Chairperson, Ministers and Deputy Ministers who are here today, Deputy Chairperson of the NCOP, Chairperson of the Select Committee on Economic Development, hon Freddie Adams, hon members, ladies and gentlemen, I would like to take this opportunity to submit an apology on behalf of the Deputy Minister of Energy. She had to accompany the President on the presidential visit to the Eastern Cape. You would know that energy is central to making sure that we can improve on services, particularly in our schools.
Chairperson, I dedicate this Budget Vote speech to Mama Albertina Sisulu, a veteran and a stalwart of the liberation movement, a mother and grandmother to her family and the nation. The passing on of this icon of the women's liberation struggle is significant in that she left us on the second day of Youth Month and on Ascension Day in the Christian calendar.
It is, however, heartwarming when one realises that at her age Mama Sisulu was able to once again make her mark when she voted during the recent local elections. The significance of these elections was that they were held on the birthday of her late husband and a true revolutionary in his own right, our father Ntate Walter Sisulu.
She was ensuring that capable and credible leaders were elected for effective service delivery in our communities. She had a lot of passion and love, not only for her family, but for the nation as a whole. May her soul rest in peace.
We owe it to her and the many other stalwarts of our struggle against apartheid and colonialism to do anything within our means to continually strive to improve our people's lives for the better.
Chairperson, this year's budget allocation for the Department of Energy is R6,09 billion. From this budget R3,2 billion will be transferred to municipalities and Eskom for the national electrification programme, a 2,3% increase from last year's allocation. The Nuclear Energy Corporation of South Africa, Necsa, a state-owned entity responsible for the country's nuclear energy innovations, research and development, will receive R586 million.
An amount of R398 million will be allocated to the energy efficiency and demand side management programme, which aims to implement energy-efficiency interventions in 21 municipalities and Eskom. And, lastly, an amount of R1,5 billion will be transferred to Transnet for the new multiproduct pipeline between Durban and Johannesburg. All indications point to the new multiproduct pipeline being operational by 1 January 2012.
The levy on petrol that motorists have been paying will yield a return. The implication is that there will be fewer trucks on our roads transporting fuel from the coast to Gauteng and other inland provinces, and thus fewer accidents.
Chairperson, only 5%, or R305 million, will fund the operational and administrative work of the Department of Energy. This, I am sure we will appreciate, has a major effect on the department and also its main mandate in that we are operating at only 52% capacity in terms of human resources. I need to indicate here that out of that 52%, 60% are women.
With regard to electrification, you will all remember that the Secretary- General of the UN has declared 2012 "The year of access to energy services", and accordingly, the quest for universal access to electricity continues. In the 2010-11 financial year, we managed to create 5 811 jobs, and connected 194 453 homes to the electricity grid by year end.
To date South Africa's energy penetration stands at over 75%, and this year, with the R2,9 billion allocated to the electrification programme, we will connect more than 150 000 households and build 10 substations, of which five will be in KwaZulu-Natal, four in the Eastern Cape and one in the Northern Cape.
We will roll out a further 10 000 solar home systems in un-electrified areas. We will, through this programme, contribute to creating about 5 000 jobs across the country. Allow me, hon members, to give some indication of the electrification focus per province for this financial year: In the Eastern Cape we will be effecting about 41 042 connections, worth R766 million; in the Free State 6 284, worth about R94 million; in Gauteng 44 614, worth about R330 million; in KwaZulu-Natal 39 306, worth about R709 million; in Limpopo 29 246, worth about R298 million; in Mpumalanga 16 550, worth about R198 million; in the Northern Cape 8 591, worth about R104 million; in the North West 15 058, worth about R179 million; and in the Western Cape 11 000, worth about R152 million. The total will be 206 000 connections, worth about R2,8 billion.
Hon members, the challenge of illegal connections is persisting, despite our endeavours to curb this criminal behaviour. These illegal connections do not only impact negatively on the revenues of the licensed providers, but also pose a health and safety risk to our people.
Initiatives are being finalised to combat this unwanted behaviour and this will be elevated to a more serious crime and will have to be dealt with harshly with the strongest might of the law. We have approached the Director of Public Prosecutions to make electricity theft a more serious economic offence that attracts the appropriate penalty.
The Department of Energy, ladies and gentlemen, would like to re-affirm its commitment to establishing more integrated energy centres throughout the country in order to minimise energy poverty. The IEC's programme is one of the vehicles that the department has embarked upon to contribute to rural development and job creation in the fight against energy poverty.
Sasol supported the drive to commemorate the 20th anniversary of the release of our leader, the first President of a democratic South Africa, President Nelson Mandela, by establishing an integrated energy centre at Qunu.
Last year we reported on the challenges facing the integrated energy centres in Kuruman in the Northern Cape and Eshane in KwaZulu-Natal. These two were pilot projects and were closed down due to poor management and a lack of proper governance structures. The department, together with Total (Pty) Ltd and the municipalities in these areas, is busy resuscitating the two projects and they should be re-opened during this financial year. The lessons learnt from the two sites were considered when developing the other five sites; hence they are still operational to date.
The department is further partnering with the Department of Rural Development and Land Reform to develop future IECs, in line with the Comprehensive Rural Development Programme. The two departments have already worked together in Muyexe Village in Giyani to conduct an energy needs assessment of the area. This year we intend to launch two more IECs that will be funded by PetroSA, the national oil company of South Africa.
With regard to petroleum licensing, backlogs identified last year have all been cleared. All fully completed applications are now processed within the prescribed 90 days and our plans going forward are to improve on this timeframe.
Hon members, as much as licensed retail service stations are there for motorists to purchase fuel, they also serve as convenient stores for the communities in which they are located. I believe that we would need to engage with retail operators to ensure that where they have health amenities these must be kept clean and in conditions that support good hygiene.
Improved energy efficiency is the most cost-effective, least-polluting and readily available energy resource. Energy efficiency can enhance the competitiveness of our economy, while helping to alleviate energy poverty as energy becomes more available. Accelerated energy efficiency can create attractive green jobs and businesses.
We will continue our discussions with other government structures to ensure that all government buildings are energy efficient. We will also continue work on further rolling out off-grid technologies, and work towards energy- efficient towns and cities. With the Department of Public Works, we will intensify efforts to make government buildings energy efficient.
Working together with the Department of Tourism, we will lobby the hospitality industry grading council to consider energy efficiency as a criterion for the star rating of establishments.
Last year, we committed to establishing the South African National Energy Development Institute, Sanedi, and this was duly done. This institution will, amongst other things, be the champion for energy efficiency in the country. This will not only save energy but will also reduce the burden on households. In addition, Sanedi will house South Africa's carbon capture and storage research and development as well as other energy research programmes.
In line with the Cabinet decision of December 2010, Electricity Distribution Industry, EDI, Holdings ceased operations on 31 March 2011. An administrator has been appointed to execute the winding-up process and this is expected to be completed by the end of June 2011.
As directed by Cabinet, we are continuing with some of the programmes that EDI Holdings was involved in, including the rehabilitation of electricity distribution infrastructure. In this regard, the department will establish internal capacity that ensures service delivery of uninterrupted power to end users. Proposals in this regard will soon 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. We need the support of this House to fast-track the eradication of electricity infrastructure backlogs.
The Nuclear Energy Corporation of South African, Necsa, continues to produce, through its subsidiary, the National Transportation Programme, NTP, radioisotopes that are critical to the diagnosing and treatment of cancer. They have become the number 1 commercial supplier of medical radioisotopes that are produced from low-enriched uranium as opposed to production from nuclear weapons-grade uranium. These radioisotopes are saving lives worldwide and we are proud to have Necsa making this big impact.
Working in conjunction with the Department of Trade and Industry, Necsa is training young people in artisan skills that are critical to the economy. This will make them more attractive to prospective employers and help alleviate the problem of joblessness.
Hon members, contrary to popular belief, the role of national oil companies globally is increasing. The fact that we are not endowed with oil should not be seen as a reason not to have an oil company. PetroSA converts gas to liquid fuel, which saves us significant foreign exchange as we have to import less petroleum.
Going forward, we will strengthen PetroSA and make sure that it plays its role in both the local and international arenas. We reiterate our commitment to ensuring that South Africa has additional refining capacity by 2020.
The department has already embarked on the development of the integrated energy plan, IEP, in consultation with other government departments. The IEP process will seek to address some of the issues which were not addressed during the integrated resource plan process and which might have an impact on the longer-term options.
This includes using a framework or methodology that incorporates key risks and uncertainties associated with long-term planning in the energy industry; alignment with government's long-term vision for emissions reduction; and delivering on the New Growth Path and Industrial Policy Action Plan.
We have stated that nuclear power is still a necessary part of our strategy in seeking to supply electricity to the economy and households and also to reduce our greenhouse gas emissions through a diversified portfolio, comprising some coal, oil and gas and renewable and energy efficiency technologies.
The recent events at the Fukushima-Daiichi Nuclear Power Plant have made it necessary for South Africa to carefully take stock of the implications of these developments on our nuclear power programme, as outlined in the integrated resource plan.
We are, as part of our contribution to the global dialogue on the future of nuclear, attending the International Atomic Energy Agency Ministerial Conference at the end of June to also make inputs with regard to the possible improvements of nuclear safety, emergency preparedness and response following the Fukushima accident.
I wish to assure members of this House that government will never compromise the safety of our nation in its implementation of our nuclear programme as part of the integrated resource plan mandate.
Furthermore, South Africa is the sixth largest producer of coal in the world, and it will be inappropriate for us to produce coal for the world and deny ourselves the benefit thereof. I need to make it categorically clear that we have included 15% of coal-generated power in the new plan, whilst simultaneously working on efforts, in partnership with sister departments such as Science and Technology, to find means to "clean" our coal.
Research and development work in the areas of underground coal gasification and carbon capture and storage is continuing.
A lot has been said on the topic of renewable energy, but I want to state again here, as we stated during the National Assembly Budget Vote debate, that we have finally arrived at a point where we are ready to procure the first clean energy projects indicated under the integrated resource plan.
We hope to conclude at least 1 000 MW of renewable energy transactions by December this year, in time for showcasing as we host the 17th Conference of the Parties, COP 17, in Durban. Apart from the showcasing, this programme is aligned to the New Growth Path and will substantially contribute to President Zuma's vision on job creation.
Following the successful Solar Park International Investors Conference held in October last year in Upington, we have committed R18,6 million to the completion of a comprehensive feasibility study by the end of July this year. We are very excited that South Africa can begin to seriously explore the possibility of solar technologies being deployed as part of our broader energy mix, in a way that will also decarbonise our energy in South Africa.
I need to state categorically that localisation is non-negotiable, and meaningful participation across the value chain for the benefit of our people will be pursued vigorously. We need to indicate here that one of the objectives in identifying the energy carriers in the integrated resource plan, IRP, was to make sure that we are able to increase our manufacturing capability.
However, we also have to make sure that we can beneficiate some of our minerals locally so that we can contribute to the energy component as well as the primary energy source.
Working together with the Department of Economic Development and the Department of Trade and Industry, this objective of localisation will be realised.
The solar water heating programme has to date delivered over 115 000 systems across the various provinces, under the fiscal and rebate funding schemes. This is a significant increase from the zero bases that we started from. We are still lagging behind our annual targets, mainly due to funding constraints, and we are working on various interventions in order to address the funding problem. The standard-offer programme will become operational this year as an alternative funding scheme for solar water heaters.
Liquid petroleum gas, LPG, is cleaner burning and is a more efficient source of energy. Therefore we will soon be proposing the use of LPG as an energy poverty intervention, where LPG would be offered to the indigent as part of free basic alternative energy and, over time, replacing paraffin for cooking and heating.
In keeping with the policy objective of diversification of our energy sources and fuel switching, we will be publishing a liquefied petroleum gas strategy, to divert households from the use of electricity for cooking and heating to LPG. We believe that by doing this as a demand-side intervention, there is the potential to delay the construction of at least one power station.
With regard to the Working for Energy project, ladies and gentlemen, you would remember that we indicated we have about R25 million for this particularly important programme. Through this programme we intend to diversify our energy mix and increase access to energy.
We will ensure that all projects under this programme are labour intensive, and educational and empowering in nature. We will also launch a waste-to- energy project at Philippi in the Western Cape, where members of the community have been trained and will produce energy from alternative sources.
On 24 February 2010, the energy regulator approved the implementation of inclining block tariffs, IBTs, for domestic and residential customers, in line with our pricing policy. The concept of IBTs means that the more you use electricity, the more you will pay. This decision was taken in order to provide for cross-subsidies for low-income domestic customers and is applicable to both Eskom and municipalities.
With regard to IBTs, we flagged the problem relating to prepaid metering systems and their inability to be configured to dispense IBTs. I am happy to announce that the reconfiguration process has been completed on Eskom prepaid meters. Prepaid meters in municipalities will be reconfigured next, as we extend coverage of IBTs to all qualifying households.
Due to IBTs being a new concept and due to municipalities facing system challenges and many other challenges, roughly 19% of the licensed municipalities have implemented IBTs on their residential customers.
The collaboration of municipalities and Salga is crucial. Just as we have done for free basic energy, we will endeavour to make IBTs an effective instrument for protecting the poor against increasing electricity tariffs.
More than 70% of identified indigent households are receiving free basic electricity, while less than 5% receive free basic alternative energy, including biofuels, paraffin, LPG and other alternative sources.
There are still challenges relating to the coverage and leakage of free basic electricity to nonqualifying households. We urge municipalities to fully implement free basic electricity. This has become even more critical as tariffs increase.
Insofar as our planned legislation for this financial year is concerned, we intend to introduce the following Bills for consideration by Parliament: the Petroleum Products Second Amendment Bill; a gas amendment Bill; the Electricity Regulation Second Amendment Bill; an independent system and market operator Bill; and the National Energy Regulator Amendment Bill.
The House, ladies and gentlemen, must note that due to the limited budget to fund the approved establishment, the department resorted to implementing an interim structure that is currently operational with only 52%, as I indicated earlier on.
We have undertaken further work in refining the approved organisational structure to enhance the department's ability to deliver on stated government-wide priorities. We have established the project management unit to ensure delivery on all identified projects and will implement a project management framework that complies with international standards that have been tried and tested in the energy environment.
This is especially critical in view of the 10 infrastructure projects and three major access-to-energy projects that will be focused on during the coming period. To further enhance our implementation capacity, we will, amongst other things, retrain 72 staff members with a view to enhancing their project management skills.
In responding to the policy positions of the ruling party, we have also established a new branch for clean and renewable energy. It will focus on areas such as the use of alternative technologies and cleaner carriers and will increase the use of renewable energy sources.
This will include the work under way in the area of demand-side management and energy efficiency. We have also partnered with the energy and water Seta and National Youth Development Agency to train 45 youths, five from each province, in the renewable energy sector. This development will also enable the department to significantly better co- ordinate and enhance its contribution to South Africa, with a view to successfully hosting Cop 17 in December this year.
Hon members, the participation of the Department of Energy in the NCOP public participation programme is still weak and this is a cause for concern. We make the commitment to intervene in these matters and enhance our responsiveness to the NCOP public participation programme, especially through the NCOP Taking Parliament to the People programme.
During the last year we were successful in heeding the call for government departments to hold at least 10 public participations per year. We will continue with such engagements, and this year, going forward, special attention will be given to our interactions with organisations for women, youth, children and people living with disabilities to focus on the role they can play in the energy space.
Our focus for the coming period will further be on the areas of energy consumption and distribution, nuclear energy generation and nuclear safety, so that the public will be empowered and educated to understand that any energy source can be a source of danger if not managed and handled properly.
In conclusion, I hereby present the Budget Vote of the Department of Energy. Finally, I would like to thank the House, as led by the Chairperson, as well as the President and my Cabinet colleagues, for supporting the Department of Energy's programme.
I also want to thank the Select Committee on Economic Development, led by the hon Freddie Adams, for making it possible that we can always come to the select committee to present our programmes. We hope they will continue to extend the hand of the department in contacting communities and informing communities about the work of the department. Thank you. [Applause.]