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Fools go where angels fear to tread…SONA..

The theatrics before the SONA address in front of the world by Julius Malema of EFF, the party which objects to the Expropriation Bill on the basis that no compensation should be paid at all for land expropriated, has once again demeaned South Africa.

As if this poor nation had not suffered enough already from the giddy behaviour of the government towards foreigners over visas, land ownership, AGOA, intellectual copyrights and international agreements, the EFF has again sent to them the message that the country might well be ungovernable.

Core issues

Why President Zuma should have fired Finance Minister Nhlanhla Nene and replaced him with Minister David van Rooyen is not of the slightest interest to South Africa going forward. The fact is he did and the result is that Minister Pravin Gordhan has his finger in the dyke. To know what was in the mind of President Zuma when he pronounced this change is to go down a very dark road and serves no parliamentary purpose at all, other than curiosity.

It appeared that the EFF really got it wrong this time when trying to disrupt Parliamentary procedure before SONA and the Speaker of House didn’t do much better either. In any case, the EFF was mysteriously upstaged by Patrick Lekota and COPE walking out and an hour of the nation’s time lost, together with a good deal of national credibility.

In fact, it was no better than a performance under the Boswell Wilkie big top, our nation’s famous circus which sadly had its last performance in December 2015, but at least its traditions have been preserved.

Stop the side shows

WYSIWYG or “what you see is what you get” is how things work in parliamentary portfolio committees and before us we see Minister Pravin Gordhan at the pump head because of ANC malfunctions and because of an attempt to reign in the President before his cabinet ministers do any more harm to the economy.

So, in parliamentary terms, it is important that all get back to normal issues of whether or not business and industry agrees with the legislation tabled before Parliament; to continue to “get voices heard” and to determine whether government policy, in terms of mining, manufacturing, finance and banking, is giving the country the breaks it needs to score at the try line.

That is what Parliament is really about but dealing with the EFF is much like dealing with a family hooligan who has just been given a new motor bicycle.

Fitch, Moodys, Standard & Poor

Such matters as firepools, the upgrading of chicken runs and the influence of various moneyed persons are of great interest to Malema, the EFF and gossip columns. However, the main issues involve the loss of billions of rands being misspent; obdurate government inaction coupled with incompetence; and whether South Africa can restore its economic image, reduce its debt and turn the fiscus around.

The only road forward (and the only issue to march for in the streets) is for people to have jobs; jobs with skills that contribute towards economic output; jobs that increase tax input by employers making profits and jobs therefore that reduce the national deficit. That means investing in people and creating those skills. Its seems so long ago that Clem Sunther said this when describing the “High Road”.

Roll up the shirt sleeves

There are other forums to address the issues brought up by the EFF, especially matters regarding the re-incarnation of the office of Thusi Madonsela. To drag the Constitutional Court into the political arena is indeed a sad reflection of what political parties put first. As business heads have said, let’s stop this nonsense and put into action plans to save the economy.

At least President Zuma has acknowledged the superb effort by business leaders to avert the course being plotted by the present Cabinet. Creating more jobs in the public service is not the answer to job creation. Sadly, for those involved, this exercise of non-productive job creation in the public service must shrink urgently.

Now let’s see what the Budget produces and whether what President Zuma has said, after a ruler has been brought down across his knuckles, can be translated into practice.  (go to SONA article) History teaches us that leaders can emerge in times of trouble but a nation wearied of unfulfilled departmental targets and broken promises now awaits the outcome of a belt tightening budget.

previous articles in this category

http://parlyreportsa.co.za/cabinetpresidential/zuma-vs-parliament/

http://parlyreportsa.co.za/earlier-stories/state-of-the-nation/

IRP plan now out and public comment called for…..

The Department of Energy (DoE) has called for public comment on the much talked about Integrated Resource Plan (IRP) clarified as being for the period 2010-2030

Commentators have noted, that the final IRP plan anticipates that 6 600 MW less capacity will be required by 2030 than originally thought. This has led many into thinking that DoE may delay, once again, impending decisions regarding the proposed nuclear build programme but ,in the State of Nation Address (SONA), President Zuma,was clear that provision was to be made for a nuclear development  but gave no dates.

The comment period on the final IRP closes in early February and DoE, in their statement and notice, says “the responses will be used to inform a final draft to be submitted to Cabinet by March 2014.”

The report finally updates the original IRP of 2011 and takes into account SA economic growth patterns; renewable energy contributions; possible changes to the electricity market and sourcing of energy.

Peak demand expectations less

A demand projection for 2030 is made which is considerably lower the 2011 peak demand but the new document notes that “from a peak demand perspective, this means a reduction from 67 800 MW to 61 200 MW (on the upper end of the range), with the consequence that at least 6 600 MW less capacity is required.”

In addition, the update still uses the National Development Plan’s economic growth target of 5.4%, meaning that as things stand at the moment, demand projections could be reduced even further amounts unless there is a considerable change in South Africa’s economic fortunes.

This has led to many projecting that any nuclear decision will possibly be delayed, further supported by the fact that the new IRP  suggests that no new nuclear baseload capacity is required until after 2025 in any case.

Nuclear development in conflict with SONA

The 1,100 page report suggests that the country should not “prematurely” commit to a technology that may become “redundant” if electricity demand expectations do not materialise. Under such low demand growth conditions, the update does not foresee a need for nuclear baseload until after 2035.

The document also favours a procurement programme launched for between 1 000 MW and 1 500 MW of “fluidised bed combustion coal plants, based on discard coal” which is completely unlike the current coal inputs from Medupi or Kusile. It supports “stepping up” exploration for shale gas in South Africa.

The possibility of enlarging the current Eskom power station configuration with the building of new, more efficient coal-fired plants are debated and the new IRP plan calls for “flexible decision-making in favour of decisions of least regret” which means, according to the DoE IRP compilers, of avoiding “commitments to long range, large-scale investment decisions”.

Play it as you go along, seems to be the theme of the new IRP. Maybe the plan is to sell energy to the North.

Previous articles on this subject
http://parlyreportsa.co.za//cabinetpresidential/energy-resources-doing-it-better-and-quickly/
http://parlyreportsa.co.za//energy/nuclear-gas-workshop-meeting/
http://parlyreportsa.co.za//energy/integrated-energy-plan-iep-around-corner/

No commitment in state of the nation address before elections….

Most know the state of the nation, so the question  was really what President Jacob Zuma had to say about it and was a rabbit going to come out of the hat.

For the mining industry and the trade unions there were indeed some specific statements but for the rest, the state of the nation address was sadly a hodge-podge of known facts, most of it un-related to the year under review. Nothing particularly new emerged.

Furthermore, very little looked into the future, other than a surprising reference to both the possibility of nuclear development, with no timings given, and fracking, mentioning Shell by name and calling such development “a game changer”. Otherwise, general industry and commerce, trade and industry and agriculture might not have existed.

Cumulative numbers

Clearly, with an election coming and such a poor record behind him, President Zuma chose the option of saying nothing of consequence, other than to blame  current unrest in some areas as being due to success in others. Furthermore, much of the statistical success claimed by him in the state’s performance referred to the period since the ANC came to power, thus subtly once again referring to the bogeyman of apartheid.

Sadly, it was “nothing” speech, just simply delivered better than in the past.

The nation therefore seems to remain in exactly the same state as it was before; that is – without strong leadership; without any message to the international world that that South Africa is interested in doing business, and with legislation in the pipeline indicating a strong leaning by most of its cabinet members towards national socialism.

Lost opportunities

On the bright side, South Africa remains still one of the greatest countries to live in and according to the numbers, to visit. Nevertheless, the “lost opportunity factor” is growing; nobody seeming to get a grip on corruption and the slow slide downwards a failure of service delivery (which cannot be blamed on the US recovery and the effect on emerging countries) not happening.

Dr Wolsey Barnard of department of energy possibly summed up the problem, although unrelated to the address last night, in his report to the portfolio energy committee on the departments’ performance for the third quarter, contained in this report, when he said that South Africa has lost 3,000 engineers in the last ten years.

He also said it took Eskom twelve long hours to get a required licence to enter a defaulting municipal area to solve power problems at Richards Bay, closed down because of a power line fault in a municipal area and where overheating was causing an ammonia storage plant to overheat, thus threatening the area with an ammonia gas discharge.

Twelve hours of demurrage on dozens of vessels standing off at sea at South Africa’s largest export port because of municipal licence needed by Eskom to enter the area.

Somehow President’s Zuma’s speech  seemed strangely unrelated to what is actually going on in South Africa.

Eskom issue raises capitalisation….

The department of public enterprises’s, Tshediso Matona, director general of DPE, clearly indicated that the apparently now solved labour deadlock at the Eskom Medupi power station was seriously occupying minds in DPE when public enterprises director generals were responding to Parliament on state-owned companies (SOCs) in the light of the state of nation address (SONA) recently delivered by President Zuma.

Indications were that the troubled Eskom construction site and the residue of issues arising was and probably still is of greater concern to DPE than issues at such as utilities as SABC and SAA, also reported on.

If the consumer doesn’t pay the lot……

On the recapitalization of SOCs generally, Matona said that if Eskom recapitalisation was not going to come from the tariffs, alternative capitalisation would have to be resorted to. This was also the problem with South African Airways and other SOCs. These companies needed sufficient capitalization to carry out their mandates and it was a matter that involved DPE greatly in their discussions with treasury.

Matona told parliamentarians that focus was being given to the challenges faced by Eskom at the Medupi power station, where work was at one stage completely stopped due to strikes. Mr Matona told the Committee that much had to be done to improve communication lines. Latest news was that Eskom had moved their financial director, Paul O’Flaherty on site.

Complexity of contracts

The minister of public enterprises was coming up with several initiatives to resolve the crises in the long term, said Matona, much of the problem being the complex nature of the projects and the fact that their complexity made them prone to delays.

Dialogue had therefore to be encouraged and he commented that “the minister was playing a major role.”

Main plan is NDP

On general issues, DPE said it was heavily focussed on “articulating the relationship between the National Development Plan (NDP) as instructed in SONA”.  Matona said this did not mean abandoning such other instruments as the New Growth Path and Industrial Policy Action Plan but that the NDP acted as a “vision” for the department and all plans and visions were being integrated.

Other issues discussed by Matona with parliamentarians dealt with the recapitalization of state-owned companies and the development of further broad based black economic empowerment (B-BBEE) initiatives within DPE.

Land restitution

Matona said that there was a need for a complete change of approach with regards to land restitution. The overcoming of current administrative and bureaucratic blockages was a most important item. It was to be dealt with shortly. On the issue of the compliance to 30 day payment of creditors rule, Matona said that this had been particularly successful and DPE was proud of what they achieved.

On the issue of investment programmes, Matona said DPE was setting up a “project management office” in collaboration with the Development Bank of Southern Africa (DBSA) to monitor infrastructure projects. DPE was now to call a supply development summit in March 2013 at which Eskom and Transnet would present their plans in terms of supplier development with DBSA present.

Land expropriation tool….

Armed with a new tool, the Infrastructure Development Bill, government is hoping to speed up infrastructure projects by cutting red tape; shorten approval times; hit the corruption chain; force quicker decision making; and change the system by which expropriation of land takes place observing correct ground rules.

The new Bill with all of these objectives in mind has been tabled by economic development minister, Ebrahim Patel, and will grant statutory powers to a special Presidential Infrastructure Co-ordination Commission to address project management and regulatory delays challenges; coordinate the issuing of permits and licences; deal with resolution of land servitudes; bring the three tiers of government into better working relationships; improving co-ordination between public entities and improving cooperative governance in an overall sense.

Cracking down on corruption

The Bill was described by President Zuma in his state of the nation address.   He said, “We are cracking down on corruption, tender fraud and price fixing in the infrastructure programme. The state has collected a substantial dossier of information on improper conduct by large construction companies. This is now the subject of formal processes of the competition commission and other law enforcement authorities.”

Minister Patel’s statement, when tabling the Bill, said that “focused project management systems and clear performance dashboards” were being built up so that projects in hand could be monitored. Opportunities for the private sector were now being investigated and a conference would be held by government to bring about such a processes with business and industry.

Constitutional process

On the issue of expropriation of land, the Bill states it is being careful to follow constitutionally accepted procedures but Minister Patel said that bearing in mind expropriation can only occur for a public process, in order to speed matters up the process will be taken as a “given” and where such an action is involved, this will be handled on a “post development basis”, the state taking the risk of losses or losing cases.

The actual workings of the Bill envisage a statutory process led by a steering committee that can override and intervene in statutory matter affecting development, the principle being to cut down on time lag and legal obstacles.

No frills

The Bill is relatively telegraphic in its preamble and simply states the Bill is intended to “provide for the facilitation and co-ordination of infrastructure development which is of significant economic or social importance to the Republic; to ensure that infrastructure development in the Republic is given priority in planning, approval and implementation; and to ensure that development goals of the State are promoted through infrastructure development.

The Bill immediately gets down to the business of forming the Presidential Infrastructure Co-ordination Commission and the first issue to be dealt with under “objectives” is the question of the acquisition of land, making it relatively transparent where infrastructure development delays might have been occurring.

Top team

The makeup of the commission also leaves little doubt on the intent that the Commission has to exercise its powers, its body made up of the President, the Deputy President; ministers designated by the President; the premiers of the provinces and the
chairperson of SALGA.

The President, or in his or her absence the Deputy President, is the chairperson of the Commission and a decision by the majority of the members present at a meeting of the Commission is a decision of the Commission.

The Bill will enable the Commission to tie in various government department to binding decisions. One has to assume that by giving such powers to the commission over the department of public enterprises, all state utilities therefore be subject to common actions.

SONA and Budget 2013/4 beat the pundits…   

With budget behind us, the script for the state of nation address (SONA) becomes a little clearer.

At the time SONA wasn’t what was expected and represented to many a total let down insofar as direction, information and inspiration was concerned.   President Zuma’s speech was really quite remarkable for the subjects it didn’t touch upon or skirted around.   Perhaps that’s what happens when a majority party is half way through its current tenure of office.

In all fairness, however, there is so much that is about to happen in South Africa on infrastructure development and so much “in the pipeline”, that there was little the current government could do other than recycle the list of eighteen major projects that the twenty seven government departments and sixteen utilities having been talking about for months, sometimes years, all of which seem in a pretty embryonic stage. The hope is that when it all comes together, it won’t be too late.

NERSA played a trump card

On energy, little was said – in fact practically nothing at all that was not patently obvious such as the fact that Medupi and Kusile are being built. In fact nothing was said on electricity at all, the reason for which was to become evident in the NERSA decision the following week when Eskom’s multi year price determination call of 16% was toned down to 8%.

Dangerous budget

Also the following week and following SONA came Pravin Gordhan’s budget with its surprising nil increase on income tax, severe budget cuts, the introduction of carbon tax and an increased fuel levy. Once again the National Development Plan was heavily emphasised and perhaps at last government is going to get on with it with a new presidential infrastructure co-ordination commission to support the initiative.

The Budget was in some ways masterful but still frightens the credit rating agencies, with Gordhan trying to balance the books after an increased deficit over the previous year, something the new government used to pride itself on not needing under finance minister Trevor Manuel – but times change and the global recession arrived.

Executive powers

Interesting for Parliament is the introduction of the draft Infrastructure Development Bill giving extraordinarily wide powers to an all-powerful commission to be known as the presidential infrastructure co-ordination commission, as stated above, with all nine premiers, the President and Deputy President steering the ship in an effort to cut red tape and speed things up.

This can only be good, if only for the fact that the captain of the ship can speak alone to the twenty seven departments and sixteen utilities described above.

Public Service too big

Which leads to the issue of a somewhat bloated public service which has had the benefit of above-inflation increases this year, so it was pleasing to see that a skills audit of public servants is about to be commenced amongst the 1.2m public servants, which in a country of only 51m, is totally disproportionate.

Public Service and administration minister Lindiwe Sisulu told Parliament that the increase of 1% per year in salaries has to be turned into a decrease of 1% next year.

Encouragingly also, planning minister Trevor Manuel (who has but ten staff) has clearly indicated that he is relying on the parliamentary oversight system to beef up his programme to wake up to the National Development Plan.  How well Parliament scrutinizes the national budget in the coming weeks in every parliamentary portfolio committee demanding both value for money and delivery on time, every time, is now the critical issue.

According to the minister of economic development Ebrahim Patel, the infrastructure development, described by President Zuma in his state of nation address (SONA),  has to be driven by public-private partnerships.

During this speech, President Zuma promised to make 2012 “the year of infrastructure development”.   Minister Patel has followed this up in his response to the presidential  speech by stating that during this year he will table before Parliament legislation to be known as the Infrastructure Development Bill. What stage this draft has reached is not known.

Minister Patel said it was the task now of his department to assist in project management by reducing regulatory delays and the resolution of land servitude issues and the new legislation would pick up such “challenges” and address them. , Speaking in response to SONA, minister Patel told parliamentarians that the draft Bill would also help co-ordinate the issuing of permits and licences and contribute to better “co-operative governance” between state and private sector bodies.

Minister Patel said a small business funding agency was about to be launched in a few days with some  R2bn available for business development loans.

Returning to the new legislation, he said he hoped that the measures introduced by an Infrastructure Development Bill would contribute further to the ability of the department of economic development to monitor development taking place in the country.

He further pointed, as did President Zuma, towards an economic development summit to be held shortly in South Africa.

President Zuma, speaking during his state of the nation address in Parliament, declared 2012 to be the year of infrastructure development and that a presidential infrastructure coordinating commission (PICC) is to be set up in September, as planned in a cabinet lekgotla last July, to implement the plan.

Five major projects have been identified by state owned enterprises as well as involving national, provincial and local government departments.

• Rail, road & water projects in Limpopo, Mpumalanga & North West provinces
• Durban-Free State-Gauteng industrial corridor-including reducing port charges
• South eastern node, including a dam on the Umzimvubu River
• Water, roads, rail & electricity infrastructure development in the North West
• West coast developments & expansion of iron ore line Sishen /Saldanha Bay

President Zuma said the plan would also contribute towards industrialisation, skills development and job creation and that a summit would be called for potential investors and social partners to interact on the possibilities of participating.

He added that a presidential infrastructure summit will be held where potential investors and social partners can interact with government on the plan.  Hospitals and nurses’ homes would also be refurbished as part of preparations for the national health insurance system and new universities built in Mpumalanga and Northern Cape.

On other legislative issues, he promised conclusion of the long outstanding matter of labour broking and changes to labour law amendment bills sitting at the moment with NEDLAC; a Women Empowerment and Gender Equality Bill in draft and matters regarding the land reform process, particularly with regard to re-writing  the willing buyer – willing seller process. Traditional affairs matters, he said, also had to be dealt with in this regard.

Costs of the infrastructure plan and how this will come about as a financial plan, are fleshed out in the Budget from minister of finance, Pravin Gordhan, presented subsequently on 22 February.

Presenting his annual state of the nation address to Parliament, President Zuma said there was an ongoing concern from business and communities about high electricity costs.

“I have asked Eskom to seek options on how the price increase requirement may be reduced over the next few years, in support of economic growth and job creation and give me proposals for consideration,” he said.

Commenting in his speech to the nation that Eskom needs to find ways to slow price increases President Jacob Zuma said, “We need an electricity price path which will ensure that Eskom and the industry remain financially viable and sustainable, but which remains affordable especially for the poor.”

However to achieve sustainability, a pact would be required with all South Africans — including business, labour, municipalities, communities, and all customers and suppliers.

The President said, “We must save electricity. For the next two years, until the Medupi and Kusile power stations come into operation, the electricity system will be very tight.”

To increase energy capacity, government would continue searching for renewable energy sources, especially solar electricity and biofuels as the green economy accord with economic stakeholders was implemented.

But Zuma said that in the meanwhile, “everyone should play a part to avoid load shedding. To date we have installed more than 220,000 solar geysers nationwide.” The government target was one million solar geysers by 2014-2015, Zuma said.

USA president, Barak Obama, mentioned taxes thirty four times and jobs thirty two times in his State of Nation Address to the American public in mid January, according to a review of his speech by Business Day but in reading his speech it becomes evident that much was also said on matters relating to energy and climate change.

He claimed that nowhere in the world was the promise of innovation greater than in it was with USA-made energy and said he was instructing his administration “to open more than 75 percent of our potential offshore oil and gas resources.”  He said that American oil production was the highest right now than it has been in eight years and the USA now relied less on foreign oil than in any of the past 16 years.

He acknowledged that the USA “had only 2 percent of the world’s oil reserves and the country needs an all-out, re-defined strategy that develops every available source of American energy.”  He was apparently referring to the possibility of developing the natural gas resources of the USA, which was, he said, “a supply of natural gas that can last America nearly 100 years.”

He said in his address listened to by millions across America, “The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy. It  was public research dollars, over the course of 30 years, that helped develop the technologies to extract all this natural gas out of shale rock”    He said that this “was one of the places where we are going”.

He went on, “What’s true for natural gas is just as true for clean energy.  In three years, our partnership with the private sector has already positioned America to be the world’s leading manufacturer of high-tech batteries.  Because of federal investments, renewable energy use has nearly doubled, and thousands of Americans have jobs because of it. “

On energy, Obama concluded, “Our experience with shale gas and our experience with natural gas shows us that the payoffs on these public investments don’t always come right away.  Some technologies don’t pan out; some companies fail.  But I will not walk away from the promise of clean energy.  We’ve subsidized oil companies for a century.  That’s long enough.”

He said he was directing his administration also to allow the development of clean energy on enough public land to power 3 million homes, with the USA navy purchasing enough capacity to power a quarter of a million homes a year. He then announced a plan to eliminate energy waste by manufacturers with incentives, and for businesses to upgrade their buildings on energy factor lines, also using tax incentives to do so.