Tag Archive | parliamentary portfolio committee on energy

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.

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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”.

 

 

Posted in Cabinet,Presidential, Electricity, Energy, Finance, economic, Fuel,oil,renewables, Mining, beneficiation, Public utilities, Trade & Industry, Uncategorized0 Comments

UCT says state should buy national grid from Eskom

The state should own South Africa’s national electricity transmission grid as an independent unit, as is common in many other countries, thus separating the grid from the operations of Eskom to in order to improve the perception in an investor’s mind of how the electricity generation industry was structured in this country. This was proposed by UCT’s Graduate School of Business (UGSB).

In a submission before the parliamentary portfolio committee on energy on the Independent System and Market Operator (ISMO) Bill, Joseph Kapika, on behalf of Prof. Anton Eberhard of UGSB, presented the case for the separation of the two structures – South Africa’s national transmission grid currently owned by Eskom, and that of Eskom itself as an operational generating body.

In complete contrast to an earlier Eskom proposal, which had mitigated for a slowing down of the process of allowing independent generating bodies proposed by the ISMO in order to preserve Eskom financial credibility, Kapika said that the reverse was needed and that the process of establishing ISMO should be speeded up in view of the dismal track record of Eskom over the last few years to run the system.

Furthermore, UGSB suggested that the minister of energy and thus Department DOE through ISMO, be given full responsibility for energy and electricity planning in South Africa.

He added that in the view of UGSB, Eskom would find itself totally unable and unqualified to deal with independent power producers (IPPS) and the hybrid power market in general. Similarly they were not the right people to handle procurement for independent power structures, whatever the type and route taken for the ISMO process.

In a radical suggestion which resonated well with a number of MPs, Kapika said that the entire grid should be bought by the state from Eskom in a simple transfer.  Costs, say it was R50bn he said, should be simply transferred as cash to Eskom in return to re-enforce their balance sheet and creditworthiness for such matters as power stations.

This would ensure a level playing field for investors, Kapika said, independents therefore establishing that the grid was free of encumbrances from Eskom and its track record.

MPs asked Joseph Kapika whether USGB felt this move would bring prices down or would such a move better control licensing of IPPs and bring security of choice to the system.   Kapika replied that whatever was said and done with ISMO, the process of establishing a level playing field for investment was the most important issue and affected both subjects.

He added that the fact that Eskom controlled 90% of the power generation and controlled also the grid gave the perception of unfairness and uncompetitiveness and therefore the perception that Eskom completely controlled the entire electricity market from start to finish was a sorry state affairs for any investor to consider.

When asked why there was only a 2% IPP input at present in the form of investors to the system, mainly solar, and what was causing the blockage, Kapika replied that it had much to do with the dominance of Eskom but UGSB had also looked to other countries “to see what had happened with their IPPs and ISMOs”.

They had found that there were many issues involved but it was quite clear that it was not just high prices that attracted IPPs to make an investment. The answer had to be that in South Africa there had to be better definitions of powers and ownership between what the ISMO does and cannot do and what Eskom owns and should not own.

This was urgent, Kapika said, and thought should be given to the idea of separation of control over the segments of the industry as soon as possible.

Posted in Education, Electricity, Energy, Land,Agriculture, Mining, beneficiation, Public utilities, Trade & Industry, Uncategorized0 Comments


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