Chairperson, hon members, Minister, the South African government should consider the need for improved energy security as one of its utmost priorities. The promotion of security of supply and competitive energy prices are critical goals in South Africa. To this end, the Integrated Resource Plan, IRP2, has been developed to directing the expansion of our electricity supply over the next 20 years.
It is vitally important, however, that this plan remains responsive to our short-term requirements, and I think the Minister has mentioned the future of coal.
Eskom's total generating capacity is currently 41 500 MG. Demand in winter is projected to increase to 38 000 MG. This leaves a relatively small margin of 3 500 MG to accommodate problems such as plant closures and plant maintenance. International best practice dictates that reserve margins should not fall below 15%, while Eskom's 3 500 MG reserve margin only represents a reserve margin of 8,5%.
This should be of grave concern to us all, especially considering the relatively mature state of the majority of Eskom plants. These figures and the age of our electricity infrastructure clearly signal that our supply concerns have not yet been resolved. Eskom themselves have conceded this fact.
Eskom's leadership has stated that our country is facing potential electricity supply shortfalls of six terawatt, TW, hours in 2011-12 and nine TW hours in 2012-13. This roughly equates - and this is important - to the amount of electricity a city such as Cape Town consumes in one year.
To address this, Eskom is building three new power stations, Ingula, Medupi and Kusile. In addition, Eskom is rebuilding and re-equipping power stations like Camden, Grootvlei and Komati, with the budget totalling R385 billion up to 2013. These are now desperate, belated steps on our path to energy security and I will elaborate on that in a second.
The 1998 White Paper on Energy and the subsequent misplaced strategy of government to stop the Eskom build programme, have put us in the position we are today. Eskom is currently forced to overinvest in large coal-fired generating units. This not only imposes a burden on the fiscus, but also undermines our commitment to combating climate change - not taking into consideration the environmental cost of our power. If we had properly planned for the expansion of our energy supply and if we had started working at it earlier on, government would have had a series of more environmentally-friendly and cost-effective options at their disposal.
Unfortunately, however, we are where we are, and no effort must be spared to place us on the path to energy security. The danger of unreliable supply, however, remains a reality, and if we lose only 600 MG, as happened at the Duvha Power Station, South Africa faces another power crisis, according to the newspapers. Duvha should never have happened, and a report and investigation need to be published. I join the Chairperson in his earlier request and remarks.
The DA, however, believes that there is a way out of this current situation, such as an urgent facilitation of the build programme. I believe we are one year behind in Medupi, and we also see ongoing labour disputes at Kusile. I think that needs to be solved very timeously. We believe an audit on the state of the distribution network and Eskom staff competency needs to be done with immediate effect.
With regard to our distribution network, hon Minister and members, we have to ask how much of our energy is being lost due to poor maintenance. Some analysts have concluded that we could save as much as R2 billion to R6 billion in distribution losses per year.
Currently, the distribution network faces R26,7 billion in maintenance backlogs, with half the distribution network requiring serious attention. I think our total amount of value in our distribution networks is about R260 billion, and we have a R26,7 billion backlog - just to put that in perspective.
The current plan to address the issue is utterly vague, with maintenance seemingly being done on an ad hoc basis and predominantly in the metropolitan areas. I believe the smaller municipalities are being neglected.
The DA strongly urges government to reconsider implementing a more comprehensive approach to maintaining our distribution network. An efficient distribution network, we know, is a prerequisite for our Integrated National Electrification programme, Inep. The current construction rate of Inep, of course, is negatively affected by this dysfunctional distribution network and also negatively affected by dysfunctional municipalities. Twenty per cent of our people do not have access to electricity. Our supply and distribution challenges have the potential to dramatically impede our efforts to electrify the lives of those one in five South Africans who do not have access to electricity yet.
Furthermore, we must not forget that our energy challenges reach further than electricity. I think my colleagues will remember Mr Guy McGregor's presentation to the portfolio committee. In it I think he agreed with me that the compulsory blending of ethanol in the petroleum pool could add up to 10% of our petroleum productive capacity.
By revising the industrial biofuel strategy to allow the excess production of maize to be used for the production of ethanol, we could help South Africa reach its objectives for the use of renewable energy. It could also create thousands of jobs in the biofuel industry.
I have written to the Minister regarding the delay in the implementation of the finer details of the regulatory processes in the biofuel industry, and I believe that much attention was given to that. Thank you, hon Minister. I would also like to thank the department for meeting a delegation from Grain SA to discuss progress in this industry.
The job is not yet done, however. Only by implementing the required reforms can people in our rural communities reap the rewards of a growing biofuels industry.
In conclusion, we have to produce more energy to meet the demands in our growing economy. This is not negotiable. Eskom has indicated that it would issue a mandatory warning to its big electricity users to save electricity and even issue fines to those who transgress. The industrial industry is concerned that insufficient progress is being made with Eskom's medium-term risk mitigation plan, and I think the Chairperson has alluded to that.
As to the large-scale load shedding we are currently experiencing in the Johannesburg area, City Power is not meeting its demand in terms of Rosebank, Dobsonville, Ekurhuleni and the greater Johannesburg, at times.
Daily shedding in selected areas is also problematic, considering that care needs to be taken not to take productive capacity out of the economy. Care also needs to be taken that we never again fail to properly plan for our nation's growing energy needs. I thank you, Chair. [Time expired.] [Applause.]