We are ready to interdict the nuclear deal

The DA will not hesitate to interdict any attempt by Minister of Energy, David Mahlobo, to force through a nuclear deal despite the fact that South Africa does not need or afford the estimated R1 trillion deal.
Media reports today indicate that the Energy Department has been forced to work overtime to ensure the Integrated Resource Plan (IRP) is ready by 14 November, a full four months ahead of when it was due.
With each passing day, it becomes clear that Minister Mahlobo was appointed to make sure that the necessary nuclear deal would be pushed through.
We will not allow Mahlobo to appease his friends, the Russians, at the expense of millions of South Africans who are struggling to survive with no jobs in a flat economy.
The DA will use every legal and Parliamentary tool at our disposal to ensure that the generations to come will not be shackled to massive debt that will compromise South Africa’s future.

DA to keep hawkish eye on any nuclear deal movements

The allegations in the media regarding the high-level Russian delegation who met with President Jacob Zuma shortly before the second cabinet reshuffle in seven months, which saw David Mahlobo appointed as Energy Minister, ostensibly to push through the nuclear deal in favour of the Russians, are startling, to say the least.
The previous Minister of Energy, Mmamoloko Kubayi, committed on record to abide by the Western Cape High Court’s ruling in April of this year, which declared that all Requests for Information (RFI) and potential RFP pursuant to the outdated Integrated Resource Plan (IRP) and Section 34 Ministerial Determinations are set aside with immediate effect. Mr Mahlobo is reminded that he too is bound by the court judgment and any deviation will be illegal.
In order for the nuclear deal to be approved, five key pieces of legislation/regulations will need to be updated and amended, which will require Parliament’s participation. These are:

  • The Integrated Resource Plan;
  • The Electricity pricing path;
  • The procurement regulations;
  • The framework agreements; and
  • Changes to the energy act – to allow for a different funding/ownership model.

In addition, the court ruling made clear the need for a substantial public participation process.
The fact is that we cannot afford nor do we need the nuclear deal. In any event, it is doubtful that we need nuclear in the energy mix bearing in mind that by the time reactors come online, green energy will be able to fill the gap sufficiently.
The DA will be keeping a very close eye out for any such amendments and will also push for the entire process to be open and competitive. Should the details of any progress on pushing through this costly and unnecessary nuclear build not be open to the public, the deal will be tainted and the DA will not hesitate to go to court to interdict it.

Energy Department delays and renegotiates IPP agreements in bid to secure nuclear

The DA is deeply disturbed by the long delays in signing the Independent Power Producers (IPPs) contracts.
Especially concerning is the announcement today by the Minister of Energy, Mmamoloko Kubayi, that the DOE will be renegotiating the tariffs for these renewable contracts.
This delay and renegotiation is most likely a smokescreen initiated by the Department of Energy and Minister Kubayi in a bid to buy time to ensure the implementation of nuclear energy. This is made abundantly clear by the freeze of all new renewable projects from October, until such time as they have thoroughly scrutinised and aligned it to the IRP and IEP.
The DA will encourage the affected stakeholders to go to court if necessary to ensure that their IPP contracts and prices are upheld. The IPP renewable energy programme is an established and internationally recognized economic model which should be defended.
The delays are costing people their jobs and could result in further closures of renewable energy companies. On top of this, the renegotiation process also sends the wrong signals to the energy industry and appears to be an attempt to stifle growth in the renewable energy sector in favour of nuclear power.
We will ensure the government pursues the most viable approach to maintain the supply of power to the country. Given our renewable resources, and job creation opportunities, South Africa should be prioritising renewable energy and not costly nuclear power.

Brown to appear before committee tomorrow, and crucial documents must be tabled

The DA has asked the Secretary of the Portfolio Committee on Public Enterprises, Mr Disang Mocumi, to ensure that Eskom and Minister Lynne Brown bring crucial reports and documents to the Committee tomorrow.
Brown is due to appear tomorrow before the committee, on the insistence of the DA, to account for the outrageous reappointment of Brian Molefe and the general emergence of the most incredible scandals at Eskom in the past week.
It has been confirmed that the Committee will meet at 09:30 tomorrow morning at the Townhouse Hotel.
Minister Lynne Brown and the Eskom board have confirmed their attendance and it is imperative that the Minister now stick to that commitment considering that she bunked out of accounting to Parliament last week, on the basis of a legally inadequate argument that the Brian Molefe matter was sub judice.
The DA has requested that the committee members have the following documentation in preparation of the committee’s inquiry into the Brian Molefe fiasco:

  • Minutes from Eskom’s board meetings related to the reappointment of Mr Molefe as Eskom CEO;
  • Molefe’s original contract of employment, in addition to his current contract of reappointment;
  • The letter from the board instructing Molefe’s R30 million “golden handshake”; and
  • The letter from Minister Brown giving the Eskom board the go-ahead to reappoint Molefe as Eskom CEO.

Tomorrow’s meeting of the Portfolio Committee will be the first time Minister Brown will have to account before Parliament regarding the Brian Molefe fiasco.
There has been a complete breakdown of good governance at Eskom, and Minister Brown’s seeming indifference to the capture of Eskom by the Zuma-Gupta mafia corruption ring has gone on for too long.
It is becoming clear that Eskom is in crisis. In the space of just seven days the power utility has been embroiled in several new and deeply concerning scandals:

  • Former Mineral Resources Minister, Ngoako Ramatlhodi, alleged that the then Eskom CEO Brian Molefe and Chairperson Ben Ngubane attempted to coerce him to withdraw Glencore’s Optimum mining licences in order to ensure that the Guptas takeover Glencore’s coal mines.
  • Minister Brown seemingly misled Parliament when she failed to disclose if there had been contracts of engagement between the Gupta-linked, Trillian and Eskom, in her reply to a DA parliamentary question.
  • Duduzane Zuma allegedly produced a fake ‘intelligence’ report which was used by the President to fire four Eskom executives in 2015.

The DA has called for a full parliamentary inquiry into Eskom, and the DA believes that this inquiry must proceed urgently. Eskom has become a haven for the politically-compromised as they loot and plunder our country’s public coffers.
The President, despite being implicated in all of the most serious Eskom scandals, has failed to intervene and it is now up to Parliament to ensure that good governance returns to Eskom.

Energy Department has demonstrated its ineptitude and thinly veiled venality

The following speech was delivered in Parliament today by the DA’s Shadow Minister of Energy, Gordon Mackay MP, during the Budget Vote on Energy.
Ngiyabonga Sihlalo,
The Year that Was
What a year it has been since we last met to debate the Department of Energy’s (DoE’s) annual R8 billion budget.
More so than in any previous year, the DoE has outdone itself in demonstrating its ineptitude and its thinly veiled venality.
The news headlines have been awash with the manifold scandals rocking the Energy sector. Not a day goes by without some new disclosure about Eskom, PetroSA, the Strategic Fuel Fund, the Central Energy Fund or the scandalous aspects of the intended nuclear deal.
Not only are the Department’s failures manifold, they are also becoming legendary.
For this is the Department that has gifted citizens the biggest loss by any state owned entity (SOE) in the history of our country. Standing at approximately R16.2 billion, the impairment liability of PetroSA is currently unfunded and will remain so as PetroSA’s precarious financial situation shows little sign of improving.
This is also the Department that oversaw the illegal sale of South Africa’s entire strategic fuel stock at rock bottom prices and then lied about it to the nation calling it a stock rotation. Little did South Africans know that crude oil stocks do not require stock rotation like finished petroleum products such as diesel or petrol.
This is the Department that has led the nation by the nose, claiming all the while that the nuclear procurement process was legally sanctioned, only to be told by the courts in no uncertain terms that the process has been patently illegal and designed to exclude meaningful public participation.
This is also the Department whose previous Minister last year delivered what can only be described as the kookiest speech ever inflicted upon this House, when she made incoherent comments about bad cheap wine, juvenile delinquents, EFF leader Julius Malema being unable to be a mother (a rather obvious observation one would think) and something about a cow licking a fire.
Suffice to say none of these colourful metaphors assisted in providing any clarity on the array of critical Energy issues afflicting the nation.
Then of course, Chair, we have also lived through President Zuma’s ‘Night of the Long Knives’ cabinet purge, where upon, the insistence of either the owners of the Saxonwold Shebeen or the President of a former Soviet Socialist Republic, Minister Tina Joemat- Pettersson was unceremoniously sacked and replaced.
The reason: she was not proving to be the pliable nuclear-deal hand-maiden that the President had hoped she would be.
While we in the DA wish the new Minister Kubayi every success in her new role as Energy Minister and trust that she will live up to her constitutional mandate to act in the best interests of our people, her participation in the ‘white-wash’ that was the Nkandla Ad Hoc Committee does little to inspire our confidence.
In fact, Chair, all the Minister’s participation on the Committee demonstrated is the Minister’s ability to take instruction from Number One, her ignorance of the most basic laws and her rather meticulous manicurist capacities.
The Minister has however, to her credit, made some promising noises about greater transparency and accountability and has made undertakings to ensure greater public participation in Energy policy decisions.
These pronouncements are welcomed by the DA and we wait with baited breath, Chair, to see if the Minister is in fact a woman of her word.
Crisis in the Energy Sector
Chair, as already alluded to, the Energy Sector is in crisis.
Dominated as this sector is by the State, this crisis is in no small part a direct reflection of the broader ANC failure of governance afflicting the nation.
Just as various state institutions have been captured by venal private interests via the governing party, so too has much of the Energy sector been captured to enrich the few at the expense of the majority.
Policy failure has also meant that the Energy sector’s overall contribution to GDP is woefully inadequate and well below the benchmarks and norms of comparable nations.
At a time when South Africa is in desperate need of economic growth to address our innumerable social problems, the Department’s policy planning unit continues to dither and delay.
This dithering is so severe, Chair, that I put it to you it constitutes a crime against our people.
If we are lucky Chair, the Department’s policy planning unit may deliver the Integrated Resource Plan (IRP) and Integrated Energy Plan (IEP) by the end of this year.
However, considering that both are unfavourable to nuclear, they may not survive the cabinet process.
These two critical documents which form the very foundation of the Energy sector in our country and which are required to provide much needed investor certainty have been delayed by more than 7 years.
Despite these serious delays, Chair, the Deputy Director General for Policy Planning, Mr Ompi Aphane, a dapper Malusi-Gigaba-esque individual, has remained in his position for over 4 years, his lack-lustre performance condoned by various ANC Ministers at a very real cost to our people.
The Department’s dysfunctional performance is also reflected in the various SoEs for which it bares responsibility.
Referred to most recently, Chair, by new Minister Kubayi as the DoE’s problem child, an epic understatement, PetroSA has become a joke that just isn’t funny anymore.
What is hilarious though, Chair, was the PetroSA board’s most recent presentation to the Portfolio Committee of its supposed turnaround strategy.
Presented in an 8 page PowerPoint document, yes Chair, I kid you not, 8 pages of PowerPoint of which 4 were merely company collateral, are what PetroSA board members think constitutes a turnaround strategy for a R16.2 billion loss making entity.
Simply put, Chair, the turnaround strategy failed to address the 2 critical problems facing PetroSA namely, that if it has no feed stock it cannot continue to operate.
And, if it ceases operation, then the ever expanding impairment liability falls due and needs to be repaid by the State as guarantor within 30 days.
Let me be plain, the minute PetroSA stops production at its refinery, Mr Gigaba is going to be forced to pull out the nation’s cheque book and fork out close on R20 billion. Not only is that R20 billion that the state doesn’t have, it is also yet another log to be added to the fire that has consumed the nation’s sovereign credit rating.
Chair, perhaps even more alarming than the complete lack of any strategic reflection in this so-called turnaround strategy – the document didn’t even contain the most basic SWOT analysis – is the fact that the directors of PetroSA were paid R17.3 million in bonuses in the last financial year, which would be funny chair, if hundreds of South Africans were not about to lose their jobs and livelihoods because of the blatant mismanagement and self-enrichment of PetroSA’s directors and board.
Action Step: DA Calls for Parliamentary Inquiry into PetroSA
Chair, as the DA we will not stand by idly.
I have today written to the Chairperson of the Portfolio Committee requesting that he use his powers to call for an immediate and thorough Parliament inquiry into the directors and board of PetroSA.
The urgency of the issue cannot be over stated, the very real possibility of collapse of PetroSA was highlighted in recent media reports on internal discussions indicating PetroSA’s intention to seek business rescue. Immediate action must therefore be taken by this Parliament as a matter of urgency lest we be found wanting.
A failure to act at this critical juncture will only hasten the demise of PetroSA and will add to the very significant debt burden already faced by the State, with the attendant impact on our sovereign credit rating.
Let me be clear, Chair, we are putting the Portfolio Committee Chairman Majola on notice, the DA awaits his immediate response and should the Chair fail to adequately apply his mind, the DA will take his decision on review to the courts.
The time for dithering on this matter is over.
The Strategic Fuel Fund
Chair, on the 2nd of May this year, Minister Kubayi for the first time confirmed what has long been suspected – that the supposed stock rotation of the nation’s strategic fuel stocks was in fact a sale and not a rotation as stated in this House by the Minister’s predecessor.
10 million barrels have been sold at bargain basement prices, at least $10 per barrel below the spot price at the time, without the required concurrence of National Treasury or any detail to the procurement and tender processes followed.
This is money taken from the poorest of the poor and is an absolute disgrace for a government that claims to be the champion of the dispossessed.
The sale of the crude at well below its market value and replacement value means that South Africa has no discernible path to replenishing its strategic fuel stocks.
The reason for the apparent sale are unknown and as the Central Energy Fund, the SFF’s parent company, admitted it only became aware of the sale when it identified unaccounted funds in its own bank accounts.
As the situation now stands, South Africa currently retains approximately 300 000 barrels of its former strategic fuel stock, against a daily demand of approximately 650 000 barrels.
Most of the remaining crude stocks are however unrecoverable and are of no use in the event of a global oil market shock.
Action Step: DA to Seek Investigation into whether the DoE Wilfully Misled Parliament
Chair, the matter was referred to the Auditor General for investigation by the former Minister. The Portfolio Committee awaits this report, but it must be noted that the new Minister’s admission stands in stark contradiction to repeated comments made by the Department to the public, in the media and in Committee, in which it maintained that the sale was in fact a rotation.
The DA is of the opinion that the Department has wilfully mislead Parliament and is currently reviewing all minutes and transcripts in order to formulate allegations in order to have them investigated by the Public Service Commission and the Office of the Speaker.
Action Step: DA to Seek Legal Advice on Declaratory Order to Have Sale Declared Illegal
The DA is of the firm belief that the sale of the nation’s fuels stocks was conducted in violation of the Public Finance Management Act (PFMA) as well as applicable procurement regulation requiring concurrence from National Treasury. The DA has briefed its legal counsel and will be taking advice on the potential success of a declaratory order declaring the sale illegal.
Nuclear Deal
Regarding the nuclear deal, the court has ruled the process undertaken by the Department to be illegal and has set it aside. The finding of the Court is a victory for the people of South Africa.
The Court has been unequivocal in its requirements that:
1. The procurement process be defined before the actual commencement of nuclear procurement; and
2. That credible public participation form a part of the National Energy Regulator of South Africa’s (NERSA’s) approval of any Ministerial determination to procure nuclear.
The Minister has said she will not appeal the court’s ruling.
Action Step: DA to Seek Time Frames on Nuclear Procurement Regulations and Court Promotion of Access to Information Act (PAIA) for All Nuclear Documents
Therefore, I have today written to the Minister asking her to clarify when exactly the people of our country can expect to see the proposed procurement regulations relating to nuclear procurement.
The DA will also in the coming weeks launch a court based PAIA application to obtain all government and National Treasury studies on the feasibility and costs associated with the nuclear deal in order to make this information publically available as a precursor to any public participation process.
The DA also puts the Minister on notice that our legal counsel have been briefed and are ready to interdict any deviation from the court’s rulings.
The Minister should further note that her statements in this House in response to oral questions as regards the issuing of the Request For Proposal (RFP) would seem to suggest that Minister has not quite understood the court’s ruling and I strongly suggest that the issuance of the RFP be held off until after the procurement regulations and IRP are finalised. Failure to do so Minister, would leave you and your Department vulnerable to further legal action.
The DA restates its absolute commitment to all Parliamentary and legal recourse to ensure that this disastrous and corrupt deal never sees the light of day.
Renewables and Independent Power Producers (IPP’s)
While the new Minister can rightly claim that much of the crisis engulfing the energy sector is not of her making, the Minister’s failure to compel Eskom to sign the remaining 37 outstanding IPP’s to the grid is damaging the fledgling sector and endangering R200 million worth of investment and thousands of jobs.
Your failure to act, Minister, is having very real consequences on the lives of ordinary and especially poor South Africans. That is to say nothing of the damage you are doing to investor confidence.
Might I remind you, Minister, that a robust renewables sector has the opportunity to play a leading role in assisting South Africa from exiting junk status.
Investors have shown a distinct appetite for investment in renewables and every day you dither, the appetite diminishes, and while that may be pleasing to your government which sees renewables as direct competition to nuclear, it is not pleasing to the vast majority of South Africans who are being denied a livelihood in the sector.
Word of Thanks
In closing, Chair, I would like to express my gratitude to our Committee Chairman, Slovo Majola, and my colleagues on this Committee. While we often disagree on critical issues, I can honestly say that the work of the Committee is conducted professionally and in a bi-partisan manner. Our Chair’s democratic instincts are a credit to the institution of Parliament.
I thank you.

Delay in signing of renewables contracts a massive blow to investor confidence

The DA will write to the new Minister of Energy, Mmamoloko Kubayi, to call on her to urgently set a new deadline for the signing of the Power Purchase Agreements (PPAs) for the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) and to stick to the new deadline.
This comes after the deadline for Eskom to sign the remaining 37 renewable Independent Power Producers (IPPs) contracts, from the fourth bid window, lapsed today.
This finalisation has been delayed for months after former Eskom CEO, Brian Molefe, expressed concern about making this commitment due to costs to the utility and its power surplus amid weak demand.
These concerns have been addressed by Treasury, the National Energy Regulator of South Africa and the Department of Energy.
Former Minister of Energy, Tina Joemat-Pettersson, stated that the impasse had been broken in February this year and stated that Eskom would sign off on the IPPs today, 11 April 2017.
Now there are further delays as Minister Kubayi has claimed that she would like to discuss the IPPs with the Minister of Public Enterprises, Lynne Brown, and other interested parties.
We believe that the delay is a further blow to investor confidence which the country can ill afford in light of the recent cabinet reshuffle and sovereign downgrades.
It is also convenient timing given the push for nuclear with the request for proposals being issued in mid-June.
With 13 000 jobs and R58 billion worth of investment waiting for signature, urgency is required in this consultative process by Minister Kubayi.
Having resulted in inward investment of R200 billion over the past six years, the DA is worried that the delay will negatively affect the IPPs and the successful bidders for the 2015 procured projects.
Renewable energy is a vital part of our future energy mix and should not be side-lined by potential patronage-linked motives around nuclear.
This is a test of the new minister’s commitment to renewable energy and whether the renewables programme has a future beyond the already allocated bid windows.

New Energy Minister Kubayi must clarify position on Nuclear deal

The DA will write to the new Minister of Energy, Ms Mmamoloko Kubayi, to request an urgent meeting to discuss and clarify her position regarding critical energy issues in South Africa.
The new Minister, seemingly with little or no energy experience, will now preside over significant changes to South Africa’s energy policy framework that will have long-term consequences and could provide the basis for an accelerated nuclear new build programme.
Specifically, the DA will seek clarity on the following:
The Nuclear Deal:
Minister Kubayi will play a direct role in the finalisation of the current draft Integrated Resource Plan 2016 (IRP 2016), which currently places a hold on new nuclear capacity until the mid-2030s. Whispers in the Department seem to suggest Kubayi will either make radical amendments to the current plan or simply not take the updated plan to Cabinet for approval – giving Eskom the necessary space to continue with the already underway procurement process. A failure to pass the IRP 2016, will also severely limit the ability of Parliament and civil society to question the nuclear deal.
The Renewable Energy Independent Power Producer Programme (REIPPP):
The appointment of Minister Kubayi also throws into question the future of the highly successful REIPPP, which has resulted in inward investment of R200 billion since 2011.
In July last year, the renewables programme ground to a screeching halt. There is now significant doubt as to whether the signing of the remaining 37 power purchase agreements will go ahead by 11 April 2017 as planned and whether the renewables programme has a future beyond the already allocated bid-windows. Eskom has expressed a preference that National Treasury directly cover the costs for the renewables programme – a move designed to free up Eskom’s balance sheet in order to pursue the nuclear new build programme. Such a move would be disastrous for South Africa’s sovereign credit rating, significantly undermining any attempts to regain an investment grade rating.
Amendments to South Africa’s Energy Regulatory Framework:
The Department has also been working on various troubling amendments to South Africa’s Energy Regulatory Framework as currently contained in the National Energy Regulation Act (2004) (NERA). These include the establishment of an appeal board which would have wide ranging powers. Alarmingly, membership to this board will be determined solely at Minister Kubayi’s discretion, and while the criteria for appointment will be similar to those for appointment to the NERSA board, it is deeply concerning that the bar on political party membership for regulators will not apply.
This amendment will effectively ensure the politicisation of the appeal board, making it subservient to political interference, undermining the independence currently enjoyed by NERSA. The creation of an appeal board will therefore open the door to unlimited challenges to NERSA’s rulings which may be judged on political criteria, rather than those of efficiency or equity.
This will greatly undermine NERSA’s ability to stand up to Eskom’s ludicrous tariff increase requests, as any decision taken by NERSA could be overturned by a politicised appeal board made of members of the ruling party.
There is now every expectation that Minister Kubayi will try ram this amendment through parliament in order to provide Eskom with greater revenue in order to prop up its balance sheet and support the proposed nuclear new build programme.
The DA will continue to push Minister Kubayi to clarify her position regarding energy in South Africa.

PetroSA shows further impairments of R1.1 billion, after the R14.5 billion in 2014/15 financial year

Today, the Committee on Energy was told of a further R1.1 billion impairment for current 2016/17 financial year at PetroSA. This is on top of another forensic report that was presented to the Committee on the monumental impairment of R14.5 billion in the 2014/15 financial year, the majority of which was due to the failed Ikhwezi ocean-gas project.
The DA will request the full forensic report so that a second opinion can be provided by another independent law firm on possible prosecutions against those responsible for the billions wasted.  With the value of this loss, a second opinion is completely justified.
An impairment is an expense when the book value of an asset exceeds the recoverable amount of that asset.
We will also call for the Minister of Energy, Tina Joematt-Pettersson, to account for the appointment of the current board who have presided over this further R1.1 billion impairment. Minister Joematt-Pettersson must also fast track the recommendations of the Presidential Review Commission. This must include a review of all contracts to ensure executives are awarded bonuses on performance and not on being retained only.
The two main findings from the forensic report presented to the committee, compiled by SNG, found that the project did not deliver on its gas promises and secondly that there were massive project management issues including changes in contractors, overruns, delays and a disconnect between the board and management.
The only punishment in relation to this R14.5 billion loss was two golden handshakes for the ex-CFO and the ex-CEO and a demotion for the vice president of new ventures upstream, after they were each on full pay and at home pending the outcome of the investigation.
The acting chair of PetroSA, Mr Ngubane, went on to say that the contracts of executives did not link performances to bonuses. This is disgraceful and highlights the critical issue crippling SOEs in SA – poor governance and a lack of oversight.
The main problem surfacing from this whole saga is that the ANC-appointed board was not fit to oversee this kind of project, as they lacked the requisite skills and that the board failed to punish the executives properly.
This trend seems to be continuing with the current impairment of R1.1 billion that will place a further liability on the SOE.
The DA will continue to strive for public money to be accounted for and the people involved in illegal and negligent activities punished.
The DA will continue to push for a comprehensive turnaround plan from PetroSA, which should be backed by detailed research, and include action steps to ensure that the leadership is held accountable.