ATC230508: Report of the Portfolio Committee on Mineral Resources and Energy on the 2023/24 Annual Performance Plan and Budget of the Department of Mineral Resources and Energy (Vote 34) and its entities, dated 03 May 2023

Mineral Resources and Energy

Report of the Portfolio Committee on Mineral Resources and Energy on the 2023/24 Annual Performance Plan and Budget of the Department of Mineral Resources and Energy (Vote 34) and its entities, dated 03 May 2023.

 

The Portfolio Committee on Mineral Resources and Energy (hereafter, the PCMRE or Committee), having considered the 2023/24 Annual Performance Plan (APP) and Budget of the Department of Mineral Resources and Energy (DMRE) and its entities, reports as follows:

 

1. INTRODUCTION

The Parliament of the Republic of South Africa (Parliament) has a constitutional obligation to oversee the work and spending of public resources by the Executive as outlined in Section 55:2 [(a), (b)] of the Constitution of the Republic of South Africa, 1996. Furthermore, Section 77 (3) of the Constitution stipulates that an Act of Parliament must provide for a procedure to amend money Bills before Parliament. This Constitutional provision resulted in Parliament passing the Money Bills Amendment Procedure and Related Matters (Act No. 9 of 2009) (the Money Bills Act). The Money Bills Act sets out the process that allows Parliament to make recommendations to the Minister of Finance to approve, reject or amend the budget of a National Department.

 

Therefore, Parliament, through its Committees and other mechanisms, should be the guardian of the use of State resources, the overseer of fiscal discipline and cost-effectiveness for the common good of all the citizens. Therefore, Parliament should assess the plans and conduct regular performance reviews and annual performance assessments of the DMRE and its entities. The Department’s APP forms part of the Medium-Term Strategic Framework (MTSF) of government and provides a strategic direction to the Department, Provincial Departments, and entities, statutory bodies and the sector as a whole inclusive of the Department’s social, and business partners. The APP is premised on governments priorities as espoused in the MTSF 2019-2024, and build towards attainment of the National Development Plan (NDP): Vision 2030 aspirations.

 

The purpose of this report is to report to the National Assembly (NA) on the Portfolio Committee on Mineral Resources and Energy’s findings after evaluating and assessing the Annual Performance and Budget of the DMRE and its entities.

 

2. THE COMMITTEE PROCESS

 

The APP, Strategic Plans and Budgets of the Departments and their entities are due for tabling to Parliament at the end of the preceding financial year, i.e. 31 March 2023.

 

Subsequently, on 18 and 19 April 2023, the Committee was briefed by the Department and its entities on their Annual Performance Plans and Budget for 2023/24 financial year.

 

3. The Department of Mineral Resources and Energy

 

The DMRE is mandated to ensure the transparent and efficient regulation of South Africa’s mineral resources and minerals industry, and the secure and sustainable provision of energy in support of socio-economic development.[1] The mining, minerals and energy sector is regulated by several Acts. The key regulatory Acts, amongst others, include:

 

• The Mineral and Petroleum Resources Development Act (2002), which provides the regulatory framework for equitable access to and the sustainable development of mineral resources and related matters.
• The Mine Health and Safety Act (1996), which governs mine health and safety.
• The National Energy Act (2008), which empowers the Minister to plan for and ensure the security of supply for the energy sector.
• The Petroleum Products Act (1977), which regulates the petroleum industry at the manufacturing, wholesale and retail levels.
• The Electricity Regulation Act (2006), which establishes a national regulatory framework for the electricity supply industry, including registration and licensing.

 

In an endeavour to discharge its mandate effectively and efficiently, the Department is structured as follows:

 

• Programme 1: Administration;
• Programme 2: Minerals and Petroleum Regulation;
• Programme 3: Mining, Minerals and Energy Policy Development;
• Programme 4: Mine Health and Safety Inspectorate;
• Programme 5: Mineral and Energy Resources Programme and Projects; and
• Programme 6: Nuclear Energy Regulation and Management.

 

Additionally, eleven State Owned Entities (SOEs, or entities) are entrusted to assist in discharging the Departments mandate.  The eleven entities reporting to the Department are the Council for Mineral Technology Research (MINTEK), Mine Health and Safety Council (MHSC), State Diamond Trader (SDT), South African Diamond and Precious Metals Regulator (SADPMR), Council for Geoscience (CGS), National Nuclear Regulator (NNR), National Radioactive Waste Disposal Institute (NRWDI), South African National Energy Development Institute (SANEDI), South African Nuclear Energy Corporation (NECSA), Central Energy Fund (CEF) Group of Companies (SOC) Ltd, and National Energy Regulator of South Africa (NERSA).

 

3.1 Annual Performance Plan of the Department for 2023 Financial Year

 

This section provides analysis of the overall budget allocation for the DMRE for the 2023/24 financial year, as well as the Annual Performance Plan (APP).

 

The priorities for the DMRE for the 2023/24 financial year is to focus on  regulating the petroleum sector; ensuring mine health, safety and equity; rehabilitating mines and the environment; extending access to electricity; enhancing energy efficiency; and managing nuclear energy in accordance with international commitments.[2] These priorities are explained in detail below.

 

Regulating the Petroleum Sector

The Department aims to ensure compliance with regulatory standards, and continued improvement of those regulatory standards to enable transformation in the petroleum sector the over the Medium Term Expenditure Framework (MTEF) period.

 

To this end, a R1.6 billion allocation is made for the Minerals and Petroleum Regulation programme to which the Department plans to inspect 4 500 petroleum retail sites, issue mining rights and/or permits to 600 historically disadvantaged South Africans, and for the Department to sample fuel and test petroleum products at 3 240 petroleum retail sites over the MTEF period to ensure that fuel meets quality standards.

 

The current legislative framework governing the manufacturing, wholesaling, and retailing of petroleum products is the Petroleum Products Act (PPA)[3]. The Petroleum and Petroleum Products Regulation Branch as administrators of the PPA raised the challenges encountered regarding the issuing of petroleum licenses and non-compliance of the PPA. The challenges is explained to arise due to the  lack of definitions of certain terms used in the PPA such as “going concern’, ‘hardship’ and ‘efficient retailing’ and misinterpretations of some provisions of the PPA, which results in inconsistency of the PPA implementation.[4] Therefore, the Department’s plan is to review the PPA to remedy the regulatory gaps with the aim for a draft bill to be tabled for Parliament by the end of 2023/24 financial year.

 

Ensuring Mine Health, Safety and Equity

The Department’s mandate to safeguard the health and safety of mine employees nearby communities and people affected by mining activities is under the Mine Health and Safety Inspectorate (MHSI) programme. The MHSI accounts for 2.19 percent of the total departmental budget allocation for the 2023/24 financial year. The programme’s budget allocation include transfer payments to the Mine Health and Safety Council and accounts for R4.74 million or 2.02 percent of the programme’s total budget.

 

Through the programme, the Department aims to conduct 24 000 mine inspections over the medium term to which an amount of R733.2 million (2.2 percent of the Department’s budget) is set aside to carry out these inspections. The department further aims to monitor and enforce compliance with the mining charter by conducting 636 social and labour plan verification inspections, and 1500 mine economic verification inspections over the MTEF period. These activities are funded through the Minerals and Petroleum Regulation programme mentioned above.

 

Rehabilitating Mines and the Environment

The Department aims to rehabilitate dangerous, derelict and ownerless (D&O) mining sites, and with the Council for Mineral Technology and Research (Mintek) as the implementing agent under the Mineral and Energy Resources Programmes and Projects programme detailed below. Through this programme the department aims to rehabilitate 3 mines, and seal 40 shafts over 2023/2024, with the projected cost of R387 million. 

 

Extending Access to Electricity

The government policy to extend access to electricity to all South Africans is carried out primarily through the Integrated National Electrification Programme (INEP), to which an additional 220 000 households are projected to be connected to the electricity grid, and a further 15 000 households over the 2023/24 period are expected to be provided with non‐grid electricity connections, such as solar electrification.  To date the INEP programme has brought a total of 8.1 million households connected to the national grid, with an additional 3 million households connected to the grid through the Municipal Programme.

The households prioritised for 2023/24 are rural areas within 44 Districts in Kwa-Zulu Natal and Eastern Cape, where the households that are far from the national grid the Department aims to implement off-grid home solar systems. The Department aims to include further access for beneficiaries not limited to lighting through the Solar Home System (SHS) of additional functions such as refrigeration and Liquefied Petroleum Gas (LPG) to enable activities such as cooking.

 

In terms of the budget, the non-grid connections are expected to increase from R271.85 million in 2023/24 to R288.5 million in 2025/26 to enable the projected 45 000 households to be connected through non-grid technology over the MTEF period.

 

The additional 660 000 households projected to be connected to the national electricity grid. The Department has indicated that 6 new substations are set to be built and 9 substations to be upgraded. To this end, Eskom transfers are expected to increase at an average annual rate of 5.2 percent, from R3.82 billion in 2023/24 to R4.17 billion in 2025/26 while transfers to municipalities are expected to increase from R2.21 billion in 2023/24 to R2.41 billion in 2025/26.

 

Enhancing Energy Efficiency

The Department has set a target of 1.5 terawatt-hours (TWh) of energy savings over the medium term. The Department has indicated 0.5 TWh of energy saving target per year through implementation of the Energy Efficiency and Demand Side Management (EEDSM) grant programme which the APP indicates an average annual rate of 4.3 percent, from R224.09 million in 2023/24 to R253.38 million in 2025/26.

 

Managing Nuclear Energy

The Nuclear Energy Regulation and Management programme accounts for an estimated 11.01 percent (R3.49 billion) of the department’s budget over the medium term, mainly comprising transfers to entities.

 

The 2023/24 APP indicates that the Department aims to improve security and supply for nuclear energy. Therefore, the Department aims to fast-track procurement of additional power generation capacity through the 2500MW Nuclear Programme, and continue oversight implementation of the Koeberg Nuclear Power Plant Long Term Operation Programme.

 

Additionally, the Department aims to issue the Request for Proposals (RFP) for the procurement of the Multi-Purpose Reactor (MPR) which will replace SAFARI-1 used for research and development, and to manufacture medical isotopes. In terms of the 2023/24 budget, R40 million is allocated for a feasibility study to be conducted in order to inform the procurement of the MPR.

 

The Department has issued authorisations to acquire, possess, import, export, transport nuclear material and related equipment to 270 companies. To this, the Department aims to conduct 40 nuclear safeguards inspections and 20 nuclear security inspections over the 2023/24 period. The Department further aims to table the National Nuclear Regulator Amendment Bill during the 2023/24 financial year.

 

 

Table 1: Overall Budget of the Department of Mineral Resources and Energy

Programme	Budget		Nominal Increase / Decrease in 2023/24	Real Increase / Decrease in 2023/24	Nominal Percent change in 2023/24	Real Percent change in 2023/24
R million	2022/23	2023/24
Programme 1: Administration	729,6	695,4	-  34,2	-  66,7	-4,69%	-9,14%
Programme 2: Minerals and Petroleum Regulation	512,3	511,7	-  0,6	-  24,5	-0,12%	-4,78%
Programme 3: Mining, Minerals and Energy Policy Development	880,0	1 081,0	201,0	150,5	22,84%	17,10%
Programme 4: Mine Health and Safety Inspectorate	236,6	233,9	-  2,7	-  13,6	-1,14%	-5,76%
Programme 5: Mineral and Energy Resources Programme and Projects	6 917,1	7 018,3	101,2	-  226,6	1,46%	-3,28%
Programme 6: Nuclear Energy Regulation and Management	1 172,0	1 160,9	-  11,1	-  65,3	-0,95%	-5,57%
Total	10 447,6	10 701,2	253,6	-  246,3	2,4%	-2,36%

Source: National Treasury, (2023).

 

Explanatory Note:

Nominal Increase/Decrease - Is when inflation is not considered

Real Increase/Decrease - Is when inflation is considered (the projected inflation rate is 4.9 per cent)

 

The overall budget of the DMRE is R10.7 billion for the 2023/24 financial year. In the previous financial year (2022/23), the Department had a total adjusted budget of R10.3 billion. In nominal terms (without inflation), the Department budget increases by 2.4 percent and decreases by 2.36 percent in real terms (with inflation) in 2023/24.

 

The majority of the Department’s budget is allocated to transfers and subsides. In the current financial year (2023/24), the subsidies and transfers amount to R8.5 billion of the total budget; the remainder of the budget is for departmental operations. The bulk of the R8.5 billion is allocated for the public corporations and private enterprises (R5.2 billion) and provinces and municipalities (R2.4 billion).

 

The economic classification of expenditure, current payments amount to R2.1 billion to which compensation of employees (COE) is R1. 066 billion, and goods and services is R1. 076 billion. The goods and services which received R1.334 billion in the previous financial year, compromises of departmental activities, computer services, consultants, operating leases, travel and subsistence. The COE at R1.066 billion is the same as the previous financial year. The COE is 9.3 percent of the current department budget, a 2.4 percentage increase in COE expenditure in 2023/24.

 

As can be seen in the table above, the largest line item in the DMRE 2023/24 budget is Programme 5, the Mineral and Energy Resources Programme and Projects with an allocation of R7.01 billion. This is 1.5 percent nominal increase and 3.28 percent decrease in real terms in 2023/24.

 

Programme 6 is the second largest budget allocation of R1.16 billion (10.85 percent of the total budget), followed by Programme 3 with an allocation of R1.08 billion (10.1 percent of the total budget). Programme 1 receives R695.2 million (6.5 percent of the total budget), and the Programme 2 with R511.5 million (4.78 percent of the total budget). The smallest budget allocation is Programme 4 with R233.8 million (2.19 percent of the total budget).

 

3.1.1 Programme Analysis

 

As stated above, the DMRE has six (6) programme areas, namely: (1) Administration, (2) Minerals and Petroleum Regulation, (3) Mining, Minerals and Energy Policy Development, (4) Mine Health and Safety Inspectorate, (5) Mineral and Energy Resources Programme and Projects, and (6) Nuclear Energy Regulation and Management. All six programme areas have their respective sub-programmes. The below is an analysis of the budget allocation of the respective programmes, and the key annual performance targets for each programme.

 

1. Programme 1: Administration

 

The primary aim of this programme is to provide strategic leadership, management and support services to the Department.[5]

 

Table 2: Programme 1 Budget Allocation for 2023/2024 Financial Year

Programme 1: Administration	Budget		Nominal Increase / Decrease in 2023/24	Real Increase / Decrease in 2023/24	Nominal Percent change in 2023/24	Real Percent change in 2023/24
R million	2022/23	2023/24
Sub-Programmes
Ministry	35,1	40,8	5,7	3,8	16,24%	10,81%
Departmental Management	40,2	41,1	0,9	-  1,0	2,24%	-2,54%
Audit Services	22,9	22,0	-  0,9	-  1,9	-3,93%	-8,42%
Financial Administration	94,8	98,2	3,4	-  1,2	3,59%	-1,25%
Corporate Services	379,1	335,5	-  43,6	-  59,3	-11,50%	-15,63%
Office Accommodation	157,2	157,6	0,4	-  7,0	0,25%	-4,43%
Total	729,3	695,2	-  34,1	-  66,6	-4,7%	-9,13%

Source: National Treasury, (2023)

 

The programme receives R695,2 million (6,5% of the total budget) for the 2023/24 financial year which is a 4,7 percent decrease in nominal terms and a real decrease of 9,13 percent. The Corporate Services sub-programme continues to be the largest line item in the programme with a R335,5 million allocation, followed by the Office Accommodation sub-programme with an allocation of R 157,6 million. The Ministry and Departmental Management sub-programme receives increase in the budget allocation of 10 percent and 2,5 percent respectively. Whereas, the Audit Services and Financial Administration has seen a budget decrease of 8.4 percent, and 1,2 percent respectively.

 

The Administration programme for the 2023/24 financial year has set nine (9) performance targets.[6] This is the same number of targets set in the 2022/23 financial year.[7] The key performance targets for the Administration programme during 2023/24 period are:

 

1. 70% reduction of wasteful and fruitless expenditure compared to prior year
2. 70% reduction of irregular expenditure compared to prior year
3. Unqualified audit opinion
4. 95% resolution of reported incidents of corruption
5. Four (4) approved shareholder compacts and Corporate Plans of Schedule 2 SOE’s
6. Seven (7) approved Scheduled 3A SOE’s Annual Performance Plans tabled in Parliament
7. Forty-four (44) SOE’s Quarterly Performance Reports reviewed and Ministerial submission produced
8. Eleven (11) SOE’s Annual Reports tabled in Parliament
9. 100% approved invoices from service providers paid within 30 days of receipt

 

3.1.2.2 Programme 2: Minerals and Petroleum Regulation

 

Programme 2 regulates the mining, minerals and petroleum sectors to promote economic growth. Employment, transformation and sustainable development.[8]

 

 

Table 3: Programme 2 Budget Allocation for 2023/2024 Financial Year

Programme 2: Minerals and Petroleum Regulation	Budget		Nominal Increase / Decrease in 2023/24	Real Increase / Decrease in 2023/24	Nominal Percent change in 2023/24	Real Percent change in 2023/24
R million	2022/23	2023/24
Sub-Programmes
Minerals & Petroleum Management	17,2	16,9	-  0,3	-  1,1	-1,74%	-6,33%
Mineral Regulation & Administration	381,2	379,1	-  2,1	-  19,8	-0,55%	-5,20%
Environmental Compliance & Enforcement	20,2	22,8	2,6	1,5	12,87%	7,60%
Petroleum Compliance Monitoring, Enforcement & Fuel Pricing	25,6	28,0	2,4	1,1	9,37%	4,27%
Petroleum Licensing & Fuel Supply	67,8	64,7	-  3,1	-  6,1	-4,57%	-9,03%
Total	512,0	511,5	-  0,5	-  24,4	-0,1%	-4,76%

Source: National Treasury, (2023)

 

The Minerals and Petroleum Regulation programme has a R511,5 million budget allocation (4.78 percent of the total budget) for the 2023/24 financial year. This is a 0.1 percent decrease in nominal terms and a decrease of 4.7 percent in real terms.

 

The budget allocation includes transfer payments to the South African Diamond and Precious Metals Regulator (SADPMR), Petroleum Agency (PASA) and international membership fees. The transfer payments accounts for 30.9 percent of the programme budget with transfer payments of R92,08 million to PASA and R63,14 million to SADPMR.

 

The Mineral Regulation and Administration sub-programme is the largest line item with a budget allocation of R379,1 million, which is a 0.55 percent decrease in nominal terms, and 5.2 percent in real terms from 2022/23 financial year. This sub-programme is responsible for the administration of mineral and prospecting rights and licensing.

 

The Minerals and Petroleum Regulation programme has 9 performance targets for the 2023/24 financial year, namely;

 

1. 8000 jobs to be enabled/ created? through the issuing of mining rights
2. 132 Social and Labour Plans (SLP) development projects completed
3. 212 SLP inspections conducted
4. 150 legal compliance inspections conducted
5. 500 Mining Economics inspections conducted
6. 1374 Environmental Inspections conducted
7. 1500 petroleum retail site compliance inspections
8. 1080 fuel samples tested
9. 200 rights issued to Historically Disadvantaged South Africans (HDSA) controlled entities

 

3.1.2.3 Programme 3: Mining, Minerals and Energy Policy Development

 

This programme purpose is to develop integrated minerals and energy policies to promote transformation, investment and sustainable development in the mining and energy sectors.[9]

 

Table 4: Programme 3 Budget Allocation for 2023/2024 Financial Year

Programme 3: Mining, Minerals and Energy Policy Development	Budget		Nominal Increase / Decrease in 2023/24	Real Increase / Decrease in 2023/24	Nominal Percent change in 2023/24	Real Percent change in 2023/24
R million	2022/23	2023/24
Mining, Minerals and Energy Policy Development Management	61,4	67,6	6,2	3,0	10,10%	4,95%
Minerals & Petroleum Policy	24,1	25,1	1,0	-  0,2	4,15%	-0,72%
Nuclear, Electricity and Gas Policy	20,0	15,3	-  4,7	-  5,4	-23,50%	-27,07%
Economic Analysis and Statistics	45,3	49,4	4,1	1,8	9,05%	3,96%
Economic Growth, Promotion and Global Relations	711,1	907,4	196,3	153,9	27,61%	21,64%
Mineral and Energy Planning	17,8	15,9	-  1,9	-  2,6	-10,67%	-14,85%
Total	879,7	1 080,7	201,0	150,5	22,8%	17,11%

Source: National Treasury, (2023)

 

The Mining, Minerals and Energy Policy Development programme receives R1. 080 billion (10.1 percent of the total budget) for the 2023/24 financial year. This is a 22.8 percent increase in nominal terms and 17.11 increase percent in real terms.

 

This programme is the second largest line item for the Department for the 2023/24 financial year. 81.6% of the programme’s total budget is transfer payments to state owned entities Council of Geoscience (CGS) (R559,46 million), Mineral Technology and Research (Mintek) (R318,68 million) and Association of African Diamond Producing Countries (R4,6 million).

 

The Economic Growth, Promotion and Global Relations sub-programme is the largest line item in the programme budget to the value of R907,4 million, an increase of 21.6 percent in real terms. This sub-programme is responsible for promoting economic growth and investment in the sector, and is therefore the sub-programme responsible for the abovementioned transfers to the state-owned entities like CGS and Mintek.[10]

 

The Mining, Minerals and Energy Policy Development Management sub-programme provides overall management to Programme 3, and receives a R67,6 million budget allocation for 2023/24. This is a 4.9 percent increase in real terms and 10.1 percent increase in nominal terms from the 2022/23 financial year. Similar slight budget allocation increase for the Minerals and Petroleum Policy sub-programme of R25,1 million for the 2023/24 financial year, which is a 4.15 percent increase in nominal terms and 0.72% in real terms from the 2022/23 financial year.

 

Budget decrease for the Nuclear, Electricity and Gas Policy sub-programme with a R15,3 million allocation. This is a 23.5 percent decrease in nominal terms and a 27 percent decrease in real terms from the 2022/23 financial year. The Mineral and Energy Planning sub-programme, responsible for ensuring security of supply of mineral and energy resources is the smallest line item and similarly receives a budget decrease of 10.6 percent in nominal terms and 14.8 percent in real terms, with the R15,9 million budget allocation for the 2023/24 financial year.

 

The Economic Analysis and Statistics sub-programme is entrusted to advise the Department on trends in the mining and energy industries in order to attract investment.[11] This sub-programme is allocated R49,4 million for the 2023/24 financial year, which is a 9.05 percent increase in nominal terms and 3.96 percent in real terms.

 

The Mining, Minerals and Policy Development programme has set eight (8) performance targets. This compares to nine (9) targets in the previous financial year. The performance targets for the 2023/24 financial year are as follows:

 

1. Petroleum Products Bill submitted to Cabinet for approval to be tabled in Parliament
2. Mine Health and Safety Bill submitted to Cabinet for approval to be tabled in Parliament
3. Draft South African National Petroleum Company (SANPC) Bill completion
4. Diamonds Amendment Bill completed
5. Report on outcomes of environmental impact assessment and data acquisition for shale gas exploration in South Africa
6. Eight (8) reports on Beneficiation Master plan initiatives
7. Eight (8) investment promotion events hosted or partnered to attract investment in the sector
8. Revised Radioactive Waste Management (RWMF) Bill submitted to Cabinet for tabling in Parliament

 

3.1.2.4 Programme 4: Mine Health and Safety

 

The purpose of programme 4 is to execute the Department’s mandate to safeguard the health and safety of mine employees, nearby communities and people affected by mining activities.[12]

 

Table 5: Programme 4 Budget Allocation for 2023/24 Financial Year

Programme 4: Mine, Health and Safety Inspectorate	Budget		Nominal Increase / Decrease in 2023/24	Real Increase / Decrease in 2023/24	Nominal Percent change in 2023/24	Real Percent change in 2023/24
R million	2022/23	2023/24
Sub-Programmes
Mine Health and Safety Management	10,4	9,1	-  1,3	-  1,7	-12,50%	-16,59%
Mine Health and Safety Regions	209,1	210,2	1,1	-  8,7	0,53%	-4,17%
Occupational Health	16,9	14,5	-  2,4	-  3,1	-14,20%	-18,21%
Total	236,4	233,8	-  2,6	-  13,5	-1,1%	-5,72%

Source: National Treasury (2023)

 

The Mine, Health and Safety Inspectorate programme receives R233,8 million or 2.19 percent of the total department budget allocation of the 2023/24 financial year. This budget allocation includes the transfer payments of R4,74 million or 2.02 percent of the programme budget to the Mine, Health and Safety Council.

 

The largest line item is the Mine Health and Safety Region sub-programme with an allocation of R210,2 million which is a nominal increase of 0.53 percent, and real decrease of 4.17 percent. This sub-programme is responsible for developing strategies to reduce occupational diseases and injuries in the mining sector and conducts audits and inspections.[13]

 

The Occupational Health sub-programme receives R14,5 million which is a nominal decrease of 14.2 percent, and real decrease of 18.2% in 2023/24. This sub-programme is responsible for establishing and promoting a culture of health and safety in the mining sector.[14]

 

The Mine Health and Safety Management sub-programme is the smallest line item with R9.1 million budget allocation, which is a 12.5 nominal decrease and 16.5 percentage decrease in real terms. The sub-programme provides overall management to the programme.[15]

 

The Mine Health and Safety programme illustrates eight (8) performance targets for the 2023/24 financial year. This compares to six (6) targets in the previous financial year. The performance targets for the 2023/24 financial year are as follows:

 

1. Reduce by 10% occupational fatalities compared to the prior year.
2. Reduce occupational injuries by 5% compared to the prior year.
3. Reduce by 10% of occupational diseases (including tuberculosis) compared to the prior year.
4. Complete 80% of investigations (initiated vs completed).
5. Complete about 80% of inquiries (initiated vs completed).
6. Conduct a total 8 000 qualitative inspections (cumulative, including individual and group audits).
7. One (1) MHS Annual Report submission to Parliament
8. Service Level Agreements (SLA) entered into in order to improve health and safety in mining.

 

3.1.2.5 Programme 5: Mineral and Energy Resources Programme and Projects

 

The programme manages, coordinate and monitor programmes and projects focused on access to mineral and energy resources.[16]

 

Table 6: Programme 5 Budget Allocation for 2023/2024 Financial Year

Programme 5: Mineral and Energy Resources Programme and Projects	Budget		Nominal Increase / Decrease in 2023/24	Real Increase / Decrease in 2023/24	Nominal Percent change in 2023/24	Real Percent change in 2023/24
R million	2022/23	2023/24
Programmes and Projects Management	4,1	6,2	2,1	1,8	51,22%	44,16%
Integrated National Electrification Programme	6 070,0	6 327,0	257,0	-  38,5	4,23%	-0,63%
Programmes and Projects Management Office	70,1	68,0	-  2,1	-  5,3	-3,00%	-7,53%
Regional Programmes and Projects Management Office	0,0	0,0	0,0	0,0	0,0	0,0
Electricity Infrastructure and Industry Transformation	120,5	6,3	-  114,2	-  114,5	-94,77%	-95,02%
Energy Efficiency Projects	292,2	253,5	-  38,7	-  50,5	-13,24%	-17,30%
Renewable Energy Projects	158,8	159,1	0,3	-  7,1	0,19%	-4,49%
Environmental Management Projects	200,3	197,1	-  3,2	-  12,4	-1,60%	-6,19%
Total	6 916,0	7 017,2	101,2	-  226,6	1,5%	-3,28%

Source: National Treasury, (2023)

 

The Mineral and Energy Resources Programme and Projects is allocated 65 percent or R7,01 billion of the total Department budget allocation for the 2023/24 financial year. This is 1.5 percent nominal increase, and 3.28 percent decrease in real terms in 2023/24.

 

This programme is the largest budget allocation of the DMRE to which transfer payments accounts for 90.85 percent of the programme total budget. As a result, the largest line item of R6.3 billion is allocated to the Integrated National Electrification Programme sub-programme. This sub-programme oversees and manages the financing and implementation for the electrification programme and makes transfers to Eskom, municipalities and private providers.[17]

 

The Electricity Infrastructure and Industry Transformation sub-programme, tasked with overseeing programmes and projects focused on the development, improvement and transformation of the electricity generation, transmission and distribution sector, and independent power producers.[18] This sub-programme receives a significant decrease in budget from the R120,5 million in the 2022/23 financial year, to R6,3 million in the current financial year. This is a 94.7 percent decrease in nominal terms and 95.02 percent decrease in real terms for 2023/24.

 

Further decrease in budget allocations is the Energy Efficiency Projects sub-programme to R253,5 million, which is 13.2 percent decrease in nominal terms and 17.3 percent in real terms for the 2023/24 financial year. This sub-programme advances energy efficiency in South Africa through planning and coordinating activities and interventions focused on energy efficiency market. The sub-programme also makes transfers for municipal energy efficiency programmes.[19]

 

The Environmental Management Projects sub-programme receives R197,1 million, a 1.6 percentage decrease in nominal terms and 6.19 percent decrease in real terms. The sub-programme provides strategic guidance on environmental management and climate change. It also assists mines to prevent the uncontrolled movement of water into and out of underground holdings and mine openings (acid mine).[20]

 

The Renewable Energy Projects sub-programme receives R159.1 million over 2023/24, a 4.49 percent decrease in real terms. The Regional Programmes and Projects Management Office sub-programme receives zero (0) budget allocation for 2023/24. This sub-programme provides regional energy related advisory services.[21]

 

The Programmes and Projects Management sub-programme receives R6.2 million, a 51 percentage increase in nominal terms and 44.16 percent increase in real terms. The Programmes and Projects Management Office sub-programme receives R68 million, a 7 percent decrease in real terms.

 

The APP indicates for the 2023/24 financial year that the Mineral and Energy Resources Programmes and Projects programme has twenty (20) planned performance targets. This is an increase of targets from the 2022/23 financial year where the annual performance targets were eight (8). The annual performance target for 2023/24 financial year include:

1. Issue request for Request for Proposals (RFP’s) for the 615 MW from storage.
2. Issue request for RFP 5000 MW (Bid Window 7) from renewable energy
3. Issue request for RFP’s for 1000 MW from gas
4. Approved Renewable Energy Sector Master Plan.
5. Fifteen thousand (15 000) additional households electrified through non-grid technology.
6. Four (4) reports on the monitoring and verification of the implementation of the grid electrification of additional 220 000 households by Eskom and contracted municipalities
7. Three (3) electrification masterplans developed (Western Cape, Northern Cape and Free State)
8. One (1) Ingress measure implemented
9. One (1) mine water management plan developed for implementation
10. Three (3) derelict and ownerless mine sites rehabilitated
11. Forty (40) unsafe shafts sealed off
12. 0.5 TWh savings and the quarterly reports on the planning, implementation and monitoring of EEDSM projects in industry, building or residential sector
13. 0.0196 TWh savings quarterly reports on the planning, implementation, monitoring and achievement by EEDSM grant participating municipalities
14. Mining Sector Women Empowerment and Gender Equality Strategy and implementation plan approved and launched
15. 4 quarterly reports on implementation of Energy Sector Empowerment and Gender Equality Strategy and Gender Frameworks
16. 30% of Preferential Procurement to qualifying Women, Youth and PWDs from allocated projects budgets of INEP
17. Three (3) small scale miners supported
18. Ten (10) Women small scale miners supported
19. Mining Sector Youth Empowerment Strategy and implementation plan approved and launched
20. Youth in Energy Sector Strategy and implementation plan launched

 

3.1.2.6 Programme 6: Nuclear Energy Regulation and Management

 

The programme mandate is to manage the South African nuclear energy industry and control nuclear material in terms of international obligations, nuclear legislation and policies to ensure the peaceful use if nuclear energy.[22]

 

Table 7: Programme 6 Budget Allocation for 2023/2024 Financial Year

Programme 6: Nuclear Energy Regulation and Management	Budget		Nominal Increase / Decrease in 2023/24	Real Increase / Decrease in 2023/24	Nominal Percent change in 2023/24	Real Percent change in 2023/24
R million	2022/23	2023/24
Nuclear Energy Management	6,8	9,2	2,4	2,0	35,29%	28,97%
Nuclear Safety and Technology	1 151,0	1 136,0	-  15,0	-  68,1	-1,30%	-5,91%
Nuclear Non-proliferation and Radiation Security	13,0	15,0	2,0	1,3	15,38%	9,99%
Total	1 170,8	1 160,2	-  10,6	-  64,8	-0,9%	-5,53%

Source: National Treasury, 2023

 

The Nuclear Energy Regulation and Management programme receives R1,160 billion or 10.85 percent of the Department total budget, making it the second largest budget allocation for the 2023/24 financial year. This is 0.9 percent decrease in nominal terms and a 5.5 percent decrease in real terms.

 

The Nuclear Safety and Technology sub-programme is the largest line item with R1,136 billion, a 1.3 percent decrease in nominal terms and 5.9 percent real terms decrease. This sub-programme manages and implements all matters related to nuclear safety and technology, as required by legislation and international agreements.[23] It also implements nuclear energy policy, in line with the requirements of the Integrated Resource Plan (IRP).[24] In addition, the sub-programme administers all matters pertaining to nuclear technology, safety, liability and emergency management with the aim of improving the governance of the nuclear sector.[25] This sub-programme also makes transfers to the South African Nuclear Energy Corporation (NECSA), the National Nuclear Regulator (NNR) and the National Radioactive Waste Disposal Institute (NRWDI); and is responsible for paying membership fees to international organisation.[26]

 

The Nuclear Energy Management sub-programme receives R9,2 million, a 35 percent nominal increase and 28.9 percent increase in real terms. This sub-programme provides overall management to Programme 6, and oversees the national liaison office of the International Atomic Energy Agency (IAEA); and is responsible for managing the African regional cooperative agreement for research, development and training related to nuclear science and technology.[27]

 

The Nuclear Non-proliferation and Radiation Security sub-programme receives R15 million reflecting a 15 percent nominal increase, and 9.9 percent real term increase in 2023/24. This sub-programme manages and implements all matters related to nuclear non‐proliferation and radiation security, as required by legislation and international agreements. It also administers the use of nuclear material, related equipment and facilities, including nuclear technology, to ensure compliance with legislation and international agreements.[28]

 

In the current financial year, the Nuclear Energy Regulation and Management Programme has set ten (10) performance targets, the same number of planned targets as the previous financial year. The 2023/24 targets are:

1. Procured 2500 MW through the Nuclear Programme
2. Four (4) quarterly monitoring reports on Koeberg Nuclear Power Plant Long Term Operation Programme (LTO)
3. Gateway review for the Feasibility study for Central Interim Storage Facility (CISF) completed and final Feasibility Report submitted to Cabinet for approval
4. RFP issued to market on Procurement of Multi-Purpose Reactor (MPR)
5. Seventy percent (70%) of authorisation applications processed within the 8-week time period
6. Forty (40) Nuclear Safeguards compliance inspection reports submitted to the Director General for approval
7. Twenty (20) Nuclear Security compliance inspection reports submitted to the Director General for approval
8. International Atomic Energy Agency (IAEA) 2024-2029 Country Programme Framework completed
9. IAEA Annual report on the Technical Cooperation Programme produced
10. Monitoring report on the African Regional Cooperative Agreement (AFRA) programme produced

 

4. ANNUAL PERFORMANCE PLANS AND BUDGETS OF THE ENTITIES REPORTING TO THE DEPARTMENT

 

As stated above, there are eleven entities that report to the Department. This section provides an overview of the APPs and Budget of the 11 entities.

 

4.1 Mine Health and Safety Council (MHSC)

 

The Mine Health and Safety Council (hereafter MHSC) is established in terms of the Mine Health and Safety Act of 1996.[29] The mandate of MHSC is derived from section 43 of the Act and states that the MHSC must:

• Advise the Minister on health and safety of mines including, but not limited to, any legislation on mine rehabilitation in so far as it concerns health and safety.
• Co-ordinate the activities of its committees, receive reports from the committees and liaise with the Mining Qualifications Authority (MQA) on matters relating to health and safety.
• Liaise with any other statutory bodies concerned with matters relating to health and safety.
• Promote a culture of health and safety in the mining industry.
• At least once every two years arrange and co-ordinate a tripartite summit to review the state of health and safety at mines and
• Annually advise the Minister on relevant research relating to health and safety at mines.

As stated above, the MHSC’s core mandate is to advise the Minister of Mineral Resources and Energy (hereafter the Minister) on matters of health and safety affecting the South African mining industry.[30] To effectively achieve this, MHSC has structured the below mentioned organisational programmes:[31]

1. Provide advice to the Minister on health and safety matters in the South African Mining Industry (SAMI) and communities affected by mining.
2. Promote a culture of health and safety in the SAMI through engagement, communication, participation and dissemination of safety matters.
3. Liaise with statutory bodies, strategic partners and stakeholders on matters relating to Occupational Health and Safety (OHS).
4. Ensure best Human Capital management practices that will support the achievement of a highly skilled, motivated and capable MHSC employees, Council Advisory Committees and Council.
5. Ensure financial sustainability of MHSC.
6. Ensure efficient and effective financial management.

The Portfolio Committee on Mineral Resources and Energy (hereafter, PCMRE or the Committee) is entrusted with the responsibility of ensuring that the MHSC delivers effectively on its mandate.

4.1.1 Programme and Budget Analysis

 

MHSC is allocated State funding of R 4.7 million, and has indicated a total R120,5 million in income, which includes levies.[32] In terms of expenditure, the MHSC has indicated R120,5 million to which the programme analysis and performance targets illustrates anticipated areas of spend.[33]

As mentioned above, the MHSC has six (6) programme areas, namely;

 

Programme 1: Advisory

 

This programme is focused on providing advice to the Minister on the health and safety matters in the South African Mining industry and communities affected by mining activities.

 

MHSC has indicated the following performance targets:[34]

 

1. Two (2) OHS related legislative advisory notes to the Minister
2. One (1) Research advisory note to the Minister
3. One (1) Advisory note on the collection, processing and distribution of health data
4. One (1) Advisory note that are not legislative or research on Health or Safety

 

Programme 2: Advocacy and Engagement on Health and Safety

 

This programme is focused on promoting a culture of health and safety in the SAMI though engagement, communication, participation and dissemination of health and safety matters, with the following performance targets;[35]

 

1. One (1) Annual publication and communication of research results
2. One (1) Advisory note on the implementation of the Culture Transformation Framework
3. Eighty (80) percent completion of the dissemination plan

 

Programme 3: Partnership

 

This programme is focused on liaising with statutory bodies, strategic partners and stakeholders on matters related to OHS. This programme has one performance target:[36]

 

1. Eighty (80) percent completion of the comprehensive stakeholder management plan.

 

Programme 4: Organisational Health

 

The purpose of this programme is to ensure implementation of human capital practises that support the achievement of highly skilled, and capable MHSC employees.[37] The programme has one performance target of:

 

1. Vacancy rate of 14 percent

 

Programme 5: Financial Sustainability

 

The purpose of these programmes is to ensure financial sustainability, and efficient financial management.[38] The performance target for Programme 5 is:

 

1. Eighty (80) percent of collection of levies billed

 

Programme 6: Efficient Financial Management

 

1. Ninety-five (95) percent of spend of capital budget
2. Eighty percent of payment to service providers with 30 days

 

4.2 Council for Geoscience (CGS)

 

The CGS is established in terms of the Geoscience Act of 1993.[39]The CGS is therefore a scientific council mandated to support research and development underpinning the sustainable development of the mining industry.[40] Further mandate of CGS includes:

 

• The systematic onshore and offshore geoscientific mapping of South Africa.
• Undertake geoscientific research and related technological development.
• The collection and curation of all geoscience data and act as a national geoscience repository.
• The compilation and development of comprehensive and integrated geoscience knowledge and information, such as geology, geophysics, geochemistry, engineering geology, economic geology, geochronology, palaeontology, geohydrological aquifer systems, geotechnical investigations, marine geology, geomagnetism, seismology, geohazards, environmental geology and other related disciplines.
• Bring to the notice of the Minister any information in relation to the prospecting for and mining of mineral resources, which is likely to be of use or benefit to the Republic.
• Promote the search for and the exploitation of any minerals in the Republic.
• Study the distribution and nature of mineral resources and geo-environmental aspects of past, current and future mineral exploitation.
• Study the use of the surface and the subsurface of the land and the seabed, and from a geoscientific viewpoint advise government institutions and the general public on the judicious and safe use thereof with a view to facilitate sustainable development.
• Develop and maintain the national geoscientific library, the national geoscientific information centre, the national borehole core depository, the national geophysical and geochemical test sites, the national geoscience museum, the national seismological network and the national geoscience analytical facility.
• Conduct investigations and render prescribed specialised services to public and private institutions.

It is important to note that the amendments to the Geoscience Act that deal specifically with the custodianship of geoscientific information,[41] the review and evaluation of geotechnical reports,[42] the maintenance of certain national geoscientific facilities[43] and the appointment of the Geotechnical Appeal Committee[44] are still held in abeyance.

However, the Minerals and Petroleum Resources Development Act[45] (MPRDA) states that CGS may receive, validate and curate geological information from prospecting rights and mining rights holders as part of the regulator compliance requirement.[46]

The Portfolio Committee on Mineral Resources and Energy (hereafter, PCMRE or the Committee is entrusted with the responsibility of ensuring that the CGS delivers effectively on its mandate.

4.2.1 Programme and Budget Analysis

CGS total income for 2023/24 is R694 million, and the total expenditure is R583 million.[47] CGS has only two sources of funding, government grants and contract revenue/activities.[48] The total of government grant is R559 million which makes up 80.5 percent of the total income of CGS.[49] The contracts and sale is R130 million which is 18.7 percent.[50]

 

The breakdown of the government grant of R694 million is as follows; the baseline grant allocation is R205 million, and R154.4 million is allocated towards geological mapping, R200 million allocated towards geoscience activities including onshore and offshore activities, while commercial revenue is R130 million for the 2023/24 year.[51]

 

The contract revenue/activities breakdown indicates that R122.3 million was allocated for 2022/23 which includes a R70 million commercial contracts and R52,3 million for Department of Mineral Resources and Energy MTEF projects.[52] The CGS has noted that this expected to increase at an average rate of 7.8 percent.[53]

 

The largest share of expenditure is personnel costs of R378 million, followed by overheads and operating costs at R225 million. The latter expenditure is a 56 percent increase from the 2022/23 financial year where R144 million was allocated.

 

In terms of the programmes, as mentioned above, the CGS has five (5) programme areas, namely;

 

Programme 1: Financial Sustainability

 

This programme is focused on ensuring effective and efficient delivery of financial management services and to secure funding for exploitation of collaborative activities and partnerships, and grant funding. The performance targets under this programme are:

 

1. Financial budget report to which 66% of overhead costs to total costs, and 70% of personnel costs to total costs
2. Revenue from collaborative activities and partners of R130. 2 million
3. Grant revenue of R559.4 million

 

Programme 2: Organisational Effectiveness and Efficiency

 

The purpose of this programme is to develop and implement effective and compliant policies, procedures and business processes to support CGS to adhere to best practice to achieve sustainable governance.

 

The performance targets for this programme are as follows:

 

1. Zero (0) number of audit qualifications
2. Forty (40) percent of procurement spend on goods and services from Small, Medium and Micro Enterprises
3. Ninety-nine (99) percent availability of key enterprise services.

 

Programme 3: An Empowered, Transformed, Motivated and Capacitated Workforce

 

This programme is focused on attracting and retaining highly skilled scientific personnel on the geoscience industry. The performance targets for this programme are:

 

1. Forty-two (42) percent of the scientific staff with masters or doctoral degrees
2. One (1) percent of training expenditure to liveable amount payroll
3. Ten (10) percent staff turnover rate
4. 1.8 percent staff living with disability
5. Forty-three (43) percent female representation in scientific cohort
6. Fifty (50) percent female managers
7. Fifty (50) percent female executive managers

 

Programme 4: Delivery of Mandate

 

The focus of the programme is to execute the integrated and multidisciplinary geoscience mapping programme. This programme consists of four (4) performance targets, namely:

 

1. Sixteen (16) percent of onshore geoscience map coverage
2. 0.3 percent of offshore geoscience map coverage
3. Nine (9) applied geoscience outputs for minerals and energy
4. Eleven (11) applied geoscience outputs for infrastructure, land use, health, ground water and the environment

 

Programme 5: Advisory, Stakeholder

 

The purpose of this programme is to improve stakeholder relations through collaborations with strategically aligned institutions and the private sector and the general public. CGS has five (5) performance targets in this programme, namely;

 

1. Thirty-two (32) articles published on media platforms
2. Seventy (70) percent stakeholder satisfaction level
3. Thirty-four (34) peer-reviewed articles published
4. Ten (10) CGS publications
5. Forty (40) papers published in a conference proceeding
6. Eighty (80) percent of collection of levies billed

 

4.3 Mintek

 

Mintek is South Africa’s national mineral research organisation and specialises in mineral processing, extractive metallurgy and related areas. Mintek provides service test work, process development and optimisation, consulting and innovative products to clients worldwide. Mintek is an autonomous statutory organisation and reports to Minister of Mineral Resources and Energy.

In order to achieve its mandate, Mintek has indicated three (3) main outcomes, namely:

1. Learning and Growth
2. Research, Development, Innovation and Industry Development
3. Financial Sustainability

4.3.1 Programme and Budget Analysis

 

Mintek has indicated a R450 million total revenue, with an estimate surplus of R5.7 million in 2023/24. Mintek has highlighted the below mentioned programme in the 2023/24 annual performance plan.

 

Rehabilitation and Small-Scale Mining Program

 

This programme includes Asbestos rehabilitation of R323.68 million expenditure for the 2023/24 financial year. This programme aims to have 43 mines successfully rehabilitated in the MTEF period. Mintek has illustrated various completed projects with a total project value of R119,5 million.

 

This programme also includes the holings projects, to which holing are illegal mining hotspots. Here expenditure is at R96.75 million excluding security costs, and Mintek states 164 holings sealed to date.

 

The programme includes the Artisanal Small Scale Mining which has 7 different projects to the value of R13.2 million. The main output for the projects is training which targets 816 people.  In terms of the 2023/24 projects the focus is on Craft Production which includes training of 100 people with a budget of R1.5. million. Small scale mining, and dimension stone which includes training of 150 and 30 people with a budget of R2.25 million and R0.33. million respectively.

 

4.4. National Energy Regulator of SA (NERSA)

 

The NERSA is the single regulatory authority established in terms of the National Energy Regulator Act, 2004.[54] NERSA’s mandate is to regulate the electricity, piped gas and petroleum pipelines industries in terms of the Electricity Regulation Act, 2006,[55] Gas Act, 2001,[56] and Petroleum Pipelines Act of 2003.[57]

 

NERSA’s mandate is further derived from published government policies and regulations developed by the Minister of Mineral Resources and Energy (hereafter, the Minister) in terms of the above-mentioned relevant legislation. It is important to note that NERSA can only take decision that are within published government policy.[58] The relevant applicable policies are:

• White Paper on Energy Policy for South Africa of 1998;
• Electricity Pricing Policy (EPP) of the South African Electricity Supply Industry;
• Free Basic Electricity Policy;
• White Paper on Renewable Energy Policy for South Africa of 2003;
• Energy Security Master Plan: Liquid Fuels published by the Department of Energy in 1998 and 2007;
• National Development Plan;
• Industrial Policy Action Plan (IPAP); and
• Integrated Resource Plan (IRP) 2019.

 

Given the outline above, NERSA mandate, as contained in the relevant legislation and policy, is summarised as follows:[59]

 

• Issuing of licences and setting pertinent conditions;
• Setting and/or approving tariffs and prices;
• Monitoring and enforcing compliance with licence conditions;
• Dispute resolution including mediation, arbitration and the handling of complaints;
• Gathering, storing and disseminating industry information;
• Setting of rules, guidelines and codes for the regulation of the three industries;
• Determination of conditions of supply and applicable standards;
• Registration of import and production activities.

 

The above-mentioned mandate is discharged to regulate the three industries, namely Electricity, Piped Gas and Petroleum Pipelines Industries.[60] In an endeavour to discharge its mandate effectively and efficiently, NERSA is structured for each industry as follows:

 

• Programme 1: Regulatory Service Delivery
• Programme 2: Advocacy and Engagement
• Programme 3: Innovation
• Programme 4: Operational Efficiency and Quality Management
• Programme 5: People and Organisational Culture

 

The priority areas for NERSA for the 2023/24 financial year is the same as those of the previous financial year. Namely, drive efficiency in facilitating entry, setting prices and resolving disputes.[61] A stable and diverse energy sector system and pricing regime, which supports access through regulatory services that are delivered on time and to quality standards.[62] Innovation that drives response to the transition of the industry.[63] Energy industry regulatory framework that is relevant and effective for customers and stakeholders.[64] Lastly, NERSA aims to prioritise an integrated and value-added service to customers.[65]

 

NERSA has indicated in its APP, the priority areas are linked to Medium Term Strategic Framework (MTSF) Priority 1: Capable, Ethical and Developmental State, Priority 2: Economic Transformation and Job Creation, and Priority 3: Education, Skills and Health. This is further detailed in the programme analysis in section 3.1. below.

 

 

 

4.4.1 Programme and Budget Analysis

 

The overall budget of NERSA is R 438,8 million for the 2023/24 financial year.[66] The total operating expenditure in terms of support services which includes the line items of advertising, promotion and communication, employment costs, facilities maintenance, office administration, professional fees; and travel, accommodation and training is R239,6 million.[67]

 

The Petroleum Pipelines regulation operational expenditure with the same line items is allocated R37, 9 million, and the Piped Gas regulation operating expenditure is allocated R45,2 million.[68] The Electricity regulation is allocated R116 million in terms of the operating expenditure also with the above-mentioned line items.[69]

 

NERSA has indicated in the consolidated budget of 2023/24 a total income of R375,8 million from license fees from the Electricity industry, levies from Piped Gas and Petroleum Pipeline industry, registration fees, interest received and income.[70] This is a 11.5 percent variance from the 2022/23 financial year.[71] However, the total operating expenditure of R438,8 million is a 10.6 percent variance from 2022/23.[72] It is important to note that NERSA funding requirement for 2023/24 is R446 million and has earmarked R74.3 million for the cash flow mitigating reserves for 2023/24.[73]

 

In the NERSA APP, Programme 4: Operational Efficiency and Quality Management is allocated the largest share with R181.4 million.[74] Programme 1: Regulatory Service Delivery follows with R161,7 million, and Programme 2: Advocacy and Engagement for R57 million.[75] The Programme 5: People and Organisational Culture is allocated R31.9 million, and the smallest allocation is to Programme 3: Innovation with R6,6 million.[76] The detailed analysis of the programmes visa-vie the industry is in the subsequent section.

 

As mentioned in the preceding section, NERSA has five (5) programme areas, namely: (1) Regulatory Service Delivery, (2) Advocacy and Engagement, (3) Innovation, (4) Operational Efficiency and Quality Management, (5) People and Organisational Culture. Each of the mentioned programme areas consist of their respective sub-programmes. Below is an analysis of the budget allocation and the annual performance target for each programme.

 

• Programme 1: Regulatory Service Delivery

This programme is focused on NERSA’s regulatory functions and is therefore divided into three sub-programmes, one for each of the regulated industries namely Electricity, Pipe-Gas, and Petroleum Pipelines. For each sub-programme, NERSA sets out key regulatory functions of;

• Setting and/or approval of tariffs and prices
• Licensing and Registration
• Compliance monitoring and enforcement
• Dispute resolution, including mediation, arbitration and handling of complaints
• Setting of rules, guidelines and codes for regulation.

 

This programme is allocated R161,7 million, with the Electricity sub-programme allocated R92,8 million, R43 million towards Piped-Gas programme and R25,8 million towards Petroleum Pipelines sub-programme.

 

For the 2023/24 financial year the Regulatory Service Delivery programme under the Electricity sub-programme has set itself seven (7) performance targets as follows:

 

1. Electricity pricing decision by 28 February 2023
2. 120 working days turnaround time for applications for licensing of electricity generation facilities
3. Forty-five (45) working days turnaround time for applications for the registration of electricity generation facilities
4. Eighty (80) percent achievement of audit compliance with Auditor General of South Africa
5. Four (4) analysis reports on audits conducted quarterly
6. Four (4) reports on non-compliance findings on a quarterly basis
7. Ninety (90) percent of disputes/complaints closed in line with Complaints/Dispute Resolution Investigations Framework and Process.

 

The Piped-Gas Industry regulation has set (18) performance targets as follows:

 

1. 100 percent completion of maximum price applications
2. 100 percent completion of applications on distinguishing features
3. 100 percent completion of transmission tariff applications
4. Four (4) calculations of the ROMPCO[77] tariff for gas volumes below 120 million Gigajoule
5. 100 percent completion of license applications
6. 100 percent completion of applications for license amendments/ revocation/ conversions
7. 100 percent completion of applications for the registration of gas activities
8. Twelve (12) monthly volume balance reports assessed
9. One (1) audit report on compliance with ROMPCO
10. One (1) report on licensees with compliance with license conditions
11. Four (4) reports on the implementation of the Regulatory Reporting Manuals for the preceding financial year
12. 100 percent of monitoring reports on implementation of transmission
13. 100 percent of monitoring reports per license on the implementation of Maximum Prices
14. Sixty (60) percent of complaint investigations completed and report on findings
15. Sixty (60) percent of initiated investigations completed and report on findings
16. Two (2) reports on new developments in the gas industry
17. One (1) report on the impact of developments on competition in the gas industry

 

The Petroleum Pipeline Industry Regulation sub-programme has set (8) performance targets in 2023/24.

These are the following:

 

1. 100 percent of completed license applications
2. 100 percent completed applications for license amendments/revocations
3. One (1) report on investigations done into suspected unlicensed activities
4. One (1) report on the geographic spread of licenses issued for petroleum pipelines infrastructure
5. Two (2) reports on the inland security of supply
6. One (1) report on prudency reviews of identified licenses
7. Two (2) reports on trends regarding utilisation of storage facilities and third-party access
8. One (1) report on the implementation of the methodology to determine capacity
9. Two (2) reports on the construction of new facilities
10. Two (2) reports on licensees’ compliance with statutory reporting requirements
11. 100 percent of compliance investigated and report
12. One (1) reports on the monitoring of implementation of the tariff methodology

Programme 2: Advocacy and Engagement

This programme purpose is to contribute towards relevant legislation and policies through focused interventions of transformation, as well as to inform customers and stakeholders.[78] The programme consists of (2) sub-programmes Regulatory and Policy Advocacy, and Customer and Stakeholder Engagement.

The programme is allocated R57 million for 2023/24, with the largest share of the allocation going to Electricity Industry with R23 million, R2.2 million towards Piped Gas and R12 million towards Petroleum Industry.[79]

The Regulatory and Policy Advocacy sub-programme consists of two (2) performance targets. These are the following:[80]

1. Two (2) reports on regulatory advocacy
2. Sixty-five (65) percent variance of planned versus actual ESI advocacy and stakeholder engagement plan

The Customer and Stakeholder Engagement sub-programme consists of (3) performance targets, namely:[81]

1. Two (2) reports on stakeholder workshops/meetings for the piped gas and petroleum industries
2. Sixty-five (65) percent variance of planned versus actual annual ESI Stakeholder Engagement Plan
3. 75 ESI customer education programmes undertaken
4. One (1) consolidated report on the customer education programmes undertaken
5. Two (2) reports on partnership creation
6. One (1) report on the implementation of the stakeholder management plan

 

Programme 3: Innovation

 

This programme as the name suggests is focused on ensuring that new technology solutions support delivery of value-added services to customers. This programme is allocated R6.6 million and has one (1) performance target of two (2) reports that indicates the health of the implementation of the ICT strategy.[82]

 

Programme 4: Operational Efficiency and Quality Management

 

This programme is relevant to ensure that NERSA operational processes, planning and project management support the core business and mandate.[83] R181.4 million is allocated to this programme with the largest allocations earmarked for the Regulatory Support Unit (R30.2 million) and Legal Advisory Services (R28 million).[84]

 

The programme has six (6) performance targets for 2023/24, namely:[85]

 

1. One (1) report on the implementation of regulatory reporting manuals regarding Standard Chart of Accounts (SCOA) for municipalities
2. One (1) report on impact of global, regional and local energy trends
3. Two (2) reports on the implementation of the Regulatory Reporting Manuals for Non-financial and financial information
4. Four (4) reports on legislative and policy development impacting on the Regulator
5. Unqualified Audit
6. One (1) report on the implementation of gender mainstreaming plan

 

 

 

Programme 5: People and Organisational Culture

 

This programme is focused on creating a conducive work culture and human capacity that is balanced, including a system development adequate to deliver value to customer and stakeholder expectations.[86] The programme is allocated R31. 9 million, and has eight (8) performance targets. Namely;[87]

 

1. One (1) report on Organisational Culture
2. Two (2) reports on the implementation of the Employment Equity Plan
3. Fifty (50) percent of women in management position
4. Two (2) percent of persons with disabilities employed
5. Four (4) reports on the implementation of the Youth Employment Accord
6. One (1) report on the implementation of the bursary programme
7. Four (4) reports on the design of a regulator course at an accredited institution of higher learning
8. One (1) report on the leadership development programme
9. One (1) report on the development of a technical regulatory training and development programme

 

4.5 South African National Energy Development Institute (SANEDI)

 

4.5.1. Budget Analysis

SANEDI derives its revenue through transfers from the Department and limited donor funding. From a funding perspective, historically about 5% to 7% of SANEDI’s actual income has been from donor-funded projects, thus ensuring appropriate selection and delivery of projects becomes an underlying strategic enabler. However, funding levels have declined in recent years. Revenue is expected to be at R125 million and declined over the Medium-Term Expenditure Framework (MTEF) period to approximately R91million. SANEDI execute its mandate through five programme areas, namely, Programme 1: Administration, Programme 2: Energy Research, Development and Innovation, Programme 3: Energy Efficiency, Programme 4: Energy Secretariat, Programme 5: Special Projects. Table 8 below shows the estimated budget of SANEDI per objective/activity for the 2023/24 financial year.

Table 8: SANEDI’S Estimated Budget for 2023/24 Financial year

Objective/Activity	Budget Estimate (thousands)	Revised Budget Estimate (thousands)
Programme (P)1: Administration	50,522	50,522
P2:Cleaner fossil fuels
P3: Energy Efficiency	15,021	15,021
P2: Smart Grids	8,184	8,184
P2: Clean energy solutions (Renewable Energy)	11,109	11,109
P2: Centre for energy systems analysis and research (Data & Knowledge Management)	3,224	3,224
P2: Cleaner Mobility	2,755	2,755
Total	90,815	90,815

Source: SANEDI (2023)

4.5.2. Key focus areas

SANEDI’s key focus areas, in line with the above budget, for the 2023/24 financial year will be as follows:

• To contribute towards sustainable energy solutions: Key performance indicators (KPIs) being Digitalised energy systems, Green House Gas (GHG) reduction through sustainable energy interventions, Energy policy support, Catalyse balanced Just Energy Transition, Energy Research, Development and Innovation, Balancing Energy Supply and Demand, Information Communication Technology (ICT), Intellectual Property, Energy Secretariat, and Special projects.
• Building energy expertise and competence: KPIs - Collaboration with industry, tertiary education bodies and SETAs, Implement skills development interventions, SMMEs and enterprise development,
• A capacitated, effective, efficient and sustainable operational environment (within which SANEDI will discharge its mandate): KPIs - HR Recruitment, Supply Chain Management, Governance Risk and Compliance, Local, Regional and International Partnerships.
• Inform and increase awareness of sustainable energy: KPIs - Developing and implementing communications strategy, Public Relations Management, Internal and External Communications, Events management, and Publications.
• Provide thought leadership: KPIs - Technical and Research Publications.

 

4.6.  South African Diamond and Precious Metals Regulator (SADPMR)

 

The South African Diamond and Precious Metals Regulator (hereafter SADPMR) is established in terms of the Diamond Act of 1986[88] to regulate the downstream diamond and precious metals industries in South Africa. SADPMR is established as a regulatory body entrusted to:

 

• Ensure that the diamonds and precious metals of the Republic are exploited and developed in the best interests of the people of South Africa
• Promote the sound development of diamond and precious metals undertakings in the Republic
• Implement, administer and control all matters relating to the purchase, sale, beneficiation, import and export of diamonds and precious metals of the Republic.

 

Important pieces of legislation which is also applicable to SADPMR’s mandate are the following:

 

• Minerals and Petroleum Resource Development Act 28 of 2002, which intends to make provision for equitable access to and sustainable development of the nation’s mineral and petroleum resource
• National Environmental Management Act 107 of 1998, is the overarching law which establishes sound environmental principles upon which all other environmental laws are based
• Diamond Export Levy Act 15 of 2007 which aims to provide for the imposition of an export levy on unpolished diamonds (but not synthetic diamonds) and allow for offsets with respect to that levy
• Diamond Export Levy Administration Act 14 of 200, which aims to provide for administrative matters in connection with the imposition of an export levy on unpolished diamonds (but not including synthetic diamonds)

In order to achieve this mandate, SADPRMR has indicated four (4) main outcomes, namely:

1. Outcome 1: Effective, efficient, developmental and innovative orientated regulator
2. Outcome 2: Competitive and Compliant Diamond and Precious Metals Industries
3. Outcome 3: Job creation, skills development and value addition to diamond and precious metal industries.
4. Outcome 4: Transformed Diamond and Precious Metals Industries

SADPMR has indicated three (3) programmes with set performance targets, which if fulfilled will enable achievements of the above-mentioned outcomes. The programmes are:

• Programme 1: Administrative
• Programme 2: Trade
• Programme 3: Regulatory Compliance

4.6.1 Programme and Budget Analysis

 

SADPMR APP indicates that the overall cost of the activities of 2023/24 is R111.7 million. In the next section is the cost breakdown for the entity per programme and indication of performance target.  As mentioned above, the SADPMR has three (3) programme areas, namely;

 

Programme 1: Administrative

 

This programme is focused on providing efficient administrative support to Human Resources, Communication, and Information and Communications Technology services, and to ensure services are effectively operational and maintained and responsive to the stakeholders.

 

The total budget for this programme is R74, 7 million for 2023/24 to which the main cost driver is personnel.

 

Programme 2: Trade

 

This programme is responsible for the facilitation of the local trade, exports and imports of diamonds in accordance with the Kimberley Process Certification Scheme (KPCS) and to ensure that diamonds are traded at fair market value. This programme has two (2) sub-programmes, namely;[89]

1. Government Diamond Valuator (GDV)

Tasked with ensuring that diamonds are traded at a fair market value.

1. Diamond Exchange and Export Centre (DEEC)

Tasked with facilitating the buying, selling and exporting and importing of diamonds.

 

The performance targets for 2023/24 are as follows:

 

• Six (6) trained new entrants
• Two (2) impact assessment reports for former trainees
• 100 percent of diamonds verified for fair market value
• 100 percent of polished diamonds subject for verification
• Eight (8) beneficiaries accessing the DEEC for the first time
• Five (5) dealers accessing the DEEC for the first time
• Five (5) quarterly imports, exports, statistics reports and KP annual report submitted
• Three (3) bilateral engagements
• Five (5) multilateral engagements
• Zero (0) lost diamonds

 

The Trade Programme is allocated R15 million in the 2023/24 financial year. This is a 13 percent decrease from the previous financial year of R13. 2 million.

 

Programme 3: Regulatory Compliance

 

This programme is focused on ensuring compliance with legislative requirements in the diamond and precious metals industries. This includes the aim to transform, improve competitiveness, sustainable development and improve job creation in the industries. The programme consists of two (2) sub-programmes, namely:

 

Sub-programme: Regulations: Tasked to receive, process and issue diamond and precious metals licenses, permit, and certificates in line with enabling legislation

Sub-programme: Inspectorate: This sub-program has specific focus areas, namely:

 

• Ensure transformation
• Ensure compliance through inspections
• Ensure enforcement of compliance through issuing of non-compliance notices and recommendations for suspensions/cancellation of non-compliance licenses/permits
• Promote beneficiation

 

The programme has various performance targets for 2023/24:

 

• 100 percent of fully completed licenses issued
• 100 percent of beneficiation licenses/permits issued
• Forty-five (45) HDP licenses issued
• Four (4) assisted inactive licensees (Precious Metals)
• Four (4) assisted inactive licensees (Diamond)
• 100 percent of export approval applications meeting local demand evaluation
• 500 licenses assessed
• Seven (7) enterprises/partnerships maintained/created
• 100 percent of partnership monitored
• 700 inspections conducted on diamond premises
• 700 inspections conducted on precious metal premises
• 100 percent enforcement actions addressed to non-compliant incidents
• Twenty-five (25) precious metals joint inspections with law enforcement
• Twenty (20) diamond joint inspections conducted with law enforcement.

 

This programme is allocated R27. 5 million for 2023/24 which is a 5.6 percent decrease from the R26. 05 million allocated in 2022/23.

 

4.7. State Diamond Trader (SDT)

 

SDT is a state owned entity established in 2007 in terms of section 14 of the Diamond Act 56 of 1986 to operate in the diamond industry to support and facilitate growth in local diamond beneficiation

The SDT is categorised as a schedule 3 B entity in terms of the Public Finance Management ACT 1 of 1999 (PFMA)

Its operations consist of:

• State Diamond Trader (SDT) purchases are initiated through a process set out in Section 59B of the Act.

• Inspections done through producers.
• Once completed GDV varies prices.
• SDT accept, reserves, or declines the purchase.

 

• Deals with allocations:

• Allocate diamonds to clients.
• Follow SDT sales strategy.
• Observe compliance.

 

• Internal process for sorting and evaluation:

• Pricing of rough diamonds.
• Inventory management.
• Financial reporting.

 

• More about customer base:

 

• Maintain clients record.
• Compliance.
• Factory visits.
• Stakeholder relations.

 

4.7.1. Programme and Budget Analysis  

Table 9 below  is highlighting the outcome goals and annual targets of the SDT:

Table 9: Outcome goals and annual targets

Outcome goal	Annual Target
A transformed and inclusive diamond beneficiation industry that ensures increased black ownership and participation in the sector	Five (5) events through facilitation of exhibitions/events
	One (1) diamond show hosted
	Purchase 7,5% of rough diamonds inspected by value
	478 699 Carats (volume) supplied to clients
	A sale of rough diamonds to the value of R533,702,369 to 100% HDSA
	A facilitation of training for participants of the EDP in rough diamond valuation and polishing
A financially viable and sustainable entity	100% implementation of Combined Audit Action Plan
	2% net profit margin
	Ensure that by 31 March 2024, the working capital ratio is not less than 10:1
	Payment of invoices within 15 days on receipt
A capable workforce and developmental industry	Eight (8) employees trained Two (2) employees granted bursaries Two (2) employee wellness programmes coordinated

Source: Presentation to the PCMRE on 18 April 2023

During the planning period, the SDT projects that total assets will reach R195 million.  About 79% of the total assets will primarily consist of cash and cash equivalents, which is indicative of the entity’s financial viability and liquidity.

Planned assets purchases include diamond equipment, inventory management system, financial software for compilation of annual financial statements and the upgrade of the main boardroom audio visual facilities.

Budget Assumptions:

• Revenue only consists of rough diamonds and the forecast is based on market conditions and the production level of the producers.
• The revenue is expected to decrease marginally over the next three years.
• Gross profit margin percentage will remain stable at 5% over the budget period.
• Operating costs are expected to increase by at least 6% for the next three years.
• Finance expense relates to interest to be incurred on credit facility
• The entity will generate positive cash flows over the next three years.
• The net profitability positions will be maintained.

 

1. South African Nuclear Energy Corporation (NECSA)

 

NECSA Corporate’s legislative mandate is derived from Section 13 and 14 of the Nuclear Energy Act.   Section 13 details the functions of NECSA which are to: 

• Undertake and promote Research and Development (R&D) in the field of nuclear energy and radiation sciences and technology and, subject to the Safeguards Agreement, to make these generally available;
• Process source material, special nuclear material and restricted material, and to reprocess and enrich source material, as well as nuclear material;
• Co-operate with any person or institution in matters falling within these functions, subject to the approval of the Minister.

 

The Nuclear Energy Act also provides for the delegation of specific responsibilities to the entity, including the operation of the SAFARI-1 Reactor, utilising the radiation technology for medical and scientific purposes; decontamination and decommissioning of nuclear facilities from historic strategic programmes, and implementing and executing safeguards, as well as other international obligations.

 

NECSA engages in commercial business mainly through its wholly-owned commercial subsidiaries NTP Radioisotopes SOC Ltd (NTP), which is responsible for a range of radiation-based products and services for healthcare, life sciences and industry, and Pelchem SOC Ltd (Pelchem), which supplies fluorine and fluorine-based products. Both subsidiaries, together with their subsidiaries, supply local and foreign markets.

 

NECSA stated execution of its mandate through five (5) programmes in 2023/24, namely: Financial Recovery and Sustainability, Research and Innovation, Profitable Commercial Enterprises, Business Continuity and Efficiency, and Talent Excellence and High Performance Culture.

 

4.8.1.  Programme and Budget Analysis

 

NECSA indicates in the short-term (within 12 months), it aims to achieve a revenue of R2.7 billion. The entity aims to attain these aims through the exploration of commercial growth opportunities primarily through the NTP, Pelchem and a repurposed Pelindaba Enterprises, Research and Development projects. Further, during the 2023/24 NECSA expects a profit of R48.9 million, which is expected to increase to R110.1 million by the 2024/25 financial year.

 

1. National Nuclear Regulator (NNR)

 

The National Nuclear Regulator (hereafter NNR) is established and governed in terms of the National Nuclear Regulatory Act of 1999.[90] The NNR fundamental objective is to provide protection of persons, property and the environment against nuclear damage through the establishment of safety standards and regulatory practices.[91] The NNR therefore provides regulatory oversight and assurance of nuclear energy in South Africa.[92]

The NNR directly contributes to Programme 6 of the Department of Mineral Resources and Energy focused on the management of the South Africa nuclear sector in terms of international obligations and nuclear legislation and policies.[93]

The NNR functions are therefore categorised with the below mentioned headings:[94]

• Nuclear Safety and Technology
• Nuclear non-proliferation and radiation security
• Nuclear Energy Management

In order to achieve the abovementioned mandate, NNR functions are structured under the following four (4) programmes;

1. Programme 1: Administration
2. Programme 2: Nuclear Power Plant
3. Programme 3: Nuclear Technology and Naturally Occurring Radioactive Material
4. Programme 4: Regulatory Improvement and Technical Services

 

4.9.1 Programmes and Budget Analysis

NNR total revenue for 2023/24 is R350. 9 million which is a small increase from the R330. 8 million of 2022/23 financial year. NNR has earmarked R46.9 million in transfers received to which oversight will be required.

As mentioned above, the NNR has four (4) programme areas, namely;

Programme 1: Administration

This programme is focused on the Office of the Chief Executive Officer (CEO) which leads with the implementation of the approved organisational strategy and ensures that the organisation’s operations and resources are administered effectively and efficiently.[95] The allocated expenditure is R163 million which includes compensation of employees (COE) at R 50. 5 million and goods and services at R 112. 9 million for 2023/24.[96] The following sub-programmes form part of the Office of the CEO: Legal, Risk and Compliance, Strategy and Organisational Performance, and Internal Audit.[97]  Below is a summary of the sub-programme performance targets

1. Legal, Risk and Compliance

This sub-programme provides legal services, compliance, enterprise risk management and governance services to the organisation.[98] This programme has one (1) performance target which is completion of  4 legislative compliance reports.[99]

1. Corporate Support Service

This sub-programme provides strategic organisational support through human resource management, knowledge and information management, integrated management systems, facilities and security management, ICT, occupational health and safety, and communication and stakeholder relations management.[100]  This sub-programme has two (2) performance targets, namely;

• 100 percent implementation of public communications and stakeholder engagement plans
• 100 percent implementation of ICT business support activities

1. Office of the Chief Financial Officer

This programme ensures that the organisation practises good financial governance and maintains financial stability.[101]  This sub-programme has three (3) performance targets.

• 100 percent funding of NNR planned activities
• Seventy (70) percent procurement spent on designated groups
• 100 percent implementation of the Cape Town office construction project

Programme 2: Nuclear Power Plant

This programme conducts regulatory oversight of Koeberg. It reviews applications, grants authorisations and verifies compliance with regulatory requirements for nuclear safety and radiation protection. It also issues authorisations for vessels propelled by nuclear power or with radioactive material on board.[102]

NNR has detailed the performance targets for this programme as follows:

• Thirty-five (35) inspections conducted
• 100 percent implementation of reviews and assessments
• 100 percent implementation of reviews and assessment plan

The budget for this programme indicated R66.1 million in total expenditure, with COE at R36 million and goods and services at R30 million.

Programme 3: Nuclear Technology and Naturally Occurring Radioactive Material

This programme is also referred to as the NTN programme and its main focus is to grant authorisation and oversee nuclear technology, waste projects and naturally occurring radioactive material.[103] This programme consists of two business units, namely Naturally occurring radioactive material (NORM) and Nuclear technology and waste projects  (NTWP). Both business units ensure compliance with regulatory requirements and conditions of authorisation through compliance inspections, audits and investigations.[104]

The NORM business unit oversees mining and minerals processing facilities and scrap metal dealers who handle or use material subject to regulatory control.[105] The NTWP business unit oversees nuclear facilities on the Pelindaba site and the Vaalputs national radioactive waste disposal facility.[106] Important distinction is that any nuclear technology matter not associated with NPP and NORM falls under the NTWP unit.[107]

NNR has indicated one (1) performance target for each business unit in addition to 100 percent implementation of the reviews and assessments plan target, namely:[108]

• 120 NORM inspections conducted
• 90 NTWP inspections conducted

The budget for this programme indicates a total expenditure of R51. 7 million which includes R46. 7 million COE and R4. 9 million for the goods and service line item.[109]

Programme 4: Regulatory Improvement and Technical Services

This programme is focused on providing safety services to all NNR technical departments in addition to providing safety reviews and assessments for all regulated facilities.[110]

Three (3) performance targets for this programme, namely:[111]

• South African National Accreditation (SANAS) accreditation status report
• NNR readiness progress report
• Approved Centre for Nuclear Safety and Security (CNSS) pilot report

In terms of the budget for this programme R69.5 million is the total expenditure costs, with R51.2 million COE and R18. 3 million allocated for goods and services.[112]

 

4.10 National Radioactive Waste Disposal Institute (NRWDI)

 

NRWDI is an independent State-Owned Entity established in terms of section 3 of the National Radioactive Waste Disposal Institute Act (Act 53 of 2008). The overarching mandate of NRWDI is to provide sustainable and technically feasible solutions for the long-term management and disposal of all radioactive waste classes on a national basis. The key objective of this mandate is to protect people and the environment as well as to avoid undue burden being placed on future generations due to our past, present and future involvement in nuclear science and technology applications.

In order to achieve the abovementioned mandate, NRWDI functions are structured under the following four (4) programmes;

1. Programme 1: Administration
2. Programme 2: Radioactive Waste Disposal Operations
3. Programme 3: Science, Engineering and Technology
4. Programme 4: Radioactive Waste Compliance Management

Programmes and Budget Analysis

The revenue over the MTEF will increase from R52.09 million in 2023/24 to R56.52 million in 2025/26. This is an increase of R4.43 million or 2.9% over the MTEF. The NRWDI will derive its revenue from transfer payments received from government allocations. This allocation is expected to increase below inflation from R50.47 million in 2023/24 to R55.12 million in 2025/26. On obtaining the Vaalputs Nuclear Installation Licence, NRWDI will also be able to generate revenue in the form of waste disposal fees from radioactive waste generators, in particular Necsa and Eskom. This will be used for the purpose of the Vaalputs low level waste disposal function.

Funding to be used mainly for infrastructure projects will, over the long term, be obtained from the Radioactive Waste Management Fund, where-in fees will be raised and collected in line with the polluter-pays-principle.

The NRWDI has four (4) programme areas, namely:

• Programme 1: Administration
  • Funding model developed
  • 100%of valid invoices paid within 30 days after relevant documents are received
  • Interface RAWIS system with generators inventory system
  • Approved partnership and collaboration framework
  • Four (4) public awareness initiatives
  • 80% implementation of communication and stakeholder engagement plan
  • Unqualified audit report

 

Programme 2: Radioactive Waste Disposal Operations

 

• 100% waste packages disposed are WAC compliant
• Assessment of the facility against the stakeholder requirements
• Implementation of Framework for the National Waste Inventory Report

 

Programme 3: Science, Engineering and Technology

• Detailed design developed
• EIA phase 2 performed (i.e. Final EIA report submitted to CA)
• Initiate 2 research focus area

 

Programme 4: Radioactive Waste Compliance Management

• 2 x compliance assurance audit reports completed
• 2 x compliance inspections completed
• Obtain ISO 9001 certification

 

4.11 Central Energy Fund (CEF) Group of Companies (SOC) Ltd

 

The Central Energy Fund Ltd (hereafter CEF) mandate is to contribute to the security of the energy supply of South Africa and the region through exploration, acquisition, development, marketing and strategic partners. CEF derives this mandate from the CEF Act of 1977, and ministerial directives issued thereafter. CEF is a schedule 2 State Owned Entity (SOE) therefore does not receive funding from the State.

Important pieces of legislation applicable to CEF’s mandate are the following:

•         Central Energy Fund Act No. 38 of 1977 (as amended)

•         National Energy Act 34 of 2008

•         Mineral and Petroleum Resources Development Act 2002

•         Hazardous Substances Act 15 of 1973

•         National Energy Regulator Act 40 of 2004

•         Petroleum Pipelines Levies Act 28 of 2004

In order to achieve its mandate, CEF has indicated a renewal strategic framework consisting of four (4) main outcomes, namely:

• Stabilisation of the CEF group and improvement of long term commercial sustainability
• Growth and increase in market share through diversification of income streams and product
• Development of key energy infrastructure and technology
• Group consolidation to exploit synergies and improve scale and improve struggling entities.

CEF consists of six (6) group operating entities and four (4) associate entities.  The focus of this analysis is on the group operating entities, namely:

• The Energy Projects Division (EPD)

• Petroleum Oil and Gas Corporation of South Africa (PetroSA)
• South African Gas Development (iGas)
• The African Exploration Mining and Financing Corporation (AEMFC)
• South African Agency for Promotion of Petroleum Exploration and Exploitation SOC Limited (PASA)
• The Strategic Fuel Fund (SFF)

 

Programme and Budget Analysis

The CEF Group Corporate Plan indicates a projected net profit of R2,4 billion in 2023/24, with expected growth to R3.2 billion in 2026/2027. For 2023/24 CEF has indicated a projected net profit performance of iGas with R690 million, PetroSA with R2.4 billion and AEMFC with R98 million in 2023/24. Whereas CEF with R306 million, and SFF with R253 million net loss.

CEF 2023/24 budget indicates R48 billion in revenue to which R35, 7 billion is the cost of goods sold, therefore R12, 2 billion in gross profit, and a net profit of R2.4 billion. CEF explains the high net profit margin due to the high gross profits from PetroSA and interest income and increased dividend received from ROMPCO by iGas

In terms of cash flow, CEF has indicated R9.4 billion in cash or cash equivalent, and R4 billion in cash flow from operating activities. Cash flow from investments there is acquisition of intangible assets and property of R6,5 billion from PetroSA and new project investment to the value of R700 million for SAPREF, Renergen, COEGA LNG and Gas Trading Venture.

Budget analysis of CEF six (6) operating entities

The Energy Projects Division

The Energy Projects Division (EPD) is responsible for the commercialisation of new energy technologies and key Group business.

During the period of review CEF has indicated that negotiations are ongoing for the SAPREF oil refinery acquisition while COEGA LNG Terminal is undergoing prefeasibility. The Avedia acquisition focused on wholesale of (LPG) is expected to launch during 2023/24.

PetroSA

PetroSA core activities are the exploration development and production of oil and gas and the production of synthetic fuels from gas. PetroSA has operations in South Africa, Ghana, and Netherlands.

PetroSA aims to reconfigure its operating business model so that PetroSA operates as a downstream company rather than an integrated company across the value chain.

PetroSA has indicated 3.5. billion litres of diesel for 2023/24 with ongoing supply of petroleum products to SOE’s.

 iGas

South African Gas Development (iGas) develops gas and gas infrastructure through active investment in the provision of gas molecules and gas infrastructure. It is the key investor in who is the commercial operator of the 865 km high pressure gas pipeline connecting the onshore gas fields in Mozambique to South Africa

iGas key priorities include:

-         Management of ROMPCO and the ROMPCO dividend for financial sustainability

-         Additional gas supply from Mozambique

-         Execution of the COEGA LNG Project and Total Interactions for the Paddavisse discoveries

For 2023/24 the ROMPCO dividend is expected to be R792 million.

African Exploration Mining and Financing Corporation

The African Exploration Mining and Financing Corporation (AEMFC) is responsible for the mining and supply of coal for the generation of electricity. It focused on key minerals that will provide energy for the future.

AEMFC states that for 2023/24 the focus is on key activities in mining and selling coal including securing the prospecting, exploration and mining rights of strategic and critical minerals.

Based on the CEF Group Corporate Plan, AEMFC targets 2.5. Mt (45 927 074 Gigajoules) of coal sold to Eskom mainly through operationalising Klippoortjie Mine. AMEFC further targets securing prospecting and mining rights of energy transition minerals such as lithium, cobalt, manganese, rare earths etc.

 South African Agency for Promotion of Petroleum Exploration and Exploitation

The South African Agency for Promotion of Petroleum Exploration and Exploitation (PASA) promotes and regulates oil and gas exploration and production in South Africa. It is responsible for evaluating oil and gas resources, attracting explorers in the oil and gas sector, and monitoring their exploration and production activities.

PASA aims to attract inward investment into the country oil and gas sector which will provide energy security.

 Strategic Fuel Fund

The Strategic Fuel Fund (SFF) is responsible for acquiring and building key energy storage infrastructure as well as maintaining the country’s strategic fuel stocks in order to ensure security of energy supply.

For SFF, the primary focus for 2023/24 is investment equity barrels for hydrocarbons and investment in oil and gas storage and logistics infrastructure for the provision of security of supply.

SFF has included a performance target of the refurbishment of four (4) crude oil tanks at the Milnerton Terminal and generate R2.8 billion in revenue by 31 March 2024.

 

5. OBSERVATIONS

 

The Portfolio Committee observed the following matters in relation to the performance plans and budget of the DMRE and entities reporting to it:

 

5.1 Department of Mineral Resources and Energy

 

• Members raised concern regarding the salaries paid to NECSA, Mintek, SADPMR and CGS employees, in relation to the high and specialised skills needed to fulfil their mandate. Members further highlighted that these entities compete in the open market for these skills, which might lead to higher vacancy rates at these entities.
• Members noted that the report of the DMRE stated that the MHSC suffers credibility issues where for example they are dealing with a number of legal matters as they do not have a legal department.
• On idling megawatts, the Minister stated that the energy availability factor comes into play, i.e. the percentage of maximum energy generation that a plant is capable of supplying to the electrical grid, limited only by planned and unplanned outages.
• It was observed:  
  •  that six (6) power stations provides about 50% of its energy availability factor. The Minister thus highlighted that the focus should be on increasing the energy availability factor of these plants.
  • that the energy availability factor speaks directly to the effective performance of each individual coal power plants, i.e. how much it can produce, regardless of its life. Members further noted that these power stations already have space in the grid, which is crucial
• Members noted and acknowledged that renewable energy has its own intermittent challenges relating to energy supply.
• Members noted that the DMRE is in the process of issuing the lifting of the moratorium on shale gas. Members further noted that the DMRE will be approaching Cabinet with an update on work done thus far, which especially focuses on environmental issues.
• Members noted that there should be a balance between economic development and environmental concerns, highlighting the need to be responsible and not harm the environment.
• Members noted that the grid in South Africa was built in a particular way, where Mpumalanga was the hub for energy generation and therefore the grid was mostly concentrated in the central part of South Africa, and variable grid on the coastal provinces.
• Members noted that the development of the grid is not in the mandate of the DMRE, but the responsibility of Eskom.
• Members note that illegal mining is a criminal issue, which must be treated as such. Members further noted that addressing the illegal mining issues need to be prioritised. It should however be noted and highlighted that the DMRE has started the process of the artisanal small scale mining programme.
• Members are encouraged by the DMRE’s efforts that the PetroSA’s refining capacity need to be re-installed, including the discussions with Saudi-Arabia in developing a refinery, taking into account the current refining capacity in the country.
• Members noted that some of the strategic fuel stock was used during the COVID-19 period, and the DMRE’s assurance that it will be restocked.
• Members were assured that Bid Window 7, will seek to ensure that the projects will be prioritised where there is grid capacity.
• Members noted that master plans have been developed for the respective provinces, which relates to the Integrated National Electrification Programme (INEP) in order to ensure that there is proper planning, with the respective municipalities.
• Members noted that various legislation were not processed due to various reasons. The Radioactive Waste Management Fund Bill was taken to Cabinet in 2021 and the DMRE was requested to redraft the legislation. The National Nuclear Regulator Bill will be submitted to Cabinet in the near future. The Gas Amendment Bill was withdrawn from the Parliamentary processes, as the Bill was drafted in 2013 and a number of developments had taken place since it was tabled in Parliament in 2021. The Electricity Regulation Amendment Bill was reportedly expected to be tabled to Parliament by the end of March 2023 for processing during the current financial year.  
• On the policy side of strategic stock and security of supply, Members noted that the country does have a draft strategic stock policy, which was drafted in 2013, but was never implemented. The sector had concerns regarding certain sections of the policy, e.g. current legislation does not provide private members to hold strategic stocks. The policy is however, currently being reviewed, and should be implemented by the end of the current financial year.
• Members noted that in the next 3 to 6 months the biggest test will come, where both SAPREF and NATREF will not be operational, and the country will be dependent on imports. However, the Committee was assured by the DMRE that they always have plans for any eventuality.
• Members noted that there is a current licensing backlog of 6 641 applications. Challenges are still experienced in Northern Cape, Mpumalanga and the North-West Provinces.
• Members noted that DMRE has made a decision that there needs to be a compliance unit in the Department. Compliance will thus be moved out of the licensing environment, to ensure that mining houses do comply.
• Members noted and highlighted that the Revised African Regional Cooperative Agreement for Research, Development and Training Related to Nuclear Science and Technology (AFRA) Agreement and the Amendment to the Convention on Physical Protection of Nuclear Material (CPNMM) has not gone through all Parliamentary processes to be finalised, and a concern for Members are that these international agreements might lapse in 2024.

 

 5.2 MHSC

• Members commended the MHSC for their performance and the important role they are playing in the economy.
• Members raised concern regarding the high vacancy rate at the MHSC, noting that key positions are not filled, even though they are budgeted for. The MHSC further indicated that they employ highly skilled personnel and that they do have a turnover of critical skills. Members note that the MHSC is working closely with the Mining Qualifications Authority to address the challenges.
• Members noted that the MHSC has strengthened their internal controls and capacity to address governance issues.
• Members are encouraged by the fact that the MHSC will continue to collaborate with all the tripartite stakeholders in implementing effective measures to ensure that the goal of zero harm is achieved.
• Members noted that most of the litigation issues at the MHSC are labour related, where some cases are at the Commission for Conciliation, Mediation and Arbitration (CCMA) and others at the Labour Court. The MHSC has appointed an Advocate to deal with all the litigation matters. The MHSC is also looking at appointing a Labour Specialist.
• It was noted that one of the limitations on fatalities in workplace is the failure to expedite the finalization of Mine Health and Safety Amendment Bill.

 

5.3 MINTEK

• Members noted that Mintek does supplement its budget through commercialising its services, e.g. developing products, offering services etc.
• On Derelict and Ownerless mines, members were informed that the major challenge is funding. There is about 780 holdings currently, and with the current model and budget used, it will take Mintek 18 years to close all of these. According to Mintek, the same goes for rehabilitation.
• Members noted that the Mintek’s HIV/AIDS test kits have passed all validation steps. They are currently undergoing clinical trials, where about 2 000 patients are participating.
• Members noted that the rare earth elements programme is not progressing well, as nobody is producing these in the country. There are 2 potential mines in the country, Steenkamp’s Kraal who are not producing, and Glennova, they are not producing. Mintek indicated that they do have an extraction plant, which can separate rare earth elements from other minerals. Mintek cannot build a bigger plant without somebody producing.
• Members are encouraged to hear that Mintek is in discussions with Foskor, where phosphate do contain rare elements.

 

5.4 SDT

 

• Members noted that the continuous change in the trade patterns brought forth by mainly macro-economic factors, continues to be the new norm in the global diamond industry. The world economic landscape prevails in pressuring luxury goods sectors. Consequently, the diamond market is anticipated to continue sluggish and trade to remain difficult as well.
• Members are concerned regarding the financial model of the SDT for operations while growing local diamond beneficiation industry.
• Members note that SDT currently has 96 registered clients.
• Members raised concern regarding the acquisition of rough diamonds from other countries in respect of whether it will not be more expensive for the clients. Members note that the SDT is in the process of conducting a feasibility study to understand that more, however the entity believes that by purchasing only diamonds that are suitable for beneficiation from other African diamond producers will mitigate the risks of whether these diamonds will be expensive or not.
• Member further noted that on Enterprise Development, the SDT are of the opinion that technical knowledge is very important for any new entrant into the diamond business, hence the programme is a three-year programme that will provide technical skills training in relation to cutting and polishing; rough diamond valuation; Industry knowledge and exposure to other diamond manufacturing countries.

 

5.5 SADPMR

 

• Members noted that the SADPMR has about 211 beneficiation licensee holders.
• On inspection targets, the SADPMR has implemented an Optimal Acceleration Project, where human resources from support services were placed in certain divisions in the entity, and a training programme was implemented. The SADPMR had to do better planning, increase efficiencies and introduce better and improved ways of working.
• In terms of collaboration with beneficiation, members noted that the SADPMR does provide training to junior entrepreneurs, in collaboration with the SDT and Mining Qualification Authority (MQA).

 

5.6 CGS

 

• Members highlighted that an investment in geology was not a bad investment by the State.
• Members raised concern regarding the low salaries paid to CGS employees, in relation to the high and specialised skills needed.
• Members noted that there has been a major shift in exploration over the past 30 years. The number of prospecting application rights (including the backlog) received by the DMRE, which is an expression of interest. Members noted that South Africa has not quantified the value of these applications.
• Members were encouraged to hear that the CGS has started a process with the DMRE, where 10 geologist interns from CGS have started to obtain the information from the prospecting applications, to translate and quantify them. They have started in Northern Cape and are now in Limpopo.
• Members noted that CGS has started with the monetisation of Intellectual Property (IP) in 2022. When the Geoscience Act was amended in 2010, it allowed for modalities for the CGS to do exploration. Either on its own, partner with a State organ or partner with a private company. This has not been put into force up until now. It was pointed out this is still work in progress and ongoing.
• Members noted that the rare earth elements map was published by the CGS in March 2022, and the DMRE has received a number of applications thus far of exploration in this area.
• Members are encouraged to hear that the CGS has a data portal and a lot of information is available thereon, and anybody can access this information from anywhere in the world.
• Members were informed that CGS is not currently doing any work in the Congo, they have partnership with their equivalent in the Central Africa Republic (CAR).
• On shale gas, Members noted that CGS has concluded a very comprehensive technical report, which has been reviewed externally. The report is with the Minister and the CGS has requested that the report be made public, which the Minister is still considering.
• On off-shore mapping, CGS has purchased a small research vessel and provides the CGS the means to obtain information.
• CGS has further partnered with the Navy and the Department of Fisheries, Forestry and the Environment to use the vessels which the State has. The CGS acknowledged that progress has been slow.
• Members noted that sharing of geological information in South Africa remains a challenge.

 

5.7 NNR

 

• Members noted that the NNR frequently meet with entities whom they regulate, to address any shortcomings and challenges with regard to licensing applications.
• Members were concerned that the Centre for Nuclear Safety and Security (CNSS) was reported to be dependent on international funding/donors – this was regarded as unsustainable. However, Members were informed that for now, the CNSS is funded through the budget of the NNR and about two years ago, the Minister approved it to be funded by donors because the NNR Act provides for the NNR to receive donations, but with the approval of the Minister.
• The Committee note and commend the CNSS for the research it has been conducting, which focusses on regulatory decision making. Furthermore, Members commended the NNR’s CNSS working relation with tertiary institutions in South Africa.
• Members noted that there was a recent court judgement against the Minister and by implication the NNR. The NNR informed Members that the Minister sought a legal opinion on the matter and he was advised that the judgement is tangible. The NNR also sought a legal opinion and they were informed that there will be issues in the judgement which will make it difficult for Board Members of the NNR to manage conflict of interest, if the judgement is to stand as is. It is based on this basis that the NNR has joined the Minister to challenge the judgement.
• Members noted that the NNR’s relationship with other nuclear based entities is not considered as hostile nor friendly because the NNR is a regulator.
• Members noted that there are engagements between the NNR and NECSA on the Multi-Purpose Reactor (MPR) to a point where NECSA submitted an overarching licensing strategy that the NNR looked at and commented on. However, the NNR emphasised that currently there is no application in front of them from NECSA dealing with the MPR.

 

5.8 NRWDI

 

• Members pointed out that the NRWDI was supposed to report back to the Committee on the staffing issues that were raised to the entity. The Committee needed to be updated on those matters because there were serious allegations that were made and serious concerns were raised about senior management. The Committee thus enquired as what the Board did to address those allegations and the staffing problems and to mitigate the impact of those concerns.
• Members noted that on 1 December 2022, there was a response to the Portfolio Committee on a high level, highlighting the processes that were undertaken, including the Human Resources Committees and the team that was appointed to look into the matter. On 31 January 2023, the NRWDI Board met with the Minister to update him on the issues, and the Minister instructed them to create an action plan on how they will deal with the issues, which was similar to what was requested by the Chairperson of the Portfolio Committee. The action plan was developed as requested, and the process that will follow is that the plan will go to the Board on Friday, 28 April 20223 for final approval before it is presented to the executive authority, and thereafter to the Portfolio Committee.
• Members noted the relationship between NRWDI, NECSA, and the NNR, as NECSA and Koeberg are the waste generators and there is a need for independence between NRWDI as a disposal organisation and the waste generators. NECSA also has the function of waste disposal in the absence of NRWDI as they are empowered by the Act, but as soon as the transition is completed, the waste function will move away from NECSA and be fully carried by NRWDI to emphasise the element of independence. This is also supported by the transitional provisions of section 30 (8) of the Act, where during the transition period, NECSA will work with NRWDI until the NNR is satisfied that NRWDI can work independently in the waste disposal sector.
• Members noted with concern the slow regulatory transition between NECSA and NRWDI.
• On the Radioactive Waste Management Fund Bill, it was noted that the Bill is led by the policy branch of the DMRE, however as part of the development of this policy, there is a project team that the Department has, which had intensive consultations with all the relevant role players, including NECSA, Eskom and NRWDI. In those intensive consultations and engagements, the modalities and the transformation of the tariffs in the model were discussed. Once it becomes promulgated, the fees or levies will become gazetted, and once that is done, the waste generators will have to pay a fee in terms of the promulgated grant into the fund and not to NRWDI, and that is how it will be ensured that the waste generators will make their contributions into the fund.

 

5.9 SANEDI

 

• Members raised concern that no mention was made by SANEDI on a possible working relation with the Council for Scientific and Industrial Research (CSIR) on clean coal initiatives. SANEDI informed the Members that they do have Memorandum of Understanding (MoUs) with Eskom, CSIR and Mintek.
• Members noted that SANEDI did not budget for the cleaner fossil technology and related programmes, as they do not have funds for these. In the current financial year, they are doing it internally, and they aim to fund these during the next financial year with a budget allocation from National Treasury.
• Members noted that the SANEDI’s Sustainable Energy Solutions deals with a number of programmes, which are in line with the Integrated Resource Plan (IRP) 2019, which include: clean coal, renewable energy, green hydrogen, wind, solar etc.

 

5.10 South African Nuclear Energy Corporation (NECSA)

 

• Members noted the significant strides NECSA has taken in improving their performance.
• Members noted the NECSA’s research in small modular reactors, as provided for in the IRP 2019.
• Members noted that the Pebble Bed Modular Reactor’s (PBMR) Intellectual Property is still at Eskom and is in the process of being transferred to NECSA.
• Members noted that Ketlapela will be forming part of the medical and pharmaceutical house which is in the entity. The entity is selling medical resources overseas and locally, so there are needs to be leveraged on.
• Members commended NECSA who started interacting with the AEMFC regarding its involvement in the mining of fluorspar.
• Members noted the improved relations between the NECSA and labour movement.
• Members commended NECSA on its skills development, where the entity has a national learning academy wherein it administers learnerships and training in collaboration with some of the Sector Education and Training Authorities (SETAs) and has signed an MoU with the Chemicals SETA.
• It was observed that the entity’s strategy in commercialising its Intellectual Property to avoid various debt is to have projects that it can initiate on its own and it has implemented some projects in partnership with other public entities. There are also Public-Private Partnerships that the entity is considering, but it would need to jealously guard its own interests and intellectual property. NECSA embarked on a strategy called ‘sustainable return to service’ which was approved by the NNR and it has implemented over 65% to 70% of the action plans under that strategy. The plan is for the technical parts of both the NNR and NECSA to come together and agree on the items that can be monitored as part of normal operations.
• Members highlighted that from a Departmental perspective, there needs to be a nuclear strategy in the country so that the projected future is understood widely amongst entities and government.

 

5.11 CEF Group of Companies (SOC) Ltd

 

• Members raised concern regarding the current situation relating to refining capacity in the country and South Africa’s over reliance on imported crude and fuel.
• Members noted the developments regarding the SAPREF deal, where the CEF group confirmed that the deal is still open and they have various tools of engagement that they have used to advance the talks with the entity. Members noted that Cabinet has approved the merger of PetroSA, SFF and iGas.
• Members noted that the Upstream Petroleum Resources Development Bill provides for the creation of a National Petroleum Company. Members questioned the existence of the CEF SOC in light of the merger.
• Members noted that the AEMFC’s focus should only be on coal, but they need to expand their activities to other minerals as well.
• Members questioned whether the storage facilities in Milnerton and Saldanha were in a position to store refined products, and if there is a plan to repurpose refineries to be able to accommodate the changes that are looming.
• Members noted that the IRP2019 suggests that Eskom needs to procure 3 000 megawatts from gas and there are 1 000 megawatts that are set aside for Coega, and questioned why is the group not taking the remaining 2 000 megawatts into the market so that the country gains the megawatts from gas.
• Members raised concern regarding the export of coal (as a revenue stream) by the AEMFC, through Transnet, taking into account the challenges which Transnet is currently experiencing.
• Members noted that CEF will in most instances be at risk against environmental litigation threats.

 

5.12 NERSA

 

• Members noted NERSA’s call that an alternative dispute resolution (ADR) is requested as a first process for dispute resolution instead of the current court processes.
• Members noted the request from NERSA regarding the speedy finalisation of amendments of governing legislation and policies – National Energy Regulator Act, Gas Act, Petroleum Pipelines Act, Electricity Regulation Act.
• Members raised concern regarding NERSA’s decisions regarding tariffs and not briefing the Committee thereon.

 

6. RECOMMENDATIONS

 

Having considered the planning documents and budgetary allocations for the 2023/24 financial year, the Committee recommends that the Minister of Mineral Resources and Energy, should:

 

1. Ensure that illegal mining is a top priority of the Department, this includes addressing the issue through legislative amendments as recommended in the Portfolio Committee on Mineral Resources and Energy’s 2022 Joint Oversight Report on Illegal Mining.
2. Ensure that the process of regulating Artisanal and Small Scale Mining is expedited. 
3. Expedite finalisation of the Department’s legislative programme, as some legislative provisions are inhibiting the growth of the industry and optional functioning of the various entities of the Department.
4. In collaboration with other relevant departments and government entities such as Public Enterprises (Eskom), ensure that the issue of grid capacity is addressed as a matter of urgency.
5. Consider having discussions with the National Treasury regarding a possible increase of the Mintek’s budget in order to effectively address the issue of Ownerless and Derelict Mines.
6. Consider reviewing legislation to balance environment and development.
7. Furthermore, consider engaging the Minister of Forestry, Fisheries and Environment (DFFE) on measures to minimise the repetitive environmental litigations as well as ensure that meaningful community engagements take place prior commencement of projects. 
8. Provide an update to the Committee in the second term of 2023/24 financial year on developments regarding shale gas, and lifting of the moratorium related thereto.
9. Accelerate plans to restore PetroSA refinery, as well as investing in new refining capacity. 
10. Amid a changing industry landscape, expedite the finalisation of the Strategic Stocks Policy, as per the commitment of the Department that it will be finalised during the 2023/24 financial year.
11. Ensure that the review of the Integrated Resource Plan (IRP) for electricity is finalised in the 2023/24 financial year.
12. Provide an update to the Committee on the Integrated Energy Plan (IEP) and the Gas Master Plan during the 2023/24 financial year.
13. Ensure the development of a clear nuclear energy policy by the end of the financial 2023/24 financial year.
14. In the fourth quarter of the current financial year (2023/24), update the Committee on the licensing backlog, especially in provinces where challenges are encountered such as the Northern Cape, Mpumalanga and North West. This should include an update on the Compliance Unit that the Department plans to establish.
15. Ensure that the licensing backlog is addressed by the end of the 2023/24 financial year.
16. Endeavour to ensure that entities of the Department who wants to commercialise their projects are given priority – encourage a set aside for the entities of the State to enable intra-trade. This applies for entities such as Mintek, Council for Geoscience, Central Energy Fund Group and South African Nuclear Energy Corporation.
17. Ensure that the National Radioactive Waste Disposal Institute submit its report to the Committee on the outcomes of its proposed interventions regarding senior management allegations and the staffing problems by 31 May 2023.
18. Ensure that the Council for Geoscience quantify and present to the Committee within the current financial year the work the entity is doing in the African Continent and the Middle East.
19. Ensure that the South African National Energy Development Institute is supported on its work on cleaner coal technologies, in order to assist the State on the Just Energy Transition discussions.
20. Ensure that SANEDI include budget allocation for cleaner fossil technology and related programmes in the next financial year, as this programme is essential in the conversation on just transition or green energy.
21. Ensure that the Central Energy Fund Group present to the Committee, the implications of the merger of PetroSA, IGAS and Strategic Fuel Fund on the Central Energy Fund as a holding company.
22. Ensure that the South African Diamond and Precious Metals Regulator updates the Committee on the performance of the Diamond Exchange and Export Centre (DEEC) and indicate the number of import and export of diamonds. The update to further outline progress with regard to beneficiation to date and notable challenges.
23. Address the Mine Health Safety Council’s legal department challenges as a matter of urgency.
24. With the Minister of Public Enterprises, develop interventions to extend the life of the six (6) coal power plants to address and/or alleviate loadshedding.
25. African Exploration and Mining Finance Corporation, Council for Geoscience and Mintek must collaborate to ensure a productive renewable energy programme and the State should consider investing in the industry.
26. Prioritise the filling of funded vacant posts by the Mine Health and Safety Council by the end of the 2023/24.
27. Ensure that the State Diamond Trader submit a feasibility study report on the acquisition of diamonds by the end of first quarter of 2023/24 financial year.
28. Ensure the availability of geological information related to critical/strategic minerals, and consideration of legal avenues to access geological information from private sector and mineral right holders.
29. Prioritise and fast-track NECSA’s submission regarding its application on the Multi-Purpose Reactor to the National Nuclear Regulator.
30. Explore public-private collaboration initiatives which the Central Energy Fund Group can leverage on regarding the 2 000 MW of gas-to-energy programme.
31. With the Minister of Transport, seek interventions in addressing the challenges by Transnet, specifically relating to the African Exploration Mining and Finance Corporation’s exportation of coal.
32. Explore the creation of internal intergovernmental dispute resolution structure as a mechanism between the department and government entities.
33. Explore and develop mechanisms to ensure that the African Exploration Mining and Finance Corporation’s mandate be expanded to include the mining of other minerals, i.e. diversifying its exploration activities
34. Ensure that investigations by the Department and its respective entities be finalised with due diligence and speed.
35. Explore collaboration between the Department and its entities, where similar work are being done by other departments and entities, or work where the department and its entities can leverage on.
36. Submit a comprehensive report to the committee on oil and gas deposits, including approved explorations, which is to be submitted by the end of the 2023/24 financial year.
37. Within the 2023/24 financial year, ensure that the regulatory transitional arrangements between NECSA and NRWDI are finalised.

 

6. OTHER MATTERS OF IMPORTANCE

 

1. The Committee envisage setting aside three (3) days to further engage the Department of Mineral Resources and Energy and its entities on its respective Annual Performance Plans and budgets for 2023/24 financial year.
2. The Parliamentary processing of the Revised African Regional Co-operative Agreement for Research, Development and Training Related to Nuclear Science and Technology (AFRA) Agreement and the Amendment to the Convention on Physical Protection of Nuclear Material (CPNMM), need to be prioritised and finalised, prior to these international agreements running the risk of lapsing in 2024.
3. On illegal mining, the Portfolio Committee on Mineral Resources and Energy intends to schedule a joint meeting, with the Portfolio Committee on Police and the Portfolio Committee on Home Affairs to receive an update by the Department of Mineral Resources and Energy, South African Police Service and the Department of Home Affairs on its interventions in addressing illegal mining in South Africa.

 

7. CONCLUSION

 

The Portfolio Committee on Mineral Resources and Energy will continue to fulfil its Constitutional mandate. It is guided by the Parliamentary rules in conducting the oversight on the functioning of the Department of Mineral Resources and Energy. This is done to ensure proper and effective functioning and compliance with the legislation and policy requirements.

 

Report to be considered.

 

 

 

 

---

[1] National Treasury, (2022)

[2] National Treasury, (2023).

[3] Act No. 120 of 1977, as amended.

[4] Department of Mineral Resources and Energy, (2023), at page 16.

[5] Department of Mineral Resources and Energy, (2023).

[6] Department of Mineral Resources and Energy, (2023) at page 34.

[7] Ibid.

[8] Department of Mineral Resources and Energy, (2023).

[9] Department of Mineral Resources and Energy, (2023).

[10] Department of Mineral Resources and Energy, (2023).

[11] Department of Mineral Resources and Energy, (2023).

[12] Department of Mineral Resources and Energy, (2023).

[13] Ibid.

[14] Ibid.

[15] Ibid.

[16] Department of Mineral Resources and Energy, (2023).

[17] Department of Mineral Resources and Energy, (2023).

[18] Ibid.

[19] Ibid.

[20] Ibid.

[21] Department of Mineral Resources and Energy, (2023).

[22] Department of Mineral Resources and Energy, (2023).

[23] Ibid.

[24] Ibid

[25] Department of Mineral Resources and Energy, (2023).

[26] Ibid.

[27] Ibid.

[28] Ibid.

[29] Act 29 of 1996.

[30] Mine Health and Safety Council, (2023).

[31] Ibid.

[32] Mine Health and Safety Council, (2023).

[33] Ibid.

[34] Ibid.

[35] Ibid.

[36] Ibid.

[37] Ibid.

[38] Ibid.

[39] Act 100 of 1993 as amended.

[40] Ibid.

[41] Geoscience Act of 1993, sec 4(c).

[42] Ibid at sec 4 (eA).

[43] Ibid at sec 4 (f)

[44] Ibid at sec 5(b) and sec 8.

[45] Act 28 of 2002.

[46] Ibid at sec 88.

[47] Council for Geoscience Annual Performance Plan (2023), at page 35.

[48] Ibid.

[49] Ibid.

[50] Ibid

[51] Council for Geoscience Annual Performance Plan (2023), at page 36.

[52] Ibid. These DMRE MTEF projects for the 2023/24 year include rehabilitation of derelict and ownerless mines and the Water Ingress Solutions project. See Department of Mineral Resources and Energy Annual Plan (2023).

[53] Ibid.

[54] Act 40 of 2004.

[55] Act 4 of 2006.

[56] Act 48 of 2001.

[57] Act 60 of 2003.

[58] National Energy Regulator Act 40 of 2004, sec 10.

[59] National Energy Regulator of South Africa, Annual Performance Plan, (2023).

[60] Ibid.

[61] National Energy Regulator of South Africa, Annual Performance Plan, (2023).

[62] Ibid.

[63] Ibid.

[64] Ibid.

[65] Ibid.

[66]National Energy Regulator of South Africa, Annual Performance Plan, (2023), at Annexure A, at page 40.

[67] Ibid at page 39.

[68] Ibid.

[69] Ibid.

[70] Ibid.

[71] Ibid.

[72] Ibid.

[73] Ibid.

[74] National Energy Regulator of South Africa, Annual Performance Plan, (2023), at Annexure A.

[75] Ibid.

[76] Ibid.

[77] ROMPCO is the joint venture company formed in 2004 to transport Mozambique’s natural gas assets to market in Mozambique and South Africa for economic benefit of the region. See https://www.rompco.co.za/

 

[78] National Energy Regulator of South Africa, Annual Performance Plan, (2023).

[79] Ibid.

[80] Ibid.

[81] National Energy Regulator of South Africa, Annual Performance Plan, (2023).

[82] Ibid.

[83] Ibid.

[84] Ibid.

[85] Ibid.

[86] National Energy Regulator of South Africa, Annual Performance Plan, (2023).

[87] Ibid.

[88] Act 56 of 1986.

[89] South African Diamond and Precious Metals Regulator Annual Performance Plan, (2023).

[90] Act 47 of 1999.

[91] National Nuclear Regulator, Annual Performance Plan, (2023).

[92] Ibid.

[93] Department of Mineral Resources and Energy, (2023).

[94] National Nuclear Regulator, Annual Performance Plan, (2023).

[95] National Nuclear Regulator, Annual Performance Plan, (2023).

[96] Ibid.

[97] Ibid.

[98] Ibid.

[99] Ibid.

[100] Ibid.

[101] National Nuclear Regulator, Annual Performance Plan, (2023).

[102] Ibid.

[103] Ibid.

[104] National Nuclear Regulator, Annual Performance Plan, (2023).

[105] Ibid.

[106] Ibid.

[107] Ibid.

[108] Ibid.

[109] Ibid.

[110] Ibid.

[111] Ibid.

[112] National Nuclear Regulator, Annual Performance Plan, (2023).