Thank you, Chairperson. Hon Minister, thank you for bringing us the good news that there is the possibility of a reduction in the fuel price before the holidays. Just for the information of my colleagues, I will be joining you in going on holiday this year, then. [Laughter.]
Many speakers have alluded to the issue of adequate supply. The problem is that there isn't a sufficient supply of electricity. I know that this is an issue that we need to address urgently, both in the short and in the long term.
I think, however, that we have to analyse the issue of reserve margins. Reserve margins have now breached the stipulated 11% threshold, despite an international best practice recommendation of about 15%. Now, if we have a 37% demand for electricity and it normally increases to 37 000 MW in winter, and our capacity is about 41 000 megawatts, that gives you a reserve margin of about 8,5%. It is critical, as the previous speaker has said, and I think we need to address it.
This morning the Minister of Public Enterprises assured the nation on television that we would not have blackouts this winter. But there are different views. The Energy Intensive User Group has indicated that Eskom's power buy-back programme can only last until June or July at the latest, putting supply at risk. Demand for electricity, as I said, is problematic, and we hope that perhaps the demand for electricity will somehow, although it's contradictory to economic growth, stay at the levels predicted.
We heard in the presentation this morning that the cost of running diesel- fired gas turbines is R8 per kilowatt-hour. This is an abnormal cost if you compare it to what it should be, which is about 60c per kilowatt-hour. These turbines are being run because we need a supply of electricity.
Let us talk about the good news. Renewable energy remains a critical potential source of alternative energy supply. Bidders heard that the second round of renewable energy provisions had not been announced on 14 May, and you saw that there was a newspaper clipping. Thank you for informing us about this. I think that we will have an extended bidding process on 21 May and that we are well on our way there.
You have also mentioned that the target is 3 625 MW. Currently, we are at 1 460 renewable energy MW, and I think it's an achievement. However, we have to take into consideration that we need bulk supply to power the economy in our country. That's very important, although this is huge progress in terms of renewables.
Minister, the oversupply of renewable energy projects, which is good news, has been presented and needs to be harnessed. It surely makes sense for the recently announced increase in the environmental levy to be allocated to funding the purchase of renewable energy. Now, my question is this: Can the Minister give an indication to the House as to whether this will indeed be the case? Have these huge amounts - I believe there are substantial amounts in that account - been ring-fenced for the purpose of renewable energy?
Then, of course, we have to talk about pricing. Many people have spoken about pricing this evening, and South Africans have recently been subjected to significant increases in the cost of living. I believe that the cost of electricity has, over the last three years, risen by 83,6% and this affects the poorest of the poor the worst.
As a means of softening the blow, especially to the poor, the following proposals were made by the DA to the Economics cluster hosted by Prof Eberhard in the Planning Commission. He indicated to us that there a special section on pricing and funding would be included in the National Development Plan which we all, of course, need to welcome.
We believe that electricity pricing should be inflation-related, following the recent reduction in the increase in electricity prices from 25,9% to 16%. Further, we expressed our view that the administered prices were inflated by the cost of replacement of assets methodology that Eskom uses. I think we've spoken to the director-general in this regard. This is not acceptable, and we need to review the methodology. We asked for an interview with you, Minister, and you actually extended an invitation to us, but unfortunately it was cancelled. It's time we got together and sorted out the funding and pricing aspects, and perhaps also had the guidance of Prof Eberhard.
With regard to the fuel price, we are also concerned that the international component of South Africa's basic fuel price is driven by market sentiment. I think you have alluded to that and - if I can find my notes - you said that there were political upheavals in the swing in the price from $100 to $120. I believe that we are on the right path, that dialogue at the international level is also necessary, and that you are doing your best in regard to that. The Department of Energy has made a call for a review of the fuel pricing mechanism, and I would like to know the progress in that regard. Considering the importance of electricity price stability to incentivise investment, to spur economic growth and to create jobs, we have made a few interventions. I would like to thank the National Energy Regulator of SA, Nersa, for all the time spent with the DA, taking into consideration that we had a reduction in the price.
We welcome Nersa's commitment - the upcoming Nuclear Build Programme will not be included in the third multiyear price determination, MYPD3, so consumers need not be too concerned about the pricing situation.
Let me jump to the last issue that was mentioned, that of distribution. The municipalities, we know, are not fulfilling their responsibilities with regard to maintaining the networks. My hon colleague, Lance Greyling, has mentioned the leadership vacuum. We are looking to you, Minister, to take the lead here, because we really need somebody to do the necessary co- ordination in this regard.
The Development Bank of Southern Africa - I'm glad Mr Moloto is present and we can share some funding and financing models - has now been repositioned as a centre of excellence for infrastructure, which will unlock infrastructure delivery.
I have written to Mr Radikeledi, Chief Director of Development Finance Institutions in the Treasury, to establish the state of readiness of the bank to embark on this new development path in the funding of 158 underresourced municipalities. We should not neglect those municipalities because we have to get electricity from A to B. I don't want any comments about "C" now! [Laughter.]
Noting that the problem lies in the huge demand for municipal capital, the additional funding by the Development Bank of Southern Africa, DBSA, to address the backlog in electricity distribution maintenance is critical. Minister, the real gap in getting electricity from A to B is the policy one. Thank you, Chair, for the opportunity. [Time expired.] [Applause.]