REPORT OF THE AD HOC COMMITTEE ON MINERALS AND ENERGY ON BUDGET VOTE 31

DRAFT REPORT OF THE AD HOC COMMITTEE ON MINERALS AND ENERGY ON BUDGET VOTE 31 – MINERALS AND ENERGY, DATED 2 AUGUST 2004:

The Ad Hoc Committee on Minerals and Energy, having considered Budget Vote 31 – Minerals and Energy, reports as follows:

A: Terms of Reference

The Committee resolved to conduct budget briefings on 2, 3, 9 and 14 June 2004. The objectives of the briefings were to:

Establish how allocated funds and transfers to statutory bodies were to be spent
Monitor the achievement of targets, and whether funds allocated meet those targets
Monitor progress made and establish problems encountered.
Fulfill its mandate of overseeing the Department of Minerals and Energy and statutory bodies that fall within its portfolio
Determine whether policy developments take place in accordance with the key objectives and aims as stated in the Department strategy plan
Determine whether policy developments take place in accordance with governments priorities of poverty alleviation, job creation black economic empowerment, human resource development and growing the economy
Monitor compliance with the Public Finance Management Act (PFMA)

B: Introduction

At a workshop on 2 and 3 June and the subsequent briefings at Parliament the Committee engaged the Department on its presentations of its programmes with regards to Mine Health and Safety, Mineral Development, Energy Planning and Hydrocarbons, Electricity and Nuclear, Finance, Administration and Support Services.

Representatives from the following Associated Institutions participated in the discussions:

The National Nuclear Regulator (NNR)
The National Electricity Regulator (NER)
The Nuclear Energy Corporation of South Africa (NECSA)
The Mine Health and Safety Council
Council for Mineral and Technology Research (MINTEK)
Council for Geoscience (CGS)
The Electricity Distribution Holdings Company (Pty) Ltd (EDI)
Central Energy Fund (CEF)
South African Diamond Board (SADB)
Mining Qualification Authority (MQA)
PetroSA

C: Departmental Programmes

Mine Health and Safety

The purpose of this programme is to regulate and promote health and safety in the mining industry to the highest standards in the world, thereby improving the quality of life of those employed in industry and those affected by industry’s activities. Its measurable objective is reduction of mining, related death, injuries and ill health. A further number of output targets had been set. The expenditure on this programme has increased from 2003/04 to 2004/05 by 13.4%

Key issues raised by the Committee

How the Department was dealing with the question of human resources development, noting that the Department highlighted one of its key challenges in this area as being the shortage of occupational hygienists and mine engineers. With regards to the Mine Inspectors, the Committee was keen to establish how many inspectors were trained and what the recruitment base for these inspectors were, from which areas etc.
The Committee sought clarity on its Nepad projects and programmes, whether there was a specific budget for such programmes
What was being done with regard to illegal mining
What programmes were in place to achieve the targets set at the Mine Health and Safety Summit in 2003 regarding the elimination of noise induced hearing loss by 2013
Whether the Department had problems in dealing with the rehabilitation of mines
The Department should consider a way to memorialise mine disasters

2. Mineral Development

The main aim of this programme is to effectively promote, manage, transform and regulate the mineral resources industry that is globally competitive in order to achieve equitable and sustainable development for the benefit of all South Africans. Its measurable objective is the increase in the number of new entrants, particularly HDSA’s in the sector. The budget for this programme increased significantly from last year, a nominal increase of 33.7% (R159,8 milllion) A breakdown in allocation to the key priority areas was presented.

Key issues raised by the Committee

Whether funding was a problem in addressing the issue of rehabilitation of mines
Why rehabilitaion of mines takes place post mining and not when mining is still in effect
With regard to socio-economic development what was being done to turn around the situation in old mining towns, for example Sterkfontein.
Whether beneficiation existed or whether it was dependent on legislation
The Committee was concerned that much of manufacturing of mineral sector took place outside the country, given the huge problem with unemployment, what are the potential for manufacturing in mining industry
Department needed to be specific regarding its contributions towards the broader government priorities. It had to indicate in terms of percentages its contributions in addressing the issue of poverty, job creation, etc.
With the coming in effect of the Mineral and Petroleum Resources Development Act (MPRDA), whether the Department had systems in place to deal with the administrative requirements of the Act
To what extent was provision made in the budget for claims regarding the expropriation of mineral rights.

3. Electricity and Nuclear

The purpose of this programme is to ensure an efficient, safe and cost effective electricity and nuclear industry in South Africa. The measurable objective is to ensure the optimum and safe use of the electricity and nuclear resources through the development of policies that contribute to economic growth and development. The expenditure for this programme, combined with Hydrocarbons and Energy Planning, has increased from R43, million in 2000/01 to R66,4 million in 2003/04 and R73,6 million in 2004/05.

Key issues raised by the Committee

The Committee needed more details on the PBMR
Why the Department could not find suitable candidates to fill vacancies in the electricity and nuclear sector
When would the issue of a single Regulator be finalised
Whether the electrification target will be met in the next 8 years

4. Hydrocarbons and Energy Planning

This programme aims to promote the environmentally sustainable use of energy through intergrated energy planning and policy development, and the appropriate promotion and regulation of petroleum products, coal, gas, renewable energies and energy efficiency. The measurable objective is to ensure the optimal use of all energy resources (electricity, nuclear, hydrocarbons and renewables through the development of policies that contribute to economic growth and development.

Key issues raised by the Committee

The Committee sought clarity on the issue of power generating capacity

The strength of the Equalisation fund, what its resource life was
The Committee needed more details with regards to PetroSA, the position with regards to the West Coast pipelines and its potential beyond 2008

5. Administration

This programme provides administrative support to the Ministry and the Department with regard to Financial, Information and Supply chain Management; Legal, Human Resource and Security risk management; Communication; Audit Services; and Compliance. There has been a gradual increase in the programme budget and this growth could be attributed to the increase in personnel to improve capacity. Employment Equity has always been one of the Department’s focus areas and representivity has improved from 0% Black Senior Management representation in 1994 to 72% as March 2004. Female representation at both Senior and Middle Management levels stood at 0% in 1994 and has now improved to 23% as at March 2004. During the same period the disabled persons’ representation moved from 0% to 0,66%

Key issues raised by the Committee:

The Committee asked whether higher targets for female representivity was possible
The Committee raised concerns regarding the "complexities’ in recruiting personnel and urged the Department to elaborate on these "complexities"
The Committee enquired about the vacancy levels throughout the Department, including the Inspectorate.
The Committee reminded the Department of the President’s zero tolerance position on service delivery and urged them to resolve the problems around employment within the DME structures.

Money allocated to the Department for this year has increased from R1,8 billion to R1,9 billion. A major part of this allocation goes to the Associated Services, whose purpose it is to provide related services in support of the Department, mandate through funded and non-funded statutory bodies and organisations.

D. Acknowledgement:

The Committee noted that the Department was able to achieve the following performance targets

Increase delivery of electricity to households in less developed provinces
Establishment of the EDI Holding Company
Petroleum Pipelines Bill passed
Petroleum Products Amendment Bill passed
Gas Levies Bill passed
Draft White Paper on Renewable Energy
Regulation of paraffin and LPG prices
Mineral and Petroleum Resources Development Act passed
Mining and Liquid fuels Charters adopted
Decrease in fatality rate in mines
New learnership programmes established under MQA and implementation of internship programmes.

E. Conclusion

The Committee resolved to follow up with the Department on an on-going basis with regard to the key issues raised, which needed more information or clarification. The Committee undertook to strengthen its oversight and monitor the implementation of programmes and projects as highlighted in the DME’s strategic plan. The DME’s annual report will have to reflect to what extent the Department had delivered on its services efficiently, effectively and economically and whether these services had impacted or made a difference in terms of the strategic priorities identified.

Report Adopted.