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Budget Vote Debate Energy No: 26 Wednesday, 16th May 2018, speech by Hon. FZ Majola on the occasion of the Budget Vote Debate

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 rises to support the budget vote 2018/19 of the Department of Energy.

Chairperson, on the 9th of May 1994, Mama Albertina Sisulu stood up in this house to nominate Tata Nelson Mandela as the President of our country. And so, it is fitting that in this year in which we celebrate the centenary of their births, that I stand on this podium dedicating this speech in their eternal honour and memory. On his return to Alexandra township, a place he called "home away from home" and where he cut his political teeth in the 1940s, Madiba said Alexandra was known as the "Dark City" because of the complete lack of electricity amidst the sparkling lights in the surrounding suburbs and what later became Sandton. In finding Alexandra still plunged in darkness 50 years later, Madiba pledged that "our immediate challenge is to electrify the whole township and transform it into the "City of Light", indeed to transform the whole of the country. Today, none can contradict us when we say that the ANC has lived up to Madiba's pledge, as 86% of households have access to electricity in line with the 2014 Manifesto commitments and that we are indeed on course to achieving 97% of households by 2025, through grid and off-grid solutions.

Despite these giant strides, the PC notes with concern the challenges that may have an adverse bearing on our flagship Integrated National Electrification Programme (INEP) towards electrifying 1.25 million more households by the end of 2019. These challenges include the swelling demand because of the accelerating urbanisation amidst the 13% fiscal draw down. The budget has been cut from R8.1b to R7b in 2018/19.

Similarly, the PC is concerned about the aging transmission and local distribution infrastructure. This is against the background of our struggling municipalities, with limited financial resources and technical personnel. Therefore, the PC recommends that a more comprehensive programme, equivalent to the INEP programme be developed to address the backlog and maintenance challenges in this regard.

We are almost at the end of the 5th Parliament and this Portfolio Committee wishes to ensure that there are clear deliverables on key areas that now need to be rounded off. Hence some of the key recommendations of this Committee to you Honourable Minister; on the generation and distribution of electricity are as follows:

  • Firstly, ensure that the Committee receives the Inter-Ministerial Task Team Report on the Electricity Distribution Industry.
  • With regard to electricity generation, as a Committee we would need an update on the Nuclear New Build Programme and on the Intergovernmental Memorandum of Understanding with the transit countries involved in the Grand Inga Project.
  • The Committee is also concerned about the state of business at Eskom and indeed we expect an update on the governance challenges and the status of the coal power stations, in the 3rd Quarter of 2018/19.
  • Finally the end-state of electricity report must be presented to this Committee before the end of the 4th quarter.

On key policy and legislative interventions, the PC welcomes the Minister's decisiveness in his intention to eliminate obstacles in the policy implementation process, indeed this is what is required to stimulate our economy. The first Integrated Resource Plan of 2011 gave our country direction in dealing with the economy's requirements with regard to electricity generation and thus it enabled and guided the development of key intervention programmes that resulted in enhanced energy security and most importantly work and economic opportunities for scores of our people. As you indicated Honourable Minister, key policy interventions such as the revised Integrated Resource and Integrated Energy Plans are needed so as to provide policy certainty and direction to "stimulate the much needed investment in our economy." Such policy certainty and direction generate the necessary confidence for investment in the development of the sector and the wider economy. Therefore, the PC recommends that the Minister present to the Committee the finalised Integrated Resource Plan (IRP) in the 4th Quarter of 2018/19.

This too applies to the necessary legislation that need to be expedited. These include the Electricity Industry Structure Bill and the Electricity Regulation Amendment Bill which we believe would generate the necessary confidence and encouragement of investment in electricity generation that is needed for economic growth. Similarly, the Gas Plan and the Gas Amendment Bill are critical for gasification of the economy. This speaks to the entire value chain from importation and storage infrastructure, all the way to distribution and safe usage of gas. The investment in this sector will result in the expansion of a key sector of the energy economy resulting in substantial investment, job creation and energy security.

Chairperson, the committee welcomes the fact that the Minister has made the filling of vacant posts within the department a priority, and indeed we would appreciate an update once these positions are filled. As indicated by the ANC on the occasion of its 106th anniversary "Our vision is an economy that encourages and welcomes investment, offers policy certainty and addresses barriers that inhibit growth and social inclusion. Our commitment is to build strong partnerships in which efficient and accountable government agencies, responsible citizens and businesses, effective trade unions and civil society work together for the common good".

With regard to the solar water-heater programme, the PC acknowledges the progress made in terms of the 80 000 units manufactured and that the installation is now to be managed by the IPP office and the Central Energy Fund. The programme has installed 400 000 units since 1994 resulting in a substantial number of homes having access to hot-water, some of them for the first time. But we cannot forget what Comrade President Cyril Ramaphosa mentioned in his State of the Nation Address earlier this year that "There are nearly a million children in early childhood development facilities and let's make sure that they have the luxury of washing their hands in warm water. That they have access to running hot water when needed".

We need to ensure that our solar water-heater programme delivers on the goal of providing access to running hot-water to our more than 3.5 million indigent households. Therefore, the PC recommends that it be updated on the Solar Water Heater Implementation Plan, including transfer of the installation phase to the Central Energy Fund, in the 4th Quarter of the financial year.

Honourable Chair, the ANC government recognises that we all need to save electricity to ensure a sustainable future. Hence, various demand-side management and energy-efficiency programmes have been implemented in industry and households in South Africa since 1994. However, it is necessary that simultaneously attention must be paid to the unintended and negative side-effects that reduced electricity consumption has on electricity sales, which is the life-blood in terms of municipal revenue stream.

With regard to the petroleum sector, the sale of the Strategic Fuel Stocks has been a major concern of the PC and as such we welcome the decision by the CEF Group to file court papers seeking a declaratory order to invalidate the sale. The PC is of the opinion that on an annual basis the department needs to set targets to increase the Strategic Fuel Stocks and the safeguard there off. In terms of oversight, the Committee will expect an update on the sale of the strategic fuel stocks once judgement has been passed on this matter.

Part of the National planning initiatives is the proposed construction of a new refinery and in this regard the PC welcomes the announcement by the Minister that a definite decision will be made in due course and we expect that the PC be kept up to date on the developments with regard to the decision to build a new refinery.

The other matter is the transformation of the liquid fuels sector, which is of perennial concern. The retail sector remains largely untransformed and here again the department and all key stakeholders need to develop strategies on how to address this. This should include, firstly, mechanisms to ensure compliance to the liquid fuels charter that requires historically disadvantaged South Africans own 25% of the aggregate value in the sector and further transformation in the retail sector.

Finally regarding the SOE's, the PC welcomes interventions to ensure that governance and leadership challenges experienced are addressed to bring stability and restore public confidence. Therefore the PC recommends that it be updated on the restructuring of the Central Energy Fund considering the central role it is playing in the energy sector in South Africa.

With regard to NECSA, this is a State owned entity that partially sustains itself through the sale of nuclear technology products, chemical products and nuclear energy services. It is important that the department should assist NECSA to develop markets for these products in the SADC region and within the BRICS countries.

Lastly, we wish to condemn in the strongest terms possible the massacre perpetrated by the apartheid Israeli regime on the people of Palestine.

To my committee colleagues thank you for your continued cooperation and robust engagement.

The ANC supports the budget.

I thank you

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