Tag Archive | Central Energy Fund

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.

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Central Energy Fund hatches fuel plan

A lot going on at Central Energy Fund…..

Central Energy Fund (CEF), the state utility which controls the Strategic Fuel Fund (SFF) and fosters PetroSA, cef logohas again been outside of a plan that has Parliamentary approval or, it appears, Treasury knowledge.    CEF falls under the aegis of the Department of Energy (DOE) and is therefore responsible to Minister of Energy, Tina Joemat-Pettersson.  Clearly there is much going on of which Parliament knows nothing – in recess as it is.

The history of CEF’s  problems go way back before the period during which  previous Minister of Energy, Ben Martins, held office and even before Ben Martins, as an MP was chairperson of the Parliament Portfolio on Energy. Most of CEF’s troubles appear to involve the fuel storage facilities  at Saldanha Bay on the West coast and PetroSA’s operation on the East coast, causing considerable negative comment from the portfolio committee and Ben Martins himself at the time. Sadly, Minister Martins was not chosen to remain by President Zuma.

tina-joemattQuite clearly a plan has been hatched to meet Cabinet ambitions.

Glaring omission

It was only after  Minister Joemat-Pettersson’s current budget vote speech did the investigative journalism of the newspaper media discover the sale of almost completely the entire SA reserve oil stock of the Strategic Fuel Fund (SFF) held at Saldanha Bay.

Not only was the sale concluded without any mention but the quantity of fuel involved appears to have been a major financial  decision  undisclosed in any cabinet statement.    It appeared that CEF had allowed SSF to sell 10 million barrels of crude — close to the entire stockpile — in a closed tender at the point that the oil price had bottomed at somewhere around R34 Brent.

It also appears that this was without the agreement of Finance Minister Pravin Gordhan and Treasury whosepravingordhan concurrence is needed under the Central Energy Fund Act.  How this will play with Treasury and the Auditor General is not clear, nor whether when and how CEF intends to replace this. The Democratic Alliance will no doubt be asking for answers in parliamentary question papers.

What the Minister said

It is interesting to note exactly what the Minister had to say to Parliament about SFF in holding back, it appears, on such major financial move. She told MPs that in line with the Presidential Review Commission on State Owned Entities (SOEs) that her Ministry had been working towards “a review of the composition of the CEF Group of companies.”

She went on to say, “Our work in this area includes the strengthening of the entities in the oil and gas sector and the stated policy objective of the creation of a stand-alone national oil company, using PetroSA as a nucleus.”
SFF had a good revenue base, she said.

saldanah bay 2“We shall finalise this work by October 2016”, Minister Joemat-Pettersson said and she would revert to Parliament on Cabinet views and strategies for a revised energy sector framework. “Accordingly, in 2015, the Ministry of Energy issued a ministerial directive for the rotation of strategic stocks in the SFF and this has resulted in an increased revenue base for SFF whilst at the same time maintaining stocks within our storage tanks for security of supply.”

Long term view

“This as a result, the Minister continued, “of a long term lease and contractual agreements with the buyers. The estimated revenue to accrue from this process is around R 170 million per annum, significantly boosting the balance sheet of the SFF.”

The Minister concluded that through the rotation of strategic stocks and trading initiatives the SFF had further consolidated its ability to be self-sustainable. “This has also allowed us to replace the unsuitable stock that we have been storing in our tanks which has been both uneconomical and did not contribute to security of supply.”

“The SFF will continue to ensure that it is able to respond to any shock in the market, whilst optimally making use of the opportunities presented in an evolving oil sector”, she concluded regarding West coast activities.No figures were given nor a clear indication mentioned that a sale had been concluded.

  SASAL LOGOHowever she was particular in supplying numbers regarding the joint venture between Sasol and Total when she said, ” Effective from 1 July 2006, Sasol Oil sold 25% of its shares to Tshwarisano LFB (Pty) Ltd, a broad based black economic empowerment consortium comprising of 150,000 direct shareholders and 2,8 million beneficiaries. The value of this transaction amounted to nearly R1.5 Billion, making it a significant BEE transaction in the liquid fuels industry.”

Trading nightmare

Therefore, the sale of nearly the entire reserve held by SFF, whether it is kept in the same tanks at Saldanha or not, at an oil price when at it’s very lowest, “suitable” or not, and being obliged by the Act to eventually replace it some later point should get an explanation.   However, it seems that there was an incentive to sell.

Also, to have to buy back at an oil price which is currently already well over double would appear to be completely against the tenets of the Public Finance Management Act; what the Auditor General is bound to call “fruitless and wasteful expenditure”; and contradictory terms of the Minister’s statement to Parliament that the SFF “has the jacob zumaability to be self-sustainable”. Unless, of course it is bolstered by external funds. 

Gas nightmare.

Parliament is of course closed for the election recess but no doubt there will be a parliamentary uproar on the subject – if not an investigation, which will come on top of the further current investigation of CEF’s activities as far as PetroSA is concerned.Once again the question will arise on how it was possible for PetroSA to continue with Project Ikhwezi when drilling for gas for two years in an area already defined by experts as impractical in lieu of fault lines in the projected gas field.

Central Energy Fund seen as politically driven

R11.7bn was the total “impairment” of PetroSA, the result of underperformance of Project Ikhwezi in its efforts to supply gas onshore to Mossgas. The total PetroSA loss for 2014/5 was in reality R14.6bn after tax. Currently a team comprising of industry experts is now defining a new strategy to save the PetroSA in its offshore struggle on the East coast, according to DOE reports to Parliament.

Roughnecks wrestle pipe on a True Company oil drilling rig outside WatfordThe experts were not named but the exercise is entitled Project Apollo and reports were also given to Parliament that the team has progressed well so far, said controlling body Central Energy Fund during 2015.

PetroSA was originally flagged by Cabinet some twelve years ago as “South Africa’s new state oil company”.     Last year, CEF described at the time PetroSA’s performance in their annual report to Parliament as “disappointing”, resulting in harsh criticism last year from the Portfolio Committee on Energy. The subject was not raised this year by the Minister in her Budget vote speech.

Failed deal

What, however, was raised in opposition questioning in the National Assembly by Pieter van Dalen, DA Shadow Deputy Minister of Energy, was Central Enegy Funds venture into the proposed purchase of Engen’s downstream activities from Malaysian company Petronas, known as “Project Irene”. This was understood to be the Cabinets secret plan to own the promised state oil company.

fuel tanker engenThe purchase from Petronas, who own 80% of Engen, was an attempt through Central Energy Fund to gain a foothold in the fuel retail and forecourt space by acquiring a stake in Engen, South Africa’s largest fuel retailer. The remaining stake is held by the Pembani Group.

First try

The board of PetroSA was repeatedly advised by both transaction advisers and the Treasury, according to Deputy Shadow Minister van Dalen, “that the proposal to buy the Engen stake did not make good business sense.”
“However,” van Dalen said to MPs, “the project was strongly championed by Minister Joemat-Pettersson and President Jacob Zuma. In the end, the deal fell through due to lack of financing.’These sort of things cannot go on”, he said.

The last word

This particular meeting in the National Assembly was completed by Shadow Minister of Energy, Gordon Mackay,gordon mackay DA attacking the Minister for “misleading the country on nuclear energy deals.”

He concluded after a long speech on the subject of the proposed nuclear build programme and what he referred to as “anomalies”, with the remark “We must ask ourselves Chair – why is our government doggedly pursuing this nuclear deal. It is clearly not a deal in the interests of the poor. It is clearly not a deal in the interests of business. It is clearly not a deal in the interest of the nation.”

Gordon Mackay did not know about the Chevron approach, or at least he did not indicate that he did.

Previous articles on category subject
Central Energy Fund slowly gets its house in order – ParlyReport
PetroSA on the rocks for R14.5bn – ParlyReportSA
Chevron loses with Nersa on oil storage – ParlyReportSA

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Parliament closes on sour note

Oversight role threatened…..

editorial…..

We have to admit it was not a happy Parliament that closed on 25 May 2016. Whilst we try to ignore newspaper parliament mandela statuescandals and listen to the more serious debate of those trying to get things right in the interests of the country, it was indeed a troubled Parliament that went into recess.

We have delayed our report to catch the last of the meetings before the election period. Usually, where there is a forthcoming election, whether national or provincial, there are many unreasonable statements from politicians. However, it seems that this time, there are lot more issues and certainly a lot more abrasive statements than usual.

Politics aside

Many such matters have involved the question of relationships with Parliament – the institution that is supposed to stand apart, like the judicial, from political machinations. Separation of these powers is critical to the process of halting a democracy from becoming a dictatorship, so it becomes important not to enter this space. However, quite clearly some members of the Cabinet, even perhaps the Presidency, are trying to by-pass Parliament on the question of oversight.

Although this is strongly denied on every occasion when the subject comes up, it becomes more and more difficult to tell whether government officials are having pressure applied on them when it comes to telling the truth, the whole truth and nothing but the truth to Parliament.

Hence, also it is difficult to discern true government policy in the long term as distinct from Cabinet putting out fires in the short term. We will be glad when this period in South African politics comes to an end, which hopefully it will.

Parliament and its system

Mbete,Baleka sworninIt would seem to us, a fact which is supported by most commentators, that the party list system is one of the culprits in this area – a system a whereby a member of Parliament stays in service, complete with salary and pension, according to his or her adjudged service to the cause.

Secondly, all directors general of government departments are, in most cases, party appointments and currently every chairperson of every committee in Parliament is a member of the ANC Alliance. It is the integrity of that person, therefore, that matters and this, we afraid to say, seems not to be coming through from the Cabinet. Every country gets the government they deserve (Joseph de Maistre).

All is not as at it appears

It came as a shock to many to learn that what had been listened to in Parliament, such as statements and presentations from directors general and CEOs of utilities or SOEs representing massive structures such as Eskom, PetroSA, Central Energy Fund, Police Services, Defence (and even PIC), that all was not quite, shall we say, totally accurate – even in expensive powerpoint presentations and in long convoluted answers to the Auditor General. The trend has been a painful experience to observe.

The cowboys, such as Lucky Montana of PRASA – now disgraced, were relatively easy to spot. Quite clearly his parliamentary reports were dubious and the presentations he made were an attempt to cover up foolish mistakes and bad management but there had remained a feeling of enthusiasm to succeed in his case. Just somebody in charge who shouldn’t have been.

However, in the case of “pressure coming from the top”, there are the odd stories continually emanating from the energy debate and matters related. These are disquieting, as are matters relating to broadband allocation, the aviation industry and land reform coupled with traditional affairs and matters related to expropriation.

Divided

Aside from the unfortunate chaos in the National Assembly debates, meetings which we attend occasionallyparliament 6 only from a business viewpoint – usually budget issues, the evident atmosphere of dissonance between Cabinet and Treasury is clearly affecting and hindering the parliamentary oversight role and translating itself down to the parliamentary working portfolio committees.

A poor relationship with Treasury badly affects the “engine room” of Parliament and makes a mockery of financial control.

We can only attend, make précis on what is said and report without opinion but we can say, quite honestly in our editorial, that currently we are not impressed by the seemingly cowed body language of the public service on certain issues. Witness the decisions on the output of the SABC and although we do not report on this as it bears no business brief, it somehow manifests a Cabinet gone wrong.

We shall continue to be watchful, particularly in the area of new legislation that affects business and declared changes in government policy.

Previous articles on category subject
Parliament under siege – ParlyReportSA
Shedding light on Eskom – ParlyReportSA
PRASA gets its rail commuter plan started – ParlyReport

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The big SA cabinet crunch

Editorial….

Cabinet hopes are Brown, Ramaphosa, Gordhan…..

Public Enterprises Minister, Lynne Brown, reports that she is to introduce as a cabinet draft, the Lynne BrownShareholder Management Bill as part of a plan to introduce 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.

We hope this is the start of something big.

The last few weeks have been an exercise in disaster, so let’s try and take a positive spin on things from a parliamentary viewpoint. Whilst troubled SAA is now an independent, falling under National Treasury and if President Zuma minds his own business, Minister Pravin Gordhan is to sort out National Treasury itself and also the troubled SARS, which he re-designed in the first place and which became such a success working with Trevor Manuel.

More problem children

Meanwhile, PetroSA is in real deep water falling, the entity falling under Central Energy Fund (CEF) reporting to Department and Energy (DOE). With Minister Joemat-Pettersson not back from COP21 or wherever, the country still faces some serious energy issues. But at least the PetroSA problem is now all in the open, with somebody obviously having to take over the reins and the mess, 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 which are now in the hands of Minister Cyril Ramaphosa to untangle. Troubling times indeed.

Public Enterprises comes to the party

lyne brown 2Now Minister Lynne Brown appears to be getting the senior management of her portfolio under control and whilst we could still have shutdowns at Eskom she says, because “machines can break down unexpectedly”, the leadership is there she says, as is the case with her Denel.
Lynne Brown recently reported that there are around 700 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 possible.

On the road again

With Deputy President Cyril Ramaphosa chairing an Integrated Marketing Committee, which will hopefullyramaphosa 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 cabinet and 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 book.

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, is open to abuse and what is worse, the consequent “jobs for the boys” system results in taxpayer’s money being thrown away through bad management, corruption and what the auditor general calls “useless and wasteful expenditure”.

On the drawing board

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

Whilst it is pretty obvious who should not be on such an appointment team, the plan begs the question of will be chosen to occupy such critical posts but it is far too early to cogitate on this one. With Ministers changing their portfolios as if it was a game of musical chairs, there is reason to congratulate Minister Brown on the statement that she herself as a Minister would be excluded from making appointments in her own SOCs.

Leadership needed

During the same address, she added that Eskom was “not out of the woods” yet and there was still not sufficient electricity to facilitate economic growth, but the leadership issue was being addressed satisfactorily with the right people being appointed. Brown said none of the entities under her control “would be approaching the National Treasury with begging bowls”.

Perhaps this is the principle being adopted behind the scenes with the SABC, which whilst not affecting business and industry other than travel costs, unlike trade and investment hurdles and industrial strategic changes, SABC is threatened by the possibility of being returned to its parent government department which at first glance appeared to be a move by President Zuma to gain control of state financed media, Mugabe style.

However, in a broad sense it seems to be Minister Brown’s idea that appointments to the top echelons running the country should be as a result of finding those qualified to do so rather than being handled by totally unqualified persons, some with solicitous intent, and others trying to retain power with dubious appointments such as having friends, in the case of the SABC, to broadcast “the truth” to specific rural audiences.

Unprincipled governance remains the one of the biggest problems facing South Africa, intrinsically coupled to (and in some cases causing} lack of growth and lack of jobs.

Croneyism

Bad appointments by Ministers and of Ministers has been the cornerstone of control by patronage, the route for corruption and the reason for sheer bad management, a practice now openly exposed but not yet controlled by any means. From a parliamentary viewpoint, let us leave it there. The rest is being said by the media but most MPs when they return to Parliament in late January 2016 will have realized that sheer stupidity can ruin their own futures and their pensions.

But if Minister Lynne Brown, in her practical and down to earth manner, can come up with the remarkable idea of Cabinet Ministers, hopefully including the Presidency as well, not interfering in who does what as far as expertise is concerned, then perhaps this can be applied to all 47 government departments and agencies.

One small step

No doubt as far as confirmation of an appointment, the Minister involved may still have to “approve” such a decision 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 bad leader with no qualification or right to be in a position of leadership, or worse led by one who has supplied fraudulent qualifications, leads to frustration and anger by those with genuine skills and high academic qualifications lower down the ladder at the coalface. This is in the space of government service where technical skills are located and badly needed.

We hope Minister Lynne Brown has more of these “eureka” moments.

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PetroSA on the rocks for R14.5bn

Project Apollo plan to save PetroSA…

Sent to clients 6 Oct.…..A team comprising of industry experts is now defining a new strategy to save the PetroSA struggling offshorePetroSA logo gas project on the East Coast.   The experts were not named but the exercise is entitled Project Apollo and reports were given to Parliament that the team has progressed well so far, said controlling body Central Energy Fund.

Despite producing a balance sheet that shows a technical cash profit of R2.5bn in simplistic terms made up of revenue less operating costs, in reality PetroSA is clearly beyond business rescue in proper commercial terms unless it manages to get a bail-out from Treasury to save the troubled entity from written off “impairments” of R14,5bn. But business rescue is on the way it would appear.

R11.7bn of the “impairment” was as a result under performance of its Project Ikhwezi to supply gas onshore to Mossgas.

Reality sets in

The total loss for 2014/5 was in reality R14.6bn after tax.      Project Apollo will now tackle the main cause of the loss at Ikwhezi, options stated as including “the maximisation of a number of upstream initiatives; the utilisation of tail gas; and how the gas-to-liquid refinery itself can be optimised with the new, revised and “limited under-supply of feedstock.”

cef logoThe Central Energy Fund (CFE), acting as the parent body for PetroSA, told Parliament that it is applying for such assistance, PetroSA being flagged by Cabinet some twelve years ago as “South Africa’s new state oil company”. CEF described PetroSA’s performance as merely “disappointing”, which raised the ire of most parliamentarians.

Those present

To add pain to the proceedings for Deputy Minister of Energy, Thembisile Majola, and senior heads of the Department of Energy (DOE) also in attendance together with the full board of CFE represented by new acting Chairman Wilfred Ngubane, the auditor general’s (AG) highly critical findings were read out one by one to MPs of the Portfolio Committee on Energy.

All this resulted in the remark from Opposition member, Gordon Mackay, that PetroSA “instead of becoming afikile majola national oil company had become a national disaster”. Criticism was levelled at both CEF and PetroSA across party lines, Chairman Fikile Majola demanding that Parliament conducts its own forensic audit and investigation into the facts that had led PetroSA to achieve such spectacular losses.

It appears that in the total accounting of the loss of R14.6bn for the year under review, R1.8m was also incurred in the form of non-performance penalties; stolen items of R110,000; over payments in retrenchment packages of some R3m; and R55,000 stock losses. Irregular transactions in contravention of company policy amounted to some R17m, the AG noted.

Lack of industry skills

Although the AG’s report was “unqualified” in terms of correct reporting, lack of management controls and bad investments were identified by the AG as the problem. In fact, acting CEO of PetroSA, Mapula Modipa, clearly inferred that lack of skills generally in the particular industry, lack of background knowledge in the international oil investment world and lack of experience in upstream strategic planning had led PetroSA year after year into its loss situation.

Particularly referring to troublesome investments in Ghana, Equatorial Guinea and continued exploration and production at Ikhwezi resulting in the “impairment”, a sort of write down of assets totalling R11.7bn, reports have been submitted before to the Portfolio Committee on Energy over the last two years. Warnings were given.

However in this meeting the AG’s views on the subject were under discussion and the terminology used by the AG could only be interpreted, as put by MPs, as poor management decision-making, lack of knowledge of the oil industry and the appropriate management skills in that area.

Roughnecks wrestle pipe on a True Company oil drilling rig outside WatfordHowever, over the years going back over previous annual reports for the last five years with forwards by Ministers and Cabinet statements issued over the period, it becomes self-evident that the “drive” to establish PetroSA as a state entity in the fuel and gas industry was politically driven, coupled with (as acting CEO Mapula Modipa had inferred) inexperience in the top echelons.

Still the Mossgas problem onshore

However, self- evident this year were the declining revenues from the wells at sea supplying Mossgas, where it was stated that now one wells had been abandoned, three were in operation and two had yet to be drilled. Project Inkwezi, against a target of 242bn barrels per cubic feet (bcf) only delivered 25 bcf from three wells. A “joint turnaround steering committee” had been formed to help on governance issues, technical performance and the speeding up of decision making. But the bcf is unlikely to change

Part of the new plan has involved of a “head count reduction” and employees had been notified. It was admitted that PetroSA had an obligation to rehabilitate or abandon its offshore and onshore operations costed at R9.3m in terms of the National Environmental Management Act and a funding gap of R9.3m now had to be bridged in the immediate future to pay this further outstanding in terms of the Act.

Further forensic audit

The cross-party call for an independent parliamentary forensic investigation that was made (which included thegordon mackay DA chairperson Fikile Majola as the driver behind the motion) “will hopefully not just result in a blame game”, said Opposition MP Mackay “but get to the bottom of how such an irresponsible number of management decisions with public money took place over so long a period.”

Chairperson Majola (ANC) concluded “This amount of money (R14, 5bn) cannot just be written off without someone being responsible.” He added, “There has appeared much difference between the abilities of technical staff and the technical knowledge of the leaders and decision makers on the board of PetroSA.”

Minister of Energy, Ms Joemat-Pettersson, was again absent from the meeting. However, earlier, in the meeting, the Deputy Minister standing in for her, said “when all is said and done we intend staying in this business”.

Nil from Necsa

necsaA meeting following in the same day, following the CEF presentation, was a report from the Nuclear Energy Corporation (Necsa) which failed to happen because Necsa were unable to produce an annual report or any report, Minister Joemat-Pettersson having obtained an extension of one month to the end of October for the annual report to be ready. Chairperson Majola said that the meeting could not take place without a financial report since oversight of such report was their mandate.

Opposition members complained that not only had Parliament’s time been wasted but that the whole instruction for Necsa to be present “appeared to be a media exercise to show that the governing party was on the ball”.

A litany of problems
The extension for the Annual Report conclusion had been granted to the Minister in terms of the Public Finance Management Act (PMFA), a fact well known, but the media were present in strength in the morning not only for the CEF’s explanation for the PetroSA loss but in the afternoon for Necsa explanation of its loss as a regulatory body, in the light of current media reports on irregularities, staff resignations and dismissals.

Other articles in this category or as background
PetroSA has high hopes with the Chinese – ParlyReportSA
CEF hurt by Mossel Bay losses – ParlyReportSA
Better year for PetroSA with offshore gas potential – ParlyReport

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CEF hurt by Mossel Bay losses

CEF R3.4bn write down was “irregular” …..

PetroSA logoLosses incurred at the Central Energy Fund (CEF) gas to liquid facility at Mossel Bay operated by PetroSA have resulted in a revaluation of assets based on the expected life of the refinery but the impairment that resulted, to the tune of R3.4bn, was found to be “irregular” by the office of the auditor general (AG) when reviewing the CEF 2013/4 results.

CEO of CEF, Siswe Mncwango, appeared before the portfolio committee on energy together with the chief executives of subsidiaries PetroSA, iGas, the Strategic Fuel Fund (SFF), African Exploration and Mining (AE) and the licensing and regulatory petroleum body, PASA, to brief the committee on their annual report and to justify their financial performance in terms of the AG findings for the group.

PetroSA struggling

The key issue central to the impairment of R3.4bn, Mncwango said, was the necessity for subsidiary PetroSA, in terms of its mandate, to maintain its levels of gas feedstock at a sufficient level to meet strategic stock policy in the national interest.  It was necessary, he said, to undertake this accounting process in view of delays experienced in exploiting undersea gas fields.

He said, the plant started operating at Mossel Bay in 1992, the life of plant being estimated at 15 years, and then known as Mossgas. With the project not having the necessary funding for exploration at sea during its early years, the plant consequently became threatened far too early in its planned operating life.

Limited choices

CEF faced two financially driven options, Mncwango explained to parliamentarians.  There was a choice between running the plant at 50% capacity or to close it down, he said.  As the strategic need for gas feedstock was an imperative facing both CEF and PetroSA, it was decided to further explore the existing and nearby gas field area.

Project Ikhwezi was thus born but at this stage expensive drilling to greater depths and lateral drives have been encountered and with newly pioneered methods, this has resulted in major additional costs. However, PetroSA, in a briefing from their engineering head on the subject drilling expectations, indicated that they are confident that plentiful gas supplies are on the cards.

Long time drilling

The project involves tapping into gas reserves in Petro SA’s F-O field which is located 40km south-east of the production platform off the south coast of South Africa.  The first well drilled was finalised in 2013 and the final link between all wells is to be completed during 2014/2015, parliamentarians were told.

The delays that have been experienced have also negatively affected the finances of PetroSA, CEF said, and this had necessitated permission for a temporary impairment from national treasury. However, this was not certificated correctly according to the AG’s report and consequently the R3.4bn impairment became “irregular”.

Difficult waters

According to Andrew Dippenaar, PetroSA’s upstream acting vice-president, Project Ikhwezi may, and probably will, be producing in some eighteen months. The riskiness and speed necessary in trying to find gas in difficult waters has added to the problems, he said, on top of which the gas field is geologically problematic.

This has led to operating losses at refinery level with a result that some sort of accounting write off was necessary in the short term, despite this hurting PetroSA’s current cash reserves of R5.5bn. This amount will not be recoverable, CEF’s financial officer said but he was adamant that this was not a cash loss affecting the taxpayer, more a book entry. CEO Mncwango added that inherited delays in finding gas at sea in the immediate area close to the landing facilities had resulted in the current situation. These were many risks in oil and gas exploration, he said.

Chief financial officer of PetroSA, Lindiwe Bakoro, was insistent that as a result of long delays in exploration any hope of immediate profits might be delayed but long term viability had been planned for and this was expected.  Consequently, new valuations on assets were undertaken to re-gear the project with treasury permission.  However, Bakoro confirmed that PetroSA would await the final results of drilling and connection before any final write down-decision on the impairment took place.

Purchasing procedures

On other irregular expenditure items, totalling some R30m, that appeared in the CEF results noted by the AG, these again were for PetroSA.   Such were mainly as a result of the correct procedures not having been followed in terms of procurement procedure. 

The correct procedures were now followed throughout the CEF group, Mncwango said, and the AG had been satisfied on this subject, since the annual report had not been qualified. A specific “irregular” figure of R1.6bn was also reported for PetroSA in respect of its Ghana operations.

Again it was explained that this was a procedural and the necessary documentation on transfer of monies had been incorrectly processed.   It would appear that treasury permission had been applied for and granted in 2013 but the actual transfer of R1.6bn had taken place in 2014, a different financial year for the record. CEF reported that PetroSA, nevertheless, had shown a particularly good return for the first time on its Ghanaian liquid fuels investment, returning a profit for 2013/4 of some R560m

On or off. Who knows?

Asked if any discussions with Engen on downstream development in the name of PetroSA had progressed, CEF’s Mncwango said that any such discussions were confidential and he would not be drawn into further explanations since these were commercially sensitive, whether with Engen or any other body in the liquid fuels sector.

Ms. Nosizwe Nokwe-Macamo, CEO of PetroSA, concluded that steps were taken to effectively manage fruitless, wasteful and irregular expenditure and that the focus for the national fuels group in the period ahead included delivery on Project Ikhwezi and finalising funding arrangements for “downstream entry”.

Gas plan on the way

The meeting was attended by the deputy minister of energy, who said she was confident that steps taken by both CEF and PetroSA were in the interests of the national strategy on gas supplies and that cabinet were shortly to debate the gas utilization master plan (GUMP). This was in response to opposition members who had complained to the minister that South Africa’s liquid fuels and energy plans could not be finalised until the state’s future gas supply scenario was properly clarified.

Other articles in this category or as background

http://parlyreportsa.co.za/energy/petrosa-has-high-hopes-with-the-chinese/ http://parlyreportsa.co.za/energy/cef-still-has-its-troubles/ http://parlyreportsa.co.za/uncategorized/central-energy-fund-slowly-gets-its-house-in-order/

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CEF still has its troubles

CEF subsidiary SASDA faces closure

Reporting under the Central Energy Fund label during parliamentary presentations to the portfolio committee on energy, the South African Supplier Development Agency (SASDA) admitted that in incurring a loss of over R18m during 2011/12 and a loss estimated at R14.5m for the present year, shutdown or liquidation was inevitable.

Lunga Saki, acting CEO, said the situation had become untenable.

He described SASDA as the “driving force behind the liquid fuels charter” but that SASDA, with dwindling cash reserves and with CEF “having insufficient dividend flows from subsidiaries” had put tremendous pressure on SASDA’s ability to continue its work, funding for which at present existed as loans from the central group.

Directors anxious to resolve

CEF had said that as a body it was to approach the department of energy and industry players such as SAPIA on the future of SASDA.  A possible liquidation was on the books, since the directors of SASDA did not want to enter the realm where they, knowing that SASDA had liabilities which exceeded its assets, could be accused of reckless trading and SASDA receiving qualifications from the auditor general with them at the reins.

SASDA focused on mentoring and coaching, providing technical support, skills training, facilitated access to raw materials, project management and they claimed facilitated financial support to CEF projects.

General picture

Sizwe Mncwango, CEO of CEF, in reporting to Parliament on overall group activities, excluding that of subsidiary PetroSA which in view of its size and structure reported separately, said he would focus on the work of CEF excluding this

CEF was in the process of restructuring for growth, he said. He saw the group as contributing to national security of energy supply dealing in renewables, oil and gas, strategic storage, licencing, mining development projects and supplier development issues within the energy field.

In clean energy, CEF’s project at Solar Park had a mission of developing renewable energy and low smoke fuel projects and agreements for solar water heaters had been signed in cooperation with the departments of human settlements and energy. Their second phase of this successful project was about to start. Photovoltaic (PV) manufacturing was being investigated.

Strategic stocks

On strategic stocks and storage facilities the company stored and managed third party crude oil on a commercial basis in order to fund the oil pollution prevention and control activities at the Saldanha Bay, Milnerton and Ogies facilities. There was a major project which included office refurbishment at the Milnerton Tank Farm, with tank refurbishment being undertaken with more sourcing of additional strategic stock tanks required.

A warning was given that the oil pollution sea vessels were aged and the fleet was urgently in need of refurbishment.

David Van Der Spuy, acting general manager at the Promotion Petroleum Agency South Africa (PASA), explained to parliamentarians the implication  of section 71 of the Mineral and Petroleum Resources Development Act (MPRDA) on the need to promote onshore and offshore exploration and production of petroleum, monitor and report regularly to the Minister in respect of compliance on permit, rights and licensing.

PASA faced a funding problem, he said, but the regulation of MPRDA remained an imperative and could not be threatened.

CEF coal venture

CEF also reported on its small coal mining venture at Vlakfontein, Mpumalanga, run by a subsidiary African Exploration Mining and Finance (AEMFC) which amounted to a pilot development and which was successfully mining 1.5m tons of coal, with no fatalities.

This financed a mining exploration venture known as Pan African Minerals Development Corporation (PAMDC and was driving PAMDC’s additional coal exploration programme. CEF investments shareholding in PAMDC was 33.3%, AEMFC being a 49% participant at project level but the group was searching for third party funding to hive the project off and engagement with the department of mineral resources was positive.

Sizwe Mncwango told parliamentarians that this was the main objective of CEF in building successful energy participants and letting them flourish on their own, once identified as a successful participants in the energy environment

PetroSA a separate issue

Such was the case with PetroSA, a part of CEF, who would report to Parliament in their own right, Mncwango said.

On questioning it became clear that, aside from the SASDA problem, much of the focus on the balance sheet had been in the creation of loans and funding for PetroSA. Consequently CEF, other than certain mandates such as that retained by PASA in licensing and oil spillage, was mainly involved in support programmes, skills development and sustainability of projects which involved the state’s drive to make contributions in the energy field.
Associated articles archived
http://parlyreportsa.co.za//uncategorized/central-energy-fund-slowly-gets-its-house-in-order/

 

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SANEDI to become a force in energy research

The South African National Energy Development Institute (SANEDI) is now clearly establishing itself as a research, evaluation and monitoring body, shedding its developmental nature at the request of the department of energy (DOE). Its main mission currently is to assist in the transition of South Africa towards a sustainable and low carbon energy future. SANEDI says it plans to become major energy research body in South Africa.

So said Kadri Nassiep, CEO of SANEDI, to members of the portfolio committee on energy when addressing them on the 2011/2012 audit recently completed by the department of performance, monitoring and evaluation (DPME) on SANEDI on its activities for the year.  Nassiep said it was setting up a data base on energy efficiencies in order to establish a consolidated picture on the subject for the whole of South Africa.

DPME expressed their satisfaction that SANEDI was on target in most areas of performance and was meeting delivery service. The auditor general has given SANEDI an unqualified clearance on its balance sheet for the year 2011/12.

SANEDI, which grew out of SANEIRI when under the aegis of the Central Energy Fund, had recently launched a wind atlas for South Africa; is dealing extensively in coal research and carbon extraction: and, furthermore, on carbon capture and storage issues.

The research institute, Nassiep said, had as an objective a wish to be recognised as the foremost institution for renewable energy research coordination and collaboration.

Nassiep reported to parliamentarians that SANEDI had established RECORD or renewable energy centre of development, which was mainly dealing with wind energy issues in the Northern Cape and solar energy initiatives in KwaZulu Natal and was receiving financial assistance from GIZ of Germany.

Initiatives on “green transport” were not on track he reported, however, in the area of fuel efficiency and fuel efficient innovations in new kinds of transport. Similarly, the “smart grid” business plan had not reached the stage of business buy-in although much work had been done.

In answer to questions, he said “smart grid” involved disciplines where the national transmission grid became more reliable; more secure; more economic and more efficient by applying more modern and advanced technologies to energy distribution and would involve the technology of such groups as Siemens.

Initiatives to reduce the carbon footprint in South Africa were ongoing, Nassiep concluded, but he would not get involved in MPs questions on whether South Africa should introduce a vehicle scrapping programme,  nor would he be drawn on the issue of SANEDI”s views on job losses by switching from coal to gain reduction of CO2 gases as part of the climate change debate.

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Central Energy Fund slowly gets its house in order

Central Energy Fund reported to the portfolio committee on energy that for 2011/2 it had importantly re-structured some of its investments and had now reached the halfway stage of what it felt essentially that an energy development company should look like.

Chris Cooper, Corporate Planner, CEF, told parliamentarians that the somewhat torrid times of the part were now behind them, have divested themselves of SANEIRI, the research body which had now become SANEDI, and they seemed to be withstanding the venture losses by PetroSA.

CEO Busi Mabuza had been advised medically not to travel and was not present. Parliamentarians asked directly if the lack of a fully substantiated and active CEO and leadership in other areas was affecting CEF operations and CEF directors replied that with team effort matters were improving, as reports showed.

Cooper said that in the CEF stable was now a stable SFF, which was dealing well with the handling strategic fuel stocks despite a downturn in storage rentals. There was Africa Exploration Mining and Finance, which was exploring for new finds of fuel feedstock and which would shortly leave CEF, going to the department of mineral resources. Also PASA, or the Petroleum Agency of SA, handling data, licences and monitoring as a petroleum agency was successfully selling its exploration data.

I-Gas which had a major interest in the ROMPCO gas pipeline from the Mozambique gas fields to Mossel Bay and SASDA which was as a developmental supplier of goods to the whole group, supplied separate reports but in an overall sense, Cooper added, and whilst small players at this stage, both companies had made important contributions.

MPs continually emphasized the need for developmental evaluations on gas off the Mozambique coast and Cooper replied that in terms of financial restraints as much was being done as possible, particularly with regard to the Ikhwezi project handled by PetroSA.    He said a pipeline was already being laid from a platform to onshore at Mossel Bay.

Cooper said that by next year, CEF would see its final shape whereby the group would existing on two legs only, splitting its interests between hydrocarbons and renewable energy development. `

He noted with some cynicism that when CEF had started, it had been almost “fashionable” in the energy environment to look at and investigate the many sources of renewable energy and much time had been expended, even wasted, but CEF had done its job by sorting out, with experimentation, research and piloting and limited capital projects using what funds were allocated, what was practical and right for South Africa.

The picture, he said, was becoming clearer, particularly if shale gas was added to the possible inputs to the final formula. The Petroleum Agency of SA (PASA), a subsidiary of CEF, was involved in the investigations into hydraulic fracturing.

Quite clearly, he said, forms of solar engineering had to be undertaken in the battle to supply electricity to the poor; the need for further feedstock in crude was an ongoing issue in a country where South Africa were takers not makers; and the potential of gas supplies for energy generation, and even vehicle production, had to be followed up on.

Cooper referred to a number of undertakings in the carbon capture area and said that working was continuing mainly based on grants from overseas and which technology was being conducted onshore to save on costs and retain better control on drilling. The future potential was to undertake carbon capture in a practical senses at sea for obvious reasons.

Revenue increased 35% to R15m (2010 : R11m 2011) mainly due to higher crude oil prices and an increase in crude and finished products. Operating expenses were down 10% while profit after tax increased 39% to R1, 85m (2011: R 1,3m) largely due to cost containment measures as well as the deferral of certain projects which required more feasibility studies.

The group maintained its strong net cash position at R19m (2011: R17, 5m).  The group’s financial position remains solid it was reported, with total assets amounting to R35, 3m.

Technical write-offs, in the area of PetroSA, which would be separately reported on, parliamentarians were told. The issue of reduced tank storage rentals at SFF was also a problem.

The group had received an unqualified opinion on its financial statements for 2011/2012 but DPME had reported separately and internally on the poor human resource programme which was acknowledged and being rectified; some irregular expenditure where the proper PMFA procedures had not been followed and faulty environmental procedures occurring during PetroSA operations, which had been corrected.

New board member, Rizia Jowoodeen, clarified MPs questioning on grades of crude that CEF was dealing with at one given time, particularly with regard to Venezuelan, Egyptian, Equatorial African and other adventures and said that this was a transparent issue and all worked through SAPIA to establish the correct levels of octane based on existing refinery capabilities but that South Africa had to look around and thinking had to engage alternatives to light crudes.

On strategic crude stock retention, Jowoodeen said that department of energy controlled this but there seemed a move coming to increase such figures. He said the difficulty experienced by CEF that there was no wording in the Public Finance Management Act to cover the task of venture capital undertakings.

However, risk management was a very real issue at CEF, he said, but essentially they were a developmental body and the journey to a good energy mix and energy security in the long term for SA was never going to be an easy one financially.

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Parliament lists its recommendations to minister of energy

In a parliamentary report on the department of energy’s strategic report for the year 2011/2, of which the final recommendations will go to the minister of energy, a call was made for “loopholes” in the Petroleum Products Act to be expedited and to increase funding of both the nuclear regulator (Nersa) and the Nuclear Energy Corporation of South Africa (Necsa).

Both Nersa and Necsa had drawn attention in their annual budget vote presentations earlier to Parliament on the general shortage of funds appropriated in terms of Pravin Gordhan’s 2012/3 budget, Nersa complaining that their budget was so insufficiently funded as to become a “danger to South Africa”.

On the subject of Nersa, the final page of the committee’s report to the minister states that Nersa should have its “mandate increased” to cover “petroleum pipeline and piped gas” and also to deal with the “deteriorating electricity infrastructure situation”. The report also said that Nersa should involve itself in South Africa’s nuclear build programme, as should Necsa.

In the subject of electricity distribution, recommendations included the necessity of introducing urgently the smart grid plans which became evident during departmental presentations. They drew attention to the SANEDI plan, called by the Central Energy Fund a “Smarter Grid”, which was the integration of two main utility infrastructures in South Africa, the electricity grid and the existing information and the telecommunications infrastructure.

The committee drew the attention of the minister to their concern on the continued reliance on the Sasol pipeline carrying natural gas from Mozambique, asking the minister to note their views that gas exploitation would become a major issue in the development of Southern Africa.

They noted that refinery capacity figures were “very low”, as evidenced by the quantity and volumes being imported, and that storage capacity and infrastructure development in this area was therefore an immediate necessity. On refineries generally, the committee noted the “very encouraging stance” adopted by PetroSA on its own refinery project, “Project Mathombo”.

The committee drew attention to the work of the South African Supplier Development Agency (SASDA) to accelerate progress in the development of black suppliers in terms of BBEEE and economic growth plans of government but said that “Engen, BP, Shell and Chevron have not contributed at all to transformation in the areas where SASDA was involved”.

The recommendations to the minister pointed out that promises were made in terms of the agreements signed “but nothing has happened”. SASDA’s attempts to get the companies on board, “even after engaging their respective CEO’s, had proved fruitless”.

 

 

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Carbon Capture Storage Technology Underway in SA

SANEDI, the South African Energy Development Institute, told the portfolio committee on energy that work was being conducted on extraction of carbon dioxide from fossil usage and pilot drilling was taking place near Port Elizabeth on the geological storage of carbon dioxide at great depth.

Dr (Prof) AD Surridge of SANEIRI, the research body of SANEDI, said that in common with other countries and backed by the department of energy, Sasol, PetroSA, Eskom, the UK and Norwegian governments, Total, Anglo Coal, Xstrata, Exxaro and others, carbon capture storage as a system was a real possibility in South Africa.

This inland location for tests had been chosen for reasons of cost, but vast suitable geological areas had been located offshore in South Africa where storage for many hundreds of thousands of years would be safe.

Dr Surridge said, “It is not so much as to whether the technology works. We know it works”, he said. “Such has been operating at global sites for many years. It’s a question of scaling up the finance and doing things on a far bigger scale to get ahead”.

SANEDI operates as part of the Central Energy Fund (CEF) which also manages the operation and development of the oil and gas assets and operations of the South African government with its subsidiary, PetroSA. A CEF subsidiary, iGas acts is involved in the development of LN gas and LP gas.

Kevin Nassiep, CEO of the operating research body SANERI, told parliamentarians that in financing its various operational scenarios to conduct energy research across all aspects of energy in South Africa, it had submitted four financial models to Treasury varying from models to develop the institute as an independent entity with a full programme of projects, a model with gradual transition over a number of years to that of SANEDI in a survival mode.

He said that the fourth option had been chosen by Treasury in its budget and consequently SANEDI was just surviving. SANERI was operating at very low level insofar as its objectives were concerned and “the two building blocks of sustainable energy solutions to South Africa’s search for a low carbon economy, that of innovation research and energy conservation, were being undertaken at slow speed.”

SANEDI’s brief in terms of the National Energy Act was to direct, monitor and conduct energy research and promote energy efficiency through SANERI, Nassiep said. Their goals were to be in direct support of the department of energy (DOE) role and DOE’s energy policy, and to assist in all matters regarding climate mitigation.

He said that that in most matters regarding radical energy decisions, South Africa in each major topic had to decide whether to become an “innovator” by becoming a leader in that field; whether to be an “adaptor” and take existing standard prototypes and change these to suit South African systems or be a “follower” and simply “buy off the shelf” in order to meet cost restraints or because such suited the occasion.

Dr Willie de Beer, dealing with electricity energy distribution matters for SANEDI, said that with the collapse of the centralised electrical distribution concept known as EDI holdings there was a resurgence of suppliers pushing their own proprietary systems in the search for a better and “smarter” national supply grid. Consequently, conformity was a problem unless it was controlled.

Lack of funding in all aspects of the work being undertaken by the research body, SANERI, appeared to be the issue, Parliament was told.

Dr de Beer told parliamentarians that urgent decisions had to be taken in this regard to underpin economic growth and an inter government smart grid task group with a smart task team financed properly so that “plug and play” commonalised systems were adopted and a lead given by a common government “voice”.

But, he said, the “smart grid” was not emerging quickly enough because there were too many players and nobody was either prepared to invest properly or take risk. There was little in the way of team approach, he said, and intergovernmental participation across the board had not been achieved.

David Mahuma of SANERI described a number of biomass projects either converting energy from invasive alien plant life; biogas projects working in agricultural situations and mini-hydro schemes currently being investigated. This was all part of the “Working for Energy programme”, he said, and current focus was to help communities with pelletised bio-mass waste systems.

SANERI described to parliamentarians a number of projects including LPG driven taxis, which were succeeding in KwaZulu-Natal and a biomass piggery plant in Mpumalanga that was providing its own electrical energy needs and some to spare for the local grid.

 

 

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