Order! Hon members, the proceedings will initially take the form of a question-and-answer session. I shall put each of the four Votes in the Schedule in turn, whereupon members will have the opportunity to ask questions to the relevant Ministers. Members must please press the to-talk button if they wish to ask a question. Hon members should please wait until I recognise them before putting their question.
Vote No 18 - Sport and Recreation South Africa - put and agreed to.
Vote No 24 - Agriculture - put and agreed to.
Vote No 25 - Communications - put and agreed to.
Vote No 30 - Public Enterprises - put:
I asked the question last year and I will ask it again this year: Where is the business model for the Pebble Bed Modular Reactor, PBMR, that shows that this project will be economically viable and will justify the spending of the taxpayers' billions of rands, simply to get a demonstration model up and running?
I also asked: Where are the other investors that we have been hearing about for over a decade? Is the lack of investors now forcing us to use an extra R1,8 billion of taxpayers' money to fund an experiment that has already cost our country over R3 billion?
Will the Minister also explain to the House when, in the best possible case scenario, can we expect to see the first commercially available PBMR module? Finally, has the design for the PBMR actually been finalised, upon which we can base a due diligence study? [Interjections.]
Order! Can we lower the noise levels, please. Hon Minister of Finance, are you responding to that question?
The truth of the matter, Chairperson, is that there is no off-the-shelf model. There is nowhere in the world where this technology that is safe and third-generation nuclear is available. If you want it, part of what you have to work with are the designs of nuclear engineers, but a lot of it is untested.
Part of what we have seen already includes the fact that, whilst a nuclear plant may be small, the heat plant which may drive a hydrogen economy into the future may be substantially larger. But, nobody will know this unless a prototype is built. If you want to build a prototype, somebody has to pay for it. Now, even the private sector or capital is a coward. Capital will sit back until there is substantially more development. We are advised that progress in this area in South Africa is quite unprecedented in the world. We don't want to take any risks but I think we understand that we can't rely on fossil fuels in perpetuity. Some changes to the scale of the low-cost electricity that we have become accustomed to in this country - something at that scale - will need to be done. You know, a few wind farms and so on are not going to generate it. Somebody has to bell the cat and that's what this process is about.
Research and development is expensive. You don't see the results in the short term but I think we need an association with Parliament on this issue, so that there is a higher level of trust, knowing that this project will be watched, that due diligence will be in place and that we will ensure that it isn't money down the tubes - which it could become. However, I think we have to provide the guarantees that Parliament is looking for on this issue. [Applause.]
Order! I want to remind hon members to be very specific with their questions regarding the adjustments before us. [Interjections.] Order!
Voorsitter, die appropriasie van bykomende fondse ten bedrae van R2,9 miljard verwys na drie openbare korporasies: Eerstens is daar die Alexkor-myn wat R44,7 miljoen ontvang om sy operasionele koste te dek tot die skikking met die Richtersveld-gemeenskap afgehandel is. Tweedens is daar Denel wat te groot gehap het met kontrakte wat nie aan die gekontrakteerde spesifikasies kon voldoen nie, terwyl die staat nou die eis moet betaal. Die DA wil van die Minister weet waarvoor 'n eis teen Denel ingestel is en wie dit ingedien het en welke kontrakte kon nie nagekom nie en waarom nie?
Die derde openbare korporasie, naamlik die Pebble Bed Modular Reactor, het R1,8 miljard ontvang, omdat hulle nie behoorlike besigheidsplanne in die vorige begrotingsjaar aan die Tesourie voorgel het nie. Minister, u moet aan die Parlement verduidelik hoekom die PBMR se korporatiewe strukture nog steeds nie in plek is nie; hoekom dit so lank gevat het om die korporasie te lisensieer, wat die projek Suid-Afrika uiteindelik gaan kos en hoekom hulle noual vyf jaar lank sukkel om buitelandse beleggings vir die projek te kry. Ek dink die DA en die belastingbetaler het rede tot kommer. (Translation of Afrikaans paragraphs follows.)
[Dr S M VAN DYK: Chairperson, the appropriation of additional funds to the tune of R 2,9 billion refers to three public corporations: Firstly, there is the Alexkor mine, which receives R 44,7 million to cover its operational costs until its settlement with the Richtersveld community has been concluded.
Secondly, there is Denel, which bit off more than it could chew in terms of contracts, and was then unable to comply with contracted specifications, so that the state now has to foot the bill. The DA wants to know from the Minister: What damages are being claimed from Denel, who lodged this claim, which contracts could not be complied with, and why?
The third public corporation, namely the Pebble Bed Modular Reactor, has received R 1,8 billion, because the corporation failed to submit proper business plans to the Treasury in the last budget year. Minister, you have to explain to Parliament why the PBMR corporate structure is still not in place; why it has taken so long to licence the corporation; what the eventual total cost of the project will be for South Africa, and why the corporation has been struggling for five years to obtain foreign investment for the project. I think the DA and the taxpayer have reason to be concerned.]
Chairperson, I believe that the questions from the hon Van Dyk are asked for effect, because they are answered in the document as it stands. In respect of Alexkor, there were two routes you could take. The one route was that the land traditionally belonged to the Richtersveld community. The Nama were given that land by Queen Victoria at the end of the Anglo-Boer War. If the claim had succeeded at the scale that their lawyers had argued for, we would have been talking billions. There is a different agreement that was struck and concluded this year. If you want the participation of the community, then it is going to cost you. You can either continue to treat the community as dirt, as part of the Kgalagadi, part of Namaqualand; just that - take the land, ignore their rights or empower them. This money is about empowering the community to a new beginning. That is the issue at hand. It is dealing with historic injustices and that is important in understanding the issues of Alexkor.
In the context of Denel, I think that it is a difficult issue because there are some corporate priority issues that are still being negotiated. I think that the sensitivity of this would have been expressed in the Portfolio Committee on Finance. We can't go into all of the details. These issues were canvassed today to the limits possible and I think we must respect that some of the detail would be covered by the confidentiality agreements.
In respect of the PBMR, I think that my colleague, the Minister of Public Enterprises, would be in the best position to explain this. As the Acting Minister and as the Minister of Finance, there are issues that have to be resolved quite speedily. Yes, I agree that a corporate structure is one of those issues that needs to be resolved.
In respect of the business plan, let me repeat: If we had responded, in the Medium-Term Expenditure Committee's hearings, to the request for money, without all of the answers that we have now provided, I believe we would have been in dereliction of duty. We have held out for as long as we can, to ensure that the answers are afforded us. They have come. The business plan is on the table. We are now talking of an amount of money that will carry not even to the end of the fiscal year. This is the nature of the beast that is research and development.
Things are not as cut and dried as with a company that has been running for a very long period of time. That is why, if I weren't reasonably satisfied with the answers that we got on the business plan, I wouldn't have had the confidence to put the request for resources for the PBMR before this House. I do it in good conscience and in good faith, knowing that we have interrogated the business plan to the best of our technical abilities in the Treasury. [Applause.]
Chairperson, hon Minister, the PBMR company has recently tabled its first annual report. So, for those members looking for a business strategy or business model they must just look at the reports or come to our committee meetings.
My question is one of a more practical nature. Before the proper commercialisation of the PBMR technology or the particular project, will the Ministry of Finance work closely with the Department of Public Enterprises in terms of monitoring its cash flow projections against its targeted timelines to ensure that there is no more special provision needed, as we are going to need a greater appropriation each year until things are commercialised?
Chairperson, as the hon Wang knows, the first audit is not just available, it is also an unqualified audit. That says something about the environment that this body is working in and I think that it provides us with the basis for addressing these matters going forward.
A lot of the investment in the last while and the largest draw on cash flow has been for personnel, and these are highly skilled, highly sought-after people. You don't get nuclear scientists sitting by the side of the road, waiting for the odd bakkie to pick them up so that they can come and clean a garden somewhere. These are highly skilled people and they are unfortunately very expensive. This has been the largest draw on cash flow.
The project is now at the point where the contract for the supply of some of the technology - some of this is in foreign exchange - has been taken into account. That day is now upon us and that is why we have to proceed, failing which all of the money spent to date will come to nought and then the Auditor-General will be unhappy with us and say that Parliament had approved expenditure which proved to be fruitless. Now you are either going to sink or swim. This is why we need to ensure that the systems are in place to ensure that the project will actually float and provide us with a durable and safe energy source. Thank you.
Vote No 30 - Public Enterprises - agreed to.
That concludes our question-and- answer session on the Votes. We shall now proceed to decide on the Votes and Schedule.
Schedule agreed to.