PetroSA Oversight visit report; 1st Term Committee Programme

Meeting report

Report of the Portfolio Committee on Mineral Resources and Energy on the Oversight Visit to PetroSA, Mossel Bay

The Committee Secretary proceeded to take the Committee through the report.

Discussion

Mr K Mileham (DA) said that the last few bullet points on the observation section do not flow very well and asked if they could be moved so that all the points concerning PetroSA could be together and all the things concerning the solar heaters could be together. PetroSA is running out of feedstock - this talks to the offtake agreement with Total to get feedstock, but the likelihood is that this could only occur after five to seven years. What is missing is how PetroSA plans to be a going concern when feedstock runs out in December 2020. This has to be highlighted as a major concern as no answer has yet been provided to the Committee about this.

Mr Mileham said that there were contradictory comments made by the PetroSA board who wanted to sell off non-core assets to ensure that PetroSA is able to meet its financial obligations including paying staff but the unions and organised labour said non-core assets should not be sold off until the merger with other entities is completed. The union approach is perhaps a little bit short-sighted because PetroSA will run out of money and fail to pay its staff. He suggested that the Committee urge PetroSA to rapidly get rid of anything that is not generating revenue and focus on remaining a going-concern in the short/medium-term.

Mr S Kula (ANC) said that as a Committee, they are concerned about the lack of relationship between PetroSA and local municipalities, particularly Mossel Bay. The concern is not only centred around the quality of geysers but around the distribution of geysers. He asked how the element of not having the buy in of intended beneficiaries would be addressed.

The Chairperson said that it is not a big deal to organise the report chronologically or properly - it can be rearranged. He thought reference would be made regarding the lack of relationship with Mossel Bay municipality. The Committee is concerned about the economic impact of the poor relationship between PetroSA and the Mossel Bay municipality. On the issue of PetroSA recommendations, he said that he did not want to block Mr Mileham but an observation had been made on the possible contradictions between what labour is raising and what was presented by the union. In the presentation, the Committee made an observation and noted that PetroSA intends to sell non-core assets, however organised labour is of the view that the sale of the non-core assets cannot happen until the merger process is finalised. The other view was that PetroSA cannot sell its none-core assets without looking at the merger process but not all details could be included in the report.

The Committee had also looked at the fact that what PetroSA was presenting was a turnaround or corporate plan that had been adopted but there is no process finalised about the final step, which is the Executive Authority, which the Committee said should be fast-tracked. The problem at the moment is that they did not know for how long the stock would last and if PetroSA is just sitting and waiting until the end of December.

Mr Mileham asked that a line be added that the Minister should inform the Committee of progress made in ensuring feedstock to keep PetroSA operational.

The Chairperson responded saying that should not be a problem.

Mr M Wolmarans (ANC) concurred and said that there is no issue.

Mr Kula said that the only concern is that when recommendations are made, they must be derived from the observations made. He wanted to check where the recommendation made by Mr Mileham is covered in the observation so that the Committee has the same understanding.

The Chairperson said that it is in the observations. He said that there has to be an accountability clause.

Mr Mileham noted the wording and asked for it to be corrected so that is says the Minister should ensure that a plan for sourcing feedstock be presented as matter of urgency, because the Committee cannot ask the Minister to make feedstock available but he can tell them what is being done to ensure that PetroSA has feedstock.

The Chairperson asked whether this is practical seeing as this is the last Committee meeting. He suggested that the Minister, in the meantime, works on the corporate plan and ensure that there is necessary feedstock in place. On the one hand, the feedstock issue is subject to the corporate plan, which has not had any views expressed on it, but the primary challenge is the question of the feedstock. He asked whether the Committee should not say that the Minister should ensure that there is enough feedstock to keep the entity afloat.

Mr Mileham was not quite sure how the Minister would ensure that.

The Chairperson said that Minister accounts to the Committee and would have to tell it why he was unable to do so.

The Chairperson pointed to another recommendation and asked whether the Committee should not say the CEO must interact with the Municipal Manager under the supervision of the Mayor of Mossel Bay as this should be treated as an operational matter instead of a political relationship and there should be some degree of accountability.

Mr T Langa (EFF) concurred with the Chairperson.

Mr Wolmarans said that the director of IDP is a delegated function from the Municipal Manager but his observation is that she would be better informed about what is happening and it might be important to include her as she would add value to the conversations that might unfold.

The Chairperson said the Municipal Manager was complaining that they had been writing but were not getting attention. He said that he did not want the municipality to think that the Committee was overstepping its mandate.

The oversight report was adopted.

Draft Committee Programme – Term One 2021

Members of the Committee were taken through the draft 2021 first quarter programme by the Chairperson.

Discussion

Mr Mileham asked whether it would be possible for the Committee to visit the Strategic Fuel Fund (SFF) Tank Farm and Storage Facility as well since the Committee would be in Milnerton anyway for the oversight visit.

The Chairperson agreed and said that should be the primary focus.

Mr Mileham thought the Chairperson had raised the point that it is both minerals and energy and if they are talking about energy, then NERSA should be present at the meeting.

Mr Wolmarans said that in the current quarter and in the past, the importance of this area had been raised and whether there are gaps, in terms of the different offices, he requested that it be shifted from March to February, bringing it closer rather than later at the end of the quarter.

The Chairperson asked if Members were comfortable with changing the date to 24 February. He said that this should be prioritised to be within that timeframe. He said that he does not have a problem with NERSA being present.

The draft programme was adopted subject to Parliament deciding otherwise.

Committee minutes dated 24 November 2020

Members were taken through the minutes of the meeting that took place on 24 November 2020

Discussion

Mr M Mahlaule (ANC) asked for clarification on point eight of the minutes.

The Chairperson said that the issue had been dealt with in the consolidated report and that it should be taken out. The minutes were amended.

The minutes were adopted with amendments.

Matters arising

The Committee Secretary said the Committee was supposed to receive information from the Department of Mineral Resources and Energy (DMRE) on resolutions, but this had not been received. Ms Malinga raised the matter.

Adv Thabo Mokoena, Director-General, DMRE, said the Department is finalising the collection of the information. He had been interacting with the CEO who were finalising this and it was cumbersome for them as they had to collate and consolidate all the information. He apologised for the delay and said that they are working very hard to ensure that the information is collated and provided.

The Chairperson said that the DG would be in trouble with his people. If the DG would not meet the deadline, one day this would get him into trouble. When people make commitments to the Committee, they are making the commitment on the behalf of the DG and the Minister. The DG should be careful that when people come to the Committee, they should not make commitments when they know they will not be able to live up to those commitments. If they cannot do that, this raises questions of whether they know their work. The DG should follow-up and let the person account. This should be the last time promises are made to the Committee and not fulfilled.

Minutes of 25 November 2020

The minutes of the meeting adopted.

The Chairperson asked that the DG ensure that the information that was requested is submitted on 14 January 2020.

The Chairperson thanked Members and adjourned the meeting.