Transcript: Post-Cabinet media briefing

20 March 2008

Date: Thursday, 20 March 2008
Venue: Imbizo Media Centre, Cape Town

Cabinet held its ordinary meeting in Cape Town yesterday morning, 19 March 2008.

Cabinet noted the proposed electricity tariffs that were submitted by Eskom to the National Electricity Regulator of South Africa. The proposed tariffs were due to the rising operational costs, particularly, the rise of price of coal and diesel. Government will monitor very closely the negotiations between Eskom and the regulator with a view to making sure that the proposed tariff does not have an adverse effect on the poor, low-income households and small to medium enterprises.

Government will ensure that a differentiated tariff structure is put in place to protect the poor, low-income households and small enterprises. The possibility of introducing time-based tariffs will also be explored. A regulatory framework will be introduced to penalise those users who do not comply with electricity-saving measures.

Although the response to the proposed tariff is fully understandable at this stage, it is important to note that such responses are premature at this stage because the new tariff is still a proposal that is subject to consideration by the regulator. We should all take comfort in the fact that there will be an opportunity for all stakeholders and the public to comment on the Eskom proposals through public hearings. However, South Africans must also come to terms with the reality that it would be difficult for Eskom to continue providing the cheapest electricity rate in the world.

Government once again reminds all South Africans that we are still in an emergency situation which requires behaviour change and deliberate efforts to save electricity usage by at least 10%. Efforts are under way to ensure that each industry agrees to targets for reduction of electricity usage in the various sectors. Initial indications are that many households and businesses are not heeding the call to save electricity and this is contributing to the current wave of load-shedding experienced in many parts of the country.

Government and Eskom are of the view that we cannot afford a situation in which only large industries, such as mining, are made to bear the brunt of power cuts and saving electricity, whilst the rest of society fails to heed the call to become more energy-efficient.

Government fully appreciates the inconvenience experienced by everyone and reiterates the apology for the inconvenience and discomfort that we are all going through at this time. We therefore appeal to all South Africans to exercise patience and resilience as everything is being done by Eskom, and the private sector, including Government, to address this emergency. Once again, Government expresses its sincere appreciation to those households and businesses that are already implementing electricity-saving measures.

The meeting noted the recent media reports regarding the investigation by German authorities into the allegations of corruption in the South African arms deal. The Department of Justice and Constitutional Development will issue a statement later this morning which will demonstrate our willingness to cooperate with the German authorities and to address the suggestion that the South African Government was not responding positively to the request for assistance. The government is particularly concerned about attempts to cast aspersions to the person and office of The Presidency. The allegations against The Presidency are accordingly dismissed as baseless, mere speculation and gross mischief as they bear no relation to the truth.

The winding down of the DIABO Trust and vesting of all outstanding benefits was approved. This trust was established to facilitate the transfer of benefits to TELKOM employees during the listing of the company in 2003. A total of 12 000 beneficiaries have not yet submitted their claims and this is amounting to R68.8million of unclaimed benefits. A service provider will be appointed to trace these beneficiaries. A joint steering committee consisting of National Treasury and the Department of Communications will be established shortly to manage the winding down of the Trust.

The meeting approved the SADC Protocols which provide the legal framework for member countries to cooperate in working towards achieving the goals of SADC. This approval is subject to SADC addressing South Africa’s reservations regarding the proposed tax exemptions for officials and employees of SADC.

The ratification of the Additional Protocol to the Trade, Development and Cooperation Agreement (TDCA) between South Africa and the European Union was approved and will be submitted to Parliament for ratification.

Cabinet noted that the United Nations Security Council’s Counter-Terrorism Executive Directorate (CTED) will be visiting a number of countries to assess their legislation, enforcement capacity, and national systems to implement anti-terror obligations in terms of the UN Security Council Resolutions and other international conventions. The CTED team will be in South Africa in June 2008. The visit will be coordinated by the JCPS cluster.

Cabinet approved the deployment of members of the South African National Defence Force in Northern Uganda, as part of the African Union mission. Further, the meeting approved the extension of deployment of the SANDF to the Central African Republic, Democratic Republic of the Congo, Nepal, DARFUR, Ethiopia and Eritrea. This deployment of our forces in these countries is part of South Africa’s fulfillment of international obligations and a contribution to peace and stability in the continent and other parts of the world.

As announced yesterday, Cabinet approved the proposal to declare May 2 a public holiday to compensate workers and other employees for losing a public holiday as a result of Human Rights Day and Good Friday being on the same day. This decision follows consultations with and proposals from, a number of stakeholders including trade unions. This decision seeks to ensure compliance with legislation and does not amount to the creation of an extra public holiday.

The President will shortly publish a Proclamation in the Government Gazette formally declaring May 2 2008 as a Public Holiday. This Proclamation will be issued in terms of the Public Holidays Act 36 of 1994 which provides for 12 public holidays every calendar year.

The upcoming Easter holidays coincide with school holidays and often lead to high accident levels and unnecessary loss of lives due to high traffic volumes on our roads. This period is often associated with an increase in irresponsible and risky behavior which includes drug and alcohol abuse, domestic abuse and unprotected sexual behaviour. Government calls on all South Africans to refrain from these and other activities which contribute to unnecessary loss of life in our communities and on our roads. The Arrive Alive campaign is already under way and stringent law enforcement measures will be implemented throughout the country. The key message is that everyone must observe the laws, be sensitive to other road users and cooperate with the law enforcement agencies. Again we wish everybody a nice Easter break.

The meeting noted that the Zimbabwe general elections will be held on 29 March 2008. South Africa is sending 55 observers who will be part of a total of the 150 election observers from the SADC countries. The SA contingent will comprise reps from civil society, business, religious leaders, members of parliament and government officials. The observer mission will be led by Angola, the current chair of the SADC committee on Peace, Security and Development.

The South African Government appeals to all Zimbabweans to do everything in their power to create conditions that would ensure free and fair elections in that country.

The following appointments were approved and the following two Bills were also approved...

End, we will take questions.


Themba Maseko: Yes? Christelle, yes. Microphone, please. Microphone.

Journalist: In terms of the German request, and the concern about attempts to cast aspersions, when you talk about them being dismissed as baseless, are you just talking about the President or for instance Mr. Chippy Shaik, the government’s chief negotiator and other allegations of Swiss bank accounts.

Themba Maseko: We’re talking particularly about allegations against the President. In this regard…and just to give some information, the statement issued by Justice this morning will give more details about the interaction that is taking place between ourselves and the Germans, which will also clearly demonstrate that we are cooperating and as we have said in the past, government is more than willing to get information and if there’s evidence of any wrongdoing as we’ve said before, we will be more than willing to conduct an investigation on those allegations. Is that a follow-up? Yes.

Journalist: I just want to know these aspersions against the Presidency, are you talking about Eddie Trent’s comment yesterday or are you talking about more substantial?

Themba Maseko: Well, in the media without referring to any particular individual, there have been media stories or allegations made that the President took bribes during the arms deal, and that was covered in newspapers last week, so that’s what we are referring to in this case. As the statement states, we think that those claims are baseless and no evidence has been provided to even substantiate those allegations. Okay, a follow-up on this, on other issues.

Journalist: Themba just on power, Cabinet statement seems to be slightly softer than what Public Enterprises was saying yesterday. I mean, the ANC yesterday issued a statement that proposed a 60% price increase was completely unacceptable. Does Cabinet have any view on whether an increase of that nature or that extent would be acceptable should the regulator deem it necessary or appropriate?

Themba Maseko: Well, Cabinet does not at this stage wish to make statements as Cabinet, which could actually pre-empt the decision of the regulator. However Cabinet is aware that in fact the proposed rates are indeed high, but the information at our disposal at this stage from Eskom is that in order to avoid substantial increases in subsequent years it’s important that in fact these increases are spread over a number of years. So we think that in fact the rise in rates is unavoidable but the amount of the hikes is something that we think the regulator should look at, but the Departments of Public Enterprises and Minerals and Energy who have been briefed in detail by Eskom about these rate hikes, are of the view that in fact these rate hikes are unavoidable.

Journalist: So 60% is substantial in itself, but you’re suggesting that there’s more to come.

Themba Maseko: Well, all indications from Eskom are that the costs of the… the operational costs of providing electricity are rising. Particularly in this case we can mention that their major concern appears to be diesel, all of us are aware that there’s a substantial increase in petrol… in the price of petrol and diesel. And the price of coal is also adding to that. And what they are saying to us, is that in fact in the next couple of years more hikes are still possible but it’s important that in fact we spread the hikes over a number of years. Yes, Sir.

Journalist: I’m not quite sure, are you saying that the 60 [unclear] spread over a few years [inaudible – speaking off mic]… followed by further increases? What’s the suggestion?

Themba Maseko: The proposals at this stage that are reported in the media are proposals for this current year. And that there will obviously be hikes in the future and many commentators have said how can Eskom be given 14% and then come back a few months later and ask for more. But the current regulatory framework is that if Eskom is aware that the costs are rising and that they may be forced to increase their prices they are required to come back to the regulator to say the conditions have changed, the costs have risen, and it’s unavoidable for us to raise the prices. So they are required to come back to the regulator and that’s precisely what is happening at this stage.

Journalist: A differentiated kind of structure. But how will you distinguish between the poor and the rich? I understand yesterday that [inaudible – speaking off mic]… poverty line. Will this be legislation?

Themba Maseko: It will be regulations. The Department of Minerals and Energy and Public Enterprises are working around a model that will be put in place to make sure that the poorest of the poor and low-income households are not adversely affected. So regulations are being prepared and they will be published for comment before implementation. But the real commitment that government is making is that everything will be done to make sure that in fact the poorest of the poor, low-income households, small enterprises are shielded somehow from the proposed rate hikes. Okay.

Journalist: A couple of things, the SADC protocols working to achieve the objectives of SADC, and you look as though you’re holding a sort of threat over SADC with these reservations regarding the proposed tax exemptions for officials and employees. What are the… what do you mean by the legal framework for member countries to cooperate in working towards achieving the objectives of SADC, what objectives are they? Secondly, the ratification of the additional protocol to the trade and development cooperation agreement, how does that tie in with the… the trade union… the European Union negotiations with the Ocean Pacific countries?

Themba Maseko: Just repeat the last questions.

Journalist: How does that tie in, the ratification of the additional protocol, how does that tie in with the stalled, or apparently stalled, negotiations with the European Union on the Asian, Caribbean and Pacific, … the African… Caribbean and Pacific countries?

Themba Maseko: Okay.

Journalist: The Cotenou Convention.

Themba Maseko: These are particularly agreements between South Africa as a country with the EU. So these are existing protocols. How they tie in with the Asia Pacific ones I’m not sure at this stage, so we’ll have to get into it. But this is essentially formalising the existing agreement between South Africa and the EU, so at the meeting yesterday there was no discussion about how these tie in to other negotiations. The SADC legal framework, basically when SADC was established a number of protocols, I think close… I think up to 26 all in all protocols were proposed and a number of countries are currently in the process of signing to make sure that we make SADC a formal, legal entity. So there will be 20/26 of those that we’ll be ratifying. The reservations that we’re talking about here is that one of the protocols basically says that all employees of SADC, employees and officials of SADC will be exempted, exempted from paying tax in the countries where they’re working as SADC officials. And our view is that in fact there is a tax regime that applies to each and every country and SADC officials should pay tax in the countries where they are operating. So we are not necessarily intimidating SADC or anything, but all we’re saying, we’re putting a proposal on the table for consideration and our indication is that other countries also share South Africa’s view on this matter.

Journalist: The bill that you refer to, what you have on the Financial Intelligence Centre Amendment Bill, what do we know about that?

Themba Maseko: Okay, I can give you more details but basically it’s an update on the FICA legislation, some weakness had been identified. For example, the fact that in the estate agency market the regulations don’t… there seems to be a loophole where people are still able to use large sums of cash to launder through the purchase of residential properties. So this is just one example of the loopholes that have been identified. So this legislation attempts to close those.

Journalist: Themba, if you could expand on the regulatory framework to penalise those users who do not comply with saving measures. What would be those? What are you looking at?

Themba Maseko: Well, the detail is still being worked on but for instance a number of municipalities together with Eskom are already talking about installing a gadget in geysers so that they can switch off geysers remotely. But basically the ideas that are being looked at is the possibility for instance of saying you need to switch off your geyser or reduce your consumption by 10%, and over a period of time they’ll look at households and business expenditure over a period and if it’s clear that in fact there isn’t a reduction in the usage of electricity, either by individual households or a business, a higher tariff will kick in immediately to penalise those users. But the exact mechanics of how that would work is still being worked on. The team that is working… the National Electricity Response Team is looking at models from around the world and the model that we are particularly interested in is the Brazilian model where these measures have been implemented quite successfully. So in short we look at your consumption over a period of time, we then see that in fact there isn’t a reduction in consumption and the higher tariffs will kick in. But details will be revealed when these are finalised. Gaye.

Journalist: Just to follow up on that. Any sort of timescale in terms of when the regulatory framework is going to be ready or the process that’ll be followed with it? Because…

Themba Maseko: We’ll release it in the next few months. And because of the urgency of the situation it is possible that in fact this could be in place within the next two months. What we are going to have to try and build into the process is the need to give the public the opportunity to also comment on these regulations before they’re finalised. But a few months. Any question? If none…

Journalist: Yes, sorry. Really, really small now. You said that there’re a total of 12 million beneficiaries not submitting their claims. But the text says 12 000. I guess you meant 12 000.

Themba Maseko: It’s 12 million people who have not submitted, and the total amount is 68.8 million.

Journalist: You’re repeating 12 million.

Themba Maseko: I mean, 12 000, sorry, 12 000 beneficiaries.

Journalist: Okay. Alright. I told you it was a very small…

Themba Maseko: 12 000 people… [off mic]

Journalist: Are not…

Themba Maseko: The trust was created remember when Telkom was listed so there’s a bit of equity that has accumulated for these lucky guys.

Journalist: The other thing is I was unfamiliar that we had South African troops on the Indian subcontinent, in Nepal. What’s that all about? And also they’re presumably attempting to put down the Tibetan rioters, are they?

Themba Maseko: This is, as you can see, its part of the UN mission. But what exactly they do, Michael, I might have to check on that one. But at least now you know we’re involved there.

Journalist: Yeah. Absolutely.

Themba Maseko: Okay, final question in the back.

Journalist: Hi Themba. I just want to know about the German issue.

Themba Maseko: Yes.

Journalist: Is the statement from Justice supposed to explain why government has taken time to, you know, give the information which the Germans are supposedly looking for? Or is the Justice Department going to explain why the President and Cabinet feel that these allegations are untrue?

Themba Maseko: The Justice statement will address the allegations that we are not cooperating, we are delaying. And it will demonstrate that in fact the request from the Germans arrived on this particular date, we responded on that particular date, they responded, we responded, so there’s a lot of correspondence that is taking place. But the latest correspondence from the Germans is indicating that in fact the reason why they’ve not been able to submit information to us is largely because there’s a huge volume of documents that have to be translated to English, because all of them are in German. So they need more time to translate those documents. But they also refute the allegation that a spokesperson from the German Prosecutions Authority issued a statement complaining that we are not cooperating. So if you see that statement it will address those issues. But it’s not dealing with the statement that we make later on about the allegations that are being made against the President. That statement [unclear].

Journalist: Have you seen the statement?

Themba Maseko: Yes, I’ve seen it, and you’ll see it within seconds.

Journalist: Oh, good.

Themba Maseko: Because we have made copies and they will be given to you as you leave.

Journalist: As we leave? Alright.

Themba Maseko: Okay, thank you very much ladies gentlemen for waking up early today. I know most of you would still be asleep.


Issued by: Government Communications (GCIS)