DEPARTMENT
OF MINERALS AND ENERGY PRESENTATION OF THE 2007/8 MTEF STRATEGIC PLAN TO THE
MINERALS AND ENERGY PARLIAMENTARY PORTFOLIO COMMITTEE
08 MAY 2007
DIRECTOR-GENERAL'S OVERVIEW
SLIDES 1 - 5
INTRODUCTION
Chairperson of
the Portfolio Committee, honourable members, thank you for the opportunity to
present to you the Department's strategic plan for the 2007/8 MTEF period.
Before I start on my presentation, I would like to extend the Minister's
apology. She is in New York attending the 15th Session of the UN Commission on
Sustainable Development (CSD15).
As indicated on the slide, the presentation for today will include an overview
of the Department's strategic plan and the discussions on Energy, Mine Health
and Safety and Corporate Services. Tomorrow our discussions will be on Mineral
Regulation, Mineral Policy and Promotion followed by a briefing on the
amendments to the MPRDA.
The DME Team is as indicated on the screen.
PLANNING FOR THE 2007/8 MTEF
SLIDE 6
Two years ago I presented to this committee the Department's changed
strategic focus where I indicated that we will be moving away from focusing on
policy development, to ensuring the implementation of our policies. As a
result, the last two years has seen the development of various computerised and
non-computerised implementation systems, processes and procedures. The time has
now come for us to strengthen our capacity to monitor-monitoring the impact of
our policies on the lives of beneficiaries, monitoring the effectiveness of our
transformation processes, monitoring how the Department together with other
government. structures (like our SOEs) are participating in the implementation
of government policy.
Honourable members, in February this year, the Department held its annual
strategic planning session where we reviewed our vision, mission and strategic
objectives. We further reviewed the Department's 2006/7 performance against
specified targets. During the same session the Minister gave us her strategic
direction for the Department. The Minister's statement form the basis and the
approach to our strategic planning. In addition, our plans have also heeded to
the President's call during the 2007 State of the Nation Address where he
called upon government to, amongst other things, intensify the fight against
poverty, security of energy supply and expand access to electricity, promote
the growth of the small and medium business sectors, address the challenges of
the second economy, reduce the cost of doing business in South Africa, and
raise the state investment in the first economy.
Over the next two days we are going to indicate to this committee how we plan
to implement the Minister's vision, explaining to the Committee the plans,
targets and objectives of our various branches.
IMPLEMENTING OUR STRATEGY
SLIDES 8 - 11: ENERGY
Security of energy supply
Honourable members, the same message has been echoed from both the private
and public sectors that South Africa's energy demand is fast outpacing
available supply. Security of supply is still a key issue for Government and
all energy sources need to be investigated fully.
Fuel shortages and electricity blackouts of the, past year indicated the need
for South Africa to "better plan for energy demand and provision. Energy
is the lifeblood of every economy but resource-based economies like South
Africa just cannot continue to produce without cheap, reliable energy. For
South Africa, security of energy supply is of paramount importance. It is only
with appropriate planning that energy supply, now and in the future, can
"be secured.
The Integrated Energy Master Plan
The recent energy challenges that have been experienced in the country are
an indication of a need to develop integrated energy modelling system which
will inform an integrated energy plan on an annual basis. To address these
challenges., we have adopted a two pronged strategy. Firstly, we will present
an Energy Master Plan that will incorporate a detailed energy infrastructure
plan covering the next five years (including 2010) by June 2007. In 2009 a
modelling system to gather data that will enable development of energy outlook
for long term planning, will be in place. This modelling system will allow for
the plan to be updated annually to take account of any changes at both policy
and technological fronts.
The current energy supply dynamics have driven home the need for improving
energy efficiency, that is, efficiency in both the production and use of
energy. In setting targets for energy efficiency for the country, it has also
become abundantly clear that international standards can never be achieved
without the promotion of appropriate energy carriers for applications. In this
regard, greater focus will be placed this year in the securing and promotion of
gas both natural and liquefied as a thermal energy of choice.
To support the renewable energy drive, energy planning and energy
efficiency, we will be introducing a piece of legislation that will mandate
provision of energy data and mandating the use of healthy, safe, energy
efficient and environmentally-friendly energy appliances. The same piece of
legislation will create entities that will promote energy efficiency, renewable
energies, energy planning and environmental protection.
The biofuels strategy will be published this year. The final strategy
will take into account all stakeholder comments received during the
consultation process that took place at the beginning of the year. Introduction
of biofuels is part of our response to the climate change challenge facing the
world. This is but one of the many initiatives that are supported by our
renewable energy subsidy programme that commenced in earnest this year with the
signing of the first subsidy contract. Most of the renewable energy projects,
because of the difficulty with moving them from an idea to a bankable project,
have very long incubation periods. Most of these projects have also applied and
have received our support for CDM credits. We are going to be pushing ahead
with a drive to promote participation by a lot more .people in these much
needed renewable projects.
Electrification
Addressing energy poverty still remains a 9hallenge for the Department.
Significant progress has been made within the implementation of the integrated
national electrification programme. Challenges of poor and the absence of
infrastructure, especially in rural areas, have put a strain on the performance
of the programme. A total of R 1,4 billion has been allocated in the 2007/8
financial year, for the electrification of 150 000 households, 700 schools and
all clinics, and the building of 10 substations. As part of the electrification
plan for this year going forward, we will prioritise schools and clinics, with
the target of all clinics by the end of this financial year and all schools by
2010.
Some of the questions we need to continuously address are whether we have
enough capacity to roll out the electrification programme to meet the 2012
target and to what extent are we able to influence Eskom and Municipalities to
deliver on our plans. We will be finalising concrete plans in the
implementation of the final stages of our programme to meet the target of
universal access to electricity by 2012.
As part of our objective of monitoring the impact of our policies, we will be
evaluating the socio impact of INEP. A baseline study was commenced in 2007,
which will allow trends to be established of the various impacts of
electrification on the electrified communities. For example, we would be able
to establish the correlation between education, healthcare, enterprise
development and job creation as an outcome of electrification
Electricity distribution
The problems afflicting the distribution sector are acknowledged by all as
being fragmentation of the industry and poor regulation. This manifests as the
blackouts and brownouts that are currently being experienced as we approach the
winter. In 20Q7, we will focus on addressing these problems by advancing the
RED creation process and by implementing the Electricity Regulation Act.
As per the Cabinet decision of October 2006, 6 REDS are to be formed as public
entities. A roadmap has already being finalized to establish the processes for
RED rollout. In a parallel process, the EDI Restructuring Bill will be
presented to parliament this year, providing the legislative framework for RED
establishment.
The biggest challenge to RED creation still remains the voluntary participation
nature of the process due to Constitutional constraints.
Free basic energy
Free Basic Electricity provision has further being augmented by the
promulgation of the Free Basic Alternative Energy policy, to cover those
qualifying households without access to grid electricity. In this way, the
thermal needs of especially rural areas can be addressed, without having to
make them wait for the grid infrastructure.
The Department's role is limited to providing the policy framework and
supporting municipalities and Eskom in implementation of the policy. As you
might be aware, the challenge exists of blanket covering even non-deserving
households in FBE provision. Our policy framework provides for limited
implementation of FBE to qualifying households only.
Nuclear
The debate on climate change and security of supply is not complete without
the discussion on nuclear energy. If we are to deal decisively with the
challenges of greenhouse gas emissions and to reduce our over-reliance on coal
for power generation, we have to seriously consider nuclear energy as part of
the solution. We are accelerating our work to ensure greater reliance on
nuclear power generation. It is in this context that we are developing a
nuclear energy policy that responds to this challenge. The draft nuclear energy
policy has already been submitted to Cabinet to enable consultation with other
Government Departments. We are concomitantly addressing the issues of nuclear
fuel supply. The proposed programme of uranium beneficiation is a response to
this need. The development of a comprehensive nuclear energy industrial complex
is inevitable given the envisaged scale of the nuclear programme. A strategy
for the development of skills required to support this programme will be
developed. Legislation emanating from the Radioactive Waste Management Policy
and Strategy will also be finalised during this year.
Petroleum licensinq
Licensing of petroleum activities started in earnest last year, with over 12
500 applications received, mostly in the last week of the conversion period,
which closed on the 17th of September 2006. The process of evaluation of
applications has begun in earnest and we are expecting to issue all licences by
the end of this financial year.
Transformation of the petroleum industry still remains high on our agenda. The
commencement of licensing under the Petroleum Products Amendment Act has
given us leverage to begin to deal effectively with the promotion of
transformation of the liquid fuels sector. It has become clear to us with the
best of intentions real change can only come with proper mandates, legal
mandates.
Addressing energy poverty still remains a challenge for the department.
Although significant strides have been reached in the provision of electricity
to the masses of our people who have previously been underserved or not served
at all, there is clearly a need for thermal energy solutions. Some of people, even
when they have electricity, still use low grade coals and paraffin for thermal
needs. We have recognised that in most cases, it is not the type of fuel per se
that presents health, safety and environmental challenges for households but
appliances that are used with fuel. With the continued focus in correcting the
prices of certain fuel types that are overpriced, we will pilot different
energy appliances.
The 2007 Energy Summit is planned for June this year: The main objective
of this summit is to engage stakeholders in reviewing the EWP of 1998, to
assess the relevance of some of the policies in the context of the prevailing
energy situation.
SLIDE 12
MINING
Mineral Regulation
Honourable Members, we presented to you a plan on eradicating the backlogs
relating to the processing of mining applications last year. We had indicated
at the time that backlogs would be eradicated by end of September 2006. Because
of the negative perceptions these' delays had caused amongst investors and
analysts, we embarked on an international roadshow targeting strategic mining
investment countries such as Canada, USA, Switzerland, and the results were
very positive. We have and continue to challenge any company that claim to have
overdue applications, to come forward so that we can address these.
Monitoring
As part of monitoring compliance with the mining charter, both an unplanned
inspections are conducted on a periodic basis. According to our strategic plan,
an average of 150- 200 inspections per Region are planned for the 2007-8
financial year to monitor the various compliance aspects.
We will continue to monitor the implementation of the Social and labour
Plans as a tool to achieve objectives of the Mining Charter, ensuring that
projects introduced by the industry are sustainable and contribute to the
long-term economic empowerment of the communities. To firm up government
approach to LED projects, a workshop is being organised for this month of May
between the Department and SALGA to set the minimum standards for acceptable
LED projects and to discourage the 'small time-monkey projects' that sometimes
companies submit for approval to the department claiming that such projects
have already received a blessing by local/provincial government.
Capacity [number of personnel and knowledge base]:
Last year, the Department together with the DPSA conducted an investigation
into the capacity challenges of this Department, with emphasis on the
challenges brought about by the implementation of the MPRDA and the Petroleum
licensing process. Recommendations made include management training programmes
for the regional staff (to ensure greater understanding of the requirements of
the Act and improve efficiency) and creating an environment for the sharing of
best practice.
Training, workshops and information sharing discussions are already planned and
being implemented this very year. Though the number of officials in this Branch
was increased last year, in the light of these Vulindlela recommendations
requests for additional personnel have been submitted to HR this last week and
are under consideration. A Directorate: BEE has been created and the
appointment of the Director is eminent. A plan and budget will be provided this
MTEF period to secure the services of experts that will assist and train the
BEE Directorate in evaluating the economic and financial models and BEE deals.
Mineral Policy and Promotion
The Branch will continue with its promotional activities in the main
highlighting the investment potential South' Africa has in the mining sector.
Late last year there were discussiens that South African Mining Sector is not
attracting any new investments during the commodity boom. In this regard an all
stakeholder meeting is to be held shortly to finalise commodity strategies highlighting
issues that need to be implemented for the industry to continue attracting
further investments. However, it should be noted that the industry has already
started seeing a number of new investments due to huge investments the state
has put in upgrading the infrastructure and the certainty in the outlook of the
Industry due to the efficient way in which we process licenses.
The Minister in her Budget Vote Speech will be updating you on the
Implementation Programme for the Precious Metals Act and the Diamond Amendment
Acts of 2006. It suffices for me to say that we have completed all the
preparatory work in this regard.
Shortly we will be presenting to you the long awaited Mineral and Petroleum
Resources Development Amendment Bill. I might as well mention to you that these
amendments are mainly of a technical nature and do not bring any fundamental
changes. During the latter half of the financial year we will also be bringing
to you amendments to the Geoscience Act which will seek to foster the alignment
with the MPRD Amendment Bill
The department will continue to contribute towards sustainable development
through mining. This we will do by:
·
Managing and administering the committee of the Mineral and Mining
Development Board that is responsible for sustainable development:
·
Develop a strategy for rehabilitation of derelict and ownerless mines;
and
·
Developing a strategy for the water ingress programme in the different
mining areas.
Slide 12 Mine Health and Safety
The strategic
goal of the Mine Health and Safety Inspectorate would be to continue
with their improvement in governing the mining industry to be healthier,
cleaner and safer. The overall trend in mining occupational related deaths have
been decreasing however the numbers still remain far too high and the burden of
occupational illness and disease also remains a concern. To this end the MHSI
will ensure that all planned mine audits and 'inspections are carried out.
Ensuring compliance to the Mine Health and Safety Council's milestones of
health and safety targets is one of the MHS's primary goals.
This will require that the restructuring process that is near completion is
finalised to ensure stability and-staff retention. The Human Resources
Development plan for the MHSI that has been developed is currently being
implemented with the recruitment of "inspectors in training". The
internal restructuring of the MHSI is being carried out also to prepare the
MHSI for integration with other inspection agencies as part of the National
Integration of Occupational Health and Safety Competencies (a November 1999
Cabinet Decision).
This year also heralds. the' Mine Health and Safety Councils biennial summits
'to review the state of health and safety at mines'. As required in terms of
section 43(e) of the Mine Health and Safety Act (1996). The tentative date for
the MHSC Tripartite Summit is the 5th of October 2007 in
Johannesburg. Allied to this Summit will be a Mini-Indaba on Seismicity and
Rockbursts as requested by the Minister of Minerals and Energy in response to
the increasing trend of accidents related to these agencies and further
aggravated by the rockburst incident in October last year where 5 miners lost
their lives at the TauTona Gold mine in CarletonvilIe. The tentative date for
the Mini- Indaba in the 7th September 2007 in- Carletonville.
The Department has developed a database for derelict and ownerless mines and a
ranking system to assist in the prioritisation of those mines that need urgent
attention. More than 30% of the identified mines are ownerless and therefore
become Government's responsibility to close .and rehabilitate in the
interest of the neighbouring communities.
SLIDE 15
Corporate Services
As of 1st March 2007, we introduced the Corporate Services
Branch within the Department. Priorities for this branch will be skills
development, building the Department's corporate culture, turning DME into a
learning organisation, enhancing the observance and implementation of the Batho
Pele principles within the Department.
Skills challenges in both the mining and energy sectors continue to pose
serious challenges for the Department. The Department will be focusing on the
implementation of the January Cabinet Lekgotla decisions in relation to
capacity building within the Mining and Petroleum licensing processes, as well
as the implementation of the Vulindlela capacity outcomes. This will hopefully
strengthen the capacity of DME to deliver on its mandate.
An Integrated Human Resource Plan will also be developed to enable the department
to meet its strategic human resource needs, resulting from the strategic plan.
Based on the aforementioned, the HR capacity of the core line-function
components within the department will be strengthened and the Human Resource
Planning function will be repositioned and restructured in line with the new
Human Resource Framework for the Public Service as issued by the Department of
Public Service and Administration.
Competency assessments will also be conducted for all employees within the
department, commencing with Senior Management and regional offices' employees,
particularly in view of the capacity constraints as identified during the
capacity assessment project and the need to enhance service delivery as
informed by the new Legislative Framework for both Mining and Petroleum. This
will be followed by the development and implementation of a comprehensive
Management Development Programme as well as tailor made line function specific
training programmes for other employees. Learnerships and the departmental
programmes will also be embarked upon to ensure an increase of the skills pool
from which the department will recruit its human "resources as and when
they are required. This will be complemented by the Couching and Mentorship
programmes that the department already has in place.
SLIDE 16 -18
The Department's 2007/8 Budget
Over the MTEF period, overall spending for the Department is projected to
grow from R2, 6 billion in 2006/07 to an estimated R4 billion in 2009/10, at an
average rate of 16.3 per cent. Additional allocations for increasing the number
of employees in the Department to meet its statutory obligations in
implementing new legislation and regulating the mining and energy sectors
contributes to this increase in spending. R18 million, 22, 4 million and R24,8
million has been provided for unfunded posts and administrative expenditure
relating to these unfunded posts over the MTEF. Other additional allocations
over the same period have gone to the Integrated National Electrification
Programme (INEP), R285 million for electrification backlogs in schools and
clinics, the Council for Geoscience (R50 million) and the Nuclear Energy
Corporation of South Africa (R145, 6 million) and the implementation of new
transfer payments to the Diamond and Precious Metals Regulator (R 100 million)
also contribute to the increase in transfer payments at an annual rate of 19, 6
per cent.
Departmental receipts
The main sources of receipts for the Department are royalties and prospecting
fees collected from mining companies. During 2005/06 and 2006/07, royalties;
surface rental prospecting fees represented approximately 96 percent of total
Departmental revenue. Projected revenue over the MTEF period is expected to
increase from R120, 8 million in 2006/07 to an estimated R146, 8 million in
2008/09.
SLIDE 19
I The following Bills will be tabled during 2007/8:
1. The EDI Restructuring Bill
2. Radioactive Waste Management Agency Bill
3. Energy Bill
4. Mineral and Petroleum Resources Development Amendment Bill
5. Geoscience Amendment Bill
SLIDE 20
Monitoring of our State Owned Entities
The variety and uniqueness of State Owned Entities reporting to the
Minister of Minerals and Energy poses a great challenge with regard to the
department's oversight role. Last year our Minister held her first annual
strategic workshop with the Chairpersons and CEOs of our entities as well as
the Department's representatives on SOE boards, where challenges and future
plans were outlined. Among these was the alignment of the Government,
Department and SOEs strategies going forward.
One of the commitments made was to capacitate the monitoring processes within
the Department. The new structure for the Strategy, Risk and Monitoring Chief
Directorate (previously known as the Compliance Office) has been approved ,and
funded and the plan is to have this component fully complimented within the
first half of 2007/8.
One of the questions that has been asked a number of times is whether our SOE
boards really understand what is expected of them by the entity itself as well
as by government. How much understanding do the different members have of the
business of the entities and how this relates to government priorities. Within
the first six months of the year, we will come up with proposals to implement a
comprehensive SOE oversight plan that will include an entity Department and
Government specific induction programme.
In conclusion, we wish to assure the Committee that all the Departmental
programmes have been aligned with overall strategic imperatives of government.
This includes issues on women empowerment, youth, and disabled persons mainly
around economic emancipation of the historically disadvantaged.
I THANK YOU.