DIRECTOR-GENERAL’S OVERVIEW
INTRODUCTION
Madam Chairperson, honourable members, thank you for
the opportunity to present to you the Department’s strategic plan for the 2007/8
MTEF period.
PLANNING FOR THE 2007/8 MTEF
Last May I presented our
plans for the 2006/7 financial year to the joint sitting of this committee and
the Parliamentary Portfolio Committee. I mentioned that the focus for the
Department was to continue ensuring the implementation of the policies we have
developed. This year honourable members, the time has come for us to strengthen
our capacity to monitor – monitor the
impact of our policies on the lives of beneficiaries, monitor the effectiveness
of our transformation policies and processes, monitor how the Department
together with other government structures (like our SOEs) are participating in
the implementation of government policy.
At our annual strategic planning session in February
this year, the Minister’s vision and strategic direction for the Department (as
aligned to the priorities of Government), formed the basis to our plans. Our plans
heeded to the President’s call during his 2007 State of the Nation Address
where he called upon Government to, amongst other things, intensify the fight against poverty, ensure 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.
At this point I would like to take the committee
through our plans for the 2007/8 financial year. With your permission, I will
not dwell on the Department’s performance for last year, as this will be
discussed in the annual report soon.
IMPLEMENTING
OUR STRATEGY
ENERGY
SECURITY OF ENERGY SUPPLY
Honourable members, energy is the lifeblood of every
economy and security of energy supply is a key priority. In our country, the
same message has been echoed by both the private and public sectors that
The Integrated Energy Master
Plan
To address these energy
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 the development of energy outlook for
long term planning, will be in place. This modelling system will allow for the plan
to be updated annually and take into account any changes at both policy and
technological fronts.
To support renewable energy, energy
planning and energy efficiency, we
will be introducing a piece of legislation that will mandate the provision of
energy data and 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. In setting targets for energy efficiency
for the country, we need to promote appropriate energy carriers for
applications. As a result, this year greater focus will be placed in the
securing and promotion of gas both natural and liquefied as a thermal energy of
choice
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.
INTEGRATED
NATIONAL ELECTRICATION PROGRAMME (INEP)
Although significant progress has
been made within the implementation of the integrated national electrification
programme, challenges of poor and the absence of bulk infrastructure, especially
in rural areas, have put a strain on the performance of the programme. The most
affected areas in this regard are
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 and continue to liaise with Eskom
and Municipalities to ensure delivery on our plans.
As part of our objective of
monitoring the impact of our policies, we will be evaluating the socio impact
of INEP. A baseline study has commenced 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 the fragmentation of the industry and poor
regulation. This manifests as the blackouts and brownouts that we continue to experience
as we approach winter. In 2007/8, we will focus on addressing these problems by
advancing the RED creation process and implementing the Electricity Regulation
Act.
As per the Cabinet decision of October 2006, 6 REDS
are to be formed as public entities. 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 with the implementation
of the policy. As you might be aware, the challenge exists of blanket covering
even to 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 LICENSING
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
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.
Although significant strides have
been reached in the provision of electricity to the masses of our people, there
is clearly a need for thermal energy solutions. Some of our 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.
We will be holding an Energy Summit later 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.
MINING
MINERAL REGULATION
Honourable Members, last year we
presented our plan of addressing the backlogs relating to the processing of
mining applications. I am pleased to report that this challenge has been
eradicated. Because of the negative perceptions these delays had caused amongst
investors and analysts, we further embarked on local and international road shows
targeting strategic mining investment countries such as
Monitoring
As part of monitoring compliance
with the mining charter, both planned and 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 was organised for the 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.
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.
Capacity
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.
MINERAL
POLICY AND PROMOTION
The Branch will continue with its
promotional activities in the main highlighting the investment potential
All preparatory work for the
implementation of the Precious Metals Act, the Diamond Amendment Act and the
second Diamond Amendment Act has been completed.
The Mineral and Petroleum Resources
Development Amendment Bill is presently under discussion. 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.
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 bi-ennial 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 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.
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 strengthen the capacity of DME to deliver on its
mandate.
THE
DEPARTMENT’S 2007/8 BUDGET
This year the Department has been
allocated R2,96 billion of which 63% is allocated to the electrification programme (Eskom and
Municipalities. The Department only receives 21% of the total budget. Areas
with additional allocations over this period are the Integrated National Electrification
Programme (INEP) with 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 (R100 million)
also contribute to the increase in transfer payments at an annual rate of 19, 6
per cent.
Honourable Members, I am happy to
report that in the previous financial year, approximately 70% of our goods and
services budget was spent on BEEs and SMMEs. Over the MTEF period, we project to
increase our procurement spent to above 80% of the total goods and services
budget. We will be targeting mainly the areas of rehabilitation of ownerless
and derelict mines, as well as other technical services that are required by
the Department from time to time.
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 per cent 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.
THE
FOLLOWING BILLS WILL BE TABLED DURING 2007/8:
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.
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.