Archive | Electricity

Parliament set for tough questioning

Editorial…

…..Busy session to get some answers

….  In the absence of any move by the National Prosecuting Authority, particularly the somnambulant National Director of Public Prosecutions Shaun Abrahams whose department seems confused as to whether 100,000 leaked Gupta e-mails constitute prima facie evidence of fraud or not, it falls to a parliamentary committee in Cape Town once again to be the first official venue for any debate of consequence on the State/Gupta corruption scandals.

In one of the first meetings of the recently re-opened Parliament, the Public Enterprises Portfolio Committee is to receive a report back from legal experts on the setting up of the Eskom enquiry.

Party vs the Church

Oddly enough, it was in also Cape Town, at St George’s Cathedral, in early June, where the fight first began.    Later, the venue was room 249 in the National Assembly, where the Public Enterprises Portfolio Committee was addressed by Bishop of the South African Council of Churches (SACC). He had then just released a report on corruption by the SACC Unburdening Panel.

It fell to the Bishop the first shot and there was a sobering moment of silence in parliamentary room 249 when he finished talking. It felt like a small moment in South African history.  What came after that seemed like a little bit of a parliamentary let-down in the following weeks but it is important that what the Bishop had to say is further reported for the record.

Take that

Bishop Mpumlwana reminded all present, and particularly parliamentarians who claimed that the Church should not be “fiddling in politics”, that the same politicians had repeated the phrase, “So help me God” when taking office.

He said that the Church had no intention of ignoring the evil that was being perpetrated on the people of South Africa and asked all to note that the Constitution ended, “May God bless South Africa.”

He also said that systematic looting of resources had created a crisis for South Africans, particularly the poor. He called upon all parliamentarians to look to their consciences and assist with “the righteous cause of tracking down all those involved” in what was now an obvious state capture plan hatched during President Zuma’s watch in which the President himself, he said, was involved.

Cry, the beloved country

In a particularly moving address, he reminded all that SACC had come out in vocal support of the ANC during the apartheid years when President PW Botha was in power.   Now was the time to speak up again on the unbridled abuse of power by an ANC Cabinet and a President “who had lost his way on moral issues.”

The Church, he said, must intervene and as a result of the SACC “unburdening” process which had been conducted some months ago, he now knew that “mafia-style control” was being exercised by a political elite in Eskom, Transnet, Denel, and other government agencies.

Ignored

An attempt was in process to gain control over public funds destined particularly regarding rail, arms and nuclear projects, the last being a totally unnecessary burden placed upon the country, he said.    He concluded with an appeal to parliamentarians present to expose the crimes committed and “restore the dream that had built a rainbow nation admired the world over.”

It was gratifying to hear in following days that the Public Enterprises committee, under chairperson Zukiswa Rantho, had instituted an enquiry into Eskom’s accounts (and also Transnet and Denel it turned out) with legal opinion to be discussed in the in the next session of Parliament.

That time has now arrived and one hopes that a lot of explanations will emerge and a lot more untruths discovered in meetings with the Department of Public Enterprises (DPE) and its apparently confused but certainly compromised leader responsible, Minister, Lynne Brown.

Looking ahead

Parliament has now a busy schedule in August to catch up on lost time with delays incurred by staging a “secret ballot” on the no-confidence in President Zuma vote.

One issue will involve the passage of the contentious Mineral and Petroleum Resources Development Amendment Bill, scheduled for a meeting with the Select Committee again towards the end of August; the Expropriation Bill; and the implementation of all Twin Peaks regulations – including those for the Financial Intelligence Centre to operate in terms of the “money-laundering” changes.

This last-named body is quoted as having handed over some 7,000 cases of suspicious money movements to SAPS/Hawks and Themba Godi, chair of the Standing Committee on Public Accounts (SCOPA), has made the public comment that any parliamentary finance joint meetings must see such matters on oversight resolved in the short term, preferably immediately.

Energy up and down

Minister of Energy, Mmamaloko Kubayi, was to be informing her Portfolio Committee on the can of worms opened with her suspension of the board the Central Energy Fund stated by her as being in connection with the suspicious sale of South Africa’s oil reserves held by the Strategic Fuel Fund.

Past Minister of Energy, Tina Joemat-Pettersson, seems to have possibly lied earlier to Parliament over the sale of these assets and she, in her subsequent silence, appears to be joining what is now a whole roomful of past ministers and director generals involved in the tangled web of deceit and manipulation at the edge of business and commerce  – some of it linked to Gupta e-mails, some just motivated by plain criminal greed.

But all Energy Portfolio Committee meetings on any subject have now been abruptly halted in the light of matters involving the possible suspension of the DG of Energy Policy and Planning, Omhi Aphane, (a long-time and experienced government staffer) on on an issue regarding of nuclear consultancy fees, according to the media.   It would appear a whistle blower is at work in DoE.

Minister Kubayi is certainly causing waves and many hope that the responsibility for Eskom is to be handed over to this Minister from the DPE, back to where it was originally rooted with all other energy resources.

Untouched as usual

The issue of debt relief legislation under the aegis of Chair Joan Fubbs of the Trade and Industry Committee will be important as will meetings on energy involving electricity, IPPs, nuclear and clearing up the PetroSA mess.   But first, this committee should sort out what is to be done with a draft Copyright Bill amending and updating anchor legislation, laws that have not been touched since 1976.

What DTI have so far come up with has legal experts in complete confusion since there appears no understanding by DTI in their draft of the difference between paintings, works of art and the high-tec world of data authorship which underwrites commerce and industry and on which depends a massive IT industry both here and mostly abroad.   Fortunately, with a person like Joan Fubbs in charge, basic misunderstandings such as this will get sorted out.  However, that such unintended consequences might have occurred worries many.

The various Finance Committees will meet for joint sessions for a number of tax and money Bills and amendment proposals and Posts and Telecommunications will hear its Department’s comments on public hearings, all regarding the ICT White Paper Policy.

Posted in cabinet, Communications, Electricity, Energy, Finance, economic, Fuel,oil,renewables, LinkedIn, Public utilities, Special Recent Posts, Trade & Industry0 Comments

Parliament awaits to hear from Cabinet

Same Parliament, same Cabinet, different mood

..editorial……Parliament has now resumed with the same Cabinet, the same 400 MPs, the same ANC Allianceparliament 6 majority instructed whips and the same names in the party benches but the ambiance is very different.     This subtle fact, however, matters little in the immediate future.   Legislation before the National Assembly (NA) will still be subject to a simple numbers game when it comes to voting. Well, almost.

In the case of a Section 76 Bill, that is a Bill that needs not merely the concurrence of that portion of the 400 MPs that sit in the NCOP but subject to full debate by all nine provinces and a mandate returned in favour or not, there might be the beginnings of healthier opposition. Power at local level has been emboldened since Parliament last met.

So far, matters of consequence have been that the Department of Energy has presented its REIPPP plan with support from most other than Eskom with no Minister present and the Mineral Resources Portfolio Committee has re-endorsed a revised Minerals and Petroleum  Resources Development Amendment Bill for process by the NCOP using its ANC majority. Again no Minister was present. Eskom will be presenting on this and matters regarding coal any day.

Old tricks

jacob zumaHowever, presuming the picture in Parliament stays as it is until the 2019 national election with Jacob Gedleyihlekisa Zuma at the helm as President, it will be interesting to see what type and how much legislation is hammered through the NA by the ANC using the same old tactic of deploying party whips with threats of being moved down on the party list system for a total majority, timed last year in a rush just before a recess.

Notably, now in the case of three Bills sent for assent after being voted through, the three were not signed by President Zuma into law acting on legal advice.

With this trio now back with Parliament on the grounds of either suspected unconstitutionality and/or incorrect parliamentary procedure, the issue is now whether the coterie of Cabinet Ministers that surround the President, with Director Generals appointed by and who report to those Ministers, will take Parliament more seriously.

Not hearing

Good advice is not good advice when it comes in the form of a last minute warning not to put signature to any Bill thereby turning it into an Act of law. Plenty of such advice not do this in respect of a number of Bills was previously given during parliamentary portfolio committee debate, at parliamentary public hearings from affected institutions, business and industry and even earlier in public comment when the Bills were first published by gazette in draft form.

Similarly, the lesson seems not to be learnt in higher echelons that the independent regulatory entities are also not to be ignored – institutions from the Office of the Public Prosecutor to ICASA, from NERSA through to the board of the Central Energy Fund and from National Treasury to international courts, the UN and international bodies protecting human rights. Parliament is due to hear from ICASA any moment.

Most worrying, however, are the attempts to by-pass Treasury when presenting policy to Parliament. Ideological bullying can bankrupt a country in no time.

Such issues as Minister Aaron Motsoaledi’s National Health Insurance dream and Minister Joemat-Pettersson/President Jacob’s Zuma’s dream of six nuclear energy reactors – plans that the country should not possibly not countenance from a financial aspect – have neither been presented to Parliament in the proper national budget planning form or officially and financially endorsed.

Missing money details

Minister of Health, Aaron Motsoaledi, has gone as far as a White Paper to Parliament on the NHI and Minister Joemat-Pettersson has briefed Parliament on nuclear tendering. Treasury have said nothing about a financial plan in each case. Money is short, as evidenced by Treasury stepping in on the provisions for BEE preferential procurement. Somewhere there is a disconnect.

As for President Zuma’s continued pressure to bring traditional leaders into the equation with what amounts to two separate judicial systems and has even talked of the equivalent of four tiers of government – one therefore not even reporting to Parliament and certainly no idea of local government and nor subject to the PMFA  has its problems. President Zuma has used his ally, the Minister of Justice, to table the Traditional Courts Bill before Parliament. Opposition parties will walk out on that one, we are sure.

The Speaker of the House, Baleka Mbete, as part of the same coterie, has made a mild signal that the days of Cabinet maverick behaviour, even arrogance, towards Parliament and no respect for the separation of powers may be coming to an end. The SACP is clearly not happy. That is where the new ambiance felt in an unchanged Parliament may play an unofficial part and pressure may start building.

 
Previous articles on category subject
Parliament to open Aug 16 – ParlyReportSA
Parliament under siege – ParlyReportSA
Radical White Paper on NHI published – ParlyReportSA
Zuma’s nuclear energy call awaits Treasury – ParlyReportSA
Here it comes again…. the Traditional Courts Bill – ParlyReportSA

Posted in cabinet, earlier editorials, Electricity, Energy, Finance, economic, Fuel,oil,renewables, Health, Justice, constitutional, Trade & Industry0 Comments

Minister Brown wants utility shareholder management 

Shareholder Management Bill could kill cosy jobs…. 

sent  to clients 20 Dec…..Public Enterprises Minister, Lynne Brown, reports that she is to introduce, as aLynne Browndraft, the Shareholder Management Bill as part of a plan to introduce more leadership ability and some form of continuity for the state owned enterprises (SOCs) under her control. This includes Eskom, Transnet, Denel, SA Express, Alexkor and Safcol.

Maybe start of something big.

Whilst troubled SAA is now an independent, falling under National Treasury for the moment. Providing President Zuma makes no more changes, Minister Pravin Gordhan is set to sort out National Treasury itself and challenge the management style of his old stomping ground, SARS.. How much come out of the Cabinet Lekgotla is critical.

The problem children

PetroSA logoMeanwhile, PetroSA is in real deep water, the entity falling under Central Energy Fund (CEF) and which reports itself to Department and Energy (DOE). But at least the PetroSA problem is now in the open with somebody obviously having to take over the reins and sort the mess out, probably CEF itself.

Oddly enough there are people in CEF who know exactly what the problem is but once again politicians pushed experts in the wrong direction, it appears.

In addition, the Passenger Rail Association (PRASA) is very much on the slippery slope and, together with SANRAL, both present highly contentious transport issues, are now in the hands of to untangle

Public Enterprises comes to the party.

Minister of Public Enterprises, Lynne Brown appears to be getting the senior management of her portfolio undereskom control and whilst there could possibly be power supply problems at Eskom she says, because “machines can break down unexpectedly”, the leadership is there, as is the case with Denel.

Minister Brown recently reported at an AmCham meeting in Cape Town that there are around seven hundred SOCs, an extraordinary fact, but bearing in mind the fact that South Africa is reputed to have the largest head count in public service per population count, this would appear quite probable.

On the road again

With Deputy President Cyril Ramaphosa chairing an Integrated Marketing Committee, which will hopefully designate which entities should remain SOCs and those which should be absorbed back into their relevant departments, there appears some hope with regard to containing the ballooning public service machine which has characterised President Zuma’s presidency.

Hands off appointments

An essential element of Minister Lynne Brown’s plan is to remove the appointment to the boards of the entities under her domain away from Ministers, including herself, to a shareholder management team that creates a leadership operational plan for all SOCs and appoints, through due process, a tightly run appointment system.
A brave proposition indeed but it does indicate that Minister Brown is her own person.

Whilst the proposals might look like state control, in fact it is a clear signal that government may have heard the message that the current system of Ministers appointing board members is not working and is one of the reasons leading to what the auditor general calls “useless and wasteful expenditure”.

On the drawing board

The Shareholder Management Bill, Minister Brown said subsequently in Johannesburg, will first need a concept paper (perhaps she means a White Paper) and such could be released after the Cabinet Lekgotla in February, with an intention of introducing such as system by the end of 2016.

Minister Brown said that she herself as a Minister would therefore be excluded from making appointments in her own SOCs for a start. Perhaps this system can be applied to all forty-seven government departments and agencies, suggested a questioner bu the Minister would not be drawn into matters outside of her brief.

Leadership needed

During the same address, she added that Eskom was “not out of the woods” yet and there was still not sufficientlyne brown 2 electricity to facilitate economic growth but this would change. Minister Brown said none of the entities under her control “would be approaching the National Treasury with begging bowls.”

One small step

No doubt, as far as confirmation of an appointment is concerned, the Minister involved will still have to “approve” any selection decision by the independent team of specialists but it is worth watching the outcome of the debate on the shortly-to-be tabled Broadcasting Bill, if only to see if the appointment of inept senior appointments can be halted or reversed.

What has come out of the Eskom, PRASA and PetroSA issues is that a person who has no right to be in a position of leadership, or worse one who has supplied fraudulent qualifications, leads to frustration and anger by those with genuine skills and high academic qualifications lower down the ladder and at the coalface.

This is in the space of government service where technical skills are located and badly needed and it is hoped that Minister Lynne Brown has more of these “eureka” moments.

Previous articles on category subject
PetroSA on the rocks for R14.5bn – ParlyReportSA
Central Energy Fund slowly gets its house in order – ParlyReport
Shedding light on Eskom – ParlyReportSA

Posted in Electricity, Facebook and Twitter, LinkedIn, Public utilities, Special Recent Posts, Transport0 Comments

Overall energy strategy still not there

Feature article………….

DOE energy strategy in need of lead 

From closing parliamentary meeting….sent clients dec 15….   South Africa’s energy strategy problem is as much about connection as it is about the integration of supply resources, said Dr WolseyDr Wolsey Barnard Barnard, acting DG of the Department of Energy (DOE), when briefing the parliamentary select committee on DOE’s annual performance before Parliament closed in 2015

Of all the problems facing South Africa on the energy front, probably the most critical is the lack of engineering resources facing South Africa at municipal and local level, negatively affecting economic development and consumer supply, he told parliamentarians.

He particularly referred in his address to the fact that the main problem being encountered in the energy supply domain was the quality of proposals submitted by municipalities for supply development in their areas.     In many cases, he said, the entities involved totally lacked the technical skills and capacity to execute and manage projects and there was also, in many cases, a lack of accountability with reports not being signed off correctly and in some cases technical issues not resolved before the project started.

Doing the simple things first

Despite all the queries from Opposition members on major issues such as fuel regulation matters; nuclear development and the tendering processes; the independent power producer situation with clean energy connection problems and issues surrounding strategic fuel stocks; again and again (DOE) emphasised that nothing was possible until South Africa developed its skills in the area of energy (electricity) connections.

electricity townshipsThe quality of delivery in this area was “extremely poor”, Dr Barnard said, inferring that without satisfactory delivery of energy the burning issues of supply became somewhat academic. Localised development at the “small end” of the energy chain had to be developed, he said. This lack of skills was exacerbated by the “slow delivery of projects by municipalities and by Eskom in particular”, he said.

Eskom  in areas not covered by local government.

Dr Barnard said that there was a lack of accountability on reports provided; poor expenditure by most municipalities evident from the amount of times roll overs were called for and high vacancy rates in municipalities. Consequently, he said, the overall Integrated National Electrification Programme (INEP) was producing slow delivery of electrification projects requested of both local government and Eskom against the targets shown to MPs.

In probably the last meeting of the present Parliament before its recess, DOE spoke more frankly than has been heard for some time on the subject of its short, medium and long term energy solutions, including a few answers on the problems faced.

Frank answers

DOE explained it had six programmes focus which were outlined as the various areas of nuclear energy; energy efficiency programmes; solar, wind and hydro energy supply; petroleum and fuel energy issues, regulations and development electrification with its supply and demand issues.

DOE specifically mentioned that the Inga Treaty on hydro-power had come into force in the light of theinga fact that conditions to ratify the long term agreement between SA and DRC were satisfied and commercial regulations could begin in order to procure power. This would change the future of energy of solutions. This was a long terms issue but targets for the year on negotiations had been met.

Opposition members were particularly angry that a debate could not take place of nuclear issues and whether South Africa was to procure reactors or not. It was suggested by the Chair that maybe the outcome of COP21 might have given more clarity but MPs maintained that to make a decision DOE, as well as the Cabinet, “must know the numbers involved”.

DOE maintained silence on the issue saying as before that enumerating bid details would destroy the process. It was assumed by the committee at that stage that the then Minister of Finance must be grappling with the issue but MPs wanted an explanation to back up President Zuma’s State of the Nation address on nuclear issues, complaining that nobody in Parliament had seen sight of Energy Minister Joemat-Pettersson nor heard a thing on the issue.

Full team minus nuclear

Present from DOE, in addition to Dr Wolsey Barnard, Deputy DG and Projects and Programmes were Ms Yvonne Chetty, Chief Financial Officer; DG Maqubela, DG of Petroleum Regulations and DG Lloyd Ganta, Governance and Compliance.

On solar energy, DOE said some 92 contracts had been signed in terms of the IPP programmes. Forty of them were now operating producing some 2.2 megawatts of energy at a “cheap rate” when on line and solar germanythe grid being supplied but it became more expensive when not being taken up. Dr Barnard explained that South Africa was not like Germany which was connected to a larger EU “mega” grid in Europe where it both received and supplied electricity.

SA’s system, he said was rather a “one-way supplier”, solar energy being made available only when needed by the grid. But as SA grew economically, things would change.

He commented that the new solar energy station in Upington had not yet been completed but shortly it would not only be supplying energy “when the sun was shining” but, importantly, be able to stored energy for later use. This made sense with the purpose of the IPP programme, he said.

The big failure

On the issue of the PetroSA impairment of R14.5bn, subject raising again the temperature in the meeting, DG Lloyd Ganta of DOE explained that the PetroSA impairment had happened mainly for two reasons.
The first was that PetroSA had made a loss in Ghana to the value of R2.7bn, primarily, he said, due to the fluctuations in the price of oil, the price falling from $110 per barrel to $50 at the time shortly after their entry and at the point of the end of the first quarter.

Project IkwheziThe second reason was due to losses at Project Ikwhezi (offsea to Mossgas) where volumes of gas extracted were far lower than expectation, the venture having started in 2011. At the end of the 2014/5 financial year, only 10% of the expected gas had been realised. When parliamentarians asked what the new direction was therefore to be, the answer received was that engineers were looking at the possibility of fracking at sea to increase the disappointing inputs.

The financial reports from Ms Chetty of DOE confirmed the numbers in financial terms making up the loss,

Dependent on oil price

Acting DG Tseliso Maqubela then stressed that nothing could not change the fact that South Africa was an oil importing country but the country was attempting to follow the direction of and promises made on cleaner fuels and it had been decided to continue with the East coast extraction.

In terms of the NDP, DOE said that South Africa clearly needed another refinery for liquid fuels but

refinery

engen durban refinery

whilst an estimated figure of R53bn had been attached to the issue some time ago for the financing of such, the issue of upgrading existing plant had not been resolved with stakeholders.

Oil companies, he commented, had said that if the government were not to pay for this in part, especially in the light of fuel specification requirements also required to meet cleaner fuel targets set by international agreements signed by SA, the motorist would have to foot the bill as the country could not import clean fuel as such to meet all demand.

More refining capacity

“A balance has to be found with industry and a deal struck”, he said, the problem being that the motorist was at the end of the fuel chain and such a call would affect the economy. He said that possibly the refinery issue could be approached in a phased manner and at perhaps a lower cost.

In the meanwhile, cleaner fuels were a reality and already some traders had applied to the DoE for licenses to construct import facilities, one in Durban and one in Cape Town.

If traders were to bring in large quantities of clean fuels, he said, this would represent a complete change in the petroleum sector and an energy task team, made up of government and main stakeholders was at present putting together a full report on cleaner fuels and a strategy for the future.

LPG a problem

lpgThe Liquid Petroleum Gas (LPG) situation was different, he said, since in this area there was not enough production and import storage facilities and it was a question of short supply therefore to the market – a problem especially in winter.

Both propane and butane, the main constituents of LPG are used in the refining process in the far more complicated process of straight petroleum fuel production and with the economies of scale that have to apply to South Africa, this resulted in a high market gate price and insufficient quantities, he said.

Unfortunately, LPG was becoming very much the energy source of preference with householders,especially poorer homes, hence the pressure on government to find some way of introducing LPG on an a far larger scale and at a lesser price. The impression was given that LPG “got the short straw” in terms of production output numbers.

Nuclear non-starter

Again when the subject came round to nuclear matters, no officials present from DOE were in a position to answer MPs questions on why eight nuclear power stations should be necessary, if nuclear was indeed a necessity at all, and whether the affordability had been looked at properly – the chairman again suggesting that the matter be put off until reappearance of the Minister of Energy in the New Year.

Gas on back-burner, as usual

Finally, on questions of gas and fracking, DG Tseliso Maqubela said that government “was takingmozambique pipeline a conservative approach” inasmuch that any pipeline from Northern Mozambique to South Africa was not under consideration but that plans were afoot to expand existing pipelines from that territory in the South.

On fracking, as most knew he said, a strategic environmental assessment had been commissioned, basic regulations published and also the question of waterless fracking was a possibility, now being investigated.
Previous articles on category subject
MPs attack DPE on energy communications – ParlyReportSA
Eskom goes to the brink with energy – ParlyReportSA
South Africa at energy crossroads: DOE speaks out – ParlyReport
Gas undoubtedly on energy back burner – ParlyReportSA
SA aware of over-dependence on Middle East, says DOE – ParlyReportSA

Posted in Electricity, Energy, Facebook and Twitter, Fuel,oil,renewables, LinkedIn, Mining, beneficiation, Public utilities, Special Recent Posts, Trade & Industry, Transport0 Comments

Nuclear partner details awaited

DoE gives update on SA nuclear plan….

russian nuclearThe Department of Energy (DoE) says it is the sole procurer in any nuclear programme and that “vendor parades” had been conducted with eights countries, the results to be announced before the end of 2015. To give cost details, they said, would “undermine the bidding process”.

The situation regarding South Africa’s current intended nuclear energy programme was explained during a parliamentary meeting of the Portfolio Committee on Energy, DoE confirming that a stage had been reached where nuclear vendors had been approached and DoE staff were being trained in Russia and China.

Eskom not involved

Neither DoE, nor the Minister of Energy, Tina Joemat-Pettersson, who was also present would givetina-joematt cost estimates nor speak to the subject of financing other than the fact the minister admitted that the idea of Eskom being involved in the building programme in the style of Medupi and Kusile was a non-starter.

At the same time Minister Joemat-Pettersson announced that a new Bill, the Energy Regulator Amendment Bill, was to be tabled that would give Eskom the right to appeal against tariffs set by the National Energy Regulator (NERSA). This followed upon the news that Eskom would be given powers to procure, which must lead to the assumption, said opposition MPs later, that Eskom will recoup costs of financing through electricity tariffs.

The Minister said the renewable IPP programme involving the private sector had included multinationals and had been “hailed as a success” and the deal that would be struck with nuclear vendors would be on best price in terms of the end price for the consumer. Any bidding would be conducted in the “style of the IPP process”, which included support of the process of black procurement and skills training.

Contribution to grid still “theoretical”

modern nuclear 2Deputy Director, Nuclear, DoE, Zizamele Mbambo, explained to opposition members that whilst government had in principle decided to include nuclear energy in the energy mix for the future, DoE itself was still only at the stage of establishing all costs involved to the point of actual connection of a theorised figure of nearly 10GW to the national grid. To disclose costs at this stage would undermine the bidding process, he said.

The main purpose of the costing exercise still remained the final cost the consumer, he said, in terms of the NDP Plan 2030, a phased decision-making approach over a period of assessment having been endorsed by the Cabinet in 2012. The whole exercise of deciding what the costs would be was therefore relevant to how much coal sourced power would contribute to the baseload of the energy mix by 2030.

Deal or no deal

Zizamele Mbambo confirmed that in 2013, DoE had been designated as the sole procurer of the nuclearsmall nuclear reactor build programme and “vendor parades” had been conducted with Russia, China, France, China, USA, South Korea, Japan and Canada. The strategic partner to conduct the next stage, the New Build Programme itself, would be announced before the end of 2015, Mbambo said, by which time costs would have been established and treasury consulted.

At this stage no deal had been struck, he confirmed.

As distinct from the actual vendors per se, and any deals, Mbambo said that international agreements had been struck with interested counties on the exchange of nuclear knowledge, training and procurement generally.

DoE trainees already in China

chinese sa flags“Fifty trainees already employed in South Africa’s nuclear industry had already gone to China for ‘phase one’ training with openings for a further 250 to follow”, he said, noting that the Russian Federation had offered five masters degrees in nuclear technology.

The New Build nuclear programme was at present based on providing eventually 10GW of power to the grid but DoE confirmed that the indirect effect on the economy from “low cost, reliable baseload electricity is logically positive but difficult to assess”.

Zizamele Mbambo showed a graph of the possible integration of energy from coal, nuclear, hydro (imported), gas and renewables over a period, stating that nuclear was clean, reliable and would ensure security of supply with “dispatchable power.”

Opposition Members complained that the process seemed likely to make the price of electricity unaffordable to the poor and have a major impact on the cost of doing business in South Africa.

Nuclear vs. coal

Mbambo was at pains to explain that in the long term, the cost of nuclear energy was considerably lessgrids than coal and this was the reason that, for future generations, South Africa had to embark on a course that not only lead to cleaner but cheaper energy.

As a final issue, DDG Mbambo touched upon the question of approval by the International Atomic Energy Agency (IAEA) and explained that any relationship with this UN body was on the basis of a peer review.

This covered nineteen issues from nuclear safety management to radioactive waste disposal and was not an audit, he explained, South Africa already having been an experienced nation in nuclear matters from medical isotopes to nuclear weapons. It was pointed out to members that that IAEA merely carried out reviews and made input.

Up to speed or not

IAEAIt was during the response to the budget vote speech on the subject of the IAEA, that Opposition Shadow Energy Minister, Gordon Mackay said that the agency had found South Africa deficient in more than 40% of its assessment criteria.   In response, DDG Mbambo did not refer to the current state of the country’s nuclear readiness at any point but confirmed there was a great need for training and this was now the emphasis.

He said the relationship with the IAEA was in three phases covering purchasing, construction and operations and although it was thirty years since South Africa had a nuclear building programme at Koeberg, the current contribution to nuclear technology was recognised.    The programme now was to create a younger generation of nuclear experts, the main issue being to build technology capacity and train trainers in the state nuclear sector.

Reactor numbers

Mbambo concluded his presentation by stating that DoE was in discussion with treasury specifically on this issue of funding training, Minister Joemat-Pettersson adding that some six to eight reactors were planned  but a this was very early, the weight that “price” would carry in determining a strategic partner was not decided.

Other articles in this category or as background
Nuclear goes ahead: maybe “strategic partner” – ParlyReportSA
National nuclear control centre now in place – ParlyReportSA
Energy plan assumptions on nuclear build out in New Year – ParlyReport

Posted in Electricity, Energy, Enviro,Water, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, LinkedIn, Mining, beneficiation, Public utilities, Trade & Industry0 Comments

MPs attack DPE on energy communications

DPE has a tough time on energy issues…

business-communicationsPoor communications with the public on the energy crisis and the limited ability of the ministries involved to communicate with state owned companies (SOCs) were issues raised during a report on SOCs falling under control of the department of public enterprises (DPE) during a meeting of the relevant portfolio committee.

The meeting was called to respond to the AG’s report on the performance targets of the DPE.

One opposition member complained that all bonuses paid to Eskom executives should be keyed to whether the lights stayed on or not. Despite there being six state utilities being reported on, it was questions on Eskom that occupied most of question time.

AG report about targets only

AGSA logoWaleed Omar, audit manager, auditor general’s office (AGSA), indicated to Parliament that no significant findings representing failings on issue targets were identified in their review of the DPE annual performance plan for the 2015/16 financial year.

It was explained by Sybrand Struwig, manager of AGSA, that any annual audit of actual performance period was prepared against pre-determined objectives, coupled with indicators and targets as contained in the annual performance report of a department.  Such confirmed compliance with laws and regulations.

The usefulness of this performance information against targets and the reliability of performance reporting enabled AGSA to compile an audit of a department or SOC to reflect an opinion or conclusion on performance against predetermined objectives and how risk had been managed.

DPE met standards set

Ms Matsietsi Mokholo, DPE acting DG, expanded on this by saying what in fact AGSA was saying to parliamentarians was that the exercise had been to assess DPE’s compliance according to AGSA’s matrix; how it aligned with the National Development Plan (NDP); and how issues were dealt with in terms of the medium strategic frameworks report (MTFs) made regularly to Parliament over the given period 2014 -2019.

She said the auditor general had confirmed that DPE was on track with regards to this alignment.  Indeed, she said, DPE had identified its key challenges and the risks which “could materialize” if measures within state owned entities under their control were not taken.

Eskom the only real SOE problem

In answer to MPs questions on Eskom, Ms Mokholo said that DPE has identified that the tense situation of load shedding needed to be carefully managed and monitored in order to avoid a blackout.   Currently the country has moved towards stage three of load shedding in order to avoid a blackout.

The issue was the only matter in the DPE portfolio of state owned companies (SOCs) that had major problems; otherwise DPE had a good record. However, she said, there were questions still being asked about how Eskom would prevent stage four which would apply in the case of a total blackout. This issue was now being addressed in its strategy plan and, consequently, the AG was satisfied that issues had been addressed not ignored. That was what the report was all about.

Medupi on or off

Other issues addressed were the unrest at the partly constructed Medupi power plant, which was difficult because the workers involved were not public servants, but the matter had been addressed and a resolution hoped for.   Another issue covered was a strategy to how further avert any downgrading of Eskom from a shareholder perspective, again most difficult because much was outside of DPE’s control.

DPE’s control over SOEs limited

Other matters being discussed were the whole issue of the reliance of SOCs on government guarantees and the reliance SOCs on road transportation.   It emerged during the discussion how little DPE could intervene in SOC management and parliamentarians said that thought should be given to this as the success of an SOC was imbedded in a minister’s performance agreement.

Ms Mokholo concluded that DPE currently was responsible for six SOCs. She said, “The challenges currently faced by Eskom should not be seen as a reflection on the performance of the entire portfolio. Eskom was the only SOC which was facing serious challenges”.

She repeated the fact that the others were doing well. AGSA confirmed that the corporate plan of any SOC was audited consistently throughout the portfolio of DPE’s SOCs and, as was reported in October 2014, the current portfolio at that time, with the exclusion of SA Express, did not have any material findings that worried AGSA.

Financials to come at end of year

Waleed Omar, audit manager, explained that AGSA did not wait until the end of a financial year to audit a department or entity’s financial plans. Financial audits were a completely separate issue. AGSA would provide input before the end of the financial year.

In this case, internal auditors of each SOC looked at the reliability of the information reported and whether the quarterly results were supported by the matching documents. AGSA would then rely on the work of internal audits. He said there have not been any instances at this stage within DPE at this stage showed any material differences between the findings of internal audits and those of AGSA.

Mr Omar explained that AGSA has considered the work of internal audits for the first two quarters of the financial year for 2014/15. AGSA followed a process according to international standards but this particular meeting showed that DPE’s operational plans were compliant.

DPE admits private sectors skills needed

When the committee started to discuss the gradual development of DPE into commercial sectors, Mr Ratha Ramatlhape, DPE director, added that many of the new strategies being triggered in the core entities of energy, manufacturing and transport would require bringing in technical experts from the outside to deal with the challenges being faced within the DPE portfolio.

Ms N Mazonne (DA) raised the fact that Eskom had paid bonuses to executives, none of which had achieved 100% of their key performance indicators (KPIs) which were therefore far too easy to reach.  DPE needed to tell Eskom, she demanded, that executive KPIs had to be aligned to whether the lights were kept on or not.

This indicated, the DA said, what the minister of public enterprises had been telling Parliament for some time to the effect that the level to which the DPE could intervene with SOCs was far too limited.   DPE could only play an advisory role it seemed, Mazonne said, and there needed to be legislation in place urgently to resolve this.

Legislation expected on minister’s powers

Ms Mokholo responded that DPE has already started working on giving ministers the power to intervene based on the Companies Act.  For example, she said, the DPE had a meeting with the Eskom board to deal with interventions which were not necessarily based on legal prescripts, an example being the co-generation contracts. She confirmed legislation was being looked at.

Opposition members were of one voice that although it was unfair to blame DPE for the electricity crisis, nevertheless, with the country at stage three of load shedding, there was no way DPE could deny that the economy and people’s lives were being badly affected. Current communication with Eskom was very poor, they said, and a national broadcast was needed to allay the air of panic that existed in some quarters of the economy.

The DPE responded that it had advised the Minister and the war room to release such a statement or the President to make a statement in his budget vote speech.

Other articles in this category or as background

Public enterprises reports on controversial year – ParlyReport

South Africa remains without rail plan – ParlyReport

SA Energy gets war room status – ParlyReportSA

Posted in Electricity, Energy, Facebook and Twitter, Finance, economic, LinkedIn, Public utilities, Special Recent Posts, Trade & Industry0 Comments

Fuel price controlled by seasonal US supply

US refinery shut downs affect fuel price…..

US refineryThe current spike in the price of petrol is due of a number of international issues  compounding together but the primary cause is that at this time of year in the United States, a number of major US refineries close down for maintenance in order to prepare for the US summer surge in fuel sales.

This was said by Dr Wolsey Barnard, acting DG of the department of energy (DoE), when he introduced a briefing to the portfolio committee on energy on its strategy for the coming year.

In actual fact, the meeting had been called to debate the promised “5-point energy plan” from the cabinet’s “war room” which did not eventualise, the minister of energy also being absent for the presentation as scheduled. It appeared that the DoE presentation had been hastily put together.

“Price swingers” make perfect storm

Dr Wolsey BarnardDr Barnard said that it could be expected that the price of fuel would be extremely volatile in the coming months due in main “geo-political events” affecting the price of oil, local pricing issues of fuel products and possibly even sea lane interruptions. Price would always be based on import parity and current events in Mexico, Venezuela and the Middle East would always be “price swingers”, he said.

On electricity matters, his speciality, he avoided any reference to past lack of investment in infrastructure, but said that he called for caution in the media, by government officials and the committee on the use of the two expressions “blackouts” and “load shedding”.

Same old story

“Over the next two years”, he said, “until sufficient infrastructure was in place, there would have to be planned maintenance in South Africa” and referred to the situation in the US as far as maintenance of refinery plant was concerned. He said that also “unexpected isolated problems” could also arise with ageing generation installations, during which planned “load shedding” would have to take place.

He said he could not imagine there being a “blackout”.

Opposition members complained that the whole electricity crisis could be solved if some companies would cease importing raw minerals, using South African electricity at discounted prices well below the general consuming manufacturing industry paid, and re-exporting smelted aluminium back to the same customer. They accused DoE of trying to “normalise what was a totally abnormal position for a country to be in.”

Billiton back in contention

One MP said, “Industry was in some cases just using cheap South African electricity to make a profit”. Suchaluminium smelter practices went against South Africa’s own beneficiation programme, he said, in the light of the raw material being imported and the finished product re-exported. “It would be cheaper to shut down company and pay the fines”, the DA opposition member added, naming BH Billiton as the offender in his view.

Dr Barnard said DoE could not discuss Eskom’s special pricing agreements which were outside DoE’s control  and “which were a thing of the past and a matter which we seem to be stuck with for the moment.”

High solar installation costs

Dr Barnard also said that DoE had established that the department had to be “cautious on the implementation of solar energy plan” as a substitute energy resource in poorer, rural areas and even some of the lower income municipal areas.  DoE, he said, “had to find a different funding model”, since the cost of installation and maintenance were beyond the purse of most low income groups.

In general, he promised more financial oversight on DoE state owned enterprises and better communications.   There were plenty of good news stories, he said, but South Africa was hypnotising itself into a position of “bad news” on so many issues, including energy matters. He refused to discuss any matters regarding PetroSA, saying this was not the correct forum nor was it on the agenda.

Still out there checking

On petroleum and products regulation, the DG of that department, Tseliso Maquebela, said that non-compliance in the sale of products still remained a major issue. “We have detected a few cases of fraudulent fuel mixes”, he said, “but we plan to double up on inspectors in the coming months, especially in the rural areas, putting pressure on those who exploit the consumer.” The objective, he said was reach a target of a 90% crackdown on such cases with enforcement notices.

Maquebela added that on BEE factors, 40% of licence applications with that had 50% BEE compliance was now the target.

Competition would be good

On local fuel pricing regulations, Maquebela said “he would dearly like to move towards a more open and competitive pricing policy introducing more competition and less regulations.”

fuel tanker engenOn complaints that the new fuel pipeline between Gauteng and Durban was still not in full production after much waiting, Maquebela said the pipeline was operating well but it was taking longer than expected to bring about the complicated issue of pumping through so many different types of fuel down through the same pipeline. “But we are experts at it and it will happen”, he said.

Fracking hits the paper work

On gas, particularly fracking, DoE said that the regulations “were going to take some time in view of all the stakeholder issues”.

On clean energy and “renewables” from IPP sources, DoE stated that the “REIPP” was still “on track” but an announcement was awaited from the minister who presumably was consulting with other cabinet portfolios regarding implementation of the fourth round of applications from independent producers.

Opposition totally unimpressed

In conclusion, DA member and shadow minister of energy, Gordon McKay, said that the DoEgordon mackay DA presentation was the most “underwhelming” he had ever listened to on energy.   Even the ANC chair, Fikile Majola, sided with the opposition and said that DoE  “can do better than this.”

He asked how Parliament could possibly exercise oversight with this paucity of information.   DoE representatives looked uncomfortable during most of the presentations and under questioning it was quite clear that communications between cabinet and the DoE were poor.

When asked by members who the new director general of the department of energy would be and why was the minister taking so long to make any announcement on this, Dr Wolsey Barnard, as acting DG, evaded the question by answering that “all would be answered in good time”.

Other articles in this category or as background
Energy gets war room status – ParlyReportSA
Medupi is key to short term energy crisis – ParlyReportSA
Integrated energy plan (IEP) around the corner – ParlyReportSAenergy legislation is lined up for two years – ParlyReportSA

Posted in Electricity, Energy, Enviro,Water, Facebook and Twitter, Fuel,oil,renewables, LinkedIn, Mining, beneficiation, Public utilities, Special Recent Posts, Trade & Industry, Transport0 Comments

Eskom goes to the brink with energy

Editorial…..

What war room?….

black bulbFor those who have been associated with a war, they will know that a war room is a pretty busy place. However, one gets the impression that the South African war room, mandated to sort out Eskom and energy planning, has no red telephone and little understanding of working overtime in a time of crisis.

Spokesperson, Mac Maharaj or his  replacement, has certainly issued no statements headed with such a title, the President being busy visiting Egypt, Algeria and Angola with the deputy president calling in on the Kingdom of Lesotho.  President Mugabe has come and gone, more presidential visits are planned…… and the World Bank report on South Africa has been published.

Teetering on the edge

Meanwhile, the Eskom issue is still boiling over, the question of the fourth round of IPP tenders and more to come has been announced by the minister of energy but little evidence exists that a war room exists, let alone a high powered advisory council to advise the war room.  Parliament was, of course, on Easter recess which added to the uncanny political silence on urgent matters, particularly the energy issue, although the story at Medupi with a return to work and the appointment of a new CEO at Eskom seems  calming.

At last public servants are re-appearing from extended Easter holidays but the so-called war room gives the impression of having bunkered down. Hopefully the report in the coming weeks on Eskom, as South Africa tackles some of the other serious matters facing the country, will not only show with what went wrong but what the war room intends to do about it.

Perhaps a picture of the war room sitting and debating might actually help us believe there is one.

Posted in cabinet, earlier editorials, Electricity, Energy, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, LinkedIn0 Comments

Zuma goes for traditional support with expropriation

Editorial….

Session ahead may bring clarity on expropriation…….

NAIt is a difficult time for business and industry to establish exactly where they are in terms of the legislative environment in South Africa, land expropriation and state or BEE participation being mainly the issues.  However, the cabinet must be aware of the need expressed in many circles for more certainty in terms of the investment climate.

The Bills held back by the Presidency for re-consideration or signature are re-emerging slowly back into the public sphere.   Aside from the highly controversial Traditional Courts Bill adding power to the arm of President Zuma’s supporters in rural  leadership roles but offending women’s rights groups, now re-tabled in Parliament in a different form, as a section 76 Bill, is the Expropriation Bill.

Being a 76 section Bill means that the proposed changes and the formation of a state valuator’s office as thezuma traditional final arbiter on land restitution will have to be debated in all nine provincial legislatures and a mandate provided to the National Council of Provinces to gain concurrence with any vote on the Bill taken in the National Assembly. 

It is interesting to note that some time ago, President Zuma let it be known that he would also like to see this Bill considered by the House of Traditional Leaders. This is probably in the light of the debate now emerging that traditional chiefs were not consulted properly, if at all, in terms of the Restitution of Land Rights amendments.

Serving notice

Crucially, the Expropriation Bill still seeks to allow any ‘expropriating authority’ to take property by serving a notice of expropriation on the owner stipulating the value the state will pay, presumably according to the state valuation if there has been an appeal.

Commentators have noted that the new Bill differs in that the state may then serve a further notice of expropriation, which could be less, more or not necessarily revised at all, and the owner will be deemed to have accepted that transfer of land to the state unless the owner commences litigation within 60 days.

The short amount of time to respond and appoint and brief counsel and the fact that litigation, a highly costly process (costs being to the owner not the state), will no doubt be an issue debated extensively in Parliament. At this moment the main opposition party has been caucusing on the Bill. The fact that the Bill will now have to be debated in all nine provinces will leave a fluid situation for some time yet.

Struggling to produce

The Protection of Investment Bill remains an unknown quantity. Speaking to the DTI legal advisor, all he could say was “We are struggling with it”. 

Similarly, no tabling notice has been published with regard to the Private Security Industry Bill.

No energy  outcome

At the time of writing the “Five Point Energy Plan”, promised by the cabinet “war room”, has also not been presented to Parliament, the minister of energy advising all that it was necessary to have first a trip to the DRC and discuss the Grand Inga Hydro project.

Instead of her unadvised non-appearance in Parliament, a presentation by the department of energy took place, monitored in this report. What did emerge however was that future regarding the intended energy mix is also very fluid, there clearly being a division of interest in what is necessary to bring about in the short term better service delivery to the poor and in the longer term the needs of investors.

Traditional support

Time and time again, since his state address to the nation, President Zuma, where land matters are concerned, has made reference to the Council of Traditional Leaders, the majority party having no doubt realised that this base of power can either be pacified or radicalised – a very sensitive area and where the least service delivery by government occurs.

In his speech opening the National House of Traditional Leaders, he encouraged traditional leaders to take advantage of the 2013 Restitution of Land Rights Act as amended and rushed through at the end of the last Parliament and for them to put in claims.

The amendment Bill passed reopened the window for lodging restitution claims, but retains the restriction that dispossession must have taken place after 1913. The hints by the President in subsequent days in further briefings that the date of 1913 “is negotiable” have led to further claims being notified some of them apparently going back many hundreds of years. 

Once again, this will only be finalised when parliamentary debate finally takes place as the issue is bound to be raised but the whole matters adds to current uncertainty.

Hole in the pocket

Meanwhile the budget for what can be paid out in the form of restitution has been decided by minister of finance Nene and was presented in the last budget to Parliament in the current session.

President Zuma’s reference in Parliament to land held by foreigners in the state of nation address produced an unfortunate atmosphere which was somewhat mollified by off-the-record remarks by ministers to the media but no legislative clarity for Parliament to consider has emerged.

Indeed, a difficult time for business and industry, not forgetting that the Eskom issue is about to be raised again in forthcoming portfolio committee meetings in the coming week, hopefully bringing some clarity to the issue of reliable electricity supply.

Editorial only

Posted in cabinet, Cabinet,Presidential, Electricity, Facebook and Twitter, Justice, constitutional, Land,Agriculture, LinkedIn, Trade & Industry0 Comments

Grand Inga hydro power possible

DRC clean energy destined for SA….

drc flagOpposition members of the parliamentary energy committee expressed a certain level of cynicism regarding the Grand Inga project treaty signed recently between South Africa and the Democratic Republic of Congo (DRC), the subject of which is a multi-phased hydro power station to be built on the Congo River.

They noted that the DRC is ranked second only to Somalia as the worst country on a worldwide index of failed states    However, despite this reservation, MPs in general noted that on the whole the project had “exciting possibilities”, albeit long term ones.

These points were made during a presentation by the department of energy (DoE) on the Inga treaty recently signed by President Zuma.   Inga 1 and Inga 2 dams are already in operation, supplying low output power. The issue of a hydro power link with the DRC has been “on the table” for some fifteen years.

Congo River cusec power

The new third Inga dam, which will be by far the largest and hence the title “grand” for the whole project. The project will be approximately 250 kms from the capital Kinshasa and 50kms from Africa’s West coast, the Congo River having the second largest and strongest flow after the Amazon, mainly as a result of the dams being sited after one of the largest waterfalls in the world. However, the Congo has by no means the longest and largest drainage area.

DoE said in response to the statement that the DRC was a failed state that whilst it recognised that the DRC had been unstable for years, especially in the North Eastern Region, most of the trouble was more than 200km from the Inga site and even when the civil war at its height, there had never been any interruption of power services.

The Grand Inga project, said DOE in quoting the developers, would be able to supply some 40,000MW in clean energy when all seven phases were completed for development in Central, East and Southern Africa.

SA power line to local grid

It is foreseen that new transmission line to South Africa necessary will be associated with the first phase of the project and which would probably traverse Zambia, Zimbabwe and Botswana.   It is estimated that the first phase will cost some R140bn at current prices.

The meeting in question was attended by the deputy minister of energy, Thembisile Majola, and DoE represented by Ompi Aphane, DDG: policy, planning and clean energy, DoE, who indicated that the treaty provided for the establishment of an Inga Development Authority (ADEPI). There would also be a joint ministerial committee drawn from the two signatory countries and a joint and permanent technical committee to facilitate the project.

Earlier failures

The deputy minister said that the new treaty had at last put behind the failed Westcor project, involving Billiton and essentially a SADC body involving SA, Angola, Botswana, the Congo and Namibia with the DRC as lead.

In 2010, the DRC announced it was pulling out of the arrangement and would develop the Inga dam complex on its own, which move collapsed the Westcor consortium. However, despite much wasted time and effort, Aphane said a good deal of the feasibility work had been completed.

Minister Majola said that what had been learnt from Westcor was that any future proposition had to be on a win/win basis for each participant in order to avoid such a collapse.    It was now recognised that the DRC had to meet its own requirements first as a basis for any project to succeed as a consortium, the minister added.

Getting in first

An MOU with the DRC was subsequently signed on this basis in 2011 and the current treaty provides not only a potential to generate the stated 40 000 MW after its seven phases but to provide relatively cheap, clean energy at any point, of which RSA has secured rights to import 12 000MW.

Ompi Aphane explained that in return DRC have agreed to grant SA the right of first refusal (ROFR) for both equity and off-take in respect of any and all future phases of the project or any related hydro-electric development of the Congo River in and around the Inga complex.

Once RSA is “locked in” to phase one and proceeds with implementation, it is committed to take 2500 MW as an off take.

SA gets lowest terms

US$ 10m is payable by SA in terms of the treaty into an escrow account as commitment fee in terms of the ROFR.    Aphane said that SA will be charged the lowest possible tariff and no other off-taker will be able to receive better terms than SA.

He continued, “DRC are to ensure that for each phase of the project, the developer company will reserve at least 15 per cent of the available equity to SA and South African entities, public or private, and SA shall be the first to be offered such share capital.”

Aphane said the “designated delivery point” will be at Kolwezi, about 150 km from the DRC/Zambia border and SA will be responsible for the 150 km line needed.   The DRC will either provide a concession to enable SA to construct and operate that portion of the line to the Zambian border, or commit to develop it themselves.   One of the DRC’s most obvious priorities was the supply of power to Kinshasa and Zambia’s “copperbelt”.

Parliament to approve

DoE concluded their presentation by telling MPs that the treaty would be introduced to Parliament for ratification in due course and negotiations on the outstanding protocols on tariff setting also needed to be finalised.    On a critical path plan were also negotiations with transit countries and a final feasibility study on the direction that the transmission line would take.

Ompi Aphane, in responding to a number of MPs questions, said that on environmental issues, which were in article 14 of the treaty, carbon credit matters has been taken into consideration and more would be heard on this.

SA not involved in dam

On the critical issue of finance, Ompi Aphane said that MPs should realize that other than the possibility of transmission lines, SA was not involved in dam construction and the country would be paying for power on connection, plus in all probability building a transmission line to connect to the SA grid.   Consequently there were no major debt issues arising at present.

Ntsiki Mashimbye, SA’s ambassador to the DRC, was present at the meeting and commented that the Grand Inga project “was not a project in isolation, not even just about electricity, but about industrializing Africa as a whole.”

The minister concluded by commenting that the integration of the African continent was the target as well as providing clean energy sustainability for South Africa and all the benefits that would ensue, including resale to other nations.
Other articles in this category or as background
http://parlyreportsa.co.za/uncategorized/grand-inga-hydroelectric-power-getting-under-way-at-last/
http://parlyreportsa.co.za/energy/integrated-energy-plan-iep-around-corner/
http://parlyreportsa.co.za/energy/doe-talks-biofuels-and-biomass/

Posted in Electricity, Energy, Enviro,Water, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, Land,Agriculture, LinkedIn, Trade & Industry0 Comments

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.

 

 

Posted in cabinet, Electricity, Energy, Finance, economic, Fuel,oil,renewables, LinkedIn, Public utilities, Security,police,defence, Trade & Industry0 Comments

Eskom crosses its fingers

Medupi:  Eskom on final run ….

eskomCollin Matjila, interim CEO of Eskom, told a joint parliamentary portfolio committee on energy and public enterprises that Eskom had learned a number of lessons in the building of coal-based power stations, probably the most important being the need for a suitably qualified and capacitated contractor oversight team to handle the complexity and extent of any project such as the construction of Medupi.

Although power from the new plant was to be introduced to the grid this Christmas Eve from Medupi, and incrementally more onwards, full power would only be happening at stable levels by winter 2015.

With both the boiler contractor and control and instrumentation contractor problems causing delays and a strike affecting between 40% -70% of the workforce, the 6-month delay had been recognised by both treasury and cabinet in financial re-calculations.

Minister notes….

Also addressing the committee, public enterprises minister, Lynne Brown, stressed that in her view “the corner had been turned at Medupi”.  She said that cabinet had approved a package to “support a strong and sustainable Eskom to ensure energy security”.   The inter-ministerial committee, which was comprised of finance, public enterprises and cooperative governance and traditional affairs, had now reviewed all options before them both on electricity and energy generally.

Eskom then stated that the second unit, Kusile would be added to the grid in a start-up process in the first half of 2015 and Ingula, the third and smaller hydro unit, in the second half of 2015.

No rest with summer

Matjila cautioned MPs that additional capacity would be needed during summer this year, despite any reduced seasonal demand.   This was because of the need to accommodate “planned” outages, which were set to take up 10% of full capacity being supplied.

By referring to full capacity, this was a theoretical maximum availability, Matjila said, subject to the reality of unplanned outages.  Eskom warned of a possible inability to meet demand throughout the remainder of the financial year, as distinct from seasonal timing, if it should be financially restrained in its use of it expensive-to-run standby open-cycle gas-turbines.

More price increases

Recovery of unbudgeted costs in this area for the year under review were part of the problem facing Eskom, Matjila said, and the recent announcement by the national electricity regulator, Nersa, of a rise of just short of 13% in electricity prices in April 2015 was no doubt motivated by this factor amongst others.

However, he said, Eskom may also have to deal with a higher maintenance in December, including half station shutdowns for three stations. He qualified this in a later Engineering News report which stated that 32 of Eskom’s 87 coal-fired generating units required “major surgery”, whilst four were in a “critical condition”.   November was also critical, he said, if all did not go as planned.

Despite continued questioning by parliamentarians on the state of progress at the second “New Build” power station, Kusile, no specific answers were provided by either Eskom or the minister other than the fact that Kusile had experienced “protected” and “unprotected” strikes in contractor workforces during the year.

Strikes

Matjila stressed that the workforce was back on site at both locations. “Additional resources had been mobilised to mitigate delays, he said, and additional shifts have been introduced 24 hours a day, 7 days a week, to accelerate progress on site.  Eskom was liaising with contractors to deal with any issues which had the potential of causing further delays, he said.

In his overall concluding remarks, Matjila said a five-point recovery plan had been introduced to improve the performance of the Eskom coal-fired fleet, with the utility having reaffirmed its objective of “returning to an 80-10-10 operating model, which implied 80% plant availability, 10% planned outages and 10% unplanned events across a period of a year.”

Outside inputs

On the situation with regard to the independent power producers (IPP) programme, Matjila said he was aware that the department of energy (DoE) had processed  over one thousand applications during the three IPP 3-stage bidding process and this had stretched DoE resources considerably.

He said it had been a complicated process to secure sustainable competitive prices in respect of the particular technologies involved. What had to be also factored in was the burden of hidden costs of storage and back-up which had to be borne by Eskom, not the IPPs.

Also the proximity and availability of energy supplies on the supply in providing the “appropriate infrastructure” was being dealt with and overcome.

It was important, Matjila said in conclusion, for Eskom to ensure that potential and online suppliers met grid code requirements and he was aware that some IPPs were struggling with this process.
Other articles in this category or as background
http://parlyreportsa.co.za/energy/medupi-key-short-term-energy-crisis/
http://parlyreportsa.co.za/cabinetpresidential/eskom-says-medupi-and-kusile-will-have-great-local-benefits/
http://parlyreportsa.co.za/energy/eskom-warns-on-costs-of-new-air-quality-rules/
http://parlyreportsa.co.za/energy/dpe-reports-on-eskom-and-it-utilities-to-parliament/

Posted in Electricity, Energy, Enviro,Water, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, Land,Agriculture, LinkedIn, Public utilities, Trade & Industry0 Comments

DTI gives warning on investment climate

High administered prices a threat…

42X90693In an apparent warning to the economic cluster, a deputy DG at department of trade and industry (DTI), Garth Strachan, warned that South Africa was reaching “a tipping point” where administered prices, either levied or taxed by the various state departments, were so high that it was making the cost of doing business in South Africa totally impractical.

 

There was neither an attractive climate for investors because of high state administered prices, he said, nor did it make any easier DTI’s developmental programme in support of the NDP and attracting investors.

In a frank presentation to the portfolio committee on trade and industry, he qualified DTI’s position during his candid commentary with the caveat that as far as the regulation of administered prices were concerned, such as electricity, port and rail freight charges, road transport costs and water tariffs, that these were not the core competencies of DTI although they were adversely affecting DTI’s current IPAP 6.

Undermining investment climate

He noted later in his talk that in the successive implementation of various IPAPs, including the current industrial plan, DTI had found that administered prices constituted a total impediment to economic development.   In fact, now in 2014, they were providing a “serious economic shock”, as he put it, to the viability and competitiveness of the manufacturing sector.

Garth Strachan commented that the addition of carbon tax could push South Africa to the ‘tipping point’, unless the proposals were with “carefully calibrated policy interventions.”

As far as electricity was concerned, it was DTI’s view that the actual problem lay in the funding structures of local government, especially where no allowance was made for infrastructure upgrading and maintenance. Water shutdowns were also an increasing problem, he said.

He told parliamentarians that in one instance a global investor had experienced 140 electricity and water shutdowns. He did not indicate over what period.

International comparisons

He said that on electricity tariffs, whereas in 2009 when compared to China, the USA, Canada/Quebec, Abu Dhabi, Kazakhstan, India and Russia to give a fair geographic spread, South Africa had been with a group that had the lowest in prices, it now had the “gold medal” for being the highest of all and by 2020 the situation would be exacerbated unless something dramatic took place.

Strachan said that in the World Bank Report of 2013, SA port charges were amongst the highest in the world; container charges being 710% more than the global norm and automotive cargoes costing a premium of 874% more than the global norm. This detrimental fact was compounded by port and rail freight inefficiencies to local destinations.

He told parliamentarians that in DTI’s view it was extraordinary that exports were virtually subsiding raw material exports such as iron and coal.  In the case of coal, this was 50% below the global norm and iron ore approximately 10%, according to 2012 figures, these being the latest DTI could get.

This led, Strachan said, to the unfortunate situation where the country exported iron ore at a net loss to the country but imported girders, cranes and containers, for example, at possibly the highest in the world.  It was impractical to have subsidies passed on to exporters of primary products penalising importers of necessary needs, he said.

On carbon tax, he dismissed any “one size fits all” programme as contributing to the overall problem by making things worse and on climate change generally, he said that DTI was already working towards the protocols agreed by South Africa “through a range of measures to support energy efficient systems and investment in energy.”    These were part of DTI’s manufacturing enhancement programme, he noted.

He said there should be a shift in pricing “in favour of less carbon intensive sectors which are more labour intensive and value adding”. He quoted particularly steel, polymers and aluminium, which he said should be considerably below import parity levels.

Nullifying NDP objectives

Garth Strachan concluded that with manufacturers already going out of business, the issue of administered prices was probably the most important issue facing South Africa at the moment in the search to create more jobs.

Parliamentarians noted with concern what DDG Strachan had illustrated in his review. Many called for a joint portfolio meeting on the subject with public enterprises, transport and energy, despite the subject of administered prices also not being a core function of the trade and industry committee. For example, it was noted, they had no parliamentary right to influence such bodies as Transnet and Eskom, nor deal with treasury on tax and tariffs.

 

Posted in Cabinet,Presidential, Electricity, Facebook and Twitter, Finance, economic, Labour, LinkedIn, Mining, beneficiation, Public utilities, Trade & Industry0 Comments

Karoo Fracking

Fracking, shale gas gets nearer

Mineral resources gives update on fracking, shale gas

In what appeared to be justification for cabinet’s support of the furtherance of shale gas exploration, director general of the department of mineral resources (DMR), Thibedi Ramontja, told Parliament recently that the discovery of gas deposits in the Karoo “was an exciting opportunity to create jobs and that this was going to make a difference to people’s lives in terms of the NDP”.

He was briefing the select committee on land and mineral resources on the department’s budget vote, his audience representing a different cluster and a more inclusive one than when DMR briefed the National Assembly’s portfolio committee the week before.

Whilst a gazette had been published in February 2014 imposing certain restrictions on the granting of new applications for shale gas “reconnaissance”, DMR said that current approvals did not yet authorise hydraulic fracturing itself.     If this was allowed, “certain amendments” would be made to the appropriate Act.

EIA to come

An environmental impact assessment would be completed in conjunction with the department of water affairs “within the second quarter of 2014/5” to determine “responsible practices” for hydraulic fracturing and to “provide a platform of engagement with stakeholders”.   DMR said that this process would be “streamlined”.

It was noted by DMR in their presentation to parliamentarians that both shale gas exploration and production, together with coal bed methane, will be authorised under environmental impact regulations.

Warning on BEE

The briefing on the DMR strategic plan for five years and this year’s budget vote for the department was preceded by a statement by the deputy minister of mineral resources. Again the warning was conveyed to the mining and petroleum industry that it was generally in default of the mining charter.

With the tenth anniversary of the charter now present, DG Ramontja said, findings by DMR indicated that whilst some targets had been partially achieved in terms of BEE and the charter, others were very much lagging. “Action will be taken”, she said.

Other articles in this category or as background
http://parlyreportsa.co.za//energy/shale-gas-exploration-gets-underway/
http://parlyreportsa.co.za//energy/move-by-minister-to-qualify-shale-gas-exploration
http://parlyreportsa.co.za//energy/fracking-regulations-enhance-safety/

Posted in BEE, Electricity, Energy, Enviro,Water, Facebook and Twitter, Fuel,oil,renewables, LinkedIn, Public utilities, Trade & Industry0 Comments

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/

Posted in cabinet, Electricity, Energy, Facebook and Twitter, LinkedIn, Special Recent Posts0 Comments

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/

Posted in cabinet, Electricity, Energy, Facebook and Twitter, LinkedIn, Mining, beneficiation, Public utilities, Trade & Industry0 Comments

Gas Utilisation Master Plan gets things going

Gas a “game changer” in energy mix…

gas pipelineWith the publication for comment of the Gas Utilisation Master Plan (Gump) by the department of energy (DoE), South Africa came a step further towards the finalisation of its Integrated Energy Plan (IEP), meaning also that the document has received approval by the cabinet.

The document, based on a Green Paper released by DOE some years ago, provides a framework for investment in gas-supporting infrastructure and outlines the role that gas could conceivably play in the electricity, transport, domestic, commercial and industrial sectors.

LNG and gas, offshore -onshore

The Gump outlines, amongst other issues,  the import of liquified natural gas (LNG) and piped gas from Namibia and Mozambique and plans for production of natural and shale gas in South Africa.  A plan to have 67 GW of installed gas generation by 2050 is considered by the paper.
The plan is particularly relevant at the moment with Eskom having to rely, as grid backup during the current winter, on expensive diesel-fueled open-cycle gas turbines. The Gump proposals on electricity generation, talk of conversion to closed-cycle turbine power using gas.

The paper also expands on importing electricity from gas sourced from Mozambique and Namibia with lines to the Eskom system grid including imports from the largest present and mainly undeveloped gas fields in Tanzania neighbouring the northern Mozambique fields.

Learning curve

New minister of energy, Tina Joemat-Pettersson, will have deepen her knowledge base very quickly on such matters as the IEP, energy resources and liquid fuels plans, all urgent and with immediacy.   Such issues as the process of energy integration overall and the issue of the stalled independent power producers (IPP) programme in terms of the held-over Independent System Market Operators (ISMO) Bill, are also waiting for position on the energy starting track.

DoE has also pointed to its intended coal gas programme with an IPP programme for the generation of some 6,500MW of power. The department further states that the Gump takes a 30-year view of the industry. It not only deals, they say, with the regulatory environment and economic predictions but does touch on social issues and environmental matters as well.

The master plan also talks of a gas line from Mozambique to Gauteng via Richards Bay and how gas will be distributed and stored, together with the issue of LNG terminal storage.

As a separate issue to Gump but part of the same overall plan, DOE has also released public comment the issue of investment by private merchants in fuel and gas storage, particularly referring to Saldanha Bay.

Storage, a vexed issue

Fuel storage at the present moment is traditionally undertaken by the major oil companies, in some cases integrated with state facilities and who can more easily absorb some of the more riskier aspects of this sector with their vertical interests both upstream and downstream.

DoE sees a greater contribution from investment by private merchants in storage and is currently attempting to re-structure the system to attract and build the industry to counter present storage problems and for early consideration as part of South Africa’s strategic fuels plan and as part of a licensing and regulation background.

In the short term, DoE says in its Gump programme, such a system is needed in terms of LNG holding reserves, imported as LNG or from state owned PetroSA’s gas-to-liquids plant at Mossel Bay, until more natural gas comes down the envisaged pipelines from the current exploration areas.

At the moment Sasol pipes 188-million gigajoules a year of gas into South Africa from Mozambique.  The possibility of LNG re-gasification plants offshore on the West coast in the near future is also debated in the Gump programme released.

Other articles in this category or as background
http://parlyreportsa.co.za//energy/parliament-re-starts-oilsea-gas-debate/
http://parlyreportsa.co.za//energy/shale-gas-exploration-gets-underway/
http://parlyreportsa.co.za//energy/oil-and-gas-industry-criticizes-minerals-petroleum-bill/
http://parlyreportsa.co.za//energy/future-clearer-as-gas-amendment-bill/

Posted in Electricity, Energy, Facebook and Twitter, Fuel,oil,renewables, LinkedIn, Public utilities, Special Recent Posts, Trade & Industry0 Comments

Carbon offsets paper still open

emissionsCarbon tax offset plans down on paper….

A paper outlining proposals for a carbon offset programme for local businesses was released for comment a month ago, part of national treasury’s response to the challenge of reducing carbon emissions in South Africa.   Planned and instituted carbon emission reduction programmes will reduce carbon tax, the paper says.

Written comment on the paper is invited until 30 June 2014, which can be e-mailed to www.treasury.gov.za.    A little confusing at first is why what has been published should be dated 2010 but this is because the idea was first mooted in the 2010 Budget Review.

Black gold, maybe

The news of a carbon tax originally was not good for Eskom, their officials said in a submission to Parliament some time ago, Eskom being almost totally reliant on coal and to a small extent on nuclear input to the grid. What is known is that SA coal has the reputation of being particularly “dirty” insofar as carbon output is concerned making SA, relatively speaking, one of the largest emitters of greenhouse gases.

The tax itself is a form of penalty despite the knowledge of the country’s reliance on coal, the government seemingly wanting to stay in the lead as far as the question of a carbon economy is concerned.

Carbon offsets are described in the paper now published as “a measurable avoidance, reduction, or sequestration of carbon dioxide (CO2) or other GHG emissions.”

Carbon reduction

Accordingly, the “softer” aspects of such a tax are designed for those who have other avenues for reduction of carbon to be used for offsetting against the tax or who have mitigation plans in process or proven as planned.    They amount to 5% to 10% for electricity, pulp and paper and 5% fixed for other key industries with varying thresholds according to investment in reduction.

According to national treasury, the paper “outlines proposals for a carbon offset scheme that will enable businesses to lower their carbon tax liability and make investments that will reduce greenhouse gas (GHG) emissions”, the plan as proposed for comment being designed to be introduced from 2016.

In the draft Bill, certain eligibility criteria for carbon offset projects are laid down.   The proposal is that successful projects will be awarded a “tradable emissions reduction credit”.    Projects could be the subject of energy saving and efficiency; transport re-organisation; agricultural emphasis on biomass; and waste applications, for example.

Commitments

In 2009, South Africa, at the UN conference on climate change, committed government to reducing carbon emissions from projected “business-as-usual scenarios” by 34 % in 2020 and 42% in 2025.  South Africa released a carbon tax policy paper last year.

The National Development Plan also calls on the nation to transform the local economy into an “environmentally sustainable low-carbon economy”.

Other articles in this category or as background
http://parlyreportsa.co.za//cabinetpresidential/carbon-tax-comes-under-attack-from-eskom-sasol-eiug/
http://parlyreportsa.co.za//cabinetpresidential/treasury-sticks-to-its-guns-on-carbon-tax/

Posted in Electricity, Energy, Enviro,Water, Facebook and Twitter, Fuel,oil,renewables, LinkedIn, Mining, beneficiation, Public utilities, Special Recent Posts, Trade & Industry0 Comments

This website is Archival

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.

Upcoming Articles

  1. MPRDA : Shale gas developers not satisfied
  2. Environmental Bill changes EIAs
  3. Border Mangement Bill grinds through Parliament

Earlier Editorials

Earlier Stories

  • Anti Corruption Unit overwhelmed

    Focus on top down elements of patronage  ….editorial….As Parliament went into short recess, the Anti-Corruption Unit, the combined team made up of SARS, Hawks, the National Prosecuting Authority and Justice Department, divulged […]

  • PIC comes under pressure to disclose

    Unlisted investments of PIC queried…. When asked for information on how the Public Investment Corporation (PIC) had invested its funds, Dr  Daniel Matjila, Chief Executive Officer, told parliamentarians that the most […]

  • International Arbitration Bill to replace BITs

    Arbitration Bill gets SA in line with UNCTRAL ….. The tabling of the International Arbitration Bill in Parliament will see ‘normalisation’ on a number of issues regarding arbitration between foreign companies […]

  • Parliament rattled by Sizani departure

    Closed ranks on Sizani resignation….. As South Africa struggles with the backlash of having had three finance ministers rotated in four days and news echoes around the parliamentary precinct that […]

  • Protected Disclosures Bill: employer to be involved

    New Protected Disclosures Bill ups protection…. sent to clients 21 January……The Portfolio Committee on Justice and Constitutional Affairs will shortly be debating the recently tabled Protected Disclosures Amendment Bill which proposes a duty […]