ATC200730: Report of the Select Committee on Land Reform, Environment, Minerals & Energy on the Adjusted Budget Vote and Annual Performance Plan 2020/21 of the Department of Mineral Resources and Energy 9dmre) – Budget Vote No 34, Dated 28 July 2020

NCOP Land Reform, Environment, Mineral Resources and Energy

REPORT OF THE SELECT COMMITTEE ON LAND REFORM, ENVIRONMENT, MINERALS & ENERGY ON THE ADJUSTED BUDGET VOTE AND ANNUAL PERFORMANCE PLAN 2020/21 OF THE DEPARTMENT OF MINERAL RESOURCES AND ENERGY 9DMRE) – BUDGET VOTE NO 34, DATED 28 JULY 2020

 

The Select Committee on Land and Mineral Resources having considered Budget Vote: 34 and Annual Performance Plan 2020/2021 of the Department of Mineral resources and Energy reports that the committee met with the DMRE on 24 July 2020 and was briefed on the matter.

 

The Department’s informed the committee that its contribution towards COVID-19 response package was submitted to National Treasury, in line with the guidelines. However, two bilateral meetings were subsequently convened by National Treasury and the outcome was that the Department should implement further cuts on 2020/21 budget allocation. The net change to baseline was a downward revision of R1,574 billion.

 

The following adjustments to programme budgets were made:

 

		Downward revisions			Reallocations
R thousand	2020/21 Main budget	Suspension of funds (COVID-19 purposes)	Virements from (COVID-19 purposes)	Virements from (other)	Allocated to (COVID-19 purposes)	Virements to (COVID-19 purposes)	Virements to (other)	2020/21 Total net change proposed	2020/21 Total allocation proposed
Programmes
Administration	642 343	-18 649	-4 681	-1 531	–	–	–	-24 861	617 482
Minerals and Petroleum Regulation	574 713	-3 684	–	–	–	–	–	-3 684	571 029
Mining, Minerals and Energy Policy Development	993 104	-6 422	–	–	–	–	–	-6 422	986 682
Mine Health and Safety Inspectorate	232 694	–	–	–	–	4 681	1 531	6 212	238 906
Mineral and Energy Resources Programmes and Projects	5 798 115	-1 534 434	–	-800	–	–	800	-1 534 434	4 263 681
Nuclear Energy Regulation and Management	1 096 059	-10 838	–	–	–	–	–	-10 838	1 085 221
Total	9337 028	-1 574 027	-4 681	-2 331	-	4 681	2 331	-1574 027	7763 001

 

In particular, budget cuts were most severe in departmental programmes associated with the transfer of conditional grants for the purposes of improving energy use efficiency in municipalities and to connect households to the electrical grid.

 

The table below highlights the reductions in grant allocation to specific sub-programmes:

 

Transfers and subsidies	Programme	Division of Revenue	Suspension of Funds	Voted (Main Appropriation)	Adjusted appropriation	Percentage change
Schedule 5B Specific Purpose Allocations to Municipalities (Direct Grants)
(a) Energy Efficiency and Demand Side Management Grant	Minerals and Energy Resources Programmes and Projects	217 994	-21799	217994	196195	10% reduction
(b) Integrated National Electrification Programme (Municipal) Grant	Minerals and Energy Resources Programmes and Projects	1 858 752	-500000	1858752	1358752	26.9% reduction
Schedule 6B Allocations-in-Kind to Municipalities for Designated Special Programmes
Integrated National Electrification Programme (Eskom) Grant	Minerals and Energy Resources Programmes and Projects	3 001 483	-1000000	3001483	2001483	33.3% reduction

 

 

 

 

 

During deliberations with the department, the committee raised concerns over the backlog in delivery of the electrification programme and the affordability of the new proposed nuclear programme. The committee was concerned that reductions in service delivery could result in service delivery protests if the impacts of reduced grants are not discussed with all role players. The committee further questioned the allocation of funds to municipalities for projects, and whether consultations with municipalities take place to ensure that funds that are allocated are spent on projects within the allocated time. . The committee further expressed concern over the major increase in activity of safety inspections that the department had to carry out and wanted to know whether the mine health and safety programme is able to perform adequately under lockdown regulations. The committee also wanted to determine whether the modest increase in the budget of the programme was sufficient for its responsibilities of regulatory enforcement.  

  

The department responded by stated that since 1994, 28 million houses have been electrified and that the current backlog stands at 2 million households. It was explained that the current backlog grew over the years because of the emergence of new settlements with migration for people. The electrification programme reached a peak of around 90% connections, but regressed to around 87% currently. In response to a follow up question pertaining to how long the department would take to finalise the backlog, the committee was informed that the municipal and ESKOM grants are not the only sources of funding for connecting households to the grid. Other initiatives from Eskom and metropolitan municipalities, which do not receive the grant, is also being utilised to clear the backlog. Migration patterns of people within and between municipalities, however, do make this work difficult. In respect of departmental funding of municipal projects, the department assured the committee funds are only released according to DORA and PMFA requirements, which requires the municipality to produce a business plan for proposed projects. This is then verified by the department.

 

Additionally, in line with the Division of Revenue Act, municipalities have to report on a monthly basis, with that information also being verified.  Within the capabilities of funding allocations, the department also attempt to perform as many site visits as possible to verify projects. The department further clarified that where it is discovered that the funds were not being utilised properly the department had the right in accordance with the grant conditions to re-allocate funds elsewhere. The committee was further assured that there is regular engagement between the department, Eskom and municipalities with regards to how budget cuts in the department will affect everyone, so that this information can be filtered down to the people on the ground.  The CFO informed the committee that projects that are still in early planning stages, or were delayed by issues such as contested land ownership or delayed EIA’s were selected for delay. This approach would minimise the impact on households connected during the financial year.   

 

The Committee was assured that the Health and Safety programme of the department is on track and has received additional funding to assist with the combating of Covid 19 in the mining sector. The department reported that since April, 1700 inspections have been performed and that non – compliance was dealt with in accordance with prescribed legislation. The committee was also informed that the department takes an inclusive approach to combating Covid-19 in the sector by engaging with the mining chamber, individual mining companies, and trade unions. This approach assisted the department in developing and implementing various guidelines rapidly, especially in the fight against the Covid 19 pandemic.       

 

The department’s response to the question pertaining to the affordability of the prosed nuclear programme was that the department has requisitioned for data and information in order to make that determination. As the potential nuclear development is only at the Request for Information stage, the department did not want to create expectations by speculating on the possible total cost of production units. Once greater details are available, the department will approach cabinet and Parliament with all the relevant information so that a proper determination can be made. The department also informed the committee that bursary recipients who have graduated will be incorporated into the department and deployed to all nine provinces and that the list of provincial deployments will be forwarded to the committee as soon as they have been finalised.

 

The Select Committee on Land Reform, Environment, Mineral Resources & Energy, having considered Budget Vote: 29 and Annual Performance Plan 2020/2021 of the Department of Mineral Resources and Energy, reports that the Committee has concluded its deliberations thereon.

 

 

Report to be considered.