Tag Archive | Sisa Njikelana

Oil/sea gas debate re-started by Parliament

Parliament calls for public input on gas debate….

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

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

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

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

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

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

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

Carbon Tax under attack from Eskom, Sasol, EIUG

Treasury determined on carbon tax…..

clampInsofar as the policy behind the need to implement a carbon tax, for whatever reason,  there appears to a vast disconnect between cabinet and the various affected government departments, treasury and energy users, said Mike Roussow, head of the Energy Intensive Users Group (EIUG).

This main point arose in a discussion group called together by chair, Sisa Njikelana, of the parliamentary portfolio committee of energy in an attempt to find some common group on the need for such a tax.    He had invited the various parties for a round-table discussion on the subject in order to put their views.

Major run in

Present at the meeting were such major players such as Eskom, Exxaro, BHP Billiton, the South African Petroleum Industry Association (SAPIA), the pulp and paper industry and Sasol.      Treasury was represented by treasury directors Ismael Mamoniat and Cecil Morden.

However, with only members of the portfolio committee on energy present but no representatives of department of energy (DoE), department of water and  environmental affairs (DWEA) or department of agriculture and fisheries (DAFF), nor any other portfolio committees such as trade and industry or environmental affairs, the discussions had little depth, said Rossouw.

Little by little says treasury

Treasury added to the discussion by stating that the point of departure was the White Paper on Climate Change and this was the basis for the tax proposals before them. The object was to change behaviour but unlike smoking legislation, such a tax would be introduced at a very low level so that energy users with emissions got used to the idea, thus giving a longer period to adjust, bearing in mind the costs of doing so.

“The worst scenario would be to wait and to introduce a sudden and crippling tax in years ahead” said Mamoniat.    The treasury officials referred to shale gas and sea gas possibilities, recognizing that these  may change the energy mix or the energy scenario, and treasury officials noted that whilst business did not like taxes and would object to their introduction on principle, a system had to be started and once going this would change behaviour.

Why be first, says business

Much of the debate centered around the fact that South Africa, with its slow rate of economic growth, business was not in a position to contribute to being a world leader, least of all being amongst the first to introduce such a tax globally.     “Perhaps we should not be leaders, but simply fast followers”, said one party to the debate who objected to the tax.

Eskom said it was saving most of its comments for the official responses to the carbon tax policy proposals recently gazetted but said that every unit it had was running at full capacity during the winter period and the cold weather currently being experienced, all effort being expended to accommodate the integrated resource plan (IRP), the anchor document for energy direction “to which the carbon tax proposals makes not one reference”, they complained.

Ducks not in a row, says Eskom

The Eskom team presenting, headed by Ms Caroline Henry, acting finance director, was pointed when said it was totally premature to introduce such a tax especiallywhen DWAE and DOE were still working on producing an integrated energy plan for the country.      The treasury proposals, she said, represented bad timing in every respect, bearing in mind that President Zuma had already announced that the country had no intention in changing its investment conditions or the economic scenario with any new conditions.     Such proposals were totally inappropriate therefore at this time, Eskom said.

Eskom added that the IRP already came up with a 34% savings factor on emissions but what was not needed at this stage, they concluded, were additional costs and further taxes added to a plan they had been working to for a long time.   Mamoniat appeared unmoved by this objection.

Sasol firm in objections

Sasol volunteered the remark that to introduce a carbon tax fully knowing that the country was totally reliant on coal gave the impression that they were out of touch with reality. They pointed to the fact that cost of the country’s exports were mainly energy intensive resulting in South Africa loosing competitiveness, if this course were adopted.

Sasol agreed that a carbon tax was one of many tools that could be used in causing industry to further mitigate the effect of carbon emissions but its introduction now was premature, they said. The costs to Sasol would be prohibitive in any case when applied to certain operations.

“We should not introduce a tool that can make no difference to a situation”, said the Sasol representative, who added, “Asking not to introduce a tax is not to say we are doing nothing.  Plenty is being done in mitigation of emissions. This country is one of the leaders carbon reduction programmes worldwide”, they added.

Liquid fuels industry over committed

SAPIA called for a practical approach and asked what really the industry could do that was not already being done. Already the petroleum industry was over-committed to modernisation and new fuel specifications.    The current world oil importation story placed the industry in a delicate position, as treasury must have surely realized, they said.

Quite clearly in the petroleum industry, said SAPIA, there is no satisfactory return on investment and the only sensible recourse in their mind was to provide conditions where the motorist was called upon to reduce consumption.

EIUG queries common approach

EIUG repeated their initial supposition that there appeared no joint departmental overall government approach to such a tax which appeared to be the brainchild of treasury, possibly in conjunctions with DWEA. They said that it appeared that neither appreciated how much was already done and what was being planned in terms of the climate response policy calls, both globally and locally.

“We cannot and should not be the world leaders in the introduction of carbon tax”, they said. “Aside from this, there are many things wrong with the way the tax is constructed.”

Eskom queries basis of tax

Eskom concluded that it was disingenuous of treasury department to suggest that nobody was doing anything answer to reduce emissions.  In any case, the tax was not being introduced at a low rate, they said and Eskom produced figures showing the tax as suggested when applied to current production output numbers which they said would be quite crippling. They added that the effects of the tax on the Medupi and Kusile power station projects when in production totally contradicted treasury calculations on the same subject.

The discourse was closed by the chair on the note that carbon tax as a proposal could not proceed in a vacuum and he acknowledged the point that it seemed reasonable not to consider this before the production of the final integrated energy plan had been tabled and agreed upon, let alone agreement on the final energy mix involving nuclear, gas and clean energy renewables.

Treasury appears dedicated to tax

Parliament is now empowered to deal with a Money Bill as a result of the 2011 amendments to the Constitution should the carbon tax policy paper result in a draft Bill for public comment but it could be considered unusual in these early stages of parliamentary development on the issue to exercise such muscle and the matter no doubt depends on what message comes down from cabinet to party whips. The Bill would come from the Minister of Finance.

Refer previous articles in this category


Posted in Cabinet,Presidential, Electricity, Enviro,Water, Finance, economic, Fuel,oil,renewables, Health, Trade & Industry0 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.



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Cutback in nuclear is not in critical skills, says minister

The Minister of Energy, Dipuo Peters, in responding to questions in Parliament on South Africa’s reserve of critical skills in the nuclear energy field said that any retrenchments in this area were in the light of the fact that the Nuclear Energy Corporation (Necsa) had made a commitment to the unions that the retention of critical skills would be a priority, should such retrenchment processes be inevitable.

She said that the department of energy (DoE), in partnership with the department of science and technology (DST), were both investigating possible plans for the retention of skills critical to South Africa’s nuclear build programme.

It became apparent recently that in order to meet the reduced appropriations in the current budget vote there was a pending retrenchment of 250 on the Necsa staff role but the Minister stated in response to the question that the department was working with the DST on a skills strategy for the nuclear programme in order to “balance risks of excess skills and skills shortages”.

In the response to the budget vote, Necsa indicated that it employed 2 179 workers, including 115 scientists, 69 engineers, 430 skilled workers, 328 semi-skilled workers, 139 management staff, 38 unskilled workers and had 23 directors. Earlier this year, as reported by ParlyReport, Necsa chairperson Sisa Njikelana told the parliamentary portfolio committee on energy that insufficient funding for the nuclear body in terms of the 2012/2013 budget vote placed South Africa at risk when it came to nuclear oversight in terms of its mandate. Necsa is set to receive R554m, less than its previous budget.

Parliament, in making its recommendations on the budget vote to the minister as a result of DoE presentations, reminded the minister that in their view both Necsa and the energy regulator, NERSA, were underfunded.


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