Energy Budgetary Review and Recommendation Report 2010

Meeting report

The Chairperson tabled the Committee’s Budgetary Review and Recommendations Report for consideration. Thereafter, he allowed Members some time to peruse the Report before making corrections, observations and recommendations.

Members firstly gave their input on correcting grammatical errors and sentence structures.

This was unanimously approved by all Members.

Mr Motau, (ANC) suggested that the progress the Department of Energy (DoE) had made towards filling the 75 vacant positions should be noted in the Report. How many of those positions had been filled thus far?

Ms Moss (DA) replied that 45 positions had been advertised and were currently at the final stages of the employment process.

The Chairperson recalled that DoE had reported unfunded activities and asked what Members’ opinions were on this issue.

Mr E Nchabaleng (ANC) stated that in public accounts there was no such thing as a surplus. The Department under spent and thus had the money that it did not use. These were funded mandates which the Department did not implement. It was not correct to refer to those funds as a surplus, the fact remained that it was under expenditure and against the law.

Ms N Mathibela (ANC) recalled that the Central Energy Fund (CEF) was not truthful in its last presentation. The Department needed to take this into consideration and ensure that the CEF implemented all the recommendations.

Mr S Radebe (ANC) commented that all State Owned Entities (SOEs) needed special attention, and recommended that the Department establish a designated group to monitor government entities.

Mr Nchabaleng said that not all the SOEs were doing what CEF did. It would be better to say that some SOEs needed to be monitored. EDI Holdings and National Nuclear Regulator were doing very well.

Mr L Greyling (ID) highlighted that PetroSA, as reported in their annual report, was engaged in activities using so much of the tax payer’s money to drill for gas and oil in Equatorial Guinea and Egypt which had no strategic objective to the country’s development. It was therefore time to reassess the activities that the SOEs were engaged in to make sure that they were achieving their developmental objectives.

Mr Greyling added that the Integrated National Electrification Programme (INEP) was very slow in getting electricity out to rural areas and it had slowed down completely. He added that it was not enough to put the blame on municipalities.

Members agreed with this observation.

Mr Selau said that the idea of getting a unit to focus on SOEs was not to just say what was right and wrong, but to create a system of accountability even with those that were doing well.

Mr Motau sought clarity about whether Members were referring to SOEs in general or just CEF.

The Chairperson clarified that they were referring to CEF and all others that come under the mandate of the Committee.

Mr Selau noted that all the key unfunded activities, which amounted to R203 million, were listed on page in the report. However under the recommendations on page 11, only the World Cup was mentioned as a key unfunded activity and the above amount was absent too. He therefore suggested that the R203million be added into that recommendation.

Mr D Ross (DA) said that in terms of petroleum, there was a Bio fuel section with a specific committee on bio fuel sitting on 17 November 2010 to discuss bio fuel. He asked how the Committee would integrate to become part of that.

Mr Nchabaleng commented that under observations on page ten it stipulated that accommodation was part of the unfunded activities. Accommodation needed to be written as office accommodation because the Department could not under spend on hotel accommodation.

Mr Motau explained that from the perspective of the Committee it could only be stated as office accommodation. The expenditure had to be qualified.

All members agreed.

Mr Selau said he agreed with Mr Ross that the Committee had not been focusing much on petroleum and perhaps needed to make a recommendation around that.

Mr Motau said that the Committee should pay attention to what was happening in the petroleum sector given the increased activities by PetroSA. It would be good to check whether PetroSA was doing what it was meant to and monitor its activities and the money that it spent. The Committee had been side tracked by electricity but petroleum would become more important in the future.

Mr Dexter asked about the deficit on page nine where it stated that the surplus for the year amounted to R348.6 million. Also, he asked how the Department could recommend more resources when there was under expenditure in the Department.

The Chairperson replied there was already a commitment to fund those unfunded programmes. About the surplus, the Department had received a qualified audit and this would be mentioned.

Mr Dexter asked whether the Committee should not be saying unfunded departmental activities must be funded but only the surpluses must be taken into account when those funds were being allocated. He was not saying that no funds should be given but rather that they should take cognisance.

Mr Motau said that the surplus was on last year’s budget but the current unfunded activities for this year up until March 2011.

Mr Motau suggested that Members move away from surpluses. There were no surplus in the annual report but rather an under spend.

Mr Dexter recommended that unfunded activities must be funded but the Department must make sure that it addresses the issues that relate to under funding.

Members agreed.

Mr Greyling suggested that the Department must provide the Committee with a timeline for when it would reach the solar water heaters (SWH) and INEP targets. The Committee needed to put some pressure on the Department to present to it a model that was going to work and then monitor the Department to ensure that everything took place as set out.

Ms Mathibela asked whether he was referring to the last bullet point under observations on page ten.

The Chairperson confirmed that this was the case, adding that he was strengthening that point.

Mr Greyling said that the Department could leave the SWH. INEP could achieve many good things but it was not working at present due to technical constraints by municipalities and needed to be completely revisited. He therefore suggested that the Department needed to come up with a workable model that could achieve its target of providing electricity.

The Chairperson said that municipalities had their own problems and the Department still had to go through municipalities in order to achieve their goal.

Mr Mathibela said that the Department could not overrule municipalities and highlighted the issue of Regional Electricity Distributor 1 (RED1) was a prime example.

Mr Nchabaleng said that according to the Public Financial Management Act, before money could be transferred to an entity, the entity concerned needed to satisfy that the money was in good hands and that there would be accountability for that money. If the municipal council was not convinced about that they would never give it to the Department. If the money disappeared it would be the Department which would be held responsible.

Mr Nchabaleng further stated that the R3.8 billion in total transfers as stated on page nine, came under transfers and subsidies which meant that it was spent internally, between the SOE to the Department.

Mr Motau said that transfers were core business of the Department. There was R1.5 billion that was directed to pipelines and Eskom for electricity transfer, thus not internally.

The Chairperson asked if there were any further recommendations.

No further input was made and the Committee approved the Report with amendments.

The meeting was adjourned.