Eskom Update Report; World Bank briefing: Issues in the SA Electricity Sector

PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES
31 May 2006
ESKOM UPDATE REPORT; WORLD BANK BRIEFING: ISSUES IN THE SA ELECTRICITY SECTOR

Chairperson: Mr Y Carrim (ANC)

Documents handed out:
Report on Joint Meeting of Public Enterprises, Minerals & Energy and Science & Technology on “Eskom: Power Cuts in the Western Cape, its national implications and challenges in Electricity Capacity”, held 14 March 2006
Presentations by Eskom
Current and Forthcoming Issues in the SA Electricity Sector

SUMMARY
Eskom provided an update of the current electricity supply situation in SA and presented details of its capital expenditure programme. Eskom was assisting municipalities with electricity supplies and structures. A system of Regional Electricity Distributors was being established to rationalise supply. Recent outages demonstrated the need for significant increase in the generating capacity. A growth in demand of 2.3% existed, and would need to be revised in response to an increased domestic growth rate. New power stations were being built to deal with demand, and mothballed stations were being brought back into service. At present the reserve capacity was only about 8%, well below international standards. Eskom would be revising its procedures following problems especially in the Western Cape. Load-shedding was still a possibility as winter approached.

An expert from the World Bank made a presentation on the situation regarding electricity in SA. While Eskom was a world player in many aspects, he presented evidence that competition was needed in the market. Price structures should be revised in order to finance the necessary capital expansion projects.

Members raised concerns about Eskom’s communications with the public during their recent problems. Some felt that the media had been irresponsible in their reporting on isolated problems. Eskom were questioned about employment policies following a recent well-publicised incident and court case.

MINUTES

A Joint Committee report (Pubic Enterprises, Minerals and Energy and Science and Technology) on power outages in the Western Cape was briefly discussed and accepted. Some grammatical errors were corrected, and a comment from the DA was included saying that the Committee felt that the Department should seriously consider introducing a greater measure of financial risk evaluation, such as VAR. The Chairperson then welcomed the delegation from Eskom, and introduced the members of the Committee. The Eskom delegation consisted of Mr Jacob Maroga (Managing Director (MD) Transmission), Mr Brian Dames (MD Enterprises Division), Ms Nthobi Angel (MD External Relations), Mr Junaid Allie (General Manager: Human Resources), Ms Anusia Govender (Chief Forensic Advisor), Ms Prudence Pitsie (Public Affairs Advisor) and Mr Lebogang Hashabe (GM ERD).

The Chairperson said that the Committee had visited Koeberg the previous day. They had been bowled over by the technology on display, and were convinced that the operation was world class. People wanted electricity, and the Committee wanted to get a better feel for the technical aspects.

He noted that Eskom’s annual report was due in October. He said that all State Owned Enterprises (SOEs) would be invited to the Committee in the six-month period preceding the presentation of their reports. First, however, they had to respond to issues raised by the Committee. There were a few requests, but overall he had high praise for Eskom’s annual report in 2005.

The issue of power outages in Johannesburg had been raised with the Chairman, Mr Moosa, and a meeting had been held with Johannesburg Mayor Masondo. City Power was a major agency, and yet Eskom took all the blame from the public. Experts were saying that government and Eskom had been given due warning of problems which were arising. The Committee and the Executive had to take some responsibility.

The Committee had requested Eskom to produce pamphlets advising the public of the danger associated with making illegal connections, but these had not yet been seen.

He asked if Mr Moosa’s report would be ready by 30 August. There were several exchanges arising from the report of 26 April.

The Chairperson felt that Eskom could have responded better to the problems in the Cape. Their anticipation could have been better. Better communications were needed, and he felt that some of the explanations had been too technical for the public to understand.

If national growth was at 6%, and the programme of spreading power to the rural areas was to continue, then reserves would be seriously eroded. The confidence of the public in Eskom had to be improved. He noted that Eskom had had a lot of time to prepare answers to the Committee’s questions, and the delays were unacceptable.

He asked how far developed the Risk Management System was. He welcomed Eskom’s efforts in promoting the energy saving campaign. A user-friendly pamphlet was required. A lot of work had been done, and he was impressed by the power usage warning being displayed on television. He felt that Eskom had exceeded requests.

He proposed that the Minister would be asked to address the ANC caucus to take the message of energy saving to their constituents during the forthcoming constituency period, and also perhaps to address Parliament on this issue. This proposal was adopted. Parliament had to show leadership. The Committee and Eskom needed to work together more often.

Mr SE Kholwane (ANC) said that the entire country was suffering under power outages. He quoted the example of a village near Nelspruit which suffered outages every five minutes. This village was in an area directly supplied by Eskom.

Mr Maroga tendered his apologies regarding the presentation. Eskom gave assistance to municipal authorities such as City Power. The impact of outages profile stretched beyond City Power. There was a liaison interface between them and Eskom, and the SOE also assisted with technical issues with a municipality like Cape Town. There was an integrated plan between Eskom and Cape Town, as was the case with City Power in Johannesburg. Common spares were held and there was a similar policy with response time. Eskom personnel also assisted City Power where necessary. Eskom could not manage City Power, but could support them.

The Chairperson said that there was a sense of paranoia regarding the power supply situation being created by the press. He acknowledged that municipalities did face challenges, and these were often the cause of problems. Eskom was the most powerful of the SOEs. He quoted statistics which showed Eskom to be the eleventh largest organisation of its kind in the world, and some other flattering figures. He observed that the power outages had had no impact on the financial markets. He asked if there were any concerns around the Regional Electricity Distributors (REDs), and if there would be any impact on delivery. He wondered if the restructuring process would complicate matters. Local government might have problems, but Eskom could help.

Mr Maroga replied that a directive had been received that the country should be covered by six REDs. Cabinet had made a decision to start in the metros, and the first RED was to be established in Cape Town. The rest of the country would be set up later while being accommodated by a national grid in the interim. RED1 would be a key part of the Integrated Recovery Plan. Cape Town did not have the ability to view the whole network on its computers, but Eskom’s system enabled this while also enabling remote control of any component.

Eskom was helping by allowing the REDs to piggy-back on its system. If the Electricity Distribution Industry (EDI) restructuring plans went ahead there would be an improvement. There were challenges in moving to the RED system, such as transformation issues, project management, service levels, repackaging of employees and remuneration. They should strengthen industry. Local problems could be the result of local equipment failures.

Mr Dames discussed the building programme. He said that significant investment and maintenance was needed. A long-term view was needed, over a period between ten and fifteen years.

The Chairperson remarked that the SA Local Government Association (SALGA) should be told to co-operate with Eskom.

Mr Dames said that the programme had been accepted by the Department of Minerals and Energy (DME). An amount of R84 billion had been approved by Cabinet. The growth in the requirement for electricity, which would be addressed by this programme, was currently 2.3%. All plans were focused on this figure, and the plan would be reviewed. An increase in capital expenditure was needed, and there were a number of projects.

The first was reclaiming the capacity of mothballed stations. Two had already been brought back into service. Peaking plants should be ready for the winter of 2007, and would be established in Atlantis and Mossel Bay. Further generating capacity was based on coal-fired stations. It took four years to build a new station.

The transmission network was very complex, and other factors involved were land acquisition and environmental impact studies (EIS). A parallel network from north to south was planned and should be finished in 2009. The construction of a new nuclear power station would take seven years. The quickest type of station to build was open-cycle gas-fired. Liquid fuels such as diesel and kerosene were used, and operating costs were cheaper. Natural gas power stations would be expensive as this was not found in the country. There were numerous challenges to the programme, including complying with the findings of EIS and the skills available in the country.

Mr Maroga commented on the lessons learnt from the outages in the Cape. The main problem was that there was a time when neither Koeberg nor the national grid could deliver supply to the Western Cape. An investment principle was that the system should be able to cope with one major problem, and any contingency plans further to that would be an over-investment. One generator at Koeberg could supply sufficient power, but the problem was that one of the Koeberg generators was off-line and there was no supply being delivered by the transmission network. Load-shedding had therefore become necessary.

During the last few weeks more load-shedding had been anticipated, but only two minimal episodes had been experienced since the start of April. Koeberg 1 was currently operating at 80% capacity.

Another lesson learnt concerned communication and stakeholder management. A forum had been established, and an Energy Risk Management Committee had been set up in the Western Cape under the chairmanship of Member of Executive Council (MEC) Tasneem Essop. Integration was taking place with the City of Cape Town.

Pamphlets had been prepared for MPs to highlight energy savings. The report should be ready by 30 August. The Minister would soon be making an announcement regarding the bolt which fell into the generator at Koeberg. He noted that the growth of the Gross Domestic Product (GDP) was in the region of 6%. The planned growth in electricity demand was 2.3 %; that figure being based on a GDP growth of 4%. With the GDP at 6% the growth of electricity would be around 4.4%. The increased growth rate had led Eskom to revise their plans, and they were working on this.

Mr Maroga said that he had already discussed measures taken to restore public confidence in the Western Cape. This was not such a problem in the rest of the country. Eskom had a winter plan to prepare for this season of high demand. More than the anticipated problems and high demand could lead to a chance of load-shedding. One of the measures taken was to institute a system of interruptible contracts with some customers. This could make 2000 MW available in crisis times. The risk management process was reviewed after big events. More plants would create a more robust system, but it was hard to compensate for the big impact of a failure at Koeberg. He agreed that Eskom could build more reserve capacity.

Dr P Rabie (DA) said that if all went well there would be no further load-shedding. He said that confused messages were being sent out. On the one hand the public was being told to reduce consumption, and on the other hand Eskom said there was no crisis. He complimented Eskom on its light bulb exchange programme. However, the public received no positive encouragement to save and instead was under constant threat of punitive measures, such as the proposed increased tariffs during peak periods which had been reported in the newspapers. He felt that this was an overreaction.

The Chairperson congratulated Dr Rabie on his 65^th birthday. He said that the meter being shown on television to warn the public in the Western Cape of energy consumption levels was impressive. He said it did contain a message of thanks when consumption was within limits. He thought that Eskom might be able to do more to let people know that their efforts were appreciated.

Mr Maroga said that Eskom took the point, and that he would work on an appropriate response. He said that there should be a separation. There was a crisis in the Western Cape, but the situation was acceptable in the rest of the country although technical risks were present. He acknowledged that a power outage was a crisis for those affected by it.

Eskom presentation

Mr Maroga presented Eskom’s replies to some of the issues raised during previous meetings. The repairs at Koeberg were on track. The faulty valve on Koeberg Unit 1 should be sorted out by the end of the week. In the meantime, the unit was up to 80% power. He hoped that Unit 2 would be finished with its refueling process by the end of July. Another problem was with the insulators on the transmission network. Some R200 million was being spent to redo the insulators on the coastal lines.

On the demand side, Eskom was dealing with some issues. Incentives were being offered for customers to generate some of their own power needs. Free geyser blankets were being distributed to the public. The public had been called upon to conserve electricity voluntarily. There had been a drive to convert from electrical appliances to gas, but he admitted that there were some price issues involved on this front. He also mentioned the demand market partnerships which Eskom had concluded with some customers, where they would be paid to remove themselves from the network in times of high demand.

He said that the television power usage barometer was focused on the situation in the Cape, but it was also creating a general consciousness of the need to conserve electricity. Load-shedding schedules were being published, but he hoped it would not be necessary to implement them.

He summarised the risks as being another failure at Koeberg, or at least delays with Unit 2, exposure of transmission components to the elements, colder weather creating higher demand, falling dam levels at Palmiet compromising the hydro-electric scheme there, and general equipment failure.

Mr Maroga described Eskom’s Winter Plan. He detailed the available resources of coal, nuclear, hydro-electric and gas plants, and their combined output was over 37 000 MW. One coal-fired station had now been returned to service, and another would be operational in the following week. Two more would return to service by the end of the year, although there were some technical problems. Large amounts of power were being received from Cahora Bassa in Mozambique. The emergency reserves included the DMP, Emergency Power and the capacity available in interruptible load-shedding agreements. Looking at the schedule of anticipated demand, he admitted that the situation was tight at present. The capacity was fine, but reserves were tight.

Failures would have an impact on the national situation. Long transmission lines were needed to distribute power nationally, and losses of up to 200 MW were experienced. Over 400 000km of cables were included in the distribution network. Other causes for concern were the condition of old plants, weather and rising commodity prices. However, he said the shortage of supply did not necessarily mean that there was national chaos. One national load-shedding incident had occurred on 6 January when the supply from Cahora Bassa had been interrupted.

He said that the transmission network agency had the ability to continue supply. Regarding the major cities, there was a big problem in Cape Town and a smaller one in East London. The position in other cities was fair. There was minimal risk in KwaZulu-Natal.

Risks to the distribution network included the chance of under-frequency load-shedding causing sudden failures, the draining effect of illegal connections and the age of the system infrastructure. Despite the problems, he felt that the outlook for 2007 and beyond was reasonable.

Dr Rabie asked what Eskom’s reserves were. The ideal situation would be a figure between 15 and 20%. Infrastructure was lacking.

Mr Maroga said that the reserves were about 10%, and even less during winter. This was a long-term measure, and judgment on the accuracy of this policy would be reflected in the reliability of plants.

Mr Dames discussed the capital expansion programme. Generation capacity of some 2100 MW was either approved or already under construction. Some 8000MW new capacity would be achieved by the upgrading of existing facilities. He then discussed the progress of some of Eskom’s projects. Some of them were only referred to by letters as project developments were still at a sensitive phase.

Project A was the first new coal-fired station to be commissioned in several years. This was the biggest project in the country, and spares were currently being negotiated. The first station was expected in September 2010 and two more by 2012. Project H was a pumping station in the Drakensberg. The first unit should be ready by March 2012 and the rest should be completed by the end of 2012. At Camden Unit 6 was up and running, and Unit 7 was running with some problems. Unit 8 was being re-commissioned, and one more would be back in service before 2007. The first unit at Grootvlei should be running in 2007. The project at Komati was nine months ahead of schedule. At Majuba, three thousand truckloads of coal were being delivered per day. A long-term solution to this problem was needed. Eskom was looking into the building of a railway line.

The Open Cycle Gas Turbine (OCGT) project was progressing as planned. Technicians from Siemens were on site, and these units should be commissioned during 2007. With these stations, he said that the contracts had already been placed before approval had been granted, as it was essential to get the ball rolling as soon as possible. This approach was also used in other projects.

He said that these projects had been based on an expected growth of 2.3 %. The current budget was some R9.5 billion although R10 billion was spent, and this figure would increase in the new financial year to R16 billion. Of the R84 billion to be spent on increasing Eskom’s capacity, R53 billion would be spent on new stations.

He said that Eskom supported the Accelerated Shared Growth Initiative of SA (ASGISA). Suppliers were being developed with the emphasis on new, small, black-owned concerns. Maximum use was being made of local content. In Project A, R26bn or 48% of the expenditure would be local. The standard of local skills was one of the bigger constraints, but some four thousand people were involved in learnership programmes, spread over all disciplines. Eskom was aware of its corporate social responsibility, and had outsourced many of its non-core activities. Maximum procurement was being made through Black Economic Empowerment (BEE) companies. The skills resourcing strategy was firstly to recruit locally. They then looked to retired persons to re-enter the organisation. The third leg of the strategy was to develop alliances with overseas partners. Finally, they were looking to recruit South Africans currently working overseas.

Mr Dames said that of the 2300 bursaries extended by Eskom, 85% had been awarded to black students and 55% were female. R500 million had been spent on training. This was down on the previous financial year, but the last financial year had been 15 months long as opposed to the current financial year of 12 months.

Eskom had developed a comprehensive programme regarding HIV/AIDS. The board and the Minister had agreed on a succession policy for key posts. For the ten most critical jobs, three different persons were identified for each. He said that the focus was first and foremost on corruption. Fraud was high compared to corruption and theft. Generally there had been an increase in irregular activities. Various strategies were being applied to combat this.

He said that of the R11 billion spent with BEE concerns, 3% had gone to those owned by black women.

Discussion

Mr Kholwane said that the succession plan had been raised during the DME budget debate. The DA had made an accusation that the CEO of Eskom earned too much. The ANC had not responded then, and felt that it was naïve of the DA to make an issue of this. The ANC was conducting its own investigation into packages, and he was raising the issue now so that it did not appear that it shared the DA’s view.

Mr Kholwane agreed that a railway line should be built for Majuba, as the trucks were causing havoc on the road. He asked if this should be in the broader context of Transnet, as they were trying to reduce the amount of road transport. He questioned why the capital expansion programme was proceeding even though the figure of 2.3% for growth was known to be insufficient.

Dr Rabie asked if the HR plan was centred first on South Africans, then other Africans and then others. He cited the Christiaans case, and noted that this indicated a barometer of oppression for appointments. He asked if this was still the policy. He quoted a speech from President Mbeki which contradicted the concept of different levels of disadvantage.

Ms N Kondlo (ANC) said that the current tight situation in power supply was due to failures in the past. She asked when stability would return, as public trust was affected.

Mr Dames replied that there were no different levels of disadvantage. The railway line to Majuba would be a dedicated line, and Eskom would work with Transnet on this issue. They were reviewing the implications of the higher growth rate.

Mr Maroga said that there had been a dent in confidence for energy supplies. However, this was an inference drawn from local problems. Some of the mothballed stations were being returned to service, and an amount of R84 billion was allocated to the Capacity Expansion programme. He said that growth might exceed the estimate, and mentioned the aluminum smelter at Coega which would use 1300 MW. He asked when the fiscus would allocate a budget in line with expenditure.

Dr Rabie asked if the time lines for the smelter and the power supply were the same.

Mr Maroga said that this was the case, as negotiations had taken place to ensure that power supply would be sufficient to meet its needs.

The Chairperson said that the Committee felt that the higher growth rate had to be seen in the context of the expansion of the electricity structure into the poor areas. The Minister had said that there had been underinvestment in infrastructure. People needed to work together and stop moaning. More openness and transparency was needed, and he had tot acknowledge Eskom’s efforts. He called for more responsibility from the press to report more accurately. Some reports had been exaggerated. The month of June represented the biggest challenge. He had enormous confidence in Eskom. He summarised that the Committee would write to the Speaker to request the relevant Ministers to address Parliament, to the Public Works Department to sensitise MPs to save power in the parliamentary villages and for the Ministers to address the party caucus.

World Bank presentation

Ms R Reinikka, Country Director for the World Bank in Southern Africa, introduced Dr Yannis Kessides who made a presentation on South Africa’s future electricity needs.

Dr Kessides said that there had been a profound re-assessment of public policy regarding electricity worldwide. Many developing countries had serious performance problems, and many states had financial problems. Eskom was a well functioning utility. It had some of the lowest prices in the world, and had exceeded electrification targets. It had doubled its domestic customer base. It was self-financed and was no burden to the state. Its performance had improved substantially, and had reached world-class levels in some aspects. There was much to applaud, but there were several problems.

Eskom had a large distribution and transmission network, but there were structural inefficiencies in the supply network. There was fragmentation with some of the small municipalities also being part of the supply chain. The merger of local distributors into the RED network was the correct response. However, implementation had been slow and RED1 was only established in 2005, and then seemingly only on paper. Several draft Cabinet memos had created confusion. It was not clear how municipalities should operate in a complex industry.

All restructuring efforts would only be meaningful if there was enough revenue. He questioned if consolidation would address governance problems. There was a dependency on revenue from electricity sales to subsidise other expenses rather than being used to address maintenance problems.

He said that after many years of surplus capacity, there was now a tight margin. The reserve margin had declined to 8.5% in 2004 compared to the international norm of between 12 and 15%. Substantial new investment was needed, especially regarding the distribution network. International experience indicated that a vertical state monopoly was not necessarily the correct system. In workable markets, private participants with their own funds would have better incentives to balance risks and rewards. International experience must be considered.

He said that the new Electricity Regulation Bill, tabled in August 2005, could undermine the regulatory structure. Some provisions had been removed, and this could be a counter-productive split of regulatory authority. For private investment, some assurances were needed especially regarding tariff policy. Municipalities had poor prospects of cost recovery. New investment was needed, and the reliance on book value would have to end. Prices needed to be based on forward looking economic costs, and would have to increase. Regulation was needed. The involvement of the Minister increased the risk. The playing field was not level at present. The lack of technical expertise would lead to capacity problems.

The next problem he saw was the lack of competition. There was a monolithic structure in most countries. Due to fundamental economic changes the model no longer existed. He asked how sector-owned organisations should be regulated, and if the circumstances applied in South Africa. Given its vertically integrated structure, Eskom had strong incentives to resist competition, as private companies would be reluctant to take them on. He said that the regional integration with Southern African Development Community (SADC) countries had significant benefits in terms of complementary endowments, sharing of resources and so on. However, other countries may see Eskom as a threat to their own utility companies.

Dr Kessides said that new investment was required, and there were varying estimates of the extent. The effect on pricing would see a movement away from historical precedents towards a forward-looking approach. He thought that the costs would be high given the monopolistic situation that reigned at present. In a competitive situation there would be a ceiling on forward-looking costs which would limit increases. The performance of the distribution network had been poor. Labour productivity had increased but was still below international levels. Excessive reserve margins were costly but brought stability. The reliance on coal was an environmental problem. No scrubbers had been installed on most of the current stations, and Eskom was one of the major contributors of greenhouse gases.

Discussion

Dr Rabie asked when the customer survey quoted in the presentation was conducted.

Dr Kessides replied that it was done during 2005, and had indicated significant customer dissatisfaction.

Dr Rabie pointed out that there had been a different government with different goals before 1994.

Mr Kholwane asked whether the survey included persons whose electricity was supplied by municipalities or just those dealing directly with Eskom. The decline in reserves was understandable as a large percentage of the population had been denied electricity in the past. This was not a true reflection on Eskom’s structure. He observed that Eskom had the lowest price in the world, and asked what was wrong with the current pricing structure. Was it really necessary to follow international trends, as the prices dictated by market forces would impact on the poor?

The Chairperson pointed out that there had been a misunderstanding that the early part of the meeting with Eskom had been a closed meeting. Dr Kessides should have attended the meeting from the start, as many of the issues he raised had already been dealt with.

Dr Kessides said that the excessive reserve margins pre-1999 were driven by the needs of an isolated government to remain independent. The model had changed. The customer base had expanded, but reserves will still be needed. It was a valid point on the dissatisfaction survey. The source of the dissatisfaction was probably a combination of local municipality and Eskom problems.

Dr Kessides said that the structure of Eskom was not necessarily ideology driven. There was some liberal opinion in the USA in favour of their type of structure. However, there was empirical evidence that there was scope for change. The South African market was large enough for several entrants. There would be benefits brought by competition. Although prices were currently low, it was a fact that new investment was needed. Forward-looking tariffs were needed to finance the cost of this new investment. A monopoly would affect the level of costs. Competition would not only put pressure on prices, but would go towards forcing competing companies to maintain socially optimal behaviour.

The Chairperson said many issues had been dealt with. The statistics all pointed to the fact that Eskom should remain in state hands. Given the amount of public sector investment, it was clear that they were happy to be involved in Eskom. International trends may suggest that competition is needed, but South Africa was in a unique situation. He said that the facts suggested that Eskom should remain as an SOE. A paper had been prepared on the role of SOEs, and the policy should be out soon.

He said that the government was moving sensibly, rationally and practically. He was glad that Eskom was still part of government. There were regulatory bodies such as the Portfolio Committee on Minerals and Energy. SADC valued integrated markets, although South Africa was seen as a big brother in the region. Labour productivity had been low, but capital productivity had been excessive. Eskom would get money from the capital market.

He said that legislation regarding EIAs was too tough in some cases. Eskom was the cheapest electricity supplier, and he had not heard enough to convince the Committee to review two years’ discussion regarding caution on privatisation. He felt that Dr Kessides’s arguments were the reverse of his conclusion. The discussion was out of kilter with the status quo. There was a mandate for 30% Independent Power Producers (IPPs), and this number would be revised.

Dr Kessides said that the case for radical restructuring was not nearly as compelling in SA as in other countries. Incentives were needed for investment. It remained an empirically proven fact that state monopolies were not the ideal mechanism. Operational performance had been good, but this was on old investment. SA would be forced to face forward-looking costs in the future.

He conceded that there was a social view to maintaining low prices. Competition would keep a ceiling on cost increases. It was a delicate issue, as Eskom had performed well thus far, but the future was uncertain. Evidence said that more competition would be beneficial.

The Chairperson said that the 30% in terms of the IPP was fine for now, but some measure was needed.

Cabinet was still pursuing the idea of competition, at a 30:70 ratio. He did not think this could work in the wholesale supply of electricity. There was some thought given to separating the generation and transmission aspects, but these thoughts were on hold

Mr Maroga said that the strength of the buyer was a significant factor. Far from being seen as a bully, big projects within the SADC could only be undertaken if Eskom was committed to taking a significant portion of the electricity generated. Its size was therefore a factor in development.

The meeting was adjourned.