I hope it's fine now.
As already indicated by Minister Peters, the year 2012 is the year for universal access to sustainable energy. This year we in the Department of Energy will continue with programmes that will support the availability of sustainable and affordable energy to all citizens in our country.
The Integrated National Electrification Programme, Inep, is the backbone of our electricity delivery programme for communities who were underserved in regard to grid and off-grid connections. It focuses primarily on servicing rural areas and newly established formal urban and informal settlements.
Although the electrification programme has been in operation for 18 years, we continue to come across various implementation challenges. These challenges include the increasing costs of supplying new customers, network capacity, lack of skills, the poor financial status of distributors, and backlogs. The biggest backlogs are in KwaZulu-Natal, the Eastern Cape and Gauteng, followed closely by the islands in and around the eight metropolitan municipalities.
In March this year, as part of celebrating Energy Month, we held an electrification indaba in Durban where we, amongst others, identified shortcomings of the current programme. The department has commenced with the process of addressing these shortcomings, with the assistance of the International Finance Corporation and consultants, in order to improve the connection rate. I would also like to take this opportunity to thank the KwaZulu-Natal provincial government and other participants for their support during the Inep Indaba.
In this financial year the programme has been allocated R3,5119 billion, with municipalities receiving R1,151 billion, and Eskom R1,882 billion. R86 million has been allocated for nongrid connections. This will result in about 192 000 grid and nongrid connections planned for this year. For bulk infrastructure projects, R345 million has been allocated to municipalities and R243 million to Eskom, respectively.
The deteriorating state of the electricity distribution infrastructure is beginning to affect the pace of the roll-out of the programme. To address these challenges, the Approach to Distribution Asset Management, Adam, project is to be launched this year, with pilot projects in selected municipalities.
Our approach is premised on the prioritisation of regulatory matters, rather than structural adjustments for distribution businesses. We also recognise that there might be limitations in the current legislative and regulatory framework, and we require some commitment from municipalities, where funding will be made available to rehabilitate the infrastructure, particularly where energy security is threatened. The government and its social partners signed a Green Economy Accord on 17 November 2011 as an outcome of social dialogue on the New Growth Path. This is an agreement between organised labour, business, communities and the government. All parties agreed to support the government with the development, establishment and publication of a sustainable funding plan to support the installation of 1 million solar water heaters. To date we have installed approximately 250 000 solar water heaters nationwide, against the one million target to be reached by 2014-15. As we move forward with this programme we will be focusing on both rebate and fiscal-funded programmes in the residential and commercial sectors. This programme is not only contributing to the decrease in electricity consumption, but also ensuring access to a basic need, which is hot water.
The department will continue to alleviate energy poverty through the establishment of integrated energy centres in rural areas as part of its contribution to the Department of Rural Development and Land Reform's Comprehensive Rural Development Programme. Our Minister conducted the sod turning ceremony at the QwaQwa Maluti-a-Phofung Energy Centre on 12 January 2012. It is also envisaged that three additional energy centres will be in operation during the 2012-13 financial year.
The key challenge is to ensure that the energy centres which are currently operational are sustainable and continue to benefit the communities in the surrounding villages. For this to be realised, they must be operated and managed as business entities, similar to existing service stations, and should therefore incorporate business management principles, irrespective of the ownership model. There is no business that will succeed unless it sticks to universal business principles.
The oil companies that are partnering with the department have the experience and expertise in operating and managing retail service stations, and these skills should be shared with and transferred to the energy centres. The department is grateful that some of the oil companies have embraced the department's call to provide access to affordable energy services and create jobs in rural areas through the energy centres initiative of our department.
Minister Peters has also indicated that later this evening we will officially launch the South African National Energy Development Institute, Sanedi. Amongst the projects to be implemented by Sanedi this year will be the hosting of the Working for Energy project, which puts clean energy solutions and sustainable development into practice, demonstrating replicable applications and improving the quality of lives in poor and rural communities. An amount of R25 million has been transferred to Sanedi for the current financial year for the implementation of this project.
Last year I also committed myself to intensifying our efforts to engage appropriately with women, youth, children and people with disabilities, and implement responsive programmes and projects in partnership with our stakeholders. Through our partnership with PetroSA, R13 million has been committed to the construction of a multipurpose centre in Nkungumathe as a joint initiative with the Nkungumathe Youth Development Forum in Nkandla. Thank you, Chair. [Time expired.] [Applause.]