Chairperson, hon Minister, hon Members of Parliament, the NCOP, invited guests, the provision of safe and appropriate energy services is seen as a fundamental pillar of the Reconstruction and Development Programme to address ongoing racially based inequalities.
This government therefore recognises that household access to adequate energy services for cooking, heating, lighting and communication is a basic need. Whilst these needs can be met by various fuel-appliance combinations, the ANC-led government also recognises that without access to electricity - a clean, convenient and desirable fuel - human development potential is ultimately constrained.
The introduction of electricity to different consumers such as domestic, industrial, agricultural and commercial users, and for community lighting, also provides the necessary infrastructure for accelerated economic activities and creates an environment for realising human capabilities.
Energy is therefore important in all the countries in the SADC region, most of which are net energy importers and energy-intensive economies. The main consumer of energy in the SADC region is South Africa, with a well- developed energy sector, particularly electricity.
The South African national electricity utility supplies more than 90% of the electricity to the country. Notwithstanding this, we must be mindful of the fact that a number of our people still have to make do with archaic forms of heating and lighting, like firewood and candles.
The electricity backlog, as reported at the end of December 2010, was between 25% and 30% and the most affected provinces are KwaZulu-Natal, the Eastern Cape, Gauteng and Limpopo. The total household electrification backlog in South Africa, as at 31 December 2010, was 3,3 million households.
By October 2009, 65 339 additional households and 712 new schools were connected to the national grid, with targets of 150 000 and 1 313 respectively. Although the department had projected to complete the remaining electrification backlog by the end of 2009-10, it has been established that in 2010-11 the electrification targets of households were not met.
Though the links between energy and poverty reduction have not yet been fully understood, it is clear that there is a strong correlation between economic poverty, food poverty and energy poverty. Against this background, electrification seeks to address the problem of energy poverty.
The 2010 state of the nation address therefore noted the establishment of an interministerial committee on energy to ensure a reliable power supply for the country. This committee will start with developing a 20-year integrated resource plan for energy, ensuring participation of independent power producers in the energy market and protecting the poor from rising electricity prices.
The committee was further charged with the responsibility of establishing independent system operators which are separate from Eskom Holdings. Progress in this regard has been very slow. The Department of Energy will introduce the Independent System and Market Operator Bill before Parliament during the current financial year.
Currently there are debates around the form and nature of the independent system and market operator and it is clear that a structured and phased approach to the establishment will have to begin post the publication of the Integrated Resource Plan for Electricity.
Chairperson, despite the global recession, Eskom has successfully managed to negotiate and secure most of the fundamental contracts. Building a coal- fired power station is a mammoth task which takes approximately eight years. This does not include project development, which typically takes five to seven years to produce a bankable document.
As such, it would seem that keeping the construction costs fixed to a specific amount is a challenge which Eskom and the Department of Energy will continue to grapple with.
The capacity expansion programme has nevertheless shown remarkable growth. The significant number of commissioned projects is evidence of the progress that has been made so far. In an effort to meet the expected quality standards and deadlines, formal project assurance is used to track project schedules, costs and safety risks.
The following portfolios of the Eskom capacity expansion programmes are on track: new Kusile and Medupi coal projects and the Ingula and Gas 1 peaking projects. The return-to-service stations are apparently not doing so well in terms of schedule, but Camden has been completed and all units fully commissioned.
Undoubtedly, the breather for Eskom, as it walks a tightrope between supply and demand, will be further enhanced when the Ingula, Medupi and Kusile power stations come on line. Once completed, the Ingula Pumped Storage Scheme will generate electricity during peak periods specifically.
The team that is building and refurbishing transmission lines and substations is making significant inroads in strengthening the transmission network. It is estimated that approximately 100 000 direct and indirect jobs will be created.
Chairperson, the work undertaken by the ANC-led government to determine the potential and options for the country to reduce its greenhouse gas emissions - the long-term mitigation scenarios - was clear about the need for renewables, together with nuclear and clean coal as options to reduce emissions from electricity generation.
For renewables, the challenge is to scale up in the next few years, so that implementation at a larger scale is feasible and more affordable in future. The central problem is cost, and much depends on technology development in South Africa and in other countries.
A number of initiatives for renewable energy have, however, been established by the department, such as the regulator's renewable energy feed-in tariff, the Renewable Energy Finance and Subsidy Office within the department, the Renewable Energy Market Transformation Project and the potential use of tradable renewable energy certificates.
The department has indicated that it has subsidised two hydropower projects, as well as biogas and landfill projects. Through the funded projects approximately 17 permanent jobs and 279 temporary jobs were created.
With regard to the Renewable Energy Market Transformation Project, the Department of Energy had access to about US$6 million in donor funds and it was reported that the department was, and I quote, "begging project developers to assist in spending that money".
The question of renewable and clean energy is always in the back of the minds of those of us who live here in the shadow of Table Mountain, barely a few kilometres from the Koeberg Nuclear Power Station.
The acute need to secure reliable energy supplies and the urgent requirement to reduce carbon emissions have put nuclear energy firmly on the agenda as a viable option to be pursued in order to achieve energy mix. Nuclear energy is becoming a preferred solution for energy security and in efforts to mitigate climate challenges.
Chairperson, in conclusion I would like to refer to one aspect of electricity transmission, or the lack thereof - which is extremely worrying, or should I rather say problematic - and that is the question of cable theft.
It was estimated three years ago that South Africa loses in the order of R5 billion a year owing to cable theft that disrupts electricity, telecommunications and rail services. The estimated direct cost of cable theft in South Africa at that stage was R500 million a year.
Unfortunately, I don't have more up-to-date figures, but one can imagine by how much that figure has increased up to now. According to Business Against Crime South Africa, the indirect cost to the economy is conservatively 10 times higher than the expenditure required for replacing stolen cables.
The knock-on effects of cable theft include a reduction in the production of service delivery, a drop in productivity and a loss of business. It is believed that the record commodity price of copper and the strong demand for the metal, especially from China, is the main reason for the escalating occurrence of cable theft in South Africa.
The challenge in combating cable theft is therefore legislation with sufficient teeth to successfully curtail the activities of scrap metal dealers and informal collectors.
Chairperson, the Minister and her department have shown that they are aggressively searching for solutions to turn the current situation in energy around.
Halala, Minister Peters, halala. Forward to building, creating and delivering a better life for all! The committee supports the Budget Vote. I thank you. [Applause.]