Hansard: Appropriation Bill : Debate on Vote No 29 – Energy

House: National Assembly

Date of Meeting: 25 May 2011


No summary available.




Thursday, 26 May 2011 Take: 21

THURSDAY, 26 MAY, 2011



Members of the Extended Public Committee met in Committee Room E249 at 14:01

The House Chairperson Mr M B Skosana, as Chairperson, took the Chair and requested members to observe a moment of silence for prayers or meditation.


Debate on Vote No 29 – Energy

The MINISTER OF ENERGY: Hon Chairperson, Deputy Minister of Energy, Comrade Barbara Thompson, Hon Chairperson and members of the Portfolio Committee on Energy led by Comrade Siza Njikelana, members of Cabinet present here today, Members of Parliament, the officials of the Department of Energy led by the director-general, invited guests and stakeholders, ladies and gentlemen, once again the people of South Africa have spoken, and have made bold their support for the path of development, redress and genuine empowerment. The people of South Africa have reaffirmed the correctness of the policies of the ANC.

As leaders in and outside of government, we have once again heard millions of our countrymen and women, young and old assert that much has been achieved since the dawn of democracy, but most importantly, also saying that they expect much more and better quality services. This budget will therefore focus on those key deliverables and outputs that are aligned to the broader policy objectives of government as a whole and is also responsive to key instruments such as the New Growth Path and the Industrial Policy Action Plan.

Hon members, before I elaborate on our plans for the next financial year, allow me to reflect on some of the key commitments made in the 2010 Budget Vote speech. Key amongst these are: The success of our efforts to ensure energy adequacy, and working together with the liquid fuels industry and municipalities during the 2010 FIFA Soccer World Cup, laid a firm foundation for future co-ordinated planning;

we have managed to eradicate the backlog on petroleum licensing and can indicate that all completed licence applications are now processed within the prescribed 90 days; we initiated and have now completed the compliance audit with regard to the liquid fuels charter; we published the roadmap for clean fuels or CF2 and have received comments from all stakeholders; the 20-year Integrated Resource Plan, which is the product of an extensive public consultation process, has been gazetted.

We managed to institutionalise the SA National Energy Development Institute, setting the stage for co-ordinated research as well as energy efficiency and demand side management interventions; through price regulation of liquefied petroleum gas, LPG, we managed to save consumers R200 million the previous year, and through this we are setting the pace for the development of the necessary infrastructure for further savings; work on the Integrated Energy Planning Strategy is progressing well, and is currently subject to further engagement with amongst others, the National Planning Commission; and in

response to the injunction of the President in the State of the Nation address, the Independent Systems and Market Operator Bill was presented to and approved by Cabinet.

Hon Chairperson, the department has been allocated a total of R15,9 billion over the medium-term expenditure framework, MTEF, period with an allocation of R6,09 billion for 2011-12.

This House should note that 95% of the 2011-2012 Budget or an amount of R5,78 billion will be transferred to the following: The Integrated National Electrification Programme which will receive R3,2 billion for transfers to municipalities and Eskom to continue with the very important task of electrification and the non-grid programme; the SA Nuclear Energy Corporation, NECSA, has been allocated R586 million to continue with its central role as the anchor for nuclear energy research, development and innovation; Energy Efficiency and Demand Side Management, which will receive about R398 million for demand side management interventions in 21 municipalities and Eskom; and lastly, Transnet, to which we transferred R1,5 billion during the previous financial year, as a contribution to the security of supply portion of the pipeline.

This year again, an amount of R375 million will be transferred quarterly to Transnet, flowing from the levy that was announced last year by the Minister of Finance. Thus, this leaves the department with 5% or R305 million for its operations. Furthermore, over the medium term, expenditure is expected to decrease from R5,6 billion in 2010-11 to R4,3 billion in 2013-14, in the main due to the termination of transfer payments to Electricity Distribution Industry, EDI, Holdings and the reduction of allocations in the demand side management programme.

In relation to matters of hydrocarbons, ladies and gentlemen, we present this budget at a time when political events in the Middle East and North Africa have had and are continuing to have a direct impact in the pockets of ordinary South Africans. This is in the main due to the fluctuations in the oil price, which has over a period of 24 months seen a fourfold increase from US $30 per barrel to a high of US $130. There are also indications that speculators in the market take advantage of the prevailing challenges and add a premium of their own. It is therefore important for South Africans to use fuel efficiently, and to contribute to a secure and affordable fuel future. To this end, I will be launching a fuel-efficiency campaign during the month of June.

We will finalise the framework for Clean Fuels 2 during the course of this year focussing in particular on the cost for infrastructure upgrade. The impact of this modernisation process is that refineries will have to be upgraded and in so doing, create more than 1 000 jobs that can be sustained throughout the duration of the programme.

In a further response to the President's call for accelerated job creation, we will also reduce the time it takes to process a licence for new service stations to 60 days in order to accelerate construction of new service stations. During construction each new station is estimated to sustain 120 direct jobs, and plans submitted to the department by industry indicate that an additional 1 500 jobs can be created by this activity alone.

We undertook to deal with regulatory uncertainty in the liquid fuels sector and have initiated a programme to develop regulatory accounts which will be used to reward investment in the value chain. We have completed the preparatory work and will now move towards early implementation of some of the aspects where decisions have been taken. Hon members, as a nation, we must make investments today to secure our future. Our investment in infrastructure initiatives such as the New Multi Product Pipeline may appear to be a burden today, but for the next 50 years this economy will reap the benefits that will sustain its competitiveness.

In May 2010, I indicated that we will conduct an audit into the compliance of the oil industry with the provisions of the Liquid Fuels Charter and I duly launched the audit process shortly before the 10th anniversary of the signing of the first ever empowerment charter, the Liquid Fuels Charter, LFC. As much as the final outcome of the audit of the LFC has not been announced, I need to indicate that the preliminary results are disturbing in many areas, especially with regard to ownership patterns, management, employment equity, with special reference to gender, procurement spent and an enabling supportive culture. This state of affairs, in 2011, cannot be acceptable to South Africans.

For our democracy to be sustained, inequality needs to be redressed. The department will develop and lead a new covenant for empowerment in the petroleum sector. This include that BEE companies should be able to source a sizeable percentage of the country's imported crude oil and petroleum products. It is clear that the disincentives for noncompliance will have to be tighter and tougher.

As a planning methodology, the Integrated Energy Plan Strategy which defines the processes that we will undertake, has started. The intergovernmental structures to ensure constructive debate and effective delivery of the Integrated Energy Plan, has been put in place. One of the key challenges which we face as we engage on this process remains the availability of relevant data to enrich the quantitative element of our planning process.

Last year, draft regulations which make the provision of data required for energy planning mandatory for certain stakeholders was gazetted. After the public consultation process, we are now finalizing the regulations and will gazette these in the second quarter of this financial year. Similarly, the content of our annual publications such as the Digest of Energy Statistics and the Synopsis of the Energy Sector, will be improved to provide relevant and meaningful information to further aid the development and growth of this critical sector.

Hon Chairperson, our national oil company, PetroSA, is an important and critical role player in the advancement of our efforts towards ensuring security of supply, and I expect that the Board, led by Dr Mokaba, will soon make a recommendation to me on a candidate for the position of chief executive officer. This team, we believe, will lay the correct foundation for a final decision on the proposed Project Mthombo. I must reiterate that I firmly believe that refineries will have to be constructed in South Africa and be put into operation by 2020. The Department is supportive of the efforts of PetroSA to ensure the sustainable viability of the Mosselbay GTL refinery, especially in terms of efforts to source feedstock.

Hon members, the IRP lays the foundation for the country's energy mix up to 2030, and seeks to find an appropriate balance between the expectations of different stakeholders, considering a number of key constraints and risks, for example, reducing carbon emissions; new technology uncertainties such as costs, operability, lead time to build, and many others; issues related to water usage; localisation and job creation; the Southern African regional development and integration; and the security of supply.

The promulgated IRP makes provision for a diversified energy mix that will comprise the following in terms of new generation capacity: Coal – 14%. I must emphasise the point that this government holds the view that there is a future for coal in the energy mix, and that we will continue with efforts in the field of research and development in areas such as the underground coal gasification, UCG, and carbon capture and storage, CCS, and work with our sister departments such as the Department of Science and Technology to find ways to clean our abundant coal resources. With regard to nuclear, you would recall that we indicated that we'll get 22,6% new additions; open gas turbine at about 9,2% and closed-cycle gas turbine at 5,6%; and renewable energy carriers including hydro at 6,1%, wind at 19,7%, concentrated solar power at 2,4% and photo voltage at 19,7%

The Renewable Energy Feed-In Tariff, REFIT, procurement process is a starting point in implementing the IRP. We also need to take advantage of the potential in municipal power generation to the extent that we can resuscitate some of these old mothballed power stations. We have finally arrived at a point where we are ready to procure the first clean energy projects indicated under the Integrated Resource Plan. We hope to conclude at least 1 000 mw of renewable energy transactions by December this year, in time for showcasing as we host COP 17 in Durban. Apart from the showcasing, this programme is aligned to the New Growth Path and will substantially contribute to President Zuma's vision on job creation.

Secondly, the procurement of solar photovoltaic, concentrating solar power, biomass and other technologies will take into consideration the legal requirements relating to public sector procurement, in terms of which procurement is required to be open, fair, transparent, cost-effective and competitive. There are other programmes under the IRP that I would like to highlight.

Energy Efficiency Awareness Campaign, which the Deputy Minister will elaborate on, still remains a key programme of the Integrated Resource Plan. The Medium Term Risk Mitigation plan under the IRP has identified other low-hanging projects that will take us through the period until Medupi and Kusile are commissioned. We have started a process to implement these projects, which largely tend to be outside of Eskom generation.

We are reviewing the regulatory environment to facilitate the introduction of power generation through Independent Power Producers. The Independent Systems and Market Operator Bill is expected to provide the institutional structure that will level the playing fields. As I indicated recently, the nuclear transaction needs to be commenced well in time so that we can commission the power by 2023.

The recent events at Fukushima Daiichi Nuclear Power station have made it necessary for South Africa to carefully take stock of the implications of these developments on our nuclear power programme, as outlined in the Integrated Resource Plan. It is therefore prudent and responsible that we monitor the relevant interventions by other countries in such situations. This could include amongst others, increasing the safety requirements of the nuclear technology, selecting the sites for the power stations in areas that are less susceptible to seismic activity as well as putting in place dedicated institutional mechanisms for dealing with nuclear safeguards.

We are not lost to the need for rigorous awareness building exercise regarding nuclear power and its pros and cons, so that our communities are better informed about not only the risks, but the benefits as well. For us the accident at Fukushima has happened at a time that makes it possible for South Africa to factor the appropriate lessons into the design of our nuclear power programme, and to take advantage of experiences from other countries. We are constantly getting updates from the International Atomic Energy Agency and other sources regarding the lessons learned from Fukushima. We are still convinced that nuclear power is a necessary part of our strategy that seeks to reduce our greenhouse gas emissions through a diversified portfolio, comprising some fossil-based, renewable and energy efficiency technologies.

Following the successful Solar Park International Investors Conference held in October last year, we have committed about R18,6 million towards the completion of a comprehensive feasibility study by July this year. We are very excited that South Africa can begin to seriously explore the possibility of solar technologies, being deployed as part of our broader energy mix, in a way that will also de-carbonize our energy. It is our intention to place South Africa in the top quartile of solar power generation, so that we can simultaneously create green jobs by localizing the manufacturing, installation, operations and maintenance's need to state it categorically that localization is non-negotiable, and meaningful participation across the value chain for the benefit of our people will be pursued vigorously. Working together with the Department of Economic Development and the Department of Trade and Industry, this objective must be realised. We want to emphasise that South Africans will not be reduced to mixers of concrete and pushers of wheelbarrows on the site of construction of these different technologies [Applause.]

Ladies and gentlemen, the Solar Water Heating programme has to date delivered over 115 000 systems under the fiscal and rebate funding schemes. This is a significant increase from the zero base that we started from, when I first announced the programme in 2009. Whilst we are lagging behind our annual targets mainly due to funding constraints, I need to highlight some of the initiatives we are working on in order to address the funding problem. As indicated last year, the standard offer policy framework was introduced and public hearings were completed by NERSA in that regard. NERSA will announce the rebate level under the standard offer, and this will be at the appropriate level to incentivize the leveraging of private capital into the Solar Water Heating programme.

In 2010 the Central Energy Fund signed two agreements with foreign companies to localize Solar Water Heating manufacturing. We see this as an opportunity to reduce the capital costs of the units at the same time as creating local green jobs. Having removed most of the identified constraints, it is our considered view that the Solar Water Heating programme will accelerate.

Energy efficiency is widely recognized as the most fundamental short-term imperative for rapid, ambitious and cost-effective climate change mitigation. As a matter of fact, improved efficiency is the most cost-effective, least-polluting and readily-available energy resource. More than half of the electricity sector-related carbon dioxide reduction target in the coming 20 years could be achieved through energy efficiency.

We must emphasize the role that can be played by the hospitality industry with regards to energy efficiency, and I will be making proposals to my colleague, the Minister of Tourism, on the incorporation of energy efficiency measures in the grading system of the hospitality sector. Part of the task ahead will be to explore the possibility of taking towns completely off grid. It is imperative that major cities retrofit their streets and traffic lights, using renewable energy sources.

Energy Efficiency can enhance the competitiveness of our economy while helping to alleviate energy poverty as energy becomes more available. Accelerated energy efficiency can also create attractive green jobs and businesses. As significant efficiency potential remains countrywide, all stakeholders should join hands to contribute to this effort.

Insofar as our planned legislation this financial year, we intend to introduce the following bills for consideration by Parliament: Petroleum Products Second Amendment Bill; the Gas Amendment Bill; Electricity Regulation Amendment Bill; Independent Systems and Market Operator Bill; and the National Energy Regulator Amendment Bill.

For us to implement and drive our key mandates as directed by government, we need a well-oiled and motivated organisational machinery. This House must note that due to the limited budget to fund the approved establishment, the department resorted to implementing an interim structure that is currently operational with only 52% of its required overall capacity. Ladies and gentlemen, I just need to indicate here that that 52% has about 60% gender representatives. [Applause.]

We have undertaken further work in refining the approved organisational structure to enhance the department's ability to deliver on stated government-wide priorities, including access to energy, poverty alleviation, rural development and job creation. We have also established a Project Management Unit...[Time Expired.]

Thank you Chairperson, but I still believe that we have been of time. [Applause.]




Mnu S J NJIKELANA: Sihlalo, hayi obekekileyo kuphela kodwa nothandekayo, maLungu ePalamente kunye nabaPhathiswa bobabini bezaMandla, nabo bonke abanye abaPhathiswa abakhoyo. . .


...directors-general, executive management of the department and state owned entities as well...


. . .nani nonke bemi boMzantsi Afrika, ndiquka ke oosomashishini, abasebenzi nabahlali.


I greet you in support of the budget vote no 29 for Energy. I wish to stand as a witness and share this gathering my views regarding this budget. The key propellant and framework of my speech is the Freedom Charter which was articulated about 56 years ago for a prosperous, democratic, nonracial and nonsexist South Africa to be realised amongst a host of issues, that everyone must have equal rights and share the wealth of this lovely country. The ANC and logically the ANC-led government draws inspiration from this Freedom Charter, a product of one of the most democratic processes in our country, in charting the road map of transforming this country, as well as articulating a developmental state as the key instrument for such.

However with another 62% confirmation of ANC legacy and mandate in the recent municipal elections it stands to reason that the ANC is on a better footing to advance and improve on its leadership in guiding the government in sourcing and supply of energy more as a development state now. Having inherited a society with a poor Gini coefficient, the wide gap between the rich and poor, ANC took a conscious decision to ensure that the poor are cushioned from the effects of electricity price hikes. The introduction of tools such as free basic electricity and the free basis alternative energy is an indication of the ANC's resoluteness in cushioning the poor.

Whilst political bankruptcy and political expediency have guided many political parties, the ANC has been steadfast in formulating its positions regarding policies and views on energy issues and is constantly refining them as regular as possible. Energy as an enabler and facilitator of not only economic and social development growth but transformation has, is and will be under spotlight not only in our transforming country but globally as well. It is therefore by neither spontaneity nor expediency that the current ANC-led government has developed tools including policies, laws and programmes that guide and direct the country towards sustainable, efficient and ultimately clean supply of energy.

To corroborate such the 52nd ANC Conference resolved that we should:

Ensure a security of supply of energy resources, and pursue an energy mix that includes clean and renewable resources to meet the demands of our fast growing economy without compromising our commitment to sustainable development.

Long time planning by the Government, on energy, particularly and by National Planning Commission generally is getting more evident. Even the Cape Town cannot deny that it is benefiting from the visionary planning by the erstwhile ANC-led metro council. In ensuring universal access to energy, let us first trace the noble efforts of the ANC which, as far back as the 1990's mobilised the country, especially civil society formations and ultimately the government to establish a programme which we now know as Integrated National Electricity Programme.

The ANC has through the ANC-led government ensured a substantial 75% of household are connected to electricity. Without any doubt such confirms the movement's commitment to ensure that electrification is one of the key elements of decent housing as espoused in the Freedom Charter. An RDP house without electricity is not decent enough.

Without ensuring comfort for our people especially the indigent and destitute as the Freedom Charter directs, we will have failed South Africans in their request for a better life for all. It is therefore on this basis that I express my unequivocal admiration of the Department of Energy in its outstanding endeavours in championing the Integrated Resource Plan 2010, which has been recently adopted by the government. It has also been one of the tools that have been used to attract investments to the energy sector both in local and global financial markets.

Whilst it may be more appropriate to have started with Integrated Energy Plan - the broader plan on energy - given the caring nature of government it was essential to address the looming threat of unsustainable supply of energy. However, I need to emphasize we still do need to see visible progress in the formulation of the energy plan, as well as enhanced public consultation in particular. It is also worth commending that through the good office of the department the government has in its own volition increase the percentage allocation on renewable in the energy mix within IRP 2010.

It is through Sanedi, that the department may find it appropriate to enhance the research and development capacity of the country in this sector. South Africa cannot afford to venture into renewable energy without reinforcing its research and development capacity as well as its skills base.

Such foresight goes along with the Medium Term Risk Mitigation Plan, MTRMP, and a plan that creates space for independent power producers to enter the energy sector, to ensure adequate response to energy demand as optimal as possible. Notwithstanding the challenges that face the new build programme for new power stations and transmission lines, I trust Eskom will do its best to meet the deadlines for completion of the various projects. Furthermore Eskom must display visible progress in support of financial investments in particular the wind and concentration solar power plants. Currently, there seems to be a lot of fog and mist in this effort unfortunately. Pre-emptive measures must be taken to avoid the repeat of the Duvha saga which by the way still has to be fully reported and the recent strikes at Medupe and Kusile.

Participation by public in all its shapes, forms and character cannot be relegated to a secondary importance when it comes to the energy sector. The role and contribution of the civil society and the state in energy efficiency, especially saving energy ensuring a paradigm shift from fossil based fuels to renewable energy not only in South Africa but worldwide. Universal access to energy in a sustainable and transformative manner must be topmost in the developmental agenda for energy issues.


Kwaye sikhule sibasa iinkuni emakhaya, kukho izitovu zamalahle, kuyinto nje emnandi xa sothe umlilo. Ngelishwa ke, isimo siyanyanzela kwezi ntsuku ukuba kube libhaqo ukwenza njalo kuba kaloku imithi namatyholo asiyinqunqi siyayivuthulula. Kwaye ke amalahle akhupha le tyhefu kuthiwa yi-carbon dioxide. Yiyo ke le nto ndisenza ikhwelo nakuthathatha lokuba le nkquleqhu yokushenxa emalahleni, mayibenze ngcathu apha emithini ngeyona ndlela. Masiyiphumele iphulo siluluntu lwasemzantsi.


The new child on the block, the Integrated Energy Centres which have been championed admirably by Sasol also demands high levels of public participation for sustainable success.


Sikwalindele ke futhi sinethemba lokuba uPetroSA, ongokarhulumente futhi ebekufanele ukuba unkqenkqeza phambili kulo mzamo ekunye nezinye iinkampani eziquka u-Shell, BP, Caltex, Total, ndibala ntoni na bakuba yinxalenye yeli linge le-Integrated Energy Centres.


Chairperson, an idea has been brewing for sometime in that public participation, ought to extend to public discussions whereby this Parliament facilitates direct inputs by the public on energy issues. I trust and hope all and sundry will respond positively and contribute to this noble effort.

Notwithstanding the sterling work by the department; there are unfortunately challenges that need to be highlighted: The need to address, quite assertively nuclear safety in view of Fukushina-Diachi disaster; however any alarmist approach to this matter must be discouraged. In fact the committee in partnership with the Select Committee for the Economic Development intends addressing this matter in June. Such will include addressing disaster preparedness and management capacity of municipalities as witnessed in Japan recently.

Parliament should seek progress in the implementation of the nuclear energy policy from the nuclear implementation committee that was established in March 2009 to review the country's readiness to implement or expand its nuclear programme so as to ensure electricity security for the Country. Theft and illegal sale of electricity is causing a searing headache for Eskom - unfortunately is not abating in a satisfactory manner. Eskom has recently lamented that:

The agricultural sector has the highest incidents of the electricity theft with farmers being responsible for up to 48% of the electricity incidents.


Ikhono lomphakathi lisemqoka ngempela uma singena ezingeni logezi ontshontshwayo. Sinabaholi nezakhamizi eziqotho emphakathini kepha umbuzo nje uwodwa. Yini ziyekela ugezi untshontshwe zibhekile? Abasebenzi bona kungani bengatsheli uhulumeni wabo ngogesi ontshontshwayo ezimbonini? Ekugcineni yizo ezihluphekayo uma ugesi usungasatholakali.


Kukho umama torhwana othe okokoko wafumana umbani obiweyo akasoze ahlukane nalo mbutho. Andizukuwubiza ngegama; sele efumene nenkinkqa encinanana.


The neglect of victims of contaminated radio active waste in the mine dumps needs a special focus. The management of tariffs is displaying signs of eluding us. Complications in the transmission and distribution of electricity vis-à-vis municipalities are quite evident. The huge backlog of infrastructure rehabilitation which is at least R26 billion cannot be allowed to rise by a single rand where possible. Chairperson, the escalating demand for fuel due to growth of vehicle market both nationally and globally must receive a collective response by both public and private sector. Furthermore government has to be more seized with exponential and erratic increase of global prices of oil due to our economy and people's livelihoods.

Institutional capacity and resourcing of the departments must be one of the priorities which should go beyond mere lip service. The department is expected to disburse and monitor utilization of 95% of R6 billion with a mere R305 million whilst being amongst the youngest of the departments in the executive. Whilst commending the retraining of the former Electronic Data Interchange, EDI, workers as well as the contribution of the Chinese government thereon; there must be exploration on relocation of former EDI employees to other entities under the department.

Chairperson, the energy sector places a challenge to South Africa to play its internationalist role in the most creative and qualitative manner. Energy is one of the centrifugal forces on global geopolitics as we are currently witnessing in Libya. Notwithstanding the flagrant breach of human rights by the Gaddafi regime, the core of the militarist intervention by the North Atlantic Treaty Organisation, Nato, forces is essential interest in Libya's oil- nothing less nothing more. The same goes for Iraq, Afghanistan and most recently the invasion of Abyei in Southern Sudan.


Ndithi maz' enethole the ANC supports Budget Vote no 29. [Applause.]



Mr S C MOTAU: Chairperson, Ministers,hon members, exactly a year ago today, Parliament approved the first Budget of the Department of Energy as a stand alone entity.

In supporting the Budget I declared among other issues that are raised as follows and I quote;

The DA has already made the point that the department's Budget is quite a stretch and we have welcomed the commitment by senior managers to do more with less, to meet targets and deadlines.

We shall be watching that, all the commitments are met in the interest of energy security and sustainability for all thepeople of South Africa.

Chairperson, I am encouraged to say that the faith I placed in the senior staff at the Department of energy to do more with less was not misplaced. At the time, the staffing situation in the department was a matter of great concern due to a number of vacant and unfunded positions. The situation is getting better.

The approved structure of the department was 925, but due to lack of funding, only 474 posts could be filled in 2010-11.This number is expected to increase to 694 over the Medium Term Expanded Framework, MTEF,period. While this is encouraging, it still leaves a shortfall of 231 vacancies to be filled. This means, the department must continue to do more with less.

However, while this commitment is commendable these staff shortages could have a negative impact on the department's ability to deliver on its mandate if they persist. It is important that vacancy should be filled with deliberate speed particularly in those areas that require appropriately skilled personnel.

It is also heartening to note that, in response to a call by government to the various departments to trim their Budget in face of severe pressures on the economy, The Department of Energy has identified efficiency savings of 23,4 million in 2011-12 53, 2 million in 2012-13 and 56,2 million in 2013-14.

Over the medium term the departmental spending is projected to decrease from 5,6 billion 2011-12 to 4,3 billion 2013-14.These savings says the department will be realised by implementing cost effectiveness measures that reduce expenditure on travel, consulting services, revenue and facility higher. These are big numbers and the department should be encouraged to ensure that the savings are realised.

This interventions call for stringent oversight in inspection on the department and the department must ensure that it has a capacity to be effective. However, while one is pleased about this exercise one cannot but wonder about the apparent wastage that has been embedded in unnecessary expenditure that could have been avoided. Some good could come out of this, if this exercise, the savings were used to fill the critical vacancies. Other savings will come from decrease in transfer payments, energy distribution industry holdings, the demand side management programme and funding of the Transnet Petroleum Pipeline.

While we welcome the end transfer to Transnetpipeline stinting on the demand side management programme could be counterproductive.

The roll out of compact fluorescent lamps should be sustained and intensified. This should also be the case with the solar water heater programme and I take note of what the Minister has said. With regard to the solar water heating programme, I remain concern despite the assurances by the Minister to the contrary, that the rate at which the programme is unfolding, the department will not meet its target of 1 million units by 2014.Cost has been mentioned as an inhibiting factor despite significant subsidies that are being provided.

Chairperson, shutting down Electronic Data Interchange Holdings, EDI, and scrapping the ill conceived Constitution 17 Amendment Bill, could not have come a day too soon.

EDI Holdings Pty Limited was incorporated as a public entity in 2003 to facilitate the consolidation of 187 municipalities and Eskom electricity distributors into six regional electricity distributors, general referred to as REDS. Its purpose was to facilitate the provision of affordable, reliable and sustainable electricity distribution.

Millions of rands were sunk into this project during the seven years of its existence. For instance just between financial year's 2007 and 2008 and 2010-11, expenditure grew from 97,3 million to 201 million, clearly creating and trying to sustain EDI Holdings in the face of strong opposition from the various quotas including the DA, was a very costly exercise.

This wastage is felt even more deeply since it comes on the hills of the R9 billion that went down the drain because of another failed experiment, the Pebble Bed Modular Reactor Nuclear Fuel Plant, PBMR that was scrapped last year.

Minister, your department has now taken over the programmes previously executed by EDI Holdings. The company had a staff complement of 102 of which 13 were at board leveland 33 professionals. What will become of the company's assets including the employees? We trust that those with appropriate skills will be absorbed into the department's personnel structure to fill the critical vacancies that I have referred to earlier.

The main purpose of the department's National Electrification Programme, is to oversee the planning, funding and implementation of the Integrated National Electricity Programme to ensure universal access to electricity and an effective and efficient electricity distribution industry capable of providing affordable electricity to consumers.

The latter objective is being put under severe threat as the price of electricity continues to escalate year on year plunging many residents particularly the poorer communities back into darkness as electricity becomes too expensive for them. Notwithstanding, the monthly free basic electricity to which they are entitled.

Neither I remind this House, that the circle of the latest three increases for Eskom approved by the National Energy Regulator South Africa, NESA, came into effect on 1 April. The municipalities will be implementing these increases plus their own mark ups from 1 July.

This 25,7% increase comes on the back of several steep consecutive increases in recent years.27,5% in 2008,33,3% in 2009 and 25,8 in 2010.The latest hike of 25,5%in this circle is due on 1 April 2012.This is an increase of a whopping 112,3% in just four years.

I draw the attention this House to these steep increases because I know several families in my constituency who have regressed to candles, wood and paraffin stoves since their electricity was cut off, because they could not pay their accounts.

One such family in Attredgeville has been without electricity for more than two years. Also threatening the universal access programme, are the recent strikes at Eskom's Medupi power station being built in Lephalale.

Eskom's management has been good in keeping us informed about the development there and we thank them for it. However, these strikes must be resolves speedily as protected delays in construction could derail the switch on date at very high cost to Eskom and the South African taxi payer and of course at this point, we have to ask ourselves a question how much is Chancellor House is going beextracting from this kind of thing. We need to be aware of that.

The switch on date for Modupi is due at the end of 2012.The completion of Modupi were on time and we think Budget is crucial given the pressures on the national grid with its stress reserve margin.

Eskom should also make sure that the incidents such as the one at Duvha power station in Mpumalanga that knocked out 600 megawatts from the national grid do not recur.

Chairperson, a major item in the Electricity Integrated Resource Plan 2010, to which the Minister has referred, commonly referred to as IRP2 and recently approved by the Cabinet, is the decision to add 9600 megawatts to national grid generated from nuclear power during the next 20 years.

The first of the three twin set units is planned for switch on in 2023, as you heard the Minister saying. A serious concern about the planned nuclear builds is that, why the consultation process leading the approval of IRP2 was well canvassed with many stakeholders taking part, the department does not seem to be playing open cards with South Africa, regarding the location of the proposed nuclear plants.

There is growing agitation and frustration as emotions rise among communities, where these plants could be situated. According to one report, possible sides including Darnefontein adjacent to Koeberg, Bantamsklip on the Southern Cape coast and Thuyspunt on the Eastern Cape coast between Oyster Bay.

Many believe that Thuyspunt has already been selected as a side for the first plant, because of an apparent higher level of activity notice at the location. Can the Minister confirm that Thuyspunt has been selected as a side for nuclear one, the first twin set unit? Followed by nuclear two at Bantam's klip with the second twin set?

What is the estimated cost of the built? Where will the money come from? Given the notoriety of the nuclear industry, regarding corruption and cost over-runs, could the government be setting itself up for another arms deal type scenario? But on a much bigger scale. Speculation is that the costs of the whole build could cost as much as a trillion rands.

Minister, I note the points you made about Fukushima and I agree with you. Indeed, I believe that in the wake of the nuclear disaster at Fukushima plant, Japan, South Africa needs to approach the proposed nuclear built with high circumspection. One way of doing so, is to engage stakeholders transparently on this controversial and highly emotional subject. Time is of the essence given the long lead times required to build a nuclear plant.

Chairperson, South Africa has committed to do its fare share in the global efforts to reduce greenhouse gases spewed into the atmosphere. In this regard, the government has set a target to produce 10 000 Gigawatt, GW, hours of electricity from renewable sources mainly, wind and solar by 2013.Some of the work has been done to assess the production capacity of Independent Power Producers,IPPs, in the country. The National Energy Regulator has also determined the renewable energy feeding tariffs for the industry. Work has also been done and established as you heard the Minister saying, on the independent sales and marketing operator to facilitate the participation and contribution of IPPs in the national electricity good.

What needs to be done now, is tangible action and progress in wind and solar energy area. We are if, we are to meet the 2013 target. For instance, according to a report by mainstream Renewable Power South Africa, to achieve this target, the country needs about 4000 Megawatts, MW, a year of wind power to be built over the next four year. As matters stand, I am not confident that we can achieve this goal.

Let me finish by reminding South Africa that earlier this year, Eskom thanked the people of South Africa for saving 1800 MW of electricity by replacing incandescent bulbs with 43,5 million compact fluorescent lamps. This is one of the best examples we have.

It was a massive collective effort and a great success. The power saved was equal to the electricity needs of the city the size of Durban. We need to build on the success and continue to save electricity. Thank you [Applause]












Mr K A MOLOTO: Chairperson, it is important to locate this debate in the context of the dynamics and the structure of the South Africa economy and intensity of energy use by critical sectors in our economy. Failure to do so will lead to wrong interventions, political posturing and grand-standing without substance.

The reality of our situation is that mining industry and mineral processing industries have a critical role to play in job creation, and current account of our economy. The question is; does my input mean that the status quo should prevail? Definitely not. This budget contains various interventions to lessen this intensity of energy use by certain critical sectors in our economy.

Energy efficiency intervention will assist the mining sector to improve efficiency of their production process and replace certain intensive energy consuming components with less energy consuming components. The transition to a less energy intensive economy requires the support of all of us. This brings me to a second critical issue which really opens the debate on nuclear energy.

The critical question that needs to be put before this House is: How do we deal with the challenges of long transmission lines from Mpumalanga to the Western Cape and other coastal provinces. Lest my position on this matter of renewable energy be misunderstood I would want to state that I firmly believe in the critical role that renewable energy play in our energy mix. I believe we need to pay a particularly attention to this matter, lest we commit the same misstate that Spain has committed in renewable energy.

I believe that renewable energy would - in not distant future, resolve one of the critical challenges that it has always faced, which relates to the storage of energy, and ultimately address the concerns on variable supply.

Six experts were asked the following question by the Fortune Magazine after the Fukuswima disaster: Can society afford to live without this carbon-free energy source? As expected the responses varied. However, there was this particular word of wisdom from one of the contributors that caught my attention, and I quote:

Society has to draw conclusions based on engineering and science about what actually happened in Japan, what could have been done differently, how serious an issue this would be in other places, and make a rational decision on nuclear energy.

I hope that the Portfolio Committee on Energy, National Nuclear Regulator and the Department of Energy will assist society in arriving at a rational decision. As part of these intense debates the portfolio committee will be visiting Koeberg Phelindaba and municipalities around those facilities.

I am confident that through these interactions, the rational decision will surely be arrived upon, which will be as one of these expert said, I quote: "Nuclear is a super-important part of our future."

Chairperson, let me transition to another mater which is critical to the security of supply of fuel in South Africa. The current fuel consumption in South Africa exceeds the supply capacity of our refineries. Over a number of years there has been a significant increase in household expenditure and gross fixed capital formation. The apartheid Group Areas Act has put our people in the periphery, and this has worsened the situation.

The critical question that we need to resolve is whether we need to make investment in the refinery capacity or increasingly import refined products. In an attempt to resolve this question we need to understand what are the opportunity costs to South Africa in choosing either of these options. We also need to be careful that the voice of the powerful and entrenched interests did not impair our vision to enhance security of supply of fuel in South Africa.

The geopolitics of oil will continue to haunt us. The gyrations of oil market and prices are not a fleeting moment - it is a permanent future. Biofuel development is urgent and critical. We need to ensure that the transition to the post oil economy does not become painful to this country. Part of that transition will require us to support PetroSA in its efforts of the productions of liquid fuel from gas. Exploration is an expensive venture, full of risks and we need to bear in mind that money will get lost in the process. We need to ensure that PetroSA succeed in sourcing the feedstock required to continue its operations.

Government has committed itself to enhance security supply through the participation of Independent Power Producers. We are also encouraged that finally, the department will introduce the Independent System and Market Operator to speed up the involvement of IPPs.

Independent Power Producers require a regulatory environment which has a non-conflicted buyer, long-term contracts, price, and policy certainty. The regulatory guidelines released by Nersa on 26 March 2009, indicated that renewable feed in tariff should be high enough to cover investment costs and provide a reasonable rate of return. However we were told by some of the IPPs that the review of the tariffs by Nersa on 22 March 2011 has created financial problems for these IPPs.

However, the response we got from engaging some independent analysts on this matter paints a different picture. It became apparent that these projects were initially structured under different exchange rate and equipment costs. The reality of this situation is that the rand has strengthened and the equipment costs have seriously come down. Therefore, we are told that the decision taken by Nersa was correct in reviewing these tariffs. This is a matter that requires close attention by Nersa, the department and Parliament. We dare not repeat the mistakes committed by Spain on this matter

Sufficient attention needs to be given to non-grid intervention. The LiquefiedPetroleum Gas project has potential to assist us in reaching our goal for universal access and has great potential to create jobs. LiquefiedPetroleum Gas installers, drivers, dispatchers and cylinder plant manufacturing will be required. We need to make a concerted effort to reach our people who are not already connected to the grid. Energy poverty has put a lot of our people in the periphery of economic activities.

The strengthening of the South African Power tool is critical to ensure security of supply of electricity within Southern Africa. We have to continue to co-ordinate our efforts to create an interconnected power system within the region. The co-ordination of generations and transmission within the region will assist in sharing operational reserves and avoid unnecessary additional investments in generation capacity.

In moving towards my conclusion, I will highlight certain concerns regarding entities reporting to this department. The central energy fund has a lot of subsidiaries and companies where it has significant shareholding. We need to ask this critical question, hon Minister; do we need to redefine the mandate of some of these subsidiaries? And the second question that we need to ask ourselves is; is it prudent for Central Energy Fund to continue to hold shareholding in businesses that are not critical or part of their core business of central energy fund?

Chairperson, I believe that the department should continue to play a critical role in the oversight on some of these entities. The ANC supports this Budget Vote. [Applause.]. END OF TAKE


The DEPUTY MINISTER OF ENERGY: Chair, hon members of Cabinet present here, hon Members of Parliament, director-general, the executive management of the Department of Energy, state-owned entities, invited guests, business and stakeholders, I think I am tempted to say this to hon Dexter before I get into my speech. It is now very clear why you lost the elections. While we were busy working and campaigning, you were busy cracking jokes in your party. No wonder you lost. Perhaps you should do much more of your joke-cracking, so you can perish quicker than now. [Interjections.]

The energy future of our children depends on the decisions we make today. It is therefore imperative that the choices we make do not result in undue burden for our children.

Our department is full alive to the imnpacts of our prgrammes ion the lives of our people beyond the mere provision of energy. In this regard,w e have a number of intiatives that I woulod like to highlight before I go into the details of our programme.

Allow me chair[person to briefly discuss the resource allocation of the department. It is proper to indicate that our department in under-resourced by at least 48%. This has a major impact on the capacity of the departmenti to deliver. This implies that the department is unabvle to ensure security of asupply of enrgy optimally, adequately exercise oversight over the SOEs, engage effectively with stakeholders. The department ti will need all the support to ensure that the requisite resources to run its operations effectively are allocated.

However, it is not all doom and gloom. Sixty-two per cent of the staff complement is women, which indicates that we have exceed our target of 50%.

Let me provide the overview of the programmes that our department has embarked upon to provide service to our communities.

The quest for universal access to electrify homesteads continues. The electrification programme provides not only a modern energy option for our people; it also has positive socioeconomic impact on th3 lives of the ordinary South Africans. We have seen improvements in the education, the health and the social circumstances of our communities that electrified through the grid and off-grid technologies.

To date, South Africa's energy penetration stands at over 75%, and this year wit the R3,2 billion allocated to electrification programmes, we will connect an additional 150 000 households. We ioll build 10 sub-stations and contribute about 5 000. In the 2010-11 financuial yesr we nanaged to create 5 811 jobs, and connected 195 000 homes to the electricity grid. We exceeded our target by 45 000 households.

Last year, in partnesrhsip with Sasol Oil, the seventh integrated energy centre was constructed at Qunu, in the Eastern Cape, and it is operational. This centre not only provides rural acommunities with access to energy services but it also includes a computer centre with internet facilities and it is located next to a school.

Two more centres, one of which will be funded by PetroSA are planned for completion this year. As we strive to improve access to energy in rural areas, we will ensure that skills training provided for the centres is biased towards the local; women, the youth and the people living with disabilities. Such programmes and interventions will have a positive socioeconomic impact on the targeted vulnerable groups.

Then we will go to the Working for Energy programme, another programme through which we intend to diversify our energy mix and increase access to energy is the Working for Energy programme which amongst other promotes labour-intensive energy projects across the country. During the year, we shall be spending about R25 million on this project. This amount excluded funds that we have received form the governments of Finland and Austria. I will touch a bit on the energy –efficiency programmes.

We are looking forward to the positive contribution that our newly formed Sanedi is going to make in the energy efficiency programme that we have earmarked. The department will work with National Treasury to ensure that Sanedi is properly resourced to deliver on its important mandate.

One of the key activities that will be undertaken by Sanedi is to oversee energy efficiency and demand side management. In terms of Sanedi's role, it is expected that they will become the custodians of all energy efficiency programmes. This requires them to oversee energy efficiency initiatives; in particular to assist with the certification of energy savings achieved by those companies that seek to claim tax –deduction under the Income Tax Amendment Act.

We have secured the concurrence of the Minister of Finance for energy efficiency incentives under the standard offer of an energy-efficiency tax incentive scheme, which will be in place this year. The 49 million campaign was launched by the Deputy President during the first quarter of this year. The campaign seeks to mobilise all South Africans to save our energy. Let us all rally beghinid this campaign and save electricity.

In addition, our department contuse to engage the public Works to ensure that all buildings are retrofitted to reduce energy consumption.

We have to constantly remind ourselves that energy


Sihlalo Ohloniphekile, njengoKhongolose, siphinde sanikezwa ngabantu baseNingizimu Afrika igunya lokuthi sethule izidingo zabo. Thina kulo Mnyango wezaMandla, sizimisele ngokukhulu ukuzithoba ukuqhubeka nokubambisana nomphakathi.

Sizosebenzisana nohulumeni wasekhaya neminye iminyango ukuze senze izimpilo zabantu zibe ngcono. Sithi-ke kubavoti baleli lizwe, siyabonga kakhulu ngokuthi baphinde bakhombise ukusethemba, nokuthi sisho kubona ukuthi ukwanda kwaliwa ngumthakathi, yena ongafuni ukubona abantu basizana. [Ihlombe] Sengathi bangaphinda benze njalo nangomuso. Siyalibeka ithemba lethu kubona ngoba nabo siyazi ukuthi balibekile ithemba labo kithina.

*** Language spoken has changed to English ***

In conclusion, Chairperson I would like to...




Adv A D ALBERTS: Thank you, Madam Chair.


Daar is geen twyfel dat Suid-Afrika...


The TEMPORARY CHAIRPERSON (Ms G M Borman): Hon Alberts, are you coming to the podium?

Adv A de W ALBERTS: Oh, sorry. Yes. My apologies, Chair.


Daar is geen twyfel dat Suid-Afrika 'n energie-krisis in die gesig staar nie, en hierdie week se aankondiging deur City Power in Johannesburg dat beurtkragskedules op hulle webwerf geplaas is, is getuienis daarvan. Die aansienlike prysverhogings van krag wat aan Eskom toegestaan is deur die Nasionale Energiereguleerder van Suid-Afrika, Nersa, is getuienis van die wanbestuur en gebrek aan voorsienigheid binne 'n kritieke instansie waarsonder die land nie kan klaarkom nie. Die effek daarvan is natuurlik steeds besig om uit te speel in die vorm van hoër pryse van produkte en dienste wat afhanklik is elektrisiteit. Ek is bevrees dat daardie golf nog aan die kom is soos 'n tsunami na die eerste aardbewing.


The fact is, however, that the electricity earthquake is now an event that has taken place, and the average South African can now only brace him or herself for the flood of high prices to come. The positive side of this is that government has been shaken out of its slumber and seems willing to tackle the future energy needs of this country. The question to be answered is what the optimal design must be for electricity generation supply and governance.


Die VF Plus ondersteun 'n holistiese benadering tot die energie-kwessie van Suid-Afrika. Tans gebruik die land baie vuil kragopwekkingsmetodes deur gebruik te maak van steenkool. Kernkrag is baie skoner en is daarom 'n sinvolle korttermyn alternatief, behalwe natuurlik as 'n ongeluk sou plaasvind. Daarom is die medium- en langtermyn doelwitte om alternatiewe krag te ontwikkel ook van kardinale belang. Verskeie toekomskundiges het voorspel dat sonkrag die toekoms van energie-opwekking gaan wees – en dalk gouer as wat 'n mens dink ook.

Indien die verdubbelingswette water sal hou, sal ons gouer as wat ons dink net op son- en ander alternatiewe energie kan staatmaak. Daarom is 'n geïntegreerde energieplan van kardinale belang en steun ons ook hierdie benadering. In hierdie verband is die skakeling tussen die Industriële Beleid Aksieplan, Ipap, se groen werkskeppingsprogram en die Department van Arbeid se ondersteuning van sonkrag-opwekking baie bemoedigend. Die geïntegreerde energieplan se benadering om van 'n gediversifiseerde energiemengsel gebruik te maak is sinvol en toon aan dat die holistiese benadering tot die energie probleem inslag vind by die regering.


We also support the idea of an independent operator that will ensure that governance and management of energy supply and demand is performed in an optimal manner with sufficient redundancy. Therefore, we are looking forward to the Independent System and Market Operator Bill. The Minister also alluded to her plans for energy efficiency. This is the first step in saving the energy system in South Africa and, if successful, can save our economy a lot of money.

I have two last thoughts. When we talk about find sources of energy, we must also consider the methodologies that we use, like "fracking." We must consider whether the environment is more important to us or short-term energy gains. Lastly, when we talk about the petrol pricing structure, we must ask ourselves whether we cannot introduce competition in this sector on the retail level to make sure that the prices are forced down by way of competition. Thank you, Chair.



Mrs B TINTO: Chairperson, I was confused. I thought that hon Dudley was before me. Chairperson, Minister and Deputy Minister, hon members and visitors, President Jacob Zuma, in his state of the nation address, declared this year as a year of job creation and economic transformation. The Department of Energy therefore has the mammoth task of ensuring that through its programmes sustainable jobs are created so that the lives of the people can be changed.


UMqulu weNkululeko owaqulunqwa ngowe-1955 yi-ANC e-Kliptown uthi kuyakubakho imisebenzi nokhuseleko. Eli sebe nalo ke ngoko kufuneka livale izikhewu ngokuqesha apho kufuneka iqeshe khona kwiiofisi zayo njengesebe eliselitsha.


Black people constitute the highest number of the unemployed. Also, they are the poorest of the poor and still homeless.


Urhulumente unoxanduva lokuphelisa yonke le ntlupheko, ingakumbi ngokubhekisele koomama abasokola kakhulu kuba ngabona bantu bajongene neentsapho. Oomama ngabona bantu ekufuneka beqinisekise ukuba iintsapho zikhuselekile kwaye zinamandla nakobu busika.


The ANC supports Budget Vote No 29: Energy. The President has also formally launched the national solar water heating programme in 2010, with the objective of ensuring that one million systems are installed in South Africa by 2014. This programme is being run parallel with initiatives by Eskom, which had started as far back as 2008. The government hopes that these and other initiatives will ensure the achievement of the one million solar heaters by 2014, hence contributing to saving energy.

The benefit of installing solar water heaters in the residential areas is to reduce peak demand during winter, as the country's reserve margin is constrained. The largest electricity-consuming appliance in our households is usually the electric geyser. It typically makes up 30% of the total electricity used in many households. A solar water heater can reduce this energy consumption figure by more than half. Also, local manufacturing of water heaters can contribute to job creation and skills development. Energy conservation schemes must also contribute to ensure continued economic growth.

South Africa is well endowed with renewable energy resources with the potential to produce energy from biomass, wind, solar, small-scale hydro and waste. The South African energy policy creates a conducive environment within which renewable energy technologies can be deployed. Subsequent to the 1998 White Paper on Energy, a White Paper on Renewable Energy was adopted by Cabinet in 2003, with the target of a 10 000 GWh contribution to the final energy consumption by 2013.

Furthermore, the National Energy Regulator of South Africa, Nersa, introduced a renewable energy feed-in tariff, REFIT, which is aimed at encouraging investment in renewable energy by offering guaranteed tariffs that are supposed to cover generation costs and ensure profits whilst, at the same time, creating a critical mass of renewable energy investment and supporting the establishment of a self-sustaining market. Investors are given access to the national grid. Eskom is designated as the renewable energy purchasing agency and is obligated to buy power from the independent power producers, IPPs, through power purchase agreements.

The Integrated Resource Plan, IRP, of 2010 includes renewable energy sources for electricity generation. Renewable energy will account for 16% from the adopted revised balanced scenarios. Since the adoption of the National Energy Act in 2008, the IRP 2010 has provided for a recognisable action to support renewable energy in South Africa. This is indicative of government's intention to deploy renewable energy in electricity generation.

On clean fuel, the department will review the current transport fuel specifications and standards to reduce harmful emissions and to align standards with global vehicle trends and environmental requirements. Government hopes to have cleaner fuel made available to the public as soon as 2013.

The new specifications were underpinned by three imperatives: the need to contribute to public health, environmental concerns, and the need to enable more advanced combustion engines on South African roads. The low levels of sulphur would allow for the introduction of more efficient engines with less carbon dioxide emission.

Liquefied petroleum gas, LPG, is a lesser used but desired fuel source in low-income households, especially where coal is unavailable. One of the key challenges for low-income households in terms of using LPG is the cost. LPG is too expensive. Low-income households resort to using coal and paraffin, which have health hazards. The LPG containers are very heavy.


Asiboni nokuba kukho ntoni ngaphakathi kula matanki erhasi kwaye athengwa ngabantu abaneemoto kuba anzima. Thina bantu bangenazimoto asiwathengi.


The Department of Energy is developing an LPG strategy which will be submitted to Cabinet during this financial year. The main objectives of the strategy are to provide access to safe, cleaner, efficient, environment friendly and affordable thermal fuel for all households and to switch low-income households away from the use of coal, paraffin and biomass.


Soloko ingoomama ke abahamba ehlathini baye kuthwala iinkuni kuba kufuneka bephekile. Kodwa ke, ezi nkuni zezi ziphinda zenze impilo yoomama ingabingcono. Ndiyabulela. [Kwaqhwatywa.]

Mrs C DUDLEY /Mia (Afr/Eng)/ GM (xh)/ END OF TAKE


Mrs C DUDLEY: Chairperson, despite a review of nuclear policy by Germany, Japan and China after the Fukushima disaster, six nuclear reactors are still being contemplated in the current Integrated Resource Plan. Our own Department of Trade and Industry's Industrial Policy Action Plan states:

A future nuclear programme will cost in excess of R1 trillion. This will place enormous strain on the balance of payments and without an effective localisation programme will have severe consequences for the South African economy.

Successful localisation will require a fleet approach to ensure economies of scale and commencement of construction of one nuclear reactor every 18 to 24 months to ensure viable business opportunities.

Nowhere in the world has this economy of scale been achieved in the nuclear industry; and of course, popular resistance to the reactors will delay the programme for years to come. We therefore call on you, hon Minister, to rather put the R1 trillion towards the implementation of energy-efficiency measures and the localisation of wind and solar energy production.

The ACDP has appealed to the Minister of Science and Technology, and further appeals to you, hon Minister, to urgently investigate technologies patented in South Africa which will enable South Africa to pioneer the transition from a carbon-based economy to hydrogen, the commercialisation of which will open new market spaces, creating massive employment opportunities for our people.

These emerging technologies integrate power supply and waste and wastewater remediation in the context of local communities. They will provide the power requirements of a community while remediating and recycling water as well as eliminating the waste of the community at its point of generation. This will eliminate the need to transport the waste at a huge cost to the taxpayer.

It provides the opportunity to generate licence revenues which will substantially provide for the establishment of these facilities throughout Africa. I would like to provide you with the relevant information. I would really appreciate an opportunity to discuss it with you further.

The ACDP has reservations regarding the budget and especially the spending on nuclear plants, but we will be supporting this Budget Vote.



Mr D C ROSS: Hon Chairperson, hon members, Minister, the South African government should consider the need for improved energy security as one of its utmost priorities. The promotion of security of supply and competitive energy prices are critical goals in South Africa. To this end, the Integrated Resource Plan, IRP2, has been developed to directing the expansion of our electricity supply over the next 20 years. It is vitally important, however, that this plan remains responsive to our short-term requirements, and I think the Minister has mentioned the future of coal.

Eskom's total generating capacity is currently 41 500 megawatts. Demand in winter is projected to increase to 38 000 megawatts. This leaves a relatively small margin of 3 500 megawatts to accommodate problems such as plant closures and plant maintenance. International best practice dictates that reserve margins should not fall below 15%, while Eskom's 3 500 megawatt reserve margin only represents a reserve margin of 8,5%. This should be of grave concern to us all, especially considering the relatively mature state of the majority of Eskom plants. These figures and the age of our electricity infrastructure clearly signal that our supply concerns have not yet been resolved. Eskom themselves have conceded this fact.

Eskom's leadership has stated our country is facing potential electricity supply shortfalls of six terawatt hours in 2011-12 and nine terawatt hours in 2012-13. This roughly equates – and this is important – to the amount of electricity a city such as Cape Town consumes in one year. To address this, Eskom is building three new power stations, Ingula, Medupi and Kusile. In addition, Eskom is rebuilding and re-equipping power stations like Camden, Grootvlei and Komati, with the budget totalling R385 billion up to 2013. These are now desperate, belated steps on our path to energy security and I will elaborate on that in a second.

The 1998 White Paper on Energy and the subsequent misplaced strategy of government to stop the Eskom build programme have put us in the position we are today. Eskom is currently forced to overinvest in large coal-fired generating units. This not only imposes a burden on the fiscus, but also undermines our commitment to combating climate change - not taking into consideration the environmental cost of our power. If we had properly planned for the expansion of our energy supply and if we had started working at it earlier on, government would have had a series of more environmentally-friendly and cost-effective options at their disposal.

Unfortunately, however, we are where we are, and no effort must be spared to place us on the path to energy security. The danger of unreliable supply remains a reality, and if we lose only 600 megawatts, like what happened at the Duvha power station, South Africa faces another power crisis, according to the newspapers. Duvha should never have happened, and a report and investigation need to be published. I join the Chairperson in his earlier request and remarks.

The DA, however, believes that there is a way out of this current situation, such as an urgent facilitation of the build programme. I believe we are one year behind in Medupi, and we also see ongoing labour disputes at Kusile. I think that needs to be solved very timeously. We believe an audit on the state of the distribution network and Eskom staff competency needs to be done with immediate effect.

With regard to our distribution network, hon Minister and members, we have to ask how much of our energy is being lost due to poor maintenance. Some analysts have concluded that we could save as much as R2 billion to R6 billion in distribution losses per year. Currently, the distribution network faces R26,7 billion in maintenance backlogs, with half the distribution network requiring serious attention. I think our total amount of value in our distribution networks is about R260 billion, and we have a R26,7 billion backlog – just to put that in perspective.

The current plan to address the issue is utterly vague, with maintenance seemingly being done on an ad hoc basis and predominantly in the metropolitan areas. I believe the smaller municipalities are being neglected.

The DA strongly urges government to reconsider implementing a more comprehensive approach to maintaining our distribution network. An efficient distribution network, we know, is a prerequisite for our Integrated National Electrification programme, Inep. The current construction rate of the Inep, of course, is negatively affected by this dysfunctional distribution network and also negatively affected by dysfunctional municipalities. Twenty per cent of our people do not have access to electricity. Our supply and distribution challenges have the potential to dramatically impede our efforts to electrify the lives of those one in five South Africans who do not have access to electricity yet.

Furthermore, we must not forget that our energy challenges reach further than electricity. I think my colleagues will remember Mr Guy McGregor's presentation to the portfolio committee. In it I think he agreed with me that the compulsory blending of ethanol in the petroleum pool could add up to 10% of our petroleum productive capacity. Revising the industrial biofuel strategy to allow the excess production of maize to be used for the production of ethanol could help South Africa reach its objectives for the use of renewable energy. It could also create thousands of jobs in the biofuel industry.

I have written to the Minister regarding the delay in the implementation of the finer detail of the regulatory processes in the biofuel industry, and I believe that much attention was given to that. Thank you, hon Minister. I would also like to thank the department for meeting a delegation from Grain SA to discuss progress in this industry.

The job is not yet done, however. Only by implementing the required reforms can people in our rural communities reap the rewards of a growing biofuels industry.

In conclusion, we have to produce more energy to meet the demands in our growing economy. This is not negotiable. Eskom has indicated it would issue a mandatory warning to its big electricity users to save electricity and even issue fines to those who transgress. The industrial industry is concerned that insufficient progress is being made with Eskom's medium-term risk mitigation plan, and I think the Chairperson has alluded to that.

As to the large-scale load shedding currently we experience in the Johannesburg area, City Power is not meeting its demand in terms of Rosebank, Dobsonville, Ekurhuleni and the greater Johannesburg, at times. Daily shedding in selected areas is also problematic, considering that care needs to be taken not to take productive capacity out of the economy. Care also needs to be taken that we never again fail to properly plan for our nation's growing energy needs. I thank you, hon Chair. [Applause.] [Time expired.]



**incomplete**"Committee Room E249 Main",Unrevised Hansard,26 May 2011,"[Take-30] [Committee Room E249 Main][NW-2-49][uh].doc"




The MINISTER OF ENERGY: Chairperson, I was told that I have 12 minutes. Maybe I must start where I ended off by indicating that we have realised, as a department that we needed to increase the project management skills of the team in the department. We are working very hard to ensure that we improve. We have already started, amongst others, to retrain 72 staff members with a view to enhance their project management skills, so as to improve service delivery. We are also finalising a new approach to recruitment, selection, and career pathing and a performance management system, in line with our strategic intent.

In responding to the policy positions of the ruling party, we have established a new branch for clean and renewable energy. It will provide for a dedicated and appropriately resourced focus on areas such as the use of alternative technologies, cleaner carriers and will allow us to exponentially increase the use of renewable energy sources. This will include the work underway in the area of demand side management and energy efficiency.

This development also enables the department to significantly better co-ordinate and enhance its contribution to South Africa successfully hosting COP17 in December this year.

We continue to be active in the development of an appropriate response to the scarcity of the required skills in the energy sector, through an enhanced participation in the Energy Sector Training Authorities, at both governing board and Subcommittee of the Sector Skills Plan levels. This has enabled the department to provide strategic inputs for the development of skills that are critical in terms of the needs of the country.

In line with the Cabinet's decision, the Electricity Distribution Industry, EDI, Holdings ceased operations on 31 March 2011. An administrator has been appointed to execute the winding up and the process is expected to be completed by the end of June 2011.

As directed by Cabinet, we are continuing with some of the programmes in which EDI Holding was involved, including the rehabilitation of electricity distribution infrastructure. In this regard, the department will establish capacity that ensures service delivery of uninterrupted power to end users. Proposals in this regard will be submitted to Cabinet for consideration. The required funding model is currently subject to detailed discussions between the relevant government departments and other potential funders.

The new full-time regulator members for National Energy Regulator of South Africa, Nersa, have been appointed and assumed their duties at the beginning of April 2011. I would like to take the opportunity to welcome Mr Thembani Bukula, Dr Rod Crompton, Ms Phindile Nzimande and Ms Ethel Teljeur and wish them well with their work. We have embarked on a process of reviewing and amending the National Energy Regulator Act in order to streamline governance at Nersa. Hon members would be central to that process.

As part of its contribution to the public education on nuclear science and technology, South African Nuclear Energy Corporation, Necsa, built and completed a nuclear science centre which is open to visits by members of the public. At this centre, people can learn more about nuclear energy. I encourage hon members and the public to visit this centre, especially our Mathematics and Science students because it is central to increasing the skills in this particular sectors.

Recognising the need for skills for nuclear expansion, Necsa, with the support of the Department of Trade and Industry, DTI, has started investing in artisan skills which are in great demand in the economy. Security at Pelindaba has also been stepped up considerably and I am confident that security at this nuclear installation is adequately prepared to respond to risks of potential diversion of nuclear materials.

During the last financial year, the National Nuclear Regulator, NNR, intervened decisively to protect the community of Tudorshaft in Mogale City, who were at the risk of being overexposed to radioactivity, which was a consequence of previous mining activity. This year, the NNR will continue to focus on reducing the risk of exposure of workers at the special case mines that are prone to enhanced levels of radiation.

The NNR is currently undergoing restructuring to ensure that they are well positioned to respond to the aspirations of government, as outlined in the integrated resource plan, IRP, as well as to respond to the ongoing need to ensure safety at Koeberg Power Station and other nuclear installations.

In consultation with the board of the Central Energy Fund, I will review the structure of the Central Energy Fund group of companies in order to consolidate the various operations, improve efficiencies and take advantage of synergies between the various subsidiaries. A key aspect of this work includes, as I have indicated previously, the repositioning of the National Oil Company, namely Petroleum Oil and Gas Corporation of South Africa, PetroSA.

Together with the Department of Mineral Resources, we are engaged in finalising the delinking of the African Exploration, Mining and Finance Corporation from the Central Energy Fund group, for it to form the nucleus of a state-owned mining company, in response to the Cabinet's decision of December 2010.

We will be engaging our counterparts in the SADC Council of Energy Ministers on the strengthening of the Southern African power pool, and the proposals for the development of an integrated resource plan for the region, taking into account that our energy needs are interlinked and intertwined. We can each contribute meaningfully to our energy needs and meeting our challenges.

We continue to participate in structures such as the International Renewable Energy Agency, the International Energy Forum, the International Partnership for Energy Efficiency Co-operation, Ipeec, the United Nations Industrial Development Organisation, Unido, the Clean Energy Ministerial, the AU-EU Energy Partnership and the Council of Energy Ministers of Africa.

Over the recent period, we embarked on a number of international engagements in our quest to find a solution to our energy challenges. Apart from servicing our international obligations in the nuclear energy space, we have a number of other binational and multilateral agreements that we have to honour. I must hasten to add that our bilateral engagement programme has taken a very practical and implementation-level approach, and we have a number of existing and developing bilateral or joint programmes in place, in support of an array of energy areas. In keeping with our recently confirmed memberships in Brics, we are expected to have a more pronounced role in the international arena.

I want to take this opportunity to thank the hon members for their valued contribution in the debate on Vote No 29. I also believe that some of the issues, raised by hon members, were addressed by my speech, the speech by the Deputy Minister, as well as the most progressive inputs by the chairperson and hon members from the ANC, as usual. I will reply to the issues as a whole.

I want to indicate that one of the important things that I have also picked up in this House is the fact that we seem to all agree that there is space for nuclear in the energy mix of South Africa. The issues raised will be addressed in the plan and brought before Cabinet. It is issues of cost to the state as well as cost tothe consumer. It is issues related to the radioactive waste management and also issues related to how we can take the lessons from Fukushima as well as Chernobyl and the Three Mile Island into consideration.

It is important that we actually use these platforms to educate the public because we are public representatives. We should remember that it is this House, the National Parliament, which adopted the nuclear policy as well as nuclear legislation, rather than coming here and talk about the negatives. It is important that we realise that we have already formulated the plan to include nuclear in our energy equation. How are we going to meet our long-term mitigation scenario with only renewable energy? We need baseload to buttress what the renewable energy cannot cover.

I heard the hon members referred to and almost repeated the report of Greenpeace, with regard to increasing renewable energy. Like I have indicated, as a department, we are making it possible to build our capacity to ensure more renewable energy. However, we are very realistic.

If you look in the Cape Times today, it would show a big crane that is putting up those huge turbine blades in one of the sites. Where does the crane come from? It means that the bulk of the money for development must go to the importation of the equipment we need to lift the crane. It is higher than the buildings here in Cape Town. What have we heard today in the very Cape Times? There is an indication of some of the communities who say yes to renewable energy but not in their backyards.

I think it is important that we realise that these are some of the things that we have to consider. Hon Dudley said that it will take time for the development of nuclear with the objections from various stakeholders, to delay the streaming of nuclear. It is equally so with renewable energy. There is a whole town that is up in arms here in the Western Cape with the development that needs to take place to ensure renewable energy. That would have helped us to meet our target. That community, predominantly well-endowed and rich people, say no to a turbine as long that, as it will obscure their view. What are we supposed to do? That are some of the things that we have to take into consideration.

We should also realise that South Africa is an energy-intensive industry. We cannot only rely on a source that is based on the elements. I am happy that hon Moloto spoke about the storage capacity. Until we have addressed the technology issue in order to ensure storage, we will not be, like Greenpeace says, at 50% by 2030 and at 95% by 2050. Yet, it is the very organisation that says that we should not consider hydro as one of the options.

I want to say to hon members that we should really be realistic. We need to keep the lights on. We need to keep our machinery going. The government, led by President Zuma, has set itself a target of 5 million jobs in 10 years. The Greenpeace report says that we can only have 150 000 jobs by 2050 from renewable energy sources. It means, in essence, that we must go and do the recalculation. It means the jobs that we anticipate from the green energy or green economy, will not realise.

These are the people who devote most of their time to researching the importance of renewable energy. I think that it is important. They said while we want renewable energy, we are not going to realise the objective of creating jobs. We want to ensure that across the value chain, from mining the sources to them being beneficiated to produce energy, we make maximum input for South Africans.

We need to increase the number of companies in South Africa which are responsible for manufacturing solar water heating components. We need to indicate that we have some challenges with the roll-out of solar water heating. We said that we want to maximise localisation. We can't take that bulk of money out of the boundaries and borders of South Africa. So, whatever we decide or whatever policy directive we take must enable us to give jobs to the people of South Africa so that they can provide for themselves. They are just doing what God said when He chucked out Adam and Eve. He said: "Go and live by the sweat of your brow". It is important to create opportunities for men and women in South Africa to live by the sweat of their brow. [Applause.]

There are quite a number of areas that members have raised which are very important to build the capacity of the department, to respond to the needs of South Africa. We will engage on some of these initiatives. Some of the hon members have written letters and we have engaged with them in my office. I believe that type of engagement can continue as well as the contributions made by members of the ANC in terms of ensuring that our energy security policy is sustained. Had it not been for the ANC adopting an energy mix policy at Polokwane, we would not have had the integrated resources plan. I want to say that this government is committed to making it possible for South Africa to have access to uninterrupted, cost-effective supply of power and energy sources. We want to ensure that we contribute.

I want to thank the Cabinet of the Republic as well as the Department of Energy, led by the director-general,the boards and stakeholders. I also want to thank my family for being very supportivein order for me to serve the people of the Republic of South Africa. Thank you to the chairperson for his leadership, because he always wants to keep us involved. On the eave of the state of the nation address, he kept me and the director-general so involved in the discussions on energy, the security of energy supply and the capacity of the department to deliver, that we could not leave before ten o' clock that night. Thank you.[Applause.]

The HOUSE CHAIRPERSON (Mr M B Skosana): Hon Minister, we have corrected ourselves. We gave you your 12 minutes plus. Hon Dexter, with regard to your question of attendance, we would have to go to the official register of the portfolio committee to ascertain that, if you want to. I cannot ask members to argue that point. It is only the official register. There is an announcement that the debate on Vote No 12, Public Service and Administration, will start at 16:45 in this venue.

Debate concluded.

The Extended Public Committee rose at 16:20.



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