Hon Chairperson; Deputy Minister of Energy, Barbara Thomson; hon Chairperson and members of the Portfolio Committee on Energy; hon members; diplomats; director-general; senior management of the Department of Energy; chairpersons and chief executive officers, CEOs, of public entities; guests; stakeholders; and ladies and gentlemen, our first democratically elected President, Dr Nelson Mandela once said, and I quote:
For to be free is not merely to cast off one's chains, but to live in a way that respects and enhances the freedom of others.
It is an instructive remark, enjoining us all to work hard, not only to cast off the chains, but to respect and enhance the freedom of others. It is therefore fitting that four years since President Jacob Zuma, through a stand-alone department, has assigned us the task to translate the ANC's policies on energy into implementable government programmes, we must reflect on the progress made and the road traversed thus far.
The ANC policy on energy is approached from the perspective of how energy resources can be effectively used to meet the national developmental goals. It should also be implemented within an Integrated Energy Plan, the IEP, balancing the goals of economic efficiency, environmental sustainability and social equity. The policy also aims at ensuring efficient use of energy and the substitution of more appropriate fuels.
Madiba further guided us when he said, and I quote:
Freedom alone is not enough without light to read books at night.
The ANC mandated the Department of Energy to ensure the secure and sustainable provision of energy for socioeconomic development. In essence, this enables us to enhance the freedom of others by making sure that the lights to read books by are always available to all the people of South Africa.
Tabling our Budget Vote in June 2009, we made various commitments on how we, as Team Energy, planned to transform the country's energy landscape to be the ANC-led government's vehicle for economic development and job creation.
I am pleased that today I can report on the progress we have made so far.
Pursuant to the ANC's resolution of, and I quote, "ensuring security of supply of energy resources and pursuing an energy mix that includes clean and renewable sources", we delivered the country's first integrated energy mix plan for electricity, known as the Integrated Resource Plan, the IRP. It has a deliberate bias towards cleaner energy and it is in line with the long-term mitigation scenario, as espoused by President Jacob Zuma at the Conference of the Parties, Cop 15 in 2009.
We created regulatory certainty in the energy sector, which is bearing fruit through significant investments in energy infrastructure. We have made significant inroads into making electricity accessible to all South Africans. We have achieved over a million household connections over the past four years, increasing access to over 84%, as per Census 2011. The Independent System and Market Operator Bill was approved by the Portfolio Committee on Energy and will soon be debated in the National Assembly. This will create the framework for the restructuring of the electricity supply industry and create the necessary space for the participation of the private sector in power generation.
Through the Renewable Energy Independent Power Producer Programme, the REIPP Programme, 47 bid companies were contracted to produce 2 450 megawatts of Mini, hydro, wind, photo-voltaic, PV, and concentrated solar projects, CSP.
To date, we have installed over 350 000 solar water geysers. And through the Green Economy Accord, we have ensured that the solar water heating programme strictly enforces the inclusion of a minimum of 70% local content threshold in an effort to optimise the benefits of localisation and create the much-needed jobs. We have continued to improve on the challenges experienced with the roll-out of the solar water heating programme. The biggest beneficiaries of the solar water heating programme are the women who are relieved of the chores of having to cook and heat water every morning.
We have promulgated the biofuels blending specifications and regulations, and are working within the government system to finalise the outstanding matters, and to facilitate the emergence of this industry with its promising job creation potential.
We set a course towards improving wages of retail and forecourt workers in the liquid fuel sector.
Through our persistence on issues of transformation in the energy sector, we witnessed the achievement of an unencumbered 25% black economic empowerment, BEE, stake in Total SA, through a consortium led by Calulo Investments of Mr Mkhuseli Faku. Calulo's stake in Total South Africa and its leadership within the consortium is an excellent example of the strides that are being made in ownership transformation in the local petroleum industry.
The Electricity Distribution Industry Holdings, EDI, has been closed down as per Cabinet's directive. Capacity is created in the Department of Energy to deal with the Approach to Distribution Asset Management, Adam.
The National Radioactive Waste Disposal Institute has been established and will be operationalised during 2013-14. Seed capital to this effect has been secured, and individuals are being recruited to the board of directors.
Hon members, you will recall that during the Conference of the Parties, Cop 17, the development of the energy resources from the mighty Congo River, popularly known as Grand Inga, was identified as one of the legacy projects. To fulfil this aspiration, you will also recall that the President of the Republic, President Jacob Zuma, and the President of the Democratic Republic of the Congo, President Kabila, witnessed the signing of a memorandum of understanding that sought to pave the way for the development of this treaty. I am pleased to announce that we have finalised the treaty that will guide the development of this project, and it has paved the way for bringing clean energy to South Africa. [Applause.]
It was Amilcar Cabral who once implored humankind when he said, and I quote:
Hide nothing from the masses of our people. Tell no lies. Expose lies whenever they are told. Mask no difficulties, mistakes, failures. Claim no easy victories.
It is therefore important that we admit that there are certain areas where progress has not been achieved as expected. One of these is energy efficiency. As a country, we have not been able to get together and resolve our energy demand side problems. Although we have initiatives such as the Eskom 49M initiative, the Energy Conservation Scheme, the Energy Efficiency Leadership Network, the distribution of compact fluorescent lamps, CFLs, and others, this is not enough, and we need to redouble efforts in this regard.
The Integrated Energy Plan, IEP, was deferred for completion to 2013-14, mainly to facilitate alignment to the National Development Plan, NDP.
We are all aware of the negative developments within the national oil company, PetroSA. I wish to assure South Africa that I have taken these governance and procurement challenges seriously, which is why, late in 2012, upon the alleged transgressions coming to my attention, I instructed the Chairperson of the Central Energy Fund, CEF, to initiate an investigation immediately, and I want to indicate that that investigation was done with immediate effect.
Hon members, we have received the report and are in the process of taking the investigation forward whilst implementing some of the recommendations made to clean up PetroSA. We need a credible national oil company. There will be no compromise on this particular issue. Hon members, the report on the audit of refineries has revealed that our refineries are operating below nameplate capacity. This is an indication that investment by the private sector has not taken place to maintain maximum capacity, let alone improve capacity. This information has assisted us in improving the management of the liquid supply situation.
The audit also indicates the need for investment in the refinery sector, which is part of the response to the call by the NDP and the Liquid Fuels Infrastructure Road Map. The road map will be presented to this House in the second quarter of the 2013-14 financial year.
The capacity constraints in the refining sector and the pending tightening of fuel specifications under the Clean Fuels II programme, point to the need for the decisions to be made on the building of the new refinery.
The Liquid Fuels Infrastructure Road Map also indicates the need for additional refining capacity and the expansion of the petroleum products import, transportation and storage facilities. For the 2012-13 financial year, the Department of Energy was appropriated R6,7 billion and has spent about 98,9% of the allocated budget.
The Integrated Energy Plan, a planning instrument to determine the most appropriate approach to meeting our energy needs up to 2050, is ready to be taken through a robust public stakeholder consultation process. This process will precede the consultation on the constituent parts of the IEP, including the Integrated Resource Plan, IRP, and Liquid Fuels and Gas Infrastructure Plans.
Our target was to electrify 150 000 households, and we have achieved 175 474 connections, which is 25 474 above the target. [Applause.]
The multi-year price determination, MYPD 3, was concluded in March this year, with the National Energy Regulator of South Africa, Nersa, allowing tariff increases of 8% per annum over the next five years. This provides certainty about electricity pricing and facilitates relatively longer-term planning for much needed investment by municipalities, Eskom and the industry.
Projects that are indicated in the Integrated Resource Plan are expected to be largely funded from tariff increases. The Eskom build programme and other Integrated Resource Plan programmes can now proceed to improve our energy security.
In line with the commitments made by President Zuma at Cop 15, our focus last year was on taking forward the clean energy initiatives. The positive outcome of our efforts in this area has been witnessed by more than R70 billion in investments in new generation capacity, with a total of about 2 450 megawatts of renewable energy capacity to come on stream from 2014. This amount of renewable energy capacity, to come on stream from 2014 forms part of the eight initiatives of the Presidential Infrastructure Co- ordinating Commission, PICC.
I am proud to say that today, amongst the G20 countries, we are now recognised as the 9th most attractive investment destination for the Green Economy. [Applause.]
Our renewable energy programme was voted by the Global Leadership Infrastructure Programme in New York as the best green energy infrastructure programme in the world for 2012. [Applause.]
In addition to this, we have also received two additional awards from the Africa Investor CEO Infrastructure Investment Summit, which was held recently in Cape Town, namely the Infrastructure Regulator of the Year and the Power Deal of the Year Awards. I want to say that this actually puts paid to your skepticism about our noncommitment to renewable energy. [Applause.]
Clearly, hon members, we are contributing to the collective effort to implement the National Climate Change Response Strategy, the Green Economy Accord and the NDP's move to less carbon-intensive electricity production through the procurement of renewable energy sources. Hon Chairperson, we pride ourselves on milestones reached. We acknowledge areas that need improvement. Going forward, allow me to point out some of the key initiatives.
For the 2013-14 financial year, the Department of Energy has been allocated a budget of about R6,5 billion, which is 2% less than last year's allocation. As much as 93% of the budget is earmarked for transfers to municipalities and state-owned entities, while 7% is to be utilised for operational and capital expenses.
Hon members, despite the success of installing over 5,6 million new electricity connections since 1994, Census 2011 shows us the glaring examples of areas with a serious lack of access to energy, such as Mbizana, Matatiele, uMsinga, uMhlabuyalingana, uMkhanyakude and many informal settlements in the Tshwane, Johannesburg and Ekurhuleni Metros, amongst others.
We remain committed to increasing access to modern energy in the fastest possible way. In support of the initiatives under the strategic integrated projects, SIPs, 6 and 8 of the PICC, we intend to publish the National Household Electrification Strategy, incorporating grid and offgrid solutions.
In the medium term, we will roll out a comprehensive energy solution in both informal and new housing developments, incorporating grid electricity, non-grid electricity, solar water heating and LP gas for formal dwellings. For informal settlements, this will involve LP gas for thermal needs, plus a PV-technology solution for lighting and small power requirements.
In the last four years, three integrated energy centres were constructed in Qunu, Mbizana and Ulundi. We have three sites in the pipeline to be completed during the course of 2013-14.
The Integrated National Electrification Programme received an allocation of about R3,8 billion. Eskom and municipalities will receive R2,1 billion and R1,6 billion respectively, and we are confident of delivering 220 000 new connections in this budget cycle. Electrification by political affiliation created islands of darkness in KwaZulu-Natal, and about 15 000 households were left unelectrified. To date 10 200 of these have since been electrified. [Applause.] The Premier of KwaZulu-Natal and the Treasurer-General of the ANC have confirmed that elimination of these so-called islands affirms that, working together, we will be able to improve the lives of all South Africans, irrespective of their political affiliation, because electricity doesn't have a membership card. [Applause.]
The challenges of lack of access to safe forms of energy lead to our communities using unsafe forms of heating, cooking and lighting. We will bring energy safety to the centre stage and enter into collaboration agreements with the Household Energy Safety Association. Members of this association are in the gallery; the LP Gas Safety Association, local government and the Department of Social Development. The CEF will play a leading role in this particular regard.
Hon Chairperson, the Integrated Resource Plan remains the blueprint of our future energy mix and electricity capacity requirements, and forms part of SIPs 8 and 9 of the PICC programmes. Various determinations to implement the technology programmes under the Integrated Resource Plan have been made and these include, amongst others, 2 600 megawatts gas to power, 2 200 megawatts coal and 800 megawatts cogeneration.
The procurement framework for these programmes will be completed this year to coincide with the third window of the Renewable Energy Independent Power Producer, REIPP, programme.
We, as Team Energy, have decisively demonstrated that we are champions of the Green Economy and implementers of its accord.
Apart from the renewable energy programme, we have more Green Economy programmes in the pipeline. This year we will prioritise the following. We will conclude negotiations with the sugar and timber industries to harness about 800 megawatts of power by capturing the value that is currently lost due to dumping biomass from these industries as waste. This is in line with the determination we made under the Electricity Regulation Act last year. Mpumalanga, the Eastern Cape and KwaZulu-Natal, with their sugar cane and timber plantations, have been identified as the hub for this initiative.
We urge these industries to recognise the importance of using this programme to facilitate agrarian reform, and we expect them to empower communities that could form complementary supply chains through sugar cane farming, and ensure BEE partnerships as an integral part of their project companies. Remember, the ANC says we need to use everything available from waste, from cow dung to nuclear, to provide energy for the people of South Africa. [Applause.]
About 350 000 mostly low-pressure systems have to date been installed, with the overwhelming majority of the systems installed being imported in the solar water heating programme. We have made the point that the continued importation of these systems is untenable, particularly if the systems are procured using public funds.
In line with the undertaking made last year, we have intervened to ensure that we create local jobs by enforcing that solar water heaters funded under the fiscal allocation have a minimum of 70% maximum local content.
We are aware of the quality problems afflicting some of the installed systems. We will soon be able to identify all the problematic installations from a central point, which will help to blacklist those service providers who do shoddy work. No one is going to install a solar water heating system in South Africa when he has done shoddy work in the previous job that he has done. [Applause.]
A new implementation model was developed and is in the process of being implemented. The transition to the new contracting model will happen during 2013 to allow for new factories to be put in place. The verification of local content of the manufactured systems will be in accordance with the standard promulgated by the South African Bureau of Standards.
Financing of solar water heaters has until now been a challenge. In addressing the funding challenges, an additional R4,7 billion has been allocated to complete the installation of one million solar water geysers.
There will also be a larger focus on high pressure systems, since higher energy efficiency gains can be achieved by replacing electric geysers in the high electricity consumption market like that of members of this House. Members of Parliament must also start to lead by example and install solar water heaters at their residences. [Applause.] [Interjections.] We are not saying ANC members, but all Members of Parliament. [Interjections.]
With regard to electricity distribution infrastructure, we will work with Nersa to provide a tight framework for using tariffs for infrastructure rehabilitation or the Approach to Distribution Asset Management, ADAM, and the energy efficiency or standard offer initiatives. The ADAM project has been launched in line with SIPs 6 and 10 of the PICC's National Infrastructure Plan. An initial amount of R320 million has been allocated for 2013-14 to pilot the Adam projects in seven municipalities and two metros.
The roll-out of these pilots will be overseen by a steering committee that will assist the respective local government entities in the planning and implementation of these projects.
We believe this will be a solution to infrastructure maintenance problems, as we have witnessed the successful achievements by the department of the front-loading of municipalities with a severe backlog infrastructure for electrification projects, such as those in Mbizana, Matatiele and Thulamela, to name a few.
In addition, the success of working in a holistic manner as part of the Presidential Revitalisation Intervention within the King Sabata Dalindyebo Local Municipality, which is also an example of how electricity network challenges, will be addressed in the Adam programme. It is also envisaged that more local authorities will, in support of SIPs 6, 8 and 9, become involved in renewable energy generation initiatives through Waste to Energy and Rooftop PV systems. Such initiatives are already under consideration in various centres in Gauteng, such as the Johannesburg Metro and Mogale City.
In line with his commitment at Cop 15, President J G Zuma called on us, and I quote:
... to prove to ourselves and the world that renewable energy, especially solar, can be a baseload power generator.
After experiencing setbacks that delayed the solar park feasibility study, I am pleased to indicate that this is back on track. We will complete the feasibility study this year and then define the implementation scheme for the concept. In fact, it is exciting that the solar park corridor concept is taking shape with different areas along the corridor getting ready for implementation, for example, in Prieska in the Northern Cape, and this truly proves that the corridor approach does work.
Hon members, the Integrated Resource Plan also takes into consideration the retiring of the old baseload coal-fired power stations. The retirement of this baseload capacity is inevitable, and therefore its substitution is extremely time-sensitive. It is incorrect to assume that the replacement of this coal baseload source will be triggered by the demand projection alone.
Irrespective of the demand, it is anticipated that the supply of power through these old coal plants will fall away around 2023, and replacements are critical if we are to ensure our energy security.
Nuclear power carries tremendous benefits for South Africa in terms of the following: by being the lowest clean baseload levelised cost; broadening the energy mix; aligning with our beneficiation strategy; contributing to industrialisation and localisation; being central to the mitigation of carbon dioxide emissions; and, most importantly, leapfrogging South Africa into the knowledge economy as well as massive industrial development.
We also believe that the Youth Accord will be given expression through massive skills development and career opportunities in this programme.
The National Nuclear Energy Executive Co-ordination Committee, NNEECC, was established, as we all know, in line with the Nuclear Energy Policy of 2008, as the executive structure to lead, monitor and ensure oversight of the implementation of the policy.
The NNEECC approved a phased decision-making approach for implementing the nuclear programme and it has designated Eskom as the owner and operator of nuclear plants in South Africa in line with the nuclear policy.
We have set an international example after doing our own country assessment by conducting the International Atomic Energy International Nuclear Infrastructure Review, IAEINIR, and we are the first country with operating nuclear power plants and reactors to conduct such a readiness assessment, because we believe in transparency.
The department has been allocated R710 million, including the South African Nuclear Energy Corporation, Necsa, and the National Nuclear Regulator, the NNR, and its nuclear state-owned companies, to conduct, amongst other things, research and development; safety regulation; control of source and special material in terms of international obligations; and the development of nuclear policies and legislation to ensure the peaceful use of nuclear energy.
Over and above this, there is a stakeholder engagement process which we have already started in terms of ANC directives on transparency and openness, and the public's right to know. Our approach is informed by the need to demystify nuclear energy.
The department will continue working towards the roll-out of the nuclear programme, including reaching a final investment decision towards the procurement of nuclear power plants.
The Department of Energy participated, like you all know, in the Brazil, Russia, India, China and South Africa, Brics, Summit held in South Africa in March 2013. The summit noted the importance of energy co-operation and mandated the South African government, through the Department of Energy, to explore the possibility of forming an energy co-operation forum of the Brics member countries. The co-operation will benefit from the complementary nature of the Brics member countries reflected in the characteristics of the energy sector and the resource potential of each country. It is our intention to meet with the Brics Energy Ministers during this financial year to establish the terms of reference for the Energy Co-operation Forum to be considered at the next Brics Summit in Brazil, in 2014.
Our dialogue with partners will continue on the continent to help Africa to strategise on how best to raise, mobilise and administer funding to deliver energy access to those in need. The UN Secretary General's Sustainable Energy for All, SE4ALL, initiative demands of us to address the serious challenges of energy poverty.
We will continue to engage with our counterparts in the Southern African Development Community, SADC, to strengthen the Southern African Power Pool, SAPP. We will also continue to play a leading role in the organisations and on platforms such as the Clean Energy Ministerial, CEM; the International Renewable Energy Agency, the IREA; and the International Energy Forum, IEF; the International Atomic Energy Agency, IAEA; and the International Energy Agency, IEA; as well as the Conference of Energy Ministers of Africa, Cema.
Hon Chairperson, the legislative programme this year involves the introduction of the Gas Amendment Bill, the Electricity Regulation Amendment Bill and the National Energy Regulator Amendment Bill.
Hon Chairperson, in conclusion, as the Department of Energy, we have managed to maintain exceptional financial standing, and achieved unqualified audits since our establishment for the past two years, and plans are well under way to improve and achieve a clean audit. I Thank you. [Time expired.] [Applause.].