Chairperson, hon Minister, Deputy Minister, hon chairperson of the portfolio committee, hon members of the committee, the acting director-general of the department and his officials, the Deputy Minister of Mineral Resources, and fellow South Africans, good morning. Is it afternoon already? Yes, good afternoon.
Let me start by explaining energy security because it appears that we do not all have the same understanding, which is that energy security includes intervention on both the supply and demand sides. We are not limited to ensuring supply in meeting our objectives. Energy security is defined to include ensuring supply, managing demand, and ensuring appropriate quality of service for the end user. The fourth administration established the Department of Energy in 2009 as a result of splitting the mining and energy portfolios within the former Department of Minerals and Energy. The split allowed for greater focus on energy issues, given the energy challenges in that period that led to major power disruptions.
There was a need to focus on energy security, as mandated by the ruling party, the ANC, through various mechanisms, including policy, legislative and regulatory amendments, forward planning, and implementation plans. Again, I need to point out that the Department of Energy is the policy department, and implementation of various critical interventions is done through Eskom, municipalities, Independent Power Producers, PetroSA, concessionaries, etc. The department is responsible for creating a policy and regulatory environment that is conducive to investment in order to support and grow the economy.
What are the challenges that confront our country? We can summarise them as follows. There is a need to reduce escalating energy prices, be it for electricity or petroleum products, to cushion the adverse impact on the poor. There is also a need to transform the energy sector and bring more historically disadvantaged people into the economic mainstream, over and above increasing access by ordinary South Africans to modern energy carriers.
In the context of Eskom's challenges, there is a need to implement our plans to keep the lights on in the short to medium term. This includes finding a solution to financing the various projects in a way that balances steep electricity tariff increases on the one hand, and, on the other, guards against blackouts and stunted economic growth due to a lack of energy capacity. There is a need to improve energy efficiency and demand- side management. The Deputy Minister mentioned that earlier on. There is a need for short-term power solutions that will assist in meeting demand until Medupi and Kusile are fully operational. There is a need to secure our liquid fuel supply chains, including crude oil supplies, refining, and distribution.
The ANC-led administration is ready to provide solutions to these challenges since it knows what these challenges are. This ANC-led government ensured that a new household electrification strategy was approved by Cabinet in June 2013 to address electrification backlogs and to ensure universal access by 2025. This will be done by means of utilising grid extension, but about 10% of the backlog will be addressed by means of nongrid photovoltaic, PV, solar systems. This is in line with the proposals of the National Development Plan, NDP, for reaching universal access, but the target date set in the NDP is 2030. I think hon Greyling is listening very attentively.
In 2002, the department introduced the first ever industry transformation charter as an effective tool for transformation in the petroleum and liquid fuels industry, the Charter for the South African Petroleum and Liquid Fuels Industry. Ten years later, an assessment of the extent of compliance by the oil industry was commissioned and showed that there was still a long way to go. Radical transformation must happen in this sector. Energy efficiency is at the core of our energy security strategy, given its cost effectiveness, speed of deployment, and job-creation potential. Interventions in the public buildings industry and the residential sector are the pillars in the National Energy Efficiency Strategy and National Energy Efficiency Action Plan produced by the Department of Energy.
Last year, this ANC-led government promulgated the energy efficiency tax incentive system, in terms of which companies can offset their tax payment in proportion to the amount of energy it had saved, which had been independently verified. You are rewarded for saving power, if you do it like that.
The Department of Energy also published the biofuels incentive framework for public comment, in order to facilitate the mandatory blending of ethanol into our liquid fuels. The increased cultivation of energy crops like sorghum and sugar will be coupled with agrarian reform to result in more job opportunities and transformation of the economy. The biofuels framework must be accelerated. Government must finalise the regulatory framework to introduce clean fuels in the petroleum sector. The financing mechanism must be finalised soon in respect of the clean fuels programme to facilitate the necessary investment that refineries need to produce liquid fuels that are more environmentally friendly.
With regard to nuclear energy, the department must work with other government departments to develop a road map for the implementation of the nuclear programme. In the meantime, the department must continue to develop the localisation, financing, funding, skills development, and uranium beneficiation strategies to support the new nuclear build programme. Electrification has more than doubled from 36% of the population in 1994 to 86% of formal housing in 2013. More than 5,8 million households, to date, have access to electricity. This is a very good story to tell, hon Greyling. [Laughter.] This financial year, more funds have been allocated to ensure that bulk electricity infrastructure is in place to ensure that a higher number of new connections can be made in the years to come. We applaud the fact that in the past five years alone, just over 1,1 million new connections were achieved.
Since the Renewable Energy Independent Power Producer Procurement Programme was initiated in March 2010, the Department of Energy has committed to purchase 3 000 megawatts from Independent Power Producers. This programme attracted over R150 billion in foreign direct investment. During the construction phase, just under 13 000 jobs had been created, of which about 7 500 were taken up by the youth, young people of this country. That is the ANC government working for you - working for you! [Applause.]
We are aware of the fact that the department works closely with immediate stakeholders, such as state-owned entities and companies that invest in the energy sector outside this country, as well as all spheres of government to ensure alignment in the areas of political security, and economic understanding of global trends and implications in the energy sector. [Interjections.] Keep quiet! The elders are still speaking. [Laughter.]
Energy security in our country depends, amongst others, on the diversity of supply sources of energy. This is particularly true for gas, crude oil, and nuclear fuel, as well as electricity. [Interjections.] Our country relies on crude oil imports from a number of countries around the world. A significant percentage, about 40%, of our crude oil imports originates from within the African continent.
Government needs to constantly ensure that the countries from which petroleum and petroleum products are sourced continue to view South Africa as a preferred destination for petroleum and, particularly, crude oil. It will therefore be important, in future, to ensure that energy is at the centre of our foreign relations. The Department of Energy must work very closely with the Department of International Relations and Co-operation in this regard. These departments need to continuously identify new partnerships with countries from which we can source energy whilst nurturing existing ones.
The ANC supports this Budget Vote. I thank you. [Applause.]