Ms Lulu Xingwana, to the Gauteng Provincial Summit on EDI Restructuring
Birchwood Hotel, Boksburg
24 April 2006
Programme Director;
Honourable Minister of Provincial and Local Government, Sydney Mufamadi;
Honourable Premier of the Gauteng Province Mbhazima Shilowa;
Honourable Minister for Local Government Qedani Mahlangu;
Members of the Executive Committee Gauteng Province;
His Worship, the Executive Mayor of Ekurhuleni Crl Duma Nkosi;
Her Worship, the Executive Mayor of Tshwane Crl Gwen Ramokgopa His
Worship;
Executive Mayor of Johannesburg, Crl Amos Masondo;
His and Her Worship Mayors of Municipalities within the Province of
Gauteng;
Chairpersons of Boards and Chief Executive Officers of our State Owned;
Enterprises, distinguished guests; and
Ladies and gentlemen
A special welcome to all the re-elected and newly elected Executive Mayors
of our Municipalities in Gauteng
I am indeed honoured to address this important summit as we chart the way
forward for continuous and improved Service Delivery through the âRestructuring
the Electricity Distribution Industry for Improved Service Deliveryâ
Summit.
Summit in line with Presidentâs State of the Nation Address
This summit is a true manifestation of all three spheres of government
working together to improve the quality of life of ordinary South Africans and
is well in line with the notion of integrated service delivery advocated to by
government. It is indicative and demonstrative of our collective determination
to fast track service delivery in a sustainable manner. We are confident that
we will emerge victors in all of our endeavours because the goal that we seek
to achieve as government is a goal that seeks to free our communities from the
firm grips of poverty and under-development.
In his State of the Nation Address to the Joint Sitting of Parliament of 3
February 2006, The President of South Africa, Thabo Mbeki said:
âIn the period ahead of us, we have to sustain the multi-faceted national
effort that enabled us to realise the advances that have inspired so much
confidence among our people for a better tomorrow.â Such advances manifest
themselves in the socio-economic and political success that our country is in
general and our respective Metropolitan areas are in particular.
One of the biggest challenges that we will continue to face is that of
sustaining the confidence that our communities have on us.
In this regard, the success that the President alluded to should not lull us
into a state of complacency, since the early signals of gaps that exist in the
electricity sector have long started to show. These are the worrying signs
which make all of us at different spheres of government and civil society
concerned about the sustainability of the programmes and projects we have
embarked upon. In this regard I am referring to programmes under the Ministry
of Minerals and Energy and Local Government, such as the:
* Integrated National Electrification Programme for the electrification of
poor households in rural and urban areas and in marginalised communities like
the farm workers and those in proclaimed informal settlements;
* Normal and continued progression of new housing development projects for all
types of consumers;
* Normal continued progression of establishment of new industrial and
commercial sector projects for all types industries; and
* The maintenance and upgrading of the existing electricity infrastructure that
supports the economic sector in our respective Metropolitan areas which
incidentally is the backbone of our national and regional economy; and
* Regulation of the electricity industry to support all the social and economic
developmental goals we have set ourselves.
This summit is fitting in the sense that it brings together all relevant
stakeholders in the Province to give meaning to Cabinet Decisions that set in
motion a process of accelerated EDI reform.
As The President said, in his State of the Nation Address of 2005,
âActing together, we do have the capacity to realise these objectives. And
sparing neither effort nor strength, we can and shall build a South Africa that
truly, belongs to all that live in it, united in our diversity.â
This statement cannot be more relevant to an event of this nature and
stature. It emphasises unity in diversity for a common goal, unity across
national government departments, across the national, provincial and local
spheres of government, across category A, B, and C municipalities, across
communities and constituencies, urban and rural in their diversities.
Service delivery statistics (Electrification) for Gauteng
Energy provision is a multi-faceted service, which poses different
challenges for different communities. As government we are committed to the
goal of universal access to electricity services. Electrification has
progressed relatively well over the past decade. We are aware that Gauteng is
one of the most electrified of the nine provinces that we have in terms of
volume but is among the least electrified in terms of percentage. As of 2003,
the official level of electrification provincially is 65%, with 67% urban and
26% rural electrification level. This is a disturbing reality if one translates
the above picture scenario into numbers. That is to say that there is almost a
million households across this province that are without electricity in a
province that is regarded as the most technologically, socially and
economically advanced in the continent.
My Department is in the process of rolling out and ensuring universal access
to electricity all in the country. Our target is that by 2012 at least 10
million households should be electrified. Basic livelihoods activities which
will indeed be sustained will be possible once people have access to
electricity. In our recent Commission for Sustainable Development workshops
held around the country communities acknowledged and commended governments on
its efforts to avail electricity to all. Key to this was the fact that
electricity has been used to kick-start and explore various income generating
projects ranging from wielding, dressmaking, to laundry services on a
small-scale. This all was in response to and in line with the Presidentâs State
of the Nation Address of 2005.
A recent spate of blackouts and brownouts in this province is only surpassed
by those in the Western Cape mainly for different reasons that are well known
to you. As this winter firms its grip upon us, the concerns that we have as
consumers of electricity services in your municipal areas are rising. If the
winter of 2005 is anything to go by the question that goes in the mind of the
consumers are the likes of:
* Will we come home to freezing homes after a hard dayâs work?
* Will we be able to put a meal on the table for our families?
* Will we have to walk down dark unlit streets?
* Will we be safe in our houses overnight?
* What is the impact on the industrial and commercial sectors?
* Will we be able to generate income to be able to pay our rates and taxes to
the same municipalities whose electricity services exacerbate our
socio-economic woes?
* Can we claim damages for damaged electric and electronic equipment that is
damaged by the poor quality of supply (dips, surges and interruptions) by our
service providers?
* Can we claim for the losses suffered as a result of procurement, production,
storage, distribution systems that fail because of unreliable electricity
supply by our service providers?
* Can we pass the blame for the loss of life that is directly or indirectly
attributable to the unreliable electricity supply to our health
institutions?
* Can we continue to electrify the un-electrified communities in a cost
effective and sustainable manner?
The list of questions of this nature is endless. If we can not confidently
answer these questions without implicating ourselves as service authorities and
service providers, then we can not afford to turn a blind eye or lend a deaf
ear to the directives of Cabinet on the need to fast-track the EDI reform
process with the requisite trepidation.
The EDI restructuring process
Just to remind ourselves, the key drivers of the electricity distribution
industry restructuring are to:
* Ensure access to electricity and affordability of energy services;
* Improve governance of the electricity sector;
* Improve electricity service delivery; and
* Stimulate economic development.
These objectives underpin the work that culminated in a plan that seeks to
establish six financially viable Regional Electricity Distributors that have
become known as. These objectives are our lodestars and assist us in a
restructuring process that:
* Is transparent;
* Builds public confidence;
* Seeks to clarify individual responsibilities between various spheres of
government;
* Communicates policy effectively.
The Blueprint
The Cabinet Decision of 2 May 2001 gave impetus to the Electricity
Distribution Industry restructuring process outlined in the Blueprint on EDI
Restructuring. This process led to the establishment of EDI Holdings as a
vehicle through which the Governmentsâ mandate of restructuring the EDI would
be executed, which would culminate in the establishment of six wall to wall ,
in a given governance framework and in a given time frame.
In this regard, EDI Holdings has developed some tools and processes that
would enable us to restructure the industry in a pre-determined way. What
became very clear, towards the establishment of red one, was that a lot still
needed to be done, both from the policy side and the legislation development
perspectives.
It is therefore the reason why Red One was established as a Municipal Entity
within the jurisdiction of the City of Cape Town only as we know it today.
The Blueprint process also guided the Eskomâs seven to six projects, which
resulted in the alignment of the then seven Eskom Distribution Regions to be
more in line with the envisaged sic.
As you are aware, the jury is still out on the Governance of the, Asset
Transfer and Compensation. To that end the Eskom Business in RED ONE is
operated through a whole number of Agreements between red one and the City of
Cape Town.
At the Launch of Red One, we as the Ministry alluded to some of the
limitations that still need to be addressed, going forward.
Cabinet decision of 14 September 2005
The financial viability of the Metros is one of the main considerations
which led to the subsequent Cabinet decision of 14 September 2005 and formed
the basis for the new approach on taking the EDI Restructuring process forward.
We have gathered here to today unpack that decision and to put it into
operation.
In that decision, Cabinet mandated us to:
* Form six metro immediately after the municipal elections;
* Form a national RED after an investigative modelling process in respect of
its financial viability, governance and organisational structure;
* Propose an implementation framework that will facilitate the attainment of
the EDI Restructuring objectives;
* Develop and propose a framework for the governance of the, the participation
of Secom, shareholding and compensation; and
* Development on an enabling legislation for EDI Reform.
Balancing demand and supply
While it is evident that the demand for infrastructure and services in the
province far outstrips the ability of the metropolitan municipalities to
provide electricity services as a result of an explosion of urbanisation of our
communities, it is still a challenge that we as Government cannot afford to
loose. But the existing infrastructure also needs maintenance and
refurbishment.
We are concerned about Electrification Funding that is allocated each
financial year, yet some municipalities fail to provide infrastructure service,
and the money is returned to national government.
We are also concerned about communities who have electrification
infrastructure, yet the beneficiaries are cut-off due to non-payment and other
similar problems, without adequately using the social nets that have been
created for that purpose.
While we are aware of grid infrastructural backlogs, we have embarked on
parallel programmes that will ensure that the absence or inadequacy of the
national grid infrastructure does not limit the availability and access to
basic energy by marginalised communities.
Non-grid and alternative energies
The provision of alternative energy is premised on meeting the total energy
need of target communities. In this regard my Department is looking at making
access to safer and more efficient energy sources like Liquified Petroleum Gas
(LPG) available to un-electrified communities. The LP Gas Association is
discussions with a number of municipalities on the issue of the free basic
electricity in relation to gas. To date a number of road-shows have been
conducted by this organisation to create awareness around the usage of gas in
mitigating the increased electricity needs while making it accessible to the
poor.
In addition my Department is conducting research on the effectiveness and
viability of solar energy as another form of energy source. It is pleasing to
note that LPG is gaining popularity in the affluent market in terms of space
heating and outdoor lifestyle as a more effective thermal energy form.
The Ministry has been in discussions with the Petroleum and Gas industries
to look at ways and means of making LPG and LPG appliances and services
available in a more affordable and decentralised manner, mainly for application
in rural and informal settlement communities.
Free basic electricity
The Ministry is aware of the free basic electricity roll out. We are also
aware that the capacity of municipalities to implement free basic electricity
is constrained by the extent of infrastructure roll out.
Co-operative governance
Together we stand and apart we will fail. Through recognising the strength
in complimentarily of relevant structures, together we shall prevail over our
individual institutional limitations. We recognise that the electricity
distribution industry in its current form is not sustainable. In that regard I
encourage you to support the Ministry, the Department of Minerals and Energy
(DME) and EDI Holdings to facilitate the EDI Restructuring so that ultimately,
the electricity services should reach those that still do not have access to
the service in a more efficient and equitable manner.
Stakeholder management
We recognise that there is a role for various stakeholders in the
implementation of the service delivery mandate. We appeal to the political,
bureaucratic and other structures to hold hands with us as we facilitate and
provide services to our communities, especially in farms and informal
settlement areas.
Capacity building and skills development
We also need to improve the participation of the local government sphere in
the Sector Education Training Authorities (LGWSETA and Energy SETA) programmes
to broaden the skills base on energy matters.
Conclusion
We need the versatility that will allow us to the lights to continue
burning, provide free basic electricity, continue electrification, maintain and
refurbish our infrastructures, provide alternative energy sources to the poor
and un-electrified and yet advance the formation of the Metro in a manner that
if fitting.
I trust that we will be meeting in your respective municipalities soon to
launch the Metro and engage earnestly to fast track the roll the National
RED.
Programme Director, Ladies and Gentleman, I wish you well in with this
summit.
Thank you.
Issued by: Ministry of Minerals and Energy
24 April 2006
