than 60% of our Budget is actually spent at levels below the national government departments. Therefore, we need to focus on that in particular. We trust that in our engagement with the committee, going forward, we will monitor this quite closely.

One of the members also referred to the issue of local government, which the chairperson raised. Our partnership with the former Minister of Finance - who is now the Minister of Co-operative Governance and Traditional Affairs, Cogta - is important. We have had a series of meetings to forge this relationship in order to emphasise, firstly, the financial management at municipal and provincial levels, and, secondly, the service delivery aspect of it. We are making good progress, and I think we are on the same page in this regard.

The issue of taking account of certain assumptions in our forecasting is also noted, and in our response that we have prepared for the committee we are dealing with those, and we would want to engage more with the committee.

The issue of the presidential review of state-owned entities, and the implementation of some of its recommendations, is also on the cards for government. Thank you very much, chairperson, for guiding us.

Hon George talks about the incoherent economic policies of government. Honestly, I don't know which ones you have read and to which ones you are referring. I think the difficulty is trying to read our economic policies with the DA's policies. The twain shall never meet, even if you actually try to liken them, as some skewed-minded individuals have tried to do. Honestly, don't try to do that because you are going to read incoherence.

You even go to the extent of saying that the NDP and the New Growth Path, NGP, are incompatible. Which part of the NDP is incompatible to the NGP? If you look at the growth drivers that are mentioned in the NGP, you will find them in our budget review that we spoke about. I always refer members to page 4 of our budget review. If you read that soberly, you will understand where we are going. [Interjections.]

You talk about corruption and you go on, all over again. That is why you actually could not get the votes you wanted. Instead of focusing on your policies that you were putting forward, you were focusing on Nkandla.

It is because of the legislative framework that we as this ANC-led government have put in place that you are able to identify corruption today. The Public Finance Management Act, PMFA, was only passed in 1999 after the ANC came into power. What was in its place prior to that? The Municipal Finance Management Act, MFMA, was passed in 2003. What was in its place before that? You measure us against the same pieces of legislation. You are able to identify corruption as a result of the legislative programme that we have put in place. [Applause.]

With regard to National Treasury's oversight, it should be complemented by Parliament's oversight. We do our bit and Parliament does its bit. That is why we subject ourselves to scrutiny by these committees, in order to take our country forward.

You still talk about the Chief Procurement Officer, CPO, as being an establishment. It is already operational, and it has already made strides in dealing with transversal procurement in particular. We will report to the committee, but some of its work is already in the public domain.

You also talk about the Brics Bank and Development Bank of Southern Africa, DBSA, overlapping. Again, how do you read these two documents? Ask, and you shall be empowered. [Applause.] We have been working on the Brics Bank and we have just returned. Mr Ross has also correctly pointed out that, which is perhaps in conflict with what you have said, we have identified the infrastructure gap in the region to be in the range of about US $93 billion. That means we still have not had sufficient instruments to address this. Therefore, the Brics part only deals with the other part of it. We still need more of these in order to do it. So, there is no overlap between the Brics Bank and the DBSA.

You welcomed the Davis Tax Committee. Thank you for that. You also focus on the saga involving the Chief Financial Officer, CFO, of the Financial Services Board, FSB. We said in the committee, when we appeared before the committee with regard to our strategic plan, that we have taken action, and we have read you the statement. We have taken action in all three areas.

The first area is that of an official in our important regulatory institutions who has been caught in the act, and we are dealing with that at a FSB level. The FSB has also publicly outlined exactly what they have been doing in order to deal with this.

We are also taking steps on the side of the SA Revenue Service, Sars, because it also impacts on Sars. Sars has also issued a statement explaining exactly what we are doing. Action has already been taken in respect of some of the officials that were implicated.

The third part of it is about the taxpayer who is prepared to bribe someone to the tune of R12 million. How much is his liability? We need to focus on taxpayers as well. You completely lose sight of the taxpayer. The taxpayer is the person whom we should actually deal with. [Applause.]

Regarding some of the things you have raised, you will have to be patient until we get to the Medium-Term Budget Policy Statement, MTBPS.

Your skewed understanding of the economic environment when you talk about the role of government as only being to intervene where the markets fail is not what government is about. Government actually also has to play an active role in making sure that we drive our economic and developmental agenda.

Hon Shivambu, you have already been assisted with a number of things, and I would just like to say to you that you are going to have an interesting five years of learning. We are available to assist you.

The ANC started discussing this issue of growth and development before you were born. We came to the conclusion that there is no way that you can redistribute wealth before you create it. So, growth is primary. [Applause.] In the five years ... [Interjections.]

The HOUSE CHAIRPERSON (Ms A T DIDIZA): Hon Minister, you can take a pause. Is that a point of order, hon Shivambu?

Mr N F SHIVAMBU: The hon Minister does not know when I was born, and he is misleading the House. He is misleading the House and he must withdraw that. [Interjections.]

The HOUSE CHAIRPERSON (Ms A T DIDIZA): Order, hon members! Hon Shivambu, can you please take your seat? Can you please take your seat?

Mr N F SHIVAMBU: He must withdraw the statements he has just made. He does not know when I was born. [Interjections.]

The HOUSE CHAIRPERSON (Ms A T DIDIZA): Can you please take your seats. Order, hon members! [Interjections.]

Mr N F SHIVAMBU: He does not know when I was born ... [Interjections.] ... and he must withdraw such a thing.

The HOUSE CHAIRPERSON (Ms A T DIDIZA): Hon Shivambu, if you make a point of order, can you please be straight to the point. Don't make a speech when you try to make a point of order. Thank you. Hon Minister, please continue.

The MINISTER OF FINANCE: Thank you, ...

Mr N F SHIVAMBU: Can we have a ruling, Chair? I said he does not know when I was born. He is misleading the House in respect of the discussion. [Interjections.] Can we have a ruling, please?

The HOUSE CHAIRPERSON (Ms A T DIDIZA): Hon Shivambu, that is not a point of order. I think we should exercise discipline in the House.

The MINISTER OF FINANCE: Okay, he was still in nappies before he joined the ANC Youth League. He must have been in nappies before he joined the ANC Youth League, of which he still qualifies to be a member, if he wants to be.

Hon Shivambu, I still want to say that we are available. We will take you through, step-by-step. It is an important learning curve for you. You must actually accept this as a free learning opportunity that the voters have erroneously allocated to you. We will help you. [Interjections.] [Laughter.]

You then talk about ... [Interjections.] You see, that is the problem with you.

Mr D D D VAN ROOYEN: Chairperson, on a point of order: I don't think it's parliamentary for a member to interject while the Minister is making his speech. Will you please rule on this?

The HOUSE CHAIRPERSON (Ms A T DIDIZA): Hon member, actually all members were interjecting when speakers were making their speeches. Thank you very much. As I said earlier, can we ... [Interjections.] Hon Shivambu! Hon Shivambu! Hon Shivambu, can you please exercise discipline.

The MINISTER OF FINANCE: Our democracy provides people with an opportunity to demonstrate their ignorance, at times.

I want to ask the hon member, when he gets back home, to check whether his party has made submissions to the Davis Tax Committee, because it is there precisely to look at the issues of taxation, including the one of the mining industry.

On the issue of co-ordination between Sars, the Department of Trade and Industry, DTI, and National Treasury, just take time, read the Constitution with regard to National Treasury's co-ordination with Sars, and take time to understand what the Department of Trade and Industry does in government.

Thank you to hon Nkomo for reminding us that we have large shoes to fill, but they provide us with a solid foundation to build on, as we take the country forward.

On the issue of strikes, I agree with you. We should actually take this quite seriously, so that there is stability as we continue to build the economy of the country on a sustainable basis.

Hon members, a number of points were made and the fact of the matter is that in supporting our Budget Vote, we are called upon to heed a number of points that the members are putting across. We are available to take them on as we continue to implement our Budget Vote.

On the issue of poor growth and Sars being a tall order, indeed, we are working closely, hon Swart, with Sars to ensure that we close the tax gap and improve on the efficiency, but that we do not stifle the economy through our collection. As the Davis Tax Committee tables its report before the end of this year - we now have the preliminary report - we will actually engage with it in order to see what areas need attention.

Hon Chairperson, I again want to thank all members for having participated in this debate and for the important points that they have made. I promise that, as we move on, we will avail ourselves to the committee in order to take some of the matters forward.

Let me also report that we have reached the one million mark on the filing of tax returns, and we want to urge members to please be part of this million that have submitted their returns. Six hundred of them have filed through e-filing and the rest at branches, and some have filed manually. We want to applaud the members because we already are at that point, and this is only from the beginning of July until today.

Regarding the relationship between the Department of Co-operative Governance and Traditional Affairs, Cogta, and us, you will notice that the Minister of Cogta, in tabling his Budget Vote, also announced that, in a few weeks time, they would establish an advisory panel to improve on the integrity of the supply chain management and procurement system in municipalities. In order to improve in that area, he was in consultation with our department as well. It has our blessing.

This panel will include members of civil society and the corporate sector to provide advice on how the procurement system of municipalities could be improved to inspire greater public confidence in municipal finance management. It will address the area that hon Khosa spoke about regarding the 30-day payment. Our commitment and resolve is to pay the suppliers within 30 days, but we also want to urge suppliers to submit credible invoices so that the delays do not arise as a result of invoices that still need to be verified. Thank you very much. [Applause.]

The HOUSE CHAIRPERSON (Ms A T DIDIZA): Hon members, I just want to remind you to go back to Rule 46 and 47 that deals with how we conduct ourselves in meetings and debates, so that we do not have to call members to order every time. All of us were given the Rules book when we came for orientation at Parliament. This book must live with us, as we continuously go on. Hon Shivambu, do you have a point of order?

Mr N F SHIVAMBU: Chairperson, I don't agree with all the rulings you make, but I am going to take it further with the parliamentary presiding officers. The rulings you have made were biased, and there must be a review of all these rulings that you have made because the Minister has said a lot of irresponsible things, and you are taking sides because, obviously, they are from the ANC. You must just put it on record that I am going to take the issue forward on the rulings that you have made, so that there is a proper process to deal with some of them. Thank you very much.

The HOUSE CHAIRPERSON (Ms A T DIDIZA): Thank you, hon Shivambu. You, as a party, do sit in on the Joint Rules Committee. You do sit in on the Chief Whips' Forum where some of these matters can be raised. It is within your right to follow the necessary processes, as you said you might, but it is also incumbent upon you to read that Rule, as I have indicated. It indicates how we all must behave ourselves during a debate and sitting of the House.

You requested a point of order. You went on and on, and I made the ruling, which was indeed in your favour, but you kept on going on and on. I reminded you that when you make a point of order, you should please be straight to the point, but obviously, as indicated earlier, I will just ask all of us to remember what the Rules for sittings and our conduct are supposed to be.

Hon members, you are reminded that the Extended Public Committee on Performance and Monitoring and Evaluation and Statistics South Africa will meet at 14:00 in the Old Assembly Chamber.

Debate concluded.

The Committee rose at 12:18.


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