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Speech by Hon. FZ Majola on the occasion of the Budget Vote Debate

11 May 2016

Honourable Chairperson
Minister and Deputy Minister of Energy
Ministers and Deputy Ministers present
Honourable Members
Ladies and Gentlemen
Comrades and Friends

The African National Congress fully supports this budget of the Department of Energy.

This 2016/17 budget of the DOE must be located within the broader spending plans of the medium expenditure framework as presented by the Minister of Finance in February. It is reflective of the subdued economic context and tighter revenue base, a context in which globally has seen the International Monetary Fund revising its projections downwards to 3.4% for 2016. In a nutshell, we are engaged in this debate in the midst of unfolding structural tendencies and changes in the global economy, in which energy and other commodities are a central part. It bears reiterating and indeed we cannot overstate the importance of the government's response in terms of the overarching Nine Point Plan, which amongst others sets out critical tasks and measures to tackle the binding constraints of energy supply - to put the economy back on a faster growth trajectory and to ignite light at the end of the tunnel for millions of our people.

The department of energy has been allocated a budget of R7.54 billion, which is less than a per cent higher than the R7.4 billion allocated to the department last year. As is the case with previous years, the Integrated National Electrification Programme (INEP) was allocated the largest share of R5.64 billion. As the ANC, we welcome the fact that the department successfully spent 99.1% of the R4.5 billion allocated to this programme last year. This is a very critical programme comprising grid and non-grid electrification of millions of households, especially the far flung rural communities.

Energy is a basic need of the people of this country; we need energy to prepare food, to keep warm, to heat water, to purify the water we drink, to provide lighting so our children can study at night. Indeed, we need it for transportation, for industry and commerce so our people can access jobs, and to grow our economy.

Honourable Chairperson

The mandate of our fifth democratic Parliament remains one of catalysing and overseeing an uninterrupted radical socioeconomic transformation. This builds on the back of the steady and yet extraordinary real gains of socioeconomic and political transformation that have taken place in our country since 1994. A continuous good story narrated by concrete facts on the ground and on record, amongst which is the fact that when our fifth democratic parliament began about 5.8 million poor households had been electrified in less than 20 years. As the ANC, we are proud to say that as at March 2016, this has been expanded to over 6.7 million households, which now amounts to 88% of all households. This already makes the South African reality almost unrecognisable given the fact that in 1994, a mere 36% of households were electrified - which was of course largely white and urban households.

Honourable Chairperson

We can be confident that with the allocation of R17.6 billion over the medium-term period, the department is on course towards achieving the mandate of 1, 4 million households by March 2019, 75 % of which are in rural areas.

Five Point Plan

Honourable Chairperson and Members

When I took the podium last year on this occasion, the house was suffocated with a sweeping air of cynicism coming from the other side and swirling in the corporate media in the midst of the spates of load-shedding that were unfolding. At that time we communicated the decisive outcomes of the ANC's January Lekgotla of that year, which directed that urgent measures must be taken to address issues pertaining to the generation capacity, a constrained network (transmission) capacity and a distribution infrastructure that is interrupted by the imperative of maintenance and refurbishment. Indeed, the Lekgotla deliberated on and endorsed a concrete 5 point plan at the centre of which is a strategy of immediate and short term interventions to stabilise energy supply.

With its War-Room led by the Deputy President, Cyril Ramaphosa, as the ANC we welcome the concrete and remarkable progress that has been registered to date. Yes, it is true there has been no loads shedding since August last year.

Renewable Energy

Honourable Chairperson

As well as the protracted global economic crisis, ours is a generation that is also facing ecological crisis of a planetary proportion. Hence, we must welcome the momentum added to global climate action to cut carbon emissions and contain global warming by the historic agreement reached in December last year in Paris. This came on the back of the United Nation's Sustainable Development Summit held in September 2015, which for the first time in history adopted a global sustainable development goal for energy - aiming for access to affordable, reliable, sustainable and modern energy for all. In this context, as the ANC we welcome the deepening national commitment to transition to a low carbon economy, as underscored by the Integrated Resource Plan (IRP) in terms of which 17800 MW are expected to be generated from renewable energy sources by 2030. This firmly places us as a country amongst some of the leading countries of the global-south that have taken on the challenge of shifting towards renewable energy sources, which include China, Morocco, Bangladesh, Mexico, Tanzania and Turkey. Since August 2011 the Renewable Energy Independent Power Producers Programme (REIPPP) has maintained its place amongst the top 10 renewable energy programmes globally - which makes SA a leader in the renewable energy sector.

We welcome the progress registered in terms of the department's REIPPP, contributing substantially to the generation capacity of SA. By the end of the last financial year, 37 projects were able to add more than 1 800 MW to the national grid. There has also been substantial tariff decreases for wind by 55% and solar photovoltaic by 62%.

With regards to the 9,600 MW nuclear new build, the department was able to complete the vendor parades, and concluded five inter-governmental agreements. The DoE is currently embarking on nuclear skills development and training programme that aims to grow the necessary local skills required for the nuclear build programme. We welcome the directive by the President that "we will only procure nuclear on a scale and pace that our country can afford".

Petroleum and Gas

Honourable Chairperson

The Middle East remains our important source of crude oil, but as the ANC we welcome the fact that more than half of our country's crude oil requirements have been met by African countries, notably Nigeria and Angola. With regard to the refined petroleum products, the capacity of our domestic refinery industry is falling short of demand even in the midst of a subdued economic climate, as illustrated by the fact that in 2014 South Africa refined approximately 27 billion litres of liquid fuels and consumed 29 billion litres, with the shortfall being imported.

The ANC's 2015 NGC appreciated that the setting up of refining capacity in the Coega SEZ is an important development for the liquid fuels sector growth and for development. This will boost industrialization, job creation and attract significant foreign direct investment. It is therefore necessary to reiterate some of the key conclusions of the NGC of the ANC, which include that:

  • Operation Phakisa recommendations to advance offshore oil and gas exploration be implemented expeditiously.
  • That the exploration onshore for shale gas should be accelerated in such a way to ensure that no damage is done to South Africa's water and other environmental resources.
  • The effective integration of the South African economy with the oil and gas resources available in the Southern African region.
  • That we expedite the drafting of policy of Oil & Gas industry, separate from the mature mineral policy, and incorporating the "free-carry" principle for the state.
  • And that South African companies, including state-owned companies, should have a clear role in the gas industry.

Honourable Chairperson

We welcome the fact that the committee will soon receive a presentation on the IEP, South Africa's own energy master plan.

With regard to the liquid fuels, despite the price volatility in the market, the demand and supply equation has been managed with commendable competency by the department of energy. None of us can claim that we have found fuel stations depleted of petrol or diesel with long queues being the order of the day. Yes this is a good South African story. However, the aging infrastructure, the slow pace of transformation, the delayed or pending decisions on the cleaner fuels specification and the proposed new refinery capacity are all adversely affecting the economy and we now need bold steps from the department to address some of these challenges.

Following the release of the Integrated Energy Plan and the updated Integrated Resource Plan, we should see the tabling of the Gas Utilization Master Plan. Similarly, a concern must be expressed with regard to the status of the solar water heater programme, which at one point was a flagship programme of the DoE, second only to the Integrated National Electrification Programme. About 400 000 SWH have been delivered to South Africans, however there have been challenges that have led to the department taking direct control of the programme. Proper and concerted attention and focus are now clearly required to reposition this programme.

With regard to the SOEs, in the last financial year there have been various challenges noted, including poor corporate governance, irregular expenditure, lack of alignment to the objectives of the department - all of which effectively resulted in poor utilization of resources. We once more urge the department to move with speed to reposition entities to ensure that they can fully deliver on their mandates. At the centre of this intervention there must be the alignment of the strategic plans of these SOE's with that of the department.

As the ANC, we can proudly and confidently say that in the overall, the department is on course. The PCE appreciates the achievements of the DOE in its few short years in existence. It has significantly contributed to energy security in South Africa and it continues to do so.

For those of us, especially the masses of our people, whose lives and circumstances have been intertwined with the history of this country, and therefore who in their living memory actually know what it means to live in the dark days of apartheid, also know that our country has the practical capacity to secure an even brighter future. Yes there can be no doubt that SA is a far better place today than it was 22 years ago. And yes we know that tomorrow will be better than today.

Siyaqhuba, Siyasebenza.

Together we move South Africa forward!

The ANC supports the budget.

I Thank You

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