notes at Umhlathuze business dinner
7 April 2006
Master of ceremonies;
His lordship the Executive Mayor of uMhlathuze Local Municipality;
Mayors and councillors present here;
Distinguished guests;
Ladies and gentlemen
It is an honour to be invited to be part of such a wonderful occasion where
business minds have converged. I have been requested to address the issue of
business opportunities as they might present themselves to the people of
uMhlathuze.
The age of hope is here; the South African economy is on trajectory as most
of you would have experienced, is going through unprecedented growth. All the
business indices are a testimony to this trajectory. The expectation is that
the economy will continue growing, which put more demand on energy input
required by the country to sustain this golden era. South African entrepreneurs
will be required to take these opportunities in the Energy Sector with special
reference to woman and youth participation, which include participation of
entrepreneurs from Richards Bay.
Energy is a critical cost input for us to be able to achieve economic growth
in line with:
* The Accelerated and Shared Growth Initiative for South Africa (AsgiSA), whose
elements include increased infrastructure investment, skills development and
leveraging the first economy;
* To achieve the Millennium Development Goals, that seeks to halve poverty by
2015.
We need to explore opportunities in the energy sector so as to bridge the
gap between first and second economy, and ultimately to find a happy balance
between the first and second economies.
Opportunities
The electricity industry is presently under transformation in order to
address inefficiency, lack of investment, poor planning and operation. It is
important that the sector responds to challenges related to industrial and
commercial growth, promoting economical and social development in South Africa,
meeting international standards of competitiveness, quality of supply, and
adequate health, safety and a sustainable environment.
South Africa is one of the leading producers of electricity in the African
continent. We supply electricity to neighbouring countries such as Zimbabwe,
Namibia and others, to an extent that we will be running out of excess
electricity in 2006 and 2007. This means that the neighbouring countries will
be affected. It will be of outmost importance to build new generation
capacity.
New generation capacity
You might be already aware of the electricity capacity challenge that we
face as a country. In fact, by winter of 2007, provided we install new peaking
capacity to the extent of 1000MW, we will be in serious trouble. For all the
aspirant business people here tonight, where there are challenges,
opportunities are galore. Just to quantify the extent of the investment that
will go into these new power stations: R200 billion over the next 10 years.
I am aware that the proposed new power station in uMhlathuze is a very
topical issue and I must deal with it. In terms of the new regulatory framework
that we have put into place, all new generation capacity must be built subject
to certain regulatory principles before a licence could be issued. Principles
include:
* A competitive bidding process that is fair, equitable and transparent,
and
* Compliance with requirements like Black Economic Empowerment.
In that context, we would look askance at unsolicited bids to the extent
they fall foul of the principles I have alluded to.
Transmission lines in South Africa will remain in the good care of Eskom,
but there will be a need of maintenance and expansion.
Distribution
Government is also in the process of establishing six regional electricity
distributors, or REDS, and from this initiative a number of opportunities will
arise for service providers at the advisory level, in technical fields,
financial services, billing systems, etc. relating to local government.
The electrification programme, Free Basic Electricity, and other electricity
related projects are being implemented using emerging contractors, engineering
consultants and SMMEs (small, medium and micro enterprises) as a matter of
policy.
Last year, we spent over 60% of the electrification budget on SMMEs
including Black Enterprises and Black Women Owned Entities.
Within the jurisdiction of the greater uMhlathuze municipal area, I am
pleased to announce that we will be implementing the following electrification
projects in the near future:
* Hlambanyathi,
* Makhasaneni - temba #2
* Makhasaneni & temba,
* Mdletsheni and mdletsheni #2
* Empembeni
* Nkosazana
* Hlanzeni
* Ezikhonkwaneni
* kwaNdlangezwa
All these projects are household connections and the capital investment is
estimated at over R20 million.
Country wide, in order to reach universal access, an estimated R27 billion
will be required over a period of seven years, to be able to electrify
approximately three million households.
Opportunities exist to manufacture and supply electrification components
including cabling, meters, transformers etc. that are currently monopolised by
traditional suppliers.
It is clear that there will be a number of business opportunities in
* Investment,
* Construction
* Maintenance,
* Financial services,
* Equipment supply etc.
How to access finance
The IDC, the DBSA and other development institutions have been mobilised to
assist BEE companies, more aggressively than in the past. Entities like Small
Enterprise Development Agency (SEDA), the Apex Fund, etc. have now been given
clear marching orders and targets to assist emerging companies. It might be
worthwhile to reflect on the German economy, which is around 60% SMMEs in
composition. This bodes well for labour absorption at localised level, and it
is the type of strategy that would solve our structural employment
problems.
Small business development support takes the form of entrepreneurial
capacity building programmes, the facilitation of access to funds and
preferable procurement policies. These interventions also add towards job
creation in the national economy. As government, we are very clear that the six
percent growth that we are targeting must be shared.
Women empowerment
There is still a major gap in terms of women penetrating the energy
industry. Women should be exposed to opportunities so that they could also take
their rightful place in the economy. It is now high time to involve women in
the electricity, gas, nuclear and petroleum industries.
Training and education remains very important as the energy sector is a
specialised sector and requires a skilled labour force.
The Department of Minerals and Energy has a number of initiatives relating
to women empowerment, which I would like to bring to your attention.
Women in Energy of South Africa (WOESA)
The Women in Energy of South Africa is a voluntary organisation of women
aimed at promoting access by women to energy opportunities. They have been very
successful.
Women in Nuclear South Africa (WINSA)
Similarly, Women in Nuclear South Africa is an organisation focussed in the
nuclear sector. As you might be aware, nuclear features in our plans to meet
our future energy, especially given that our fossil fuels are finite and will
be depleted in time.
I strongly urge all women to participate in these structures in order to
make them strong.
There are enough opportunities in the energy sector if we work closely
together in order to maximise the participation by emerging business.
Thank you!
Issued by: Department of Minerals and Energy
7 April 2006
