22 November 2007
Themba Maseko: Apologies for calling you so early on a Friday morning. I
know in Cape Townâ¦.
Journalist: It is very early for a Friday.
Themba Maseko: I know in Cape Town you guys normally wake up after nine. So
apologies for being here, okay, thank you, welcome. And the reason we are doing
it a bit early today is because of the Fifa World Cup Preliminary Draw in
Durban. I have to go there, catching a flight at eleven o'clock to deal with
your colleagues, about 3 000 of them who have gathered there. Thanks for
understanding. Already we can start. All ready? Okay.
Cabinet held its meeting, ordinary meeting, in Cape Town yesterday morning,
21 November 2007. Cabinet decided that the Ministries of Minerals and Energy,
Water Affairs and Forestry, Public Enterprises and of Trade and Industry must
collaborate to develop a comprehensive Electricity Master Plan for the country.
This decision followed the presentation of a draft electricity master plan,
which showed inter-alia the rise in demand for energy caused by the high rate
of growth, and South Africa's continued reliance on coal as an energy source,
which is standing at around 88%. The global norm is around 45% reliance on
coal. The pillars of the comprehensive Electricity Master Plan will include
increasing capacity, and improving the reliability of electricity
infrastructure; providing reasonably priced electricity; ensuring security of
supply as set out in the security supply standards; diversifying energy sources
and meeting renewable energy targets. The investment in maintenance and
rehabilitation of infrastructure, and the quality of supply of electricity will
be better regulated in future.
This plan will enable the state to make the correct investment decisions to
meet South Africa's extensive energy requirements owing to the strengthening
and growth of the economy. Some of the strategic considerations will include
the skills development and management; the need for investment in research and
technology; and meeting demands that are a result of the rise in fixed capital
formation by both the public and private sectors, including economic activities
associated with the 2010 Fifa World Cup. In the meantime Eskom's investment
strategy, to increase the generation capacity and local government's
maintenance of existing infrastructure will continue and will form part of the
comprehensive Electricity Master Plan. The final plan will be finalised and
approved by the end of the year.
The meeting was also briefed on the progress in the development of the
Bio-fuels Industrial Strategy and resolved that the strategy be approved by the
end of the year when all the final details have been finalised.
Cabinet also approved that South Africa ratify the African Energy
Convention, which regulates and sets standards on energy policy matters in the
continent.
The Interim Textile and Clothing Development Program was extended for a
further two years until 31 March 2009. The Ministers of Trade and Industry and
Finance were directed to consult further on measures that need to be put in
place to strengthen the administration and monitor the implementation of the
program to curb abuse of the system.
The meeting also endorsed the Historic Schools Restoration Project, which
seeks to restore the rich heritage of schools that were established for
Africans in the late 19th century and 20th century. These schools remain the
principle bearers of modern education among Africans and became the incubators
for African intelligentsia. This project will form part of the Bicentennial
Celebrations of Ntsikana, who promoted the visions that Africans should learn
to read and write. This vision led to the establishment of the schools, such as
Ohlange High and Adams College in KwaZulu-Natal, Healdtown and St Mathews, the
latter two being schools in the Eastern Cape.
The project will be piloted in the above-mentioned schools and will form
part of the national movement to revive the culture of teaching and learning in
our schools, and is expected to expand as more historic schools are added to
the list. The pilot project in the four schools will be implemented at a cost
of R11,2 million over three years, and will be funded jointly by the
Departments of Arts and Culture and Education. Anglican Archbishop Njongonkulu
Ndungane has been appointed as the Project Champion.
The meeting noted that the preparations for the hosting of the 2010 Fifa
preliminary draw, which is the key milestone event prior to the 2010 Fifa World
Cup, were proceeding according to plan, and that this event will demonstrate
our ability to host successful international events. This occasion is the first
major Fifa event on African soil, and will give the world a taste of the
outstanding World Cup that Africans will deliver in 2010. The event will be
addressed by President Thabo Mbeki and a host of other dignitaries.
The Sixteen Days of Activism for No Violence Against Women and Children will
be launched on Sunday, 25 November 2007. Notable events on that day will
include men's marches in all provinces with the national event taking place in
Bloemfontein. Cabinet calls on all men to participate in the marches to show
their support for the campaign against women and child abuse. This year's
campaign coincides with other international events that will take place during
December, including the International AIDS Day on 1 December, and the
International Day of Disabled Persons on 2 December 2007.
The Africa agenda will receive further momentum when the Commonwealth heads
of government meeting holds its session in Kampala, Uganda, from 23 to 25
November 2007, under the theme "Transforming Commonwealth Societies to achieve
political, economic and human development." South Africa will be providing
security and logistical support to the Ugandan authorities during the duration
of this meeting.
The meeting also noted that South Africa successfully hosted the Diaspora
Conference which took place in Johannesburg over the past weekend. This
conference recognised that the Diaspora discourse cannot just be about an
emotional and spiritual journey, but must also focus on concrete, actionable,
measurable results in political, social and economic spheres. It also
identified the need to pay attention to areas such as tourism, culture,
communication and development of sustainable partnerships. The conference
resolved that the Diaspora must become the 6th region of the African Union in
order to facilitate the establishment of the necessary institutions to make the
concept operational.
Cabinet decided that the South African Customs Union should be strengthened
as an anchor to regional economic integration in the South African Development
Community. The meeting agreed to adopt a developmental cantered approach, which
seeks to harmonise policy within government and in the region. Work will be
done to enhance the sectoral co-operation within South African Development
Community (SADC), as part of the strategy towards regional integration within
the context of the broader African integration agenda.
Progress regarding the⦠South Africa's bid to host the square kilometre
array radio telescope was noted. Government is indeed confident that the well
prepared bid could see the SKA being awarded to South Africa. The final
decision is now expected only in 2011 after some of the bidding countries
requested a postponement.
The report on the meeting between President Mbeki and CEOs and heads of
state entities was noted. The meeting concurred with the need for greater
co-ordination and alignment between government and the various state entities,
and among the entities themselves. This initiative will help to identify and
address overlapping mandates, the role of state entities in development
programs, and will ensure that the state system can contribute meaningfully to
the achievement of a better life for all South Africans.
The continued deployment of South African National Defence Force members in
different parts of the continent, in countries such as Uganda and Sudan, was
noted. Furthermore the meeting approved that the Departments of Defence, and
Arts and Culture, should formulate social programs aimed at motivating deployed
forces, especially during the festive season.
The guidelines on the design, implementation and maintenance of
organisational structures in the public service were approved. This guide
provides a common framework for the public service, and will serve as a
practical tool to support practitioners in designing, implementing and
maintaining organisational structures.
Cabinet approved that the Department of Agriculture and Land Affairs of
South Africa hosts the 16th Commonwealth Agricultural Bureau's international
review conference which will take place in June 2008. The meeting also noted
that South Africa's successful hosting of the Group of 20 Ministers of Finance
and central bank governors in Kleinmond in the Western Cape took place last
week. This meeting marked the culmination of the work done during South
Africa's tenure as the chair of the group. Cabinet noted that the G20 meeting
discussed four major themes. These were the global economy, fiscal elements of
growth and development, commodity cycles, and Bretton Woods reform. Climate
change was also discussed.
With regard to appointments, Cabinet rejected the reports which suggested
that President Mbeki had blocked the appointment of Mr Ruben September as CEO
of Telkom. These reports are nothing but an embarrassing fabrication that only
serves to mislead the public and present the President in a very bad light.
Once again we call upon members of the media to refrain from publishing
unsubstantiated stories as this will discredit the media houses that allow
themselves to be used by anonymous and so-called unnamed sources. The following
appointments were approved and the following bills were approved. End of
statement.
Thank you very much. We will take a few questions.
Question: A couple of questions. First of all, strengthening Southern
African Customs Union (SACU)! How do you intend to strengthen SACU? What is
going to be done to strengthen it? Secondly, when did the meeting between
President Mbeki and Chief Executives, heads of state entities take place? That
will do.
Themba Maseko: Okay. Strengthening SACU, as you know, government is
committed to the notion of economic integration in the region. Some of the
measures that will be taken will be to ensure that we adopt policies as
governments within the SADC regions, to ensure that there is proper alignment
at a policy level that makes sure that the interests of all the member
countries are served. It will also include the need for structures that are
currently in place to be strengthened to make sure that in fact there is some
kind of structure that can manage the activities of SACU and that payment of
customs as agreed by all the countries are complied with by all the
participating countries.
The meeting between the President and CEOs and heads of state entities, that
meeting took place about a month or so ago, and as we say the idea was to try
and make sure that there is better alignment between what government is doing
and what the state entities are doing. Because there were indications that in
some cases there will be differences or misunderstanding of government policy
by some of the state entities, and to make sure that all of them as they do
their work, they do so in support and in co-ordination with government. We will
come back to your third question.
Journalist: Thanks. My question is on the very first bit, on electricity
supply. For some time now government has said that the reason why we have all
these outages is because the economy grows so phenomenally. Surely however this
economic growth was planned for and expected, given government's macro-economic
policy. Would government therefore agree that perhaps it did not plan very well
for electricity supply? Because I mean we cannot just say oh you know it is a
bad thing, but it is actually a good thing.
Themba Maseko: Deon, we have a few follow-ups, yes?
Journalist: Just to follow-up on Jan-Jan's question. One of the government
successes that are often trumpeted is the fact that they have expanded
electricity supply to now⦠what is it now⦠over 80% of households from a
previous point of 50%, I think. Surely that must also be a factor in the
increased demand for electricity. Can the government in fact distinguish
between the demands on the electricity supply that have come from those
successes, and the demand that is coming from the economy as such? Thank
you.
Themba Maseko: Yes, okay.
Journalist: Thanks. It just goes to the meeting with the CEOs of the SOEs as
well, whether Eskom's proposed, you know, 18% tariff hike was an issue there,
given that government on the one hand is very keen to keep inflation within the
band, and whether ⦠whether this was in fact a draft master plan that was
presented to Cabinet, or whether it was more of a kind of⦠you know, this is
where we are at and these are the risks and dangers going forward kind of
presentation? And who made that presentation? Thanks.
Themba Maseko: Okay. Let us take that question.
Journalist: Your first major paragraph on electricity says that Cabinet
decided that these ministries must collaborate. The decision followed the
presentation of a draft Electricity Master Plan. Does that mean that the
Cabinet criticised the master plan because it lacked collaboration between
these departments? Is there an implied criticism there of the draft master
plan?
Themba Maseko: Okay Jan-Jan. The master plan is something that is long
overdue. All of us would know that our economy has performed extremely well
over the past few years. A lot of what is happening in our economy was indeed,
yes, planned and anticipated. But the pace of the growth has actually exceeded
our capacity to meet the power or energy demands of the country. So you could
say that in fact this master plan is long overdue, and I will concede to that.
But I think what is important is to focus on the fact that we now know where we
are at this stage as far as our energy requirements are, and we are putting a
plan in place to make sure that in fact we deal with the challenges that we are
facing in the economy. So you could look at it as a negative, to say it was
poor planning. But what we are suggesting here is that we have identified this
as one of the major challenges that could constitute a major risk to economic
growth, and we are putting a plan in place to make sure that we deal with the
challenges that are posed by this plan.
Deon, yes, the presentation included a discussion on the current state of
affairs as far as energy supply is concerned. And the presentation does look at
the current use by the different sectors in the economy, the growth of the
residential sector, largely due to, yes, a commitment by government to make
sure that each and every household has access to energy. But also a lot of the
initiatives in the private sector as more and more people were rising through
the various living standards measures (LSMs), affording new houses. You have
seen a lot of private developments taking place in many parts of the country.
So yes, there is a push on the residential side for greater energy, but the
economic growth is also putting a major burden on our generating capacity. We
have got major investments already in the countryâ¦the Coegas and many other
infrastructure initiatives that are already putting strains on our capacity.
But the plan is to make sure that we begin to come up with a long term master
plan that takes into account the demands that are placed on the power by
industry itself, but also by the residences. And what is very clear in the
report is that, yes, there is indeed a possibility out there to begin to save
on the energy, especially at a residential level. Because it is very clear that
in fact the use of energy especially in the residential sector is taking place
between the hours of six and ten, and mainly used for cooking and heating of
water. And we think that in fact it is possible with better strategies that
need to be put in place, it is better⦠it is possible to manage our electricity
better, to make sure that we kind of manage the use of energy as we increase
our capacity to generate more power. But the figures, yes, are presented, which
indicates what percentage is used by residential⦠the residential sector and
what by the private sector. And if I have time I can actually check the figures
for you and give them to you.
Gaye. Your question about whether the tariff rise was discussed at the
meeting between the President and the CEOs and heads of state institutions.
Pardon? No, no⦠that issue never arose. The meeting did not discuss specific
problems and difficulties and challenges experienced by the individual state
owned⦠state entities. So the issue of tariffs was not discussed. But neither
was it discussed at the meeting yesterday. The draft plan⦠let me say that the
task team that was working on the draft electricity master plan was actually
hoping that this would be the final stage of the draft master plan. So there is
a plan but Cabinet was of the view that in fact there needed to be greater
co-ordination and collaboration with the other ministries to make sure that
when the plan is approved soon there would have been input from all the key
players in the sector. For instance, you know, Mineral and Energy is a driving
department, but you have got to make sure that state entities and state
enterprises are also on board and they have got their investment plans to
support this plan.
And that is why Cabinet said, yes, it is a good plan, it was not rejected,
Michael, but it was basically saying a good plan but let us get more input from
these departments. Because some ministers were saying it was important to
consider a number of other areas first before we finalised the plan. So I think
I have answered your question, Michael. It was not criticising it, it was
saying good plan but do further work in collaborationâ¦
Journalist: Sorry. Just a quick follow-up. Is this⦠is this statement
actually saying that those departments have not been collaborating in the
past?
Themba Maseko: No, no.
Journalist: Because that is moderately astonishing.
Themba Maseko: As I just said, this master plan was a product of a
departmental task team, which prepared a presentation. This is primarily
officials working on the report. It then comes to Cabinet. Cabinet looks at it
and Cabinet says, yes, good plan. But the ministers now must look at it to make
sure that in fact it is inline with the policy objective of government, and
that all other key aspects of the plan are taken into account. But the plan is
a product of an interdepartmental task team of officials which worked on it.
Yes, Sir, I will take that question.
Journalist: You mention a comprehensive master plan but there is no mention
of climate change here. Why is that? Why has it been omitted? And why is the
Department of Environmental Affairs not included in that group of ministries
that are dealing with the problem, given that 80%⦠80, 90% of South Africa's
energy comes from coal-fired power stations which are pumping up millions of
tons of greenhouse gases?
Themba Maseko: Look, I do not think there is a⦠this report did not deal
with the issue of climate change specifically, because we have produced lots of
documents on that, and the Department of Environmental Affairs and Tourism is
actually leading government's processes in that regard. This plan is focusing
primarily, specifically on electricity management, and the need for us to make
sure that we meet energy requirements. So there would not have been an
extensive focus on climate change specifically with regard to this plan. But
government does have, yes, a strategy to deal with all the challenges that are
associated with climate change. For instance, this plan also does not deal with
issues of the nuclear energy strategy that is in play. We did brief you guys
about what we are planning to do as far as that is concerned. So there is a
comprehensive strategy dealing with all of these issues, but this plan is just
focusing on meeting the electricity or energy needs at this particular point in
time, but again if you need a comprehensive briefing about what the other plans
and strategies are dealing with other aspects I am sure we can give that to you
at a later stage.
This is the comprehensive master plan focusing specifically on the
electricity part. But as we have briefed you before, there is a broader plan
that deals with challenges of energy requirements in the country, and we have
briefed you on these issues previously. So, we can do another presentation
later on to show you how the different pieces link up together. You have a
follow-up question, Sir?
Journalist: Just following up, are you not trying to have your cake and eat
it? We have got one part of government focusing on developing energy⦠the
supply of energy, and another part of government pushing for recognition of
climate change. How are you going to bring those two together?
Themba Maseko: Well, as I am saying, that there is a government task team
dealing with all the challenges with regard to climate change. Now this master
plan is just one component which is dealing with the electricity master plan.
So how this deals with the other components of the strategy is something that
we can brief you on at a later stage. But this one is just saying as far as
meeting and dealing with the power outages that we are experiencing in the
country, this is what we are putting on the table to deal with that problem but
it does not mean that in fact it is de-linked with all the other initiatives
that are taking place in government. I think we will take that question.
Journalist: Thank you, Themba. It is sounding more and more like a
mini-master plan, but anyway. Just two questions if I may. The security of
supply standardsâ¦what are they and where can one get hold of them? And then the
last sentence, the investment in maintenance and rehabilitation of
infrastructure and the quality of supply of electricity will be regulated in
future, can you explain that please?
Themba Maseko: Okay. I think let us start with your latter question by
giving you an example, Deon. We have a situation where at local government
level as an example you have many of the municipalities using electricity
income as a source of revenue. Now when that revenue comes in very little is
invested back into maintaining and upgrading electricity supply. So you have
infrastructure getting old, and not being maintained for literally decades. Now
what this regulation means is that in fact standards will be set, to say what
percentage of the municipality's revenue must be put back and reinvested into
making sure that we build and strengthen and maintain our electricity
infrastructure. So that is what this basically means. Now already there are
standards set. Part of the difficulty is that at this stage a lot of these
decisions are being taken at local government level, with very little input
from provincial or even national government. Now through the implementation of
the regional electricity distribution agencies we think that it is possible for
greater regulation of this sector to be put in place. Security of supply, it is
a standard that is been set and approved by government, and the key department
there is the Department of Minerals and Energy, so I would ask you to get
contact with them and they can give more details on that. Okay. You had your
question earlier.
Journalist: Just to follow up on that and also a question about biofuels.
Does this mean that we are headed for a clash with municipalities like Cape
Town regarding the Regional Electricity Distributors (REDs)? And secondly⦠the
Red One in that case. And secondly, your statement on bio-fuels, given the
context of a world crisis over using food productive land for biofuels, what
was said particularly to Cabinet about this problem in South Africa?
Themba Maseko: Does this mean we are heading for a clash with
municipalities, particularly Cape Town, with regard to the Reds? Not
necessarily, I do not think so. The issue of making sure that we have a
comprehensive strategy to meet energy requirements for the country is something
that is of national interest. And government will make sure that as and when we
move with this strategy all the key spheres of government are part of the
process, to make sure that we meet the needs. Because I am sure that the people
of Cape Town are at this stage probably sick and tired of the power outages
they had in the past few months, and they would be willing to participate in
any efforts that are aimed at making sure that we ensure security of supply of
electricity. So I do not anticipate that there will be major clashes as far as
that is concerned. But I am aware that there are indeed discussions as far as
the establishment of Reds is concerned, and you are aware that in fact Cape
Town has officially pulled out of that. But there will be discussions to sort
that one out later on. The bio-fuels strategy was discussed at Cabinet. The
view was that we needed to do further work on this matter, to make sure that
issues such as what⦠you are raising the issue of food security and making sure
that as you move along in developing the bio-fuels strategy you do not haveâ¦
that does not have a negative impact on food security in terms of leading to
higher prices, food prices and⦠the fact that South Africa has limited water
resources was one of the issues that were looked at, and when the final
strategy is presented I am sure we will have answers to a lot of those major
policy issues.
Journalist: Thanks Themba. Just a last question from me on the electricity
supply thing. I mean, it is essentially about managing the really tight supply
and the growing demand going forward, but there was a briefing by Eskom and it
was made clear there that the big problem is the fact that municipalities have
not been doing the necessary maintenance and refurbishment of their power
supply systems, and that as a result whatever you do about increasing the
supply of energy if you cannot actually supply to the local consumer because
those power systems are in a state of collapse. It is just not going to help.
So clearly a large focus then, is that correct, that a large focus of this
would be on that level?
Themba Maseko: When we talk about some kind of regulation of this issue,
those are some of the issues that will be put on board to make sure that we
deal with this complex issue. Because as I was saying earlier on, one of the
major challenges we are facing as a country is that a lot of the municipalities
have used electricity as a major source of revenue, so income generated from
the sale of electricity to private consumers, houses and the private sector has
basically been taken and used for other services at local government. So the
need for regulation basically says, yes, you can generate as much income as you
choose from the sale of electricity, but you will be required to invest a
certain percentage of that revenue to upgrade and maintain your infrastructure.
So those are some of the issues that will be dealt with when we are talking
about better regulation of the sector.
Journalist: Themba, what are these abuses that you are⦠that you have been
experiencing in the interim textile and clothing development program, and how
will that be dealt with now?
Themba Maseko: Can I refer you to the Department of Trade and Industry (Dti)
on that one? It is a question of detail. What came before Cabinet at the
meeting was simply to say this is the challenge, this is what we need to
address, and we need to extend the timeframe for this interim measure. Because
it was indeed an interim measure so some of the sectors have not been fully
complying with the interim measure that is currently in place. But as far as
the details are concerned I will make sure that somebody from DTI can answer
your question.
Journalist: Themba, did government express any concern or discuss the
possibility of football by candlelight in 2010?
Themba Maseko: Okay. Another question!
Gaye Davis: And whether there was any noting or any concern expressed, or
perhaps a dim view taken, of the fact that the costs are likely to overrun, in
fact we cannot even say by how much they are likely to overrun. And whether the
Finance Minister's prepared to sort of recant on his determination not to give
any extra money for 2010?
Themba Maseko: Football by candlelight, that is a new sport you are
inventing, Wyndham. But I am confident that in fact⦠or government is confident
that the 2010 Fifa World Cup will not be affected by any power outages. Part of
the arrangement with Fifa is that a lot of the stadia will also have generators
that will serve either as the primary source of energy or as a backup. So
measures are indeed put in place for that, and it is a procedure that is used
by Fifa in all its World Cup tournaments. I am told that in fact in Germany,
the primary source of energy for the '06 World Cup was actually the use of
generators in the various stadia. But Eskom has also given an assurance that in
fact all⦠everything will be done to make sure that in fact power outages do
not affect the tournament in any way whatsoever.
The issue of cost overruns was not specifically discussed at Cabinet because
there is already an existing Cabinet decision that in fact everything will be
done to make sure that the World Cup is indeed a success, and that all the
infrastructure requirements are met. The main focus of our work as government
at this stage is to ensure that there is proper management of the budgets by
the various hosting cities, to make sure that we do not have the costs overruns
exceeding what may be considered acceptable levels at this stage. The Minister
of Finance is on record as saying that in fact we cannot allow a situation
where each and every six months host cities come back and say we need an extra
100 million rands or hundreds of millions of rands to fund the stadia. So the
focus is on making sure that support is given to municipalities to better
manage the costs. Okay. Final question and then we conclude.
Journalist: Was there a decision taken on bio-fuels. How was it discussed
between maize, grain and sugar as a source?
Themba Maseko: Michael, it is one of the issues that are included in the
strategy document. That document does identify the major policy choices. No,
Cabinet has not yet taken a final view on which route to go, but it is very
clear that in fact some tough choices are going to have to be made about which
specific products will be used for bio-fuels. But the document does go into
details about some of the policy choices, and the implications of each and
every choice. Government is going to have to decide on which route. It is
expected⦠I think I say here by the end of the year, but it is expected fairly
soon, fairly soon. Okay, thank you very much, I think this brings us to the
end.
Thank you.
Issued by: Government Communications (GCIS)
22 November 2007
