Enkosi kakhulu Mhlalingaphambili. [Thank you very much, Chairperson.]
Dumelang bomme le borre. [Good morning, ladies and gentlemen.]
Hon Deputy Minister Ambassador Thembisile Majola, chairperson of the portfolio committee, chairperson of the select committee, members of the Portfolio Committee on Energy, Cabinet colleagues, leadership of our trade unions, captains of the industry, acting director-general, senior officials, leadership of our state-owned entities, invited guests, comrades, ladies and gentlemen, I want to greet you in the name of our beloved leader, the late former President Nelson Rolihlahla Mandela, whose birthday we celebrated recently. In the light of this, I ask that we debate this matter not only with the same spirit and intensity with which he fought against injustice, but also with the same degree of humility that Madiba would have shown.
I am pleased to report that the department, together with a number of private sector partners, heeded the clarion call to clean up for Madiba by visiting the Mamelodi Tateni Community Centre, and the Kido's educare centre in Soweto. Besides cleaning up and painting the facilities, the department was able to install solar water heaters and efficient lighting in each of these venues. One of our agencies, the SA National Energy Development Institute, Sanedi, also announced that they will build a learning centre for preschool children at the children's home.
On 17 June, on the occasion of the first state of the nation address of our fifth democratic administration, President Zuma affirmed the imperatives to address our country's energy challenges in order to create a favourable environment for economic growth and development. To set the tone, I have to repeat what the President said. He first recognised the problem in saying that we need to respond decisively to the country's energy constraints in order to create a conducive environment for growth. Furthermore, he said that this situation called for a radical transformation of the energy sector in order to develop a sustainable energy mix comprising coal, solar, wind, hydro, gas and nuclear energy. The directive is clear. We need no longer debate the matter. Instead, we have to address the matter by tackling the energy constraints in a way that properly balances the many alternatives we have. My task today is showing you how we, as the Ministry and the department, are planning to do so.
We accept the responsibility that our people have placed on the shoulders of the leading party through their vote on the 7th May. Our role is to keep the lights on - but not at all costs - and the cars on the road, and we will do our best to ensure this happens.
At the same time, I also want to ensure that energy is something that is understood by ordinary people, that it is accessible and affordable, and that we build a national consensus about how we are going to take our country forward. This is in part a problem for the scientists and engineers who are trying to find ways of producing more energy, especially clean energy. But, it is also something that each one of us can help with in our efforts to use energy more efficiently. Therefore, it is not just a challenge for government. It is also a challenge for the private sector, and for the public, and we have to solve it collectively.
That is why - I hope you have noticed - I have already advertised for nominations to an expert panel, which I plan to convene. I hope all interested parties will put forward the names of suitable people, with the right expertise, who can help us to bring about the radical economic transformation we desire. This will not be a party-political structure, but rather a true advisory council of experts.
We are committed to the countrywide roll-out of our economic and social infrastructure programme, especially in the energy sector. We see this as a major instrument to catalyse and spur positive economic growth and job creation, which will make a positive difference in the lives of citizens - whether they are living in town, on the grid, or in a rural village getting electricity from alternative off-grid sources.
As a starting point, we have taken steps to ensure that coal supplies to existing and future power stations are secured. We have also set ambitious targets for producing additional cleaner energy and ensuring energy self- sufficiency in the future. We further stated that both traditional and green energy will be expanded to ensure a platform for growth and social inclusion. This will include the use of nuclear power for base-load energy generation, which will be done in a safe and environmentally sustainable manner.
The manifesto of the ruling party states that additional energy will be generated through the completion of large power stations, and that solar and wind power will feed into the electricity grid to increase our generation capacity and promote environmental sustainability. We will intensify work to ensure that further hydroelectric energy will be secured domestically and regionally for our national grid.
During the term of this government, over 1 million homes will be equipped with solar water heaters, ensuring cheaper hot water and lower energy use for more than 7 million South Africans. An additional 1,5 million households will also be connected to energy sources, either through the grid or through nongrid means.
Lastly, the pace of oil and gas exploration - including shale gas exploration - by the state and other players in the industry will be intensified as part of the country's effort to ensure national self- sufficiency and energy security whilst, once more, actively promoting environmental sustainability. The energy sector has been shown to be an economic game changer globally. For South Africa, energy is the catalyst to revolutionise our economy and drive economic transformation. However, the current global energy situation is faced with many uncertainties. These include complex environmental and climate change matters in which energy is a major player. There are also persistent global economic challenges that we, together with some of our major trade partners, are still facing, whilst the ongoing turmoil in the Middle East and Ukraine are continuing to impact on us. All of these impact on our energy situation and therefore our economy. We need to be responsive to all of these circumstances as we chart the course into the future.
These uncertainties, and how we respond to them, however, remind us that South Africans, as a nation, need to engage in a national dialogue about our energy future. The question is: How do we meet the imperative of ensuring a sustained and secure supply of energy, especially cleaner energy? In taking on this debate, we will continue to build and strengthen relations with the SADC on the African continent.
We have just returned from the Brics summit in Brazil, where our relations with these major players were further strengthened, and we will be guided by the experience of these major economies as we move forward. Of course, we will also engage other countries, both in the North and South, which can help us to develop a common perspective on energy.
The department operates in this dynamic global environment. But we must recognise that existing infrastructural constraints, some of which are the result of inadequate infrastructure development planning, make this task a difficult one. Declining budgets, rating downgrades, and the shortage of skills in the energy sector all contribute to rising electricity costs and volatile oil prices, which in turn contribute to the critical energy situation.
These factors, many of which are beyond our control, place severe constraints on our supply chain, and we have to work collectively to address these challenges. Better co-ordinated, seamless interaction with Eskom remains an imperative.
The Department of Energy has made a number of strides since its formal establishment in 2010, and these have contributed to the overall development agenda of our country. I do not wish to repeat the good stories that have already been told, but rather wish to reflect briefly on some of the key areas of work undertaken.
A revised regulatory framework for facilitating the introduction of new generation capacity through Independent Power Producers, IPPs, will be consolidated. This has already culminated in reaching financial closure, and commencing with the construction of 1 000 megawatts of open-cycle gas turbines at Avon in KwaZulu-Natal and Coega in the Eastern Cape, as well as 3 900 megawatts of renewable energy plants based on solar, biomass, hydro, wind, and landfill gas energy sources. It gives me pleasure to indicate that, out of the 28 IPPs approved during the first window, a total of 14 generation plants have been completed, producing more than 600 megawatts of green power for the national grid.
A new household electrification strategy was approved by Cabinet in June 2013 to address electrification backlogs and ensure universal access by 2025. This will be done by means of utilising grid extension, and also by means of nongrid-connected PV solar systems. This is in line with the proposals of the National Development Plan, NDP, for reaching universal access. However, a progressive roll-out programme is being implemented through the new household electrification strategy to reach the target of universal access earlier.
The electrification target for 2013-14 was to grid and electrify 260 000 households. We have achieved a total of 292 714 grid connections, and an additional 14 059 nongrid connections. During the past financial year, a total of 306 773 households received access to electricity for the first time, which is 46 773 connections above target. We have checked these figures. In the main, this is due to good co-operation and support from Eskom, municipalities, metros, and the private sector. In addition to this, a number of substations and lines have been upgraded to further ensure that capacity exists for this expansion.
We implemented a regulatory accounting system for the petroleum sector that is used to determine appropriate margins for petrol at wholesale, retail, secondary storage, and secondary distribution level. It also seeks to introduce transparency into the market as well as root out inefficiencies, cross subsidisation and uncontrolled costs. This provides certainty to investors with regard to the return on assets throughout the petroleum value chain. I must, however, hasten to add that the roll-out of this system has not been as smooth as we would have expected, considering the fact that the power relations between oil companies and retail companies are continuing to be a challenge. We intend to engage with this matter urgently.
With regard to the development of our gas resources, including regional gas opportunities in neighbouring countries and our own shale gas resources, a draft of the Gas Utilisation Master Plan, Gump, is being finalised. Energy efficiency is at the core of our energy security strategy, given its cost effectiveness, speed of deployment and job-creation potential. Interventions in respect of the public buildings industry and the residential sectors are pillars in the energy efficiency strategy and action plan that we have recently revised. The completed Energy Efficiency Target Monitoring System provides a platform for quantifying the responsiveness of our energy efficiency efforts.
The discussion document on a regulatory framework for a Maximum Refinery Gate Price for Liquefied Petroleum Gas has been developed with the intention of facilitating the importation of liquefied petroleum gas, LPG, especially during supply constraints in the winter season. The road map for the implementation of the nuclear procurement programme is progressing well, and the department is currently working with sister departments and entities to finalise work in this regard.
I am pleased to announce that for the previous financial year the department was appropriated R6,5 billion and spent 99,6% of this allocated budget. The appropriation for this financial year is R7,4 billion, with 93% of this amount being earmarked for transfer to municipalities and state- owned entities. However, this time we cannot rely on transfers and a clean audit after the transfers. There has to be monitoring and evaluation in respect of the money that has been transferred. We cannot be happy with the transfer alone and then automatically receive a clean audit. It doesn't work that way. We need value for the taxpayers' money. So, it is clear that if the actual delivery of energy is largely in the hands of statutory bodies, such statutory bodies should have good governance and function efficiently and effectively.
The 2014-15 appropriation is 14% higher than the 2013-14 final appropriation. The increased allocation will enable the expansion of the Integrated National Electrification Programme, Inep, to increase the number of households connected to the electricity grid. The Inep therefore receives an allocation of R4,1 billion, with Eskom and municipalities allocated R2,5 billion and R1,6 billion respectively. A further R96 million is allocated to the nongrid electrification programme.
Through Eskom and municipalities, we must improve the implementation of energy efficiency and expand the use of clean energy technologies. We will continue rolling out the solar water heater project, which seeks to make solar water units more affordable. To this end, Eskom will use their R1,6 billion for the installation of more than 200 000 solar water heating units.
On the nuclear front, R850 million has been allocated to the department and its relevant agencies in order to undertake further research and development, especially in relation to safety matters. Regulations for the handling of hazardous materials, in terms of international obligations, and the development of nuclear policies and legislation will be put in place to ensure the peaceful use of nuclear energy in pursuing our international agenda.
In line with the injunctions of the National Development Plan, the department is central to the processes of developing policies and innovative energy strategies to build this economy. We are expected to implement programmes which will ensure that South Africa has a sector that promotes economic growth and development, fosters social equity through expanded access, as well as pursues environmental sustainability.
Our mandate is unambiguous - we will ensure energy security for a growing and job-creating economy. I repeat: We will ensure energy security for a growing and job-creating economy. [Applause.] We have to be unambiguous about what is expected from the Ministry of Energy and the department.
The Energy Security Master Plan has been developed to crystallise the immediate actions that the department and the entire energy sector will have to take. Undertaking a comprehensive review of the entire sector, where necessary, will bring about structural changes within our department and the sector. I thus want to thank our Deputy Ministers Thabethe and Xasa, and Minister Oliphant who have been really strategic and consistent in supporting the structural changes of this sector.
In doing so, we will be guided by the need for further diversification of our energy mix. Wind and solar energy sources are growing dramatically, especially in the Northern Cape. We have to double our efforts in this regard. Together with imported and locally sourced natural gas, as well as the introduction of 9,6 gigawatts of nuclear power, we will lay the foundations for a new mix of national energy sources. Localisation has to be at the foundation of this development. South Africans can produce locally, and we therefore do not need to rely on imports in creating more jobs. [Applause.]
We are directed at intensifying the Integrated National Electrification Programme in pursuit of universal access. Our Independent Power Producer, IPP, programme will remain another key area of engagement and focus. The IPP programme must also focus on local content, local skills development, and local planning.
We will continue to consult and refine the Independent System and Market Operator; Ismo Bill. This will seek to provide a better regulatory environment for power providers. Once it is ready, we will go through an extensive consultative process to bring all stakeholders on board.
Allow me to highlight some of the key programmes and initiatives - and I can see the Independent System and Market Operator Bill is already causing quite a lot of excitement. [Laughter.] As enjoined by the President in the state of the nation address, my immediate priority is to ensure that the Integrated Energy Plan, IEP, is finalised. This plan must be geared to address the short, medium, and long-term energy requirements. It has to be supported by effective policies, institutions, governance subsystems, and regulation within a competitive market system.
Given the overall global energy challenges, one of the key objectives of the revised Integrated Energy Plan will be to look at multiple and alternative energy sources. South Africa cannot afford to find itself at the mercy of geopolitical developments over which we have no control. Therefore, we must find sources that ensure energy security and our country's sovereignty.
It is therefore necessary to reflect on the critical questions that we have identified. These include: improving our efficiency levels; diversifying our energy mix towards a low carbon economy; finalising the nuclear power option; stabilising future electricity tariff increases; and ensuring universal access to modern energy technologies for those without electricity. Furthermore, our energy plan has to address the plight of rural women and youth and lift them out of unemployment.
The introduction of new power stations across a range of technologies is outlined in the Integrated Resource Plan, IRP. We will further engage in the decentralisation of energy provision.
In the period up to 2030, the Integrated Resource Plan makes provision for 9,6 gigawatts from nuclear power, 6,3 gigawatts from coal power, 11,4 gigawatts from renewable energy sources, and 11,0 gigawatts from other generation. The implementation of the plan is well under way. This is evidenced by the IPP Bidding Programme, which has approved the provision of 3,625 megawatts of capacity from Independent Power Producers.
In addition, we have to attract international and local investments, and for that we need about R120 billion. We are confident that this will boost employment and growth, and we know that we can further improve on this.
We have no intention of abandoning the coal option, but we are determined to find cleaner technologies that will reduce the adverse environmental impact associated with greenhouse gas emissions from coal-fired power generation.
Institutionally, we have formed the Carbon Capture and Storage leadership forum, which serves a critical role in fast-tracking our technology research efforts in collaboration with other countries. Young people need to develop their research capabilities, and, if need be, we have to send young students abroad or elsewhere on the continent to develop their skills. Our research capacity has to be improved. [Applause.] The SA National Energy Development Institute, Sanedi, which is our state-owned entity responsible for energy research, leads this programme. Sanedi must increase its intake of learnerships.
You may not be aware that for the past five years, underground coal gasification, UCG, has been under way at Matimba Power Station. This project is aimed at developing the technology needed to exploit our extensive coal reserves in order to produce a form of gas.
Apart from our local research stations, I am sure that Medupi and Kusile Power Stations, representing our technology, are ready for the state-of-the- art carbon capture and storage processes. However, we cannot continue with the burden of not knowing when these projects will be completed. The electrification programme will continue, and our aim is to finalise the first draft of the electrification master plan at the end of this calendar year in order to ensure that universal access can be reached by 2025.
Lastly, I want to mention that I will be thanking all the relevant parties during my concluding remarks. For now, I thank you. [Applause.]