Hansard: EPC: Debate on Vote 26 – Energy
House: National Assembly
Date of Meeting: 19 May 2015
No summary available.
EPC – NATIONAL ASSEMBLY CHAMBER
Tuesday, 19 May 2015 Take: 1
TUESDAY, 19 MAY 2015
PROCEEDINGS OF EXTENDED PUBLIC COMMITTEE – NATIONAL ASSEMBLY CHAMBER
Members of the Extended Public Committee met in the National Assembly Chamber at 10:30.
House Chairperson Ms A T Didiza, as House Chairperson, took the Chair and requested members to observe a moment of silence for prayers or meditation.
The HOUSE CHAIRPERSON (Ms A T Didiza)
START OF DAY
WELCOMING OF GUESTS
The HOUSE CHAIRPERSON (Ms A T Didiza): We would like to welcome the guests of the Minister, the stakeholders of the Department of Energy who are here to support their budget. As we welcome you, we also want to indicate that, in terms of the Rules of the House, as our guests, you are supposed to express your appreciation – yes. If there are things that unnerve you, we can’t deny you that right, but that can’t be expressed, either by clapping your hands or making comments that are so loud as to disturb the House. So, I ask all of you to comply, at least, with those Rules of the House while you are here. Now you are no longer only the Minister’s guests, but guests of this House. You are our guests as well.
I must also recognise the officials of the department and welcome you to this Budget Vote debate.
The MINISTER OF ENERGY
The HOUSE CHAIRPERSON (Ms A T Didiza)
Debate on Vote 26 – Energy:
The MINISTER OF ENERGY: Hon Chairperson and members of the extended parliamentary committee; hon Deputy Minister of Energy, Ambassador Themibisile Majola; hon Cabinet colleagues; chairperson Mr Fikile Majola and members of the Portfolio Committee on Energy; members of the diplomatic corps; the Department of Energy; Acting Director-General, Dr Barnard; our state-owned enterprises, SOEs; the National Energy Regulator of South Africa, Nersa, and fellow South Africans, on 24 May 2015, President Zuma will lead the Africa Day celebrations. The theme is ``We are Africa - Opening the doors of learning and culture from Cape to Cairo.’’
South Africa will also host the 25th Ordinary Session of the Assembly of the AU Summit. As part of this programme, the heads of state and government of the AU will visit the SA Fundamental Atomic Research Installation, Safari-1, research reactor at the SA Nuclear Energy Corporation, Necsa, site in Pelindaba. This is part of South Africa’s celebration of the 50th Anniversary of the Safari-1 nuclear reactor. The visit will further serve to highlight South Africa’s successes and efforts to harness the peaceful uses of nuclear energy for broader developmental purposes.
Africa is grappling with the challenges of sustainable development. South Africa is in a unique position to contribute towards the energy security of our own country and our continent through our diversified energy mix in general and our renewable programme, in particular. However, South Africa’s lack of timely co-ordination of our planning, alignment and implementation of our country’s energy programmes has created serious challenges for us. [Interjections.]
I want to reassure South Africans that the load shedding which prevails is receiving our highest priority for urgent resolution. [Interjections.] Partnerships have been established between government, labour, business and civil society to find solutions to our problems, in keeping with the great spirit of our country. The Five-Point Plan was adopted by Cabinet as a blueprint for addressing our challenges.
Our government’s urgent response to load shedding has accelerated the finalisation of the much-awaited Integrated Energy Plan. [Interjections.] Once approved by Cabinet, the Integrated Energy Plan will be published as a policy document. This plan will inform our future energy mix and prioritise policy interventions for future programmes within the energy sector.
Whilst energy policy development continues, we announced a package of energy supply and demand options last month. This will increase the independent power producer energy supply to the grid by means of renewable energy, coal, gas and cogeneration by 17 000MW towards the end of 2022. An annual increase of 2 400MW of additional energy capacity will be added to the grid. Our current circumstances compel us to add a significant amount of electricity generation to the grid in a very short time.
The Renewable Energy Independent Power Producer Procurement, REIPPP, programme has added to the energy-supply capacity and electricity diversity in South Africa over a period of only three-and-a-half years. Competitive energy prices have been achieved, with a distinct and meaningful possibility to make a real socioeconomic difference in the communities where they are located.
From 2011, the department procured 5 243MW of renewable energy in Bid Windows 1 to 4 and connected 37 projects, with a capacity of 1 827MW to the grid. On average, 15% of this energy was delivered to the power system during system peak periods, alleviating pressure on the power system. The energy contribution should grow to approximately 7 000GW hours per annum with the first 47 renewable energy independent power producers, IPPs, fully operational and producing at full capacity by mid-2016. Through the competitive procurement approach, the average per kilowatt hour tariff, in April 2014 terms, for onshore wind has declined by 55% to an average of 62c per unit and for solar photovoltaics, PV, by 76% to 79c per unit.
This programme has secured a commitment of about R170 billion in capital investment to the South African economy. South Africans own an average of 48% in all IPPs, with black South Africans owning 28% of these projects. [Interjections.] There is a drug prescribed for attention deficiency – it’s called Ritalin. [Laughter.] [Applause.] So, if members cannot listen and concentrate, please forgive them. They need prescription medication. [Interjections.]
We are pleased to inform you about progress in this regard. [Interjections.] Pursuant to our earlier announcements, we have already submitted for concurrence to the National Energy Regulator of SA, Nersa’s, new determinations for an additional 6 300MW for the Renewable Energy IPP Programme, as well as 1 800MW for cogeneration. [Interjections.] Co-generation supply ... [Interjections.] Please wait! Be patient!
The HOUSE CHAIRPERSON (Ms A T Didiza): Order, hon members! Even as we make interjections, can we please not disturb the speaker at the podium. [Interjections.]
The MINISTER OF ENERGY: I will get to the legislation and I will get to the Independent System and Market Operator Bill. Please! I know you are obsessed with the Independent System and Market Operator Bill!
Cogeneration supply of about 720MW has been secured through Eskom. In addition, we have revised the approach in relation to the procurement of cogeneration in line with the Integrated Resource Plan, IRP, to assist with the current electricity challenges. The request for proposals, RFP, for the revised cogeneration approach, totalling 1 800MW, is on track for release to the market. The announcement of the preferred bidders is expected in the third quarter of 2015. The new approach will ensure that the approval process is expedited and financial close accelerated.
The REIPPP request for proposals for an additional 1 800MW from existing bid submissions is on course for release to the market by June 2015. As previously indicated, this bidding process will be open to all unsuccessful bidders from all previous bid windows who are ready for resubmission. These projects are well cooked already. They just need to be presented for approval. We will also announce the appointment of additional preferred bidders from Bid Window 4 in early June.
Projects under this programme have started to spend on their socioeconomic development and enterprise development commitments. A spending pattern is unfolding, with most spending being allocated for education and skills development, health care, infrastructure, and social housing improvements, amongst others. The Department of Energy is engaged in the redesign of the IPP request for proposals, paying particular attention to early, efficient and equitable benefits to communities, as well as to a greater local content approach that will strengthen industrialisation in South Africa.
What does this mean for the very ordinary South African, you and me?
An HON MEMBER: Nothing!
The MINISTER OF ENERGY: Ms Gail Cleophas from the Hopefield Home Improvement Project has been trained as an artisan to work on an IPP wind project. When I am done, I will ask them to stand. Ms Theresa Jaars is a beneficiary and member of the maintenance team of the Solar Systems projects in the Bokpoort area. Ms Kate Serunye from Rustenburg was provided with training opportunities in the security sector in the RustMo 1 project.
We are also honoured to have been joined by 9-year-old Banele, who, through displaying true entrepreneurial acumen, collected plastic waste around the Jeffreys Bay Wind Farm and sold this to the project, raising enough funds to purchase himself a bicycle. Please stand. [Applause.] I am assured that they are really here or on their way.
In the !Kheis Municipality, Mrs Hilda Scheepers ... [Applause.] ...
The HOUSE CHAIRPERSON (Ms A T Didiza): Our guests in the gallery, please don’t clap. [Laughter.]
The MINISTER OF ENERGY: ... is part of the Duineveld community, which has never had basic services. Candlelight and paraffin stoves made it impossible for her children to do their homework at night. This situation has changed. Every house in Duineveld now has electricity due to the installation of a 75W solar panel.
We have amended the Small Projects RFP to provide for a simpler, less costly and less complex bidding process. Additionally, this will include stringent economic development criteria that will focus on the target bidders being local, black economic development-compliant SME entities.
In April, we indicated that we will provide more information on collaboration by development funding institutions, DFIs, for designing an innovative, sustainable funding mechanism for small IPP projects, with the Minister of Small Business Development. This funding mechanism will also include a technical assistance facility for project development, funding of advisory costs and the achievement of financial close for small renewable project bidders. The Development Bank of Southern Africa and the German Development Bank, KfW, have joined forces, and they will launch the Facility for Investment in Renewable Small Transactions in the next few weeks.
In line with our vision of an expanded natural gas sector, the Gas Utilisation Master Plan is at the final stage. Why has it taken so long? It is because we had put in place a gas utilisation road map for internal approval. The plan will be released for public comment during the second quarter of the 2015 financial year.
The Request for Information for gas-fired generation will be released to the market today. The outcome of this request for information will guide us in the design of the Gas-to-Power Procurement Programme for a combined 3 126MW allocation. This is a significant step forward in the diversification of our energy mix. We expect the request for proposals to be released to the market in September, with a bid submission phase planned for the first quarter in 2016.
Furthermore, the request for proposals in relation to new coal-fired generation was released to the market in December 2014, with the bid submission initially scheduled for June 2015. Given ongoing engagement with the market and the private sector, they have expressed the need to ensure a successful procurement phase with firm results, and they have requested that we extend this period by about two months. I have agreed to this request to extend the period to the end of August 2015. We will then allow the request for proposals to be submitted. Preferred bidders for this programme will be announced before the end of this calendar year.
As part of our regional energy collaboration and in pursuit of our climate change mitigation objectives, we are partnering with the Democratic Republic of the Congo in developing the Grand Inga project. Potentially, this project could be the largest hydroelectric power project in the world, with the potential to power half the continent. There are huge economic spin-offs to be harnessed from this project, including industrialisation due to supplying goods and services, skills development relating to various aspects of hydropower development and job creation. We are negotiating a preferential procurement status for companies domiciled within South Africa and the Southern African Development Community so that they can take advantage of this economic opportunity.
South Africa and the DRC are formalising the structure of the business model. I implore private sector investors not to listen to the doom and gloom from this side. They will miss out on opportunities. The World Bank is supporting this project. The World Bank is looking at funding this project. Please, do not be cynical. You will be missing out on an investment opportunity. [Interjections.]
The Grand Inga project, which is now situated in the IPP Office, provides a valuable opportunity for South Africa to duplicate the success factors of the Renewable Energy Independent Power Producer Programme. A number of countries on our continent will work with South Africa to explore business opportunities regarding the project and this will lead to essential growth necessary in countries where the government and private sector players are committed to renewable energy.
Various small hydro projects have been allocated under the IPP programme. In addition to this, the department, in collaboration with the Minister of Water and Sanitation and other entities, is looking into the potential of developing micro or small hydro projects. Hydro IPPs and gas from our neighbour, Mozambique, and other SADC countries will be encouraged.
A generation license is not required for own generation. The department is considering all applications with a view to assisting developers to fast-track potential projects that will further alleviate the current supply challenges. Similarly, we will improve third-party access to the network and the wheeling of power.
Nersa has commenced with the process of developing the necessary rules pertaining to this. We implore Nersa to fast-track its process of public consultation for tariff adjustments to assist Eskom to stabilise its balance sheet.
Energy security is a prerequisite for achieving the 5,5% economic growth target envisaged by the National Development Plan. The development of our electricity infrastructure, through, amongst others, our IPPs, the nuclear build programme, gas-to-power by exploiting the indigenous shale gas resources, and other interventions, will contribute towards ensuring our country’s economic growth and development.
Our government approved the Nuclear Energy Policy in 2008, which provides for the expansion of the nuclear build programme in a co-ordinated manner to address our socioeconomic needs and to bolster the economy. The Cabinet-approved Integrated Resource Plan, IRP, 2010 provides for 9 600MW of electricity to be generated through nuclear power, with the first unit commissioned by 2023. [Interjections.] For your information, the IRP runs from 2010 to 2030. [Interjections.]
In this regard, South Africa has signed various intergovernmental agreements, IGAs, laying the foundation for co-operation, trade and exchange for nuclear technology, as well as procurement. These agreements describe broad areas of nuclear co-operation and they differ on emphasis, based on the unique needs of each country. Completed IGAs will be submitted to Cabinet for discussion and endorsement on Wednesday next week. [Interjections.] Next week. Wednesday. Don’t you understand? Hon member, I wish to add. [Interjections.] The requisite parliamentary processes for ratification of these agreements will follow. [Interjections.]
The HOUSE CHAIRPERSON (Ms A T Didiza): Order, hon members! I think you will get the answer to ``When?’’ when you listen to the Minister, as she presents. [Interjections.] Can we please ensure that we don’t distract her? Hon Minister, you may proceed.
The MINISTER OF ENERGY: Vendor parades have been completed with all nuclear vendor countries that have shown interest in participating in the nuclear new build programme. South African professionals from government departments, state-owned entities and universities were part of this process.
We will commence with the actual nuclear procurement process in the second quarter of this financial year to select a strategic partner or partners in a competitive, fair, transparent and cost-effective manner. We expect to present this outcome in a similar fashion to that of the IPPs.
We will finalise the business model for the re-establishment of the Nuclear Fuel Cycle Facilities to take advantage of our mineral resources and the beneficiation strategy of our government.
In preparation for the roll-out of the nuclear new build programme, we have commenced with a nuclear skills development and training programme. We will be sending students to attend focused training in various countries. In this regard, 50 trainees from government nuclear industry entities were sent to China, in April 2015, for Phase 1 nuclear training. Plans are under way to send an additional 250 trainees to China. The Russian Federation has offered five new nuclear scholarships at Master’s Degree level in Nuclear Physics this year, while South Korea has a standing programme to train South African students in Master’s Programmes in Nuclear Engineering.
We wish to acknowledge the presence of two young men whose innovative and entrepreneurial spirit has proven that indeed, we can all make a difference to society. Harald Oswin and Evan Creamer own a company, called Geyser Flicker. They have developed an ultra low-cost load controller that enables Living Standards Measure, LSM, 4 to 7 households to easily automate their current, cumbersome, manual energy routines. It also enables municipalities to shift expensive residential peak loads to less constrained hours of the day.
This Proudly South African project is set to be piloted in Johannesburg and Tshwane over the next few weeks. We will support you in this. Proud young men, you and your project promise to be our future! You are our future industrialists. You have an innovative game-changer for the country and other emerging market energy grids looking to rapidly offset residential demand. We will continue to support this and other initiatives. [Applause.]
We will finalise the National Energy Efficiency Strategy and Action Plan. Draft regulations have already been published for compulsory energy management plans to be put in place by targeted end users.
The SA National Energy Development Institute, Sanedi, continues to play a leading role with respect to a variety of energy-efficiency initiatives. The Cool Surfaces pilot programme, with a particular focus on schools and low-income households, will mobilise our youth to form part of energy-efficiency initiatives.
The Municipal Energy Efficiency and Demand-Side Management Programme will continue. Already, savings to the extent of 500GW hours have been achieved. Light-emitting diode, LED, street-lighting, and the installation of smart meters, water and sewage pumps will be pursued. This incentive scheme has proven to be effective in reducing losses associated with inefficient technologies.
Our focus this year will be on reducing the energy consumption associated with street lighting. We have completed a pilot project with the Nelson Mandela Bay Municipality, and we intend to embark on a national roll-out as a sub-programme of the Municipal Energy Efficiency and Demand-Side Management Programme.
The solar water heater programme will change, effectively from this budget year, with implementation led by the Department of Energy. The planned new contracting model has been submitted for Cabinet approval. In order to drive the localisation effort, the installation programme will be rolled out by local municipalities.
In partnership with the Departments of Labour and Energy and the Water Sector Education and Training Authority, Seta, a comprehensive training programme will be implemented. The Department of Labour has allocated R38 million for this. The Department of Energy has allocated R500 million. We are confident that, once in full implementation mode, additional funding will be solicited from the fiscus.
The Integrated National Electrification Programme is responsible for planning, project management and funding the bulk infrastructure grid and nongrid new connections for households. This programme receives an allocation of R5,7 billion; Eskom and municipalities, R3,6 billion and R2 billion, respectively. We will deliver 280 000 new grid and nongrid connections in this budget cycle.
Biofuels are under way and being discussed.
We call on oil companies to do more in changing the landscape of ownership. I will continue with the rest when I have my last five minutes.
In terms of electricity amendments and Bills, the Electricity Regulation Second Amendment Bill and the National Energy Regulator Amendment Bill will be brought to Parliament. The Independent System and Market Operator Bill will be revised and taken to Cabinet in due course. [Interjections.]
An HON MEMBER: When? When? When?
The MINISTER OF ENERGY: Other Bills that are in process include the Gas Amendment Bill and the Electricity Industry Structure Bill.
The Department of Energy was appropriated R7,4 billion and has spent 84% of the allocated budget. The rest will follow later.
Hon members, I notice there’s a golden crown with my dear friend. I want to tell my dear friend, Van Dalen, my grandchildren no longer wear golden crowns, even at their birthday parties. My grandchildren are three, four and five years old. Minister Van Dalen still wants to wear a golden crown today. [Laughter.] Let him have his moment of glory. [Interjections.]
Mr I M OLLIS: Chairperson, on a point of order ...
The HOUSE CHAIRPERSON (Ms A T Didiza): Hon Minister, can you take your seat?
An HON MEMBER: He should be the Minister!
Mr I M OLLIS: He’s not the Minister, and he’s not your ``friend, Van Dalen’’. He’s the hon member Van Dalen.
The MINISTER OF ENERGY: I just said, ``hon member’’. Thank you!
I wish to thank the Deputy Minister for her tireless efforts and the leadership she gave in the War Room. I wish to thank the Chairperson and members of the Portfolio Committee on Energy for their much-needed advice, as well as for their management and oversight.
The HOUSE CHAIRPERSON (Ms A T Didiza): Hon Minister, your time is up.
The MINISTER OF ENERGY: I would like to thank Minister Brown, before she leaves, for the collective leadership we have been able to have in this field. [Applause.]
The HOUSE CHAIRPERSON (Ms A T Didiza): Thank you.
Seated here, hon Ollis, I have noted that you have been out-manoeuvred after the DA congress. You are the only one I used to hear on my left. Now there are many voices! [Laughter.]
Mr F Z MAJOLA
THE MINISTER OF ENERGY
Mr F Z MAJOLA: Hon Chairperson, Minister, and Deputy Minister of Energy, Minister Brown, hon members, ladies and gentlemen, comrades and friends, the ANC supports this budget of the Department of Energy for 2015-16.
Hon members, this Budget Vote takes place under the shadow of the passing on of Isithwalandwe/Seaparankwe ANC stalwart, Comrade Ruth Segomotsi Mompati in the early hours of 12 May, after a courageous, long battle with illness. Mme Mompati leaves behind a proud legacy of steadfastness, resilience and selflessness in the face of daunting challenges. We, of our generation, commit to continue to walk in her footsteps.
During the 2015 state of the nation address, His Excellency, President Jacob Zuma succinctly summed up the current context when he said:
We meet yet again during a difficult economic climate.
This week the IMF revised down to 3,5%, the GDP growth forecasts for global economic growth in 2015. Our ambition of achieving a growth target of 5% by 2019 is at risk, because of the slow global growth as well as domestic constraints in energy, skills, transport and logistics, amongst others.
He then outlined government’s response in terms of the overarching Nine-Point Plan which, amongst others, sets out the critical tasks and measures needed to tackle the binding constraints of energy supply to put the economy back on a faster growth trajectory and to ignite light at the end of the tunnel for millions of our people.
The spate of load-shedding occurrences have indeed stifled economic activity and caused disruption to people’s lives, but it is also true that cynical political point-scoring and grandstanding from some quarters have saturated public discourse around this matter, while not casting much light in terms of practical measures and solutions. Those of us in this House who are the primary agents and custodians of the democratic and socioeconomic transformation know that we have come this far in the face of massive challenges simply because we have always understood and tackled the challenges in our world as they really are, not as we think or wish they are. [Applause.]
We are confident and we pride ourselves on the knowledge that we are first and foremost practical people with the ultimate historic responsibility for and dedication to changing our country, assured by our experience, love of our people and clarity of our plan. And so, for us, the pressing challenges of the moment are not cause for alarm and despair or even indulgence in idle ideological debates around the future of Eskom. As the ANC we say that Eskom will continue to have a leading and strategic role in the provision of energy, including in future build programmes. [Applause.]
What we know is that the people of our country are only interested in effective implementation of a realistic and sustainable package of measures to address the challenges. The solid ANC government’s track record assures our people that our country is up to the challenge of meeting its electricity requirements, including ensuring a total of 1,4 million new household grid connections by March 2019, 75% of which are in rural areas.
The ANC lekgotla in January this year directed that urgent measures had to be taken to address Eskom’s challenges pertaining to a generation capacity that is increasingly becoming unreliable, a constrained network capacity, and a distribution infrastructure that is interrupted by the imperatives of maintenance and refurbishment.
In spite of these challenges, and against the sweeping current of cynicism and political opportunism, we have seen a steady turnaround in recent months. These positive signals towards a turnaround include a state-owned German bank showing confidence in Eskom with a R4 billion shot in the arm; the rising optimism within Eskom as Medupi slowly inches towards target with the first unit reaching a new output level of 735MW, having run for six days without tripping in the current test phase; and, as announced by Minister Pravin Gordhan last week, progress made by Eskom and the 20 municipalities in finding a win-win solution on arrears.
These positive indicators come on the back of procurement of over 5 000MW from independent power producers, IPPs, using renewable sources, which represent a massive investment of R168 billion in the economy.
The ANC is nothing if not a practical agent of change guided by a sound and concrete plan to meet the challenges of the moment. As our icon, Madiba, in his letter to Adelaide Tambo whilst in prison on Robben Island, taught–
... significant progress is always possible if we ourselves plan every detail of our lives and action, and allow the intervention of fate only on our terms.
In January, the ANC lekgotla deliberated on and endorsed a concrete Five-Point Plan at the centre of which is a strategy of immediate and short-term interventions to stabilise the energy supply. In a nutshell, these interventions are the following.
Eskom would improve its strategic focus regarding maintenance and operational efficiency. This, amongst others, means targeting key plants for maintenance and bringing them back on line and raising the current level of availability from 72% to the target of 80%.
On co-generation, we set out to build on the current 1 390MW supplied to the grid which was facilitated through power purchase agreements, PPAs, between the co-generators and Eskom. Thus, in addition to the extension of the PPAs by another three years, a procurement process would be opened for additional co-generation opportunities, including an additional 1 000MW that is available to be brought online within the next 18 months.
Over the next 36 months, gas to generate electricity of between 2 000MW to 5 000MW will be sourced.
With regard to coal, opportunities for IPPs would be made available to deliver a generation capacity of about 2 400MW.
Other interventions must include utilising untapped Waterberg coal resources to contribute to future generation supply and upgrading the railway link between Waterberg and Mpumalanga.
A focus on demand-side management is crucial, at the centre of which would be engagement between government, Eskom and intensive users to explore further efficiency improvement opportunities.
These are not pipedreams, hon members. They are practical interventions that are actually taking place as we speak. Thus, we welcome the fact that Minister Joemat-Pettersson has announced a further allocation of 6 300MW in renewable energy power. In the interest of economic empowerment and job creation, the Minister has requested that the Small Projects Request for Proposals process be simplified in future, to provide for a less costly bidding process.
We welcome the fact that the Minister has also announced that the department has developed a Small Projects Programme which seeks to procure renewable energy from small-scale IPPs, with projects that are between 1 and 5MW in size.
Regarding petroleum, the challenges are clear. In the first instance, averaging 21 days, the current strategic stocks reserves have been below internationally acceptable norms for a growing economy. There is an urgent need to scale them up to at least 42 days.
Our refining capacity has been outpaced by the ever-growing demand, resulting in a greater reliance on imported finished products.
Therefore, in response to these challenges, the ANC has directed government to implement the following interventions: to organise the lead departments and state-owned companies responsible for the security of supply for petroleum products; to increase government’s participation from the current 5% market share to 25% to 30% in the short to medium term; to build a national oil company that can make a meaningful contribution in the market; to take advantage of the current relatively low prices of crude oil and the abundance of storage capacity to increase storage reserves; and to invest in petroleum infrastructure such as storage tanks, pipelines and terminal facilities. In this regard, the Portfolio Committee on Energy welcomes the news that the Transnet petroleum pipeline between Durban and Gauteng is now complete.
We can only be confident because South Africa is surrounded by gas-rich countries whilst, on the other hand, we have discovered shale gas deposits in our own Karoo region. The Operation Phakisa Ocean Economy initiative, launched last year, promises to unveil more oil and gas resources which, when it comes to pass, will decisively transform the development trajectory and outlook of our country and region.
In the current context of a shortage of electricity supply and the high costs of diesel to run Eskom’s open-cycle combine gas turbine generators, gas presents an opportunity for an urgent intervention in the short- to medium-term.
Therefore, as the ANC, we say that there must be a switch from diesel to gas and, in this regard, government is directed to enter into short- to medium-term strategic partnerships with countries such as Mozambique, Tanzania, Algeria and Nigeria. Similarly, there must be strategic plans to significantly change energy reliance from heating, cooking and transportation to gas.
The government must finalise its work on investigating safe and environmentally friendly ways of exploration and exploitation of shale gas resources. In this regard, we welcome the announcement by Minister Ngoako Ramatlhodi...
The ANC supports the Budget Vote. I thank you. [Time expired.]
Mr I M OLLIS
Mr F Z MAJOLA
Mr I M OLLIS: Chairperson, before I begin, I just want to state - before the ANC jumps up to say that I do not ever attend the energy committee meetings - that I am reading this speech on behalf of the hon Mackay, not that attending your committee would make much difference, of course, because, as we all know, I know at least as much about energy as your Minister. [Interjections.]
Our country is in crisis. In the first 100 days of 2015, South Africa experienced approximately 33 days of blackouts. That sets a new record of shame for the country, exceeding our previous worst performance of 22 days in 2008. While this might sound to some a mere inconvenience, as it actually does to Eskom CEO, Brian Molefe, load shedding is in fact delivering a death blow to our already faltering economy. According to analysts at Deutsche Bank, the impact of load shedding has already shaved 0,4% off South Africa’s gross domestic product, GDP, in the first quarter alone. By the end of this year, that figure could rise to 1,5% of GDP, leaving us with an anemic growth rate of 1.9%. Pathetic! Such a low growth rate is well below the 5% required by your National Development Plan, NDP, to reduce unemployment and meaningfully address extreme poverty experienced by almost half of South Africa’s population. Such a growth rate also makes a mockery of this government’s commitment to economic growth and radical economic transformation.
In light of this existential threat to our nation’s economy, it would be reasonable to expect decisive leadership on the part of the President and his Ministers of Energy and Public Enterprises. Instead, the nation has had to suffer the dithering and ineptitude of two clueless Ministers who have been forced to hand over aspects of their executive authority to the War Room. This is a clear admission that both Ministers are completely out of their depth. So clueless is the hon globetrotting Tina Joemat-Pettersson that, more than a year into the job, she has yet to update and refine the institutional framework for securing and expanding South Africa’s energy mix known as the Integrated Resource Plan, IRP. A strange oversight considering the extent of our energy crisis, wouldn’t you agree, Chairperson?
The absence of the IRP can be compared to knowing that you want to bake a cake but being completely clueless as to the necessary ingredients. How might this be explained? Well, an updated list does exist and it is called the IRP 2013, Minister, and not 2010. The Minister does not like what it says – namely, that it is harsh on nuclear power. So, the Minister has not bothered to submit the updated IRP to Cabinet. That department is rumoured to be preparing a more palatable update 2015, which should raise a few red flags. What standing will this document have if the 2013 one was chucked out the window so easily, or does the Minister simply plan to colour outside of the lines again, as is her wont? Minister, remember the downfall of agriculture and fisheries? Are the fish still keeping office hours? [Laughter.]
On energy sector reform, the Minister’s performance is similarly abysmal. To be fair, it can’t be easy to implement the policy when the ANC talks the National Development Plan but walks the national democratic revolution. Wow! One such example is the shelving of the Independent System and Market Operator Bill or, as she referred to it, the Ismo Bill. The Independent Systems and Market Operator Bill was first approved by the Portfolio Committee on Energy in the Fourth Parliament. It was tasked with allowing private energy producers into the market to introduce much-needed competition. This Bill has become as elusive as Disney’s similarly named lost fish, Nemo.
To point where we can, we must earnestly ask the Minister. Minister, please find Ismo, the original Ismo. Ismo is critical to the long-term alleviation of South Africa’s energy crisis as it will be instrumental in replacing the cronyism and cadre deployment of state monopoly Eskom. Minister, just find Nemo, I mean Ismo. It will achieve this all the while significantly boosting generation capacity, lowering prices of electricity and ensuring that the public does not pay for the capital cost of the build programme but only for the electricity they consume. The Minister has acted with remarkable speed on the new nuclear build programme. She has blocked the IRP 2013 update; turned her back on the department’s recommendation that nuclear be postponed. You heard it this morning in her announcement.
Minister, I just have one question about the Russia nuclear deal. Your party today at 13:00 at the Shimmy Beach Club - who is paying for it? Is it the Russians? Is it Rosatom? Is Mark Lifman suddenly heading into nuclear power provision? Nothing is more damning perhaps than the findings of the International Atomic Energy Agency on South Africa’s nuclear preparedness which finds South Africa deficient in more than 40% of the assessment criteria, strongly indicating that South Africa is simply not ready. Minister, where is the report of the International Atomic Energy Agency on South Africa’s nuclear preparedness? They gave it to South Africa. Have you lost it?
Echoing these findings are the World Association of Nuclear Operators which found the capacity of management staff at Koeberg to be suboptimal and identifying the cash crunch at Eskom as negatively impacting on the long-term nuclear safety on South Africa’s ability to have nuclear power stations. Now the Minister wants to build a nuclear station close to Port Elizabeth. Danny Jordaan might be running for the hills. [Laughter.] This is to say nothing of the capacity constraints being experienced at the National Nuclear Regulator – a body that lacks the requisite skill to oversee just about anything.
In light of these severe challenges, we in the DA find the Minister’s announcement to go ahead with the nuclear build programme to be downright confusing, premature and irresponsible. Perhaps we should remind the Minister that ignoring the facts will not change the facts. The truth is simple. There simply is no real case for expanded massive nuclear capacity in South Africa. We don’t even have the money.
House Chairperson, on the issue of tariff increases, let me simply say this: The DA cannot and will not support above-inflation tariff increases that do nothing more than ravage our economy and ensure that electricity becomes even more unaffordable to the poor. [Applause.]
In closing, let me be unequivocal – the DA is calling for nothing short of the rapid and progressive reform of the energy sector. It is only through real reform that we can ensure that the sector delivers sustainable – did you hear that: ``sustainable’’ - and reliable electricity; relieves the existing fiscal burden faced by the state; and, finally, ensures that electricity is affordable and usable for the millions of South Africans who are poor. I thank you. [Applause.]
Mr M M DLAMINI
Mr I M OLLIS
Mr M M DLAMINI: Hon Chair, hon members, hon guests in the gallery, there is one thing that we know for sure in this world, and it is that this world does not respect three kinds of people: The weak, the lazy and cowards. Unfortunately, those are the characteristics of this current government. It is a government of weak people, a government of lazy thinkers and a government of cowards. Cowards are those who, when they are in power, instead of taking decisions on behalf of the majority of their citizens, they will never take decisions without consulting their colonial and capital masters.
The EFF does not support the Budget Vote of the Department of Energy. This Minister here cannot tell the House with confidence how she is going to ensure that there is continuous supply of electricity, something which is part of her seven key priority areas, because the Minister does not know what is happening at Eskom. [Interjections.] Minister, we cannot even ask you how you are going to ensure that there is effective and efficient energy utilisation because the Minister is not even sure if Eskom is capable of supplying any electricity.
To everyone else, the tariff hike of 25,3% requested by Eskom is sickening and it will be shameful if the National Energy Regulator of South Africa, Nersa, even begins to consider it. It is the poor and the working South Africans who will have to dig deep in their pockets to fund this tariff hike. Load shedding cannot be part of the electricity supply feature. It is misguided and unacceptable for the ANC government to tell that to the nation because this load shedding is due to lack of planning and poor oversight by the ANC government.
Without electricity the government will fail to realise its massive industrialisation. Selling Eskom to white monopoly capital will achieve nothing but end the free electricity grant for the poor and working South Africans while multinational companies like BHP Billiton are guaranteed cut-rate electricity until 2028. Yet they dismally fail to comply with the Mining Charter and that is a clear demonstration of a country that is led by cowards. We have multinational companies who are using South Africa as their playground and they do not even comply with the rules of the country. There is no overlap between the Department of Energy and the Department of Public Enterprises but a lot of confusion and the lack of a clear and coherent policy to deal with the state-owned enterprises.
We are told that Eskom does not have the money to complete the construction of Medupi and Kusile Power Stations. Yet the President, behind this Minister’s back, is busy running around the country signing nuclear deals which will paralyse the state budget. There are so many basic things we can do as a country but, also, there are lots of questions that still need to be answered. Hon Minister, why are we not reducing energy use through energy efficiency measures especially in mining and in manufacturing? Why are we not reducing energy use through energy efficiency measures in homes and large buildings? Minister, why is the government reducing the budget allocated for solar heaters? We want to know why there is so much secrecy around the nuclear deal with Russia.
As long as the ANC government continues to burn coal; damage our environment; contradict the Energy Act; implement sickening tariff hikes and have nuclear deals with corruption written all over them, the EFF will never be convinced to accept anything that comes from this House. The reality is that our President is reported to have lied that before 1994 only 30% of houses had electricity, which is not a fact, because it has been proven that it was 50%.
The truth of the matter, fellow South Africans, is that we are a country that does not have leadership and does not have ... [Interjections.] Hon Chair, those who were wishfully thinking that the EFF would support this Budget Vote were dreaming. [Interjections.] The EFF will never support this Budget Vote. Thank you.
Mr J A ESTERHUIZEN
Mr M M DLAMINI
Mr J A ESTERHUIZEN: Hon Chairperson, before I begin, I would just like to recognise two of my guests in the gallery today - Mr Grant Renecle, the CEO of Combustion Technology, and Mr Malcolm Gessler, consul of the Seychelles government.
I don’t think one could ever underestimate the severity of continued rolling power constraints to the socioeconomic growth in South Africa. The immensity of the impact is just impossible to sugar coat.
Earlier this year, the hon Finance Minister advised this House of his plans to improve Eskom’s balance sheet, and a great deal was riding on Minister Nene’s ability to reassure markets, investors and credit rating agencies that fiscal policy would be put on a sustainable path and that there is a solution on the table to address Eskom’s massive funding gap. Yet, the facts are the facts and they are irrefutable. Eskom’s credit rating is now at junk status and the public and business sector have lost all faith in the management and ability of the power utility to supply the sustained electricity demand in South Africa.
To put it quite simply, Eskom never planned or spent for tomorrow. This crisis has been purely orchestrated through their own incompetence and ineptitude at management level who, by the way, are still paying themselves millions of rands in performance bonuses. In the real world Eskom should be a major net contributor to the fiscus rather than a leech sucking away at the nation’s life blood. Based on the present levels of power generation and a selling price of 74% per kilowatt-hour, revenue is underestimated by 30%, unless Eskom is selling far more discounted power than is publicly acknowledged. Are there more power contracts of the BHP Billiton-style hiding in the woodworks?
Eskom does not overspend; it ruthlessly shatters its budget expenditure ceilings. If Eskom’s application is approved, this would result in an unbelievable 22,27% increase in bulk electricity tariffs in just one financial year, which is over 25% to the consumer.
Minister Nene also warned that a wage increase of more than 1% point above inflation – which is about 6% - would lead to job losses in the energy sector, and this country simply just cannot afford it. Already they demand 15%. The ruling party’s recent out-of-hand dismissal on talks around the privatisation of Eskom is just another bad idea in a very long list of bad ideas. Minister Nene commented yesterday that - I think in Johannesburg – Eskom’s return to full financial and operational sustainability is a top priority. We welcome this.
Although the IFP has no objection to the development of nuclear energy, we should approach this with extreme caution. We need to ask whether spending over R1 trillion on a nuclear programme, which is more than three times the size of Medupi and Kusile combined and yet will deliver the same amount of electricity is wise.
We require an entire rethink of our energy mix and, in this regard, we would like to see greater government support for both privatisation and private-public partnerships in all energy programmes and particularly in the renewable energy sector. The IFP supports the budget. Thank you. [Applause.]
THE DEPUTY MINISTER OF ENERGY
Mr J A ESTERHUIZEN
The DEPUTY MINISTER OF ENERGY: Hon Chairperson of the House and members of the Extended Public Committee; hon Minister of Energy, Tina Joemat-Pettersson; hon chairperson of the Energy portfolio committee, Fikile Majola; hon members of the executive; hon members of the Energy portfolio committee; senior officials of the Department of Energy and of government, leadership of state-owned companies and fellow compatriots, good morning to you all. Let me begin by paying homage to one of our struggle stalwarts, Mme Ruth Mompati, a veteran of the ANC, of the ANC Women’s League, of uMkhonto weSizwe, Parliament and of government. I stand here today as a proud product of her guidance, her leadership and nurturing. She always led by example. Rest in peace Mme Ruth, Mme wa sechaba.
I would like also to take a moment to once again strongly denounce the xenophobic attacks that have taken place in our country against our brothers and sisters. Those acts do not represent us. We are Africans.
The National Development Plan outlines the need for an energy sector that promotes economic growth and development, promotes social equity through expanded access to energy services that are sustainable and contribute to the reduction of pollution and the mitigation of the effects of global climate change. The ANC manifesto identified the access to reliable energy supply, in all its forms, as a priority for this administration.
In his state of the nation address on 12 February, President Zuma said and I quote:
The country is currently experiencing serious energy constraints which are an impediment to economic growth and is a major inconvenience to everyone in the country. Overcoming the challenge is uppermost in our programme. We are doing everything we can to resolve the energy challenge.
Cabinet has moved swiftly and established a War Room, chaired by the Deputy President that oversees the implementation of the Five-Point Plan. The Minister has spoken about this Five-Point Plan strategy which looks at the immediate and short-term interventions to manage electricity supply and demand, and ensure that bottlenecks are tackled. I would, however, like to just take a little moment to focus on the emergency.
South Africa has enough installed generation capacity for all our needs. [Interjections.] However – listen - a sizeable number of megawatts is currently unavailable due to a variety of factors such as unplanned breakdowns, ageing infrastructure, and a poor outage maintenance programme, leading to increased slippages and increasing partial load losses. Eskom is addressing these matters so as to achieve the necessary reserve margins needed to conduct the required maintenance without the need for load shedding. The approach is impacting on the current supply of electricity to various consumers in the short term, but has long-term benefits - are you listening - as it ensures that our plants and generators are properly maintained, predictable and reliable for sustainable energy generation.
Hon members are aware that Eskom currently generates over 95% of our energy, and there can therefore be no solution to our current challenges that does not factor in Eskom. That’s reality. The National Energy Regulator, amongst many other priorities, will also be looking at the determination of the price path for the 2016-17 to 2018-19 years and a possible multiyear price determination – a new one - that should ideally include a price path for municipalities.
Energy is central to our developmental goal of a better quality of life for all. Those with access to affordable modern energy know that it unlocks access to improved health care and education, improved economic opportunities and better, longer quality of life. For those who don’t have access, it is a major constraint to their social and economic development and, as we are all painfully aware, women bear the brunt of this energy poverty. We all know that there’s access to electricity particularly in rural areas – which you wouldn’t know - as well as modern and efficient, heating, lighting and cooking infrastructure. We know that once these have been accessed, trees cease to be cut down for cooking; education and health are enhanced; there’s access to information communications technology, ICT, at our fingertips; security is heightened due to better lighting and the possibility of small enterprise are immediately evident due to possibilities brought about by modern forms of energy.
R4,2 billion has been appropriated for this financial year on the electrification programme, and we are confident of achieving the over 265 000 connections, using both grid and nongrid technologies, within this budget cycle. The nongrid programme is now being considered even for urban areas with a view to increasing the basic electricity services in informal settlements. The first draft of the electrification master plan will be finalised before the end of this year - if you want to know.
In the past three months, together with Eskom, we have crisscrossed the country - we would like you to join us to get some education - going to the most remote of areas, to consult our people about their energy needs and its impact on their lives. We have interacted with residents of Goso Forrest and Ntabankulu, Ulundi, Mtubatuba, Chatty Extension, Mashamba and Mahatlani in Makhado and so on. [Interjections.] They wouldn’t know where this is. Our compatriots have reaffirmed their belief in this government, while not hesitating to tell us of shortcomings in our service delivery. This was a valuable process as it enabled us to provide technical and other support to municipalities to ensure seamless service delivery. We remain determined and committed to reach universal access by 2025, for all our people, including you.
In another community engagement we had with the people of Free State in the Moqhaka Municipality, we experienced first-hand an electricity pilot project generated by fuel cell technology using platinum. Currently, a trial is being run, using the system as a provider of electricity to remote communities where the cost of electrification through an expansion of the national grid may be too expensive or too technically prohibitive. The project has a potential to contribute meaningfully to our electricity needs, especially since our country has large deposits of platinum. We will continue to work with science and technology and other partners, including the Department of Minerals and tertiary institutions, that are collecting and analysing data from this trial site. There have already been innovations and improvements to the supply reliability for the people of Moqhaka.
It is an exciting development that Science and Technology will be rolling out this technology this year to 20 000 schools across the country this financial year. Can you imagine the impact of this on the learners? They will be able to access ICT services, carry out chemical experiments and access technology.
We have a good story to tell. Nuclear energy plays an important role in the energy security of our country and the Nuclear Energy Corporation of South Africa plays a pivotal role in the localisation of our nuclear build programme which is in line with our energy policy. South Africa has been utilising nuclear to produce energy for decades and, in fact, Cape Town is basically powered by nuclear energy.
As we celebrate 50 years of the Safari-1 reactor, we must not lose sight of the fact that this is the Safari-1 that produces isotopes for the diagnosis of cancer. These technologies have also assisted us in cutting the time of diagnosis of Ebola by 75%. That’s nuclear technology.
It has been 20 years since the Beijing conference and Beijing Platform for Action. The case for expanding women’s economic opportunities is becoming increasingly evident. I want to quote a wise elder, the former first President of Zambia, Dr Kenneth Kaunda, who said:
To educate a man is to educate an individual ...
There are many men here.
but to educate a woman is to educate a nation.
As part ... Hon Chairperson, I support the Minister’s Budget Vote. [Time expired.] [Applause.]
Mr M H MATLALA
THE DEPUTY MINISTER OF ENERGY
Mr M H MATLALA: Hon Chair, Minister Joemat-Pettersson; the Deputy Minister, hon Majola; Minister of Tourism members of the portfolio committee; hon members; ladies and gentlemen, and fellow South Africans, dumelang.
Hon Chair, most advanced societies like ours have a period that redefines social relations and the ideals of the nation. South Africa has had two moments that can be classified as colossal moments which have set the trajectory for this nation apart from that of any other nation. We have recently celebrated one in the form of Freedom Day, but most of us should know that, 60 years ago, this nation changed forever in Kliptown. At an event co-ordinated by the ANC, a multiparty society not known to South Africans assembled to draft the edifice of the South Africa we have come to know today.
As we sit here today, each of us is attempting to fill the massive shoes of people like Lionel ``Rusty’’Bernstein and Alan Lipman, whose wife Beata Lipman handwrote the original Freedom Charter, who set aside their privileges and applied their knowledge to change the lives of this great nation’s citizens. We are the true embodiment of ``the people shall govern’’. [Applause.] As elected men and women, our duty is to ensure the people of South Africa enjoy equal rights.
These are some of the core principles that the ANC formulated at the real congress of the people, post-1994. South Africa, as we know it today, is a totally different South Africa. The process of including a marginalized segment of society into the mainstream economy has come with many challenges but also many good stories to tell.
Electrification is certainly one of those stories that have been good to tell but not without its challenges. Many South Africans have witnessed the transformation of South Africa by being beneficiaries of electricity, a commodity which they were deprived of merely because of their race.
An independent study undertaken by the University of Cape Town’s Energy Development Research Centre illustrates this fact as follows: Prior to 1994, less than a third of the population had access to electricity. Only 36% of the population had access to the electricity grid. Over the past 20 years of our democracy, about 20 million households now have access to electricity, 7 million more than in 1994. An additional 1,6 million homes will be connected to the electricity grid over the next five years. We, of the ANC, can proudly say unprecedented progress in delivering electricity to the people of South Africa has been achieved. [Applause.]
They have been made equal through this government ensuring access and connecting them to the electricity grid.
It has now become trite that the expansion of our economy has presented us with the challenge of balancing the expansion of the infrastructure with that of electrification. As a result, we have had shortfalls in power, but let me pause here.
You are here to tackle a very discomforting narrative that has come out of Soweto during the recent protests. In the news and in the media we hear pundits, reporters and commentators pushing a narrative that says the reason why the people of Orlando are protesting is that they do not want to pay for electricity. In other words, these people feel that they are entitled to free electricity. Nothing could be further from the truth. This is something that we hear time and time again - that black people suffer from this disease called entitlement where they march or protest for a correction of something which is not right.
The fact of the matter is that the people of Soweto are not marching for free electricity but for an accurate reading of units that they purchased.
This is something that Eskom addressed through effective communication with the end users of the product. Having said, we need not lose sight of the fact that not everyone has universal access to electricity. We have a backlog that needs to be addressed.
This budget, as presented by the Minister, tackles those problems quite accurately. It makes provision for the fact that municipalities might not have the expertise to effectively plan and implement. It scales down the lead time in the process of implementation and, most importantly, it removes the burden of electrification that relies solely on the current national grid.
These are decisive interventions that will change the lives of many low-cost households in South Africa. As the ANC, we think this is one of those pivotal actions that will help us realise the ideals of the Freedom Charter.
I want to end by quoting none other than Bernstein on what it means to serve the ANC, more aptly for us the electorate. I quote:
We’re uniquely lucky in that we were part of a movement which did change the world in the direction we wished to change it and that we lived to see it.
Let us continue to change South Africa in the direction we wish to see it going by supporting this budget. I thank you. [Applause.]
Ms D CARTER
Mr M H MATLALA
Ms D CARTER: Chairperson, in a recent published article by Ronwald Pressly, published in Noseweek April 2015, he stated, and I quote:
If the cost of electricity continues to rise at the rate of the past few years, by 2030 the average household in South Africa will be paying R100 000 a month just to keep the lights on. The Eskom crisis is not only a critical situation, it is fast on its way to becoming a national catastrophe.
The power utility is already drowning in a tsunami of debt, is in an administrative mess and simply does not have the skills, manpower or the financial skills to recover.
We need to add that it is also drowning in ashes.
Hon Minister, can you possibly explain at the end today why a broad-based black economic empowerment company from KwaZulu-Natal supplies Western Cape power plants with diesel and not a local petrochemical company? Why do we pay a black economic empowerment, BEE, company R16 a litre for diesel, whereas in January the price was only R10, 28 per litre? We have to ask: Is this not another cadre? Who is benefiting at the expense of our citizens? With a budget of R1,7 billion for January, Women of Africa overcharged and gained R400 million in January only through overcharging on diesel prices.
Minister, how much does Eskom pay for coal per ton? Is it true that some of the older long-term coal contracts supply coal at R160 per ton? But then, if it is true, why is it that BEE companies are being paid R460 a ton? Who is benefiting here? This should not be a secret, hon Minister.
Cope will not support any further unaffordable tariff hikes in the light of what we are seeing. I put it to you, Minister, that the lack of maintenance of municipal reticulation infrastructure is a ticking time bomb. The reason is not merely maladministration and the like by the incompetent and dysfunctional municipalities but also because of the flip flopping by Cabinet and those that make policy. Not so long ago, the ANC was pushing for the establishment of Regional Electricity Distributors, Reds, who were to take over the reticulation of electricity from municipalities. Under such circumstances, one must question how much a municipality would be inclined to invest in the maintenance, knowing that such an investment may well be taken away. What’s happened to the Reds, Madam Minister? Has the idea been scrapped? Or is it just pie in the sky?
According to Edwin Koot, CEO of Solarplaza, our country’s solar power potential is enormous. We have superb radiation output. In this regard, we are just behind the Sahara region and certain parts of Australia. We have an abundant resource that lies unexploited.
The development of Powerwall by Tesla is a game changer. Technology is racing ahead to make energy from the sun available round the clock. South Africa should seek to collaborate with Tesla because this technology will have a huge demand in South Africa and Africa. The dream of people to get off the grid is now within reach.
Minister, can you agree that the ruling party sought to profit from its ties with Hitachi and, because of that, we are in the mess that we are in. We have the most stable and reliable solar radiation output in the world. We have ample space and plenty of solar hours. Cope supports the solar route and the foundation of energy supply.
I have said it before and I will say it again: The difference between South Africa and the Titanic is that, unlike South Africa, the Titanic’s lights were on when it sank. If we investigate, I’m sure we will uncover another gate ... [Time expired.]
The TEMPORARY CHAIRPERSON (Mrs Y N Phosa): Thank you, hon member Carter. I will now call on hon member C Doodley. [Interjections.]
Mrs C DUDLEY
Ms D CARTER
Mrs C DUDLEY: That’s the Zulu version! [Laughter.]
South Africa has a clear development plan and growth is the objective. Without the required energy, though, to drive this plan, we will have no hope of accomplishing our goals. The challenge, however, does not stop there, as we will need to do this with as much respect for the environment and quality of life for future generations as possible.
The ACDP welcomes reports that power projects in Southern Africa are on the increase, with new planned capacity coming from thirteen different projects. The majority of these are being undertaken by South Africa and at least five projects are being targeted for commissioning in 2015. Even better news is that an estimated 45% of the planned new capacity for 2015 is expected to come from renewable energy sources.
What doesn’t sit well with us, though, is the pronouncements that the Energy department has committed to building more nuclear power stations.
The ACDP believes this decision, which goes against global trends, is not based on available information and appears to be significantly influenced by the best interests of Russia, China and France rather than South Africa. The ACDP would like to see a greater focus on innovation. Critics say that government seems to only support commercialization of already developed technologies, which is shortsighted considering the many South African inventors who have come up with innovative solutions to existing problems. There are technologies like sunlight for the delivery of liquefied natural gas for our consumption as well as export.
Lastly, the ACDP would like to talk about fracking. We have consistently called on government to pay careful attention to community concerns and recommendations to initiate the necessary environmental assessments which, we note with relief, are now going ahead. However, with fracking-related activities continuing before the relevant assessments have been completed, it does seem likely that minds have been made up, at least to some degree. If South Africa goes ahead, an independent watchdog regulatory body made up of competent people who understand the science of hydraulic fracturing will be essential.
There are claims that shale gases are affordable, abundant and environmentally acceptable, that eight million people without electricity will have power, that just 10% of our reserves would bring 700 000 permanent jobs, and that it would contribute 3,3 to 9% of the GDP. Any government facing the challenges ours does would be tempted to go this route.
There are, however, indications that shale gas is not so affordable, and is not proving to lower global emissions in any hurry. As far as electricity and jobs go, it may or may not be misleading, but gains would come at a cost including air, soil and water pollution, toxic waste damage to roads, displacement of agriculture and health implications. Sadly, this budget does not inspire much-needed confidence and the ACDP does not see it ensuring sustainable solutions. Thank you.
The HOUSE CHAIRPERSON (Ms Y N PHOSA): Thank you, hon member. My apologies for mispronouncing your name earlier on. Thank you, hon member Dudley.
Mr R T MAVUNDA
Mrs C DUDLEY
Ms R T MAVUNDA: Hon House Chair, hon Minister and Deputy Minister, hon members, ladies and gentlemen, i mixo lowunene [It is a very good morning].
The ANC’s key commitment is to move South Africa forward by radically transforming our economy for the beneficiation of all South Africans. The Department of Energy is asked to provide adequate and affordable energy sources to the people of South Africa at a reasonable cost to the end-users.
Our 2014 election manifesto states that government of the ANC will use solar and wind energy to fit into the electricity grid to increase our generation capacity and promote environmental sustainability. Furthermore, hydroelectric energy will be secured domestically and regionally for the national grid. A further 1,3 million homes will be installed with solar water heaters, bringing the total to 1,7 million houses and covering more than 7 million South Africans.
The radical second phase of our transition must bring about total economic emancipation for all our people. For the above to be achieved, the energy sector must anchor our vision and be the foundation that builds an inclusive economy that creates decent work.
The Working for Energy projects initiated by the department has seen some successes which can be pointed out as follows. There is a partnership between the SA National Energy Development Institute, Sanedi - which is the Department of Energy’s entity - with the eThekwini metro. The two have developed a framework for the renewable energy hub that will see renewable energy technologists being deployed in the entire province of KwaZulu-Natal. The first phase of the development of this hub will supply electricity to the KwaMashu waste water treatment plant. This project is intended to produce about 2 megawatts of power from the sewage. This is the government of the ANC in action and government at work.
Hi yisa emahlweni hi karhi hi twisisa leswaku mbyana yi vukula movha lowu fambaka. [Va phokotela.] [We will continue whilst taking cognizance of the fact that the opposition parties criticize us for delivering services to the people.] [Applause.]]
In the Northern Cape, two solar power plants located in Priska and De Aar, are two very successful projects which have been delivered by this administration of His Excellency J G Zuma and his collective. The above projects are examples of the department at work and the government that is in touch with its people. The time for words is over and now is the time for action.
Hakunene mitirho ya vulavula. Yi vulavula hi ririmi leri twisisiwaka hi mani na mani. Hina a hi fani na vona. Hi hambane kule na vona. Xa vona i ku vulavula kambe mitirho ku hava. (Translation of Xitsonga paragraph follows.)
[Indeed actions speak louder than words. They articulate in a language that is understood by everyone. We are not like them. We differ significantly from them. What they do is to criticize, but there are no actions.]
[Interjections.] Hon members, I think you must listen.
Energy is one of the key elements in the production process and the lack thereof will have serious negative effects on our economic growth. South Africa’s economic performance over the past decade has resulted in a constrained supply of energy sources. [Interjections.]
Listen to this one: In January 2015, the national executive committee, NEC, of the ANC lekgotla articulated that energy remains a constraint and continues to have a major impact on economic growth and investment.
This budget must work to our advantage and make it possible for our energy hub and for our economy to show positive spin-offs and foster growth. By nature the distribution of the independent power producers, IPPs, depends on the location where the renewable energy resources offer the most potential for that particular technology. As a result, the IPPs are spread throughout the country according to the relevant sources. For example, we have solar energy technology in the Northern Cape where you have the most sun, and wind energy technology in the Western Cape along the coast.
If the human race has not advanced to the point where we can put aside immediate self-gratification for the larger societal good and our own future, then we shall perish together as a poor nation. We should take a moment and go outside the comfortable environment we are in in this House and examine the have-nots or less privileged areas or townships and rural villages, especially here in the Western Cape.
South Africa belongs to all of us. When we achieve, we do so as a nation. That is why the ANC is working together with all South Africans to do more for the country. Together we move South Africa forward.
Ha khensa, inkomu, khanimamba! [Va phokotela.] [Thank you. We thank you. [Applause.]]
Mr P VAN DALEN
Mr R T MAVUNDA
Mr P VAN DALEN: Hon House Chairperson, I rise today to tell you that we need to be honest with all South Africans about the energy crisis. We have seen that the poor people of Soweto are being punished for people who are, on the other hand, hugely benefiting from this energy crisis.
I rise today to tell you that there are people and institutions that are keeping our country hostage. There are people who have become overnight billionaires and companies that are making billions in the energy sector while ordinary people in Soweto and other areas in the country are now suffering the brunt of these ridiculous tariff increases and enrichment schemes. South African simply cannot afford these exorbitant prices for electricity.
Let me say that the following people and institutions are hugely benefiting from coal. Coal is to South Africa what oil is to the Middle East. Eskom’s power is reliant on 85% of our coal. We need to sort out our coal industry. Unfortunately, we cannot because the first beneficiary is the hon Cyril Ramaphosa, through his BEE Company Shanduka. Shanduka has over the years become the biggest owner of coal mines. The crisis we are facing today is because of his, until recent, control of the coal industry over the years.
Shanduka was the front runner in terms of coal production, producing 50% of the junior mining sector producer market shares. Isn’t it strange that hon Ramaphosa is now leading the War Room on energy? We know why he is protecting his interests and the interests of Shanduka and Glencore in the coal industry. We know his track record with Lonmin and the blood bath in Marikana, and we cannot have confidence in him in the War Room. There exists a huge conflict of interest right there. We want the special pricing agreements for coal between Shanduka, Glencore and Eskom to be out in the open. Transparency in his dealings with Glencore will help the people of Soweto not to suffer again.
In the 1870s there was a man called Sammy Marks who out of obscurity became the unknown king of coal. Today I crown the hon Ramaphosa South Africa’s undisputed king of coal. The current king of coal has made huge profit out of this country’s energy emergency and the misery of the poor. I think it would be prudent to ask him exactly how much of the 300% increases we experienced over the last six years went to Shanduka and Glencore. We hope that the king of coal will be part of the independent inquiry into the mismanagement and failure of Eskom to supply cheap and reliable electricity. If Glencore is there for South Africa, they need to be open and transparent to all of the people of South Africa.
In this crisis we must look at our immediate needs. We need to look at sectors that are not profitable, are energy guzzlers, contributing the least to gross domestic product, GDP, and are getting electricity at below the cost of generation. Surely this makes sense. We need to relook the secret special pricing agreement that was signed and our so-called legacy contracts. These are contracts that are long term and not governed by the National Electricity Regulator of SA, Nersa, price increases. The prices do not fluctuate with the increase like ours, but are coupled to the aluminium spot price. So, while we have been paying 300% more for electricity in the past six years, their prices have not risen significantly and they are still paying between 12 and 20 cents a kilowatt per hour. You and I, the domestic consumers that only use 25% of the generated electricity, pay R1,60 a kilo watt per hour. That is 800% more than BHP Billiton pay. They are also not paying the environmental levy on carbon tax of five cents per kilo hour like everybody else. We need to look at the value add and make hard choices for the benefit and survival of this country.
With regard to the economy and jobs, nobody will benefit if we have blackouts and the whole network collapses. We need to make sure that no jobs are lost and the industry is fairly reimbursed for their loss of profit.
We need to take a hard look at our coal addiction and ask ourselves why we are so stubborn on supporting an industry that is killing us slowly. We know that we are running out of coal at Mpumalanga’s 12 sister power stations. [Interjections.] These stations have been run too hard and have depleted their lifetime coal stocks. Coal will have to be secured from Waterberg but it is 600 kilometres away. There is no railway line, and trucking it in will cause chaos on already congested roads. Technology is fast changing and China has already started converting their coal fire power stations to gas. These twelve Mpumalanga power stations are close to gas pipelines and Sasol. Why are we not looking at possibilities of retrofitting and converting so they burn a much cleaner energy?
In closing, when we talk energy and electricity we are talking about the blood that makes this economy run and when we talk about power stations we talk about the heart of this country ... the heart of the economy. [Interjections.] Without it we will not grow a healthy body and we will stay sick. We will shed more jobs and become poorer every day while load shedding is implemented. Just raising the price of coal is not going to cure the problem; I submit that we need to start thinking pragmatically and come up with solutions that will take us forward. We need to find the right medicine for this sick country. Thank you. [Applause.] [Interjections.]
House Chairperson, can I make sure that you give this to the hon Ramaphosa, please?
The TEMPORARY CHAIRPERSON (Mrs Y N Phosa): Hon member, your time is up.
Mr P VAN DALEN: Can you give it to the hon Ramaphosa.
The TEMPORARY CHAIRPERSON (Mrs Y N Phosa): Your time is up. [Interjections.]
Hon member, before I allow the next speaker to speak ... [Interjections.]Order! Hon member, I would like to bring to your attention that you have made serious allegations about another member of the House and that is seen as improper conduct. I am going to request that if you wish to bring this allegation to the House, you can bring it in terms of the ...
Mr J R B LORIMER: Madam Chair, on a point of order: What the hon member said ...
The TEMPORARY CHAIRPERSON (Mrs Y N Phosa): Excuse me, hon member; you are out of order. I am still in the Chair and when I finish you can rise. [Interjections.]
Now, if the member wishes to bring these allegations to the House, the member may do so by submission of a substantive motion to the House. Hon member, you may rise. [Interjections.]
Mr J R B LORIMER: Madam Chair, on a point of order: What the hon member has said is commonly held knowledge, in that I did not hear any allegations as you call them that are already not in the common space.
The TEMPORARY CHAIRPERSON (Mrs Y N Phosa): Hon member, I think you are also out of order. You are rising to give me your opinion. I have made a ruling, thank you very much. We may now proceed with the debate. [Interjections.]
Mr J R B LORIMER: Madam Chair, with respect, I do believe that you are incorrect.
The TEMPORARY CHAIRPERSON (Mrs Y N Phosa): Excuse me, hon member. What you are doing is not parliamentary. [Interjections.] I have made a ruling so that is not parliamentary. Let’s be parliamentary and maintain the order in the House. [Interjections.] Hon member, you may come in.
The CHIEF WHIP OF THE OPPOSITION: Madam Chair, on a point of order: I respect what you are saying. However, I would like to equally and respectfully draw your attention to the judgment recently in the Cape High Court by hon Justice Bozalek which guaranteed members of this House freedom of speech. [Interjections.] He made a ruling against the presiding officer for comments made by the hon Malema in the House. I would ask that, before you make a considered ruling on this, you do take into account Justice Bozalek comments and judgment on that particular matter. [Applause.]
The TEMPORARY CHAIRPERSON (Mrs Y N Phosa): Hon members, you are allowed freedom of speech but that must be done within the parameters of the Rules of this House. [Applause.] Hon members, may we proceed with the debate. [Interjections.]
Mr Z M D MANDELA: Hon Chair, on a point of order ...
The CHIEF WHIP OF THE MAJORITY PARTY: On a point of order, hon Chair.
The TEMPORARY HOUSE CHAIRPERSON (Mrs Y N Phosa): Hon member, you may speak.
The CHIEF WHIP OF THE MAJORITY PARTY: I can’t speak after you have already ruled but the hon member the Chief Whip of the DA is wrong. The Rules accepted by all of us stipulate that after the ruling has been made, if any member is prejudiced, they can appeal to the Rules Committee, and not challenge the ruling.
The TEMPORARY CHAIRPERSON (Mrs Y N Phosa): Thank you, hon Chief Whip. May we proceed with the debate.
The CHIEF WHIP OF THE OPPOSITION: Hon Chair, on a point of order ...
The TEMPORARY CHAIRPERSON (Mrs Y N Phosa): What is your point of order?
The CHIEF WHIP OF THE OPPOSITION: It’s important for clarity’s sake, Madam Presiding Officer, that ... [Interjections.] I didn’t hear you make a ruling. What I heard you say was to issue a warning to a member that if they wanted to make those allegations, they had to bring this allegation as a substantive motion. I didn’t hear you make a ruling that what the member said was unparliamentary. Therefore, I am not challenging your ruling. The only point I have made, ...
An HON MEMBER: Where were you?
The CHIEF WHIP OF THE OPPOSITION: very specifically, is that if you are going to make a considered ruling, my only request was that you bear in mind what Justice Bozalek had ruled in the Cape High Court.
The TEMPORARY CHAIRPERSON (Mrs Y N Phosa): I have already made a ruling on this matter. I will not repeat the ruling, so members must be very observant and listen carefully. May we proceed with the debate.
Mr Z M D MANDELA: Hon Chair, on a point of order: Can you request the hon member to remove that materialistic object from the podium? Thank you. [Laughter.]
The TEMPORARY CHAIRPERSON (Mrs Y N Phosa): Hon member, I guess it is unparliamentary to bring objects and leave them at the podium. Hon member, will you please remove the ...Thank you; thank you very much. [Interjections.] Shall we now proceed with the debate? [Interjections.] Order! Order! You may proceed.
Ms Z C FAKU
Mr P VAN DALEN
Ms Z C FAKU: Hon Chairperson; Minister of Energy, hon Joemat-Pettersson; Deputy Minister of Energy, hon Thembi Majola; members of the executive; hon members; senior officials of the department; distinguished guests, and ladies and gentlemen, the ANC’s economic transformation vision rests on the Freedom Charter’s clarion call that ``The People Shall Share in the Country’s Wealth’’. The intention therefore is to achieve the key strategic goal of placing the economy on a new job-creating and equitable growth path in the context of the ANC’s 2007 52nd Polokwane National Conference’s resolution on economic transformation.
This resolution spoke to creating a democratic state that must ensure that our national resource endowments, including land, water, minerals and marine resources, are exploited to effectively maximise the growth, development and employment potential embedded in such national assets, and not purely for profit maximisation.
The petroleum industry has great influence on all aspects of our society, namely, social, political and economic. Within the context of a democratic developmental state, the petroleum industry can also be the basis for the industrialisation of our country, job creation, poverty alleviation, and a significant improvement in the lives of all the people.
The petroleum sector globally has had to face major challenges in the past 12 months. While motorists were smiling all the way to the pumps, the same could not be said about the producers of the petroleum products. We know that, in part, this was a result of a strategy pursued by one of the major producing countries to deal a blow to the producers of shale gas and shale oil.
We want to acknowledge the fact that despite the steep decrease in oil prices, the petroleum sector in South Africa kept the wheels of the economy turning. Even when there was an increase in diesel demand, the petroleum sector was able to adjust and cater for the additional demand. This happened under the stewardship of the department. We are also aware that in this tough climate some investments were made in the country’s distribution infrastructure by new players in the sector. These investments will, amongst others, enhance security of supply. We acknowledge that there are flashing lights ahead in the sector and would like to call upon the department to be decisive in proactively preventing the emerging challenges from graduating into crises.
Equally, the retail sector was able to keep the pumps flowing and was able to sustain the all-important 70 000 jobs in the petroleum retail sector. We welcome the announcement of the Fuel Quality Monitoring Programme which will involve taking samples at service stations to ensure that we are all paying for what is displayed. We trust that this programme will reach even the most remote areas of our country. Siyaqhuba. [We are moving forward.]
Even as we applaud the good performance record of the petroleum sector in the past year, we remain unconvinced about their commitment to meaningful transformation in the retail level. We hear about efforts by companies such as Total SA to empower women in the retail space and wonder why others cannot embark upon similar transformative programmes. We will be keeping a close eye on this matter and the department needs to be more robust in its approach on this matter.
It is indeed pleasing to see the commitment of the Central Energy Fund, CEF, Group to women’s empowerment. The CEF Group is increasing the number of people with disabilities in the workforce and is contributing towards the growth and sustainability of local enterprises and suppliers through support development initiatives and preferential procurement for black economic empowerment, BEE, companies. In the 2014-15 financial year, about 35% of promotions were women. An amount of R9,1 billion was spent on procurement from BEE companies, and 2,3% of the total staff complement is now made up of people with disabilities. Significant progress is being made in regard to supplier development, especially in the Mossel Bay area.
The CEF Group’s plan is that 50% of all vacancies at top senior management level will be filled by women; 30% of all vacancies at professional level will be filled by youth and 2% of vacant posts will be filled by people with disabilities across the group during the 2015-16 financial year. Expenditure to BEE companies will increase to about R10 billion, and R20 million will be spent on local enterprise and supplier development.
The restructuring of the Central Energy Fund Group and review of the subsidiaries is substantially complete and should be finalised in the current financial year. The CEF Group, through the Clean Energy Division, has thus far provided extensive technical support to the Department of Energy in putting together the biofuels strategy and this will continue until this is concluded. We are aware that the outstanding matters relate to feedstock and financial restructuring and its implications. These matters will be concluded shortly.
Our country currently has limited oil and gas reserves and the demand for liquid fuels exceeds domestic supply. The refineries alone are not able to meet the demand and, as such, petrol and diesel are increasingly imported. This is not sustainable and the department should accelerate the process aimed at arriving at a decision to invest in new refinery capacity. In terms of the NDP this could be an expansion of the existing refinery and the construction of a new one. The export of petroleum products to countries in the region such as Botswana, Namibia, Swaziland and Lesotho talks to a need to integrate approaches in these countries.
We applaud the increase in crude oil imported from the African continent. The department has informed us that 47% of South Africa’s crude oil requirements were met by African countries, with Nigeria accounting for the bulk of this imported crude oil. We also look forward to a resumption of the crude oil imports from the Islamic Republic of Iran, and we welcome the interactions led by the Minister of International Relations and Co-operation in that country. We also welcome the announcement by the Minister of the Environmental Affairs in the study that, we believe, will ultimately lead to exploitation of the shale gas resources of our country. Siyaqhuba. [We are moving forward.]
When hon Ollis was at this podium he talked about darkness, because that is all he knows. He is a prophet of doom. They are allergic to nuclear energy even though Cape Town is powered by nuclear energy provided by Koeberg Nuclear Power Station. [Interjections.]
The DA is obsessed with the 2013 Integrated Resource Plan, IRP, which does not even exist. Hon Lamina, shame! I think he needs to submit his speech to the Department of Public Enterprise and Minerals, because he was not talking to the Department of Energy. I think he must afford himself a chance to participate in our committee and learn because he ... [Interjections.] The hon member from the EFF who was participating in the committee absconded ... [Interjections.] ... All he does is come to this House and shout out points of orders at the Presiding Officers. They do not come to the committee to participate. The ANC supports the budget. [Applause.]
Ms Z C FAKU
THE MINISTER OF ENERGY
THE MINISTER OF ENERGY: Hon Madam Chairperson, hon members, I would like to invite the hon member Pieter Van Dalen to my grandchild’s kindergarten party. [Laughter.] He can arrive with his crown and I shall gladly pay him as the clown. Hon member Van Dalen, please, next time, come to the budget of the Department of Energy and not to the budget of the Department of Public Enterprises. Public entity Eskom reports to Public Enterprises and not to Energy.
Hon members, while in the process of reviving the Independent System and Market Operator Bill, Ismo, we have ensured that private sector participation in the energy sector is not constrained. The success of the flagship Independent Power Producers, IPP, programme is tangible proof that we have invited the private sector to participate. The upgraded Integrated Resource Plan, IRP, 2015 will be released in 2015 and not in 2013; 2013 has passed.
Who is paying for our dinner? You are. The EFF hardly attends committee meetings, so please do. Hon member Van Dalen, we will then also able to discuss with you.
The following members will constitute the Inaugural Ministerial Advisory Council on Energy: Dr Abedian, Ms Van Tonder, Dr Govender, Ms Francis, Ms Geen, Professor van Dyk, Professor Eberhard, Professor Lloyd, Ms Martin, Mr Bischof-Niemz, Mr De Beer, Nteo, Mahlatsi, Manamela, Mowzer, Ndebele, Mkontwana, Morgan, Van der Berg , Muzenda , Kuni, William Wright, Forlee, Rustomjee, Xate, Kemm, Kapdi, Johnson, Zungu, Nyker - different areas; all the different areas. Don’t worry, they will advise you - Fakude, Makhubela, Xia, Chili, Statham, Chown, Levington, Fakir, Moloyi and Olagunju. We wish them well in this enormous task.
South Africa will host the International Renewable Energy Conference from 3 - 7 October 2015 in Cape Town, led by the SA National Energy Development Institute, or Sanedi, with the Renewable Energy Policy Network for the 21st Century, REN21. Preparations for this conference are well under way.
This is not a kindergarten party, hon Van Dalen. Don’t come with your crown. Leave the hon Deputy President alone and come to host this landmark conference for the first time. We expect more than 6 000 delegates, so please don’t embarrass us. This number includes more than 100 Ministers. Please don’t come and embarrass our country. [Interjections.] We want to encourage ...
The TEMPORARY CHAIRPERSON (Mrs Y N Phosa): Hon members, may we allow the member to be heard.
The MINISTER OF ENERGY: Hon Chairperson, members of the Portfolio Committee on Energy, thank you very much for your much-needed advice, as well as your management on oversight of the work you do. Thank you for your oversight.
Our appreciation goes to Minister Hanekom for being here and other colleagues in the energy space, in the energy Inter-Ministerial Committee, IMC, and in the energy War Room for their collective leadership in addressing this mammoth challenge.
I wish to thank Team Energy for the hard work under trying and difficult circumstances - Dr Barnard, our SOEs, chairpersons and CEOs. I wish to thank Ms Nompi Majola for allowing her mother to be selfless and entirely part of this job, and her - my Deputy Minister’s - partner. Jamilla Pettersson, thank you very much for sacrificing your time because family time is our time as a country.
I wish to commend the 2015-16 Budget Vote of the Department of Energy to the nation, to this House and to all of us. Thank you. Ke a leboga. Enkosi kakhulu. Baie dankie. [Applause.]
The TEMPORARY CHAIRPERSON (Mrs Y N Phosa): Thank you, hon Minister.
The TEMPORARY CHAIRPERSON (Mrs Y N Phosa): This is a reminder that the debates on the justice and constitutional development and defence and military veterans Budget Votes will take place at 14h00 in the National Assembly and Old Assembly Chambers respectively.
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