Deputy Minister of Energy, Ms Barbara Thompson
Director-General, Ms Nelisiwe Magubane
Executive Management of the DoE
Government officials
Invited guests and stakeholders
Members of the media
Ladies and gentlemen,
In the next two hours, I will be tabling the Department of Energy’s Budget Vote speech for the 2011/12 fiscal year. This year’s speech is very significant for us as it happens just a week after the recent municipality elections. For us, the elections have communicated the message that, as the department entrusted with the provision and security of energy to all our communities, we have been given another opportunity to do even more in the energy sector to increase the economic growth of our country.
This year’s budget will focus on key deliverables and outputs that the Department of Energy (DoE) will focus on in the coming year and beyond, and that is aligned to the broader policy objectives of government and responsive to key instruments such as the New Growth Path and the Industrial Policy Action Plan.
It also comes at a time when the political events in the Middle East and North Africa have had and are continuing to have a direct impact in the pockets of ordinary South Africans due to the fluctuations in the oil price.
There are also signs that some traders in global stock markets are taking advantage of the situation and adding a premium to the already high prices. At the same time demand has increased compared to 2009, putting further pressure on supply.
I recently issued a statement re-iterating the importance of fuel efficiency following the increases in the crude oil prices which is mainly attributed to the current fuel hikes. One of the interventions we suggested was the possibility of the reduction of the speed limit as a measure to save fuel – and as indicated previously – I have instructed a team to look into this matter.
Not only are we looking into fuel efficiency, but as a department we are finalising a comprehensive Energy Efficiency campaign to educate and encourage the public to use fuel and electricity efficiently to avoid load shedding and other energy disruptions as experienced in 2009.
This campaign will be launched in the second quarter of this year. We have partnered with a number of stakeholders including other government departments in this initiative dubbed the “Industrial Energy Efficiency programme”. The programme includes the review of the Energy Efficiency Strategy as one of its output.
Significant work has also gone into the development of a framework towards the modernisation of our liquid fuels with the aim of making them cleaner and less harmful to the health of people. We published a roadmap together with a position paper on fuel specifications for the public and interested parties to provide input.
It must be noted that the impact of this modernisation process is that refineries will have to be upgraded and in so doing more than 1000 jobs can be sustained throughout the duration of the programme.
We committed to reducing the number of days it takes to process a fully completed application for retail or wholesale licence in the petroleum sector to below the prescribed 90 days.
I also undertook to deal with regulatory uncertainty in liquid fuels sector and we have initiated a programme to develop Regulatory Accounts which will be used to reward investment in the value chain. We have completed the preparatory work and will now move towards early implementation of some of the aspects where decisions have been taken.
In keeping with this policy objective, we will soon be publishing a Liquefied Petroleum Gas (LPG) Strategy, which seeks to divert households from the use of electricity for cooking and space heating to LPG.
We believe that by doing this as a demand side intervention, there is a potential to delay the construction of at least one Power Station, which is to the benefit of Eskom, but mainly the consumer.
LPG is cleaner burning and more efficient use of energy, and we will further be proposing the use of LPG as an energy poverty intervention, where LPG would be offered to the indigent as part of free basic alternative energy and over time replacing paraffin for cooking and heating.
Last year, we started the process of developing the Integrated Energy Plan (IEP). We have put in place a planning methodology which defines the processes that we will undertake as well as intergovernmental structures to ensure constructive debate and effective delivery of the Integrated Energy Plan.
Well, at this stage discussions and debates are still taking place within the auspices of government, however, we aim to open engagements to the broader public before the end of the first half of this financial year.
Subsequent to that, Cabinet approved the Integrated Resource Plan (IRP 2010) which outlined 42% allocation to renewable energy by 2030 and I am delighted to announce that the preparation of procurement documentation under Renewable Energy Feed in Tariff (REFIT) has been completed.
By December 2011 we would have completed the procurement process under the REFIT programme as committed and announced by National Energy Regulator of South Africa (NERSA) in 2009. We do confirm that the outcome of the current revision of these tariffs by NERSA will only affect the second phase of renewable procurement.
This will showcase South Africa’s commitment to clean energy as we build up to upcoming Cop 17 or the United Nations Framework Convention on Climate Change (UNFCCC) conference of parties which will this year be hosted by South Africa in Durban at the end of this year.
In addition to this, South Africa through DoE is the only African country participating in the Clean Energy Ministerial launched in July 2010.
South Africa has endorsed its full participation on the Global Wind and Solar Atlas and a Long term Strategy on capacity building programme following the decision by the Major Economies forum in July 2009 to develop the Technology Action Plans.
These initiatives will further elevate both sectors to an international level whilst addressing a key priority of the skills development in the country.
While the IRP focuses on addressing our electricity challenges, the IEP will also consider other viable options which could be considered for displacing to some extent even electricity. The IEP will therefore test different policy objectives not considered in the IRP process, and make propositions going forward where relevant.
You will recall that one of the major challenges in electrification projects over the last few years, was that only municipality which were licensed to distribute electricity were allocated electrification funding. However, in order to increase the roll-out process, we have initiated the “Turnkey” projects with the municipalities that are not licensed.
The “Turnkey” approach is a recommended alternative to in-house electrification done by the municipalities or Eskom in the light of the pressures and limitations that these entities have.
Most of the municipalities that are not licensed are in rural areas and are often faced with challenge of shortage of technical skills, human resources, and limited time to manage electrification projects.
In light of these challenges, the “Turnkey” projects provide a solution to fast-tracking service delivery, and producing a good quality product that is produced by qualified and experienced experts in the field, while knowledge transfer is taking place in the municipality.
In our effort to intensify the implementation of energy efficiency projects, the drive to achieving a target to install one million solar water heaters by 2014 is underway. The Solar Heater Water programme has to date delivered over 115 000 systems under the fiscal and rebate funding scheme.
The IRP 2010 was approved shortly after the earthquake and Tsunami that hit North Eastern Japan causing widespread damage including the Fukushima Daichi nuclear power plant.
Following this catastrophe, the National Nuclear Regulator (NNR) will develop the appropriate “stress-tests” for the Koeberg Nuclear Power Station. These will be additional to the actions that have already been taken by Eskom such as the testing of all emergency related equipment.
In this undertaking, we will engage with the International Atomic Energy Agency.
We have also directed NNR to engage in an exercise to incorporate lessons learned from the Japanese experience into our regulatory practices to ensure that the current approach to nuclear safety in our nuclear facilities is continuously assessed and improved.
In my speech later today, I will talk more on issues relating to various entities reporting to the department including the electricity distribution industry (EDI) Holdings which, as per Cabinet decision has ceased operations on 31 March this year. As the department we are committed to our mandate of ensuring energy security in the country.
I thank you!
