NCOP Economic and Business Development
Integrated National Electrification Programme: briefing by Department of Energy
Chairperson: Mr F Adams (ANC; Western Cape)
Date of Meeting: 07 March 2011
The Committee was briefed by the Department of Energy on the progress of the Integrated National Electrification Programme (INEP) whose new drive was to increase access to electricity from 81% to 92% by 2014. The biggest chunks that had not been electrified were in
In terms of universal access, a 92% target by 2014 was more realistic under the current conditions. Low backlog municipalities and provinces (
On performance, municipalities needed guidance and the trend had been that municipalities, usually the rural ones, did not perform due to low skills and backlogs. The Department was in an uncomfortable position as they wanted to stretch the money as far as possible in providing electricity access,. However, by neglecting disadvantaged municipalities that could not deliver the same yield per rand as opposed to municipalities with better infrastructure, they would wind up disadvantaging disadvantaged areas even more. They needed to get a sense of what to do because it was a bigger fiscal problem.
Projects in the
Members wanted clarity on the definition of formal (having permanent walls) versus informal backlogs, how many jobs had been created, the misuse of funds, provision of electricity to un-proclaimed areas, bulk infrastructure and job creation gender bias. The Committee requested that a department official accompany the Committee as they would have to vigorously pursue oversight over
Chairperson’s opening remarks
The Chairperson, Mr F Gona (ANC;
Integrated National Electrification Programme (INEP): Department of Energy (DoE) presentation
Ms Nelisiwe Magubane, Director-General: DoE, said that they had filled the vacancy for the executive manager for INEP and that the new manager was Dr Wolsey Barnard. The presentation would deal with how far the roll-out had proceeded, job creation and which municipalities were problematic.
Dr Wolsey Barnard, Chief Director, INEP: DoE, said INEP was established in 2001 following the Energy White Paper. The Department had extended funding further up the electricity distribution line due to the fact that most rural municipalities did not possess the funds to build infrastructural capacity. INEP funding came from National Treasury and the Department then disbursed it to Eskom and municipalities to implement grid electrification. Non-grid electrification was implemented by service providers. In terms of the national backlog there were three big chunks that had not been electrified in
The challenges that they were faced with included un-electrifiable informal settlements, electrifiable urban informal settlements and terrain that was characterized by scattered settlements typical of the
The total number of jobs created due to INEP so far had been 5, 811 which had exceeded the 5, 000 target. The actual expenditure was R 363,901,989 which was 36% below the budgeted amount of R 504,731,218. On the gender target side of things the Department had not performed adequately. In terms of universal access, the challenges included insufficient programme funding; building of new bulk infrastructure in rural areas; refurbishment and rehabilitation of electrical infrastructure; building municipal capacity without negative impact on service delivery; structured planning approach (COGTA, Human Settlements etc.); project management; resources management (contractors, consultants, etc.); technology innovations (integration of other sources of energy) and the unacceptability and misconceptions about off-grid technology used on Solar Home Systems which lead to vandalism of systems.
In conclusion, the 92% target by 2014 was more realistic under the current conditions. Low backlog municipalities and provinces (
Ms Magubane said that in terms the performance, municipalities needed guidance. The trend had been that municipalities, usually the rural ones, did not perform due to low skills and backlogs. The Department was in an uncomfortable position as they wanted to stretch the money as far as possible in providing electricity access, but by neglecting disadvantaged municipalities that could not deliver the same yield per rand as opposed to municipalities with better infrastructure, they would wind up disadvantaging disadvantaged areas even more. They needed to get a sense of what to do because it was a bigger fiscal problem.
The Chairperson said that some municipalities were not even using the allocated funds to pay salaries; they just did not touch the funds. This was a serious problem.
Mr Mohau Nketsi, INEP Senior Manager, said that projects in the
Ms Magubane said that her experience had shown that if a municipality had its own internal problems, then INEP performance would also be affected.
The Chairperson said that they would then be receiving a hand-out on municipality performance from the Department. He added that municipality hold-ups were hampering delivery.
Mr A Lees (ANC -
Ms Magubane replied that formal households were defined as houses, be they in rural or urban areas. The reason why
Mr Nketsi replied that the R2.8 billion was split between Eskom and municipalities, with R1.1 billion going to municipalities. If one talked about under-performance in Eskom’s case, they would most likely only under-spend by 5%. By the end of March the Department tried to disburse all it money and usually were at 80-90% of the allocated budget for municipalities.
Dr Barnard said that the Department was not in the habit of simply dishing out solar panels and that he was surprised at the situation Mr Lees noted. There was a specific process that the department followed when distributing solar panels where they earmarked specific areas.
Mr Lees said that houses in rural areas were not in proclaimed areas.
Ms Magubane replied that the municipality usually proclaimed an area as safe for accommodating humans.
Mr A Nyambi (ANC;
The Department had indicated that by 2014 there would be 92% coverage. He asked what the target for 2012 was and how they would monitor progress.
Ms Magubane said that in rural areas bulk infrastructure was needed for household uptakes of electricity and they found that as a result in one year they would have to spend large amounts on bulk infrastructure, which reduced the total number of households electrified but allowed for capacity potential to do so in the future. She was not proud of their job creation gender bias and expressed her embarrassment at the state of things. She admitted that this was an area that needed serious work. The jobs created were gauged when they transferred money to Eskom or municipalities under INEP. The transfer stipulated that either Eskom or the municipality needed to report to the DoE on employment equity and other demographics of the people employed. Once they received the reports, they did an audit to verify the information.
Mr Nketsi replied that in terms of the Mbombela project, it could be a bit misleading as they went by municipal information and in some cases the project name might be different from the actual municipal area in which the project was. Thus, the reference to Mbombela may just be a project name; however the details would be in the spreadsheet that he would furnish members with.
Dr Barnard said that in terms of the Department improving, they already used a phased approach to electrification goals and were currently at 81%. They knew exactly how they would step it up to 92%. They were busy working on turn-key projects where they helped municipalities with projects. They did not take way the projects, but rather assisted and negated the need to hire contractors.
Ms E Van Lingen (DA;
Ms Magubane replied that they tried to look at the service provider that was going to service the area. The municipality also usually provided free access to basic alternative energy. The service provider usually requested R62 per month for maintenance; municipalities paid this on behalf of each resident, which covered the maintenance fees. This made the system viable.
Mr Nyambi asked whether it was possible for un-proclaimed areas to be electrified.
Mr Nkalipi replied that the municipality proclaimed areas and the Department followed them through the process of proclamation. His belief was that if people were living in an area, then services needed to be provided. Ultimately the municipalities were responsible as the Department provided services to them.
The Chairperson said that some areas in the
Ms Magubane said that in
Ms B Abrahams (DA;
Mr Nketsi said that he would look at this issue and get back to Ms Abrahams on it.
Ms Van Lingen asked how they calculated backlog figures in the
Dr Barnard replied that in the Coega area 391 houses were proclaimed. There was solely a process problem there as the Environmental Impact Assessment (EIA) process had started late.
Mr Nketsi relied that there was a 67, 000 household backlog in the
Ms Van Lingen said that the EIA approval had been given with the condition that they could provide proof that they would be able to provide electricity to the houses. She asked what the Department was doing to ensure this.
Mr Nketsi replied that if the party concerned was a municipality, then all they needed to do was provide the Department with a business plan which they would look at and then guarantee.
Mr Lees asked how much money was just sitting untouched in the bank accounts of municipalities. In
Mr Nketsi replied that a lot of the time money wound up being unused because projects were delayed.
Mr D Gamede (ANC; Kwazulu- Natal) said that the Department should not use the term ‘disabled’ as they were referring to people who could function and were rather “people with disabilities”. He said that it seemed that they were moving away from the Millennium Development Goals (MDG) and asked if this was the policy of government. They could not stop at 92% and needed to focus on 100% service provision. They should not admit defeat and settle for 92%. They should aim for 100% delivery and see how far they could get. He asked if it would be possible to get a Department official to go with the Committee in order to visit areas on the ground. He was happy that the Department had acknowledged their shortcoming around gender and people with disabilities in terms of job creation, but the figures were really not acceptable.
Dr Barnard took note of Mr Gamede’s comments around the term ‘disabled’ and said that they would facilitate the visit spoken about. He added that they had regional offices and people on the ground everywhere. They were very aware that they were not achieving job creation targets for people with disabilities and women. They acknowledged the problem and were committed to solving it.
Ms Magubane said that in terms of the MDG, it was not their intention to abandon them. They were looking at the current Medium Term Expenditure Framework (MTEF) and looked at what the implications were for their ability to deliver their targets according to the funding. They had not given up on the MDG, but would need to motivate for more funds to achieve it. She added that she would get Dr Barnard to provide Mr Gamede with his contact details.
Ms Van Lingen said that it seemed to her that the alternative energy systems installed in various areas were being installed by some sort of choice and not on a house to house or street by street basis. She was concerned that municipalities were doing this. For some townships in the
Dr Barnard replied that the Eskom serviced areas would stay as they were.
The Chairperson said that the Department had made a good impression and it seemed that everyone was satisfied. They would have to vigorously pursue oversight over
The meeting was adjourned.