Report of the Portfolio Committee on Science and Technology on Study Tour to ENGEN Refinery, Durban 10 November 2006:

The Portfolio Committee on Science and Technology, having conducted a study tour to ENGEN refinery in Durban on the 10 November 2006, reports as follows:

Members Present:

The delegation, under the leadership of the Chairperson of the Portfolio Committee, Hon. E N N Ngcobo (ANC), included Hon. A R Ainslie (ANC), Hon. F Mahomed (ANC), Prof I J Mohamed (ANC), Hon. S N Nxumalo (ANC), Hon. J P I Blanche (DA)

Apologies:

Hon. S Dithebe, Hon. B T Ngcobo (ANC), Hon. B J Mnyandu (ANC), Hon. M J Bhengu (IFP), Hon. A M Dreyer (DA), Hon. P J Nefolovhodwe (AZAPO), Hon. V C Gore (ID) and Hon. N T Godi (PAC)

Supporting Staff:

Ms Z Jansen (Committee Secretary)

Mrs C Adams (Committee Assistant)

Background:

The Portfolio Committee conducted a study tour of the ENGEN Refinery in Durban, a Division of ENGEN Petroleum South Africa. As the Portfolio Committee plays an influential role in government decision-making process on energy matters, a study tour to the refinery was beneficial to it.

Purpose for the study tour:

The aim of the study tour was to afford the Portfolio Committee an opportunity to familiarize themselves with the manufacturing of crude oils. It was also an opportunity for ENGEN and the Portfolio Committee to interact on issues of mutual interest such as: cleaner fuels program, bio fuels and the interrelationship with cleaner fuels; availability of skills pool and its capacity to meet the quality and demands of anticipated Capex Programs; issues relating to BEE and EE, and the industry charter; environmental issues around ensuring cleaner air in South Durban; challenges that ENGEN face and social responsibility issues.

Presentation by Mr W Hartmann, General Manager of ENGEN Refinery, Durban:

· It is unacceptable that the refinery is situated next to a residential area. However, it is working together with the community to overcome the challenges.

· ENGEN had made tremendous strides in environmental issues. The issue is a “hot potato”, but it had worked on it jointly with the communities concerned and the situation has improved.

· Approximately 70% of ENGEN’s construction work is outsourced to BEE owned companies. The staff of these companies are trained by ENGEN and used consistently. Staff would become familiar with the refinery and this would improve safety.

· ENGEN is actively involved in training. However, there is still a shortage of skills and this leads to the projects being delayed.

· ENGEN proposed a three point plan:

1. Effective use of training – For example, candidates don’t earn enough money and therefore leave the learnerships.

2. Better management of scarce skills resources – A data base should be established in order to inform companies of what skills are available in the country.

3. Scheduling of projects to reduce skills demand – Align projects with the shortage of skills and create incentives for going local.

· ENGEN will forward report discussed to the Chairperson and suggested that people who compiled the report on scarce skills present to the PC.

· ENGEN emphasized that the shortage of skills is an international phenomenon and many of South Africans are approached to work overseas.

· It is difficult to unlock funds from Sector Education and Training Authority (SETA) and therefore the delegation was requested to assist ENGEN in this area.

The following formed part of the discussion:

· The delegation from the Committee wanted to know what environmental issues were discussed with the communities? It expressed concern about the slow rate that women were absorbed in to high profile management positions and further enquired whether ENGEN facilitates storage tanks for new BEE entrants?

ENGEN responded that the environmental issues concern the impact that its sulphur dioxide emissions have on the surrounding communities. ENGEN has a permit to release 90 ton of sulphur dioxide. ENGEN had been issued a five year permit with a list of requirements. It would take ENGEN some time to meet the requirements. In terms of the permit, ENGEN is allowed 90 ton of emissions, however it had accumulated to more over time as it had incorrectly assessed the output. ENGEN environmental team is working on the problem in the best interest of the community. The environmental team had compiled a health study on the impact of sulphur dioxide and it was ascertained that it only affects people suffering from asthmatics. Coincidently there are many people suffering from asthma in the surrounding communities. ENGEN is striving to improve the air in Durban and it is unfortunate that the media tends to exacerbate issues. The media have not given them an opportunity to tell their side of the story. It has a progressive equity plan and all women who are appointed are so because they deserve it as it does not believe in “token” appointments. It will not support its competitors but there is legislation underway to support new entrants with storage facilities.

· Committee wanted to know what the level of Benzine is being emitted?

In response, ENGEN said that the Benzine levels are lower than what is required from the guidelines within the refinery. However, outside it is more and was not able to say why that is the case. Presently, ENGEN uses MNT in gasoline in order to curb high octane level.

· Committee pointed out that South Africa has lost skills in science, technology and engineering due to people leaving the country. Enquired what is being done to have those people with the necessary skills return to South Africa?

ENGEN responded that people are returning to South Africa however there is still the problem of skilled people leaving the country. This is attributed to the fact that there is a skills shortage internationally.

· During the oversight visit to Rhodes University, the delegation for Science and Technology it discovered that there were many students, approximately 60% with science and technology degrees. However, these students struggled to find employment and many of them were preparing to leave the country.

ENGEN responded by saying that the Joint Initiative on Priority on Skills Acquisition (JIPSA) experienced the same problem. ENGEN had received a number of Curriculum Vitaes from JIPSA. However, it was only able to employ two graduates in its operations department. Other graduates did not have science, technology or engineering degrees. It was proposed that such Curriculum Vitaes be forwarded to the office of the General Manager, Mr W Hartmann.

· Committee wanted to know what sanctions were taken against ENGEN?

ENGEN responded that its intention was to meet all requirements. However, it had under estimated the weather conditions in Durban. The air in Durban remains stable. At the time when ENGEN agreed to the release of 35 tons, it did not have the information about the weather conditions. It had agreed to a package without all the necessary information. It was fined R2000,00 per ton. It is working on improving the situation in a collaborative effort with the surrounding communities. It had demonstrated to the City of Durban that it is doing its utmost best to improve the scenario. Emphasized that Sulphur Dioxide is not as a big problem in the surrounding communities as the media has made it out to be and it is shifting to a more environmental approach wherein science can be used to assist in these issues.

Recommendations by the Portfolio Committee on Science and Technology:

· Committee should be briefed by both ENGEN and the surrounding communities on the environmental issues that was raised during the study tour. The Committee wants to assist companies like ENGEN to build relationships with communities as it has a bad history with communities. Committee should also assist ENGEN in building relationships with National and Provincial Government.

· Committee recommended that ENGEN send students overseas to obtain skills in order that they return and train people in South Africa.

· Committee agrees to provide assistance to ENGEN in accessing funds from SETA in order to train more graduates.

Acknowledgements:

The Committee wishes to thank all the people that it met and interacted with during the study tour. The hospitality accorded to the Delegation made the task of the Committee much easier and affordable.

Report to be considered.