Chairperson, it is important to locate this debate in the context of the dynamics and structure of the South African economy and the intensity of energy use by critical sectors in our economy. Failure to do so will lead to wrong interventions, political posturing and grand-standing without substance.
The reality of our situation is that the mining and mineral processing industries have a critical role to play in job creation, and the current account of our economy. The question is: Does my input mean that the status quo should prevail? Definitely not! This budget contains various interventions to lessen this intensity of energy use by certain critical sectors in our economy.
Energy efficiency intervention will assist the mining sector to improve the efficiency of their production process and replace certain intensive energy- consuming components with less energy-consuming components. The transition to a less energy intensive economy requires the support of all of us. This brings me to a second critical issue that really opens the debate on nuclear energy.
The critical question that needs to be put before this House is: How do we deal with the challenges of long transmission lines from Mpumalanga to the Western Cape and other coastal provinces? Lest my position on this matter of renewable energy be misunderstood, I want to state that I firmly believe in the critical role that renewable energy plays in our energy mix.
I believe we need to pay particular attention to this matter, lest we make the same mistake that Spain has made with renewable energy. I believe that renewable energy will, in the not too distant future, resolve one of the critical challenges that it has always faced, which relates to the storage of energy, and that it will ultimately address the concerns of a variable supply.
Six experts were asked the following question by the Fortune magazine after the Fukushima disaster: Can society afford to live without this carbon-free energy source? As expected, the responses varied. However, there was this particular word of wisdom from one of the contributors that caught my attention, and I quote:
Society has to draw conclusions based on engineering and science about what actually happened in Japan, what could have been done differently, how serious an issue this would be in other places, and make a rational decision on nuclear energy.
I hope that the Portfolio Committee on Energy, the National Nuclear Regulator and the Department of Energy will assist society in arriving at a rational decision. As part of these intense debates the portfolio committee will be visiting Koeberg, Pelindaba and municipalities around those facilities.
I am confident that through these interactions, the rational decision will surely be arrived at, which will be as one of these experts said, and I quote:
Nuclear is a super-important part of our future.
Chairperson, let me transition to another matter that is critical to the security of the fuel supply in South Africa. The current fuel consumption in South Africa exceeds the supply capacity of our refineries. Over a number of years there has been a significant increase in household expenditure and gross fixed capital formation. The apartheid Group Areas Act has put our people on the periphery, and this has worsened the situation.
The critical question that we need to resolve is whether we need to make investment in the refinery capacity or increasingly import refined products. In an attempt to resolve this question we need to understand what the opportunity costs are to South Africa in choosing either of these options. We also need to be careful that the voices of the powerful and entrenched interests do not impair our vision to enhance the security of the supply of fuel in South Africa.
The geopolitics of oil will continue to haunt us. The gyrations of the oil market and its prices are not a fleeting phenomenon - it is a permanent feature. Biofuel development is urgent and critical. We need to ensure that the transition to the postoil economy does not become painful to this country.
Part of that transition will require us to support PetroSA in its efforts towards the production of liquid fuel from gas. Exploration is an expensive venture, full of risks, and we need to bear in mind that money will be lost in the process. We need to ensure that PetroSA succeeds in sourcing the feedstock required to continue its operations.
Government has committed itself to enhancing a secure supply through the participation of Independent Power Producers. We are also encouraged that finally the department will introduce the Independent System and Market Operator to speed up the involvement of IPPs.
Independent Power Producers require a regulatory environment which has a nonconflicted buyer, long-term contracts and price and policy certainty. The regulatory guidelines released by Nersa on 26 March 2009, indicated that the renewable feed-in tariff should be high enough to cover investment costs and provide a reasonable rate of return. However, we were told by some of the IPPs that the review of the tariffs by Nersa on 22 March 2011, has created financial problems for these IPPs.
However, the response we got from engaging some independent analysts on this matter paints a different picture. It became apparent that these projects were initially structured under different exchange rates and equipment costs. The reality of this situation is that the rand has strengthened and the equipment costs have seriously come down. Therefore, we are told that the decision taken by Nersa was correct in reviewing these tariffs. This is a matter that requires close attention from Nersa, the department and Parliament. We dare not repeat the mistakes made by Spain on this matter.
Sufficient attention needs to be given to nongrid intervention. The Liquefied Petroleum Gas, LPG, project has the potential to assist us in reaching our goal for universal access and has great potential to create jobs. Liquefied Petroleum Gas installers, drivers, dispatchers and cylinder plant manufacturing will be required.
We need to make a concerted effort to reach our people who are not already connected to the grid. Energy poverty has put a lot of our people on the periphery of economic activities.
The strengthening of the South African power pool is critical to ensure the secure supply of electricity within Southern Africa. We have to continue to co-ordinate our efforts to create an interconnected power system within the region. The co-ordination of generation and transmission within the region will assist in sharing operational reserves and avoid unnecessary additional investments in generation capacity.
In moving towards my conclusion, I will highlight certain concerns regarding entities reporting to this department. The Central Energy Fund has a lot of subsidiaries and companies where it has significant shareholding.
We need to ask this critical question, hon Minister: Do we need to redefine the mandate of some of these subsidiaries? And the second question that we need to ask ourselves is: Is it prudent for the Central Energy Fund to continue to hold shareholdings in businesses that are not critical to or part of its core business?
Chairperson, I believe that the department should continue to play a critical role in the oversight over some of these entities. The ANC supports this Budget Vote. [Applause.]