Tag Archive | SAPIA

Eskom warns on costs of new air quality rules

Air quality worries add to cost….

smokeWhilst confirming that it supported full compliance with Section 21 of the National Environmental Management: Air Quality Act listed activities insofar as emissions were concerned, Eskom told the portfolio committee on water and environmental affairs that compliance with the amended Act was also going to mean additional capital costs to Eskom of between R25m to R28m on each of its power plants.

Certain stakeholders in the energy industry were given the opportunity over two days to make submissions on listed activities which result in atmospheric emissions, the development of a such a list having been ongoing since 2010.  Present at the hearings insofar as industry was concerned were the South African Petroleum Industry Association (SAPIA), Eskom and Chamber of Mines and others. Notable in its absence was Sasol.

A lot more than just smoke

Eskom in their presentation, also went on to say that additional water requirements needed to reduce nitrogen oxides and sulphur dioxides at all its plants in terms of the proposed Section 21 list would require between 3-6 million m3 of water per annum, with 400,000 tons of sorbent required.    Only a certain portion of these costs had been taken into account when submitting to NERSA on the multi-year price determination for new electricity tariffs for the next five years, they said.

Eskom spokesperson, Dr Kristy Langerman, said that they would like to see the list of emissions amended and drew attention to the facteskom logo that Eskom did not emit ash or nitrogen oxide emissions and that there was only one area that was non-compliant as far as sulphur dioxides were concerned and that was Kriel town in Mpumalanga.

Eskom provided the committee with an emissions road map relative to all its plant for the period 1982 to 2020. They pointed out that as at 2013, where Medupi appeared on the plant schedule, funding constraints were now applicable. They called for the ability to offset projects and for a 48-hour start-up period in the minimum emissions standards for a cold start after long outages.

In calling for amended timeframes for implementation of capital projects to meet the new requirements, Adv.de Lange, chairperson, told Eskom’s Tony Stott that for this they would need to have a plan with DEA “in a matter of days”; this debated and agreed. He said the country had made commitments on the international climate response stage and, whether the committee or Eskom agreed or not with such agreements, all parties had to participate in SA reaching the targets.  Heavy fines for those not doing so would be the order of the day, he said.

Not happy with point source

sapia logoAnton Moldam, for SAPIA called for a more holistic approach to emissions control that was being proposed. Having been deeply involved since 2007 with government in the development of emissions control, their concern was the “disconnect” between general ambient and “point source” standards, by which whole communities were intended to be protected rather than what came out of stacks and only affected immediate areas, if at all.

It was not good making enormous investments in capital equipment if they do not improve general air quality in public “airsheds”, SAPIA said, and they called for specific site parameters to be drawn up, as is done in other countries.

“New refineries can be designed to meet new specifications”, Moldam said but SAPIA could not support the expectation that existing plant everywhere can be somehow retrofitted to meet new refinery standards. “This is not technically feasible in many cases”, he said.  “The expectation that ageing plants should be upgraded to meet standards of new plant has to be dropped”.

“Bubble” the best

He said that the petroleum industry had for years worked on the “bubble approach” for emission standards where emissions from plant in general was calculated. However, the new regulatory process of emission controls per individual plant stack was impractical for a refinery to consider, since what went through that stack came from dozens of sources.

The decision of the department of DEA to drop the “bubble” approach did not reflect the fact that refineries were highly integrated processes and this was not a manageable process without enormous cost.

SAPIA called for a complete re-think on the DEA proposals on emissions as listed and called, like Eskom, for a “grandfathering” clause whereby DEA allow for the age of the plant and its eventual shutdown be taken into account when regulating that re-capitalisation takes place to meet new standards.

Dr Thuli Mduli, national air quality officer and a chief director of DEA, in introducing the proposed listed emissions in terms of the section 21 list, said that it was a DEA viewpoint that grandfathering was not supported and a consistent approach was needed across the entire spectrum of industries, which was why the “bubble” system of monitoring had been discontinued and a “source specific” approach applied.

Compliance timeframes, she said, for new plants would be corrected back to the original section 21 provisions but in the light of business proposals that it was unreasonable for new plant standards to be defined by such moves, this might be reconsidered. She noted, however, that civil organisations had already condemned DEA for its apparent relaxation but she also noted the committee’s call that further discussion should take place with stakeholders, despite limited time to do this.

When push becomes shove

Lloyd Nelson for Chamber of Mines said that a number of unintended consequences had arisen in terms of existing legislation and they were uncomfortable with “technology forcing” in what was already a difficult financial environment for the mining sector, particularly the platinum sector which was most affected by the proposed lists of controlled emissions. They appealed for “re-categorisation” of certain metallurgical operations.

Nelson said whilst the mining industry very much supported the principles of the proposals, they regretted the constant “moving of the goal posts”, since the original 2010 proposals, which their members had adhered to, had been changed and many mines were angry with the present uncertain investment climate with constant changes and flux.

In making various recommendations, including that the compliance timeframes be relaxed, Chamber of Mines appeared surprised that the petroleum industry had separately negotiated a specific period of three years beyond that applied to industry generally on compliance.

Also not happy with fixed point source

They also pointed to the fact that international regulations permits relaxation of “point source” emissions, providing ambient air conditions continued to meet requirements, and said that attainment of some the limits either by 2020 or before, was not possible or, in some cases, because of purely unrealistic or unsustainable cost.

Also voicing opinion was the cement industry who expressed concern on the cost of monitoring and the chemical industry who complained, as did Eskom and others, that basic errors in the wording of the 2010 Section 21 notice had prevented upgrades and had therefore already caused delays prejudicing planning, thus meaning the extent of re-engineering was now not possible in the timeframes allowed.

secunda emissions graphGroundwork Africa drew a picture of failing governance of air quality control in South Africa, stating that in Secunda, 90% of data showed that that air quality in the area was well in excess of that allowed by international standards. Dr. Eugene Cairncross of the Coalition for Environmental Justice said it had been an error of DEA to allow exclusion of petroleum industry flare emissions since flares were known to give off heavy pollution for at least fifteen minutes on start up and sometimes for a whole day.

In conclusion, chair Adv. de Lange, said once again as he had continued to say  throughout the meetings, that hede lange would resist any attempts by applications to allow DEA to extend timeframes “because industry is known for putting such issues off time and time again and that he was not going to allow South Africa to be polluted by old factories and plant”.

However, he finally admitted that DEA should consider that where it was known that a plant was to be “mothballed”, account of this should be taken into consideration, particularly when an industry member showed that it was patently obvious that to retrofit plant eventually due for closure was both wasteful and uneconomical.

“Industry had better get these requests in fast and make a plan, he said, because the fines are going to be heavy, heavy enough to make everybody think twice”.

The following articles are archived on this subject:

Posted in Energy, Enviro,Water, Finance, economic, Fuel,oil,renewables, Mining, beneficiation, Trade & Industry0 Comments

Chemical industries plan for training skills in fracking

SETAs report to Parliament with training skills update.

On the subject of fracking and in a presentation to the parliamentary portfolio committee on energy by the Chemical Industries Education and Training Authority (CHIETA), parliamentarians were told that major objectives included providing the necessary skills for jobs during the possible exploration for shale gas in the Karoo.

They were also to be part of the exploration process for gas where alternative energy employer were providing jobs and there was a promising outlook for new jobs with specialised skills which CHIETA could provide.

CHIETA is the statutory body established by the National Skills Development Act, through the Department of Labour, one of  twenty three SETAs currently carrying out sector education and training authorities in SA, each being responsible for promoting economic and social development through learnerships and skills programmes.

Gas exploration also under consideration

CHIETA told parliamentarians that the subject of gas exploration and possible new skills needed to develop off-shore gas resources along the West Coast SA and also mentioned also the need for training and skills in upgrading of refineries “to meet new clean fuel standards”. The skills needed “ in consideration of building a new refinery to reduce dependence on the import of refined products” were discussed.

Skills development levies from the petroleum industry at a figure of 95,000 persons far exceeded any other of the category of employer in CHIETA, which ranges from fertilizer to pharmaceutical groupings, of which there were 116,826 employees.

Simple trade related skills represented 50% of the shortfall in the petroleum industry, other than senior professionals who represented another 40%. The presenter talked of an integrate training process that was conducted between SAPIA, the department of energy, CHIETA itself and Johannesburg (Wits) University.

Other training groups report

Two other SETA’s briefed parliamentarians in the form of the Wholesale and Retail SETA who has some time ago signed an MOU with major training group MERSETA and arranged transfer from the latter of 3,256 levy paying companies whom they assumed responsibility for, developing a manual to accommodate fuel retailers downstream.

The levies transferred amounted to R26.9m, transferring also the NQF level 2 National Certificate Service Station Operations qualification and numbers trained with joint exercises with the fuel sector and with grants, amounted to  clerical and administrative workers-227; community and personal service workers-130; elementary workers- 866; machinery operators and drivers – 202; managers- 610; professionals– 62; sales workers– 9,559; technicians and traders workers- 259, making a grand total of 11, 915 persons trained.

The Local Government Sector Education Training Authority (LGSETA) said that their programmes were mainly focused on water and waste water treatment  with a total 1795 candidates  trained in 8 provinces. An electrical training school has been established.

In the same series of presentations, the committee heard from the grouping “Woman in Oil and Energy” presented by Mthombeni Moller .

SAPIA reports for the liquid fuels sector

A briefing by SAPIA on transformation in the liquid fuels industry noted that it was the view generally of the fuel sector that the recently introduced and revised BEE scorecard “made sense” but in welcoming the new BEE amendment bill added to anchor B-BBEE legislation, they gave a warning to legislators and department of trade and industry that whilst penalties might stop “fronting”, the whole process of criminalising such aspects of business development might have “unintended consequences”.

The industry representatives said that the concept of a BEE commission was welcomed for a number of reasons and they told parliamentarians that SAPIA’s plans for the future included an advanced certification in management for oil and gas aimed at middle management persons in transition to senior posts and for trainers to impart to these people specialist knowledge in the oil and gas Industry.

SAPIA called upon the department of energy to take the lead in developing a number of issues in sector transformation including a proper BEE framework for all to work to; revised B-BBEE codes for the sector and technical assistance guidelines to work with that were more specific on certain issues.

Posted in Energy, Fuel,oil,renewables, Land,Agriculture, Mining, beneficiation, Trade & Industry, Transport0 Comments

South Africa to stick with published fixed fuel pricing

On briefing parliamentarians in the portfolio committee on energy on fuel pricing in South Africa and the planned “roadmap” for the future of liquid fuels being undertaken by government, Muzi Mkhize, DG of hydrocarbons in the department of energy (DOE), indicated that South Africa would continue on its current course of formula-based fixed fuel pricing for the foreseeable future.

He said this was DOE’s preferred option rather this than go for a “liberalised” system, such as is the case in Australia, where market forces operate within a structure overseen by a state consumer and competition watchdog.

The department’s director for petroleum and petroleum infrastructure policy, Jabulani Ndlovu, told parliamentarians that the import parity pricing system was being retained, with zonal pricing fixed according to magisterial districts.

A transport cost allowance built in based on least price working from pipeline to rail, then as last option, road delivery will continue.

Under questing from MPs as to whether Sasol would ever be allowed to operate independently and fix its own possibly lower prices,  he said that both Sasol and those imported crude oil and who had built refineries locally to all had to be equated in the same pricing model.

If Sasol were to follow such a course, Ndlovu said. The consequent consumer shift would be totally beyond Sasol’s capability to supply and at the same time threaten the whole of the current national refining structure, particularly where continued investment was needed by current oil companies as far as the development of cleaner fuels was concerned. He told parliamentarians that a course involving a completely free market would never be on the department’s strategic agenda.

Ndlovu explained that the basic fuel price (BFP) was based on a parallel pricing structure, or comparison made with an “importer buying the refined product from overseas seller and transporting the same to the market place in South Africa incorporating such costs as losses at sea and landing.”  It is to be assumed that he also meant to include storage costs.

However, Ndlovu said, the BFP system resulted in under and over recoveries in the light of changing crude oil prices on an agreed global market cross section and the national BFP, calculated on the first Wednesday of each month, corrected the previous month’s price differential. But then levies had to be added, he said.

This amounted to a pipeline levy run by Transnet to the interior for capital cost recovery; a levy on the quantity pumped whatever the product and a dye levy to curtail the illegal mixing of paraffin and diesel.

He then explained to parliamentarians that in addition there was a “slate” levy, a self-adjusting mechanism to finance the effect of cumulative petrol and diesel grades under recoveries realised by the petroleum industry and run by SAPIA, the petroleum association, in response to daily changes between the BFP and the petrol and diesel and price structures as announced by the state monthly as per the monthly fuel price media statements. The “slate” is cleared when reaching once exceeding R250m and re-distributed back to the industry.

On the issue of illuminating paraffin (IP) and liquified petroleum gas (LPG) the formula for each was explained, most of the problems existing, particularly in the case of IP, where products were sold on the open market and exploitation of the poor in rural areas often took place due to lack of alternative sources.

On external exported finished product, a number of neighbouring countries who bought diesel and petrol products  from SA did not necessarily have the same structure of levies, Ndlovu said, accounting for the fact that sometimes landlocked neighbours had fuel that was cheaper than in SA.

On the 20-year “roadmap” that was being planned for South Africa by DOE in an attempt to ensure that the country retained access to “reliable, affordable, clean, sufficient and sustainable sources of energy to meet the country’s demand for liquid fuels”, DOE confirmed that the department was three months behind in producing such a plan.

This Jabulani Ndlovu said, was because of the “difficulty in getting data from the oil companies” but under questioning from MPs, he admitted that there has been incompatibilities in the way questions were put to stakeholders making the answers difficult to supply due in the main to a lack of understanding on how the industry worked and separation of data facts according to the question asked.

He said DOE had leant much in the process of compiling such a “roadmap” and that it was being undertaken to encourage investment, promote diversity of supply to deal better with supply disruptions and to ensure an “integrated government response in dealing with issues on liquid fuels.”

DG Muzi Mkhize promised that the plan would be released in draft form by 30 January 2013 and the final report published by 15 February. He said he hoped DOE would be undertaking a refinery audit next year.

Neither DG Mkhize nor Jabulani Ndlovu would be drawn on the subject of “Project Mathombo”, PetronetSA’s proposed refinery for the Coega port area, nor would they be drawn on how the products would reach the market, whether by pipeline or rail.

Ndlovu said that this, they understood, was still in “feasibility study stage” with an international funder and the whole issue of any finished product emanating from the Eastern Cape had not been taken into account in the “roadmap”.

Posted in Energy, Finance, economic, Fuel,oil,renewables, Public utilities, Trade & Industry, Transport, Uncategorized0 Comments

Local government technical skills totally lacking, MPs told

Sisa Njikelana Chairperson

Despite relatively positive reports from both Eskom on skills training in the electrical engineering workplace and from SAPIA on petro chemical industry advancements in the same sphere, a report from the Association of Municipal Electricity Undertakings caused chairperson of the portfolio committee on energy, Sisa Njikelana, to remark that the country faced massive problems unless efforts to improve the quantity and quality of skills training in all spheres were re-doubled.

Present was the director general of the department of energy (DOE), Nelisiwe Magubane.

Chairman Njikelana remarked in conclusion of the meeting that nobody really seemed “totally coherent on the issue of skills transfer, mentorship and apprentice training as indeed they should be, some worse than others”, although he acknowledged that EWSWTA, the energy sector SETA, had fallen well behind in its targets mainly as a result of mal-administration in the past.

As the meeting progressed it became more and more evident that skills at local level service delivery level were a “crisis issue”.

Senzeni Sokwana, on behalf of EWSWTA’s interim board recently appointed, said that in the year under review this SETA had made a certain recovery; had identified a strategic direction with a revised corporate governance plan and that past performance in the recent short period had received unqualified audits. Nevertheless, MPs commented later, the SETA was still under-achieving.

Artisan learners registered for the energy and water SETA were 1765 with 1004 persons completing their courses and 649 wireman’s licences were issued. Included were projects such as that of Coega and a special emphasis that had been laid of “green energy” skills.  Clearly what EWSWTA was achieving, said Sokwana, was a “drop in the ocean compared with what was required” but MPs noted that it was pleasing that the turnaround in governance had been achieved.

A relatively positive contribution came from Dr Raymond Patel of the metal, engineering and motor retailing SETA, merSETA, which institution had received major funding from the German DIZ programme. He gave positive figures on learners enrolled on traditional-energy related programmes, sponsorships and programmes initiated as a result of international skills training agreements.

Training was reported with positive numbers in the metal and engineering; auto manufacturing; motor and retail management; tyre manufacturing and plastics industries. Of specific interest was their “green energy” programme and Dr Patel told parliamentarians of their first internally bench-marked forum being held at that time on the subject.   merSETA was part-sponsor of the VW-NMMU solar car being developed at Tshwane University; had signed photovoltaic skills development agreements in the Eastern Cape and was working with Eskom on the Kusile power project and Medupi power station.

SAPIA’s presentation came from Gerard Derbsy, CEO of BPSA, who told parliamentarians that the industry was going through “a period of transition as a new generation of engineers and operators entered the industry”.     The annual payroll if the industry was some R5bn with 1bn paid in tax, he said, and the industry offered 100,000 jobs both direct and indirect.

Survey findings clearly indicated, Derbsy said, that the industry was lacking high level technical skills and the reasons for scarce occupations in the petro-chemical industry were lack of experience and a lack of qualifications of equity candidates, especially black women.

There was a need, he said, to recruit people with petroleum industry-specific knowledge and “upskill” existing employees and replace those already trained but who had moved on.

At the end of 2010, 1215 artisans and process operators qualified and another 106 were completing training for qualification mid 2011. Such were funded jointly by the Chemical Industries Educational and Training Authority. 348 people, mainly black people and women graduated from the 2006-11 “Leadership in Oil and Energy Programme”. An advanced certificate in oil and gas management programme is to be launched next year, he said.

Parliamentarians noted the lack of a recognised qualification in the industry and BP’s Derbsy said that the possibility of an “institute of petroleum qualification” had been initiated and an MOU between Total, the French government and Sapia with Wits University was about to be entered into.

On the lack of women entrants into the industry, he answered that that one of the problems with the petro industry was its global nature.

On questions regarding skills training being given on oil procurement, he countered these by stating that most of the answers here lay with DOE, the future of and direction of renewable energy and a conclusion of the ISMO Bill..

Eskom showed a year 2013 target of 5,735 on stream for internal learners in training from apprentices to engineers and the utility had already achieved 7,110 persons, mainly because of the emphasis on power station building in the New Build programme.   In addition, they had achieved a total of 5,018 “external” learners mainly through the support of the sixteen Further Education and Training (FET) colleges in South Africa.

In addition, Eskom was supporting six universities in South Africa, each “leading” in a specific area of research and development, which programme was called the Eskom Power Plant Institute programme. For example, Wits University handled combustion engineering and high voltage (AC) subjects, UCT handled and energy efficiency, Stellenbosch University renewable energy; Pretoria University handled asset management and Kwa-Zulu University high voltage (DC).

Eskom said it had 4,950 artisans in the pipeline which represented 11.8% of the Eskom artisan headcount; they were investing R758m in skills training and 80% of the workforce was undergoing some form of training.

The Association of Municipal Electricity Undertakings reported that a crisis was developing at municipal level throughout the country insofar as training of electrical engineers and trade qualified artisans was concerned and the necessity to re-build staffing levels was critical.

CEO Rhodes said that South Africa had gone through a process of indecision over the REDs issue; underfunding, incoherent SETA programming and liaison; and a process of moving towards outsourcing to the private sector, all of which had left the cupboard bare in terms of local level staffing in municipal structures.

He called for a complete and national review of the needs to improve training and skills development at local government level and he was aware that SALGA was very active with the department of energy on this issue, who again were awaiting the outcome of the ISMO Bill to see what training emphasis was necessary.

Chairman Sisa Njikelana concluded that “the grim environment” in the local government area had to be investigated in the next parliamentary session.



Posted in BEE, Electricity, Energy, Fuel,oil,renewables, Labour, Mining, beneficiation, Public utilities, Trade & Industry0 Comments

This website is Archival

If you want your publications as they come from Parliament please contact ParlyReportSA directly. All information on this site is posted two weeks after client alert reports sent out.

Upcoming Articles

  1. Jeremy Cronin back on land expropriation issue
  2. Integrated Energy Plan reflects cleaned-up thinking
  3. Changes to Companies Act headed for Parliament
  4. State Bank a strong possibility with certain provisos
  5. No more Competition Commission yellow card warnings
  6. Business to meet transformation targets by law

Earlier Editorials

Earlier Stories

  • AARTO licence demerit system studied  …. In what has been a legislative marathon, the update of the Administrative Adjudication of Road Traffic Offences Act (AARTO) has now reached a stage […]

  • SARS role at border posts being clarified …. In adopting the Border Management Authority (BMA) Bill, Parliament’s Portfolio Committee on Home Affairs agreed with a wording that at all future one-stop border […]

  • Modernising SAPO a culture change ….. sent to clients 27 February…. Stage by stage, Mark Barnes, Group Chief Executive Officer of South African Post Office (SAPO), appears to be reforming cultures and […]

  • OECD money task force waiting for SA   ….sent to clients Feb 7…. Chairperson of the Standing Committee on Finance, Yunus Carrim, made it quite clear in terms of parliamentary rules that […]

  • President Zuma vs Parliament on FICA Bill …..editorial……The convoluted thinking that is taking place in South Africa to avoid the consequences of the law has once again become evident in […]