Tag Archive | parliamentary affairs

Parliamentary start to 2018 will be stormy

….Cabinet changes on the way

…. editorial...After having endured so many of President Jacob Zuma’s cabinet reshuffles, most of them in his own interests, it is painful to think that in all probability there is still one more shuffle to go. The focus for business and industry now falls upon the parliamentary portfolios of public enterprises, energy, mineral resources, communications, state welfare, land reform and trade and industry.

In past shuffles, the regular passing of the hat has allowed minister after minister to side-step the truth and report to Parliament on a “it wasn’t me” basis.  It has been the bane of Zuma’s presidency and in many cases the cover up for wholesale corruption and the ineptitude of some of those anointed.

When the music stops…

So, it is with trepidation that Parliament awaits another round of new ministerial faces which will probably coincide with a new round of appointments of chairperson of committees, let alone some new faces in the benches. This is all at a time when the economy sits at tipping point and President Zuma still retains powers to appoint cabinet ministers but is unlikely to against the wishes of the new ANC president, Cyril Ramaphosa.

But everything is changing on a day to day basis.   On the opening of Parliament the immediate business to be dealt with is the status of the current Presidency.  Parliamentary Speaker of the House, Baleka Mbete, has been instructed by the judiciary to fulfill her constitutional mandate to establish consequences for President Zuma on the Nkandla affair in terms of an action brought by the EFF.  But even whether the current President will make it to Parliament remains in doubt.

Baleka Mbete remains therefore the person to watch in coming weeks as much as Cyril Ramaphosa

Avoiding the crunch

In all likelihood Deputy President and now President of the ANC, Cyril Ramaphosa, and his party executive, the NEC, will avoid the road to impeachment at all costs.  But one never knows with President Zuma.  For example, the Higher Education announcement came like a bolt of the blue from the Presidency, a callous call made by Zuma leading to a departmental debacle and a financial conundrum for the Minister of Finance.

Once again, the parliamentary telephone directory will be at the mercy of ever-changing power battles within the governing party and which somehow represents the country-wide breakdown in communications across of whole section of the governance and political spectrum.  This sadly occurs every time cabinet portfolios get switched around en bloc.

Musical chairs….

This waiting period for new faces is similar to the usual vacuum before an election. In this case, however, the small but important difference is that the ordinary Joe has no say in outcome. In an election, one sees a manifesto of beliefs, values, policies and an appeal to the electorate.  In this case it is a choice between more of the same, less of the same, or if unity wins, how many compromises there will be and how many appointments are determined by political expediency.

To put it simply, we shall learn soon who will be picking up each of the cards in the ministerial cabinet pack and who will be contributing to the promotion of nearly fifty pieces of legislation in Parliament awaiting attention.

Wasteful expenditure

The current power battle within the ANC will tell us, for example, who will be finalising a stalled and messed up Minerals and Petroleum Resources Amendment Bill; a confused Border Management Authority Bill; a Land Reform Programme from Rural Affairs that has got muddled up with an Expropriation Bill from Public Works; a Communications Bill that has totally shaken the confidence of its industry sector and a Management Shareholding Bill for SOEs that is now tainted with violations of the Public Finance Management Act (PMFA).

Policy matters are also confused.  Moves towards land reform without compensation; 5-year  free higher education plans; nuclear “expansion”, oil and gas dreams and state health schemes have all been expounded upon by President Zuma’s previous allies when trying to gain the higher ground in policy making. The picture is as confused for Cabinet as much as Parliament and the public.

Spiral of outrage

Meanwhile, in another Parliament on 6 December, Lord Peter Hain, when introducing a UK Money Laundering  Amendment Bill, said to the British House of Lords, “My Lords, in recent weeks I have again been stunned by the systemic transnational financial crime network facilitated by an Indian-South African family the Gupta’s and the presidential Zuma family.”

This watershed statement was not  missed by the international banking world and which has brought the country to the point where it was learnt that the FBI are around the corner and the UK’s Serious Fraud Unit are also on the trail.

2017  was also a year in which civil society responded from the public platform, joining OUTA and Corruption Watch and others in their lonely battle to expose the truth.   AmaBhungane started the ball rolling and with the Gupta emails and Jacques Pauw’s The President’s Keepers adding momentum, all learnt during the rocky road of last year that Parliament is a situation as much as an institution. There is constant movement. Every day is different.

Down to work

2018 sees the genie out of the lamp  but Parliament will initially remain the battleground, the courts having emphasised the separation of powers and scolding Parliament and the Speaker for not doing their jobs.

As shadow minister of public enterprises, Natasha Mazzone (DA), amusingly shouted to state capture adherents during the Eskom Inquiry, it is now time in the new parliamentary session for those either in default of parliamentary rules or who challenge the norms of the PMFA  to “bring it on.”

 

Previous editorial http://parlyreportsa.co.za/earlier-editorials/cabinet-paralyisis-times-need/

 

 

Posted in Cabinet,Presidential, Communications, Energy, Health, Justice, constitutional, LinkedIn, Special Recent Posts, Trade & Industry0 Comments

Houses_of_Parliament_(Cape_Town)

Parliament : some clarity on policy emerging

Departments brief new Parliament..

Editorial….

Again and again the words ‘certainty’ and ‘uncertainty’ have arisen in parliamentary working committees,  not only in terms of the foreign investment climate but also in terms of borrowing, building and direction of strategies to achieve growth and the creation of jobs.

More than anything else, uncertainty seems to be South Africa’s greatest economic stumbling block. Even public utilities, let alone investors, bankers and private sector industrialists, have made submissions asking for clarity on government policy and decision making.

Cabinet indecision could be the problem. Leadership could be the problem. Let the political commentators decide but from a parliamentary viewpoint this week one sensed the first elements of certainty and clarity.

IRP being finalised

No doubt the news that the integrated resources plan is finally happening will bring more certainty to the energy sector and the recent nuclear and hydro decisions have let everybody know where that sector is going.

Whether recent decisions are considered right or wrong in the health sector, Minister Dr Motsoaledi seems to have a firmer hand on the tiller.  Similarly in the transport sector, and more than just hopefully but certainly, the first Brazilian train is due to arrive and new coaches will shortly be going through some new stations that are being built.

Minister Pravin Gordhan has brought his experience with SARS to bear on local government and his unsmiling manner will no doubt rattle many a cage down the line and produce the necessary repayment plans.   He appears, from reports coming to Parliament, to be getting around the constitutional problem of local affairs being out of bounds to national affairs and will bring a number of errant provincial and local employees to court.

Saving the day

Although Parliament still cannot amend a money Bill but only debate same,  national treasury seem to have come to the party to plug the gap in certain instances, thus getting rid of expressions like “currently in negotiation on possible funding” in departmental and state utility reporting. But a what cost and will this be enough?  Be that as it may, the gap has been plugged.

Whether recent events are good or bad news according to the governing or opposition parties, confirmation of direction in government policy takes the crystal ball out of planning and strategy.   Decisions can be made.

We sense at the moment some direction in parliamentary affairs and in the coming weeks, whilst there will be surprises for some such as the Areva nuclear build award, disappointments for some such as no reversal of the decision to proceed with carbon tax and the worry of the decision to increase electricity tariffs despite the multi-year fixing, at least we are beginning to know for certain where we are.

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DOE spells out biofuels and biomass

Biomass, biofuels and jobs……

On the subject of creating biofuels and biomass, the department of energy told parliamentarians that the main objective of any such exercise, if it was undertaken in the agriculture industry, would be to create jobs.       However, such a move towards the use of biomass would not take place if national food or water security was jeapordised in any way.

This answer was given to the portfolio committee on energy by Muzi Mkhize, chief director hydrocarbons, department of energy (DOE), when briefing parliamentarians on DOE’s current strategy towards biofuels.  He said that in the South African context, a specific requirement of the biofuels strategy was to create a link between first and second economies and the focus was not only on jobs but specifically on creating employment in under-developed areas.

Key incentives

Bio-fuels, he said, like most renewables, required incentives in order to be cost-competitive against conventional fuels, the upside of such a direction being the saving in balance of payments, energy supply security and economic growth factors that were more stable that the volatile traditional oil market.

He referred to 2006 estimates, where a targeted 2% biofuels scenario was estimated to create about 25,000 jobs.

With the IPP third round completed, Mkhize said biofuels would contribute to the national renewable energy policy, the director general, DOE, having already advised that 93 independent power producers (IPPs) had applied for licences in the third round of requests for submissions. Thus biomass, he said, together with IPPs were contributing greatly towards targets that South Africa had in the journey to reduce greenhouse gas emissions.

As far as biofuels manufacturing facilities were concerned, Mkhize listed eight locations where bioethanol or biodiesel had or were being licensed. He said that biodiesel would fall within the fuel tax net and manufacturers would receive a rebate of 50%. Bioethanol would not, however.

Incentives upgrade

As was the case with all renewable energy projects, a 50:30:20 depreciation allowance on capital investment over three years would apply but DOE had started discussions which were underway to improve incentives as this was not sufficient to attract investors, it was felt.

“Infant industry” incentives over a twenty-year benchmark period were being looked at, he said, with an initial incentive of 3.5c per litre to 4c, to be recovered through a levy to be included in the national monthly price determinations.

Overproduction threat

It was pointed out by parliamentarians that about 229 million litres of fuel were sold annually for about R9,2bn and if all players in the fuel industry joined the process as required, there would be an excess with about 4-6% of biofuels produced over the national call for 2%. Who would take up the excess, they asked.

Mkhize was also asked what agro studies had been done and how were farmers responding to a possible call for biomass crops. Also, they asked, if there was drought or some similar disaster, what would happen to the fuel industry in the reverse case of a shortage of biomass.

Mkhize said there was a general agreement in place only on agricultural biomass and this was “only in the form of mindset until pricing and subsidy issues were finalised, so accordingly the question of national quantities in relation to fuel company needs did not arise”.  However, he confirmed that the fuel industry would not be allowed to suffer from a shortage of biomass delivered.

Treasury and subsidies

In answer to more questions, Mkhize said a licence to produce biomass would not disallow a farmer from switching crops, say from soya to maize.  But, he added, all this was total speculation until “national treasury came up with the answers on subsidies”.

When MPs complained that the picture given by DOE “was no more than a snapshot of where we were on biofuels exactly one year ago”, Mkhize said he was trying to show the milestones that had been reached in the enormously difficult stage that the fuels industry had reached with regard to the entry of biofuels, which was a strategic issue.

Gas the issue

He said there were issues such as LPG remaining the forerunner of natural gas to be investigated as this household market had to expand and added, “We are looking at the system used commercially of bringing gas from Mozambique to Durban and whether this is the basis for further development.”

Mkhize promised his department would deliver shortly on promises to deliver DOE’s plan for gas expansion but this was not part of the biofuels or biomass study. All such matters were intertwined in terms of the integrated resources plan with the eventual integrated energy plan for the whole country.

Making a profit

On new entrants to biomass to fuel production, Mkhize responded to questions that it had been shown that the breakeven point for any biomass plant was a constantly changing factor over a long period and it was difficult to establish at what point a subsidy of, say, 2% would assist.

He said breakeven studies showed from a 2% profit, moving down to 5% loss for a long while, and then eventually moving up to 10% profit had been the standard established and banks did not like that kind of venture. Models he said were difficult to establish that were both profitable in either the short or long term.

There had been great disappointment when oilcake made from soya had proven too costly for biodiesel and it had been found that better recoveries could made through the food industry. This had proved a setback, Mkhize said.

Sugar cane

In answer to queries on sugar cane possibilities for biomass, as practised in Brazil and possible land shortages in South Africa, Mkhize said that the SA Sugar Assoc had said that land was available but that sugar cane was more likely to be linked to co-generation of electricity energy. Brazil, he said, had a vast subsidized lower income biomass agricultural industry but was producing on a large scale for biodiesel, not bioethanol as would be required in SA.

Mkhize concluded that the DOE biofuels task team was studying very carefully the forward national food security and water situation, “because”, he said, “we cannot afford to subsidize an industry in the form of small scale farmers if we are at the same time threatening food security and water availability at the same time.”

Back to jobs

However, he said that the country at the moment could not ignore the huge potential for job creation that could be brought about by such a new industry and the present lack of agricultural knowledge on the subject would eventually be substituted by experience gained by the new entrants as they established themselves.

In answer to questions on where blending would take place and “whether this was upstream or downstream in the fuel industry”, meaning at refineries or at depots it was assumed, Mkhize said a lot would depend on where the crop was grown; the wish to support crops grown in rural areas; sustainable projects that had been developed; and water availability.

previous articles on this subject
http://parlyreportsa.co.za//cabinetpresidential/biofuels-development-stays-in-limbo/
http://parlyreportsa.co.za//energy/south-africa-at-energy-crossroadsdoe-speaks-out/
http://parlyreportsa.co.za//energy/ipp-3-delayed-until-mid-august-says-doe/

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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


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