Questions and Replies

Reply:

I wish to inform the Member that it is not part of the mandate of the Department of Energy to build power stations such as Medupi and Kusile.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

Reply:

To prevent collusion, bidders declare that in submitting a Bid Response that each of its members, its Lenders, the Contractors and all other participants in any Bid Response certifies that there has not been communication with a competitor or potential competitor that would amount to collusive bidding.

If the Department becomes aware of or is of the opinion that any of the collusive activities have been undertaken by any Bidder or any of its Members, Lenders, Contractors or Advisors, the Department shall be entitled to disqualify such Bidder, its Members, Lenders, Contractors or their Advisors and to bar any or all of them from participating further in the Renewable Energy Power Producers Procurement Programme. No collusion has been found.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

Reply:

Projects are not evaluated on the directorship of participating companies but rather on the shareholding of each project company to ensure that the bid criteria in respect of South African Entity and Black ownership participation are met. Thus the persons (names furnished) were not required to declare directorship.

All bidders are bound by rules against collusion which may result in disqualification. The commonality in directorship in the specified project companies refer to a group of companies with the same shareholding structure. Thus, collusion with another bidding group or developer is not relevant. The individual bids by the named project companies competed with multiple other bids in respect of the unique offering of each underlying project, in terms of a combination of factors that inform their pricing, for example location, size of plant and technology.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

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Reply:

Projects are not evaluated on the directorship of participating companies but rather on the shareholding of each project company to ensure that the bid criteria in respect of South African Entity and Black ownership participation are met. Thus the persons (names furnished) were not required to declare directorship.

All bidders are bound by rules against collusion which may result in disqualification. The commonality in directorship in the specified project companies refer to a group of companies with the same shareholding structure. Thus, collusion with another bidding group or developer is not relevant. The individual bids by the named project companies competed with multiple other bids in respect of the unique offering of each underlying project, in terms of a combination of factors that inform their pricing, for example location, size of plant and technology.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

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Reply:

Projects are not evaluated on the directorship of participating companies but rather on the shareholding of each project company to ensure that the bid criteria in respect of South African Entity and Black ownership participation are met. Thus the persons (names furnished) were not required to declare directorship.

All bidders are bound by rules against collusion which may result in disqualification. The commonality in directorship in the specified project companies refer to a group of companies with the same shareholding structure. Thus, collusion with another bidding group or developer is not relevant. The individual bids by the named project companies competed with multiple other bids in respect of the unique offering of each underlying project, in terms of a combination of factors that inform their pricing, for example location, size of plant and technology.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

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Reply:

Projects are not evaluated on the directorship of participating companies but rather on the shareholding of each project company to ensure that the bid criteria in respect of South African Entity and Black ownership participation are met. Thus the persons (names furnished) were not required to declare directorship.

All bidders are bound by rules against collusion which may result in disqualification. The commonality in directorship in the specified project companies refer to a group of companies with the same shareholding structure. Thus, collusion with another bidding group or developer is not relevant. The individual bids by the named project companies competed with multiple other bids in respect of the unique offering of each underlying project, in terms of a combination of factors that inform their pricing, for example location, size of plant and technology.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

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Reply:

The shareholding of BTSA Netherlands Cooperatie U.A, Ramizest and Friedshelf 1294 are the same across all four projects. Refer to table below for detail per shareholder.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

Reply:

I am not privy to the required information.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

Reply:

I am not privy to the required information.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date

Reply:

Government employees declare their financial interest in companies annually as required by the Public Service Regulations.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

Reply:

I have not found out if my relatives have shares in these companies. Ministers declare their financial interest annually through the appropriate platforms.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

Reply:

All bidders, evaluation teams, review teams as well as governance audit specialists are required to complete extensive declarations of conflicts of interest. Bidders are also required to declare that no collusion took place in the preparation of their bids and if found to have taken place the bids will be disqualified.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

Reply:

Eskom is not required to produce less electricity as a consequence of Independent Power Producers. Eskom’s policy on the decommissioning of its fleet is informed by an optimal balance of cost efficiencies, reduced capacity and carbon emission considerations. Eskom’s planned decommissioning of the Arnot, Camden, Grootvlei, Hendrina, Komati coal-fired power stations was already projected in the Integrated Resource Plan (IRP) 2010 which indicated that the decommissioned capacity would be replaced by approximately 8 800MW new Coal Generation capacity through Kusile and Medupi. The Wind and Solar Photovoltaic technologies introduced through the renewable energy programme do not displace coal-fired power stations as these technologies do not provide base load capacity.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

Reply:

A) The impact of the REIPPPP on the South African economy is not about costs, but rather about benefits. The highly competitive procurement conditions of the Renewable Energy Independent Power Producer Programme (REIPPPP), combined with excellent domestic natural resource potential, policy support and technological progress has resulted in rapid cost reductions and competitiveness of renewable energy technologies.

The South African government established the REIPPPP in 2010 as an urgent intervention to support the transition to a low-carbon economy, enhance and diversify South Africa’s electrical power generation capacity and accelerate private-sector participation in the energy industry through a competitive bidding process. The programme design, implementation and operational requirements further makes significant contributions to broader national economic development objectives, such as job creation, social upliftment, enterprise development, increasing economic ownership opportunities for black people, foreign direct investment, technological progress, climate change mitigation, alleviating pressure on the fiscus and lower electricity costs.

Approved / Not Approved

Mr J T Radebe,MP

Minister of Energy

Date:

Reply:

Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) projects are procured and contracted pursuant to Ministerial Determinations issued by the Minister of Energy, in consultation with the National Energy Regulator of South Africa (NERSA) in terms of Section 34 of the Electricity Regulation Act, No 4 of 2006. Considerations include issues of carbon emission reduction commitments, new technology uncertainties such as costs, operability and lead time to build, water usage, localisation and job creation as well as regional development and integration and security of supply.

Each Independent Power Producer (IPP) participating in the tender process is responsible to undertaking a feasibility of its own project before bid submission to ensure the bankability of the project. At bid submission the IPPs have to comply with various qualification criteria which can only be complied with if they did undertake feasibility studies.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

Reply:

There is no direct or indirect spend by Government or relevant entities exclusively attributable to the Electricity Regulation Act, 2006, Section 34 sanctioned Renewable Energy Independent Power Producer Programme (REIPPPP). Regulation 10 of the New Generation Regulations enable Eskom, as the single buyer, to recover all costs in respect of the Section 34 Ministerial Determinations and includes payments for the purchase of electricity from Independent Power Producers (IPP) in terms of a power purchase agreement. Eskom only pays for actual electricity evacuated into the grid at a predetermined fixed price that can only escalate by CPI annually.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

Reply:

In terms of the Request for Proposals (RFP) for coal IPPs, the preferred bidders bid the following in terms of job creation:

*(Person years: 1 job = 12 person-months and 1 person-month = 160 working hours)

The quantification of job creation is calculated in terms of the above formula stipulated in the RFP. If one were to assume the Construction period to be 4 years with the Operations period being 30 years, the total direct jobs during Construction would be equivalent to having approximately 2 580 people working for 4 years during Construction and approximately 510 people working for 30 years during Operations. However, since jobs are provided in job years as per the RFP, the figures are likely to be understated given workers who are employed for less than one year, especially during the construction phase.

Furthermore, these job numbers directly associated with the coal IPP plants do not include the indirect jobs created as a result of the new mine which one of the Projects will be dependent on as well as the jobs created in relation to the discard coal supply which the other Project will be utilising. The job numbers further exclude indirect job creation in respect of factors such as manufacturing and limestone supply.

Reply:

Eskom is not closing its own coal plants early as a result of offtake requirements of the coal IPPs. Eskom’s policy on the decommissioning of its fleet is informed by an optimal balance of cost efficiencies, reduced capacity and carbon emission considerations. Eskom’s planned decommissioning of the Arnot, Camden, Grootvlei, Hendrina, Komati coal-fired power stations was already projected in the Integrated Resource Plan (IRP) 2010 which indicated that the decommissioned capacity would be replaced by approximately 8 800MW new Coal Generation capacity through Kusile and Medupi. The efficiency of Eskom’s older coal-fired power plants have deteriorated rapidly and these plants cost substantially more to operate, resulting in a spill-over into tariff increases.

Standard impact mitigation measures at a local and regional level can be planned on the basis of Paris Agreement and OECD just transition principles which are largely based on the International Labour Organisation (ILO) just transition guidelines.

Government’s energy policy is, among others, premised on a balanced energy mix recognizing our country’s natural endowment of energy carriers, including coal., Government’s policy also supports techno-economic solutions for power production from environmentally hazardous discard coal stock-piled over years above ground. Notably, one such solution is presented by one of the coal IPP projects as a first of kind in South Africa.

Government’s policy position to reduce carbon emissions as well as continue with the new build coal plants, contained in its 2015 submitted Nationally Determined Contributions, remains unchanged.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

Reply:

All the SMS members have declared their financial interest for the year 2017/ 2018 as required by the Public Service Regulations, except for three (3) SMS officials (a) this was an oversight from the officials who missed the concession deadline of 31 May 2018 (b) Three (3) officials did not declare their financial interest (c) the names of officials who missed the concession deadline are (i) Mr LF Aphane, Mr P Musekwa and Mr L Phakati and their ranks are (ii) DDG: Energy Planning and Policy, Director and Parliamentary Officer;

The process is currently underway wherein non-complaint SMS members will be issued with written warnings for failure to declare their interests by the due date;

There are currently (a) Two (2) officials that are suspended on full salary both the employees are on post level 15 and (b) employee one was suspended on 19 May 2017 which is a total of 396 days; employee two was suspended on 27 July 2017 which is a total of 327 days.

The total amount of cost attached to the days of service lost as a result of the suspensions is (a) the first official’s total amount of cost attached to the days of service lost as a result of suspension on full pay is R1 453 379.62, the second official’s total amount of cost attached to the days of service lost as a result of suspension on full pay is R1 234 357.92

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

Reply:

There is one (1) case from South African National Energy Development Institute (SANEDI). It is currently being investigated by SAPS.

Reply:

The National Energy Regulator of South Africa (NERSA) continues to work with Eskom to advise on Eskom’s pricing model, in line with Electricity Regulation Act, 2006 (Act No. 4 of 2006). The aim is to safeguard and meet the interests and requirements of present and future electricity customers and end users.

Reply:

Energy is the lifeblood of any economy. This is why the purpose of the Integrated Energy Plan (IEP) is to provide a roadmap of the future energy landscape for South Africa which guides future energy infrastructure investments, policy development and alignment. The IEP provides an overarching planning framework for electricity, liquid fuels and gas sector plans such that the development of these plans are done in a coordinated and integrated manner. Following the Cabinet decision of December 2017, the department is steadily working towards concluding the review of the IRP this year (2018).

Reply:

All international trips involving my family and I in the period in question were in total compliance with the applicable prescripts that govern such trips, including costs, destinations and approval by the President.

Reply:

The Bid Submission for REIPPP Projects in Bid Window 4 was on 18 August 2014, a total number of 77 bids were received and evaluated based on stringent qualification and evaluation criteria. Accordingly these four projects were selected as preferred bidders based on the outcome of the evaluation. The shareholding of each project company was disclosed at bid submission as bid criteria include South African Entity and Black ownership requirements. Bidders are not precluded from submitting more than one project for evaluation. All bidders are bound by rules against collusion which may result in disqualification. As the four specified project companies have the same shareholding structure collusion with another bidding group or developer is not relevant. The individual bids by the four project companies competed with multiple other bids in respect of the unique offering of each underlying project, in terms of a combination of factors that inform their pricing, for example location, size of plant and technology.

Reply:

The Department owns seven (7) vehicles of which six (6) of them have tracking devices and one (1) vehicle is currently in the process of being installed with tracking device. No road accidents were reported in the period in question.

Reply:

Labour unions raised concerns relating to IPP programme being the reason for de-commissioning of coal fired power plants. It is important to note that the de-commissioning of coal plants is not due to introduction of new power plants (such as REIPPP) but due to existing coal plants reaching end of life.

Any bidding window will be informed by the revised IRP which is expected to be considered by Cabinet by August 2018.

Reply:

At the Portfolio Committee meeting on 8 May 2018, the department submitted the attached document giving an update on the Legislative Program.

Approved / Not Approved

Mr J T Radebe, MP

Minister of Energy

Date:

Reply:

The response to question 505 still stands. The matter is before the Courts.

Reply:

Neither the department nor its Entities have conducted lifestyle audits. The department and its Entities will implement any directive in this regard that is developed for the Public Service of the Republic.

Reply:

The bid prices offered by each company in ZAR/kWh 2014 Terms is as follows:

The services in the bid of each company to provide new generation capacity for the Renewable Energy Independent Power Producer Procurement Programme is as follows:

Reply:

1. (a) The directors of the four specified project companies at bid submission were, as per the table below. Please note that the tenure of directors of any company is not indefinite and the directors may change from time to time.

b) The four specified project companies all have the same shareholding structure as the underlying projects were developed by the same developer who submitted multiple projects for evaluation. The shareholding structure for each of the specified companies at bid submission was as follows:

Reply:

Ward 21 of Mqanduli is under the Eskom license area. Khwenxura and Kalalo villages are planned to be electrified by the King Sabata Dalindyebo (KSD) municipality under Schedule 5b and on the MTEF. The Lower Tyholo, Upper Tyholo and Thamsanqa are planned to be electrified by Eskom.

In line with municipal Integrated Development Plan (IDP), KSD municipality like all other municipalities, plan and priorities electrification for all villages under their areas. This includes the areas under Eskom license.

KSD Municipality is allocated over R122 million to prioritise the electrification projects as per their IDP.

The villages are tentatively planned by the KSD municipality to receive electricity that is not in the form of solar energy by financial year 2021, based on the 3 year Medium Term Expenditure Framework (MTEF).

Reply:

There is no second phase of the Bokpoort Concentrated Solar Power Project. The Bokpoort Concentrated Solar Power Project was procured under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) Bid Window 2. The project reached commercial operation on 18 March 2016 with a capacity of 50MW.

Any subsequent phases to the Bokpoort Concentrated Solar Project will be subject to evaluation pursuant to a new procurement bid window.

Reply:

The transfer did not have an impact on the project. It was evident that the national Solar Water Heater Project (SWHP) would realise savings at a year end due to other phases of the project that could not be implemented before the end of the financial year. That would have compelled the Department to surrender the unspent funds back to the Treasury.

Reply:

The facility was temporarily shut down on 17 November 2017 as a result of non-adherence to some standard operating procedures (SOPs). Production trial runs commenced on 21 February 2018.

The estimated total revenue loss for NTP Radioisotopes (SOC) Ltd is about R250 million. 92.7% of the total revenue is generated in foreign currency. The average monthly fixed costs for NTP Radioisotopes (SOC) Ltd amount to R32 million.

The NTP Board commissioned an investigation to determine the root cause of the incident. Internal oversight for Quality Control, Quality Assurance, Nuclear Safety assurance will be strengthened throughout the organization and regular compliance and assurance exercise conducted.

Reply:

The information requested by the Honourable Member is very comprehensive and covers a multitude of services providers over a significantly long period. However, it is important to note that much of this information is contained in all the Annual Reports and Financial Statements from the Auditor General (AG) that are submitted to Parliament on an annual basis. The Auditor General captures this information in the Financial Statements under Current Payments. In this regard, the AG mentions the appropriated funds, final appropriations and Actual Expenditure.

Procurement items are always listed under Current Payments, including advertising, catering, communication, consultants, contractors, outsourced services, entertainment, travel and subsistence, etc.

Reply:

I wish to remind the Honourable Member that the issue in question is now before the Courts.

Reply:

The Department of Energy does not own a land. Other information relating to the Entities is as follows:

Reply:

The company in question has not been awarded any project for renewable energy. It is one of three black entity shareholders in six (6) projects acquired by a South African institutional investor, Old Mutual, after the announcement of Preferred Bidders in 2015.

Reply:

a) The evaluation of bid responses and the selection of preferred bidders follow a two phased approach:

• The bidders first have to qualify in terms of the qualification criteria as outlined in the Request for Proposals (RFP); and
• If compliant with the qualification criteria will then be assessed against the evaluation criteria as outlined in the RFP. The evaluation criteria has two parts, being price and economic development. The evaluation is undertaken in accordance with a 70/30 points system, with price being scored out of 70 points and economic development being scored out of 30 points.

The recommendation of an independent evaluation team is forwarded to the Department of Energy’s Bid Adjudication Committee (BAC) for consideration. In the event the BAC is in agreement and satisfied with the assurance by an external governance reviewer that evaluation was done in accordance the evaluation RFP and the pre-determined evaluation procedures set by the BAC, the BAC will recommend the results for approval to the Director-General of the Department of Energy, where after the preferred bidders are appointed in writing.

Reply:

I wish to remind the Honourable Member that the matter is now before the Courts.

Reply:

The following are the names of the preferred bidders that were set to sign the power purchasing agreements with the Government and Eskom on 13 March 2018 for the Bid Window 3.4 and 4:

The total value of investment for the 27 projects is R 55.8 billion. This amount includes all debt and equity as provided by the shareholders and the debt providers.

The Power Purchase Agreements (PPAs) for the 27 projects were set to be signed with Eskom for a period of 20 years.

Reply:

There is currently a project for Mqanduli Ph6 for financial year 17/18 with a target of 500 connections. The financial year 2017/18 beneficiaries are; Mamfengwini, Enkalweni, Sikhobeni, Engqeleni, Mhlabubomkhanise, Esikobeni, Mahlathini and Gengqe. There are 289 connections / houses have been energised and the remainder which is 211 connections / houses will be completed within the next 3 months.

Depending on the availability of funds, the balance of the houses will be done in financial year 2020/21. 420 connections / houses are planned for the 2018/19 in Gotyibeni, Bijolo, Esikhobeni, Xhorana and Tutwini.

Reply:

The Department of Energy does not own a land. Other information relating to the Entities is as follows:

Reply:

The process to appoint the Advisory Panel is led by the Inter Ministerial Task Team which is chaired by the Minister of Cooperative Governance and Traditional Affairs.

Reply:

I wish to inform the Honourable Member that as a recently appointed Minister of Energy, I am not privy to the requested information.

Reply:

The department will finalize the process of reprioritization of critical posts on 31 March 2018. As a Policy making department, the critical posts will mainly consists of line function (core business) and Executive management posts however, Support function will also be taken into consideration in order to continue providing strategic administrative support to the department.

The process of reprioritization of critical posts will not compromise service delivery, The DoE continues to ensure that the limited human resources that are available are optimally utilized in order to ensure that the strategic objectives of the department are achieved.

Reply:

a) There is no binding commercial and financial information secured yet to assist with the nuclear expansion programme. When Cabinet approved in December 2015 that the Request for Proposal be issued, the main intention was to test the market, a process which would allow the determination of the pace and scale that the country can afford. Cabinet had also resolved that the Department should report back to Cabinet before a final decision is made. Subsequently, a decision was taken by Cabinet on 02 November 2016 that:

• the Ministers of Finance, Energy and Public Enterprises collaborate on ensuring that the scaling and phasing of the nuclear programme is in the interests of the country;
• Eskom be the Owner Operator and Procurer for the Nuclear Plant as per Nuclear Energy policy of 2008;
• NECSA be the Owner Operator for the Nuclear Fuel Cycle and Multi-Purpose Reactor respectively.

Reply:

The NTP Radioisotopes SOC Ltd radiochemical plant was given approval by the National Nuclear Regulator (NNR) to restart production which came into effect on 22 February, 2018. The senior executives remain on leave pending finalisation of the investigations. The NTP board will thereafter decide on further appropriate actions that the organisation needs to follow in this regard.

The Necsa Group is constituted of NTP and Pelchem as its subsidiaries, as is well documented in the Group's annual report. The relationships with the subsidiaries are governed by the Necsa Group policy and procedures. It is also true that monies do flow between Necsa and NTP. Necsa as a shareholder receives dividends from NTP on the one hand; and there are also other services rendered by Necsa to NTP which are governed by service level agreements and NTP pays for these.

Since NTP and Pelchem are wholly owned subsidiaries of Necsa and some IP commercialised by these subsidiaries emanates from and belongs to Necsa as an R&D organisation, the group always reflects on the matters of where IP and its commercial value is reflected within the group. This is simply part of the optimisation of group assets and intra-group liquidity management.

Reply:

The Department of Energy has a sexual harassment policy in place. The policy has been in existence since 2011. When a case is reported, an Independent Investigator is appointed to conduct a full investigation and produce a report for consideration by the management. Each case is treated based on its merits and the department strictly follows disciplinary procedure as stipulated in the Labour Relations Act, 1995.