ATC080604: Report on Strategic Plan and Budget Vote: 28

Mineral Resources and Energy

Report of the Portfolio Committee on Minerals and Energy on hearings on the Strategic Plan and Budget Vote: 28 Department of Minerals and Energy, dated 4 June 2008.

The Portfolio Committee on Minerals and Energy, having considered Budget Vote: 28 Department of Minerals and Energy, reports as follows:

Terms of Reference

The Committee resolved to hold a briefing on Vote 28: Department of Minerals and Energy on 21 May 2008. The objectives of the briefing were to:

·           Establish how allocated funds and transfers to statutory bodies are spent;


·           Monitor the achievement of targets, and whether funds allocated meet those targets;


·           Monitor progress made and establish problems encountered;


·           Determine whether policy developments take place in accordance with the key objectives and aims as stated in the Department’s strategic plan;


·           Determine whether policy developments take place in accordance with government’s priorities of poverty alleviation, job creation, Black Economic Empowerment (BEE), human resource development and growing the economy; and


·           Monitor compliance with the Public Finance Management Act (PFMA).


B. Introduction

The Director General of the Department of Minerals and Energy, Advocate Sandile Nogxina, presented to the Portfolio Committee on the department’s plans for the 2008/9 year and MTEF. The Chief Financial Officer presented the overall Budget, per programme and expenditure estimates. The Committee then deliberated on the presentations, after which the Department responded. 

This year the Department decided to take the initiative and adopt the balanced scorecard approach at the strategic planning stage. Before, there were challenges in presenting outcome-based results from output-based plans. As this was the first year of the implementation of this approach, the Department’s overall plan would not highlight the desired outcomes, as these will only become apparent in the years to come.

C. Overview of Departmental Programmes

The programmes within the department are: 

·           Administration


·           Promotion of Mine Safety and Health


·           Mineral Regulation


·           Mineral Policy and Promotion


·           Hydrocarbons and Energy Planning


·           Electricity and Nuclear


·           Associated Services


The Director-General informed the Committee that the department’s key focus areas included addressing the current electricity challenges; implementing policies to address security of energy supply, energy efficiency, and renewable energy; finalising and reporting on the Mine Health and Safety Presidential Audits; intensifying the progress with the Mineral and Petroleum Resource Development Amendment Bill and the proposed amendments; and capacitating the department to deliver on its mandate.

D. Key issues emanating from presentations

(i). Energy

The energy saving campaign was on-going. The Director-General emphasised the importance of public education. The Department would work on programmes to achieve this. The Department was finalising the implementation process of the Energy Summit resolutions, and the Minister would duly report on this at this year’s Budget Vote debate in the National Assembly.

The Director-General said that the Department was of the view that the energy crisis in the country had taken place in a policy vacuum. The Department would engage the Electricity Pricing Policy and consult widely to address this. He assured the Committee the 2010 Soccer World Cup would not be under threat because of the energy challenges.

The Department was geared to ensure the increased supply and use of cleaner energy sources through the provision of renewable energy, energy efficiency and the promotion of environmentally friendly energy policies and technologies. This was part of the department’s sustainable development objectives. The implementation of the Renewable Energy White Paper would, as a result, be accelerated. 

In order to ensure the implementation of the Radioactive Waste Management Policy and Strategy, the Department would finalise legislation to establish the National Radioactive Waste Management Agency. The bill has already been approved by Cabinet.

(ii). Legislation

The Director-General expressed the wish of the Department to engage policy processes with Parliament more vigorously this year, noting that there were still four bills to be dealt with. The four bills included for the year are the Mine Health and Safety Bill, the Electricity Distribution Industry Restructuring Bill, the Energy Security Bill and the Radioactive Waste Management Agency Bill.

(iii). Mine Health and Safety

The lives of 67 miners had been lost this year due to mining accidents, and this was obviously of great concern to the Department. Although this was an improvement from last year, it was still not a good picture. The Mine Health and Safety Inspectorate will be finalising and submitting a report on the Presidential Health and Safety Audit soon. The report will cover the findings and recommendations from the audits of the 333 high-risk mines that were identified by the Inspectorate. 

(iv). Internal Environment

The Department had unfortunately continued to experience a fairly high staff turnover rate, although there had been improvements. Exit interviews conducted with employees leaving the Department indicated the following reasons:

·           Better remuneration packages outside the Public Service;


·           Better conditions of service;


·           Better opportunities, growth and exposure;


·           Work overload as a result of the high staff turnover;


·           Career advancement and development; and


·           In addition to these, the mandate of the Department had grown over time creating additional pressures.


Interventions in this regard included the recently approved Integrated Human Resource Plan and the Master Systems Plan. Both these processes would promote an integrated approach towards the improvement of service delivery within the department, and ensuring that Human Resources needs was met.

(v). Youth and Women Empowerment

The participation of women and youth in the mining and energy sectors was still a challenge. In seeking to rectify this, the Department utilised Small Scale Mining as a vehicle to broaden the base of beneficiaries from the mineral resources of the land by introducing new entrants to the industry. This intervention would encompass youth development and women empowerment to give content to government’s ASGISA and JIPSA initiatives. Career guidance programmes would also be conducted for science learners in schools annually. 

The Department has entered into a Memorandum of Understanding with Umsobomvu Youth Fund. This could assist with finance. 

(vi). Financial Planning – Medium Term Expenditure Focus (MTEF)

The Department’s Chief Financial Officer, Mr Sakhile Simelane presented the financial plan for the 2008/9 financial year. 

The medium-term estimates showed that the total budget for the department for this financial year totalled R 3, 95 423 billion, with the biggest estimate being an R 2 904 388 on Associated Services (see Overview of Departmental Programmes). These figures included R 5, 6 million for losses incurred.

E. Issues raised by the Committee

After the presentations, the Committee raised the following issues:

·           Clearly the increase of electricity tariffs would impact greatly on the poor households in the country, has this impact been assessed?


·           The budget showed that theft and losses were escalating within the department. Why?


·           What was meant by ‘Associated Services’?


·           The relationship between Eskom and Department. What role does the department play in Eskom’s operation? What is the nature of their relationship?


·           The loss of lives in the mines was worrying. Do the Mine Health and Safety Inspectorate have the capacity to deal with this?


·           In terms of youth and women empowerment, why were there no clear, measurable targets for this year and the future?


·           Measurable targets in other programmes, like redressing past injustices. The targets must be clear.


·           Environmental agreements between the Department and that of Environmental Affairs and Tourism need not be delayed to 2012, they can be implemented earlier as damage to the environment was accelerating.


·           Where does the Pebble Bed Modular Reactor (Pty) Limited (PBMR) belong, with the Department of Minerals and Energy or elsewhere?


·           What was the deadline of mining conversions?


·           Vacancies, from administrative level to other areas, which have not been filled?


·           Conditions required for licensing, what are they?


F. Responses by the Department

There were measurable targets for empowerment of youth and women and redress in the department’s Strategic Plan.

Empowerment should now be broad-based as the situation has changed. When considering applications, the department takes this into consideration.

Eskom is housed under the Department of Public Enterprises. The Department of Minerals and Energy formulates policy for the entity, so the interaction between the two is at a policy level.

The impact of increased electricity tariffs would be great on the poor. The Department would engage alternatives that could assist in this regard. There were a number of options, like subsidising such products as paraffin and looking into general middle distillates used by most countries to produce energy.

The Department would engage the departments of Transport, and of Environmental Affairs and Tourism in tripartite negotiations on cars and fuel, the impact on the environment and the development of more environmentally friendly alternatives.

National Treasury has been approached for more funding for Electricity and Nuclear.

On Mine Health and Safety, the review of the Mine Health and Safety Act will deal with companies who do not take this seriously. Fines would be meted out to perpetrators. The Department of Justice and Constitutional Development was currently dealing with this and implementation would take place this year.

‘Associated Services’ in the budget referred to transfers undertaken to state-owned institutions.

There were reported thefts during the months of December/January 2007/8 at the department’s offices. This was currently being investigated by the Asset Forfeiture Unit.

The conditions for licensing are prescribed by law. When these are met, applicants must be issued with a license.

The deadline for conversion is 30 April 2009.

There were improvements when it came to vacancies. From 363 last year, to 266 this year. 

A number of scholarships, learnerships and bursaries for serving employees had been implemented.

G. Conclusion

The meeting agreed that there were a number of policy issues, as raised by the Chairperson of the Portfolio Committee, which needed to be dealt with. Because of time constraints and the nature of this particular briefing, they could not be engaged with in depth. It was agreed that more time was needed to deliberate on policy issues in future.


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