Solar Water Heater programme: DMRE briefing

Meeting report

The Chairperson accepted the apology of Minister of Mineral Resources and Energy, Mr Gwede Mantashe. He noted that the Committee should not just discuss the matters presented to it, but also make recommendations and determine whether it was necessary to compile a report to Parliament on its discussions.

Mr Thabo Mokoena, Director-General, Department of Mineral Resources and Energy (DMRE), said that the solar water geyser programme was a service delivery programme, with the aim of reducing national electricity consumption and greenhouse gas emissions, supporting the poor and developing skills. Committee Members had raised concerns about the progress that had been made. The Department had addressed these and would give an update on the progress that had been made. Seventy percent of the geyser units had been delivered to municipalities, which was reducing storage costs, and the DMRE was aiming to complete the installation of 33 000 units by the end of December 2020. There were some municipalities that were not cooperating with the Department. Where there were problems, units would be redirected to other municipalities. The DMRE was assisting where possible, but the ultimate success of the programme would depend on the municipalities themselves. The oversight role of the portfolio committee would also be very important.

DMRE Presentation

Ms Mokgadi Modise, Acting Deputy Director-General: Clean Energy, DMRE, began the Department’s presentation with a high-level overview of the programme’s implementation process, noting that the nature of the programme was such that it required social facilitation at all stages. Technical feasibility assessments (TFAs) had been completed in 15 out of the 18 participating municipalities and 61 096 out of 87 000 of the geyser units had been delivered to them. The reasons for non-delivery included insufficient and insecure storage and a dispute with a supplier in eThekwini. Nine service providers had been appointed to install the geysers and the Department was aiming to complete the installation of 33 000 units by the end of December 2020. In some municipalities, several service providers had been appointed to ensure that the target was met. The training of technicians was taking place across municipalities and the aim was to complete training by the end of November 2020.

Ms Modise discussed some of the challenges the programme was facing. The water quality in some municipalities was not suitable for the geysers (Ndlambe municipality had had to withdraw from the programme for this reason), and the roofs and walls of some houses were not strong enough to carry a geyser safely. According to the South African Bureau of Standards (SABS), geysers could not be installed on asbestos roofs. Some houses had non-standard plumbing. Most municipalities had refused to allow installation to begin before learners were trained and the Department had had to ensure them that skills development was part of the programme. It was also challenging to ensure that local businesses were given the necessary opportunities to participate.

Discussion

Ms C Phillips (DA) was happy to hear that people were finally getting the geysers. She asked for the total number of geyser units that had been damaged in storage and lost to theft, and case numbers for these thefts. Had insurance claims been submitted? She also asked for copies of the reports on the houses that had been found to be unsuitable for geyser installation.

Ms N Hlonyana (EFF) asked what the dispute with the supplier in eThekwini had been about and what the name of the supplier was. She asked whether municipalities had been given deadlines to resolve issues before the geyser units allocated to them were redirected. She asked about the measures that were being taken to ensure that the geysers were properly installed. This would require auditors and it was not dealt with in the presentation. She was concerned that the geysers would not be installed properly, creating even more problems for the users. How would installation quality be ensured?

Ms V Malinga (ANC) said that the programme had started out as a failure, and asked what had happened to the project manager who was responsible for the failure. She asked whether the service providers that had been appointed were local and if so, why were they not drawing learners from the local area? Were the service providers compliant with broad-based black economic empowerment (BBBEE) procurement policies? Would the Department be able to meet its target in JB Marks Municipality, where they did not have a venue for training? She recalled that the Auditor-General had identified irregular expenditure in this programme.

Mr M Wolmarans (ANC) welcomed the progress that had been made since the last update. He had confirmation that the venue issue at JB Marks Municipality had been resolved. He asked which municipalities were not cooperating with the department and not supporting the programme? How was the reallocation of the geyser units for Ndlambe Municipality being handled?

Mr K Mileham (DA) also welcomed the progress that had been made. He echoed Ms Hlonyana’s call for the geyser units to be monitored even after installation. He asked why water quality issues had not been identified when feasibility studies were being done. He noted that certain service providers had been appointed in numerous different municipalities. What process had been followed in their appointment and why had local service providers not been appointed?

Responses

Ms Modise asked if a written report on the lost units could be submitted. She confirmed that the reports on unsuitable houses had been approved and sent to the relevant municipalities, and the DMRE would be able to share them with the committee. The dispute in eThekwini concerned a supplier who wanted the DMRE to increase the fees it was paid for storage going back to 2016-2017. The Department had realised that municipalities had internal capacity constraints that limited their ability to do quality control. She agreed that monitoring the quality of the installations was critical. Each municipality would have a quality assurance analyst, and the DMRE’s own team as well as the owner of the house would also have to sign off on the installation. Installation companies were not refusing to train local learners. The training component of the programme would provide the learners with an accreditation and experiential training but not full employment. Thereafter they would be expected to participate actively. Procurement had been done according to BBBEE policies. A list of problem municipalities could be provided. As an example, Ekurhuleni Municipality had wanted the programme to cover Thembisa but the budget was not sufficient, councillors objected to the programme and they had not provided storage. In some areas, such as Ndlambe Municipality, water quality had not been an issue when the feasibility had been determined but it had become an issue because of drought. The geyser units that had been allocated to Ndlambe would be redirected to municipalities that would have received the stolen units. The service providers had been appointed through a national competitive open tender, and all municipalities had been instructed to advertise the tender to find local service providers. Municipalities had had until mid-October to deal with challenges that had been outlined in the TFAs and the Department was pressing to get responses from them.

Mr Jacob Mbele, Deputy Director General: Programming and Projects, DMRE, explained that the programme was designed to give learners experiential training during the installation phase which would allow them to take responsibility for local maintenance in the future.

Mr Mokoena said that the Department was working with the National Treasury and would be able to share a progress report in the next meeting on the issue of consequence management. A forensic investigation was currently underway which would deal with the project manager. The name of the company involved in the dispute in eThekwini was Clean Heat. He noted the points raised by members about the benefits of the programme to local businesses.

Mr Mileham explained that his question had been about water quality rather than water supply. Why had municipalities not detected the water quality issues during the feasibility studies? He urged the Department to involve local suppliers in the installation process as far as possible. Emzansi Consulting, for example, was providing services to five different municipalities. It would be preferable if these services were provided by local businesses in those municipalities.

Ms Hlonyana added that Mbalisto Energy, registered in eThekwini, was also providing services to numerous municipalities, including Tshwane. She understood that there was a process for appointing suppliers but predicted problems and complaints from local businesses. She said that the original project manager of the programme should simply be fired, as there had been so many problems from the start. She was not satisfied with the DMRE’s response to her question on quality control. She stressed that quality control should be done before an installation company was paid in full. This function could not be left in the hands of municipalities that could not even arrange storage. Quality control by an independent company should have been included in the programme from the start.

Mr S Kula (ANC) was not satisfied with the DMRE’s response to questions about local suppliers.  A company from Kwazulu-Natal could not be doing work in Gauteng unless there was no company based in Gauteng that could do the same work. The involvement of local businesses was crucial to the long-term success of the programme. A company from another province would simply pack up and leave once the contract was complete.

The Chairperson said that the presentation did not indicate what the DMRE was doing differently to avoid the problems that the programme had experienced in the past. Had the responsible individuals been investigated? Were they still working in the department, and if so, why? Where there had been misconduct, someone should be held accountable. It appeared that someone had tried to sabotage the programme, and it was not enough to just correct the mistakes. He asked for a record of action taken against responsible officials. He was also concerned about the buy-in of municipalities. If a municipality was enthusiastic about the programme, what was its role? Notwithstanding the state of local government at the moment, if a municipality could not even make an effort to arrange storage for the geysers, it raised the question of how much they wanted them. How much interaction had the DMRE had with the Department of Cooperative Governance and Traditional Affairs (COGTA) and the South African Local Government Association (SALGA)? Even though it was a national programme, the DMRE was responsible for ensuring that it promoted local economic development and a sense of ownership of the services. Without a sense of ownership, the benefits would be compromised.

Ms Malinga asked if any of the appointed service providers were companies owned by women or young people. She also asked how long it would take to resolve the dispute with the supplier in eThekwini. Would it hamper the Department’s ability to meet its target of 33 000 installations by December 2020?

Responses
Mr Mbele explained that there were monitoring and evaluation teams made up of departmental and municipal officials, including a registered plumber, that ensured the quality of the installation. He said that municipalities were supposed to do a TFA when they applied for the programme which would look at issues such as water quality. The DMRE’s TFA was intended to confirm the municipality’s assessment. He assured the committee that its concerns about local business and community involvement would be taken into account during procurement for phase 2 of the programme.

Ms Modise noted that there were clear criteria for water quality. The main issue was hardness, or high mineral content. The Department’s TFA included recommendations for treatment to reduce the mineral content. She said that Women in Engineering South Africa (WOESA) was participating in the programme, and service providers were expected to report on the participation of women and youth. She noted the Chairperson’s comments on the involvement of COGTA and SALGA.

Mr Mokoena asked the Chairperson if the response to Ms Hlonyana’s question on quality control was sufficient. He noted the committee’s concerns about local business involvement and assured the committee that the DMRE was committed to dealing with the issue. He noted the Chairperson’s comments about consequence management, and he agreed that the department had to hold officials responsible, albeit without purging people. He also agreed on the need for a report on what the department was doing differently to avoid past problems and noted the comments on the buy-in of municipalities. He agreed that bringing a company in from a different part of the country could create problems, and that without a sense of ownership, people would disown the project. The programme was envisaged as a “turnkey” project, since the manufacturer would be in the best position to install the geyser units, while still considering the empowerment of local companies.

Ms Hlonyana was concerned that one registered plumber for an entire municipality, in which there might be 2000 geyser units, would not be sufficient.

Mr Mbele explained that each installation company had various installation teams, each of which included a registered plumber. It was not one plumber per municipality.

The Chairperson instructed the DMRE to report on what it had done to rectify the issues that the programme had experienced. Where municipalities did not cooperate, the DMRE should raise its frustrations with COGTA and SALGA. He asked the Department to report on the work done to ensure buy-in and instil a sense of ownership within communities, and to acknowledge where mistakes had been made. He reminded the Department about the critical importance of skills development and local business involvement in the programme. The Department should look at the cost of hiring plumbers, and he noted that there might already be people within the municipality who could do the work.

The meeting was adjourned.