As part of the Budgetary Review and Recommendations Reports, the Portfolio Committee on Mineral Resources and Energy was briefed by the Auditor-General (AG) on the performance of the Department of Mineral Resources and Energy (DMRE) and its entities. The committee was also briefed by DMRE and the South African Nuclear Energy Corporation (NECSA) on their financial and non-financial performance in the 2022/23 financial year.
The Committee was pleased with the fact that some of the entities under the DMRE received clean audits in the year under review. Those entities are the South African National Energy Development Institute (SANEDI), National Energy Regulator of South Africa (NERSA), National Nuclear Regulator (NNR), National Radioactive Waste Disposal Institute (NRWDI), South African Diamond and Precious Metals Regulator (SADPMR), and the Council for Geoscience (CGS). The Chairperson of the committee, Mr Sahlulele Luzipo, said that this performance dispels the myth that seeks to suggest that all state-ow
ned entities are inherently defunct. He said that the fact that 60% of entities under the DMRE achieved a clean audit together with the department indicates that state-owned entities can maintain a healthy financial state, only with strong and capable leadership at the helm.
The committee has acknowledged a significantly improved performance by NECSA. Under a fairly new leadership that was appointed three years ago, NECSA has improved from the previous four consecutive disclaimer audit opinions to a qualified opinion with just one finding. It was projected three years ago that NECSA would only start making a profit in the 2025/26 financial year. However, the entity has recorded an early achievement with a total comprehensive income of R145 million in the period under review. The committee is aware of the reality that NECSA is still not out of the woods yet, but it applauded the entity’s remarkable achievements and encouraged it to aim for a clean audit in the next financial year.
Meanwhile, the committee ha
s noted the poor performance of Pelchem, which is one of NECSA’s subsidiaries. It encouraged more efforts to be made to address the challenges. Pelchem has recorded a loss of R62.8 million due to unreliable plant performance and the committee wants the entity to emulate the good work done by NTP Radioisotopes, which recorded a profit of R113 million in the period under review. This profit is an improvement from the R52 million that was recorded in the prior financial year.
The committee further welcomed the unqualified audit opinion by the DMRE and impressed upon the department to lead by example and aim for a clean audit. It noted the AG’s sentiments on the department’s programme of closing off derelict and ownerless mines and acknowledged that the challenge of derelict and ownerless mines is beyond the department. There are 6000 derelict and ownerless mines in the country and the DMRE aims to close at least three of them per year. The committee then implored the AG to make recommendations on what resources
are required for this challenge to be adequately resolved.
At the same time, the committee has expressed concern about some of the recurring challenges associated with the implementation of the National Solar Water Heater Programme (NSWHP), including irregular, fruitless and wasteful expenditure, amongst others. It still acknowledged the DMRE’s efforts to reduce fruitless and wasteful expenditure as a result of storage fees on this programme. The fees were approximately R300 million in the 2020/21 financial year and are now reduced to approximately R7 million in the period under review. The committee has welcomed this performance and implored the department to urgently ensure that all procured solar water heaters are installed on the rooftops of deserving beneficiaries.
The committee is of the view that a good relationship with stakeholders such as the South African Local Government Association, the Department of Human Settlement and the Department of Cooperative Governance and Traditional Affairs could bri
ng about the speedy implementation of the NSWHP. According to Mr Luzipo, the NSWHP is an important project that can address the challenge of energy shortage and form part of the Integrated National Electrification Programme.
Lastly, the committee is of the view that the DMRE’s performance indicators should be linked to government priorities, saying that both the AG and the Department of Planning, Monitoring and Evaluation are important players in this regard.
Source: Parliament of South Africa