Update on public participation processes relating to Gas Amendment Bill; Update on licensing regime (both Minerals and Energy): DMRE & NERSA briefing with Deputy Minister

Meeting report

Opening remarks

The Chairperson welcomed everyone to the meeting and stated that he hoped that the Committee would continue to make progress in its various tasks. There were apologies from Ms P Madokwe (EFF), Mr T Langa (EFF), and the Minister.

Mr K Mileham (DA) asked the Chairperson if the Committee was quorate. The Chairperson confirmed that there were enough Members present to proceed with the meeting and explained that a quorum is only necessary when a decision must be taken.

The Chairperson commented that he did not realise Mr V Zungula (ATM) was in the meeting.

Mr Zungula stated that he was present but must depart early due to other commitments.

Revised Committee Programme – 3rd Term 2021

The Committee Secretary took the Committee through its revised third term programme.

Discussion

Mr K Mileham (DA) commented that the revised programme is scheduled to run well into October despite the programme put out by the Programming Committee showing that the National Assembly rises on 1 October 2021. ‘What is the plan considering this’?

On the Committee inquiry, he noted that the Chairperson undertook to return to the Committee with the terms of reference for the inquiry and requested feedback on these terms of reference. He commented that the Minister should be responding to some of the other inputs received by the Committee. From an inquiry perspective, the Committee should be receiving inputs from various stakeholders; including those who are alleging impropriety or that there are problems with the programme. These inputs should be received before the Minister and the Department responds. It is not an inquiry to allow the Minister to say what the situation is – it is basically a briefing. If the Committee is to hold an inquiry, there must first be a presentation on the allegations and concerns of the various stakeholders, and then a response by the Minister.

Mr M Wolmarans (ANC) questioned when the National Assembly (NA) would be rising and what this means in terms of the Committee programme had already been asked.

On the Committee inquiry and the terms of reference, he noted that at another discussion the Committee was told that it would first need to ask the Minister to briefly discuss certain issues which the Committee had previously raised. This discussion benefits the inquiry process, and there is no problem with the Minister briefing the Committee before it discusses the details of the terms of reference, the leading of evidence, and other legal considerations. He moved for the adoption of the programme.

Mr Zungula asked on the Gas Amendment Bill hearings, if the hearings are only taking place at one location, and if this is the case, how is this justified.

On the revised programme, the Chairperson reminded Members that it was sent to the House Chairperson in advance, and it was returned in its current state. The question on the dates is a difficult one because even though the Budget Review & Recommendation Reports (BRRRs) are excluded, the House Chairperson did not see a problem. The Committee will determine how to adjust it if it needs to. The programme reflects how Parliament was programmed.

The Chairperson stated that he would examine the procedure for an inquiry. The Committee received the briefing from the Department which discussed extensively what is to happen. In this case – when there is an inquiry – one must first call the Executive Authority, especially if the inquiry is made into that person or is related to the actions authorised by that person. Before one started with the actual work, one would invite that person to talk about these “allegations”. Then, based on what was told, one would then formulate the terms of reference – the scope, approach, and potential witnesses that could assist during the inquiry amongst other things. This is what happened when the Committee dealt with the issue during the fifth Parliament on the Executive Authority at the time. If the inquiry does not begin with the person accounting, the Committee will instead receive apologies from the Executive Authority, and it will not be possible to exercise the authority of Parliament in terms of making a person appear. The terms of reference will be guided by the information that one would have received, and one would then know what one wants the inquiry to determine.

On the issue raised by Mr Zungula, the Chairperson said that it was not the agenda. Initially, there were two options planned. Firstly, there can be public hearings in the form of provincial oversight visits. Secondly, depending on the nature agreed upon as a Committee and subject to the submissions already received, there can be oral submissions. According to the programme, the Committee must decide on which option to take. The Committee will be guided no matter which option it chooses.

The Committee Secretary stated that the programme was sent to the Office of the House Chairperson for approval, and it was approved. The Committee was told by the Office of the House Chairperson how to develop its programme. But, as indicated by the Chairperson, if there are changes to the Parliamentary programme the Committee will adjust and revise its programme accordingly.

Mr Mileham respectfully disagreed with the Chairperson on the inquiry process. The Committee had already been briefed by the Minister once, and there have already been extensive discussions on the issue. He was concerned that the Committee, as Parliament, is expected to hold the Executive to account. The Committee cannot allow the Minister or the Department to set the terms of reference – Members must do so. They are set by establishing upfront what the Committee wants to examine and what process it will follow, which is followed by having the allegations put before the Committee, and then by allowing the person, entity, or Department – who is alleged to have been in breach of their/its own procedures, rules, or legislation – to respond. This is the standard practise of any inquiry anywhere. It is the way that the Eskom and SABC inquiries were conducted.

The Committee is putting the cart before the horse by saying that the Minister must brief Members and then the terms of reference must be developed. It cannot work like that. The Committee must develop the terms of reference upfront and then determine who it will call, what it wants to investigate, and then allow the Minister and Department to respond. What the Committee is currently doing is very backwards. Members have already received one piece of legal advice from the State law advisor saying that this Committee does have the authority to conduct inquiries, oversight, and investigations.

If the Committee is going to go down this path, Mr Mileham urgently requested that Members receive guidance from the State Law Advisor or the parliamentary legal advisors as to what the procedure should be, rather than the Committee basically inventing its own.

The Chairperson responded to Mr Mileham by stating that at no stage did he say that the Department or the Minister would make the terms of reference instead of the Committee.

Secondly, the terms of reference depend on what the Committee has experienced. The presentation that the Department presented to the Committee was not on an inquiry – it was a briefing on what the Department was told to brief the Committee on, and thus the Department was present but not the Minister. The Minister had never accounted to the Committee.

Thirdly, he agreed with Mr Mileham that the Committee decides on the development of the terms of reference. The difference is that the Minister, and not the Department, cannot be substituted by anyone because of his Executive Authority. By allowing the Minister to account, the Committee will have a better understanding of the allegations against him. This does not mean that during the inquiry the Minister cannot be called upon again to account as a witness. The process of an inquiry begins with the decision to conduct an inquiry, followed by the formulation of the allegations and the terms of reference.

The first port of call in an inquiry is to hold the Minister to account. This was done with the former Minister Mosebenzi Zwane, and Mr J Lorimer (DA) should recall that the Committee had to formulate the terms of reference only because former Minister Zwane could not appear before the Committee after he had already appeared once previously. The same thing happened during the Eskom inquiry, where the Minister of Public Enterprises at the time was the first to be called to account on allegations made against him, followed by the terms of reference.

The only difference between this inquiry and the Department of Public Enterprises and the Department of Communication’s inquiries is that there were people who led evidence during the latter two inquiries. Parliament says that this did not occur in this Committee in the Fifth Parliament.

There may be disagreements on which stage of an inquiry happens first, but it is wrong to say that Members do not understand their roles in holding the Executive accountable.

Mr M Mahlaule (ANC) commented that the Chairperson could not have summarised the issues raised on the inquiry process better. He agreed with Mr Wolmarans that the programme should be adopted and stated that the inquiry process was sufficiently discussed.

The Chairperson concluded the discussion on the programme by stating that there was a mover (Mr Wolmarans) and a seconder (Mr Mahlaule) for the adoption of the programme. The Committee is guided by the administrative staff on precisely what it must do. Members must adopt the programme in principle, but the programme is subject to change. For example, Parliament may rise before the items on the programme are concluded, or the BRRRs may not be dealt with but other outstanding matters on accountability may be. These outstanding matters include entities like NERSA proceeding to deal with issues – according to the standard procedure – that are not tabled in the National Assembly.

Update on the Gas Amendment Bill

The Committee Secretary took the Committee through the update on the Gas Amendment Bill. He commented that the options listed on the public participation processes are not exhaustive, and the Committee can decide on how to deal with the Gas Amendment Bill without choosing one of the listed options.

Discussion

Mr Mahlaule stated that, for the Committee to do justice to the Bill, all three options should be undertaken. At a later stage the Committee may want to discuss whether the proposed date will allow for the completion of all the options, but for now, all three options should be undertaken.

Mr Mileham agreed with Mr Mahlaule that all three options should be undertaken. On option three, he commented that there are possibly three to four provinces that require extra attention. Firstly KwaZulu-Natal, and specifically the Richards Bay area. Secondly, the Western Cape, and specifically, the Mossel Bay and Saldanha areas. Thirdly, the Eastern Cape, and fourthly, the Northern Cape. On the Northern Cape, the focus must be on the impact of hydraulic fracturing. The Committee may need to visit some inland communities such as Graaff-Reinet in the Eastern Cape, where the impact of hydraulic fracturing is a very sensitive issue.

The Chairperson expressed his concern about option two but was willing to compromise. The issue with option two relates to the question of which criteria would be used to identify stakeholders except in the case of traditional stakeholders. Option two tends to be very technical and challenging. The Committee must agree in principle that a decision will be made on the provinces and key areas, and the suggestions made by Mr Mileham were noted.

Mr S Kula (ANC) commented that it is good for the Committee when Mr Mileham agrees with suggestions that were raised by Mr Mahlaule because it means that the Committee is making progress. He agreed with the options listed but had a problem with the suggestion that a specific area in each province be identified. The problem relates to how option two was worded. If the Committee must be able to identify a specific area in a province, it should also be able to identify which stakeholders it intends to invite. This must be agreed upon now or during a later meeting so that the Committee does not appear biased when it sends the invitations.

Mr Zungula agreed that all three options must be undertaken to do justice to the Bill. However, he also agreed with the point raised by Mr Kula. The Committee will be assisted by the invites not creating a perception of bias. If a perception of bias is created, the Committee might find itself in a difficult position.

The Chairperson agreed that option two would require the Committee to explain why certain stakeholders were invited to make submissions. For example, the Committee usually invites university professors, but these invitations would now have to be justified because it could be interpreted that these stakeholders may not have had an interest in the public participation process in certain areas. This potential issue is not currently urgent, and the Committee will return to discuss and motivate which areas and which provinces will be targeted for public hearings. In some provinces and areas, the Committee may need to stay for longer than one day, but this will also be discussed at a later stage.

Update by the Department on the licensing regime

The Chairperson welcomed the Deputy Minister and stated that the Committee looks forward to interacting with her. He explained that while briefings are important, they must go straight to the point. The Department must highlight the challenges it is facing so that the Committee can assist and determine whether there are areas requiring emphasis. Presentations should not be read word-for-word to the Committee.

The Deputy Minister of Mineral Resources and Energy, Dr Nobuhle Nkabane, greeted everyone present and stated that she appreciated the work done by the Committee. It is tough oversight and critical lines of questioning which are very important to the Department and its entities. The Department will not take this effort and guidance lightly.

She introduced the management of the Department and stated that Adv Thabo Mokoena would be leading the delegation.

She stated that the presentation would focus on regulation and compliance perspectives. As the legislatures, context should be considered, and a one-size-fits-all solution should not be prescribed when responsibilities are performed. When policies are reformed, or relevant statutes in the sector are amended, the subsequent interventions should be informed by the challenges encountered while the daily responsibilities are completed, as well as by the magnitude of the problem.

The Committee will remember that on 3 March 2021, the Department presented to it on the license application backlog and the turnaround plan to address the backlog within a three-month period. The Department was also directed to present an improved plan for the SAMRAD online application system within a six-month period which will be included in the 2021/2022 Annual Performance Plan (APP).

The Department is pleased to announce that it had already begun implementing the programme to clear the mining license backlog in Mpumalanga which has the highest backlog. The configuration and installation of the electronic application system is still being procured. There may be some obstacles in the system and in the sector, but together with the Members of this Committee the Department will overcome these obstacles. Resilience is the only hope for the future of the economy.

The Department understands that the Committee is currently facing competing demands and a shortage of staff, together with the fact that the Chairperson of NERSA has not been appointed as yet, but the Department hopes that within two weeks the Minister would have appointed a chairperson as this has already been signed off.

Adv Mokoena provided a brief outline of the presentations that were to follow and stated that Mr Tseliso Maqubela, DDG: Minerals and Petroleum Regulation, would take the Committee through the presentation on the licensing regime, followed by a presentation by NERSA.

Mr Maqubela then took the Committee through the presentation.

Progress update on clearing the Mining License backlog

The Department is pleased to report that the procurement of an online application system is underway and the clearing of the backlog is work in progress – not much progress has been made.

Number of licenses adjudicated since March 2021

Prospecting rights applications:

-New: 438
-Renewals: 69

Mineral rights applications:

-New: 34
-Renewals: 14

Challenges

-Disruptions caused by covid-19 closures and directives on the percentage of employees at premises.
-Connectivity from use of desktops to laptops must be phased in.
-Inadequate staffing to deal with the volume of work.

Interventions

-Re-skill personnel from Department of Energy (DOE) and encourage multi-skilling within the branch.
-Improved ability to work remotely. Conversion of use of desktops to laptops will be phased in.
-Institute consequence management where necessary to improve accountability.
-Temporary assignment of personnel from the Western Cape and Free State to assist with the Northern Cape backlog.
-Procurement of the online licensing system.

SAMRAD update

-Commenced with the procurement process of a new modern IT system through the State Information Technology Agency (SITA).
-Appointment of a service provider expected to be completed by end of October 2021.
-The procured system is expected to:

1-Simplify and improve efficiency in rendering of services to investors in the mining industry and the public.
2-Enhance investment in the mining sector and to grow the economy.
3-Provide a seamless interface for investors through the licensing value chain.

Petroleum Licensing

Challenges

-Rotational and staggered staff attendance in Covid-19 regulations has unintended consequence on the turnaround time of applications.
-Departmental/office closures for decontamination due to positive cases affecting the turnaround time of applications.

Interventions

-Introduction of overtime work during weekends has assisted in processing applications.
-PPALS system update will enable regional offices to transmit applications to the Head Office online with effect from 27 August 2021.
-This will improve operational efficiencies as:

1-Quick turnaround time by reducing the time it takes to transfer a physical application from the regional office to HQ via post or courier would be reduced.
2-Prompt update of application process
3-Quick decision-making process

(View the presentation attached for further detail.)

Update by NERSA on the licensing process

Mr Smunda Mokoena, NERSA member, introduced the delegation from NERSA and stated that Adv Nomalanga Sithole, Acting CEO, would take the Committee through the presentation.

Adv Sithole then took the Committee through the presentation.

Petroleum Industry

Number of licenses issued

Total:

-Western Cape: 48
-KwaZulu-Natal: 43
-Eastern Cape: 25
-Northern Cape: 7
-Gauteng: 31
-Free State: 31
-Mpumalanga: 18
-North West: 15
-Limpopo: 13

Transformation (BEE) & Investment

Investment by licenses:
-Construction licenses issued: 1 January 2018 to 31 July 2021 = 6 projects; R4.753 billion
-Construction projects completed: 1 January 2018 to 31 July 2021 = 7 projects: R5.64 billion

Main challenges and corrective steps being taken

Challenges:

1-Capital intensive nature of projects
2-Proving financial abilities (new entrants) for bankability
3-Third party access (import facilities and pipeline)

Interventions:

1-Funding to be made available/institutions
2-Securing product supply/Signing of take-off agreements
3-Determine uncommitted capacity on a forward-looking basis

Support requested in respect of identified regulatory challenges:

Amendments to the PPA and Regulations:

-Definitions in the PPA
-Registration (similar to Gas and Electricity)
-More powers to enforce compliance

Addressing fragmented regulation:

-Overlapping/concurrent mandates
-Alignment of processes/coordination between government depots/authorities/agencies
-Funding support for new entrants

Piped-gas industry

Number of licenses

Issued/declined/withdrawn/cancelled

To date:

-Issued – 254
-Withdrawn – 3
-Revoked – 7 (revoked by licensees who no longer require the licenses e.g., construction licenses revoked after construction activities were completed)
-Not granted – 2

Main challenges and corrective steps/proposed solutions

Challenges:

1-Lack of adequate provisions in the current Gas Act, e.g., definition of gas, no provisions for TPA to distribution facilities
2-Incomplete information in licence applications
3-Lack of proof of tenure (lease agreement) with the Ports Authority

Proposed solutions:

1-Expedite finalisation of Gas Amendment Bill
2-Pre-licensing meetings with prospective applicants to clarify application requirements before submission of license applications
3-Nersa and TNPA already working to coordinate their processes. However, a more streamlined process for strategic gas projects is needed

Electricity industry

Number of licenses issued

-Number of generation licenses:

1-Eskom – 32 power stations
2-Municipalities – 12
3-IPP including renewable energy – 155

-NERSA has registered 375 generation facilities of no more than 1MW with a total capacity of 165MW

Number of licenses issued/declined/withdrawn/cancelled

-Total distribution licensees = 178 including Eskom
1-165 municipalities
2-12 private distributors
3-1 Eskom

-Two transmission licenses:
1-Eskom
2-Motraco

-One trading license

-There were no licenses declined/withdrawn/cancelled

Main challenges and corrective steps being taken

-Applicants do not want to spend any money on project development without getting a license first. Applications would then be submitted without environmental authorisation, technical and financial feasibility studies.

-NERSA has already relaxed the requirement for complete environmental authorisation, but it still requires technical and financial feasibility studies, because these requirements are legislated as well as evidence that the environmental authorisation was initiated.

-Applicants do not want to undergo the public participation process but it is a legal requirement for NERSA. Without the public participation process, NERSA’s decision can be easily challenged in court. NERSA is holding conferences to educate the public.

(View the presentation attached for further detail.)

Discussion

Mr J Lorimer (DA) stated that – on the cadastral licensing system – when he first joined the predecessor to the current Mineral Resources Committee in 2013, it was an issue. Those early few years were marked by the Department and government essentially denying that it and SAMRAD had serious issues up until 2017.

In the EPC of 2017, the then Minister stated that SAMRAD was not only sufficiently functional, but also that it was completely transparent. Within a few months, it became clear even to the Department that there were problems, and the Committee was told back then by the Department that it was looking at a new system. The plan developed by the Department was not simply to use a new cadastral system as in many other countries, but to use a new, all-encompassing IT system that will integrate the cadastral system with all other systems.

Despite the failures of SAMRAD, it is still being used by the Department. The tender that has gone out for the replacement for SAMRAD is an entirely new system, apart from the financial system. It is a very high-risk approach replacing all the internal systems at once, and it will also be a much longer process.

The team appointed a few years ago to deal with the replacement system has said that there is nothing commercially available – as a cadastral system – that will meet its needs, because it is an integrated system and not simply something that deals with online mining rights applications. This team is proposing to build an entirely new system that is custom-made. This recommendation has apparently come from the State Information Technology Agency (SITA), which does not have a good record.

For example, the integrated financial management system is a project that the State embarked on around ten years ago. After ten years, it had to modify it to include off the shelf software. SITA then admitted that the project was not feasible, and it had to start again. In the meantime, SITA had spent almost R1 billion that is currently under investigation. This is a risk that the Department also faces. After three to four years, the tender finally went out, and it was several hundreds of pages long. However, those wanting to apply for it only had ten days to do so. It was also written in such a way that no established cadastral service provider or an international company could participate.

‘Are the people who drew up the tender specifications also bidding for that tender’? He believed that this was the case. On the issue of timelines, ‘when will there be a functioning online cadastral system’? The lack of one is a key obstacle to new mining investment. What will the system cost? Any figure that is given now will most likely be exceeded, and any timeline given will most likely not be met. Why does the Department insist on developing such a huge new system, and why has the tender been written in the way that it was?

Ms V Malinga (ANC) welcomed the progress made by the Department, especially in the Mpumalanga office. ‘Is the Department comfortable with the timeline that has been set around October 2021 for the SAMRAD tender? In the meantime, what will the Department do’?

She heard that the KwaZulu-Natal offices were closed due to two issues – the pandemic, and the diamond rush. Were any diamonds found in Ladysmith?

On the issue of the illegal digging for chrome, which is then transported on South African roads, has law enforcement been involved, and if it has, how far is this process? A license is required for the mining and transportation of chrome.

Mr Wolmarans stated that the presentation dealing with the licensing regime was discussed at length last year when Parliament began. The situation did not look good. Today’s presentation on the licensing regime and turnaround strategy has shown good progress – especially in Mpumalanga – and came as a relief to the Committee. Initially, there were many complaints, both from within the Department and this Committee as representatives of the public.

The figures show significant improvement in several provinces, but there are also challenges. For example, there is a staffing issue in the Northern Cape. How will the Department deal with this issue? Is it sufficient to relocate staff from other provinces, and what might happen to the gap that may be left? What steps is the Department taking to ensure that the regional management is empowered to function sufficiently and be accountable for their work?

In areas such as North West, there is a large amount of minerals on tribal or communal land. Communities in that area are constantly in talks with the Department or the Regional Manager, which takes away valuable time from the strategic management to deal with the issues of the communities. There is a lot of conflict among communities and facilities which own pieces of land where mining is taking place. ‘What strategy does the Department have in places to expedite the handling of such issues, given that these issues hamper the assessing of licenses and permits, as well as the potential investments into the areas’?

The Department must stick to the stipulated timeline of October 2021 to secure a service provider that is able to deal with the issues of backlogs and reliability adequately.

Mr Mahlaule welcomed the presentation, which showed the progress made by the Department since the last presentation on the licensing regime. He reminded the Department that the Committee called to have this presentation tabled because communities and businesses were unhappy with the system used to issue licenses in the respective categories. Communities were also unhappy with the way the Department responded to their issues and alleged that the regional offices were acting in bad faith.

These complaints should be given more attention, especially the ones coming directly from communities. The Committee is overwhelmed with letters, emails, WhatsApp messages, and calls from members of the community who complain that the Department is not assisting them in resolving their problems. This is an issue on a regional level.

He noted that when the Department records progress, its categorisation of the numbers show that progress is not being made as new applications and complaints are submitted while the backlog is attended to. The Committee should not worry and should applaud the good work that the Department is doing in supporting the many dysfunctional regional offices. The Committee should also assist the Department to allow it to continue addressing the backlog.

He suggested that there should be a centralised, systematic method of dealing with the complaints submitted to the Committee by the communities. The Committee had dealt before with the letters which came directly from the Speaker, with some having not been responded to. This method must ensure that the Department responds to the complaints quickly. The responses themselves do not always need to be positive, but complaints must always be responded to. Even acknowledgements of complaints are sufficient in some instances. Communities want a responsive Department of Mineral resources and Energy, and maybe the Director-General should be held accountable for ensuring that complaints are responded to.

The Chairperson welcomed the progress made by the Department but commented that it will end up being a victim of its own success. He feared that the Department would not be able to respond to all complaints submitted to it within a reasonable period, resulting in this Committee becoming a platform for the lodging of appeals by the communities. The Committee may not have the capacity for this.

He agreed with Mr Mahlaule that responding to complaints must be done in a systematic way to ensure that there is confidence in the Department.

He commented that it may be problematic that the Department uses a system that was believed to be dysfunctional for not yielding the necessary results on the one hand, but on the other hand, that there are now positive results using the same system. Can this success be attributed to the current system? If so, does it not send the message that the system was never the problem, and instead, the people working with the system were? Would this success not reflect a lack of consequence management and manipulation of the system?

Can it be assumed – on the turnaround time for a prospecting rights application, for example, being 27 days – that if an application is lodged on the 14th of a month, and keeping in mind that public servants are paid on the 15th of every month, that same public servant responsible for the processing of applications will get paid on the 15th of the following month without having done anything on the application?

On the number of backlogs, particularly in Mpumalanga, would it be correct to say that the drastic reduction in this number shows that the biggest problem is human character? The current system is prone to manipulation, and, without questioning the integrity of the Department, is there any proof of the correctness of the numbers, such as an auditing system of the information? This sort of system is a necessity for accountability.

On the initial procurement and the briefing that was given on it around four years ago by the Chief Information Officer, what is the status and progress of it? Is this initial procurement linked to the current one, and are there any cumulative costs involved? Is the Department certain that was being recommended to it is actually what it needs?

Is the ease of doing business being considered, to the extent that the Department makes available easily accessible data which makes it easy to understand where commodity investment could be made? The Department and Committee can also consider whether this data should be under the direction of the Department itself or one of its entities.

‘On the issue of consequence management and transparency, has the Department conducted a thorough investigation on problematic individuals, and is it certain that those workers who worked at the office that was closed were not hired again’? What action has been taken on these individuals? Is it possible for the Department to utilise a system that reflects the date when an application was lodged and how long it has been in the backlog?

Responses by the Department

The Deputy Minister stated that the Department is committed to improving any gaps.

She stated that the Committee deciding to configure and install the electronic system that is being procured was in response to the needs of communities, businesses, and all other relevant stakeholders as there were many complaints submitted. It was alleged that the system was prone to manipulation and the Department is trying to close all gaps that were identified.

On the issue of staffing, the transferring of personnel between offices does have a negative impact on performance, but the Minister made a commitment that the Department will re-evaluate its organisational structure.

Adv Mokoena noted and confirmed the comments made by Mr Lorimer on the history of SAMRAD but reminded the Committee that the Department is not married to SAMRAD.

On governance and the wording of the tender, he stated that one cannot be part of the process of formulation of the tender and then bid on the finished tender. The Department does not consist of businesspeople, and the officials from the IT side, as well as those from SITA only assist with their technical expertise to develop the terms of reference. The SITA is empowered by the law to work in this area.

The tender is closing soon, and the Department estimates that the successful bidder should be able to start working around November. The Department respectfully declined to respond to the question on the costs as the tender is about to close.

The service providers were given a period of 21 days to respond, which the Department believes to be reasonable as the system was available off the shelf and because this period was governed by the law. There are relevant governance structures or processes which can deal with any related issues.

The tender does have many pages, but this was intended to clarify any possible issues or questions. The Department also believes that the timeframe stipulated to bid for the tender is sufficient. In addition, there was a compulsory briefing session with the aim of clarifying any issues or questions from bidders. There may still be people who want to raise issues, and the Department has made it clear that it is available to deal with these issues. The bidders were also given a week to send any additional questions.

International bidders are not excluded from participating in this tender and they may participate if they wished to.

The implementation has a staggered approach. The priority is the replacement of SAMRAD, which will be followed by other additional MPFDA functionality as well as optimisation. This will be achieved within the first year.

On the motivation, the Department has been experiencing challenges and it needed a new system that would attract investment and align with the pronouncement by the Minister.

The Department has noted the strategy that it must implement as suggested by Mr Wolmarans. There is in fact already a plan in place. With the amalgamation of the two Departments, there is an excess of staff members. The Department understands that the issue lies in its dynamic mandate, and it must use its available resources to deal with all its service delivery issues. A unit has been established to deal with community facilitation whenever there are complaints from communities, and the Department has initiated the process of establishing this specific Directorate by appointing the Director.

On the issue of minerals on communal land, there is a legal provision – Section 104 of the MPRDA – which states that communal land members can apply directly to the Minister for prospecting rights, which would ultimately evolve into mining rights. According to the plan that has been implemented, the DDG Maqubela and his team must be able to focus on the strategic issues, while others focus on the operational issues on the ground. Stability in the mining industry will assist the Department.

The Department started a process with the Minerals Council and established what it calls a ‘one-stop shop’. Here, the Department deals with all issues being raised by different companies. The issue raised by Mr Mahlaule on the involvement of the communities and the need for a systematic method of dealing with community complaints was noted, and the Department will ensure that it is established.

On the issue of vacant posts, the Department is looking into it and since last year has been advertising several positions, especially for the land function branches in the Department.

On the issue of proof raised by the Chairperson, the Department does have an audit directory which audits the work done by different branches. It is a matter that the Department is concerned about, and it ensures the Committee that whatever it presents is credible.

The issue raised on the human input into the system is a contributory factor, and the Department has taken the necessary measures to discipline those who acted illegally, and it continues to do so. Reports on the progress of these measures to date are available.

Mr Maqubela appreciated the words of encouragement from the Committee and stated that it was a team effort. The fact that the Committee recognises the progress made by the Department will assist the Department in making further progress.

There are three Chief Directors and a committee of six people responsible for licensing. All the numbers presented have gone through the licensing committee, minutes are kept of all meetings, and these minutes are auditable. The records of the meetings exist and can be audited.

On the Mpumalanga Office, part of the problem was that employees were not updating the SAMRAD system for whatever reason. What was found to be effective was to be firm on the system being updated. If someone does not update information, they must account for that. In practice, this has also helped to improve the credibility of the operation.

On the question of the diamonds, unfortunately, they turned out to be of much less value quartz crystals. The community was informed that, despite it being quartz, a license must be obtained to undertake any form of activity. The regional team is handling this process quite well.

On the issue of the illegal mining and transportation of chrome, the reality is that there is undoubtedly a syndicate operating in the chrome environment. This conclusion was reached with the South African Police Service (SAPS) and through the intervention of the Director-General. The Department has a team examining all illegal activity in the mining sector. This team has work streams and is hard at work in trying to deal with the issue of illegal mining.

Recently, the Department has appointed someone who is experienced in enforcement and was previously at SAPS. His presence in the Department has already led to breakthroughs in the investigations and arrests in the illegal mining space.

On the issue of the exchanging of staff, it is true that the provinces where staff members were sourced from may suffer. In response, the Department decided that some employees from the Western Cape will assist in the Northern Cape with the system which can be done online from anywhere.

On the issue of wrongdoing, consequence management is being implemented. The internal investigations conducted by the Director-General have found some of those acting against the Department and action has been taken in response. This work is ongoing and the hope is that the culture in the Department changes. The Department will continue with its effort to ensure that any advice given to management by the internal auditor is implemented.

The Department acknowledges that it can do more on the issue of community complaints and commits to doing things slightly differently. One way it intends to do so is to decentralise the community and stakeholder engagement by not just having a central point at a head office. Instead, multiple regions will be able to perform this function.

On the specifications of SAMRAD, the Department as the user detailed the specifications after consulting the Director-General and mining experts, including some in as far as Canada. The experts then developed the terms of references which have since gone out. The Department is slightly removed from the process and awaits the outcome thereof.

On the issue of the human character, the Department must constantly look to improving its culture. What it found is that if everyone knows that someone else has an interest in the work done by them, they will try as much as possible to limit any possibility for manipulation. The Department cannot deny that there has been manipulation, but it can ensure that it is dealing with cases of manipulation.

The Department also ensures that it will date its information, as was done with the Mpumalanga numbers. As indicated, the backlog from 2012, 2013, 2014, 2015, and soon 2016 was cleared, and soon there will not be any applications older than three years in the system.

Further discussion

Mr Lorimer asked, again, when the Department will have a working, credible cadastral system. Why is an expensive, risky, and purpose-built system preferred to an off the shelf system? A working cadastral system is vital for unlocking development.

He understood to an extent why the Director-General was coy about giving the exact cost of the new system, but he requested an indication of how much it will cost as there must be a budget for it. Once the new system is developed it can then be compared to an off the shelf system that has been tested in the market.

Despite consulting with mining companies in Canada, it does not seem as if the Department consulted with any successful cadastral companies. ‘Was Botswana consulted with’?

International companies are also shut out because of a pre-specification on the bid for the tender.

Mr Lorimer did ask other questions, but he was experiencing connection troubles and those questions were inaudible.

Follow-up responses by the Department

Ms Cathy Leso, CIO, DMRE, stated that, on the shutting out of international companies, the government has a mandate to transform especially the ICT sector. The bid specification states that international companies must partner with a local company and share their skills in South Africa so that the Department does not rely on international companies.

On the timeline for a working system, this time around the Department will adopt a staggered and phased approach to its implementation. During the first year of its implementation the Department should have SAMRAD stable and working. During the next years the Department will implement the other models to be used by the other branches.

The license system is a value chain. Simply focusing on exposing the data and allowing the client to apply without monitoring their compliance or their lack of giving back to the economy will not serve the purpose of the Department investing in the new system. The other new function being incorporated into the system – through the complete revamp of the system – is the incorporation of the entire value chain. This will allow the Department to determine if production steps taken are correct, and if licensees are giving back to the economy by building roads or adhering to the social and labour plans (SLPs). Through this incorporation the Department can deal with most of the issues raised in communities about irresponsible mining.

On the need for an expensive, custom-built system, the Department did consult the mining industry and special dimension at the time before the specification for the system was developed. The Department tried using an off the shelf system, but it became unable to support its processes. Ideally, an ICT system must support the processes, and the processes must not be compromised for the sake of the system. There was not a readily accessible off the shelf system that could support the processes without requiring customisation.

The Department also wanted a system where it owned the source code so that it did not need to enter additional contracts. By the time employees were trained and the system was stable, the Department found that – because service providers owned the intellectual property (IP) and source code – it was unable to access the source code. After having already invested millions into the system, the Department would also need to pay for a seemingly never-ending contract.

On the time given for companies to respond, the Department unpacked the detailed specification document in the briefing session and answered all questions asked by the companies. This was sufficient to respond to the request.

Further comments by the Chairperson

The Chairperson stated that Members will need to consider mechanisms to handle matters of this nature and find a common solution. An efficient system must also be developed to expedite this process, but this is something that the Committee will discuss with the Department in the future.

In the meantime, on the current licencing system, broader engagement with stakeholders may be necessary, especially with those who the Committee works very closely with such as the Minerals Council. In addition, consultations should be had with emerging small-scale mining companies, labour, and academics. A comparative study on the licensing models for the mining sector should also be conducted.

The Department is not wrong in trying to procure a new system, but it bears the risk of procuring a system which it thinks is new but which has already been on the market. Currently, developments are made very quickly. The Department should broaden its search for a new system to the best licensing models for the mining sector around the world. However, a more immediate concern should be responding to the issues raised by the communities.

Committee questions/comments on the NERSA presentation

The Chairperson expressed his concern about the complexity of the licensing process and is worried that it may be even more difficult to understand for those who want to physically enter the space.

Mr Mileham drew NERSA’s attention to a persistent complaint from role-players in the energy sector that the licensing process takes far too long and is far too bureaucratic. If there is to be a rapid rollout of economic activity and transformation of the industry, the licensing process must be made easier and quicker for businesses and role-players. NERSA is not taking adequate steps to address its internal bureaucracy.

The public participation processes seem very lengthy and drawn out. A way of enabling public participation must be found, which may be through written submissions. However, to have public hearings as frequently as NERSA does is expensive and difficult in the current Covid-19 environment. Public participation is a process that must be managed better and more streamlined. It does not seem as if NERSA truly seeks to be an efficient and effective licensing regulator.

How does NERSA plan to ease the burden on businesses that are applying, and how does it plan to speed up the process?

Mr Mahlaule stated that when an entity of the Department loses its chairperson and somebody is appointed as acting chairperson or otherwise, some formal communication should be made to the Chairperson of this Committee so that Members are kept up to date. Often the Committee is informed of a new appointment on the day that person is due to present to the Committee.

The Committee must be given time to get used to the new person’s name, and for the sake of courtesy, the Committee should not hear on the street that someone new had been appointed.

What are the names of the 12 private distributors that have been granted distribution licenses?

Responses by NERSA

Adv Sithole noted the issue raised by Mr Mileham that the licensing process is long and bureaucratic. As part of NERSA’s licensing process, the law requires that it complies with certain provisions of the Mineral and Petroleum Resources Development Act (MPRDA). Some of these provisions specify timeframes, which were passed in terms of the rules governing the related industries.

During the development of these rules, NERSA went through a process of public participation with interested and affected parties within the industries, and the timelines that have been used are based on the outcome of this public participation. One of NERSA’s objectives is to review these timeframes and it intends to start a project this financial year to evaluate how to reduce the timeframes without contravening the provisions of the MPRDA and the Promotion of Administrative Justice Act (PAJA).

NERSA will in future provide the full particulars of the private distributors that have been granted licenses in all industries.

Closing remarks

The Chairperson stated that when the Department appears before the Committee, its goal should be receiving clarification and information on the issues at hand, as well as listening to how the Committee would handle certain things. The Committee will assist where it can, critique where it feels necessary, and appreciate what has been accomplished.

Some of the issues at hand require further discussion and the Department must appear before the Committee again at a later stage. The Committee believes in striving to always do the best but recognises that no one is perfect. One must always be fully committed to doing things the right way for the sake of one’s fellow citizens.

The Chairperson reminded Members of the items for the following day’s meeting.

The meeting was adjourned.