Joint Report of the Portfolio Committees on Mining and
Energy on Budget Vote 28: Minerals and Energy; dated 23 June 2009
The Portfolio Committees on Mining
and Energy, having considered Budget Vote 28 for 2009/10, jointly report as
follows;
1.
Introduction
Due to the re-alignment of
departments and ministries, the National Assembly referred Budget Vote 28 to
the Portfolio Committee on Mining and the Portfolio Committee on Energy to
consider jointly and report. Whilst the departments undergo the process of
re-alignment, Budget Vote 28 (for this financial year) is to be debated and
approved by Parliament as a single vote, Parliament constituted its portfolio
committees as per Cabinet’s re-alignment. This thus entailed the establishment
of two portfolio committees – one of mining and the other on energy.
Hereafter, the Departments are
thus referred to as [one] Department of Minerals and Energy.
2.
Terms of Reference
On 9 and 10 June 2009, joint
meetings of the Portfolio Committees on Mining and Energy were constituted. The
objectives of the briefing were to:
1. Determine whether policy
developments take place in accordance with the key objectives and aims as
stated in the Departments’ strategic plan;
2. Fulfill the mandates of the
Committees in overseeing the Departments of Mining and Energy; and statutory
bodies that fall within its portfolio;
3. Establish how allocated funds and
transfers to statutory bodies were to be spent;
4. Monitor the achievement of
targets, and whether funds allocated meet those targets;
5. Monitor progress made and
establish problems encountered;.
6. Determine whether policy
developments take place in accordance with government’s priorities of poverty
alleviation, job creation Black Economic Empowerment (BEE), human resource
development and growing the economy;
7. Monitor compliance with the
Public Finance Management Act (PFMA).
3.
Estimates of National Expenditure: Department of Minerals and Energy
3.1 Budget Summary
The Department of Minerals and Energy
presented to the meeting its 2009/10 Medium Term Expenditure Framework (MTEF)
Strategic Plan, with it the budget allocations for each of the seven identified
programmes. The total MTEF allocation for the financial year amounts to R4 647
196 000 000, 00. The Auditor-General has, over the past four years given the
department unqualified audit reports.
3.2 Related Matters
The Committee was taken through a
list of the ten State-owned Enterprises and their mandates. The Department also
presented the key focus areas that have been identified as part of the
financial year’s Strategic Plan. These are; the promotion of health and safety
at mines; beneficiation; small scale mining; universal access to energy;
security of energy supply and transformation. A comprehensive strategy map was
also laid out.
In the next few months, there will
be two departments emanating from the current Department of Minerals and
Energy. Each of the new departments will contain functional branches that
logically fit into that particular department, as well as their own support
services. Each Department will further manage its own regional offices in line
with the approved structures. The Minister and the current Director General
will appoint an Acting Director General of Energy and other critical
appointments to set up the new Department. The current Director General remains
the hosting Accounting Officer (Department of Mining). The Committee raised its
concern on the adequacy of the budget to support this process.
4. MINING
The Committee would like to highlight a few issues of
concern that were raised during its deliberations and also make some proposals:
4.1 Mine Health and
Safety
The Committee noted the reported lack of security at
derelict and ownerless mines. This is of concern to the Committee. The
finalization to the strategy to rehabilitate these mines is encouraging. Labour
related issues, raised by ex-miners, should be investigated and addressed.
The Committee expressed its concern on the increased mine
related fatalities, from 200 in 2006 to 220 in 2007. The strengthening of the
Mine Health and Safety Inspectorate, through the amendment in 2008 to the Mine
Health and Safety Act, to investigate and enforce compliance to the Act, will,
hopefully, result in reducing occupational injuries and ill-health.
4.2 Illegal Mining
The shortcomings in dealing with illegal mining need to be
addressed. Underground security patrols should be encouraged. Security should
be increased at functioning mines including search procedures to prevent the
theft and smuggling of equipment and explosives.
The Committee will consider conducting oversight visits to
the affected areas, particularly in the Welkom and
4.3 Presidential Audit
The Committee will engage the Department on the recently
completed Presidential Audit, as the reported 66% compliance to health and
safety measures by mine houses, is unacceptable and therefore of concern.
4.4 Transformation
Resistance and reluctance to meaningful transformation by
the mining industry, is noted by the Committee. The need to strengthen existing
legislation to advance transformation, in particular to benefit communities
will be investigated.
4.5 Beneficiation
The Committee would like a full detailed report from the
Department on beneficiation, and whether it has contributed to job creation.
5. ENERGY
The Committee was given an
overview of the legislation promulgated over the years, which forms part of the
energy legal framework. Further overviews of the public entities which report
to the Minister, as well as that of other key players in the energy sector were
given.
5.1 Energy Security Master Plan
(Liquid Fuels)
The Energy Security Master Plan on
liquid fuels was approved by Cabinet in September 2007. In the short term, the
said plan focuses on developing supply chain solutions to
The presentation further covered
the status of the Energy Security Master Plan projects, as well as the
challenges thereof. A brief review of the performance from the previous cycle
was presented, as well as status quo in the sector. The Department reports that
amongst other interventions, it is clear from its Long Term Mitigation
Scenarios (adopted by Cabinet) that nuclear will play a central role in the
supply of energy from 2015.
5.2 Energy Security Policy
The Energy White Paper position
provides for diversification of energy mix, including coal, nuclear, gas and
renewable energy. The Cabinet decision requires Eskom to do seventy (70)
percent of new generation, and Independent Power Producers (IPP) to produce the
difference.
The Nuclear Energy Policy was also
approved by Cabinet, and it provides a framework for prospecting, mining,
milling and use of nuclear materials for energy use. A radioactive waste
management policy and strategy was approved, and it establishes the radioactive
waste governance framework. A Cabinet Committee was established to oversee
implementation.
5.3 Energy Efficiency
The Designated National Authority
(DNA) is responsible for registering the Clean Development Mechanisms (CDM).
CDM is an initiative under the United Nations Framework Convention on Climate
Change. Fifteen (15) projects are currently registered under the initiative,
and over a hundred and twenty (120) are in the pipeline. The Tradeable
Renewable Energy Certificates (TRECs) implementation framework is being
finalized, to enable benefits to be derived from climate change advantages
associated with renewable energy sources.
The challenges and interventions
of the plans were presented, and are further elaborated on under the
discussions reported herein.
6. Deliberations
The
meeting deliberated on the following;
6.1 Independent Power Producers
(IPPs)
The Committee enquired about the
planning around this issue, whether any agreements had been made with possible
key producers. Members also recommended that a regulatory environment that is
conducive to do business be encouraged for the IPPs, as there have been
complaints about the monopoly Eskom has in the sector.
6.2 The Pebble Bed Modular Reactor
(Pty) Limited (PBMR)
Issues of concern were highlighted
with regards to the PBMR. Enquiries were made on the status of the entity, as
well as the costs implications to carry it forward. Members felt that the PBMR
has not produced what it was expected to on its formation. The Committee agreed
that the Department needs to come back and brief it on the state of PBMR, at an
agreeable time.
6.3 The governance of newly formed
structures
There are a number of structures
that have or will be formed as a result of promulgated legislation. The
Committee felt that the governance of these structures was not clearly
explained and requested a response with regards to the accountability
mechanisms in place for these entities.
6.4 Renewable Energy
The Committee suggested that more
be done by the Department on this issue, as it has been on the cards for some
time but lacked on clear, decisive implementation.
6.5 Energy Efficiency
Public education campaigns should
be intensified on efficient use of energy in the country. The strategies
employed for the 2010 Soccer World Cup host cities should be applied around the
country for the promotion of tourism during this period.
6.6 Nuclear: costs and related
matters
Members of the Committee enquired
about the planned development of nuclear, cost implications, security and job
creation that this project could bring about.
6.7 Electricity tariffs
The Committee expressed concern
that the looming increase in electricity tariffs would be a burden on the
nation, especially during this difficult economic period.
It is the wish of the Committee to
engage the leadership of Eskom at a later stage on this issue. The nature of
the engagement will be informed by the outcome of the recent application by
Eskom to the National Energy Regulator of South Africa (NERSA) to increase the
tariffs.
6.8 Transportation of Liquid Fuels
The Committee enquired about the
strategies to improve the country’s rail efficiency as the transportation of
liquid fuels is, of late, mostly done by road.
7. Conclusion
The Committee was satisfied with
the responses given by the Department during the deliberations, but asked the
Department officials to avail themselves for further engagement on the
outstanding issues, after the Budget Vote has been concluded. The need for the
Committees to engage the public entities reporting to the Department, as well
as other stakeholder in both the sectors (mining and energy) was emphasised by
the members.
The
Committee unanimously adopted the report on Budget Vote 28 and the Strategic
Plan as tabled by the Department of Minerals and Energy.
Report to be considered.