International programmes of Department of Energy
Meeting Summary
The Department of Energy briefed the Committee on its international programmes, with particular reference to the Southern Africa Power Pooling (SAPP) and the participation of
The presentation focused on the major tenets of the Department‘s international engagement in the oil, gas and electricity sectors. The implementation of the strategy was driven by issues of security of energy supply and resources, access to funding, climate change, skills and capacity building, diversity of supply, safety, access to technology and access to information. Specifics were given of each of these areas. The presentation then focused on
With regard to issues of climate change DoE’s policy was directed by the President’s commitment to Green House Gas (GHG) reductions by 34% by 2020 and 42% by 2025, and had aligned its policies and international engagements to this. The various initiatives in which it participated were outlined. Pilot projects were under in
Funding for international activities was covered by a Declaration of Intent (DOI) on the South African Renewable Initiative with the
A summary was then made of the demand and supply situation within 12 countries in
Members enquired about the implications of the United Nations sanctions on
International Programmes of the Department of Energy
Ms Neliswe Magubane, Director General, Department of Energy, apologised for the absence of the Minister, and noted that she would be unable to attend the entire meeting as she had to attend another meeting.
She noted that the International Engagement Strategy of the Department of Energy (DoE or the Department) was informed by principles of national interest, cooperation in developing and diversification of clean energy, and security of supply. Regionally the driving factors were distribution of energy supplies and power pools.
Ms Elizabeth Marabwa, Chief Director: International Coordination, Department of Energy, noted that DoE’s International Engagement Strategy was in alignment with the foreign policy as dictated by the Department of International Relations and Cooperation (DIRCO), which was premised on principles of National and Regional interest, South-South relations and North-South relations. The implementation of the strategy was driven by issues of security of energy supply and resources, access to funding, climate change, skills and capacity building, diversity of supply, safety, access to technology and access to information.
She noted that
The Department signed several Memoranda of Understanding (MOUs), such as one between PetroSA and SINOPEC (
DoE also signed a number of MOUs with
DoE’s policy on climate change was directed by the President’s commitment to greenhouse gas (GHG) reductions of 34% by 2020, and 42% by 2025. Therefore, DoE had reviewed its policies and international engagements to enable alignment to this mandate. DoE participated in initiatives such as the International Partnership for Energy Efficiency Cooperation and the Carbon Sequestration Leadership Forum, in which energy Ministers endorsed Carbon Capture and Storage Technologies to combat climate change through the development of clean coal technologies. Pilot projects were under way in
DoE, in furtherance of the promotion of Clean Energy, had participated in initiatives such as the Clean Energy Ministerial Forum spear-headed by the United States (USA) in the Major Economies Forum.
Other initiatives included the African Energy Ministers Conference (AEMC), which was attended by Ministers from 45 countries in preparation for COP 17. Ministers had outlined priority projects and made a conscious decision to support climate change initiatives through deployment of sustainable energy programmes. In addition, there was emphasis on the need for funding, technology and skills transfer within the Energy sector.
With regard to Nuclear energy, DoE had established relations with multilateral bodies that promoted the safe use of nuclear energy and adhered to the principles of non-proliferation, such as the International Atomic Energy Agency (IEAE). In addition, several bilateral engagements had been conducted and agreements had been concluded with
Ms Marabwa detailed how DoE would access funding for international activities. DoE had signed a Declaration of Intent (DOI) on the South African Renewable Initiative with the
In addition, there was a US$20 billion investment between the South African government and the People’s Republic of
With regard to capacity building, MOUs had been signed with the International Energy Agency (2011) and the International Atomic Energy Agency. Projects initiated in the Southern African Development Community (SADC) included the Energy Ministers’ Annual Meeting, which was aimed at developing a master plan for the Renewable Energy Strategy for SADC. Discussions at the meeting could also include deliberations over the alignment of regulatory policies to ensure regional trade and investment through the establishment of the Regional Electricity Regulatory Authority (REGA).
DoE also intended to conducted several capacity building workshops on energy, such as the clean development mechanisms on bio-fuels and food security.
Ms Marabwa then outlined the demand and supply situation within 12 countries in
She also tabled a summary of the planned capacity versus the forecast of the Southern African Power Pool (SAPP) members. A critical call for capacity could be experienced by 2014 and therefore there was a need to build in adequate reserve margins. There was also the possibility of a crisis in regard to the forecasts in relation to energy planning, by 2016, and she said it would be imperative to implement the energy projects on time to avoid an energy crisis.
Ms Marabwa noted, in regard to the SADC Power Pooling, that there need to create an enabling environment through financing, regulation and pricing in long-term cross-border power trading. An overview of the regulatory decisions of cross border deals was then illustrated in a diagram (see attached presentation).
A summary was given of the potentially viable SAPP Transmission Projects. These included the Transmission Backbone in
An overview of the estimates of the Regional projects was given, listing the Kudu Gas Project (US$ 600 million), Mmamabuala(US$3 000 million), Kafue Lower (US$1.500 million) and Zizabona (US$385 million).
Ms Marabwa concluded her presentation by summarising that DoE had initiated both multilateral and bilateral relations that focused on ensuring that South Africa had access to secure, affordable and accessible energy, access to funding, technology and skills transfers, promoted localisation investment, job creation and the embracing of the African continent and SADC region. Furthermore the relations promoted South – South Cooperation and North – South, in line with DIRCO policy.
Discussion
Mr K Moloto (ANC) asked about the implications of the United Nations sanctions on
Ms Thandeka Zungu, Chief Operating Officer, Department of Energy, replied that Members would soon be briefed on the outcomes of a Cabinet meeting in which the issue was being discussed by the Minister of Energy.
Mr Moloto asked about the current status of the Mmamabula Project, particularly considering the complex politics involved.
Ms Marabwa pointed out that the pace of project was determined by the Botswana Government and DoE had no influence over the progress.
Ms Zungu reiterated that these projects were a negotiated process and
Mr Moloto mentioned that power investment projects took far too long to maintain investors’ interests and wondered what DoE was doing to resolve the challenge.
Ms Marabwa highlighted that these projects took so long because of their nature and the intricacies involved, such as absence of local skills and capacity to implement such projects. Some countries lacked finances to fund the projects. She agreed that there were various challenges in the tabling and implementation of projects. Nonetheless the Energy Ministers at the conference had prioritized these areas where the Continent required assistance.
Mr Moloto referred to the project between PetroSA and the Chinese company, asking about the terms and conditions of ownership.
Ms Marabwa replied that PetroSA was cognisant of its responsibility, the mandate, significance and strategic importance of the project to the country. In all assertions, it would, as an equity partner adhere to principles of national interest. DoE would be involved in the negotiations, acting as “gatekeepers” in ensuring that there was necessary compliance before execution.
Mr D Ross (DA) asked for the terms and conditions of the Chinese Bilateral Agreement amounting to US $20 billion, including an indication of the broader intention and designation of this loan.
Ms Marabwa replied that the loan was to be used in the energy sector for whatever project was commercially viable and bankable.
Mr E Lucas (IFP) commented that DoE should give the set deadlines for implementation of the projects and plans.
Mr Lucas referred to SAPP, and asked the costing of specific projects and
Mr H Schmidt (DA) reiterated that the presentation did not indicate the cost and economies of each of the initiatives listed.
Ms Marabwa replied that unless DoE had been involved in the feasibility studies it was not in a position to determine the individual costs involved in each project. It had to rely on figures provided by the partnering country.
Ms Zungu reiterated that costing could be done at a later stage.
Mr Schmidt mentioned that Petro SA had a poor track record in terms of oil exploration, as it had wasted R2 billion on explorations in
Ms Marabwa replied that PetroSA had gone through the exploration phase and identified that it was a high risk / high return sector. It was now placing more emphasis on near producing or producing assets.
Mr Schmidt commented, in regard to gas deposits in
Mr Schmidt asked the reasons for delays in the Grand Inga Project in the Democratic Republic of Congo, also asking what measures DoE could put in place to overcome the challenges and make the project a reality.
Mr Ross commented on the need to have the ISMO Bill in place in order to include private sector involvement. At regional level, it was also imperative to have regulation for securing security of supply.
Mr S Radebe (ANC) asked for progress made by South African National Energy Development Institute (SANEDI), with regard to the Smart Grid initiative.
Ms Marabwa replied that SANEDI had a unit that was looking into the Smart Grid initiative. This was still at research and not promulgation phase, but she was certain that once funding was made available, more serious efforts could be made for its implementation.
The Chairperson noted that SANEDI could be called to the Committee to give an update and respond to questions regarding the Smart Grid initiative.
Mr Radebe asked about the appliances used for energy efficiency.
Ms Marabwa replied that the appliances were already on the market, but consumers had to be made aware of them.
Mr Radebe asked about the viability of the electric and gas cars initiatives, noting that an oversight visit had highlighted several shortcomings, including the short battery life in the electric car.
Ms Marabwa replied that these projects were still in the initial stages and would improve as the technology was improved. There was progress, and investment in battery technology, to ensure an increase in battery reliability to make it a more feasible option, if overnight charging could increase the time that cars could be driven.
Mr Radebe asked for clarification on the Declaration of Intent (DOI), what was meant by a soft loan, and the terms and conditions of these loans.
Ms Marabwa replied that these were loans, issued out by developed countries/ financial institutions willing to fund projects such as the Renewable Energy Projects, at interest rates that were not at the current money market rate. The funding was given under the condition that it should allow for transfer of technology and access by local energy investors.
The Chairperson noted that while the Department could respond to some of these questions, they were not directly related to international activities.
Mr J Selau (ANC) asked for plans put in place to overcome the challenges of financing, regulation and pricing of power trading in the SADC region.
Ms Marabwa replied that one strategy was Regional implementation of projects through SAPP, as the commercialisation of most of the projects required the presence of an anchor customer such as
Mr Selau asked one consequence of electric cars might be an increase in the use of energy in the evenings as car batteries were charged.
Ms Marabwa replied that DoE could budget for it as there were different peak times for energy usage. The technology of storing electricity was not well-developed, and electricity could be used at night to charge batteries. DoE, however, did not see that oil and gas propelled vehicles would be totally replaced, and rather that electric car technology could simply augment them. This technology would allow a country to eventually wean itself off a resources which could come to an end in future generations to come.
Mr Schmidt asked if, given the crisis in the Middle East, crude oil was being stored at Saldanha to hedge against supplies being were cut off or reduced.
Ms Zungu replied that Saldanha was operational and was storing an average of 10 million barrels of crude oil. Refined products were kept by individual companies for however long they decided, given the time periods in which these had to be used in order to maintain specifications. DoE was, however, in continuous discussions with private companies regarding their level of stocks in order to ensure sufficient stocks.
The Chairperson asked where the international group was located within DoE.
Ms Zungu replied that the international Department’s Chief Directorate was placed within the office of the Chief Operating Officer (COO).
The Chairperson asked what was meant by an anchor customer, and asked for an overview of all potential anchor customers for the gas resources in the continent.
Ms Zungu noted that currently SASOL was the major buyer of gas in South Africa. She added that an anchor customer was a confirmed, definite customer who gave confidence to the investors to develop in the infrastructure and gas assets.
The Chairperson asked for clarification on the terms “near producing and producing assets”. He asked why DoE had chosen to work with the Venezuela Government.
Ms Marabwa replied that near producing assets were identified definite reserves, so the requirement here was simply sinking the well. Sinking the well and preparing it for production took between five and ten years depending on the size. Producing of assets involved buying of equity in an already-producing well, also referred to as “farming out”. The agreement with the Venezuela Government was made because the government had been keen and forthcoming in supporting the initiative of sourcing near producing and producing assets.
The Chairperson asked about a wind-energy deal reported in a newspaper between a South African Investment Company, Lesotho, and a Chinese Investment Company.
Ms Marabwa replied that DoE was aware of the deal and was awaiting a formal approach from government on this.
The Chairperson asked for more documentation on the Partnership for Energy deals.
The Chairperson asked about the number of MOUs signed to date.
Ms Zungu replied that the Minister had initiated an exercise to take note of all the MOUs from the 1960s to present date, highlighting the outcomes of each.
The Chairperson asked what “CCUS” was.
Ms Marabwa replied that it referred to Carbon Capture Use and Storage. The use element has been introduced by the Chinese, who were in the process of developing technology to use the captured carbon. This research was still in its preliminary stages and very expensive. South Africa could learn and copy these technologies at a later stage.
The Chairperson asked for clarification on the role of Switzerland in the presentation, as few details had been given.
Ms Marabwa replied that DoE had signed a MOU with Switzerland to assist in funding a project to measure and monitor energy verification of energy efficiency. This was essential in creating an auditing, measuring and verification system to measure energy efficiency pegged at international level.
The Chairperson asked what programmes were being implemented by the Clean Energy Ministerial Forum, and what was South Africa’s role as ambassador, and if there were any challenges.
Ms Marabwa replied that South Africa was the only African country of the 24 participating countries, so what it learnt was shared with other African counterparts. Its role was also to ensure that the interests of African countries were taken into consideration at an international arena. For instance, DoE motivated that a wind and solar atlas be developed to include Africa. This could enable African countries to identify areas where wind turbines could be placed. DoE also motivated that pilot projects for certain initiatives be initiated in African countries. Another initiative that had benefited the Continent was the Clean Energy Solution Centre, an interactive policy centre that would assist individual countries in the drafting of legislature.
The Chairperson asked for more details around the Mexican Model of Appliance and the policies around it.
The Chairperson commented on the Energy Public Meeting to be held this month to debate if prospects existed for local manufacturing of energy technologies.
The Chairperson commented that the Minister of Energy was required to give a briefing on the outcomes of the Energy Ministerial Conference.
Ms Zungu replied that this had been noted and arrangements could be put in place to this effect.
The Chairperson asked for details on DoE’s relationship with international bodies concerned with nuclear energy.
Ms Marabwa replied DoE had a working relationship with bodies such as the African Commission on Nuclear Energy, led by South Africa. A conference was held in which the IAE assisted in teaching regulators from the DoE and the private sector on best practices in nuclear energy.
The Chairperson asked who was involved in the International Partnership for Renewable Energy.
Ms Marabwa replied that it was initiated by the G20 countries who saw it necessary to have the Energy Efficiency Accord. Countries signed to ensure that they harmonised their policies and regulations to ensure energy efficiency. South Africa had been approved, but there was a membership fee.
The Chairperson asked about the chances of continued funding from the European Investment Bank, given the financial crisis in the Euro zone. He wondered if there were funding prospects from South-South partners.
Ms Marabwa replied that while the Euro zone was going through a financial crisis, there was a growing trend, globally, to move away from over reliance on the service industry, to the transfer of technologies to new markets. The investment in Renewable Energy technologies was indirectly going to promote the deployment of their technology. DoE was confident that the funding was likely to be forthcoming. With regard to South-South relations, South Africa was the major contributor in terms of investments in Africa.
The Chairperson commented there should be harmonisation of legislation at regional level. While no Regional Parliament existed, these initiatives should be pushed through the Parliamentary Forum.
The Chairperson mentioned that DoE should give Members an invitation to attend the biofuels and food security workshop.
Ms Zungu replied that could be taken into consideration, as the Minister had declared March an energy month with a number of indabas taking place.
The Chairperson asked for the reasons and rationale why the Zizabona Project excluded South Africa, although the grid was supposed to be a region-wide grid.
Ms Marabwa replied that the intention was not to exclude South Africa, but link up the three countries (Botswana, Zambia and Namibia). A link already existed between South Africa and the individual countries, but they lacked a link between each other to increase connectivity.
The Chairperson commented that Regional Energy Integration was expected to be included in discussions on Regional Economic Integration being held by the Department of Economic Development.
The Chairperson asked for the progress made on the International Energy Strategy document, and when it was scheduled for presentation to the Committee.
Ms Zungu replied that the document had taken longer than anticipated, mainly because there had to be consultation with a variety of other stakeholders and departments. It should be finalised in the next couple of weeks.
Mr Moloto asked for clarification on the supply demand table.
Ms Marabwa noted that the installed capacity was the maximum capacity of the country, while the actual capacity represented what was produced. In most cases actual would be less than maximum, due to challenges such as maintenance issues and unplanned shut downs. Peak demand represented the highest demand during the year, which in most countries happened during winter. In the event that the peak demands exceeded actual capacity there would be black outs and load shedding.
Mr Moloto asked what Petro SA was doing to secure feedstock with Mozambique, given that it had less than five year stock.
The Chairperson asked for clarification on DoE’s relationship with multilateral organisations such as the UN.
Ms Marabwa replied that DoE had a strong relationship with the African Union (AU), participating in activities such as the Conference of the African Energy Ministers and the African Energy Partnership. In addition the Department was hosting the Africa/EU Conference in May 2012. In addition, DoE had a good working relationship with United Nations Industrial Development Organization (UNIDO) that had resulted in the implementation of a variety of projects.
The Chairperson commented that the presentation lacked comment on the Regional Energy Strategy led by SADC to meet the demand and supply, on the African continent, of the projected growth and the harmonization of policy and legislations.
Ms Marabwa replied that the biggest challenge was that while Master Plans had been developed, such as the Hydro Carbons Strategy, Oil and Gas Strategy and Renewable Energy Strategy, implementation was lacking at the moment. She suggested that it would be necessary to hold discussions to ensure that other countries’ energy projects were prioritised. This was a political challenge that could not be driven by the Minister only, but also required the involvement of parliamentarians in the region.
Ms Zungu noted that some of the questions that had not been responded to could be addressed in future meetings.
The meeting was adjourned.
Meeting report
International Programmes of the Department of Energy
Ms Neliswe Magubane, Director General, Department of Energy, apologised for the absence of the Minister, and noted that she would be unable to attend the entire meeting as she had to attend another meeting.
She noted that the International Engagement Strategy of the Department of Energy (DoE or the Department) was informed by principles of national interest, cooperation in developing and diversification of clean energy, and security of supply. Regionally the driving factors were distribution of energy supplies and power pools.
Ms Elizabeth Marabwa, Chief Director: International Coordination, Department of Energy, noted that DoE’s International Engagement Strategy was in alignment with the foreign policy as dictated by the Department of International Relations and Cooperation (DIRCO), which was premised on principles of National and Regional interest, South-South relations and North-South relations. The implementation of the strategy was driven by issues of security of energy supply and resources, access to funding, climate change, skills and capacity building, diversity of supply, safety, access to technology and access to information.
She noted that
The Department signed several Memoranda of Understanding (MOUs), such as one between PetroSA and SINOPEC (
DoE also signed a number of MOUs with
DoE’s policy on climate change was directed by the President’s commitment to greenhouse gas (GHG) reductions of 34% by 2020, and 42% by 2025. Therefore, DoE had reviewed its policies and international engagements to enable alignment to this mandate. DoE participated in initiatives such as the International Partnership for Energy Efficiency Cooperation and the Carbon Sequestration Leadership Forum, in which energy Ministers endorsed Carbon Capture and Storage Technologies to combat climate change through the development of clean coal technologies. Pilot projects were under way in
DoE, in furtherance of the promotion of Clean Energy, had participated in initiatives such as the Clean Energy Ministerial Forum spear-headed by the United States (USA) in the Major Economies Forum.
Other initiatives included the African Energy Ministers Conference (AEMC), which was attended by Ministers from 45 countries in preparation for COP 17. Ministers had outlined priority projects and made a conscious decision to support climate change initiatives through deployment of sustainable energy programmes. In addition, there was emphasis on the need for funding, technology and skills transfer within the Energy sector.
With regard to Nuclear energy, DoE had established relations with multilateral bodies that promoted the safe use of nuclear energy and adhered to the principles of non-proliferation, such as the International Atomic Energy Agency (IEAE). In addition, several bilateral engagements had been conducted and agreements had been concluded with
Ms Marabwa detailed how DoE would access funding for international activities. DoE had signed a Declaration of Intent (DOI) on the South African Renewable Initiative with the
In addition, there was a US$20 billion investment between the South African government and the People’s Republic of
With regard to capacity building, MOUs had been signed with the International Energy Agency (2011) and the International Atomic Energy Agency. Projects initiated in the Southern African Development Community (SADC) included the Energy Ministers’ Annual Meeting, which was aimed at developing a master plan for the Renewable Energy Strategy for SADC. Discussions at the meeting could also include deliberations over the alignment of regulatory policies to ensure regional trade and investment through the establishment of the Regional Electricity Regulatory Authority (REGA).
DoE also intended to conducted several capacity building workshops on energy, such as the clean development mechanisms on bio-fuels and food security.
Ms Marabwa then outlined the demand and supply situation within 12 countries in
She also tabled a summary of the planned capacity versus the forecast of the Southern African Power Pool (SAPP) members. A critical call for capacity could be experienced by 2014 and therefore there was a need to build in adequate reserve margins. There was also the possibility of a crisis in regard to the forecasts in relation to energy planning, by 2016, and she said it would be imperative to implement the energy projects on time to avoid an energy crisis.
Ms Marabwa noted, in regard to the SADC Power Pooling, that there need to create an enabling environment through financing, regulation and pricing in long-term cross-border power trading. An overview of the regulatory decisions of cross border deals was then illustrated in a diagram (see attached presentation).
A summary was given of the potentially viable SAPP Transmission Projects. These included the Transmission Backbone in
An overview of the estimates of the Regional projects was given, listing the Kudu Gas Project (US$ 600 million), Mmamabuala(US$3 000 million), Kafue Lower (US$1.500 million) and Zizabona (US$385 million).
Ms Marabwa concluded her presentation by summarising that DoE had initiated both multilateral and bilateral relations that focused on ensuring that South Africa had access to secure, affordable and accessible energy, access to funding, technology and skills transfers, promoted localisation investment, job creation and the embracing of the African continent and SADC region. Furthermore the relations promoted South – South Cooperation and North – South, in line with DIRCO policy.
Discussion
Mr K Moloto (ANC) asked about the implications of the United Nations sanctions on
Ms Thandeka Zungu, Chief Operating Officer, Department of Energy, replied that Members would soon be briefed on the outcomes of a Cabinet meeting in which the issue was being discussed by the Minister of Energy.
Mr Moloto asked about the current status of the Mmamabula Project, particularly considering the complex politics involved.
Ms Marabwa pointed out that the pace of project was determined by the Botswana Government and DoE had no influence over the progress.
Ms Zungu reiterated that these projects were a negotiated process and
Mr Moloto mentioned that power investment projects took far too long to maintain investors’ interests and wondered what DoE was doing to resolve the challenge.
Ms Marabwa highlighted that these projects took so long because of their nature and the intricacies involved, such as absence of local skills and capacity to implement such projects. Some countries lacked finances to fund the projects. She agreed that there were various challenges in the tabling and implementation of projects. Nonetheless the Energy Ministers at the conference had prioritized these areas where the Continent required assistance.
Mr Moloto referred to the project between PetroSA and the Chinese company, asking about the terms and conditions of ownership.
Ms Marabwa replied that PetroSA was cognisant of its responsibility, the mandate, significance and strategic importance of the project to the country. In all assertions, it would, as an equity partner adhere to principles of national interest. DoE would be involved in the negotiations, acting as “gatekeepers” in ensuring that there was necessary compliance before execution.
Mr D Ross (DA) asked for the terms and conditions of the Chinese Bilateral Agreement amounting to US $20 billion, including an indication of the broader intention and designation of this loan.
Ms Marabwa replied that the loan was to be used in the energy sector for whatever project was commercially viable and bankable.
Mr E Lucas (IFP) commented that DoE should give the set deadlines for implementation of the projects and plans.
Mr Lucas referred to SAPP, and asked the costing of specific projects and
Mr H Schmidt (DA) reiterated that the presentation did not indicate the cost and economies of each of the initiatives listed.
Ms Marabwa replied that unless DoE had been involved in the feasibility studies it was not in a position to determine the individual costs involved in each project. It had to rely on figures provided by the partnering country.
Ms Zungu reiterated that costing could be done at a later stage.
Mr Schmidt mentioned that Petro SA had a poor track record in terms of oil exploration, as it had wasted R2 billion on explorations in
Ms Marabwa replied that PetroSA had gone through the exploration phase and identified that it was a high risk / high return sector. It was now placing more emphasis on near producing or producing assets.
Mr Schmidt commented, in regard to gas deposits in
Mr Schmidt asked the reasons for delays in the Grand Inga Project in the Democratic Republic of Congo, also asking what measures DoE could put in place to overcome the challenges and make the project a reality.
Mr Ross commented on the need to have the ISMO Bill in place in order to include private sector involvement. At regional level, it was also imperative to have regulation for securing security of supply.
Mr S Radebe (ANC) asked for progress made by South African National Energy Development Institute (SANEDI), with regard to the Smart Grid initiative.
Ms Marabwa replied that SANEDI had a unit that was looking into the Smart Grid initiative. This was still at research and not promulgation phase, but she was certain that once funding was made available, more serious efforts could be made for its implementation.
The Chairperson noted that SANEDI could be called to the Committee to give an update and respond to questions regarding the Smart Grid initiative.
Mr Radebe asked about the appliances used for energy efficiency.
Ms Marabwa replied that the appliances were already on the market, but consumers had to be made aware of them.
Mr Radebe asked about the viability of the electric and gas cars initiatives, noting that an oversight visit had highlighted several shortcomings, including the short battery life in the electric car.
Ms Marabwa replied that these projects were still in the initial stages and would improve as the technology was improved. There was progress, and investment in battery technology, to ensure an increase in battery reliability to make it a more feasible option, if overnight charging could increase the time that cars could be driven.
Mr Radebe asked for clarification on the Declaration of Intent (DOI), what was meant by a soft loan, and the terms and conditions of these loans.
Ms Marabwa replied that these were loans, issued out by developed countries/ financial institutions willing to fund projects such as the Renewable Energy Projects, at interest rates that were not at the current money market rate. The funding was given under the condition that it should allow for transfer of technology and access by local energy investors.
The Chairperson noted that while the Department could respond to some of these questions, they were not directly related to international activities.
Mr J Selau (ANC) asked for plans put in place to overcome the challenges of financing, regulation and pricing of power trading in the SADC region.
Ms Marabwa replied that one strategy was Regional implementation of projects through SAPP, as the commercialisation of most of the projects required the presence of an anchor customer such as
Mr Selau asked one consequence of electric cars might be an increase in the use of energy in the evenings as car batteries were charged.
Ms Marabwa replied that DoE could budget for it as there were different peak times for energy usage. The technology of storing electricity was not well-developed, and electricity could be used at night to charge batteries. DoE, however, did not see that oil and gas propelled vehicles would be totally replaced, and rather that electric car technology could simply augment them. This technology would allow a country to eventually wean itself off a resources which could come to an end in future generations to come.
Mr Schmidt asked if, given the crisis in the Middle East, crude oil was being stored at Saldanha to hedge against supplies being were cut off or reduced.
Ms Zungu replied that Saldanha was operational and was storing an average of 10 million barrels of crude oil. Refined products were kept by individual companies for however long they decided, given the time periods in which these had to be used in order to maintain specifications. DoE was, however, in continuous discussions with private companies regarding their level of stocks in order to ensure sufficient stocks.
The Chairperson asked where the international group was located within DoE.
Ms Zungu replied that the international Department’s Chief Directorate was placed within the office of the Chief Operating Officer (COO).
The Chairperson asked what was meant by an anchor customer, and asked for an overview of all potential anchor customers for the gas resources in the continent.
Ms Zungu noted that currently SASOL was the major buyer of gas in South Africa. She added that an anchor customer was a confirmed, definite customer who gave confidence to the investors to develop in the infrastructure and gas assets.
The Chairperson asked for clarification on the terms “near producing and producing assets”. He asked why DoE had chosen to work with the Venezuela Government.
Ms Marabwa replied that near producing assets were identified definite reserves, so the requirement here was simply sinking the well. Sinking the well and preparing it for production took between five and ten years depending on the size. Producing of assets involved buying of equity in an already-producing well, also referred to as “farming out”. The agreement with the Venezuela Government was made because the government had been keen and forthcoming in supporting the initiative of sourcing near producing and producing assets.
The Chairperson asked about a wind-energy deal reported in a newspaper between a South African Investment Company, Lesotho, and a Chinese Investment Company.
Ms Marabwa replied that DoE was aware of the deal and was awaiting a formal approach from government on this.
The Chairperson asked for more documentation on the Partnership for Energy deals.
The Chairperson asked about the number of MOUs signed to date.
Ms Zungu replied that the Minister had initiated an exercise to take note of all the MOUs from the 1960s to present date, highlighting the outcomes of each.
The Chairperson asked what “CCUS” was.
Ms Marabwa replied that it referred to Carbon Capture Use and Storage. The use element has been introduced by the Chinese, who were in the process of developing technology to use the captured carbon. This research was still in its preliminary stages and very expensive. South Africa could learn and copy these technologies at a later stage.
The Chairperson asked for clarification on the role of Switzerland in the presentation, as few details had been given.
Ms Marabwa replied that DoE had signed a MOU with Switzerland to assist in funding a project to measure and monitor energy verification of energy efficiency. This was essential in creating an auditing, measuring and verification system to measure energy efficiency pegged at international level.
The Chairperson asked what programmes were being implemented by the Clean Energy Ministerial Forum, and what was South Africa’s role as ambassador, and if there were any challenges.
Ms Marabwa replied that South Africa was the only African country of the 24 participating countries, so what it learnt was shared with other African counterparts. Its role was also to ensure that the interests of African countries were taken into consideration at an international arena. For instance, DoE motivated that a wind and solar atlas be developed to include Africa. This could enable African countries to identify areas where wind turbines could be placed. DoE also motivated that pilot projects for certain initiatives be initiated in African countries. Another initiative that had benefited the Continent was the Clean Energy Solution Centre, an interactive policy centre that would assist individual countries in the drafting of legislature.
The Chairperson asked for more details around the Mexican Model of Appliance and the policies around it.
The Chairperson commented on the Energy Public Meeting to be held this month to debate if prospects existed for local manufacturing of energy technologies.
The Chairperson commented that the Minister of Energy was required to give a briefing on the outcomes of the Energy Ministerial Conference.
Ms Zungu replied that this had been noted and arrangements could be put in place to this effect.
The Chairperson asked for details on DoE’s relationship with international bodies concerned with nuclear energy.
Ms Marabwa replied DoE had a working relationship with bodies such as the African Commission on Nuclear Energy, led by South Africa. A conference was held in which the IAE assisted in teaching regulators from the DoE and the private sector on best practices in nuclear energy.
The Chairperson asked who was involved in the International Partnership for Renewable Energy.
Ms Marabwa replied that it was initiated by the G20 countries who saw it necessary to have the Energy Efficiency Accord. Countries signed to ensure that they harmonised their policies and regulations to ensure energy efficiency. South Africa had been approved, but there was a membership fee.
The Chairperson asked about the chances of continued funding from the European Investment Bank, given the financial crisis in the Euro zone. He wondered if there were funding prospects from South-South partners.
Ms Marabwa replied that while the Euro zone was going through a financial crisis, there was a growing trend, globally, to move away from over reliance on the service industry, to the transfer of technologies to new markets. The investment in Renewable Energy technologies was indirectly going to promote the deployment of their technology. DoE was confident that the funding was likely to be forthcoming. With regard to South-South relations, South Africa was the major contributor in terms of investments in Africa.
The Chairperson commented there should be harmonisation of legislation at regional level. While no Regional Parliament existed, these initiatives should be pushed through the Parliamentary Forum.
The Chairperson mentioned that DoE should give Members an invitation to attend the biofuels and food security workshop.
Ms Zungu replied that could be taken into consideration, as the Minister had declared March an energy month with a number of indabas taking place.
The Chairperson asked for the reasons and rationale why the Zizabona Project excluded South Africa, although the grid was supposed to be a region-wide grid.
Ms Marabwa replied that the intention was not to exclude South Africa, but link up the three countries (Botswana, Zambia and Namibia). A link already existed between South Africa and the individual countries, but they lacked a link between each other to increase connectivity.
The Chairperson commented that Regional Energy Integration was expected to be included in discussions on Regional Economic Integration being held by the Department of Economic Development.
The Chairperson asked for the progress made on the International Energy Strategy document, and when it was scheduled for presentation to the Committee.
Ms Zungu replied that the document had taken longer than anticipated, mainly because there had to be consultation with a variety of other stakeholders and departments. It should be finalised in the next couple of weeks.
Mr Moloto asked for clarification on the supply demand table.
Ms Marabwa noted that the installed capacity was the maximum capacity of the country, while the actual capacity represented what was produced. In most cases actual would be less than maximum, due to challenges such as maintenance issues and unplanned shut downs. Peak demand represented the highest demand during the year, which in most countries happened during winter. In the event that the peak demands exceeded actual capacity there would be black outs and load shedding.
Mr Moloto asked what Petro SA was doing to secure feedstock with Mozambique, given that it had less than five year stock.
The Chairperson asked for clarification on DoE’s relationship with multilateral organisations such as the UN.
Ms Marabwa replied that DoE had a strong relationship with the African Union (AU), participating in activities such as the Conference of the African Energy Ministers and the African Energy Partnership. In addition the Department was hosting the Africa/EU Conference in May 2012. In addition, DoE had a good working relationship with United Nations Industrial Development Organization (UNIDO) that had resulted in the implementation of a variety of projects.
The Chairperson commented that the presentation lacked comment on the Regional Energy Strategy led by SADC to meet the demand and supply, on the African continent, of the projected growth and the harmonization of policy and legislations.
Ms Marabwa replied that the biggest challenge was that while Master Plans had been developed, such as the Hydro Carbons Strategy, Oil and Gas Strategy and Renewable Energy Strategy, implementation was lacking at the moment. She suggested that it would be necessary to hold discussions to ensure that other countries’ energy projects were prioritised. This was a political challenge that could not be driven by the Minister only, but also required the involvement of parliamentarians in the region.
Ms Zungu noted that some of the questions that had not been responded to could be addressed in future meetings.
The meeting was adjourned.
Audio
- PC Energy: Department of Energy on its international programmes including power pooling and energy trade in SADC Part 1
- PC Energy: epartment of Energy on its international programmes including power pooling and energy trade in SADC Part 2
- PC Energy: Department of Energy on its international programmes including power pooling and energy trade in SADC Part 2
- PC Energy: epartment of Energy on its international programmes including power pooling and energy trade in SADC Part 1
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