ATOMIC ENERGY CORPORATION OF SOUTH AFRICA LIMITED
OFFICE OF THE CHIEF EXECUTIVE OFFICER
1.1 Section 4: Incorporation of South African Nuclear Energy Corporation Limited |
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Issue |
Note |
(a) The NEB 99 provides for the formation and incorporation of the corporation as a public company within the meaning of the companies Act. The AEC's corporate name will also change to the South African Nuclear Energy Corporation Limited. |
It is still unclear how the proposal within the White Paper on Energy to divide the AEC into two separate and independent organisations, one dealing with commercial activities and the other with institutional responsibilities, will be facilitated by the NEB 99. The NEB 99 is silent on this issue. It is recommended that the draft Bill provides some clarity on this issue. |
1.2 Section 13: Ancillary powers and functions of Corporation |
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Issue |
Note |
(a) Section 13(2)(e) |
Ministerial approval authority to protect the non-proliferation of nuclear technology, may be appropriate but should not hamper the exploitation of proliferation insensitive or inappropriate commercial technology. In the latter case, this clause will retard speedy decision-making on new commercial develop-mental projects as has been demonstrated on a number of occasions. |
1.3 Section 14: Loans |
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Issue |
Note |
Section 14(1) of the NEB 99 declares that the corporation, with the written permission of the Minister granted with the agreement of the Minister of Finance, may raise loans to finance any expenditure that may be incurred by the Corporation. |
Due to cash flow shortfalls and capital fund needs for new commercial projects, short term loans are often required by the AEC on short notice. Experience has shown that to obtain the permission of two Ministers is a prolonged and cumbersome process. |
1.4Section 26: Accounting and Auditing |
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Issue |
Note |
(a) Section 26(3) of the NEB 99 declares that the Corporation's accounting records and financial statements must be submitted to the Auditor-general for auditing. This procedure is not in line with the Companies Act, 1973. |
The current NEA 93 declares that the Reporting of Public Entities Act, 1992 (Act no 93 of 1992) applies to the AEC. In terms of this Act, the appointment, duties and powers of auditors have been clearly defined. According to this Act, an external audit on the AEC is performed by auditors who are appointed by the Minister on recommendation of the Board of Directors and with the concurrence of the Auditor-General. Sub- sequent to the external audit, copies of the AEC's financial statements are sub-mitted to the Auditor-General's office annually and regular feed-back is received on the AEC's broad com-pliance with the Reporting of Public Entities Act of 1992. The Auditor-General's office, however, does not carry out a formal audit of the AEC. |
1.5 Sections 45 and 46: Authority over the management and discarding of radioactive waste and storage of irradiated nuclear fuel |
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Issue |
Note |
1.6 Section 34: Authorisations required for acquisition or possession of, and certain activities relating to nuclear material, restricted material and nuclear-related equipment and material |
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Issue |
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2 GENERAL COMMENTS ON CHAPTER III OF THE NEB 99: NUCLEAR NON-PROLIFERATION
2.1 The major concern with regards to this section of the Bill is the fact that Safeguards implementation has no longer been assigned to the AEC, as was the case in the previous draft Bill. Not only has it now been defined as an "institutional obligation" (page 4) with the Minister being responsible for institutional obligations (page 34), but according to the NEB 99, section 33(1), the Minister is now regarded as the national authority, responsible for the implementation of safeguards. This is not in line with the international trend, for in none of the member states of the IAEA has a Minister ever been appointed as "national authority". The national authority is usually associated in these states with a nuclear-related organisation or agency. According
to this Bill, the Minister will now be involved in many mundane day-to-day safeguards implementation matters as specified in sections 33(2) and 33(3). It is recommended that section 33(1) be changed in the sense that the Minister may appoint an organisation as the national authority.
2.2 According to sections 34(2) and 35(2) of the NEB 99, there is no obligation on the Minister to consult with any party in authorizing acquisitions/imports/exports of nuclear materials (to ensure that non-proliferation commitments are complied with) and in terms of section 44, the Minister has the power to acquire, lease or expropriate nuclear material. In addition, there is no obligation on the Minister to delegate safeguards to any other party. This will make the obligatory regular reporting to the IAEA, very difficult.
2.3 In the present NEA 93, the evaluation of patent applications is confined to the nuclear proliferation potential of the patent application. The new draft NEB 99, according to section 41(5), extends this "to the interests of security of the Republic" and involves the Minister of Defence - for a first time in a nuclear energy act. Not only may this lead to a duplication of expertise (mainly for a low frequency activity), but may create a negative perception on South Africa's nuclear intentions.
2.4 Section 33(5) of the NEB 99 states that all fees from time to time that are due to the IAEA must be paid by the Minister. This is an apparent change from the current arrangement with DACST which makes provision for the payment of the regular IAEA membership fees by the AEC and payment of the TCF-contributions by DACST.
ATOMIC ENERGY CORPORATION OF SOUTH AFRICA LIMITED
AEC COMMENTS ON THE LATEST DRAFT NUCLEAR
ENERGY BILL, 1999 (NEB 99)
1 MAIN OBJECTIVES OF THE NEB 99
The AEC has taken cognisance of the following main objectives of the latest draft Nuclear Energy Bill, 1999 as stipulated in the attached memorandum (page 66) to the Bill:
1.1 Reformulation of governance of the AEC to increase transparency and accountability.
1.2 Reorganisation of the AEC mandate by placing matters of sensitive and national nature under control of the Minister.
1.3 Reorganisation of the Board of Directors and Management to enable restructuring in line with the "Systems Wide Review of Public Sector Science, Engineering and Technology Institutions" of the Department of Arts, Culture, Science and Technology.
1.4 Separation of legislation that governs the AEC and the CNS.
2 PRACTICAL IMPLICATIONS FOR THE AEC
In general, the AEC is comfortable with the broad aims of the new draft Bill but would like to indicate the following implications with respect to two of these aims:
2.1 Ministerial control of matters of sensitive and national nature. This will imply ministerial authorization of the following actions:
· Daily operations involving transport, disposal and storage of radioactive waste [sections 45, 46 and 34].
· Conferring rights of usage of AEC developed technology to any person or organisation. This may impact on the AEC's technical supporting role to SA industry and also on its role in Africa under the AFRA agreement [sections 13(1) and 13(3)].
· Apart from sensitive matters, the ministerial control envisaged will also require the AEC to seek ministerial approval for the commercial exploitation of non-nuclear metals and chemicals or to render services for reward to any person or organisation [section 13(2)].
· The increased ministerial control may severely limit the decision-making powers of the AEC Board of Directors in commercial matters which generally require fast decisions, for example, the authority for financing of new ventures via loans or JV arrange-ments (the latter is also a limitation in the existing 1993 Nuclear Energy Act). [Sections 14(1) and 13(1)].
2.2 Reorganisation of the mandate of the Board of Directors and Manage-ment to enable restructuring of the AEC.
· The Bill makes provision for the Minister to delegate powers to the Director-General who may subdelegate in turn. There is, however, no provision for delegation of powers from the Minister to the Board of Directors. A direct line between the Minister and the Board of Directors is essential for effective decision-making in commercial ventures. [Secion 55(1)]
· Section 9 of the Bill states that the State will hold shares in the new Corporation based on the net asset value. It has to be pointed out that if all past liabilities are taken into account, the Corporation will be technically insolvent, which will have a negative influence on the commercial division. The principle to separate the commercial division first before encumbering it with historic liabilities was followed in the UK and should be considered here. In fact, it is not very clear to the AEC how the NEB 99 will facilitate the future separation of the AEC into two autonomous entities (institutional and commercial activities). [Section (9)].
3 RECOMMENDATIONS
The AEC would like to pose the following recommendations (details outlined in attached annexure A):
3.1 The delegation of powers from the Minister to the Board of Directors on a wide range of operational and commercial issues should be clarified before the Bill is enacted. Alternatively, that an appropriate transitionary period be set in the Bill to allow for the establishment of the necessary delegation powers.
3.2 The Bill, through insertion of a specific statement, to provide more clarity in terms of the future separation of the AEC's institutional and commercial activities as instructed within the White Paper on Energy Policy.
3.3 The current auditing procedure as stipulated by the current Energy Act of 1993, whereby externally audited financial reports are submitted to the Auditor-General annually, be retained in the draft Bill. [Section 26(3)].
3.4 In terms of the assigned role of national authority responsible for safeguards implementation, the draft Bill be brought more in line with international practice by allowing the Minister to appoint an organisation or agency in this capacity. [Section 33(1)].
ACTING CHIEF EXECUTIVE OFFICER