DMRE Budget: Committee Report

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Mineral Resources and Energy

14 July 2020
Chairperson: Mr S Luzipo (ANC)
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Meeting Summary

Video: Portfolio Committee on Mineral Resources and Energy, (NA) 14 July 2020

Tabled Committee Reports

The Committee met to consider and adopt its Report on the Special Adjusted Budget for Vote 34: Department of Mineral Resources and Energy. The Committee’s biggest concern was the cutting of the Integrated National Electrification Programme by R1.5billion. The Committee noted that this was too important of a project to decrease its budget and recommended that the Minister of Finance and the Minister of Mineral Resources and Energy should engage on this. It was noted the Programme was one of the largest service delivery areas of the Department for the electrification of the country.

The Committee also recommended that the Department should develop a mitigating strategy on the spending of the INEP grant in order to avoid funds being reallocated or rolled over.

The Report was adopted with amendments. The DA reserved its right.

Meeting report

Report of the Portfolio Committee on Mineral Resources and Energy on the Special Adjusted Budget Vote No 34: Department of Mineral Resources and Energy

The Chairperson took Members through the Report page by page

Mr K Mileham (DA) commented on National Treasury emphasising that a guarantee cannot be provided that a reduced amounts will be reinstated in the next budget process as the allocation of resources is guided by the prevailing priorities of the government – he found this concerning because it will significantly impact the Integrated National Electrification Programme (INEP) going forward. He said the INEP has been reduced by R1.5billion and there is no guarantee that the funds will come back. The Department, in the meeting last week, said that the project would be delayed because they would just push it out to the next financial year, but then they have a real problem if there is no guarantee that the funds will come back.

The Chairperson said that the Committee should check if this point is accommodated under the observations section. If not, it will be added.

Moving to the observations section of the Report, it was said the household connections target of 180,000, will decrease by 43,000 to 137,000 connections.

The Chairperson asked Mr Mileham if this point caters to what he had pointed out earlier.

Mr Mileham said the bigger concern was that National Treasury informed the Department that there will not be a guarantee that this money will come back in. the INEP is the Department’s biggest project and it is being put on hold right now during a pandemic when people needed electricity and heat during the cold. While he understands the logic, he did not agree that Treasury and the Department seem to think this is unacceptable.

The Chairperson says that from his understanding, this is what the Department was told by National Treasury. The concern is the serious implication on service delivery. Under the recommendations, the Report could refer to the Committee’s considered view that Treasury should reconsider decreasing the budget. The Chairperson said he was at a bit of a disadvantage as he was not at the meeting where this was discussed. He asked other Members for their input.

Mr M Mahlaule (ANC) said bullet point one and two of the recommendations made it clear that the Minister must consult the Minister of Finance on additional funding for the INEP prior to the September 2020 budget process. The INEP is one of the few service delivery programmes of the Department and addresses the electrification problem in SA. The Department must have a mitigation strategy to ensure it spends this grant on time to avoid funds being reallocated or rolled over. The issues raised by Mr Mileham cannot be left unattended because it will not be good enough for National Treasury to just say that they do not know when the Department will receive this money. There should be continuous engagement between the Minister of Finance and the Minister of Mineral Resources and Energy to make sure that there are mitigation strategies regarding this matter.

Ms V Malinga (ANC) concurs with both Mr Mahlaule and Mr Mileham. She said the Committee laboured extensively on this point. Under observations, the Department explicitly explained that Eskom has always had rollover of about R1billion per year, but that does not take away from the fact that the Minister must motivate that this money should be brought back in the 2020/2021 financial year during the October budget.

Ms C Phillips (DA) said the Department needs to be more precise and assertive with this. There are other areas where funds can be cut such as catering, rent and consultants. The Committee should emphasise that it cannot cut the budget for the INEP even if it is only for this year.

Mr S Kula (ANC) said the recommendations addressed the point that Mr Mileham was making and the Committee should just continue with matter - the issue should be addressed in the recommendations.

The Chairperson said that on the first bullet point under observations, it should not be written as past tense. He suggests that instead of saying the budget was cut by R1.5billion, it should be emphasised the budget has been cut by R1.5billion –the Committee needed to be bolder with its recommendations on critical matters. The Chairperson took the Committee through the recommendations.

While going through the recommendations, Ms Malinga noted it is not the Department who spends the INEP, as it is given to municipalities. She said this statement should be a directive to Eskom and municipalities. The recommendation should state the Minister must ensure the Department has a mitigation strategy to ensure Eskom and the municipalities spends the INEP grant on time, to avoid funds being reallocated or rolled over.

The Chairperson says that even if the money is being spent, there has to be a framework for the manner in which it is spent and how it is accounted for. In this case, it is the Department that is granted the money and if that money is not spent in a manner that befits public financial accountability, there must be some accountability from the Department’s side. The recommendation should include reference to the expenditure framework and not just a mitigation strategy.

Mr Mahlaule says that he would have assumed that when the Committee instructs the Department to ensure it has a mitigation strategy, that that strategy would have an intervention and accountability strategy. The mitigation strategy is all encompassing meaning that it must have all these elements. That would cover the concerns that the Chairperson is raising.

The Chairperson put the Report forward for adoption.

The Report was adopted with amendments.

Mr Mileham said the DA reserved its right.

Meeting adjourned.

 

 

 

 

 

 

 

 

 

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