Archive | Mining, beneficiation

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

Minister Davies continues with IPAP 6

 IPAP equals “smart” industry…

The minister of trade and industry, Dr Rob Davies, before the elections, published his further Industrial Policy Action Plan (IPAP) with a theme of “smart re-industrialisation” taking South Africa to 2017.  He now returns to the same cabinet post to implement his proposals.

His department, DTI, talks in the document of integration of the region with both SADC countries and the continent as a whole, giving emphasis in SA on manufacturing rather than relying on commodity exports.

In presenting the plan, Minister Davies said the objective was to grow the economy; enhance manufacturing; and tackle poverty alleviation.    He said the new IPAP was aimed at the revitalisation of industry, with focus on competitiveness and the “labour-absorbing capacity of the manufacturing sector – especially in the traditional and non-traditional tradable and value-adding sectors of the economy.”

Tough times ahead

He warned that “ahead lay a tough, incremental process, during which there will be advances and setbacks” but he believed in the last five years the department of trade and industry (DTI) had placed the manufacturing sector in a much stronger position than before to take advantage of “emerging positive factors on the local economic scene”.
The minister said the latest IPAP has a guiding mission, which is to take South Africa’s potential for industrial growth to “greater intensity”; firstly with the infrastructure spend of R840bn over the next three years and also with localisation focusing on government procurement to support local manufacturing.    He called on all business and industry to support this process.

He named beneficiation as an important “driver” of the latest IPAP, moving away from dependency on export of primary commodities and developing its “enormous resource endowment by developing strategic partnerships in the burgeoning regional oil and gas economy.”     He said this would be a game changer.

Moving into Africa

As far as regional integration was concerned, Minister Davies said the new IPAP saw a move from primary and semi-processed products exported outside the continent, to the building of regional markets for a growing domestic manufacturing base and the manufacture of competitive products for global export.

To this end, he said, there had to be “accelerated development of a free trade area linking SADC in Central Africa with COMESA in the East.”

Minister Davies laid great stress on the need for the development of strong economic incentives for competitiveness, involving concessional industrial financing and mechanisms that promoted upgrading.    He said he saw the new Special Economic Zone (SEZ) incentives, building on the previous IDZs system, as a priority.

Customs catch up

Collective action by state institutions against the “illicit economy” – especially illegal imports – must be the subject of greater focus and action by government and DTI will continue to emphasize this, he said.

The minister continued, “We came into office in 2009 having lost a million jobs, 200 000 of those in manufacturing . . . and I think if we had not done what we have done, we would have been sitting here and talking seriously about the loss of industries across the board in this country.”

He added, “We have far too few black industrialists . . . and far too many people who are looking to go into business who are generalists; who are looking to any contracts coming from government and then subcontracting that to somebody else.”

The desire now, he said, supported by amendments to the Broad-Based Black Economic Empowerment Act and the associated codes, was to develop “deeper entrepreneurship” in the productive sectors of the economy.

Getting going

“This IPAP must belong to all of us”, minister Davies said, “from departments of state to the state utilities; from industry stakeholders and associations to organised labour and the academia”.    He concluded there was much to do in the next three years and “there was no room for complacency”.

He now returns in the new government to do just this.

Other articles in this category or as background
http://parlyreportsa.co.za//cabinetpresidential/ipap-focuses-on-jobs-to-beat-current-economic-problems/
http://parlyreportsa.co.za//cabinetpresidential/get-sadc-free-trade-agreement-right-first-davies-warns/

Posted in Facebook and Twitter, Finance, economic, Labour, LinkedIn, Mining, beneficiation, Public utilities, Special Recent Posts, Trade & Industry, Transport0 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

Mineral and Petroleum Resources Bill halted perhaps

Mineral and Petroleum Act extends State rights…

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

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

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

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

Beneficiation of minerals included

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

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

Stockpiles and residues affected

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

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

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

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

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

Coal and  gas targeted maybe

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

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

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

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

Chamber opinion differs

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

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

Other articles in this category or as background

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

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

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

Eskom looks at cutbacks, maybe rebates

Eskom reviews whole process of rebates…

eskomEskom has placed its energy efficiency rebates for businesses and homes on hold pending a review of financial constraints after being with left with , the spokesperson says, a shortfall of R7.9bn when granted the third Multi-Year Price Determination (MYPD) period until 2018. All this compared with the R13.09bn it sought.

The review to curb on costs would affect new projects that were to be implemented in the next financial year and a review is being conducted on present rebates.

Cannot maintain “aggressive” style

As part of a programme of cutbacks, new general manager Andrew Etzinger has confirmed that the lower-than-applied for funding meant that Eskom could not sustain such an “aggressive programme” at the same levels whilst, he said the group was in discussions with government on alternative funding models.

Etzinger stated that the benefits of current integrated demand management (IDM) programmes were obvious and such interventions had assisted with the country’s power situation. With savings of about 3 600 MW since inception, the IDM programmes have established capacity in megawatt equivalents, to an average power station. Without those savings, South Africa would have been in daily load shedding since 2008, Etzinger said.

Energy targets outlined

In the MYPD2 period, Eskom spent R5.4-billion on the current IDM interventions and achieved savings of 1 200 MW over the three-year period. For the current financial year, Eskom is aiming to achieve savings of 379 MW through energy efficiency interventions and is targeting 240 MW in the next financial year. Hence the cut backs, he said.

Eskom says, “The residential mass roll-out was the largest contributor to demand savings in the 2013 financial year. The programme is based on a free bulk roll-out of a “basket of technologies”, focusing on replacing inefficient lighting and implementing energy saving technologies and load control devices in the residential sector.”

Since inception in October 2011, about 245 projects have been registered for the standard offer, realising demand savings of 118 MW and energy savings of 478.6 GWh. More than 4 800 projects have been registered for the standard product programme, which started in January 2012, realising demand savings of 122.7 MW and energy savings of 555 GWh.

Presumably Eskom with its current statement means that any new programmes will not be started and it will review current arrangements.

Etzinger stressed, however, that while the IDM interventions were temporarily on hold, Eskom would continue to benefit from the savings achieved through the projects that are implemented on an ongoing basis with agreement with the parties involved.

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Oil/sea gas debate re-started by Parliament

Parliament calls for public input on gas debate….

Roughnecks wrestle pipe on a True Company oil drilling rig outside WatfordOn the prospects of transforming the gas industry through partnerships, the parliamentary portfolio committee on energy has invited comments.  Recent presentations to the portfolio committee have led to a renewed belief that gas, whether found and transformed, offshore or onshore, needs more focus.

The background to the invitation for comment, which will have no doubt come from chair Sisi Njikelana, says, “Current development of regional gas-fields will lead to natural gas becoming a more important fuel source in South Africa. With the availability of natural gas in neighbouring countries, such as Mozambique, Namibia and Tanzania, and the additional discovery of offshore gas reserves in South Africa, the gas industry in South Africa is poised to undergo expansion.”

The notice continues, “ Natural and coal gas play separate roles in the energy system, with natural gas being used solely as a feedstock for the production of synthetic fuels, and coal gas as an industrial and domestic fuel.”

“The gas industry in South Africa is regulated by the Gas Act 48 of 2001, which is currently being revised. As part of the build up to discussing amendments to this Act, Parliament wishes to engage the public on the topic of “Prospects of transforming the gas industry through partnerships”.

“Sub topics (as part of the main theme) can include (but not limited to) finance, pricing, infrastructure development, procurement, technology research and development, key success factors, skills development and transfer, community involvement and expansion of the gas industry in South Africa.”

Public hearings are scheduled for 30 January 2014. Interested individuals, organisations and institutions wishing to comment were requested in the notice to forward written submissions to the Portfolio Committee have been asked to declare an interest in making an oral presentation to the portfolio committee itself if they so wish.

Posted in Energy, Enviro,Water, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, LinkedIn, Mining, beneficiation0 Comments

Nuclear and gas workshop meeting

Gas emerges as winner……

nuclear logoIn what appeared to be a listening platform for anti-nuclear lobbyists, an energy stakeholders meeting, organised by the portfolio committee on energy on nuclear energy with the subject of nuclear energy as a component of South Africa’s future energy mix, was billed as a debate as such.  However it turned out to be a platform for speakers and not a debate at all.

This was primarily because there were so many submissions and questions had to be cut down to one minute, most of the earlier time having been taken by the department of energy, NECSA and proponents of the nuclear build programme using the day for presentations, already seen in Parliament and by parliamentarians.

Nuclear platform not provided

Opposition members expressed their anger at their inability to listen to any serious opposition to the use or deployment of nuclear facilities but a number of interesting points did emerge that may give value to whether or not it was worth having had a meeting at all.

Much of what emerged was the seriousness of the costs of any nuclear programme; safety matters and job creation ability, particularly in the relationship between nuclear versus solar and wind and other clean energy projects.

Govt. seems fixed on nuclear

Whilst the chair, Sisa Njikelana, said the meeting was not about trying to change government plans on its nuclear ambitions which clearly included nuclear energy in its planning, or debate the extent to which whether or not nuclear will or will not be part of the energy mix, he nullified arguments put forward by stating that a revised integrated resources plan was to be available in the coming weeks.

Most presenters expressed surprise that government policy was so fixed on the matter.

What did emerge that detractors were quoting the high costs of Finnish nuclear re-actors but the subject of low-cost Chinese or Korean re-actors did not emerge, as stated by one commentator.

Plans for waste in hand

Furthermore, DEO negated all complainants on the issue of nuclear waste by saying that plans were in process to handle long term nuclear waste with a scientific solution by government and the main problem was a misinformed public at this stage.

DEO also responded that hydro power could be a lot more dangerous and threatening to a massive number of communities downstream than any nuclear re-actor and that nobody had died in the Fukushima accident, which was the result of an earthquake not nuclear mishandling.

From results tabled it appeared that wind power was more expensive on a consumer cost basis.

Shell says gas cost effective

A major input came from Shell SA who pointed out that whilst they were not against building nuclear plants but for cost of building one nuclear plant, three national gas pipelines could be built, enough to handle all South Africa’s gas field requirements and include also the cost of gas to fuel technology.

The result of the stakeholders meeting in fact resulted in a determination of parliamentarians to insist upon DEO that gas should be focussed upon to a far greater extent when determining South Africa’s future energy mix and needs.

Refer to articles in this category

http://parlyreportsa.co.za//energy/integrated-energy-plan-iep-around-corner/ http://parlyreportsa.co.za//cabinetpresidential/nuclear-goes-ahead-maybe-strategic-partner/ http://parlyreportsa.co.za//energy/national-nuclear-control-centre-now-in-place/

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

B-BBEE Codes of Good Practice far more onerous

One year for implementation…

ladderThe final Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice have been published. Companies will be granted a one-year transitional period to align with and prepare for the implementation of the revised Codes.

Trade and Industry Minister Dr Rob Davies has stated that the amended codes are a “new beginning” aligned to government’s transformation ambitions and follow a period of much debate and which were earlier released in October last year.

The revised codes deliver a reduction of elements, from seven to five, within the generic scorecard, comprising ownership, skills development, enterprise and supplier development, management control and socioeconomic development, and changes to the points required for compliance.

Black ownership goes to 40%

The codes set the minimum requirement for ownership at 40% of net value, with skills development accounting for 40% of the total weighting points, and enterprise and supplier development required a sub-minimum requirement of 40% within each enterprise and supplier development element, namely preferential procurement, supplier development and enterprise development.

All companies, barring micro enterprises, will be required to comply with the five elements of the B-BBEE scorecard including  all organs of state and public entities; and  “natural or juristic persons who conduct a business, trade or profession in South Africa, which undertakes any economic activity with organs of state or public entities.”

There is an increased threshold in points required to achieve a better B-BBEE status and exempted micro enterprises have now a threshold of R10m and general companies, known as QSEs, have a range of R10m to R50m.

On the new enterprise and supplier development enterprises totalling 40 points, 23 points are required as black ownership majority. Procurement is down to 12 points, of which only five points relate to all suppliers with black economic empowerment credentials, three points to qualifying small enterprise suppliers and four points for exempt microenterprises with a 15% target each.

Commentators have pointed out that many companies acquire total, or at least most of their imported goods on international markets and this will place them a complete disadvantage. The amended codes outline in much more clarity that large companies are required to comply with all three priority scorecard elements – namely ownership, skills development and enterprise and supplier development.

Refer to articles in this category
http://parlyreportsa.co.za//bee/bee-comes-under-scrutiny/
http://parlyreportsa.co.za//bee/turnover-fines-employment-equity-breaches/
http://parlyreportsa.co.za//bee/mprda-bill-causes-contention-parliament/
http://parlyreportsa.co.za//bee/new-b-bbee-bill-avoids-circumvention-of-the-law/

Posted in BEE, Facebook and Twitter, Finance, economic, LinkedIn, Mining, beneficiation, Trade & Industry0 Comments

Integrated energy plan (IEP) around the corner

IEP a few months off

Benedict MartinsAn integrated energy plan (IEP) for South Africa covering the full energy spectrum will definitely be published before the year end, according to the director general, department of energy (DOE), a fact also confirmed by minister Ben Martins when addressing an energy conference in Johannesburg recently.

Ms Nellie Magubane, when addressing the relevant portfolio committee under chair, Sisi Njikelana who had called for an update on the energy plan, was accompanied by minister Ben Martins at the time and present for his first meeting in Parliament. The minister acknowledged and highlighted the importance of unfolding the plan as part of the country’s investment credentials as soon as possible.

Continuing energy story

Whilst re-confirming that the strategy was still at public participation stage, DG Magubane said there was “no end-state tomorrow” with the plan but rather a reflection of a “phased approach as the country’s appetite for energy as it  develops”.

The process began, she said, with the 1998 White Paper, the development of independent powers system operators (ISMO) and the accompanying ISMO Bill also awaiting the production of the IEP, the National Energy Act in 2008 and regulations on resources that have followed. The IEP this year would start the energy initiative rolling to be followed by gas development plans.

Not just supply factors

In the years since apartheid, said Magubane, when energy had different directives which were focused primarily on just maintaining supply, what had changed significantly were economic, environmental and social imperatives which now were being drawn in and superimposed. “The fixation with supply capacity is not now the only criteria to be considered in the energy paradigm”, she said.

The liquid fuels shortages of 2005 and subsequent electricity disruptions in the years up to 2008, Magubane said, had shown the need for coordinated planning to avoid disparate plans and contradictory initiatives in the sectors of electricity, liquid fuels and gas.

A twenty-year road map for the liquid fuels industry was in progress by the department, she said, and a gas planning infrastructure plan was to be developed once the extent of resources were better understood.

International view

Through time, and above all because of energy security, Magubane said, scenario planning has changed in South Africa to take in security, environmental and climate response factors. In conjunction to long-term climate change policy and agreements, lessons had been learnt from the IEA, Austria, Belgium, Canada, the Czech Republic, Italy, Japan, the Netherlands, Norway and Spain, she said.

When asked what had been learnt from a study tour of the USA, DG Magubane said that the primary aspect learnt there was the success of establishing localised energy resources, focusing on what mattered most to the USA and reducing dependence on imports. We learnt, for example, that we must not try a change the impossible or employ unrealistic factors but move according to what was a fact locally. “For example, South Africa has a lot of coal but little water and these factors have to be built in, not ignored.”

She said that the overseas studies where different economies and different state policies were involved, due note that the position had changed radically in South Africa had to be acknowledged, as had been the case in many of those countries.

Control of resources

“For example, government has come from a position where in SA we were determining the appropriate level of involvement with the liquid fuel levels industry during transition to a rapidly globalising picture, to now having to maintain a strategic role in shaping all key sectors of the economy.”

In response to queries from parliamentarians, she acknowledged that the IEP to be produced would not incorporate any powers to the minister, who “would rather be able to exercise any powers affecting energy matters through normal regulatory enforcement contained in the many pieces of legislation that applied to the energy sector, such as the Energy and Gas Acts.”

Pricing restructuring

On pricing issues as far as the IEP was concerned, Ms. Magubane responded to questions that national treasury figures had so far been the base of determinations but in the light that submissions and input from stakeholders which were to emerge from the process now in progress, the issue of price factors could in all probability be reshaped.

In answer to complaints that that there was still no indication from her, or DOE, where the country was going in hydrocarbons, electricity or renewables and what pricing factors were involved for urgent investment needs, the chair asked that DOE be given time to develop the final report or “everything would go in different directions”.

DG Magubane assured parliamentarians that the final plan would enable everybody to weigh up infrastructure plans with government policy, even bearing in mind that the position is constantly changing given such issues as hydro input from neighbours, gas exploration in various forms and global tensions.

previous articles on this subject
http://parlyreportsa.co.za//uncategorized/mineral-and-petroleum-development-bill-grabs-resources/
http://parlyreportsa.co.za//cabinetpresidential/president-obama-and-power-africa/
http://parlyreportsa.co.za//cabinetpresidential/nuclear-goes-ahead-maybe-strategic-partner/
http://parlyreportsa.co.za//energy/petrosa-has-high-hopes-with-the-chinese/

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

Labour Relations Act changes passed

LRA Bill through Parliament

Mildred OliphantThe Labour Relations Amendment (LRA) Bill has now been passed by the National Assembly, thus confirming the ambition of Minister of Labour, Mildred Oliphant, to have this and the Basic Conditions of Employment Amendment Bill (BCEA) as signed-off legislation before the last session of Parliament of the present government. The Bill received the concurrence from the NCOP, in this case the matter being considered a formality although the select committee involved called for submissions.

Two down, two to go and more to come

This leaves the two equity labour laws, the Employment Services Bill and the Employment Equity Amendment Bill, as part of four Bills approved by the Nedlac process and designed by the department of labour (DOL) to overhaul labour legislation in South Africa, to be finally approved in the last session.

The LRA changes in the meanwhile will enable legislation to address, DOL says, “a number of unfair labour practices” with minister Oliphant telling the House that the Bill now passed “will bring the provisions relating to child labour in line with international standards and will strengthen the mechanisms for enforcement of basic conditions of employment, including wages.”

Ballots and part timers

The new Act will alter the anchor Labour Relations Act (1995) to include a number of major amendments including the facilitation of the granting of organisational rights to trade unions that are “sufficiently representative” and, in addition, will require a trade union or any employers’ organisation to conduct a ballot prior to calling a strike or lock-out.

The new provisions will strengthen the status of picketing rules and agreements and in many instances the powers of the labour court are clarified. They will also determine and outline minimum service conditions deal with circumstances involving workers placed by temporary employment services, regulates on the employment of fixed-term contracts and deals with part-time employees earning below an earnings threshold.

UIF also involved

DOL has also tabled amendments to Unemployment Insurance Act to include foreign workers and public servants as well as to amend benefits by extending the period of payment of benefits to the contributor from eight months to twelve months and also extending the period in which a contributor can lodge a claim from the current six months to twelve months. Nomination of beneficiaries for death benefits will be possible and the fund itself will be allowed to finance its own employment promotion projects.

Under the occupational health aspect of DOL’s mandate, a Bill has been promised on the issue of noise pollution levels in the factory environment.

previous articles on this subject
http://parlyreportsa.co.za//cabinetpresidential/parliament-delays-process-on-labour-relations-bill/
http://parlyreportsa.co.za//education/employment-services-bill-will-promote-jobs-and-free-employment-services/
http://parlyreportsa.co.za//bee/dates-for-new-labour-law-amendments-outlined/

Posted in Facebook and Twitter, Labour, LinkedIn, Mining, beneficiation, Special Recent Posts, Trade & Industry0 Comments

Uncertainty in oil and gas exploration industry

Oil and gas industry criticizes MPRDA Bill…

Government’s definition of what an  oil and gas industry stakeholder is and the continuous use of that mysterious word “player” have both come in for some serious investigation after the recent hearings into the Minerals and Petroleum Resources Development Amendment Bill, which aims to grab a stake in oil and gas exploration industry and combine the BEE charters of both the mining and liquid fuels industry with regard to employment and beneficiation.

The minister now announced that the state will be able, it will be pr0posed, to acquire at first 20% in successful gas exploration ventures  without capital outlay (called “free carry”) and subsequently 50%.

In the case of this Bill tabled in Parliament, after public comment, participation with industry stakeholders, such consultation with stakeholders has been claimed by the minister involved both in print in the written background to the Bill as part of the tabled document and by the departmental of mineral resources in  briefings to the portfolio committee concerned.

Generally, liquid fuels companies are concerned at the suggestion that if both BEE charters are combined it is like “combining water and oil”, to quote one member, since the mining industry is more labour intensive with massive capital outlay and the liquid fuels industry is twice as capital intensive but with less manual labour involved but greatly higher risk issues in capital outlay.

According to a number of oil and gas industry exploration companies vitally affected by the proposals contained in the Bill, any discussions with the gas exploration industry  has neither happened nor were they even notified.

State participation

Considering the fact that the Bill proposes acquisition by legislation of shareholding in those companies and regulations, as yet unpublished, will vitally affect not only their balance sheet but whether they enter into ventures in the first place, makes this is extraordinary.

One imagines that not only are eyebrows raised in the international world of trading and investment but some unfortunate comparisons made to other failed states in Africa.

Certainly there is a fear of exploitation in Africa and not without undue reason. Also it was hoped that one set of reasonable rules, known well ahead, would bring the kind of certainty that was needed to key worldwide industries and this would bring in turn South Africa to the top of list in investment destinations in an otherwise very unstable and avaricious stable of governments to our North.

Lack of certainty

From what has been said during the hearings on the Minerals and Petroleum Resources Development Amendment Bill, the minister would seem to be way off mark with this new Bill, some of those making submissions saying it was the first time they got their voices heard and others stating that some of the conditions are outrageous.

Whilst the terminology “hearings” is used for such sessions after a Bill is tabled, we just hope that the minister is listening.

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

Green Paper on nautical limits to make SA oceanic nation

SA to extend its nautical limits…

South Africa’s claim to resources from the sea bed currently extends some 400 nautical miles but with claims by government now submitted to international authorities, this could well run to 700 nautical miles, adding nearly two million square kilometers to South Africa’s “continental shelf”, making the country a nautical and oceanic resource nation of some consequence.

This fact emerged in Parliament recently on the tabling of a Green Paper on the subject but the warning was added by Adv. “Johnny” de Lange that at the same time South Africa must find the resources, both in skills and finance, to administer a “national data base” of resources, weather, oceanic data such as currents and tides, fishing factors and maritime general information that was available to and contributed to by all sectors of government and industry to manage such an additional load .

More environmental changes

With only four submissions to Parliament emanating from the public, department of water and environmental affairs (DWEA) specialist in monitoring, Ashley Naidoo, briefed the parliamentary committee on water and environmental affairs on the new Green Paper on a future South African policy framework falling under the National Environmental Management Act for the management of ocean sectors.

Primarily motivated by the enormous oil spill in the Gulf of Mexico and the fact that issues like liabilities and the basis for governance of the oceans are still outstanding, DWEA said it has been motivated of late to engage urgently in policy regarding the management of the ocean sector generically, a policy which will be developed shortly and submitted to cabinet as a White Paper.

Other countries

The process, said Naidoo, involves studying the policies of about twelve other countries, such as Norway, Korea, Brazil and Russia which already had frameworks in place whilst including in their deliberations the USA and the United Kingdom who are developing theirs.

Involved also as an ongoing process is a review of sectoral stakeholders, such as mining, fishing and gas exploration; a review of international agreements across all departments that South Africa is subject to; and, finally, shipping policies.

Most important would be the development of a national inter-departmental data base for all to consult with and a regulatory base on which to consider activity applications.  South differed from most nations, Naidoo said, in that 95% of its oceans in the continental area of South Africa were pristine and benefited also from strong currents. South Africa was lucky in this regard, he said.

Fishing, oil, shipping involved

It was noted, Naidoo told parliamentarians, that  whilst each sector, such as the fishing, the oil industry in its many aspects and merchant shipping all had their own conventions and agreements, it was time for SA to develop its own overall policy framework to which all could refer to and fall under.

“Whilst there was a good knowledge base on fishing and on the currents and climate factors, we have very little knowledge on what minerals and where they are located and also pharmaceutical resources”, said Naidoo.

Present situation

The current position, he said, was that South Africa had a line representing a 400 nautical mile ownership on waters adjacent to its coastline; a line which was mapped and fixed. At present, South Africa was negotiating a claim through the relevant international bodies for an 1,800,000 sq kilometers additional ownership over the next five years in the Atlantic and Indian Oceans, which would classify South Africa as an “ocean” country of some significance.

Naidoo said that there were some 15,000 ships passing through our waters a year with about 9,000 ships calling at SA ports.   “We have few competitors in the Southern Oceans wanting to gain space, although there are existing zones “owned’ by countries and South Africa will have to learn to live with some of its new oceanic neighbours, such as Norway.

Looking ahead

Naidoo said that with 70% of the globe being covered by water, climatic effects are the major issue affecting the oceanic eco-system at present and consequently there is a need to build on general environmental governance principles in order to handle governance on the high seas.   Provisions had to be made for sea trade; fish and fishing; minerals, pharmaceuticals, sewage and waste disposal.

Also, he said, regulation had to cover environmental issues, climate response, weather matters and the recycling of carbon and nitrogen and heat issues.  Support had to be provided for niche projects on bio-diversity such as mangrove development and delta management and cultural aspects had to be considered. All this would be found in the White Paper.

Naidoo outlined the guiding principles and strategic objectives, Adv. De Lange chairperson the portfolio committee concerned, emphasising that the priority in his view was a national data base across all departments which had to be costed in properly so that Treasury was involved, otherwise regulation of the high seas managed as a national policy would just be a “pipe dream”.

“Government was designing too many policies and not enough working systems and the time has come to deliver”, he said.

Mossel Bay objection

Of the submissions presented orally, notable was the submission from REVAG, an environmental group from Mossel Bay, vehemently objecting to the PetroSA LNG tanker depot and unloading facilities moored offshore within a few hundred metres of the coast at Pinnacle Point, next to Mossel Bay.

REVAG said that they could not wait for such a Bill as envisaged by the Green Paper and called for a moratorium on the PetroSA LNG activities at Mossel Bay and an immediate halting of such operations.

REVAG said that PetroSA’s first application in the form of a land-based EIA to undertake this project was withdrawn in the light of objections initially but it is understood that such an application has now been re-submitted. REVAG said that the projects would be an environmental disaster of major proportions for the area from many aspects.

Adv. De Lange said how surprised he was that only four submissions from the public on the Green Paper had been received by Parliament.
Refer previous articles in this category
http://parlyreportsa.co.za//uncategorized/integrated-energy-plan-iep-is-not-crystal-ball-gazing-says-doe/
http://parlyreportsa.co.za//uncategorized/better-year-for-petrosa-with-offshore-gas-potential/

Posted in Energy, Enviro,Water, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, Land,Agriculture, LinkedIn, Mining, beneficiation, Public utilities, Trade & Industry, Transport0 Comments

MPRDA Bill brings changes in BEE and exploration rights

BEE consolidated

coal miningMoses Mabuza, when briefing Parliament on the Mineral and Petroleum Resources Development Amendment (MPRDA) Bill, told parliamentarians that amongst the many issues proposed by the new Bill an important issue was the setting up of penalties for non-BEE compliance across both the mining and liquid fuel sectors.

However, he said that he was confident that all stakeholders in the both industries would look back on a their association with black empowerment with understanding and pleasure, despite the opposition to the Bill on various differing and wide-ranging issues at present.

Bill will create right environment

Mabuza, who is deputy director general, mineral and policy promotion,department of mineral resources (DMR), said industry will be surprised see how much this legislation in the years to come will have contributed  to the country’s development, both in the mining, liquid fuels industry and business in general.    He told told the portfolio committee on mining resources, when briefing MPs on the Bill page by page, that it was important to understand government’s viewpoint as far as the oil and gas industry is concerned.

“We want to see that no partnerships created by the Bill are mutually exclusive or self interested”, he said. “We wish to create an environment where the state participates together with mining and gas industry with nation’s developmental objectives in mind.”

Blank cheque

“We give you the assurance”, Mabuza said, “that any regulations which are to follow will provide the kind of certainty sought in both the mining and petroleum industry”.

Opposition members still called to see the basis of the regulations first before further debate, since they claimed that at present, and as things stood, the wording of the Bill amounted to giving the state “a blank cheque” by not knowing what regulations were to be imposed.

The minister objected to this, saying that trust was called for and DMR would sit down with other departments and stakeholders and agree upon regulations within the framework  of the Act. “This is the only way things can work”, Mabuza said. “That is why the Act is a framework, with us all working from this plan.”

Working with stakeholders

In tracing the history of the MPRDA, deputy Mabuza and his co-presenter for policy development in DMR, Adrian Arendse, continually referred to stakeholder meetings throughout the process over the years, including stakeholder workshops where the various parties consulted were broken down into sectors such as environmental, petroleum industry, mining industry, finance and bankers and legal interests.

“We received commendable inputs from these workshops and in an overall sense, particularly where mining and petroleum was concerned and we have received both consensus and support for the proposals now before Parliament.”

Not conducive

Opposition parliamentarians denied this saying from what they had heard that there had not been overall consensus on many issues and the complete lack of uncertainty.   Lack of clarity on state motives was a total disincentive to investors, commented one MP.    Said another opposition MP, “Mining industry representatives have said in the media that this Bill will not grow the industry, so tell us why you think it will.”

Deputy director Mabuza, in response, again gave assurances from government that the proposed Bill represents no fundamental shift in government policy. He said clarity and certainty would follow in the course of time as regulations became evident.

Different horses on courses

Further on BEE matters, questions were asked on how government intended putting into force a parallel BEE charter that incorporated the liquid fuels charter, which called for less than 10% ownership as a target, and the mining charter which was at 27%, plus other anomalies.   One MP said that in gas exploration there were enormous developmental costs and the charter made no sense on these issues.

Mabuza said he was aware of the “vast differences” between the two documents and this would have to be discussed in rounds of talks to come and considered carefully. Some of those talks had already started, not referring with whom and on what particular subject.

However, he said there were also big differences in the industries themselves, in both matters of beneficiation and style of operations. DMR wanted to land up in a situation where nobody was disadvantaged, either the poor or the investor.

Exploration rights change

On exploration rights, Mabuza said where the Bill really differed from previous regimes was that the “first come first served” principle in exploration and rights licensing was to be abolished totally. “This system leads to mediocrity”, he said. “We have learnt much over the 15 years with such licensing regulations, during which time South Africa has lost it share in global resource exploration, going from 3% to a current 1%. We do not wish to go down this road any longer”, he said on licensing.

“The first person served often meets the absolute minimum requirements and in so many cases, South Africa has had years of brownfields investments and never the greenfields operations that number 5 or 20 in the queue might have offered for a license on the same project. Mediocrity resulted and South Africa has suffered consequently”, he said.

Mining and energy split

In answer to questions on the liaison between DMR and the department of energy (DOE), Mabuza described the sphere of control under the MPRD Act as being simply a question of “downstream” energy resources being for DOE and “upstream” matters on exploration mining licences and industry regulations being for DMR.  Obviously, he said, environmental issues were handled by those competent to do so.

Mabuza said that in coming up with the proposed Bill, DMR had consulted with, or observed, the practices of Canada, Angola, Ivory Coast, Russia and Gabon but opposition members complained that the process of consultation or observation meant absolutely nothing.   They want to know who DWEA had listened to in coming up with the current proposals.  Those before Parliament said they had made their own decisions and stakeholders had been involved along the road in discussions, particularly in the mining industry.

Planned for the future

Mabuza said that South Africa “remained the wealthiest mining and exploration production country in the world and with Africa reaching never-before, unprecedented levels of geo-political stability, the future was bright.   “We have designed legislation that takes both the state and our developmental economy into that future”, he said.

On the subject of penalties in the area of BEE non-compliance, opposition members complained that such contributed further to red tape, political uncertainty and investor complications.    Mabuza denied this and told parliamentarians that any penalties written into the Bill were a maximum sum only “and in any case”, he said, the 10% maximum still represented ‘just petty cash’ for most mining companies”.

“We had to bring in some form of penalty where shareholders were alerted to non-compliance otherwise management just carried on regardless of regulations or compliance issues”, Mabuza said.

Refer previous articles in this category
http://parlyreportsa.co.za//uncategorized/mineral-and-petroleum-development-bill-grabs-resources/
http://parlyreportsa.co.za//energy/draft-mprda-bill-for-comment/

Posted in BEE, Energy, Enviro,Water, Facebook and Twitter, Fuel,oil,renewables, LinkedIn, Mining, beneficiation, Trade & Industry0 Comments

Employment Services Bill waits in the wings

Job data required…..

For the first time in SA, every employer might have to advise the minister of all positions that become vacant in their structures and give details to the state of new jobs being created. The proposed Employment Services Bill is one of four new labour bills in process through Parliament.

It consequently follows that the principle with the new proposals being considered that the minister of labour in the proposals now before Parliament that government departments may pass on to the private sector job applicants that they have on record to fill jobs.  Also, companies that fail to notify the minister or department of labour when positions are filled may face a minimum fine of R10,000.

EEA Bill  bound to succeed in some form

These are some one of the more radical aspects of the proposed Employment Services Amendment Bill (EEA) Bill, which at this stage has proposed various changes within government setting up its own public service employment agencies as an inter-departmental internal process. Quite naturally, it is expected that this process will proceed, as DOL is not likely to object, nor any other state entities.

Parliament awaits to debate the Bill.

One of the primary aims of the EEA Bill is the proposal to keep a record of job seekers and record of vacancies in both private and public sectors and thus contributing to the national aim of reducing South Africa’s unemployment figures. The Bill acknowledges the seriousness of South Africa’s unemployment figures.

Free placings

The Bill also focuses on the section of government policy, touched upon in the three other amendments to labour legislation that are in parliamentary process,following the desired avenue of the eradication of the labour broking industry and, in the process, to allow the state to become more involved in the recruitment business on a free of charge basis.

This is also indicated in the department of labour (DOL) statements in Parliament recently when DOL officials stated that government’s view is that it has to influence the path of creating more jobs in order to meet targets set by the New Growth Plan if the department is to reach the targets set and subsequently evaluated by the monitoring and performance process within the presidency structure.

Foreign workers isolated

The EEA Bill flies in the face of constitutional queries, say commentators in the labour market, and the proposals seek to elevate opportunities for citizens over those of foreign workers by requiring employers to make use of the public employment service to be managed by DOL before employing foreign nationals.

The proposed Bill states that reasons will have to be submitted as to why citizens with suitable profiles referred to them by the department could not be employed with further questions as to their nationality.

Labour broking targeted

The EEA Bill also seeks to regulate, and to provide a licensing system, for what are referred to as “private employment agencies” and commentators say that definitions are poor when it comes to what is a labour broker,  a recruitment agent, and even employers working through contacts. They complain that it will be the state registration process that will soon decide who is and who is not acceptable.

The Bill introduces criminalisation for failure to meet many of the proposals outlined in the Bill.

Finally, the EEA Bill introduces a proposed Employment Services Board with functions to oversee the public employment services and oversee various regulatory matters connection with the process of hiring labour. A proposal is also made to regulate the existing agency, Productivity South Africa, insofar as its mandate is concerned to provide skills and put them in line with DOL strategies.

Refer previous articles in this category
http://parlyreportsa.co.za//cabinetpresidential/parliament-delays-process-on-labour-relations-bill/
http://parlyreportsa.co.za//labour/new-noise-level-labour-bill-on-way/
http://parlyreportsa.co.za//education/employment-services-bill-will-promote-jobs-and-free-employment-services/

Posted in Finance, economic, Labour, Land,Agriculture, Mining, beneficiation, Public utilities, Special Recent Posts, Trade & Industry0 Comments

Treasury sticks to its guns on carbon tax

2015, only if implementable….

nattreasury logoNational Treasury is still planning to introduce a carbon tax on January 1, 2015, but chief director for economic and tax analysis, Cecil Morden, told business that government will only move ahead when it is satisfied implementation possibilities.

In Parliament, when asked by members of the finance standing committee if this was “yet another revenue tool”, he said the primary objective of implementing carbon taxes was to change future behaviour before it was too late.

Doing our own thing

“The clock is ticking”, said Morden.   He asked parliamentarians not to diminish South Africa’s role as a potential leader on the issue with carbon tax. “The USA is paralysed and if we do nothing because China and the USA does nothing, we would have lost the opportunity to start at a lower level, do things slowly and sensibly, with marginal steps towards inevitable change.”

Confronted at a National Business Initiative meeting in Johannesburg calling for more information on the tax and answering further queries as to such a tax was necessary at this stage of South Africa’s development, Morden said that more clarity would be provided in the draft legislation.

At the moment a policy document on the tax has been published by Treasury for public comment.

Phasing in

The tax is proposed at a rate of R120/t of carbon dioxide equivalent, increasing at 10% a year during the first phase, from 2015 to 2019 and the legislation, of which a draft has yet to be published as a result of the current public comment period. This would give the detail, Morden said. It would describe the tax-free thresholds for each sector and possible offset structures.

Morden acknowledged that there might still be gaps, but encouraged stakeholders to highlight these in their written responses and to make proposals on how these could be filled.

We’re not tax collectors

Again he denied, as he did to opposition members in Parliament, that the carbon tax was nothing more than a revenue-generation exercise and disagreed flatly with the argument that such tax proposals were not a priority in the context of the country’s other socio-economic, skills and infrastructure problems.

Morden countered his Johannesburg questioners in the same manner as he did in Parliament on to why the tax was necessary; saying, “We do not have to have a carbon tax to raise revenue as suggested and the gradual introduction of a carbon tax should been seen as a contribution to the international agreements on climate response that South Africa has already agreed to and the consequent necessity to reduce South Africa’s greenhouse-gas emissions.

Tax to be fed back somehow

The National Treasury would not, however, entertain “hard” earmarking or ring fencing of the revenue accumulated but would consider other recycling mechanisms, including “soft” earmarks in future Budget undertakings; reducing other taxes and levies; and the introduction of new incentive schemes.

More background articles on subject
http://parlyreportsa.co.za//energy/gigaba-to-line-up-eskom-for-carbon-tax/
http://parlyreportsa.co.za//cabinetpresidential/carbon-tax-not-popularly-received-by-parliament/
http://parlyreportsa.co.za//energy/parliament-briefed-on-new-climate-response-policy/

Posted in Cabinet,Presidential, Energy, Enviro,Water, Finance, economic, Health, Mining, beneficiation, Public utilities, Special Recent Posts, Trade & Industry0 Comments

Mineral and Petroleum Development Bill grabs resources

The state muscles in…

offshore gasThe Mineral and Petroleum Resources Development Amendment Bill, approved by the cabinet in May, has now been tabled in Parliament and sections 80 and 84 of the anchor Act are to be amended, it is proposed, to provide for State participation in petroleum development carried out by the private sector.

The draft bill was published for comment in December 2012 and the proposed legislation, other than to extensively address the issue of re-describing many definitions and include petroleum and petroleum products in many of the issues covered by the Act such as beneficiation, also regulates extensively the exploitation of minerals and the legal movement and transfer of resource rights.

The new Bill also aligns the MPRDA with the newly assented Geoscience Amendment Act and “addresses shortcomings identified, whilst simultaneously streamlining the administrative processes in relation to the regulation of the mining environment management function”.

“New entity” to be formed

Two issues are of note in that under section 71 of the new Bill it is proposed that the minister forms a “new entity” which will “promote onshore and offshore exploration for and production of petroleum” and which will also “receive, store, maintain, interpret, add value to, evaluate, disseminate or deal in all geological or geophysical information relating to petroleum submitted” of the anchor Act, the MPRDA.

The new entity (and it is to be assumed those involved in “exploitation” of minerals and petroleum must through such an entity) must, it is proposed, “ bring to the notice of the Minister any information in relation to the exploration and production of petroleum which is likely to be of use or benefit to the state”. This clause will no doubt cause debate.

The background to the Bill clearly states that in terms of the new proposals, Sections 80 and 84 of the anchor Act are amended to provide for the state participation in petroleum development as described and that the state “has a right to a free carried interest in all new exploration and production rights”.

The proposal that matters

Section 84 of the MPRDA is further amended to include State board participation in the holders of production rights in terms of the proposals.

Section 2.9 of the background giving policy views also underlines the concept that the state will “exercise its rights and options having evaluated the applicable finance modalities to prioritise and optimise state participation in petroleum exploitation and in line with the national developmental priorities.”

The newly tabled Bill states that “specific details regarding the extent of the State’s free carried interests” will be published in a government gazette.

More background articles on subject
http://parlyreportsa.co.za//energy/south-africa-at-energy-crossroadsdoe-speaks-out/
http://parlyreportsa.co.za//energy/draft-mprda-bill-for-comment/

Posted in Cabinet,Presidential, Energy, Enviro,Water, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, LinkedIn, Mining, beneficiation, Public utilities, Special Recent Posts, Trade & Industry, Uncategorized0 Comments

President Obama and Power Africa

Power Africa and a $7bn involvement

In an excellent speech to a young audience at the University of Cape Town but seen the world around, the words “Power Africa” were heard by many for the first time from none other than the President of the US and although by no means did the financial implications have any comparison to the US Marshall Aid plan to Europe in 1945, this is without doubt a much played down mini-version in energy terms.

It comes with an initiative already started; US business plans in energy to Africa already in motion to an estimated tune of $9bn….. and thats just a start, said President Obama.    Energy, he said, is the key to Africa and electricity to all homes is the hope for all Africans. Without electricity there is no possibility that education can take root and therefore no way out of the poverty cycle, he said.

Electricity for all

If anything of value therefore from a business viewpoint came out President Obama’s trip other than some very warm-hearted gestures of friendship, it was certainly the extraordinary news that he personally, and that presumably means in fact the US Administration, has plans for a state $7bn initiative to enhance access to every household with electricity across Africa by tapping the continent’s vast energy resources and plenty of money by attracting international US investment.

By reading up on Forbes Magazine, which presumably has one of the best lines on what the US Administration is up to financially, their story on Power Africa appears to be already a well established initiative in the US.    For the most part, it is most detailed.   The story ends, however where perhaps it should have started.

In the last paragraph, after a giving a picture of the structure of the Power Africa programme and the names of the many partners US partners contributing to the initiative with finance and skills, the Forbes article ends with the observation……

“The recent discoveries of oil and gas in sub-Saharan Africa will play a critical role in defining the region’s prospects for economic growth and stability, as well as contributing to broader near-term global energy security.  Yet existing infrastructure in the region is inadequate to ensure that both on- and off-shore resources provide on-shore benefits and can be accessed to meet the region’s electricity generation needs.”

And there, possibly, we have it.   A sort of Mozambique Channel gold rush.   Yet we are assured by no less than President Obama himself that the USA has enough shale gas not to be importers but shortly exporters.

The Chinese robotic approach

However, to assume the US is looking for new oil fields for its own use or not would be to miss the point.   Trading in Africa with Africans was the point in Obama’s speech and hopefully, as the US President says, the USA can add value to what is made in South Africa before it is exported and not just exploit the resources in Africa, as does he says China and others of their ilk. The general feeling remains that China will put in power plants just to get out the resources. Either way, we get power – but the US way seems more sustainable and of use to economic and social needs of Africa in the long run.

Power Africa, Obama says, will, in, addition also “leverage private sector investments” beginning with an additional $9 billion in initial commitments from private sector partners in sub-Saharan Africa.   Most of the talk is about land-based electricity grid support, off grid projects, renewable energy projects and supplies to marginalised communities and there was a clear inference in the article that nobody in the US was going out of their way to invest in more coal mines.

The article says most importantly, “Although many countries have legal and regulatory structures in place governing the use of natural resources, these are often inadequate.  They fail to comply with international standards of good governance, or do not provide for the transparent and responsible financial management of these resources.”

“Power Africa”, Forbes continues, “will work in collaboration with partner countries to ensure the path forward on oil and gas development maximizes the benefits to the people of Africa, while also ensuring that development proceeds in a timely, financially sound, inclusive, transparent and environmentally sustainable manner”

In other words there has to be certainty.

ParlyReport this week focuses on the introduction to the South African  public of the Mineral and Petroleum Resources Development Amendment Bill on that very subject. One would hope that the intentions of government to have a stake in oil and gas exploration success stories do not frighten investors off and that the amendments to the Act stay fixed when agreed, give certainty and are properly regulated and the MPRDA changes are not the precursors of the mess that such regulations are to our North.

Posted in Cabinet,Presidential, Electricity, Energy, Enviro,Water, Finance, economic, Fuel,oil,renewables, Mining, beneficiation, Public utilities, Trade & Industry, Transport0 Comments

New Air Quality Act will deal with major polluters

Three areas under focus…

emissionsIn terms of who is in trouble in terms of the newly proposed Air Quality Act amendments, the chief director, air quality management at the department of environmental affairs (DEA), told parliamentarians that there were three priority areas that had been identified in South Africa where ambient standards are being exceeded.

These are the Vaal Triangle airshed, which could be said to be Orange Farm south to Sasolburg; the Highveld area, roughly Witbank south to Ermelo and back up to Delmas; and the Waterberg-Bonjala area which is essentially Brits through to Limpopo. The minister believes that that these areas, said Dr Mduli, should be “declared” as such in terms of the law, as soon as possible.   In the case of the Waterberg-Bonjala area, it was more a case of what was being planned for the area, than what existed at the moment, she said.

de Lange gets tough

Adv. de Lange, chair of the water and environmental portfolio committee, who were being briefed on current developments under the National Environmental Management: Air Quality Act, asked why Durban South was not a priority area in terms of DEA’s estimations.   Dr Mduli replied that recent improvements in ambient air quality in that area had shown that it need not be rated as such.

The main sources of pollution in the three priority areas were emissions from industrial complexes; the domestic burning of dirty fuels in highly populated areas; mining operations; and vehicle emissions, she said.

Hotspots named

She named the industrial “hotspots” as the Vaal Triangle area, this being Sasolburg, Vereeninging, Vanderbijlpark, Meyerton, Orange Farm and Soweto. Also, the Highveld, which mainly suffered from SO2 (sulphur dioxide) problems, this being the generalised Ekurhuleni area, Delmas, the eMalaheni area and Witbank, the Govan Mbeki area and Secunda, the Steve Tshwete area and Middeburg, the Msukaliqwa area and Ermelo and the Lekwa area which took in Standerton.

PM10 problems (heavy dust particles) existed in Ekurhuleni, Witbank, Secunda and Ermelo, she told parliamentarians, but in general terms the department was establishing a national air quality indicator where, by using the 45 monitoring stations that existed in South Africa, there was a possibility of establishing a “constant” that could be evaluated against comparison.

Getting together

Dr. Mduli said that it was not just a question of penalising pollutants that, in many cases, were providing valuable jobs.  It was more a case of working with the industries involved to provide answers. An example, she said, was Engen in Durban South, where a compromise had been found between saving jobs and achieving an outcome which resulted in better ambient air quality.

The issue of offsets to business as incentives, either as tax or other credits, was raised by parliamentarians as a benefit for results achieved with improved ambient air qualities for their “airsheds” but Dr Mduli said whilst these might apply to industry where there were routes to follow, the answer had yet to be found how to apply incentives to communities where traditional fuels producing carbon emissions in highly densely populated areas were the problem.

Community answers

Insofar as industry incentives were concerned, she felt that offsets were not so much a problem and which no doubt were to be considered but in the case of communities, where just individuals were concerned, a lot of the problems would be solved with simple electrification being applied as the answer, as distinct from coal or wood burning. As a result of all this, DEA monitoring stations tended to be located in highly populated areas in order to measure results, rather than emissions.

Dr. Mduli said that for this reason, so DEA could understand better the effects on communities, monitoring was on results, not on emissions, as mostly the bigger particles were in fact the biggest contributor to poor health amongst communities. “Command and control systems by regulation as conducted with industry cannot be used here”, she said and “community persuasive systems had to be envisaged”, she added.

Added to this was the winter atmospheric inversion problem on the Highveld, which tended to trap bigger particles on a long-term basis and contributed to health problems.

Eskom again in the picture

It was noted by Dr Mduli, in displaying graphs, that SO2 played a large part in the national industrial emissions problem and Eskom were the certainly the greatest polluter in this regard, she said. But offsets would not help here, she said as Eskom had other financial priorities, although electrification of townships and all rural areas were amongst Eskom targets to fight the problem of pollution.

In describing the new regulations to follow from the Air Quality Act amendments, she said a number of events would follow in the next few months. Firstly, section 21 of the Act required a list of activities to be published and which had been attended to, the control of which would define the associated regulations necessary to finalise environmental emission standards as an answer to the climate response issue.

The rest of the proposals…

Secondly, section 22 and onwards would include a declaration of control of processes and which was constantly under revision; for example, even the control of declaring mobile asphalt plants might be considered, she said.

Section 29 and following sections involved the definition of greenhouse gasses as pollutants as defined internationally and requirements that followed from global agreements. Then followed clauses which would allow regulations on a “hands on” basis, bringing controls and regulations down to a localised basis, such as sugar cane burning in KwaZulu Natal.

Get a big fish

Adv. de Lange concluded that DEA, in his summing up of the new amendments, had “done well” and he noted “his surprise” at the advanced stage of air quality controls in the country and successes to date. He stated, however, “that what was needed now was a legal success in a major test case against a large industry polluter to show that DEA meant business”.

It was noted in the presentations that Cape Town in general had dropped as far as excessive quality emissions were concerned but that Goodwood, as a residential area had suffered particularly insofar as SO2 was concerned and this had to be investigated. Other issues that concerned DEA on air quality emissions was that mercury readings in emissions were gaining ground, mainly in coal producing areas.

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