Archive | cabinet

Energy gets war room status

Cabinet creates energy crisis committee…..

Editorial…….

eskom logoIn retrospect, for the cabinet having had to resort to establishing an energy war room is probably a good thing inasmuch that a meeting of minds appears to have taken place at all levels of the ANC Alliance on energy matters. The situation is indeed serious.

The message from business and industry that the “energy crunch” is not only immensely threatening to the economy appears to have got through, accompanied probably by the realisation that so many regular failures, power or otherwise, are threatening to the ability of the ANC to stay in power.

Foggy outlook

Perceived at first as an issue mainly affecting the rural poor, the failure of Eskom to deliver on most of its promises; the bumbling of the department of energy on independent power producer parameters and the to-ing and fro-ing of cabinet on the adoption of nuclear energy into the energy mix, has been somewhat of a pantomime.

For months we have been reporting from Parliament on the ambivalence of Eskom and the reluctance of the department of energy and public enterprises to chart a course on energy.

The whole truth…

NA with carsHowever, what is a matter of concern is the fact that in all those lengthy power point presentations and detailed reports to parliamentary committees that we have witnessed or read, the ball has been completely dropped on the energy issue and badly so.   At the very least Parliament were not given the full facts, particularly in the case of Eskom, thus threatening the parliamentary oversight process.

Deputy President Ramaphosa has now been designated to oversee the turnaround of SAA, SAPO and Eskom. The cabinet statement says regarding this, “Working with the relevant ministries, SAA will be transferred from the department of public enterprises to national treasury. The presidency will closely monitor the implementation of the turnaround plans of these three critical SOCs that are drivers of the economy.”

Maybe next year

It is comforting therefore to some extent to know that such a “war office” has been established and that cabinet has adopted a five-point plan to address the electricity challenges facing the country but it just seems incorrect that a relatively empty, tired statement such as “more cross cutting meetings to meet the challenges facing  the country will be adopted” was all that could be added in the form of action before ministers disappeared for the Christmas recess, including, we understand, the contractor’s staff at Medupi.

elec gridIt seems that nobody is in charge over the same period nor interested enough to be there and nobody is really looking much beyond January 15, when South Africa starts switching on again.

 

Perhaps in 2015, some reality will return to South African politics and amongst the governing party. They may learn that there is a direct relationship between being in power and keeping the power on and we foresee many more direct confrontations on this issue and others in Parliament during the coming year.

 

 

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Minister Nene maps survival route

Not so merry Christmas….

Editorial……

candlesWithout wishing to put a dampener on festive arrangements, the last few weeks of the closing parliamentary session, which included the medium term budget from minister Nene, have seen a difficult period, not in the least caused by fiascos in the National Assembly with the EFF. Baiting President Zuma, whatever the reason, has nothing to do with running a country.

Such hooligan behaviour completely demeans the status of Parliament but worse, it also denigrates all the real work that is going on the engine room of Parliament, the working committees.  Some observers are quietly happy that the ANC Alliance is being called to account on certain matters but the overall effect has been to take South Africa perceptually into dangerous waters.

Nkandla unpleasant diversion

The Nkandla issue has clearly damaged the political standing of Parliament as well as giving the media a field day, or a field month as the case turned out to be.  But in the parliamentary portfolio, ad hoc, finance standing and NCOP select committees, the work has gone on and it has been a busy and difficult period as a result of the necessity to approve finance minister Nene’s medium term budget.

Difficult because some fifty utilities, government departments and section nine companies had to declare their objectives, say how things were going and reflect upon the auditor general’s findings on each of them.   Difficult because cabinet statements are really giving no true direction on questions being asked every day in Parliament.   Difficult because it is still the first year of a new Parliament and everything is running late with new MPs.

Whilst the auditor general (AG) may have declared that government departments only received 15% unqualified reports, the balance of 85% are qualified to some degree by the AG.  A learning process. This means the working committees have seen it, everyone knows about it and the system works. This is the difference between weekend newspaper reporting and monitoring. It is not just a question of putting a positive spin on things but recognising that there is, indeed, a force working for morality and financial correctness.

Focus is on medium term budget

Nevertheless, minister Nene’s budget speech was still the key issue of the last month, not Nkandla as the perception might be.  Nene’s remarks that “business is a key area in fostering the ideal that the NDP becomes a reality” had the all too familiar ring of what Alec Erwin had to say twenty years ago when the ANC promised private and public partnerships on energy matters. Nothing happened of course, the ANC embarking upon ten years of infrastructure inactivity.

In fact major private sector participation in the country’s development was totally halted at that point and has since never really got going.

When is when?

Now the question is being asked once again as to whether the government will actually ever embark upon real hard core private/public investments, other than dishing out a few solar and wind power projects. This is the question being asked by opposition MPs in Parliament at working committee level, ignoring for the moment the embarrassing fracas upstairs in the National Assembly.

It is difficult to imagine in parliamentary terms that minister Rob Davies, minister Tina Joemat-Pettersson, minister Jeff Radebe, minister Lindiwe Sisulu and minister Lynne Brown will ever truly understand the tenets, motivations and passion that drive businesses, even perhaps the President himself.  South Africa suffers from bad politicians, not necessarily bad government.

Circus with no ringmaster

What the presidential national planning commission is actually saying to the cabinet is an issue that cannot be guessed at by anybody at this stage, such private messages certainly not being conveyed in Parliamentary papers. In fact nobody seems to be talking, the DA having as little knowledge as half the SA cabinet, it appears.

Consequently minister Nene’s hopes appear somewhat lame at this stage. To be positive however, it may be that as next year’s parliamentary oversight programme on service delivery targets gains momentum, as it has already, accompanied with all the political pain that will occur if voters remain dissatisfied, political reality may force the governing party to at last start walking the talk that minister Nene espouses.

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Parliament brings government to account

Editorial, October end…

Six month review of targets…

FSY001803or three weeks now, the parliamentary working committees have been exercising oversight on the forty seven government departments responsible for service delivery throughout the three tiers of government service.  In terms of the Constitution, oversight is necessary to qualify and quantify the appropriations made to each department for the next six months of the budget year.

Under each department have also come the reports of the many state owned entities (SOEs) described under section twenty nine of the Constitution and scheduled into categories under the Public Finance Management Act. There are the many national government business enterprises similar to Eskom and Telkom; then the funding entities controlled by boards such as the Road Accident Fund; and finally the less self sufficient and less commercial entities such as CSIR and SABS.

Owned by the public

Generally speaking, SOEs are funded from the public purse, meaning that the public has a legitimate interest in the workings of the SOEs.   In the case of the large national enterprises, it could be said that the public is an indirect shareholder through the shareholding minister. The new and so far quite successful system of evaluation by Parliament involves reference to performance rating by the newly established presidential evaluation department.  

Also contributing are the auditor general reports produced on time, and thankfully every time, by the backbone of South Africa’s essential and probably most un-applauded department, the office of the auditor general. We have watched these mainly young men and women in action. Thank heavens for their contribution.

Monolithic structures

Following minister of finance Nhlanhla Nene’s address on the medium term budget statement, there will follow a pause and even perhaps a vacuum of expectation.  It is an enormous machine that he addressed in the public sector; a government structure which has 34 ministers, 33 deputy minister, 159 directors general, 642 deputy directors general, 2,501 chief directors and 7,782 directors.

In a sour note, the Freedom Front pointed out for what it is worth that 40 years ago the country had 18 ministers, six deputy ministers and 18 directors general and in the most recent quarter of 2014 it has been reported, they said, that more than 44 000 public servants have been appointed bringing the number of public servants to just over 3m, or 22.6% of the total labour force of South Africa.

Catch 22

The dilemma now is that all the regulatory processes put in place to monitor spending of tax payer’s money could so easily establish more red tape and further hinder the delivery process.    But to be positive, the oversight system seems to be working and has established a far better ethos in spending procedures and also seems to have established an improved sense of morality.

Politicians such as chairperson of the standing finance committee, Joan Fubbs, may seem fuddy-duddy at times but such are erudite and responsible people and bad performance on delivery receives little change when in debate. Performance of SOEs is now is now clearly the key issue in South Africa and whether what is happening in Parliament can be translated down to provincial, municipal and local level, where local governance controls are often shaky, is now the constitutional issue facing minister Pravin Gordhan.

Bigger by the day

The overall trend is also clear – employment in the private sector has declined while public sector employment has grown. Public service and administration minister, Lindiwe Sisulu, in charge of what has been rapidly expanding public service, faces a major problem ahead in dealing with the intimidating annual wage negotiation period, which is not a good time to rein things in.

In the coming weeks, until the year end possibly, the uneasy feelings expressed in many portfolio committees that nothing is happening will probably persist until some sort of positive results emerge from the massive infrastructure spend. Like a tanker making a turn at sea, any large public service in any country is slow to respond and it will no doubt take time before this change in economic direction, now being better monitored in the parliamentary sphere, can be distinguished as a turn for the better.

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Zuma

Nkandla vs NDP: the argument rages

Editorial…

Has the emperor got clothes on?….

Whilst the nation focuses on the Nkandla issue, which has now involved to a lesser or greater extent the parliamentary process on the subject of who reports to who in terms of the Constitution, the largest elephant in the room still remains. This, of course,is how far the ANC will go to protect President Zuma in terms of the law, aside from the Constitution.

Accordingly, we have not monitored the issue further until the subject once again reaches the level of parliamentary committee debate.

Nevertheless, there still remains a smaller elephant in the room. Whilst this issue does not reach the media in the same way, it concerns business, manufacturing and industry to a far greater extent than the Nkandla issue.

Reality check

This smaller elephant concerns the ever-present issue of how to create more jobs in South Africa.  It also concerns the manner in which South Africa goes about achieving the noble aspirations of the National Development Plan (NDP).    Meanwhile, unemployment has now reached a record 45%.

MPs across party lines are of two minds on this. There are two distinct camps of thought developing on these subjects and attitudes are hardening on which approach should be taken.  Firstly, to put it in question form, are the state utilities really the controllers of our destiny and will a massive infrastructure spend by state institutions alone, with emphasis on black procurement, turn the economic corner as far as jobs are concerned?

Or, is the answer to create a very much more enlightened environment for investors on the basis that we need their money and is this sufficient excuse to play down some more investor-unfriendly legislation and regulatory red tape and a place less emphasis on BEE with its sad and long history of black non-empowerment?

Problems, problems

In every parliamentary committee meeting one can sense this philosophical and ideological problem.   Indeed, if this is not the commercial and industrial elephant in the room, it is the dichotomy that ANC whips have to handle on a daily basis and work hard with every party MP involving strong messages coming down from Lithuli House.

Witness the confusion of the power of African traditional leaders, which clearly emanates from the President himself; the necessity to bulldoze through certain unworkable legislation on transformation which then gets returned to Parliament on good legal advice; and the fight between finance minister Nene to suck in more for the fiscus to finance social welfare and health budgets with ridiculous customs and excise tariffs at the expense of the national deficit.

Stay positive

mantasheWe cannot comment, only observe, but somehow we believe that many of Gwede Mantashe’s more obtuse observations do not represent all of ANC parliamentary thought patterns.   We sincerely believe that within the governing party machine and with added well-tuned opposition, there will follow a sensible compromise in order to survive.

We also believe that it may be discovered by adherents that the emperor may not have clothes on, despite what the praise singers say, and that also, and more importantly, a good investment climate can be balanced with social imperatives.

Hof Communications

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Medupi is key to short term energy crisis

Eskom bogged down with Medupi …

medupiActing director general of the department of energy (DoE), Tseliso Maqubela, told Parliament before it went into short recess that once Eskom’s new Medupi power station starts supplying the grid the country would have “turned the corner”.

“It is well known we are challenged on electricity”, he said, adding that the fresh view is being taken on the independent system marketer’s operators (ISMO) system which would contribute to recovery in the medium term through the addition of independent power producers (IPPs).

DG of energy policy, planning and clean energy, Ompi Aphane, in his presentation told parliamentarians that, as per the State of Nation Address (SONA), “vigorous attention is now being given to the establishment of the operator’s office to implement independent power supplies.

Financial  certainty, they say

On the subject of infrastructure build generally in the electricity sector, financial certainty was now being restored in the energy industry, Maqubela said, with the result that R120m in energy investment is now planned, “some of which has already come in and projects started.”

The overall plan was to divide power supply between Eskom and IPPs on a 70-30 basis through the national grid by 2020, decisions on refining and gas replacing diesel also being necessary in the short term in terms of a revised energy mix to meet future demand.

Other immediate focus areas for DoE were to increase access to electricity; increase “the momentum” of the installation of solar units; finalise the integrated energy plan; address maintenance and refurbishment programmes; “strengthen” the liquid fuels industry and facilitate decision taken on the nuclear programme.

Interface problems

A major issue being tackled was the in the area of household connections, according to the DoE presentation. Dr Wolsey Barnard, in charge of energy projects and programmes, explained that whilst Eskom was often bringing power to an area, the municipal backbone installations were either not ready or municipal skills were lacking.  DoE had recognised the problem and was busy trying to bridge this gap, he said, with skills training or by working on temporary permissions from municipalities with Eskom assistance.

However, Dr Barnard said it was encouraging that whereas the position ten years ago could have been described as hopeless, the situation was now specific and targeted to small areas, in most cases the most difficult remaining.

At the moment, 1,5m additional households will be connected by 2019 but as this is still insufficient to meet the target of universal electrification by 2025, additional funds are now being allocated by the state and plans made.

Barnard calls for co-operation

In order to achieve this, it was essential, Dr Barnard said, that the modalities regarding national, provincial and local government powers be revised on the ability for Eskom to assist in view of the lack of skills and the handling of appropriation funding.

He called for urgent attention to the fact that power installation funding by DoE to municipalities should be “ring fenced” and accounted for. This area had to be focused upon urgently, he noted.

He said that too many times Eskom had supplied power to an area only to be told by a municipality that there were no funds for distribution boxes or no skilled persons available to connect lines.  Dr Barnard said he was aware that the economic planning department were “in the picture” and legislation was planned despite the constitutional barriers but again he wanted to emphasise that this issue had to be resolved urgently.

EFF members asked if there were plans to specifically assist the unemployed with electricity connections and wanted a list of all power cuts to the different areas and the reasons for these.

Priorities from both sides

ANC member Ms Makwbele-Mashele asked the DG that with all the emphasis on “greening”, the high cost of gearing industry to meet new emissions and pollutants standards and the recently introduced air quality regulations, whether in his opinion these issues were hindering the country’ energy and industrial development.  The ANC also asked, as the fuel price seemed to be “out of our hands”, whether Sasol could increase production locally.

The DA wanted more detail on the exact steps at present underway to increase co-generation of energy to solve the immediate energy crisis.   This was in the light of the fact that the ISMO process had initially failed simply because DoE could not foresee the end state of independent power production, they said.    They also felt that a paper was needed to get clarity on how the integrated energy plan and the integrated resources plan locked into the NDP.

The DoE promised to respond to MPs questions in writing through the chair as the minister of energy had taken up most of the debating time available.

Other articles in this category or as background

  • http://parlyreportsa.co.za//bee/electricity-connections-target-far-short/
  • http://parlyreportsa.co.za//energy/electricity-tariffs-billiton-tells-its-side/
  • http://parlyreportsa.co.za//uncategorized/major-metros-open-up-on-electricity-tariffs/
  • http://parlyreportsa.co.za//energy/eskom-issues-alerts/

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New minister focuses on Eskom strategy

Eskom strategy goes to economic cluster

In the light of recent Eskom rolling blackouts, new minister of public enterprises and past Western Cape premier, Lynne Brown,  promised that Eskom will have a “comprehensive sustainability strategy” submitted to the newly appointed economic cluster by the end of June, this cluster including new finance minister, Nhlanhla Nene, and new energy minister, Tina Joemat-Pettersson.

The arrival of such a report on his desk has not confirmed in any way by minister Nene in recent statements regarding the budget vote.

Despite the Eskom complaint that it is on the receiving end of a R225bn revenue shortfall for the current multi-year determination tariff (MYPD) for 2013 and 2018, fixed at 8% by the regulatory authority Nersa instead of the 16% asked for by Eskom, it might appear that the electricity giant has successfully prevailed upon Nersa for a further 5% effective after only one year of the new tariff structure from comments during portfolio committee meetings during the new Parliament’s first few weeks.

We told you so

Eskom’s new sustainability programme will include new funding options, acting CEO Collin Matjila has said, but funding aspects will no doubt be affected by the recent downgrade in ratings, a fear of this being expressed in the appeal against the Nersa award played out by past CEO Brian Dames in the parliamentary energy and public enterprises portfolio committees last year.

Fitch, as quoted recently by Reuters, noticeably excluded energy sustainability issues as the reason for downgrading but indicated that it was more the result of mining labour unrest and manufacturing index dips. Now, the IMF has commented unfavourably on SA’s economic growth and whilst again no fingers were specifically pointed at energy shortages, it is acknowledged by most commentators that international funding requirements will not benefit from such sentiments.

IEP needed

In addition to financial sustainability issues, Eskom says also it needs to know soon the final findings of the integrated energy plan being finalised so as to complete its own future strategies, some clue having been provided by the new Gas Plan recently published by DoE.

Minister Lynne Brown said the matter was indeed her priority to get such strategies to cabinet whilst at the same time she needed time to acquaint herself with all outstanding issues in her new cabinet post.

Other articles in this category or as background
http://parlyreportsa.co.za//parliament-sa-this-week/cabinet-fifth-sa-parliament/
http://parlyreportsa.co.za//energy/eskom-taking-sa-to-the-edge-eiug/
http://parlyreportsa.co.za//energy/eskom-the-elephant-in-the-room/
http://parlyreportsa.co.za//energy/eskom-determined-to-sustain-mypd-asking-price/

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New SA cabinet

Who for cabinet?…

NAAfter a week of intense speculation, with the swearing in of Members of Parliament, the election of the Speaker and Deputy Speaker of the National Assembly and the re-election of Jacob Zuma as President, followed by a gala inauguration process at Union Buildings, the political and financial world held its breath until the moment arose when the composition of the cabinet was announced over the weekend.

Also in the week previous, the first seating of the National Assembly marked noticeable changes in the hierarchy of the new governing alliance party. Strategic seating arrangements displayed the fact that Cyril Ramaphosa took the conspicuous seat allocated for the Deputy President.  In this sense, the mould was cast for a new period in South Africa’s political history at that point.

Ramphosa ZumaSince his defeat by Thabo Mbeki for status in the ANC, Cyril Ramaphosa, chairman of the Student Christian Movement, former secretary-general of the ANC and first secretary National Union of Mineworkers, was deeply involved in the negotiations that led to Nelson Mandela’s release. His involvement with South Africa’s political development is extensive.  He will now bring to cabinet decisions his twenty years of business experience gained whilst remaining as a political heavyweight in waiting.

Old faces

When the seating in Parliament took place, it appeared at the time that the incumbent minister of trade and industry seemed to haveRob+Davies maintained his influence within the ANC caucus and so it was to be.

tito mboweniWith the status-quo being to some extent maintained, one would therefore not expect any major changes or shifts in terms of policy, regulations and government position of matters related to business, the economy and international relations. The “behind the scenes” withdrawal of Tito Mboweni from parliamentary lists was significant since it had been clearly rumoured that he was tipped for the position of finance minister.

If the election of Baleka Mbete as Speaker and the massive influx of ANC cadres from Luthuli House to the National Assembly areMbete,Baleka swornin anything to go by, we can expect a more controlled environment in Parliament, particularly in the light of a reduced majority and the presence of the EEF.   Such tighter control will be evidenced in the nominations of chairpersons to the various Portfolio Committees.

Also in the past week, National Council of Provinces held its first seating. Unlike the National Assembly, 80% of the members of the NCOP are new to the House. Although this House does not particularly influence national, international and economic trends, one might expect significant changes in terms of committee positions on important issues.

Thandi Modise, former premier of the North West was elected chairperson of the NCOP and who is noted for her open-mindedness and approachability.

 The final choice

neneFinally, in a major cabinet reshuffle, President Zuma, announced his choice of ministers. To the surprise of most. he promoted deputy finance minister Nhlanhla Nene to finance minister, replacing minister Pravin Gordhan. Whether minister Nene was groomed for the position or minister Gordhan, who goes to governance and traditional affairs, is needed to sort out the finances and delivery disciplines in local government, remains to be seen. The appointments are nevertheless surprising.

The size of the cabinet apparently is not an issue with either the President or the ANC Alliance.    Clearly, the issues wracking the allianceanclogo are as important as economic issues and time will tell if the appointments are a consolidation of power or a compromise.

President Zuma also confirmed businessman Cyril Ramaphosa as his Deputy President. Considering Ramaphosa’s background and position, his appointment is expected to be welcomed by investors and the private sector.   As we speculated, Rob Davies is to maintain his position as minister of trade and industry, providing some continuity for the business world despite the fact that sparks never seem to fly in this area. However, DTI can be said to have had some success.

Mining and police

Mining minister, Susan Shabangu, who had been criticised for her handling of the strike in the platinum mines now in its fifth month, wasNgoako Ramatlhodi replaced by Ngoako Ramatlhodi, a former deputy minister in the prison service. Minister Shabangu goes to the new ministry of women, part of the Presidency.

radebeThe National Planning Commission and the ministry of performance, monitoring and evaluation have been merged and will be headed by former Justice Minister, Jeff Radebe, thus becoming part of the triad with the President and Deputy President. The total shake up of the security cluster, mining and energy portfolios could be set to have an significant impact on the five month strike in the platinum belt.

Left of centre

Mzwandile Masina has been appointed deputy minister of trade and industry. If there are to be “radical changes”, as President Zuma Mzwandile Masinaanticipated, this is where changes in B-BBEE might occur. Masina was formerly the national convenor of the ANC Youth League and was recently at the centre of a controversy when referring to NUMSA General Secretary, Irvin Jim, he used bad language.

Should Masina have any hold on policy and regulation, one could witness a significant shift in policy to the left, bearing in mind minister Rob Davies is a member of the SACP.

Electric shock

tina-joemattThe new minister of energy, Ms Tina Joemat-Pettersson, emerging from her fisheries complications and other difficult personal issues under investigation, will have her work cut out to get a grip on the energy picture and will have to rely, hopefully, on the many experts in the department of energy. This is before tackling the complicated issues facing the country in such areas as Eskom sustainability, the petroleum and fuels strategy and ISMO.

The new deputy minister of finance is Mcebisi Jonas, former MEC for economic development and environmental affairs of the Eastern Cape provincial government during which time it could be said that the Eastern Cape did not benefit from his term of office.
This is a disappointing appointment.

Madala Masusku, former Mpumalanga MEC for finance, is another provincial MEC who has made cabinet as deputy minister of economic development in a key position without too much experience.

Mr Policeman

Nkosinathi-NhlekoChief whip of the ANC, Nkosinathi Nhleko, previously deputy minister of labour, seems to have been rewarded for caucusing legislation through at the last minute in Parliament at the close of the fourth Parliament and becomes minister of police, whilst incumbent Nathi Mthethwa slips down to minister Paul Matashile’s position, Pallo Jordan’s old post, at arts and culture, Matashile disappearing from the hierarchy it appears, as did Jordan as well.

Also disappearing is Marthinus van Schalkwyk, whose ministry of tourism goes to Derek Hanekom, moving from the ministry of sciencehanekom and technology.

oliphantOn the labour front, experienced Mildred Oliphant stays where she is and continues to implement the four new labour laws thus providing some sort of continuity.

With so many changes, continuity in the short term is the issue.

Start up time

There is clearly going to be a time gap with so many shuffles and structural changes and it might be months before the whole impetus of the fifth government of South Africa gains traction to deal with the economic and delivery problems facing South Africa.

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Mineral and Petroleum Resources Bill halted perhaps

Mineral and Petroleum Act extends State rights…

New MPRDA starts with 20% free carry, maybe more….

oil rigThe Mineral and Petroleum Resources Development Amendment Bill, the legislation that will give the state a right to a 20% free carried interest in all new exploration and production rights in the energy field, has been passed by Parliament before it closed and sent to President Zuma for assent. According to press reports, new minister of mineral resources, Ngoako Ramatlhodi, may have halted the process by request, however, in the light of public sentiment and opposition moves to challenge the Bill’s legality.

Section 3(4) of the Mineral and Petroleum Resources Development Act (MPRDA) currently states that the amount of royalty payable to the State must be determined and levied by the Minister of Finance in terms of an Act of Parliament. This Act, in force, is the Mineral and Petroleum Resources Royalty Act 28 of 2008 but considerable uncertainty always surrounded how this would work and what was actually meant.

Any uncertainty has now been removed and the MPRDA amendments now passed have brought to an end a process which started when the draft Bill was first published for comment in December 2012.

Beneficiation of minerals included

mine dumpThe legislation seeks to “regulate the exploitation of associated minerals” and make provision for the implementation of an approved beneficiation strategy through which strategic minerals can be processed locally for a higher value – the exact definition of the word “beneficiation” yet having to be defined.

Importantly, the new Act will give clear definitions of designated minerals; free carried interest; historic residue stockpiles; a mine gate price; production sharing agreements; security of supply and state participation generally.

Stockpiles and residues affected

The new Act also states that regulations will apply to all historic residue stockpiles both inside and outside their mining areas and residue deposits currently not regulated belong to the owners. Ownership status will remain for two years after the promulgation of the bill.

In addition to the right to a 20% free carried interest on all new projects, ownership by the state can be expanded via an agreed price or production sharing agreements.

The NCOP concurred with Bill on its passage through Parliament and made no changes.

Legal commentators note that the Royalty Act, at present in force, triggers payment in terms of the MPRDA upon “transfer”, this being defined as the consumption, theft, destruction or loss of a mineral resource other than by way of flaring or other liberation into the atmosphere during exploration or production.

The Royalty Act differentiates between refined and unrefined mineral resources as “beneficiation”, this being seen as being important to the economy; incentives being that refined minerals are subject to a slightly lower royalty rate.

Coal and  gas targeted maybe

Nevertheless it appears, commentators note, that in terms of mineral resources coal is being targeted and also zeroed in on is state participation in petroleum licences. Others have pointed to the possible wish of government to have a state owned petroleum entity such as PetroSA to be involved fracking exploration.

Earlier versions of the Bill entitled the State to a free carried interest of 20% and a further participation interest of 30%, with the total State interest capped at 50%; however, the version that Parliament approved removed the reference to a 30% participation interest as well as the limit of 50%, effectively giving the State the right to take over an existing petroleum operation, law firm Bowman Gilfillan explained in a media release earlier this month.

Democratic Alliance (DA) Shadow Minister of Mineral Resources, James Lorimer said in a statement that the Act, “would leave the South African economy in a shambles”, adding that this would lead to people losing their jobs.

The DA has said it has now begun a process to petition President Zuma, in terms of Section 79 of the Constitution, to send this Bill back to the National Assembly for reconsideration,” he said.

Chamber opinion differs

Surprisingly, the Chamber of Mines stated that it “generally welcomed and supported” the approval of the MPRDA Amendment Bill, adding that it believed significant progress had been made in addressing the mining industry’s concerns with the first draft of the Bill, published back in December 2012.

Clearly the mining and petroleum industries particularly gas exploration industries, both of whom have separate equity BEE charters, are still very much at odds on the effects of the promulgation of such an Act, as is DA and the ANC.

Other articles in this category or as background

http://parlyreportsa.co.za//bee/mprda-bill-causes-contention-parliament/

http://parlyreportsa.co.za//bee/major-objections-minerals-and-petroleum-resources-bill/

Posted in BEE, cabinet, Energy, Facebook and Twitter, Fuel,oil,renewables, Justice, constitutional, LinkedIn, Mining, beneficiation, Public utilities, Trade & Industry0 Comments

Parliament stays open for business

The way it works

NA smallFor the last three weeks, Parliament has been clearing a vast quantity of legislation and parliamentary committee oversight deadlines in order to bring down the curtain on the fourth government of South Africa and to prepare for elections.  It has hardly been possible to keep up with the pace of legislation being passed and the manner of its passing.

In fact, the National Council of Provinces will stay open for an extra two weeks to give concurrence to a number of the Bills on the legality they require before they pass to the President’s office for assent. When they become law is a matter for gazettes to publish. Or they could call Parliament back to sit if there are disagreements on the provisions.

Critical Bills

The last sitting of the National Assembly was a difficult affair, perhaps because of the overtone of electioneering – a fact which was evident in a number of Bills which were clearly passed in time for the elections but which could have done with a lot more aforethought applied before they went to the NCOP, namely the Mineral and Petroleum Resources Amendment Bill, the Private Security Amendment Bill and the Women Empowerment and Gender Equality Bill – if not the Land Restitution Bill.

Once the election results are known, the first sitting of the new, the fifth government of South Africa, will take place. Technically, all Bills outstanding at the end of the fourth government fall away but each time a government has ended in the past, a certain number are revived by proposal from an MP in the early portion of the first new session.

What is important to recognise is that with the closing of Parliament, the parliamentary world does not go into cold storage. Much of what goes on in Parliament is about government policy and government departments use this period to often re-set the clock on certain matters where it is evident that a minister will change or policy matters need a clarion call for a new cabinet to heed.

New blood

With Cyril Ramaphosa returning as deputy president and head of the NDP drive, a ray of hope returns to what has been a messy affair in parliamentary circles in the last few months, political opportunism having been the order of the day.

Stalwart ANC Joan Fubbs, chairperson of the trade and industry portfolio committee, put it succinctly to all members of her committee, the governing party and opposition members alike, when she said that South Africa deserves lot more from Parliament than it is getting and if she has anything to do with it, members will be working a lot harder for their stipend in the coming session.

Whether Parliament will be recalled for impeachment procedures before elections is not a concern that we shall report on, and, in any case, every detail and every word uttered will be covered by newspaper reporting.

Refer last fortnight’s editorial

http://parlyreportsa.co.za//cabinetpresidential/parliament-closes-many-bills-outstanding/

 

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Parliament gets ready for elections

Last session of present Parliament to start

Houses_of_Parliament_(Cape_Town)With Parliament closed and all parliamentarians on vacation; then to a busy constituency period with elections forthcoming and finally a final and last session of the present government starting late January, the ParlyReport focus will be mainly government policy and the political rhetoric ignored . Thus will be a busy period in Parliament

Posted at present on ParlyReport recently are a number of matters of general interest as well as parliamentary matters that have arisen in the recess.

The editor wishes all well over the break whether it was Christmas to you or not, and a prosperous and very Happy New Year.

Hof Communications

Cape Town

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If you want your publications as they come from Parliament please contact ParlyReportSA directly. All information on this site is posted two weeks after client alert reports sent out.

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