Transcript of Economic Cluster Briefing questions and answers: Imbizo Media Centre, Ground Floor, 120 Plein Street, Cape Town

Journalist: My question is directed to the Minister of Communications. Minister, it's not related to the statement, it's about the South African Broadcasting Corporation (SABC). We've seen what has happened within the national broadcaster with the suspension of the CEO, the calls for the board to resign, surely isn't it time for your department to intervene?

Minister Ivy Matsepe-Casaburri: Well, if you've read the law, the law allows very little for the minister to be able to do because we all insisted when we established the SABC that there are certain processes to establish that, which go through Parliament, approved then by the President. And the minister simply supervises the work of the SABC in that sense. Having explained that clearly what is happening is that we are all concerned about what had happened at the SABC, but we are also confident that we'll be able to overcome the difficulties that are there. There've been reports that the Board has been able to give me, we have seen this morning that certain actions are being taken and we will monitor those to make sure that there is no instability at the SABC, that it carries out its mandate. That the work of the SABC especially of journalists is done as I indicated with impartial that has no partiality, that there is accuracy and the normal things that the SABC is supposed to do and do not do any further damage to the image of the SABC. So in that sense we have done what we can, but there are other matters that the minister does then look at, which are the business plans of the SABC and we will continue doing that and these have been a subject matter of discussion with the portfolio committee, because as we all know all these entities present budgets, strategic plans and budgets to the portfolio committee and usually these come through the departments, also the departments then have to monitor the implementation of those plans and budgets that have been approved or passed through the portfolio committee. And that work continues to be done by the minister. In terms of being able to either say I appoint or I don't appoint, it is the Board that appoints the executives, and so they hire and fire, it is not the minister that does things like that.

Journalist: To Deputy Minister Davies, could he update us please on the progress or otherwise with the Economic Agreement Partnerships (EPAs), please? Thanks.

Deputy Minister Rob Davies: Thanks. Well, I think that you are aware that we have not initialled the interim EPAs, and that we have indicated a number of concerns that we have in the text of those EPAs. And the agreement that we reached with commissioner Mandelson and the Southern African Development Community (SADC) EPA configuration in March was that there would be two parallel processes, that those countries that have initialled the EPAs would go ahead with the processes that are implicit therein, and that there would also be a process of addressing the concerns that have been raised which are now going to be presented as concerns of the SADC EPA group as a whole and not just of some of its members. And that work has begun, there've been some informal interactions with some of our officials and the European Commission (EU), a few days ago, and I will be leaving here to go to a SADC EPA meeting tomorrow in Lesotho, where we will be discussing our common presentation of these concerns. We are hoping that there is a positive response to those concerns, a positive response that will enable us as South Africa to sign onto the EPAs, because if there isn't then there are going to be some very serious challenges for the Southern African Customs Union (SACU). Not least arising from the fact that there are some 500 tariff lines which have been offered to the EU, supposed to be for duty free, quota free access by the other members and for improved access for South Africa which we don't have in some lines. And if we don't all agree and we're not all in the same space on this matter then we will have a situation where the Customs Union will be applying differential tariffs for different members of the Customs Union which will be a breach of the common external tariff. So it's a very serious set of challenges but as I say the dialogue has begun and we feel that the spirit of the initial engagements at least was reasonably positive, and that has to move further forward. Thank you.

Journalist: Minister Erwin, you said the scheduled date for the African West Coast cables is 2010, how realistic is that? Have you signed with the service provider [unclear] constructed, when will the marine survey begin and the ordering of the cable itself? And then for the Minister of Communications if I may, UHURUnet, is there still a plan to lay an East Coast cable considering two projects are well underway there? And also with digital TV migration, when will we see the national policy being published and gazetted? That was supposed to have been done in June last year, if... and then you also promised Parliament it will be done earlier on this year and we still haven't seen. Thank you.

Minister Alec Erwin: One of the reasons why the statement was issued was that we have to give priority to the West Coast cable in order to meet those timelines. This is really quite crucial, so the processes of entering contractual arrangements, finalising the slots are well advanced, and this is why we're pushing very, very hard to ensure that we meet that 2010 deadline. If we get the... stick to our timeline that we've got now we should... we'll be able to do that.

Minister Ivy Matsepe-Casaburri: With regard to UHURUnet, yes that project is still going on. Because we do need more cables in order for us to be able to reduce the cost. Because some of the models that are being undertaken by the different cables are not the same as the UHURUnet one, and the negotiations that have been taking place between companies as well as governments in support of the fact that we want to have the harmonised regulations and so on [unclear]. But you'll also remember that the UHURUnet also has part... I mean the east cable also has the intention that it would allow for links that would then link landlocked countries, which makes connectivity through Africa much easier and at reduced cost. So we cannot give up on that particular program, which is not necessarily what the other cables are doing. But as you know that the cables also go to different areas, some... that is that you want to go to the Middle East where obviously Africa is beginning to make a lot of business connections. The other is to help the cables to then go to Asia and there is also intention that it should also go to the west from the northern side. Because the cables that are there are quite expensive and not available, so UHURUnet is also looking at that. So the intention of UHURUnet is really to bring the whole African continent into... I mean to reduce the... or let's say to give access for Africa and do so at reduced cost and that is the main reason. With regard to the digital migration, the policy that had to be issued... I couldn't remember what the question is actually.

Journalist: The policy was supposed to have been published last year. And you promised earlier this year to government we done... owe it to Parliament to be done the following week, and we still haven't seen it yet. And the deadline is coming quite close for the switch on, that's the first of November. So when will we see that policy? Is it going to be...?

Ivy Matsepe-Casaburri: My understanding is that the policy is ready because it had to have discussions that were undertaken also with the industry players etcetera, and that by June... is it June this year? Yes, June this year, we'll be issuing that policy.

Journalist: My question is to Minister Erwin please. Minister, could you just provide us a brief snapshot of what you expect this winter in terms of peak demand and whether or not there's in your forecasts with your sort of specialist taskforce... the forecast is... for the mining industry, is there a possibility however slight that you might be clawing back the five percent electricity power that you've given them, to boost them to 95 percent? Secondly I mean has there been any agreement with... between government and the central bank on sort of... on the electricity prices and their... and agreeing and their call basically to look at sort of alternative ways to finance the capital expenditure, and it's finally the 16th of May, what... where, and what can we expect is the [unclear]? Thanks.

Minister Alec Erwin: Well, our target would be to try and reduce peak demand, winter and for the future by 10 percent. The key factor in that is the behavioural changes that are crucial in this short term, and the reason why we were able to stop the scheduled load shedding was that we're starting to see good performance on the savings. I think the working group now with the top ten customers is really going well. The industrial customers have been hitting the 10 percent target quite easily and of course as you know one of the reasons for the scheduled load shedding was to try and even the burden across the two sectors. But the performance in saving is improving. The introduction of energy efficient equipment will be very important, so some of the work we're doing with the top ten customers is to improve their metering processes, to allow for various implements to be put in that can manage the load over time, the energy load over time. And as we've indicated in this statement there's a project that's well advanced to see if we can't increase the usage quickly of solar geysers. Now if we can achieve those and maintain our savings habits and get the 10 percent reduction in demand then we should have a reserve margin that will give us some comfort. But as we've warned, a very severe bout of extremely cold weather or any problems that we could hit as we've often had in the past on some main transmission lines, may bring in emergency load shedding. So we need to warn people on that. But thus far I must say the commitment by stakeholders has been really very good indeed. No, we would not attempt to claw back anything from the mines; we'd like to keep them at the production levels that are as high as possible. With regard to the price increase, the reasoning behind it is to recover the rising costs of primary energy but there've been a number of inputs from many, many players and of course we've been evaluating that and talking to everyone. So we're hoping that on the 16th when we come together we'll try and reach some common understanding about meeting the need which everyone acknowledges for a rise in price, but doing it in a manner that impacts less on everybody but as you know a fundamental underpinning proposition of the price increase is that the impact on poor households would be minimised as far as we possibly can. So we hope that on the 16th with the broad grouping of people essentially within the National Economic Development and Labour Council (NEDLAC) framework we would be able to reach some common approach to this. I think the dialogue's been going on well. We're hopeful. The formal process as you know is important and that is the regulator must consider and make the decision, but I'm sure like any regulator with a tough decision like this they would welcome some common ground in the broader society, and that's what we were trying to achieve in the summit.

Journalist: Two [unclear] questions. First a follow-up, the digital migration question. Can you tell us at what stage we might expect to acquire set top boxes? Are they going to be in the shops? What's going to happen about that? Secondly, a different question altogether, you say Mr Erwin that in October 2008 the Home Affairs is expecting a marked improvement in their ability to process applications. Why that date? What's happening in October 2008?

Minister Ivy Matsepe-Casaburri: The set top boxes are to be manufactured in South Africa and the standards and certification of those standards between South African Bureau of Standards (SABS) and Independent Communications Authority of South Africa (ICASA) is happening now. But as you know that... so I can't give you a specific date as to when those set top boxes, you know, will be available. However we do know that we need the set top boxes only at a point where the switch off is taking place. And the switch off is in 2011, but they will obviously be available before that to get people moving. Because what they will do is to take the digital signal for the analogue televisions.

Journalist: Will we be able to use our satellite... Digital Satellite television (DSTV) equipment to get the digital signal? I was wondering if we would get the... would be able to use the satellite DSTV equipment that we have in our houses to receive the digital signal when it begins in November, without the desktop boxes.

Minister Ivy Matsepe-Casaburri: ... top box, is that your equipment should be digital, ready to receive the digital signal. So if you have digital equipment ready in your house you'd be able to get the digital signal. But because there'll be dual elimination, both analogue equipment as well as the digital equipment will be receiving the signal of course, [unclear] also the digital signal. It is when the switch off takes place or during that dual elimination period would have ended and only the digital signal will be sent out, then you will absolutely need your set top box to take your digital signal onto analogue.

Minister Rob Davies: Yes, I just wanted to say that there's another dimension of course and the set top boxes will be for people that have analogue TVs to actually get the transmitted into a digital signal into an analogue set, but there's another market that is anticipated and that is that there will be people that will want to change to the digital TVs, and we have been engaging with the television sector as the Department of Trade and Industry (DTI) to try to analyse the conditions that would be necessary in order to support the emergence of production of fully made up digital TV sets. So we've started some work with the television industry on that. So we're keen to make sure that this process involves a contribution by the South African manufacturing industry.

Minister Alec Erwin: Remind me Michael when you come to my budget vote cocktail I'm not going to give you the first glass of wine, because you asked me such a difficult question. We'll have to check. As I understand it's related to systems, but I think what we'll do is get GCIS to give you a detailed answer from Home Affairs. I don't want to mislead you in any way, but my understanding is related to improvements in systems.

Journalist: Also to the Department of Communications, Minister if you could elaborate a little bit for us on the types of services and information that you say citizens will be able to access through the set-top boxes. What types of services specifically?

Minister Ivy Matsepe-Casaburri: It will be in the main electronic (E)-government services because lots of people do not have access necessarily to government services and information. It will be specifically towards making them access those kinds of services, government services that will be related to safer lives and make things easier for people.

Deputy Minister Roy Padayachee: Unidentified Speaker: If I may just elaborate on that. I think that the thing to understand is that, we have a basic requirement which we must satisfy and that is that we must give the capacity for residents to receive a digital signal, so that their present analogue televisions are not laid to waste and that they must be able to, over a period of three years, have the possibility of transmitting from an analogue television into a digital one. So the set-top boxes that are very basic must give that requirement so that the existing analogue television sets will receive the digital signal and they will not be switched off. Now we have a three-year period within which we must enable this capacity to transit from an analogue television to a digital one. Now, part of the strategy of what we do about this, is to establish whether it is possible to provide additional services other than this basic requirement. And so the strategy incorporates us building into the analogue box the capacity to provide e-government services across education, health and other public services. Now that precise formulation is still being composed by the department and it then means that the technical capacity of this box has got to meet certain standards for which we are now getting the industry to co-operate in determining these standards and through which we are now applying to the South African Bureau of Standards that will finalise it and its at the stage where these specifications are being finalised and the technical qualifications of these boxes will then be available and we will then establish a process by which we will generate a local industry to produce these boxes.

Journalist: I understand that the set-top boxes operate like decoders. Surely if they are like that, there is a cost component. How much will they cost and you know, people who cannot afford them, is there any kind of subsidy that government is thinking about? And then secondly, as a follow-up on Michael's question, for people who already have DSTV in their homes, surely they don't need them because they already receive the digital signal into their TV's.

Journalist: There is supposed to be an awareness campaign explaining the whole digital TV migration. When do we expect that to start and when will we see the first set-top boxes actually are trailed? Then there's also the controlled access component. Has any decision been made on that? And you said you had discussions with industry. Does that include the broadcasters as well? Thank you.

Minister Ivy Matsepe-Casaburri: The discussions and part of the delay, was because some broadcasters said that they had not been involved and so we had to make sure that everybody had been involved. As to the question of how much the cost will be, we have worked out a cost of between R400 to R500. That should be finalised I think, within a month or so. But that is generally where they are. Whether there will be a subsidy, we have not decided the nature of the subsidy but we are looking at different models of it if we are to subsidise, how will the subsidy be structured, which will be the target populations and obviously it is reality that subsidies will have to go to the poorest people in the country, given that we have so many of the poor people and the idea of being able to have this extra service is precisely to also be able to bring in people who had been traditionally excluded from being able to access services easily and this is why we have taken a bit of time to make sure that this is possible. The awareness campaign is an awareness campaign that is linked to all of these things, so we want to make sure that the logistics and the planning of this is taking place, but in terms of the exact information that we would have to give people, and dependent on a number of these little things that needed to be finalised, issues of subsidy and so on, and that is why we want to make sure that all of that information will go out at the same time. The strategy has been developed. It is close to finalisation already.

Deputy Minister Roy Padayachee: Yes, I think that we need to be very clear about this question of the costs of these set-top boxes. Clearly we are targeting a particular sector of our people, whom we would consider to be that sector that will not be able to afford the normal cost of these boxes and in a sense, the principle of subsidy will be applied only to that particular sector of our people, so there's a certain income level within which our studies are indicating for whom the boxes will be subsidised. The second thing is that we also have to understand that the costs that we have on the table right now, include an understanding of what it costs, what the industry is saying it will cost at the level of the manufacturer's plant. So what we still have to ascertain, whether there will be additional costs that would have to be factored in, that would take into account distribution and the marketing, before it actually gets into the hands of the consumer. So what the department is seeking for right now, is an end-to-end solution that will eventually determine the cost, and once we've established that cost then we would be able to establish precisely what component of that cost that government will be called upon to subsidise. And that in turn will reduce the actual cost of the box to that particular customer. I hope I'm being clear about this. So the figures that the minister is referring to, around about R400 or so, at this stage refers to the estimates that have been provided by industry as to what it would be prior to all these other additional costs. So really, on that particular matter, cost is still a work in progress in the department and we will make an announcement once we are able to finalise that particular matter. I don't think we're able to give a clear date yet on the trials because we're still awaiting the finalisation of the specifications and then we'll dialogue within the industry as to how quickly and how fast we can get the industry to respond to this.

Journalist: A question to the Acting DG of Department of Minerals and Energy (DME) please. I wonder if you can tell us whether there have been any substantive changes to the Mining Royalties Bill since the public hearings that took place?

Jacinto Rocha, acting DG for Minerals and Energy: Thank you very much. The Royalties Bill is being dealt with by National Treasury. So DME is not directly involved. There is a public hearing next week Tuesday, 13th where National Treasury is going to present the results of their assessment of the comments presented during the public hearings. So we don't have the contents of their minutes.

Journalist: To Department of Trade and Industry (DTI). The amendments today, Competition Bill. Can you just give us a bit of detail what exactly you want to achieve? There was a hint some time ago that you were seeking to tighten up the compliance with the competition laws and wonder whether they are giving some tip to the Competition authorities, but just give us some details around what you want to achieve with the amendments.

Minister Alec Erwin: I don't think we can provide a detailed account of a bill that hasn't yet been approved by cabinet. We go to a cabinet meeting on Wednesday next week, but I think that some of the objectives were indicated in the Industrial Policy Action Plan. Basically we have seen a need to tighten up the capacities of the Competition authorities to deal with cases of collusive behaviour, which is raising the prices of components that are used by downstream manufacturers and I think the steel price example was the one that was most prominent at the time. Subsequently to that of course, we have had the issue of food prices and the collusive behaviour that has been observed in terms of some firms and bread prices and also the way in which once the Competition authorities have made a ruling, there have been continuations of the same outcomes, although perhaps not necessarily with the same practices giving rise to those outcomes. All I think I can really say is that the Competition Amendment Bill is intended to provide a response to both of those problems.

Journalist: There was a briefing of the committee yesterday about the Electricity Redistribution Restructuring Bill, which is currently apparently, delayed in Cabinet. I don't know whether cabinet has reached any decision on the question of compulsory municipal participation in the regional electricity distributions (REDs) and how that issue is being resolved and when can we expect the Bill and what it plans to do?

Minister Alec Erwin: We are seeking to resolve this matter as quickly as possible. It falls within the ambit of what you see in the briefing there of the Accelerated and Shared Growth Initiative for South Africa (ASGISA) Committee and the option of constitutional amendments has been considered but there could be that delays matter so that is under consideration, but really we'll finalise this matter very quickly. It's important. There's a general agreement by everybody that it's important that we get the position cleared and allow for a maintenance programme and investment programme at a regional level. But I'm sure the minister will make some announcements relatively soon.

Journalist: A question for Mr Erwin please. Can you just update us on the latest status quo regarding the Coega smelter and whether the government remains committed to these smelter projects and the existing ones, given the criticism that has been raised? They use vast amounts of electricity and create relatively few jobs and questionable benefits for the economy.

Minister Alec Erwin: With regard to Alcan, there's a task team from the DTI, Public Enterprises, Eskom and Alcan itself, that was a contractual position so we've agreed to enter discussions to review and see whether we can get those timelines, what the position would be, and it will entirely depend on whether we are capable of supplying that electricity at the time. We'll have to evaluate that very carefully as we go forward. With regard to the debate on smelters, many, many assertions have been made. This is something that between DTI, Eskom and Public Enterprises and Mineral Energy, we look at in the overall context of the economy and I think it's a far more complex issue than has been asserted that it doesn't have much impact on the economy. It has quite a considerable impact from many different perspectives. So currently all customers are treated equally. The smelters in South Africa are giving us the savings we want from them and we are evaluating in some detail, what the most effective option is for us to get the reserve margin we want. Now these, with the existing smelters, these are contracts and you don't just walk away from contracts. You have to engage around those and discuss it. But let me just stress that the smelters have given us savings. They are matching the savings level we're getting from industry and I think that's an important factor.

Deputy Minister Padayachee Just the question that Paul asked us about the Digital Migration Awareness Strategy. I think the statement says that the awareness campaign is going to be launched soon. But I think that there is something that the media, our friends in the media can assist us on in relation to this particular matter. I think one of the concerns we have, is the possibility that industry might dump analogue televisions on our people by discounting schemes. And if these analogue televisions become available at a low cost, people might be tempted to purchase them. So the kind of thing that we ought to be communicating to our people who are in the market for purchasing televisions, is that they must ensure that the television that they purchase now are digitally ready. That's quite an important message and if we can get that message, with your assistance, I think it will assist our people so that they do not get into acquiring these television sets through practices that might not be quite acceptable by us, especially in view of the fact that we are entering into this transition period.

Journalist: Just quickly. Does high definition mean digitally ready? You see TV's out there, it says 'High Definition TV'. Does that mean it's digitally ready or are those two separate things?

Minister Ivy Matsepe-Casaburri: I'm going to ask the DG just to help us on that question. It's a technical matter.

Lyndall Shope-Mafole, DG for Communications: The high definition really relates to the resolution, you know the quality with which you can see a picture, but that can also happen using analogue technologies. The digital ready is not the same thing. And also I think, to stress that digital television is actually fairly new. The finalisation of the frequency spectrum globally, that international telecommunications union was only done last year at the World Radio Conference. But the TV set in fact, will be safe - these are some of the things that we're finalising with the Bureau of Standards and with ICASA which is the part of our strategy.