Chairperson, Ministers, hon members, exactly a year ago today, Parliament approved the first budget of the Department of Energy as a stand-alone entity. In supporting the budget, I declared, among other issues that I raised, the following:
The DA has already made the point that the department's budget is quite a stretch and we have welcomed the commitment by senior managers to do more with less, to meet targets and deadlines. We shall be watching that all the commitments are met in the interest of energy security and sustainability for all the people of South Africa.
Chairperson, I am encouraged to say that the faith I placed in the senior staff of the Department of Energy to do more with less, was not misplaced. At the time, the staffing situation in the department was a matter of great concern, due to a number of vacant and unfunded positions. The situation is getting better.
The approved structure of the department was 925 posts, but due to a lack of funding, only 474 posts could be filled in 2010-2011. This number is expected to increase to 694 over the Medium-Term Expenditure Framework period. While this is encouraging, it still leaves a shortfall of 231 vacancies to be filled. This means that the department must continue to do more with less.
However, while this commitment is commendable, these staff shortages could have a negative impact on the department's ability to deliver on its mandate if these shortages persist. It is important that vacancies should be filled with deliberate speed particularly in those areas that require appropriately skilled personnel.
It is also heartening to note that, in response to a call by government to the various departments to trim their budgets in the face of severe pressures on the economy, the Department of Energy has identified efficiency savings of R23,4 million in 2011-2012, R53,2 million in 2012- 2013 and R56,2 million in 2013-2014.
Over the medium term, departmental spending is projected to decrease from R5,6 billion in 2011-12 to R4,3 billion in 2013-14. These savings, says the department, will be realised by implementing cost-effective measures that reduce expenditure on travel, consulting services and revenue and facility hire. These are big numbers and the department should be encouraged to ensure that these savings are realised. This intervention calls for stringent oversight and inspection of the department and the department must ensure that it has the capacity to be effective. However, while one is pleased about this exercise, one cannot but wonder about the apparent wastage that has been embedded in unnecessary expenditure that could have been avoided.
Some good could come out of this if with this exercise the savings were used to fill the critical vacancies. Other savings will come from a decrease in transfer payments to energy distribution industry holdings, the demand-side management programme and funding of the Transnet petroleum pipeline. While we welcome the end of transfers to Transnet pipelines, stinting on the demand side management programme could be counterproductive.
The roll-out of compact fluorescent lamps should be sustained and intensified. This should also be the case with the Solar Water Heating programme, and I take note of what the Minister has said. With regard to the solar water heating programme, I remain concerned - despite the assurances by the Minister to the contrary - that the rate at which the programme is unfolding, the department will not meet its target of one million units by 2014. Cost has been mentioned as an inhibiting factor, despite significant subsidies that are being provided.
Shutting down Electricity Distribution Industry Holdings, and scrapping the ill-conceived Constitution Seventeenth Amendment Bill, could not have come a day too soon. EDI Holdings (Pty) Limited was incorporated as a public entity in 2003, to facilitate the consolidation of 187 municipalities and Eskom electricity distributors into six regional electricity distributors, generally referred to as regional electricity distributors, Reds. Its purpose was to facilitate the provision of affordable, reliable and sustainable electricity distribution.
Millions of rands were sunk into this project during the seven years of its existence. For instance, just between financial years 2007-08 and 2010-11, expenditure grew from R97,3 million to R201 million. Clearly, creating and trying to sustain EDI Holdings in the face of strong opposition from various quarters, including the DA, was a very costly exercise.
This wastage is felt even more, since it comes on the heels of the R9 billion that went down the drain because of another failed experiment: the Pebble Bed Modular Reactor nuclear fuel plant that was scrapped last year. Minister, your department has now taken over the programmes previously executed by EDI Holdings. The company had a staff complement of 102, of which 13 were at board level and 33 were professionals. What will become of the company's assets, including the employees?
We trust that those with appropriate skills will be absorbed into the department's personnel structure to fill the critical vacancies that I have referred to earlier.
The main purpose of the department's national electrification programme is to oversee the planning, funding and implementation of the Integrated National Electricity Programme in order to ensure universal access to electricity and an effective and efficient electricity distribution industry, capable of providing affordable electricity to consumers.
The latter objective is being put under severe threat as the price of electricity continues to escalate year on year. It plunges many residents, particularly the poorer communities, back into darkness, as electricity becomes too expensive for them; notwithstanding the monthly free basic electricity to which they are entitled.
Need I remind this House that the second of the latest three increases for Eskom, approved by the National Energy Regulator South Africa, Nersa, came into effect on 1 April? The municipalities will be implementing this increase, plus their own mark-ups from 1 July.
This 25,7% increase comes on the back of several steep consecutive increases in recent years: 27,5% in 2008, 33,3% in 2009 and 25,8% in 2010. The latest hike of 25,5% in this cycle is due on 1 April 2012. This is an increase of a whopping 112,3% in just four years!
I draw the attention of this House to these steep increases because I know several families in my constituency have regressed to candles, wood and paraffin stoves since their electricity was cut off because they could not pay their accounts.
One such family in Attridgeville has been without electricity for more than two years. Also threatening the universal access programme are the recent strikes at Eskom's Medupi Power Station, which is being built in Lephalale.
Eskom's management has been good in keeping us informed about the developments there, and we thank them for it. However, these strikes must be resolved speedily, as protracted delays in construction could derail the switch-on date at a very high cost to Eskom and the South African taxpayer.
Of course, at this point, we have to ask ourselves a question: How much will Chancellor House extract from this kind of thing? We need to be aware of that.
The switch-on date for Medupi is due at the end of 2012. The completion of Medupi on time and within budget is crucial, given the pressures on the national grid with its stressed reserve margin. Eskom should also make sure that incidents such as the one at Duvha Power Station in Mpumalanga that knocked out 600 MW from the national grid do not recur.
A major item in the Electricity Integrated Resource Plan 2010, to which the Minister has referred, commonly referred to as IRP2 and recently approved by the Cabinet, is the decision to add 9 600 MW to the national grid, generated from nuclear power during the next 20 years.
The first of the three twin-set units is planned for switch-on in 2023, as you heard the Minister say. A serious concern about the planned nuclear builds is that, while the consultation process leading to the approval of IRP2 was well canvassed with many stakeholders taking part, the department does not seem to be playing open cards with South Africa regarding the location of the proposed nuclear plants.
There is growing agitation and frustration, as emotions rise among communities, where these plants could be situated. According to one report, possible sites include Duynefontein, adjacent to Koeberg; Bantamsklip on the Southern Cape coast; and Thuyspunt on the Eastern Cape coast between Oyster Bay and St Francis Bay.
Many believe that Thuyspunt has already been selected as a site for the first plant, because of an apparent higher level of activity noticed at the location. Can the Minister confirm that Thuyspunt has been selected as a site for Nuclear 1, the first twin-set unit, followed by Nuclear 2 at Bantamsklip, with the second twin-set?
What is the estimated cost of the build? Where will the money come from? Given the notoriety of the nuclear industry regarding corruption and cost overruns, could the government be setting itself up for another arms-deal- type scenario, but on a much bigger scale? Speculation is that the costs of the whole build could be as much as R1 trillion.
Minister, I note the points you made about Fukushima and I agree with you. Indeed, I believe that in the wake of the nuclear disaster at Fukushima plant, Japan, South Africa needs to approach the proposed nuclear build with great circumspection.
One way of doing so is to engage stakeholders transparently on this controversial and highly emotional subject. Time is of the essence, given the long lead time required to build a nuclear plant.
South Africa has committed to do its fair share in the global efforts to reduce greenhouse gases spewed into the atmosphere. In this regard, the government has set a target to produce 10 000 gigawatt hours of electricity from renewable sources, mainly wind and solar, by 2013.
Some of the work has been done to assess the production capacity of Independent Power Producers, IPPs, in the country. The National Energy Regulator of South Africa has also determined the renewable energy feed-in tariffs for the industry. Work has also been done - as you have heard the Minister say - on the independent sales and marketing operator, to facilitate the participation in and contribution of IPPs to the national electricity grid.
What is needed now is tangible action and progress in the wind and solar energy area, if we are to meet the 2013 target. For instance, according to a report by Mainstream Renewable Power South Africa, to achieve this target the country needs about 4 000 MW of wind power a year to be built over the next four years. As matters stand, I am not confident that we can achieve this goal.
Let me finish by reminding South Africa that earlier this year Eskom thanked the people of South Africa for saving 1 800 MW of electricity by replacing incandescent bulbs with 43,5 million compact fluorescent lamps. This is one of the best examples we have.
It was a massive collective effort and a great success. The power saved was equal to the electricity needed by a city the size of Durban. We need to build on this success and continue to save electricity. Thank you. [Applause.]