Chairperson, Ministers, hon members, exactly a year ago today, Parliament approved the first budget of the Department of Energy as a stand-alone entity. In supporting the budget, I declared, among other issues that I raised, the following:
The DA has already made the point that the department's budget is quite a stretch and we have welcomed the commitment by senior managers to do more with less, to meet targets and deadlines. We shall be watching that all the commitments are met in the interest of energy security and sustainability for all the people of South Africa.
Chairperson, I am encouraged to say that the faith I placed in the senior staff of the Department of Energy to do more with less, was not misplaced. At the time, the staffing situation in the department was a matter of great concern, due to a number of vacant and unfunded positions. The situation is getting better.
The approved structure of the department was 925 posts, but due to a lack of funding, only 474 posts could be filled in 2010-2011. This number is expected to increase to 694 over the Medium-Term Expenditure Framework period. While this is encouraging, it still leaves a shortfall of 231 vacancies to be filled. This means that the department must continue to do more with less.
However, while this commitment is commendable, these staff shortages could have a negative impact on the department's ability to deliver on its mandate if these shortages persist. It is important that vacancies should be filled with deliberate speed particularly in those areas that require appropriately skilled personnel.
It is also heartening to note that, in response to a call by government to the various departments to trim their budgets in the face of severe pressures on the economy, the Department of Energy has identified efficiency savings of R23,4 million in 2011-2012, R53,2 million in 2012- 2013 and R56,2 million in 2013-2014.
Over the medium term, departmental spending is projected to decrease from R5,6 billion in 2011-12 to R4,3 billion in 2013-14. These savings, says the department, will be realised by implementing cost-effective measures that reduce expenditure on travel, consulting services and revenue and facility hire. These are big numbers and the department should be encouraged to ensure that these savings are realised. This intervention calls for stringent oversight and inspection of the department and the department must ensure that it has the capacity to be effective. However, while one is pleased about this exercise, one cannot but wonder about the apparent wastage that has been embedded in unnecessary expenditure that could have been avoided.
Some good could come out of this if with this exercise the savings were used to fill the critical vacancies. Other savings will come from a decrease in transfer payments to energy distribution industry holdings, the demand-side management programme and funding of the Transnet petroleum pipeline. While we welcome the end of transfers to Transnet pipelines, stinting on the demand side management programme could be counterproductive.
The roll-out of compact fluorescent lamps should be sustained and intensified. This should also be the case with the Solar Water Heating programme, and I take note of what the Minister has said. With regard to the solar water heating programme, I remain concerned - despite the assurances by the Minister to the contrary - that the rate at which the programme is unfolding, the department will not meet its target of one million units by 2014. Cost has been mentioned as an inhibiting factor, despite significant subsidies that are being provided.
Shutting down Electricity Distribution Industry Holdings, and scrapping the ill-conceived Constitution Seventeenth Amendment Bill, could not have come a day too soon. EDI Holdings (Pty) Limited was incorporated as a public entity in 2003, to facilitate the consolidation of 187 municipalities and Eskom electricity distributors into six regional electricity distributors, generally referred to as regional electricity distributors, Reds. Its purpose was to facilitate the provision of affordable, reliable and sustainable electricity distribution.
Millions of rands were sunk into this project during the seven years of its existence. For instance, just between financial years 2007-08 and 2010-11, expenditure grew from R97,3 million to R201 million. Clearly, creating and trying to sustain EDI Holdings in the face of strong opposition from various quarters, including the DA, was a very costly exercise.
This wastage is felt even more, since it comes on the heels of the R9 billion that went down the drain because of another failed experiment: the Pebble Bed Modular Reactor nuclear fuel plant that was scrapped last year. Minister, your department has now taken over the programmes previously executed by EDI Holdings. The company had a staff complement of 102, of which 13 were at board level and 33 were professionals. What will become of the company's assets, including the employees?
We trust that those with appropriate skills will be absorbed into the department's personnel structure to fill the critical vacancies that I have referred to earlier.
The main purpose of the department's national electrification programme is to oversee the planning, funding and implementation of the Integrated National Electricity Programme in order to ensure universal access to electricity and an effective and efficient electricity distribution industry, capable of providing affordable electricity to consumers.
The latter objective is being put under severe threat as the price of electricity continues to escalate year on year. It plunges many residents, particularly the poorer communities, back into darkness, as electricity becomes too expensive for them; notwithstanding the monthly free basic electricity to which they are entitled.
Need I remind this House that the second of the latest three increases for Eskom, approved by the National Energy Regulator South Africa, Nersa, came into effect on 1 April? The municipalities will be implementing this increase, plus their own mark-ups from 1 July.
This 25,7% increase comes on the back of several steep consecutive increases in recent years: 27,5% in 2008, 33,3% in 2009 and 25,8% in 2010. The latest hike of 25,5% in this cycle is due on 1 April 2012. This is an increase of a whopping 112,3% in just four years!
I draw the attention of this House to these steep increases because I know several families in my constituency have regressed to candles, wood and paraffin stoves since their electricity was cut off because they could not pay their accounts.
One such family in Attridgeville has been without electricity for more than two years. Also threatening the universal access programme are the recent strikes at Eskom's Medupi Power Station, which is being built in Lephalale.
Eskom's management has been good in keeping us informed about the developments there, and we thank them for it. However, these strikes must be resolved speedily, as protracted delays in construction could derail the switch-on date at a very high cost to Eskom and the South African taxpayer.
Of course, at this point, we have to ask ourselves a question: How much will Chancellor House extract from this kind of thing? We need to be aware of that.
The switch-on date for Medupi is due at the end of 2012. The completion of Medupi on time and within budget is crucial, given the pressures on the national grid with its stressed reserve margin. Eskom should also make sure that incidents such as the one at Duvha Power Station in Mpumalanga that knocked out 600 MW from the national grid do not recur.
A major item in the Electricity Integrated Resource Plan 2010, to which the Minister has referred, commonly referred to as IRP2 and recently approved by the Cabinet, is the decision to add 9 600 MW to the national grid, generated from nuclear power during the next 20 years.
The first of the three twin-set units is planned for switch-on in 2023, as you heard the Minister say. A serious concern about the planned nuclear builds is that, while the consultation process leading to the approval of IRP2 was well canvassed with many stakeholders taking part, the department does not seem to be playing open cards with South Africa regarding the location of the proposed nuclear plants.
There is growing agitation and frustration, as emotions rise among communities, where these plants could be situated. According to one report, possible sites include Duynefontein, adjacent to Koeberg; Bantamsklip on the Southern Cape coast; and Thuyspunt on the Eastern Cape coast between Oyster Bay and St Francis Bay.
Many believe that Thuyspunt has already been selected as a site for the first plant, because of an apparent higher level of activity noticed at the location. Can the Minister confirm that Thuyspunt has been selected as a site for Nuclear 1, the first twin-set unit, followed by Nuclear 2 at Bantamsklip, with the second twin-set?
What is the estimated cost of the build? Where will the money come from? Given the notoriety of the nuclear industry regarding corruption and cost overruns, could the government be setting itself up for another arms-deal- type scenario, but on a much bigger scale? Speculation is that the costs of the whole build could be as much as R1 trillion.
Minister, I note the points you made about Fukushima and I agree with you. Indeed, I believe that in the wake of the nuclear disaster at Fukushima plant, Japan, South Africa needs to approach the proposed nuclear build with great circumspection.
One way of doing so is to engage stakeholders transparently on this controversial and highly emotional subject. Time is of the essence, given the long lead time required to build a nuclear plant.
South Africa has committed to do its fair share in the global efforts to reduce greenhouse gases spewed into the atmosphere. In this regard, the government has set a target to produce 10 000 gigawatt hours of electricity from renewable sources, mainly wind and solar, by 2013.
Some of the work has been done to assess the production capacity of Independent Power Producers, IPPs, in the country. The National Energy Regulator of South Africa has also determined the renewable energy feed-in tariffs for the industry. Work has also been done - as you have heard the Minister say - on the independent sales and marketing operator, to facilitate the participation in and contribution of IPPs to the national electricity grid.
What is needed now is tangible action and progress in the wind and solar energy area, if we are to meet the 2013 target. For instance, according to a report by Mainstream Renewable Power South Africa, to achieve this target the country needs about 4 000 MW of wind power a year to be built over the next four years. As matters stand, I am not confident that we can achieve this goal.
Let me finish by reminding South Africa that earlier this year Eskom thanked the people of South Africa for saving 1 800 MW of electricity by replacing incandescent bulbs with 43,5 million compact fluorescent lamps. This is one of the best examples we have.
It was a massive collective effort and a great success. The power saved was equal to the electricity needed by a city the size of Durban. We need to build on this success and continue to save electricity. Thank you. [Applause.]
Chair, I am here to say that we support the Budget Vote and also the Freedom Charter. [Laughter.] This year, we debate once again the issue of energy or, rather, the shortage of it in our country and unfortunately, Minister, we have to say that there is not much to celebrate if you compare it to where we were last year.
First of all, the facilitation of the participation of Independent Power Producers, IPPs, in producing electricity continues to move at a pace that is probably slower than the electrification of the former Soviet Union.
Secondly, the electrification backlog, as reported at the end of December last year, was still between 25% and 30% or 3,3 million households. Although the department projected that we were to complete this by the end of last year, it is now the year 2011, and we still have not met those targets. The risks to timelines and the schedules of the build programme are still not overcome. Medupi is behind schedule by approximately one year. The government strategy for promoting the use of renewable resources through departmental-funded projects and the private sector is no more a reality than it was last year.
The government has stated that this policy is central to its creation strategy in the New Growth Path. There is no evidence, Minister, that your government is taking this policy seriously.
Solar water heater installations continue to be rolled out at a pace that will ensure that only by the year 2361 will most South Africans have solar heated water. This is happening in a country with an abundance of free, clean, publicly owned sunshine! The so-called mass roll-out of solar water heaters is hardly that. Minister, you yourself said the figure, of 115 000 since 2008 is simply unacceptable.
The country is nowhere near achieving the 10 000 gigawatt per hour generation from clean energy sources. You said yourself, Minister, this year at a conference on renewable energy that less than 10% of the 2013 goal has been achieved. There are problems with the Transnet multiproduct pipeline and the policy for the national strategic fuel stock, and I could go on and on, but I don't have enough time.
Once again, the same as last year and the year before, we are here to say the following. End the stranglehold that Eskom and private monopolies that produce coal have on the generation of electricity.
Deregulate the production of electricity and remove the remaining hurdles such as the dysfunctional refit so that IPPs can produce the energy we all need; and put a more reasonable financing mechanism in place for households and enterprises to use solar and wind energy potential. In fact, here is a radical idea: Make them all potential generators of energy. Finally, get your department to work.
Albert Einstein, a person who was quite familiar with energy, and someone who I would like to dedicate this speech to today, once said that insanity is when one repeats the same action over and over again, each time expecting a different result - or words to that effect. This annual debate has begun to take on that character. There is a movie called Groundhog Day that you should go and watch, Minister. [Laughter.]
The consumers in our country deserve better because all of them, with few exceptions, pay for their electricity, and so do the future generations of our country. If we come back here next year again to repeat the same issues I, for one, Minister, am going to ask that you and the officials in your department all undergo some kind of medical or psychiatric examination. [Laughter.]
What about you?
I will be happy to go there as well, because it is true that I keep coming back here year after year, making the same speech. I am happy to participate. If we are all found to be insane, Minister, please, can we all be committed to some institution where we can do that without harming the public out there? [Laughter.]
Then we can do this same thing over and over again, because, frankly speaking, Minister, that is the state in which things are. I say that, knowing that you have tried harder than anyone I have ever seen in your office to change this. Clearly what we are doing is not having the effect that we want it to. I think it is time for a radical shift, and I really think that if you do that, you will have the support of everyone.
The department must get on with doing what is really essentially a very simple thing. It must facilitate the exploitation of the abundant natural resources that we have, as a country, and that we have been blessed with to provide for the energy needs of our people. I am not asking you to vote for another political party, Minister. I am asking you to change your policies. [Interjections.] Thank you very much. [Applause.]
Chairperson, Minister, Deputy Minister, and colleagues, the aim of the Department of Energy is to formulate overall energy policy and to oversee its implementation to ensure access to affordable and reliable energy for all South Africans.
An affordable and reliable energy supply is crucial for our country's development. It impacts upon the ability to alleviate poverty, create jobs and improve the quality of life for all South Africans.
We have all witnessed the negative impact that increases in fuel and electricity prices have. An increase in the fuel price, for example, is felt by every South African, as it leads to price increases in transport, food and other essentials. Job creation, economic development and, ultimately, the elimination of poverty are all affected by issues of energy.
The work of the Department of Energy is therefore very important to all South Africans. The high crude oil price, which is currently hovering around US$110 per barrel - today it was around US$114 - and now the weaker rand, is putting pressure on many sectors of the economy and also on the lives of the ordinary South African.
We realise that this price is influenced by outside forces beyond our control. Considering the dire consequences that these price increases have, it is important for the department to find ways of minimising the effects thereof. We need to look at a new pricing formula for fuel and also provide some form of support and relief for the poorest members of our country, who once again bear the brunt for these increases.
Many of the poor, and especially those who live in rural areas, are still reliant on illuminating paraffin for their energy needs. High fuel prices will have an even harsher impact on them. During the Liquid Fuel Charter public hearings, it was found that the Petroleum Products Act was impeding the transformation of historically disadvantaged individuals.
With regards to electricity, the IFP is concerned about Eskom's ability to meet the country's electricity demands. The quest for development and economic growth has meant that demand for electricity has outstripped supply. This has contributed to load-shedding and blackouts, which we have all experienced.
In addition to this, there are still backlogs in the supply of electricity to households, especially in the rural areas. Eskom is faced with an uphill battle in its bid to ensure that South Africans enjoy a reliable and affordable energy supply.
While coal will be the primary electricity source for many years, it will not last forever, and it is not environmentally friendly. Our energy mix needs to be diversified and expanded, and clean coal technology must be implemented to minimise the impact that coal has on the environment. Cleaner and renewable energy, such as solar, wind and hydro must be incorporated into our energy mix on a larger scale, as should nuclear. Despite the many misconceptions and negativity that surround nuclear energy, there is still a place in our energy mix for nuclear.
We need to look closely at the unfortunate disaster in Japan, bearing in mind that it was a natural disaster. We need to educate the South African population on nuclear energy and its challenges, for example, high waste disposal and high cost, as we all know that nuclear is clean energy.
We also believe that more attention and resources should be given to the expansion of natural gas as an energy source. We thank the Department of Energy for influencing the price of gas to households.
The department has a difficult job to do in a very turbulent environment, and some good work has been done. However, there are still many areas where improvements must be made. The IFP would also like some clarity on why the cost of the multiproduct pipeline, which is under construction, is much higher than it was budgeted for. The Minister has said that in the next 50 years, we may benefit from it. The IFP supports the Budget Vote. I thank you. [Applause.]
Hon Minister, this Energy Budget Vote is taking place at a time in our country and, in fact, the world's history where a new paradigm has to emerge within the energy economy. We are firstly entering the era of peak oil, which will be characterised by a fluctuating but consistently high price of oil playing havoc with all those economies that are still wholly dependent on this fossil fuel.
We are also entering a carbon constrained future where countries like our own will have to massively decarbonise our growth path if we are to remain competitive and live up to our global responsibilities of warding off climate change.
On the positive side, however, countries that are able to rapidly take hold of the opportunities that this new paradigm offers will be able to position themselves to grow in a rapidly expanding global market.
South Africa has started to engage with this new paradigm of clean energy and it must be said that the latest Integrated Resource Plan, IRP, does represent a fundamental disjuncture with our past energy planning. Just five years ago, I was a lone voice in these Budget Votes calling for renewable energy, whereas today on the rhetorical level at least, renewable energy has entered the mainstream of our debates. The problem however, is that we are still flirting with this new paradigm and have not fully committed to it.
The targets for the renewable energy on the latest IRP are still far too low, with only 9% of generated energy projected to come from these sources in 2030. The problem with such a low target and one which is spread over such a long period, is that it will not be enough to spur on the establishment of locally based industries in this field.
We need to become part of a global value chain producing many of the components for the clean energy technologies; and to do that we need to be sending out very clear and ambitious signals to the market.
A number of research papers, including government documents such as the South African Renewable Energy Initiative, and the Minister's own department's review on the renewable energy White Paper - which, Minister, you still have not released - claims that a target of 15% renewable energy by 2020, is both feasible and required in order to firmly position our industries in this space.
Once these industries have been established, we will then have the capacity to massively upscale our efforts and even perhaps reach a target of 50% by 2030. Instead of creating certainty in this new market though, we are constantly changing the goal posts. The much-vaunted feed-in tariff, which was announced with such fanfare over two years ago, has still not concluded any deals with renewable energy producers.
After developers have sunk millions into developing feasible projects, Nersa has now signalled its intention to reduce the tariffs. To add insult to injury, there is no even speculation that the feed-in tariff will, in fact, be abandoned in favour of a straight tendering process.
This speculation is fuelled by the fact that the latest regulations for new energy generation do not make any mention of the feed-in tariff. Minister, can you give the assurance today that your department is still committed to implementing a feed-in tariff and that we will start to see a number of projects being approved before COP-17 at the end of the year.
Another area in which the IRP is not ambitious enough is that of energy of efficiency. Why is it that we have only included a target of 3 400 MW of the energy savings when Eskom itself has said that we can achieve savings of between 10 000 MW to 12 000 MW?
Energy efficiency should be our number one priority and this should not only be expressed through advertising campaigns. Minister, you have the power to implement new regulations that will make energy savings mandatory and provide real incentives for the roll-out of energy efficient technologies. Energy efficiency must be taken out of the hands of Eskom, because, as one commentator has stated, it is like asking a butcher to advocate vegetarianism during a meat shortage. Energy efficiency must be given a proper institutional home with real budgets and personnel to drive programmes throughout our economy. In this way we cannot only avoid further energy crunches but also save our economy huge amounts of money that would otherwise be spent on building more and more power stations. We are at a crossroad in our energy choices and the ID will continue to push us to become one of the leaders in the new clean energy paradigm. I thank you.
Chairperson, it is important to locate this debate in the context of the dynamics and structure of the South African economy and the intensity of energy use by critical sectors in our economy. Failure to do so will lead to wrong interventions, political posturing and grand-standing without substance.
The reality of our situation is that the mining and mineral processing industries have a critical role to play in job creation, and the current account of our economy. The question is: Does my input mean that the status quo should prevail? Definitely not! This budget contains various interventions to lessen this intensity of energy use by certain critical sectors in our economy.
Energy efficiency intervention will assist the mining sector to improve the efficiency of their production process and replace certain intensive energy- consuming components with less energy-consuming components. The transition to a less energy intensive economy requires the support of all of us. This brings me to a second critical issue that really opens the debate on nuclear energy.
The critical question that needs to be put before this House is: How do we deal with the challenges of long transmission lines from Mpumalanga to the Western Cape and other coastal provinces? Lest my position on this matter of renewable energy be misunderstood, I want to state that I firmly believe in the critical role that renewable energy plays in our energy mix.
I believe we need to pay particular attention to this matter, lest we make the same mistake that Spain has made with renewable energy. I believe that renewable energy will, in the not too distant future, resolve one of the critical challenges that it has always faced, which relates to the storage of energy, and that it will ultimately address the concerns of a variable supply.
Six experts were asked the following question by the Fortune magazine after the Fukushima disaster: Can society afford to live without this carbon-free energy source? As expected, the responses varied. However, there was this particular word of wisdom from one of the contributors that caught my attention, and I quote:
Society has to draw conclusions based on engineering and science about what actually happened in Japan, what could have been done differently, how serious an issue this would be in other places, and make a rational decision on nuclear energy.
I hope that the Portfolio Committee on Energy, the National Nuclear Regulator and the Department of Energy will assist society in arriving at a rational decision. As part of these intense debates the portfolio committee will be visiting Koeberg, Pelindaba and municipalities around those facilities.
I am confident that through these interactions, the rational decision will surely be arrived at, which will be as one of these experts said, and I quote:
Nuclear is a super-important part of our future.
Chairperson, let me transition to another matter that is critical to the security of the fuel supply in South Africa. The current fuel consumption in South Africa exceeds the supply capacity of our refineries. Over a number of years there has been a significant increase in household expenditure and gross fixed capital formation. The apartheid Group Areas Act has put our people on the periphery, and this has worsened the situation.
The critical question that we need to resolve is whether we need to make investment in the refinery capacity or increasingly import refined products. In an attempt to resolve this question we need to understand what the opportunity costs are to South Africa in choosing either of these options. We also need to be careful that the voices of the powerful and entrenched interests do not impair our vision to enhance the security of the supply of fuel in South Africa.
The geopolitics of oil will continue to haunt us. The gyrations of the oil market and its prices are not a fleeting phenomenon - it is a permanent feature. Biofuel development is urgent and critical. We need to ensure that the transition to the postoil economy does not become painful to this country.
Part of that transition will require us to support PetroSA in its efforts towards the production of liquid fuel from gas. Exploration is an expensive venture, full of risks, and we need to bear in mind that money will be lost in the process. We need to ensure that PetroSA succeeds in sourcing the feedstock required to continue its operations.
Government has committed itself to enhancing a secure supply through the participation of Independent Power Producers. We are also encouraged that finally the department will introduce the Independent System and Market Operator to speed up the involvement of IPPs.
Independent Power Producers require a regulatory environment which has a nonconflicted buyer, long-term contracts and price and policy certainty. The regulatory guidelines released by Nersa on 26 March 2009, indicated that the renewable feed-in tariff should be high enough to cover investment costs and provide a reasonable rate of return. However, we were told by some of the IPPs that the review of the tariffs by Nersa on 22 March 2011, has created financial problems for these IPPs.
However, the response we got from engaging some independent analysts on this matter paints a different picture. It became apparent that these projects were initially structured under different exchange rates and equipment costs. The reality of this situation is that the rand has strengthened and the equipment costs have seriously come down. Therefore, we are told that the decision taken by Nersa was correct in reviewing these tariffs. This is a matter that requires close attention from Nersa, the department and Parliament. We dare not repeat the mistakes made by Spain on this matter.
Sufficient attention needs to be given to nongrid intervention. The Liquefied Petroleum Gas, LPG, project has the potential to assist us in reaching our goal for universal access and has great potential to create jobs. Liquefied Petroleum Gas installers, drivers, dispatchers and cylinder plant manufacturing will be required.
We need to make a concerted effort to reach our people who are not already connected to the grid. Energy poverty has put a lot of our people on the periphery of economic activities.
The strengthening of the South African power pool is critical to ensure the secure supply of electricity within Southern Africa. We have to continue to co-ordinate our efforts to create an interconnected power system within the region. The co-ordination of generation and transmission within the region will assist in sharing operational reserves and avoid unnecessary additional investments in generation capacity.
In moving towards my conclusion, I will highlight certain concerns regarding entities reporting to this department. The Central Energy Fund has a lot of subsidiaries and companies where it has significant shareholding.
We need to ask this critical question, hon Minister: Do we need to redefine the mandate of some of these subsidiaries? And the second question that we need to ask ourselves is: Is it prudent for the Central Energy Fund to continue to hold shareholdings in businesses that are not critical to or part of its core business?
Chairperson, I believe that the department should continue to play a critical role in the oversight over some of these entities. The ANC supports this Budget Vote. [Applause.]
Thank you, Chair. Hon members of Cabinet present here, hon Members of Parliament, the director-general, the executive management of the Department of Energy, state-owned entities, invited guests, business and stakeholders, I think I am tempted to say this to hon Dexter before I get into my speech: It is now very clear why you lost the elections. While we were busy working and campaigning, you were busy cracking jokes in your party. No wonder you lost. Perhaps you should do much more of your joke-cracking, so you can perish more quickly than now. [Interjections.]
The energy future of our children depends on the decisions we make today. It is therefore imperative that the choices we make do not result in an undue burden for our children. Our department is fully alive to the impacts of our programmes on the lives of our people beyond the mere provision of energy.
In this regard, we have a number of initiatives that I would like to highlight before I go into the details of our programme.
Allow me, Chairperson, to briefly discuss the resource allocation of the department. It is proper to indicate that our department is under-resourced by at least 48%. This has a major impact on the capacity of the department to deliver.
This implies that the department is unable to ensure the optimal security of supply of energy, to adequately exercise oversight over the SOEs or to engage effectively with stakeholders. The department will need all the support it can get to ensure that the requisite resources to run its operations effectively are allocated.
However, it is not all doom and gloom. Sixty-two per cent of the staff complement is women, which indicates that we have exceeded our target of 50%.
Let me provide the overview of the programmes that our department has embarked upon to provide services to our communities.
The quest for universal access to electrify homesteads continues. The electrification programme provides not only a modern energy option for our people, it also has a positive socioeconomic impact on the lives of the ordinary South Africans. We have seen improvements in the education, health and social circumstances of communities that were electrified through the grid and off-grid technologies.
To date, South Africa's energy penetration stands at over 75%, and this year, with the R3,2 billion allocated to electrification programmes, we will connect an additional 150 000 households. We will build 10 substations and contribute about 5 000 jobs.
In the 2010-11 financial year we managed to create 5 811 jobs, and connected 195 000 homes to the electricity grid. We exceeded our target by 45 000 households.
Last year, in partnership with Sasol Oil, the seventh Integrated Energy Centre was constructed at Qunu in the Eastern Cape, and it is operational. This centre not only provides rural communities with access to energy services, but it also includes a computer centre with internet facilities and is located next to a school.
Two more centres, one of which will be funded by PetroSA, are planned for completion this year. As we strive to improve access to energy in rural areas, we will ensure that skills training provided for the centres is biased towards the local women, youth and people living with disabilities. Such programmes and interventions will have a positive socioeconomic impact on the targeted vulnerable groups.
Then we will go to the Working for Energy programme, another programme through which we intend to diversify our energy mix and increase access to energy. We shall be spending about R25 million during the year on the Working for Energy programme which, amongst other things, promotes labour- intensive energy projects across the country. This amount excludes funds that we have received from the governments of Finland and Austria.
I will touch on the energy efficiency programmes. We are looking forward to the positive contribution that our newly formed South African National Energy Development Institute, Sanedi, is going to make to the energy efficiency programme that we have earmarked. The department will work with National Treasury to ensure that Sanedi is properly resourced to deliver on its important mandate.
One of the key activities that will be undertaken by Sanedi is to oversee energy efficiency and demand-side management. In terms of Sanedi's role, it is expected that it will become the custodian of all energy efficiency programmes. This requires Sanedi to oversee energy efficiency initiatives, in particular to assist with the certification of energy savings achieved by those companies that seek to claim tax-deductions under the Income Tax Amendment Act.
We have secured the concurrence of the Minister of Finance for energy efficiency incentives under the standard offer of an energy-efficiency tax incentive scheme, which will be in place this year.
The 49 million campaign was launched by the Deputy President during the first quarter of this year. The campaign seeks to mobilise all South Africans to save our energy. Let us all rally behind this campaign and save electricity. In addition, our department continues to engage the Department of Public Works to ensure that all public buildings are retrofitted to reduce energy consumption.
We have to constantly remind ourselves that energy is the lifeblood of any form of existence and it impacts on what we do and affects our very existence. This year, going forward, special focus will be given to our interactions with organisations for women, youth, children and people living with disabilities.
In August this year we will be launching the South African chapter of the Clean Energy Education and Empowerment programme. This is one of the international clean energy Ministerial initiatives where our hon Minister of Energy, Ms Peters, has been designated as the clean energy ambassador for Africa. [Applause.]
Through this initiative we seek to empower women of all ages to participate in the clean energy space through business and professional networking; mentorship and coaching; training; and clean energy ambassadorships. We are in partnership with the industry and other interested parties to promote this initiative.
We will also enhance and streamline Women in Oil and Energy South Africa, Woesa, and its governance structures in order to intensify its operations. In July this year, together with our SOEs, we will be hosting the annual learners' focus week, which is one of our youth information-sharing and awareness sessions that addresses Grade 9 and Grade 10 learners from all provinces on careers in the energy sector.
I will now come to the public's participation. We have heeded the call from Cabinet to have a minimum of 10 successful public engagement events throughout the country annually. We take these public participation programmes very seriously as they provide us with opportunities to interact with communities in an unmediated manner.
More importantly, these events give our people an opportunity to express their views on service delivery issues to government leaders directly. It is what we call "izimbizo".
We require that our state-owned entities always contribute to the socioeconomic development of the areas in which they operate. Our national oil company, PetroSA, recently contributed to the provision of water to the Mossel Bay community through an investment of over R80 million for the construction of a plant. The plant will provide PetroSA with all water requirements for the gas-to-liquids refinery and drinking water to the residents of Mossel Bay.
PetroSA has also spent an amount of R16 million towards the construction of a school in Vredenburg, and R2,5 million towards the restoration of Healdtown Combined School, where our former President, Nelson Mandela, completed his high school education. I think this is a challenge to other stakeholders as well.
We continue to improve on one of our important strategic outputs of providing an effective and efficient communication service to the public. Our communication strategy is being aligned with the government communication strategy as set out by the government's communication and information systems.
Our department continues to strive to resolve all Presidential Hotline issues within the given timeframes and we continue to maintain a 100% resolved cases status. We are in the process of strengthening our Presidential Hotline office to ensure that we have sustained improvement in our turnaround time.
We have continued to strengthen our relationships with stakeholders such as the media, NGOs, other government departments, the private sector and SOEs, through increased interaction.
In this regard, our engagement with the mainstream media through regular round table discussions, have been effective in communicating the views of government on key energy matters.
In conclusion, while ensuring that energy security is critical, service delivery at a community interface is also something that we undertake with gusto.
Sihlalo Ohloniphekile, njengoKhongolose, siphinde sanikezwa ngabantu baseNingizimu Afrika igunya lokuthi sethule izidingo zabo. Thina kulo Mnyango wezaMandla, sizimisele ngokukhulu ukuzithoba ukuqhubeka nokubambisana nomphakathi.
Sizosebenzisana nohulumeni wasekhaya neminye iMinyango ukuze senze izimpilo zabantu zibe ngcono. Sithi-ke kubavoti baleli lizwe, siyabonga kakhulu ngokuthi baphinde bakhombise ukusethemba, nokuthi sisho kubona ukuthi ukwanda kwaliwa ngumthakathi, yena ongafuni ukubona abantu besizana. [Ihlombe.] Sengathi bangaphinda benze njalo nangomuso. Siyalibeka ithemba lethu kubona ngoba nabo siyazi ukuthi balibekile ithemba labo kithina. (Translation of isiZulu paragraphs follows.)
[Hon Chairperson, as the African National Congress, we have been given the mandate by the people of South Africa to take care of their needs. In the Department of Energy, we are prepared to work with the community in a humble manner.
We will work with the local government and the other departments to improve the lives of our people. To the voters of this country we are saying, we are very grateful that you believed in us once more, and we would like to say that it is highly appreciated. [Applause.] They must do it again. We trust them as much as they trust us.]
In conclusion, Chairperson, I would like to dedicate this Budget Vote speech to Gugu Janet Wood, who was my PA and who passed away two weeks ago. Despite her short stint in the department, she had made a tremendous contribution. May her soul rest in peace. [Applause.]
Thank you, Madam Chair.
Daar is geen twyfel dat Suid-Afrika ... [There is no doubt that South Africa ...]
Hon Alberts, are you coming to the podium?
Oh, sorry. Yes. My apologies, Chair.
Daar is geen twyfel dat Suid-Afrika 'n energiekrisis in die gesig staar nie, en hierdie week se aankondiging deur City Power in Johannesburg dat beurtkragskedules op hul webwerf geplaas is, getuig daarvan.
Die aansienlike prysverhogings van krag wat aan Eskom toegestaan is deur die Nasionale Energiereguleerder van Suid-Afrika, Nersa, getuig van die wanbestuur en gebrek aan voorsienigheid binne 'n kritieke instansie waarsonder die land nie kan klaarkom nie.
Die effek daarvan is natuurlik steeds besig om uit te speel in die vorm van die hor pryse van produkte en dienste wat afhanklik is van elektrisiteit. Ek is bevrees dat daardie golf nog aan die kom is, soos 'n tsunami na die eerste aardbewing. (Translation of Afrikaans paragraphs follows.)
[There is no doubt that South Africa is facing an energy crisis, and this week's announcement by City Power that load-shedding schedules have been placed on their website bears witness to this fact.
The significant increases in the cost of electricity that have been granted to Eskom by the National Energy Regulator of South Africa, Nersa, attest to the mismanagement and lack of foresight within a critical body, without which the country cannot manage.
The effect of this is, of course, still playing itself out in the shape of the higher prices of products and services that are dependent on electricity. I'm afraid that this wave is still coming, like a tsunami after the first earthquake.]
The fact is, however, that the electricity earthquake is now an event that has taken place, and the average South African can now only brace him- or herself for the flood of high prices to come.
The positive side of this is that government has been shaken out of its slumber and seems willing to tackle the future energy needs of this country. The question to be answered is what the optimal design must be for electricity generation supply and governance. Die VF Plus steun 'n holistiese benadering tot die energiekwessie van Suid- Afrika. Tans gebruik die land baie vuil kragopwekkingsmetodes deur gebruik te maak van steenkool. Kernkrag is baie skoner en is daarom 'n sinvolle, korttermyn alternatief - behalwe natuurlik as 'n ongeluk sou plaasvind. Daarom is die medium- en langtermyn doelwitte om alternatiewe krag te ontwikkel ook van kardinale belang. Verskeie toekomskundiges het voorspel dat sonkrag die toekoms van energie-opwekking gaan wees - en dalk ook gouer as wat 'n mens dink.
Indien die verdubbelingswette klop, sal ons gouer as wat ons dink net op son- en ander alternatiewe bronne van energie kan staatmaak. Daarom is 'n gentegreerde energieplan van kardinale belang en steun ons ook hierdie benadering. In hierdie verband is die skakeling tussen die Industrile Beleid Aksieplan, Ipap, se groen werkskeppingsprogram en die Department van Arbeid se ondersteuning van sonkragopwekking baie bemoedigend.
Die gentegreerde energieplan se benadering om van 'n gediversifiseerde energiemengsel gebruik te maak, is sinvol en toon aan dat di holistiese benadering tot die energieprobleem by die regering inslag vind. (Translation of Afrikaans paragraphs follows.)
[The FF Plus supports a holistic approach to South Africa's energy crisis. At present the country is using many dirty methods to generate electricity through the use of coal. Nuclear power is a lot cleaner and therefore a sensible, short-term alternative - except, of course, if an accident should take place. That is why the medium and long-term aims of generating alternative power are also of critical importance. Various futurists have predicted that solar power will become the future of electricity generation - maybe sooner than one would think.
If the duplication laws hold water, we will be able to rely on solar and other alternative sources of energy sooner than we think. That is why an integrated energy plan is of critical importance and also why we support this approach. In this regard the connection between the green job-creation programme of the Industrial Policy Action Plan, Ipap, and the Department of Labour's support for solar power generation are very encouraging.
The approach of the integrated energy plan, making use of a diversified energy mix, is sensible and indicates that this holistic approach to the energy problem is becoming popular with the government.]
We also support the idea of an independent operator that will ensure that the governance and management of our energy supply and demand is performed in an optimal manner with sufficient redundancy. We are therefore looking forward to the Independent System and Market Operator Bill.
The Minister also alluded to her plans for energy efficiency. This is the first step in saving the energy system in South Africa which, if successful, can save our economy a lot of money.
I have two last thoughts. When we talk about finding sources of energy, we must also consider the methodologies that we use, like fracking. We must consider whether the environment is more important to us than short-term energy gains.
Lastly, when we talk about the petrol pricing structure, we must ask ourselves if we cannot introduce competition on the retail level in this sector, so as to make sure that the prices are forced down by way of competition. Thank you, Chair.
Chairperson, I was confused. I thought that hon Dudley was before me. Chairperson, Minister and Deputy Minister, hon members and visitors, President Jacob Zuma, in his state of the nation address, declared this year as a year of job creation and economic transformation.
The Department of Energy therefore has the mammoth task of ensuring that sustainable jobs are created through its programmes so that the lives of the people can be changed.
UMqulu weNkululeko owaqulunqwa ngowe-1955 yi-ANC e-Kliptown uthi kuyakubakho imisebenzi nokhuseleko. Eli sebe nalo ke ngoko kufuneka livale izikhewu ngokuqesha apho kufuneka liqeshe khona kwii-ofisi zalo njengesebe eliselitsha. (Translation of isiXhosa paragraph follows.)
[The Freedom Charter compiled by the ANC in 1955 in Kliptown says there shall be work and security. This department, therefore, needs to close the gaps by filling vacancies at their offices where these are needed, as a new and budding department.]
Black people constitute the highest number of the unemployed. Also, they are the poorest of the poor and still homeless.
Urhulumente unoxanduva lokuphelisa yonke le ntlupheko, ingakumbi ngokubhekisele koomama abasokola kakhulu kuba ngabona bantu bajongene neentsapho. Oomama ngabona bantu kufuneka beqinisekise ukuba iintsapho zikhuselekile kwaye zinamandla nakobu busika. (Translation of isiXhosa paragraph follows.)
[The government has the responsibility to eradicate all poverty, especially with regard to women who are suffering because they are the ones taking care of their families. Women are the ones who have to ensure that their families are safe and strong even during winter.]
The ANC supports Budget Vote No 29: Energy. The President has also formally launched the national Solar Water Heating programme in 2010, with the objective of ensuring that one million systems are installed in South Africa by 2014. This programme is being run parallel with Eskom initiatives, which had started as far back as 2008.
The government hopes that these and other initiatives will ensure the achievement of one million solar heaters in operation by 2014, hence contributing to saving energy.
The benefit of installing solar water heaters in residential areas is to reduce peak demand during winter, as the country's reserve margin is constrained. The largest electricity-consuming appliance in our households is usually the electric geyser. It typically makes up 30% of the total electricity used in many households.
A solar water heater can reduce this energy consumption figure by more than half. Also, local manufacturing of water heaters can contribute to job creation and skills development. Energy conservation schemes must also contribute to ensure continued economic growth.
South Africa is well endowed with renewable energy resources with the potential to produce biomass, wind, solar, small-scale hydro and waste energy. The South African energy policy creates an environment within which renewable energy technologies can be deployed.
Subsequent to the 1998 White Paper on Energy, a White Paper on Renewable Energy was adopted by Cabinet in 2003, with the target of a 10 000 GWh contribution to the final energy consumption by 2013.
Furthermore, the National Energy Regulator of South Africa, Nersa, introduced a renewable energy feed-in tariff, Refit. This is aimed at encouraging investment in renewable energy by offering guaranteed tariffs that are supposed to cover generation costs and ensure profits. At the same time, this will create a critical mass of renewable energy investment and support the establishment of a self-sustainable market and investors are given access to the national grid.
Eskom is designated as the renewable energy purchasing agency and is obliged to buy power from the independent power producers, IPPs, through power purchase agreements.
The Integrated Resource Plan, IRP, of 2010, includes renewable energy sources for electricity generation. Renewable energy will account for 16% of the adopted revised balanced scenarios. Since the adoption of the National Energy Act in 2008, the IRP 2010 has provided for recognisable action to support renewable energy in South Africa. This is indicative of government's intention to deploy renewable energy in electricity generation.
On clean fuel, the department will review the current transport fuel specifications and standards to reduce harmful emissions and to align standards with global vehicle trends and environmental requirements. Government hopes to have cleaner fuel made available to the public as soon as 2013.
The new specifications were underpinned by three imperatives: the need to contribute to public health, environmental concerns, and the need to enable more advanced combustion engines on South African roads. The low levels of sulphur would allow for the introduction of more efficient engines with less carbon dioxide emissions.
Liquefied petroleum gas, LPG, is a less-used but desirable fuel source in low-income households, especially where coal is unavailable. One of the key challenges for low-income households in terms of using LPG is the cost. LPG is too expensive, so low-income households resort to using coal and paraffin, which pose health hazards. The LPG containers are also very heavy.
Asiboni nokuba kukho ntoni ngaphakathi kula matanki erhasi kwaye athengwa ngabantu abaneemoto kuba anzima. Thina bantu bangenazimoto asiwathengi. [We cannot even see what is in these gas cylinders and it is only people driving cars who buy them for they are heavy. We, people without cars, do not buy them.]
The Department of Energy is developing an LPG strategy which will be submitted to Cabinet during this financial year. The main objectives of the strategy are to provide access to safe, cleaner, efficient, environment friendly and affordable thermal fuel for all households and to switch low- income households away from the use of coal and paraffin to biomass.
Soloko ingoomama ke abahamba ehlathini baye kutheza iinkuni kuba kufuneka bephekile. Kodwa ke, ezi nkuni zezi ziphinda zenze impilo yoomama ingabingcono. Ndiyabulela. [Kwaqhwatywa.] [It is always women who have to go to the forest and collect firewood because they must cook. However, it is the same firewood that causes them ill health. Thank you. [Applause.]]
Chairperson, despite a review of nuclear policy by Germany, Japan and China after the Fukushima disaster, six nuclear reactors are still being contemplated in the current Integrated Resource Plan. Our own Department of Trade and Industry's Industrial Policy Action Plan states:
A future nuclear programme will cost in excess of R1 trillion. This will place enormous strain on the balance of payments and without an effective localisation programme will have severe consequences for the South African economy.
Successful localisation will require a fleet approach to ensure economies of scale and commencement of construction of one nuclear reactor every 18 to 24 months to ensure viable business opportunities.
Nowhere in the world has this economy of scale been achieved in the nuclear industry; and, of course, popular resistance to the reactors will delay the programme for years to come. We therefore call on you, hon Minister, to rather put the R1 trillion towards the implementation of energy-efficiency measures and the localisation of wind and solar energy production.
The ACDP has appealed to the Minister of Science and Technology, and further appeals to you, hon Minister, to urgently investigate technologies patented in South Africa, which will enable South Africa to pioneer the transition from a carbon-based economy to hydrogen, the commercialisation of which will open new market spaces and create massive employment opportunities for our people.
These emerging technologies integrate power supply and waste and wastewater remediation in the context of local communities. They will provide the power requirements of a community while remediating and recycling water as well as eliminating the waste of the community at its point of generation. This will eliminate the need to transport the waste at a huge cost to the taxpayer.
It provides the opportunity to generate licence revenues which will substantially provide for the establishment of these facilities throughout Africa. I would like to provide you with the relevant information. I would really appreciate an opportunity to discuss it with you further.
The ACDP has reservations regarding the budget and especially the spending on nuclear plants, but we will be supporting this Budget Vote.
Chairperson, hon members, Minister, the South African government should consider the need for improved energy security as one of its utmost priorities. The promotion of security of supply and competitive energy prices are critical goals in South Africa. To this end, the Integrated Resource Plan, IRP2, has been developed to directing the expansion of our electricity supply over the next 20 years.
It is vitally important, however, that this plan remains responsive to our short-term requirements, and I think the Minister has mentioned the future of coal.
Eskom's total generating capacity is currently 41 500 MG. Demand in winter is projected to increase to 38 000 MG. This leaves a relatively small margin of 3 500 MG to accommodate problems such as plant closures and plant maintenance. International best practice dictates that reserve margins should not fall below 15%, while Eskom's 3 500 MG reserve margin only represents a reserve margin of 8,5%.
This should be of grave concern to us all, especially considering the relatively mature state of the majority of Eskom plants. These figures and the age of our electricity infrastructure clearly signal that our supply concerns have not yet been resolved. Eskom themselves have conceded this fact.
Eskom's leadership has stated that our country is facing potential electricity supply shortfalls of six terawatt, TW, hours in 2011-12 and nine TW hours in 2012-13. This roughly equates - and this is important - to the amount of electricity a city such as Cape Town consumes in one year.
To address this, Eskom is building three new power stations, Ingula, Medupi and Kusile. In addition, Eskom is rebuilding and re-equipping power stations like Camden, Grootvlei and Komati, with the budget totalling R385 billion up to 2013. These are now desperate, belated steps on our path to energy security and I will elaborate on that in a second.
The 1998 White Paper on Energy and the subsequent misplaced strategy of government to stop the Eskom build programme, have put us in the position we are today. Eskom is currently forced to overinvest in large coal-fired generating units. This not only imposes a burden on the fiscus, but also undermines our commitment to combating climate change - not taking into consideration the environmental cost of our power. If we had properly planned for the expansion of our energy supply and if we had started working at it earlier on, government would have had a series of more environmentally-friendly and cost-effective options at their disposal.
Unfortunately, however, we are where we are, and no effort must be spared to place us on the path to energy security. The danger of unreliable supply, however, remains a reality, and if we lose only 600 MG, as happened at the Duvha Power Station, South Africa faces another power crisis, according to the newspapers. Duvha should never have happened, and a report and investigation need to be published. I join the Chairperson in his earlier request and remarks.
The DA, however, believes that there is a way out of this current situation, such as an urgent facilitation of the build programme. I believe we are one year behind in Medupi, and we also see ongoing labour disputes at Kusile. I think that needs to be solved very timeously. We believe an audit on the state of the distribution network and Eskom staff competency needs to be done with immediate effect.
With regard to our distribution network, hon Minister and members, we have to ask how much of our energy is being lost due to poor maintenance. Some analysts have concluded that we could save as much as R2 billion to R6 billion in distribution losses per year.
Currently, the distribution network faces R26,7 billion in maintenance backlogs, with half the distribution network requiring serious attention. I think our total amount of value in our distribution networks is about R260 billion, and we have a R26,7 billion backlog - just to put that in perspective.
The current plan to address the issue is utterly vague, with maintenance seemingly being done on an ad hoc basis and predominantly in the metropolitan areas. I believe the smaller municipalities are being neglected.
The DA strongly urges government to reconsider implementing a more comprehensive approach to maintaining our distribution network. An efficient distribution network, we know, is a prerequisite for our Integrated National Electrification programme, Inep. The current construction rate of Inep, of course, is negatively affected by this dysfunctional distribution network and also negatively affected by dysfunctional municipalities. Twenty per cent of our people do not have access to electricity. Our supply and distribution challenges have the potential to dramatically impede our efforts to electrify the lives of those one in five South Africans who do not have access to electricity yet.
Furthermore, we must not forget that our energy challenges reach further than electricity. I think my colleagues will remember Mr Guy McGregor's presentation to the portfolio committee. In it I think he agreed with me that the compulsory blending of ethanol in the petroleum pool could add up to 10% of our petroleum productive capacity.
By revising the industrial biofuel strategy to allow the excess production of maize to be used for the production of ethanol, we could help South Africa reach its objectives for the use of renewable energy. It could also create thousands of jobs in the biofuel industry.
I have written to the Minister regarding the delay in the implementation of the finer details of the regulatory processes in the biofuel industry, and I believe that much attention was given to that. Thank you, hon Minister. I would also like to thank the department for meeting a delegation from Grain SA to discuss progress in this industry.
The job is not yet done, however. Only by implementing the required reforms can people in our rural communities reap the rewards of a growing biofuels industry.
In conclusion, we have to produce more energy to meet the demands in our growing economy. This is not negotiable. Eskom has indicated that it would issue a mandatory warning to its big electricity users to save electricity and even issue fines to those who transgress. The industrial industry is concerned that insufficient progress is being made with Eskom's medium-term risk mitigation plan, and I think the Chairperson has alluded to that.
As to the large-scale load shedding we are currently experiencing in the Johannesburg area, City Power is not meeting its demand in terms of Rosebank, Dobsonville, Ekurhuleni and the greater Johannesburg, at times.
Daily shedding in selected areas is also problematic, considering that care needs to be taken not to take productive capacity out of the economy. Care also needs to be taken that we never again fail to properly plan for our nation's growing energy needs. I thank you, Chair. [Time expired.] [Applause.]
Chairperson, I would also like to start by echoing all our colleagues in supporting Budget Vote No 29. Chairperson, hon Minister, hon colleagues, and all present in this august House, I wish to dedicate my contribution in this debate to our voters throughout South Africa and, to the friends of the ANC throughout Africa and the world. I shall start by saying thank you to all who voted for the ANC in the local government elections recently. The ANC requested me to focus on climate change, The 17th Conference of the Parties of the United Nations Framework Convention on Climate Change, COP 17, and the green economy in today's debate. I wish to start by asking a question - what is climate change?
Climate change is a phenomenon that takes place when carbon dioxide accumulates in the atmosphere, forming a blanket around the earth that traps heat energy in the atmosphere, thereby warming the earth and altering the climate.
It alters the normal functioning of the earth systems, for example, by causing shifts in rainfall as well as the amount of rain that falls. Instead of rain falling throughout summer, climate change could cause the entire amount of rain that would have fallen in a season to fall in just one month. This would cause flooding and eventually drought in the same area as the rainfall is not spread out over time.
These floods and droughts affect poor people more negatively as they have no resources to adapt to the impacts. The consequence of this, if not attended to, could lead to very serious challenges, such as diminished natural resources; reduced agricultural production, thereby worsening food security; increased flooding and drought, thereby spreading various diseases; and increased risk of conflict over scarce land and water resources. That is climate change!
This leads us to the next difficult question. What should be done to address the reduction of carbon dioxide in the atmosphere? The South African government, due to the high greenhouse gas emission profile, has been forced to take necessary measures, both domestically and internationally, with the aim to address both mitigation and adaptation.
In the domestic arena, our achievements are: the release of the National Climate Change Response Strategy for South Africa in 2004; the completion of the Long-Term Mitigation Scenario study and its release in 2008; the hosting of a Climate Change Response Policy for South Africa in March 2009; convening the Green Economy Summit in May 2010 and; the release of the National Climate Change Response Police Green Paper in 2010, on which the Portfolio Committee on Water and Environmental Affairs held public hearings here in Parliament in March 2011.
The need to mitigate energy related greenhouse gas emissions is a major theme of this Green Paper. The Green Paper's response clearly articulates the government's responsibility for the wise governance of the earth's climate by pursuing a green economic growth and development.
The green economy includes green energy generation based on renewal energy to substitute polluting fossil fuels and energy conservation for efficient energy use. It is considered viable for green jobs; shows real sustainable economic growth; and will prevent environmental pollution and degradation.
The green economy is based on the following six main sectors: renewable energy; green buildings; clean transportation; water management; waste management; and land management.
In the international arena, it is important to know that energy in itself is the international enabler of the world's economies, let alone the role it plays in a household life internationally. Let me take this opportunity to note that the generation of energy in many respects emits a lot of carbon dioxide contributing to the challenge of climate change which the whole world is grappling with to date. The question is: What is the history of this challenge?
A scientific gathering in 1979 declared to call upon the world's governments to foresee and prevent a potential man-made change in climate that might be adverse to the well-being of humanity. This gathering established a worldwide programme under the responsibility of a body called the "World Meteorological Organisation", the United Nations Environment Programme and the International Council of Scientific Unions. These bodies took that responsibility upon themselves. In 1992 in Rio, a framework that enables international communities to agree on future action as science improves and new tools and technologies become available, was agreed upon in the form of a convention. This framework established the rules of the game, set long-term goals, determined key principles and identified main areas of work.
This convention was finalised 15 months later, signed by 154 states and came into force on 21 March 1994. South Africa signed and ratified it on 29 August 1997, and has been active in this process to date. It is important to note that South Africa is hosting the 17th Conference of the Parties, COP 17, in Durban in December 2011, this year. A very important conference indeed!
Chairperson, I shall not have completed my task if I do not take the opportunity to make reference to the debates that have been ensuing here today. I want to say that the elections took place on 18 May 2011. There is no need to electioneer. As the ANC, we are happy with the outcome that gave us over 60%. We are satisfied with that. [Applause.]
It is boring.
It might bore you, sir, but it is important. The important issue that we need to be reminded of here is that people understand, quite clearly, the powers of portfolio committees; that the committees, through their own power, can call on anyone to come and account on any matter, including election outcomes, if you like. However, we really cannot do what hon Dexter says.
What?
Stay away for the whole year and come here to say what you could have said in the committee.
No, I said it there!
We cannot do that! You are a member of the committee, hon Dexter, and you are not attending. [Laughter.]
Order, order, please!
I have found hon Lucas, hon Greyling and hon Dudley, hon Ross ...
Hon member, there is a point of order.
What about my time?
I am sure the Chair will give you your injury time. Chair, on a point of order: Is it parliamentary for a member to come and tell untruths about another member in a meeting like this? [Interjections.] I am with him in the committee all the time, and I can bring witnesses. [Interjections.]
Order, please! Can I hear the hon member? What is the point of order?
I am saying he is saying that I do not attend meetings. It is not true. Ask my colleagues!
Hon member, that is argumentative.
What is argumentative?
That is argumentative. Please continue. [Interjections.]
Can I conclude, hon Chairperson, that ...
Order, order, please! If I have to ask a member of the DA now, it is argumentative.
Chairperson, it is not argumentative, it is a fact. I either attend or I do not.
Take your seat, hon member, please. Please continue, hon member.
In conclusion, hon Chairperson, I want to thank hon Lucas, hon Greyling, hon Dudley and hon Ross for their constructive input in this meeting. Thank you. [Applause.]
Chairperson, I was told that I have 12 minutes. Maybe I must start where I ended off by indicating that we have realised that, as a department, we need to increase the project management skills of the team in the department. We are working very hard to ensure that we improve.
We have already started, amongst other things, to retrain 72 staff members with a view to enhancing their project management skills, so as to improve service delivery. We are also finalising a new approach to recruitment, selection, and career-pathing and a performance management system, in line with our strategic intent.
In responding to the policy positions of the ruling party, we have established a new branch for clean and renewable energy. It will provide for a dedicated and appropriately resourced focus on areas such as the use of alternative technologies, cleaner carriers and will allow us to exponentially increase the use of renewable energy sources. This will include the work underway in the area of demand-side management and energy efficiency. This development also enables the department to significantly better co- ordinate and enhance its contribution to South Africa's successful hosting of COP 17 in December this year.
We continue to be active in the development of an appropriate response to the scarcity of the required skills in the energy sector through an enhanced participation in the Energy Sector Training Authorities, both at the level of the governing board and Subcommittee of the Sector Skills Plan. This has enabled the department to provide strategic inputs for the development of skills that are critical in terms of the needs of the country.
In line with the Cabinet's decision, the Electricity Distribution Industry, EDI, Holdings ceased operations on 31 March 2011. An administrator has been appointed to execute the winding up and the process is expected to be completed by the end of June 2011.
As directed by Cabinet, we are continuing with some of the programmes in which EDI Holdings was involved, including the rehabilitation of electricity distribution infrastructure. In this regard, the department will establish the capacity that ensures service delivery of uninterrupted power to end users. Proposals in this regard will be submitted to Cabinet for consideration. The required funding model is currently subject to detailed discussions between the relevant government departments and other potential funders. The new, full-time regulator members for the National Energy Regulator of South Africa, Nersa, have been appointed and assumed their duties at the beginning of April 2011. I would like to take the opportunity to welcome Mr Thembani Bukula, Dr Rod Crompton, Ms Phindile Nzimande and Ms Ethel Teljeur and wish them well with their work.
We have embarked on a process of reviewing and amending the National Energy Regulator Act in order to streamline governance at Nersa. Hon members would be central to that process.
As part of its contribution to the public education on nuclear science and technology, the South African Nuclear Energy Corporation, Necsa, built and completed a nuclear science centre which is open to visits by members of the public. At this centre, people can learn more about nuclear energy. I encourage hon members and the public to visit this centre, especially our mathematics and science students because it is central to increasing the skills in this particular sector.
Recognising the need for skills for nuclear expansion, Necsa, with the support of the Department of Trade and Industry, DTI, has started investing in artisan skills which are in great demand in the economy. Security at Pelindaba has also been stepped up considerably and I am confident that security at this nuclear installation is adequately prepared to respond to risks of potential diversion of nuclear materials.
During the past financial year, the National Nuclear Regulator, NNR, intervened decisively to protect the community of Tudorshaft in Mogale City, who were at the risk of being overexposed to radioactivity, which was a consequence of previous mining activity. This year, the NNR will continue to focus on reducing the risk of exposure of workers at the special-case mines that are prone to enhanced levels of radiation.
The NNR is currently undergoing restructuring to ensure that they are well- positioned to respond to the aspirations of government, as outlined in the integrated resource plan, IRP, as well as to respond to the ongoing need to ensure safety at Koeberg Power Station and other nuclear installations.
In consultation with the board of the Central Energy Fund, I will review the structure of the Central Energy Fund group of companies in order to consolidate the various operations, improve efficiencies and take advantage of synergies between the various subsidiaries. A key aspect of this work includes, as I have indicated previously, the repositioning of the national oil company, namely Petroleum Oil and Gas Corporation of South Africa, PetroSA.
Together with the Department of Mineral Resources, we are engaged in finalising the delinking of the African Exploration, Mining and Finance Corporation from the Central Energy Fund group, for it to form the nucleus of a state-owned mining company, in response to the Cabinet's decision of December 2010.
We will be engaging our counterparts in the SADC Council of Energy Ministers on the strengthening of the Southern African power pool, and the proposals for the development of an integrated resource plan for the region. Taking into account that our energy needs are interlinked and intertwined, we can each contribute meaningfully to our energy needs and meeting our challenges.
We continue to participate in structures such as the International Renewable Energy Agency; the International Energy Forum; the International Partnership for Energy Efficiency Co-operation, Ipeec; the United Nations Industrial Development Organisation, Unido; the Clean Energy Ministerial; the AU-EU Energy Partnership; and the Council of Energy Ministers of Africa.
Over the recent period, we embarked on a number of international engagements in our quest to find a solution to our energy challenges. Apart from servicing our international obligations in the nuclear energy space, we have a number of other binational and multilateral agreements that we have to honour.
I must hasten to add that our bilateral engagement programme has taken a very practical and implementation-level approach, and we have a number of existing and developing bilateral or joint programmes in place, in support of an array of energy areas. In keeping with our recently confirmed memberships of Brics, we are expected to have a more pronounced role in the international arena.
I want to take this opportunity to thank the hon members for their valued contribution in the debate on Budget Vote No 29. I also believe that some of the issues, raised by hon members, were addressed by my speech, the speech by the Deputy Minister, as well as the most progressive inputs by the chairperson and hon members from the ANC, as usual. I will reply to the issues as a whole.
I want to indicate that one of the important things that I have also picked up in this House is the fact that we seem to all agree that there is space for nuclear in the energy mix of South Africa. The issues raised will be addressed in the plan and brought before Cabinet.
These are issues of cost to the state as well as cost to the consumer; issues related to the radioactive waste management; and also issues related to how we can take the lessons from Fukushima, as well as Chernobyl and Three Mile Island, into consideration.
It is important that we actually use these platforms to educate the public because we are public representatives. We should remember that it is this House, the national Parliament, which adopted the nuclear policy as well as nuclear legislation, rather than coming here and talking about the negatives.
It is important that we realise that we have already formulated the plan to include nuclear in our energy equation. How are we going to meet our long- term mitigation scenario with only renewable energy? We need a base load to buttress what the renewable energy cannot cover.
I heard the hon members refer to and almost repeat the report of Greenpeace, with regard to increasing renewable energy. As I have indicated, as a department, we are making it possible to build our capacity to ensure more renewable energy. However, we are very realistic.
If you look in the Cape Times today, it shows a big crane that is putting up those huge turbine blades on one of the sites. Where does the crane come from? It means that the bulk of the money for development must go to the importation of the equipment we need to lift the crane. It is higher than the buildings here in Cape Town. What have we seen today in the very Cape Times? There is an indication of some of the communities who say yes to renewable energy, but not in their backyards. I think it is important that we realise that these are some of the things that we have to consider. Hon Dudley said that it will take time for the development of nuclear with the objections from various stakeholders, to delay the streaming of nuclear. It is equally so with renewable energy. There is a whole town that is up in arms here in the Western Cape because of the development that needs to take place to ensure renewable energy that would have helped us to meet our target.
That community, predominantly well-endowed and rich people, says no to a turbine as tall as that one, as it will obscure their view. What are we supposed to do? These are some of the things that we have to take into consideration.
We should also realise that South Africa has an energy-intensive industry. We cannot only rely on a source that is based on the elements. I am happy that hon Moloto spoke about the storage capacity. Until we have addressed the technology issue in order to ensure storage, we will not like Greenpeace says, be at 50% by 2030 and at 95% by 2050. Yet it is the very organisation that says that we should not consider hydro as one of the options.
I want to say to hon members that we should really be realistic. We need to keep the lights on. We need to keep our machinery going. The government, led by President Zuma, has set itself a target of five million jobs in 10 years. The Greenpeace report says that we can only have 150 000 jobs by 2050 from renewable energy sources. It means, in essence, that we must go and do the recalculation. It means the jobs that we anticipate from the green energy or green economy will not be realised.
These are the people who devote most of their time to researching the importance of renewable energy. I think that it is important. They said while we want renewable energy, we are not going to realise the objective of creating jobs. We want to ensure that across the value chain, from mining the sources to them being beneficiated to produce energy, we make maximum input for South Africans.
We need to increase the number of companies in South Africa which are responsible for manufacturing solar water heating components. We need to indicate that we have some challenges with the roll-out of solar water heating.
We said that we want to maximise localisation. We can't take the bulk of that money out of the boundaries and borders of South Africa. So whatever we decide or whatever policy directive we take must enable us to give jobs to the people of South Africa so that they can provide for themselves. They are just doing what God said when He chucked out Adam and Eve. He said: "Go and live by the sweat of your brow." It is important to create opportunities for men and women in South Africa to live by the sweat of their brows. [Applause.]
There are quite a number of areas that members have raised which are very important to build the capacity of the department, to respond to the needs of South Africa. We will engage on some of these initiatives. Some of the hon members have written letters and we have engaged with them in my office.
I believe that that type of engagement can continue, as well as the contributions made by members of the ANC in terms of ensuring that our energy security policy is sustained. Had it not been for the ANC adopting an energy mix policy at Polokwane, we would not have had the integrated resources plan.
I want to say that this government is committed to making it possible for South Africa to have access to an uninterrupted, cost-effective supply of power and energy sources. We want to ensure that we contribute.
I want to thank the Cabinet of the Republic as well as the Department of Energy, led by the director-general, the boards and stakeholders. I also want to thank my family for being very supportive in order for me to serve the people of the Republic of South Africa.
Thank you to the chairperson for his leadership, because he always wants to keep us involved. On the eve of the state of the nation address, he kept the director-general and I so involved in the discussions on energy, the security of energy supply and the capacity of the department to deliver, that we could not leave before ten o'clock that night! Thank you. [Applause.]
Hon Minister, we have corrected ourselves. We gave you your 12 minutes plus. Hon Dexter, with regard to your question of attendance, we would have to go to the official register of the portfolio committee to ascertain that; if you want to.
I cannot ask members to argue that point. It is only the official register. There is an announcement that the debate on Vote No 12, Public Service and Administration, will start at 16:45 in this venue.
Debate concluded.