Category Archives: Energy advocacy

The Rubik’s cube of legislating the Mineral and Petroleum Resources Development Amendment Bill

By Abdul Waheed Patel (Managing Director) and Wisahl Jappie (Political and Communications Advisor)

Mineral and Petroleum Resources Amendment Bill

Amidst ‘chamber politics’ that has thwarted Parliament’s public perception and credibility, it is presented with a significant opportunity to exhibit its Constitutional powers and functions as the national legislative authority and platform for public consideration of issues and overseeing executive action.

On 16 January 2015, President Jacob Zuma referred the Mineral and Petroleum Resources Development Amendment Bill to the National Assembly – eleven months since the National Council of Provinces passed the Bill and Parliament transmitted it for Presidential assent and proclamation into law.

The President’s referral requires Parliament to exercise its Constitutional mandate to review within certain parameters and grounds, the process and legislative considerations it previously adopted in passing the Bill.

This presents Parliament with a legislative Rubik’s cube that corresponds with South Africa’s investor friendly pitch at the 2015 World Economic Forum – punting the viability and stability of South Africa’s mining, resources and energy sector.

There was no shortage of lobbying on the amendment bill. Some labeled it “controversial” and discouraging investment in South Africa’s embattled mining industry and the growth of the fledgling oil and gas sector. Stakeholders lamented the Parliamentary public consultation process, the redrafting of the Bill by the Department of the Mineral Resources and the timing of the Gazette notice publishing the amendments to the Act on 27 December 2012.

The President’s letter of referral addressed to the Speaker of the National Assembly, cites the following concerns regarding Bill’s ability to pass constitutional muster:

  • The definition of the Act elevating the Codes for Good Practice for the South African Minerals Industry, the Housing and Living Conditions Standards for the Minerals Industry and the Amended Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry to national legislative status.
  • Inconsistency of the sections dealing with local mineral beneficiation, with South Africa’s obligations under the General Agreement on Trade and Tariffs (GATT) and the Trade, Development and Cooperation Agreement (TDCA) as it relates to quantitative restrictions on exports.
  • Insufficient consultation by the National Council of Provinces and provincial legislatures, including the consultation period and the timeliness of notification of public hearings by provincial legislatures.
  • The need to consult the National House of Traditional Leaders with regard to customary law and customs of traditional communities, in respect of land owned or occupied by traditional communities where mineral or geological investigations are contemplated.

The President’s referral on these bases is significant. Prior to the May 2014 general election, the 4th ANC-led administration and Parliament stewarded the bill through the legislative process. This was aligned with the ANC elections manifesto for the transformation of the mineral and energy sector.

This drive towards advancing increased local beneficiation and industrialization finds its genesis in the objectives of the Freedom Charter, which proclaims that the mineral wealth of the country “be owned by the people as a whole”.

The ANC’s 2015 January 8 Statement reaffirmed the furthering of “radical socio-economic transformation” and in reference to the Mineral and Petroleum Resources Development Act (MPRDA) stated:

“The vast mineral wealth of our country, which lies beneath the soil, has been transferred to the ownership of the state on behalf of the people as per the Freedom Charter. However this has not yet translated to equal and full benefit of all South Africans. The ANC commits itself to continue working with our people to ensure that there is enhanced benefit from this ownership. This year we must finalise the amendments to the applicable laws to ensure that mineworkers and mining communities share, much more equally, in South Africa’s mineral wealth”.

All of these factors cascade into three distinct and interlinked messages.

Firstly, the ANC’s policy position on State participation in the minerals, oil and gas sector remains consistent with the original intent of the Bill and the principles of the Freedom Charter – notwithstanding the referral of the Bill back to Parliament. These are further echoed in the party’s 2014 elections manifesto and the 2012 National Conference resolutions.

In the Organisational Report to the party’s June 2012 National Conference, ANC Secretary-General Mr. Gwede Mantashe called for delegates to assess progress made in implementing the MPRDA in order to ensure compliance with the Act, in the context of maintaining the state’s strategic role in the mineral and energy complex as key sector of the economy.

In June 2015, the ANC National General Council gathers to assess the party’s mid-term progress and policy review to shape resolutions for adoption at its National Conference in 2017.

Any fundamental legislative realignment on the MPRDA and which deviates from the original policy intent is unlikely to occur in isolation of these party political policy processes which overlaps with the timing of the Parliamentary review process.

This represents the Parliamentary and legislative Rubik’s cube through which MPs are challenged to achieve a reasonable balance between their party policy objectives and ideologies, public policy and the differing interpretations of what constitutes policy certainty.

Secondly, Government is signaling to the investor, mining, oil and gas community, that the attainment of these policy objectives will not be pursued at the expense of legislation that disincentivises the investment inflow upon which Government’s quest for socio-economic transformation is dependent.

Thirdly, the State is communicating its sensitivity to the impact of sub-standard legislation that might be open to Constitutional challenge and which therefore undermines the ability of the State to advance its socio-economic objectives.

It was former Speaker of the National Assembly, Max Sisulu who vocally cautioned lawmakers during the 4th democratic about the perils of drafting poor quality legislation. During the 2013 Debate on Parliament’s Budget Vote, he bemoaned the number of laws passed by the National Assembly being returned for correction and being found unconstitutional as the consequence of “inadequate scrutiny”. He underscored the growing complexity and technicalities of legislating and the need for Parliament to draw on and maximise the availability of stakeholders to ensure access to specialized knowledge and information.

Parliament is Constitutionally endowed with powers to deal with legislation returned to it for review, as well as drafting new alternative legislation, private members legislative proposals and addressing constitutional concerns. In the case of the MPRDA, the extent of Parliament’s scope and oversight is restricted to the parameters of the constitutional concerns raised by the President.

By referring the matter to the Portfolio Committee on Minerals Resources, the Speaker of Parliament has delegated the Committee a formidable maiden legislative task, since its inception following the May 2014 general elections.

The Committee must familiarise itself with the principles and imperatives behind the legislation, the legislative and consultative process followed by its predecessors in the 4th Parliament and stakeholder input received.

Although the provisions exist for the Committee to expand its review of the legislation, it is premature to preempt the Committee’s approach to the referral and the intersecting political considerations, policy objectives and industry imperatives.

This process presents the Committee with a multifaceted piece of legislation that lends itself to the approach advocated by former Speaker Sisulu. It is a landmark opportunity for this Committee to initiate itself into Parliamentary affairs.

In recognizing the opportunity that this presents, stakeholders should be cognizant of the complex interplay between party policy, public policy, the separation of powers between the Executive as well as Parliament and its Constitutionally derived powers, functions and rules of procedures. All of these weave an intricate web of institutional arrangements comprised of Parliament’s legislative and oversight structures, party political parliamentary caucuses, Parliamentary and State legal advisors and Parliamentary programming structures. Unraveling these intricacies and the solutions to be crafted require a robust and constructive approach by decision-makers and stakeholders alike.

Published in Business Day, on Friday 6 February 2015.

‘Minerals Act a chance for Parliament to flex its muscle’

Biofuels regulations welcomed by leading industry player Mabele Fuels

Screen_shot_2012-01-23_at_10.12.26_AMCAPE TOWN:Mabele Fuels - a pioneering investor in the nascent biofuels industry in South Africa, welcomes the Department of Energy’s publication of the South African Biofuels Regulatory Framework in the Government Gazette of 15 January 2014.

 

Since the release of the 2007 Biofuels Industrial Strategy, Mabele Fuels has answered the call from Government for private sector investment in developing South Africa’s biofuels industry. The company has participated extensively in key Government consultations on the development and finalization of the industry’s regulations.

 

“The gazetting of the biofuels regulatory framework takes us a step closer towards closure of a lengthy regulatory process. Once regulatory closure is achieved, we are able to realize our longstanding commitment to develop South Africa’s largest bio ethanol refinery at a cost of R 2,5 billion” says Mabele Fuels Joint CEO Zahir Williams.

 

Job studies have recognised the Mabele Fuels project for its ability to create 15 000 – 18 000 rural and agricultural jobs in the Free State Province, through farming to meet the demand for grain sorghum as feedstock for the production of biofuels.

 

“The speedy finalization of these regulations will enable our project to progress to the construction phase and to be completed in time to meet the 1 October 2015 regulatory date for the commencement of mandatory blending of biofuels with petrol. This will be good news and inspire confidence for our stakeholders and especially the farming communities who stand to directly benefit in terms of sustainable economic development opportunities  ” adds Williams

 

Mabele Fuels will make further announcements on the project’s progress and its participation in the consultative process on the published regulations.

 

NOTE TO EDITORS:

Mabele Fuels is a South African company owned by Black Economic Empowerment groupings, emerging farmers, local investment institutions and private investors. Its business is the manufacture of fuel-grade ethanol from grain sorghum for sale in the South African bio fuels market. Grain sorghum is cultivated in South Africa’s traditional summer grain areas, like the eastern Free State and eastern parts of the North West provinces, which receive summer rainfall. It is an ideal crop for bio fuels because it can withstand droughts and works well on fallow soil.

 

Mabele Fuels is at an advanced state of readiness to commence construction of a large-scale bio ethanol refinery (158 million litres per annum) in the Bothaville area of the Free State province. The project has enjoyed strong Government support and recognition. In 2012 the Department of Energy promulgated the mandatory blending of bio ethanol with petroleum. In September 2013 the Minister of Energy promulgated 1 October 2015 as the effective date for mandatory blending to commence in the country.

 

Mabele Fuels has been expecting imminent Government approval to enable immediate implementation of its refinery construction program, for completion before the 1 October 2015 effective date of the mandatory blending of bio fuels with petrol at a 2% blending ratio.

 

There has since been significant public discourse and debate about the matter, which is likely to continue into the future as the local bio fuels industry develops toward this vision. Mabele Fuels will continue to play a leading and proactive role in heightening and informing public education and awareness about biofuels in South Africa, in particular grain sorghum as a biofuels feedstock.

 

www.mabelefuels.com

 

 

Mabele Fuel has published a set of Frequently Asked Questions about biofuels in South Africa. This is available for download in PDF at:

http://www.ethicore.co.za/resources/mabele-fuels/

 

 

MEDIA ENQUIRIES:

 

Issued on behalf of Mabele Fuels by ETHICORE Political Consulting

Ms Wisahl Jappie

Political and Communications Advisor

T: +27 (0) 21 424 1443 / 3125

M: +27 (0) 72 227 1144

Email: biofuels@ethicore.co.za AND wjappie@ethicore.co.za

www.ethicore.co.za/resources/mabele-fuels

South Africa an African & global leader in nuclear energy

Screen Shot 2013-02-09 at 12.19.10 PMSouth Africa was the first African country to undertake an Integrated Nuclear Infrastructure Revie (INIR) and the first country with existing nuclear capacity to do so. This is according to the International Atomic Energy Agency’s (IAEA’s) director-general Yukiya Amano, who is in South Africa as part of the agency’s infrastructure assessment mission. This, he argued, demonstrated South Africa’s commitment to pursuing a responsible programme in a transparent manner.

Amano was in South Africa as part of an Integrated Nuclear Infrastructure Review (INIR) mission, through which IAEA experts had been requested to conduct an independent assessment of South Africa’s nuclear infrastructure and its readiness to pursue major new developments. The INIR had been identified by government as a critical milestone ahead of any investment decision and/or public consultation process. The IAEA mission followed on from a South African self-assessment report, which was completed in mid-2012 and which had been submitted to the IAEA team. The IAEA experts, who visited South Africa between January 30 and February 8, had already compiled a preliminary report, which was handed to government at 11:00 on Friday, February 8.

The review, which is not legally binding, assessed the country’s readiness to start purchasing, constructing and operating nuclear power plants and is based on an evidence-based questionnaire covering 19 key nuclear issues, from funding and financing through to security and waste management.

Details of possible policy, technical, regulatory, safety, security and skills gaps were not immediately divulged, but Magubane said that government was committed to making the results public once the final IAEA report became available. Amano praised government openness, saying that it was important for the credibility of the nuclear industry for both the good and the bad news to be shared.

Screen Shot 2013-02-09 at 12.20.16 PMMeanwhile, Department of Energy (DoE) director-general Nelisiwe Magubane revealed on Friday that South Africa is likely to reach a “point of no return” with regard to a proposed new nuclear energy build programme by June this year. She was speaking at the South African Nuclear Energy Corporation’s (Necsa’s) Pelindaba site, west of Pretoria, following a meeting with Amano.

Magubane said the country was progressing through the various milestones endorsed by Cabinet ahead of any nuclear decision and indicated that that government still considered the solution as central to meeting the policy objectives of supply security and reducing the country’s carbon footprint.

South Africa’s current Integrated Resource Plan (IRP) for the period 2010 to 2030 envisaged the deployment of 9 600 MW of new nuclear capacity between 2023 and 2030. However, delays to the process meant that the first new nuclear capacity was unlikely to enter the system by 2023 as initially envisaged.

In addition, the IRP was due for review, with most energy-sector observers having noted that it is no longer aligned with changes in the global electricity sector, notably in the low proportion of generation capacity allocated to natural gas. In addition, the demand-growth assumptions were unlikely to be met, owing to far slower economic growth and rising power prices.

Nevertheless, Magubane indicated that a nuclear determination was likely to be published by Minister Dipuo Peters in March, which would be followed by a decision on a build programme by June. This decision would be overseen by National Nuclear Energy Executive Coordination Committee (NNEECC), which is chaired by Deputy President Kgalema Motlanthe.

The NNEECC comprises political and technical components and included Ministers and directors-general from DoE, the National Treasury, the Department of Public Enterprises, the Department of Trade and Industry, the Department of Science and Technology and the Department of Environmental Affairs. Representatives from Eskom, which has been designated as the owner-operator of any new nuclear power plants, Necsa and the National Nuclear Regulator have seconded staff to its technical committees.

The DoE has commissioned consultants to interrogate the cost and financing options associated with the development, which some have estimated could involve and investment of up to R1-trillion. Those cost projections together with the possible financing frameworks would be delivered to the NNEECC by June and would be used to inform any procurement process that could arise.

ETHICORE Political Consulting is a leading South African and regional advocacy, lobbying, government relations, political risk and political communications firm, specialising in servicing highly regulated industries, including the energy sector.