Final push for renewable energy promised

The DG of the department of energy, Nelisiwe Magubane, claimed that South Africa’s renewable energy supply programme introducing independent energy producers was receiving world wide acclaim and all it needed was a “final push” to get it underway.

She told parliamentarians of the energy portfolio committee that the “vulnerability of the country’s refining sector was again exposed” when, because of a number of refinery shutdowns, the department’s attention had to be diverted from other serious matters to attend to such crisis and therefore, to some extent, affecting the outcome based results for the year.

Also she said time was lost “developing a response plan to US sanctions on Iran on the subject of oil supplies to SA” but she maintained that South Africa’s energy supply, in a strategic sense, was “secured and demand was well managed”, meaning, she told parliamentarians, that this important target had a successful outcome, despite the diversion of time and effort which could have been directed elsewhere.

Of the total DOE budget for the year under review only 5% was not spent and of the major programmes, the integrated national electrification programme received R3.2bn; Transnet’s new multi-product pipeline got R1.5bn; NECSA spent R586m on its planned development and renovation budget and the demand side management of DOE spent R398m on energy efficiency.

Yvonne Chetty, chief financial officer for DOE, said that all irregular expenditure incurred in the 2010/11 financial year has now been condoned and R39.5m of irregular expenditure was 99% related to lease payments for office expenditure which have now been condoned. The department had therefore received an unqualified audit result.

Chief Operating Officer, Thandeka Zungu reported that the DOE governance and compliance directorate started operating in May 2010 covering strategy and risk management; monitoring, evaluation and reporting; state owned enterprise oversight and international coordination.

As a result, DOE held its second strategic planning session in November 2011 which resulted in the production of 2011/12 – 2015/16 strategic plan and the 2011/12 annual performance plan (APP) that are aligned to the current government outcome based approach.

DOE’s subsequently revised strategic plan for 2011/12-2015/16 and the APP were tabled in Parliament in February 2012 and later presented to the joint meeting of the portfolio committee on energy and select committee on economic development.

In summation, a 43% achievement rate against targets was the outcome in the monitoring and evaluation area. It appeared from her report that much of the failure to achieve better results was due to the lack of winding up of the EDI exercise and the failure to staff senior positions, although a CEO of PetroSA had at last been appointed.

Tseliso Maqubela, then DDG of hydrocarbons and energy planning, reported that his department increased turnaround time for processing of all applications for licensing; the development of standard operating procedures for all processes thereby improving consistency in the application of the law. He said the department had started tackling the issue of blending values and break-even prices for biofuels although support mechanisms were not by any means finalised.

He asked parliamentarians to note that an integrated energy plan (IEP) had been presented to cabinet and that the liquid fuels charter audit had been finalised and debated.

DOE work in hand as far as hydrocarbons was concerned included the IEP, which had been underestimated as far as complexity was concerned; the Gas Amendment Bill, which still had to be completed, as did the Petroleum Amendment Bill and regulations on the mandatory blending of biofuels – all as originally planned for 2012. In fact the total integrated energy centre programme was delayed due to administrative and logistical challenges, as is currently the twenty year energy plan.

DDG Maqubela confirmed that a major issue was the non-completion of the strategic stocks framework plan. However, work satisfactorily in progress was the fuel pricing framework review; a programme for incentivising the application of cleaner fuels and for a number of good reasons, an LPG strategy remained held up.

Ompi Aphane, then DDG clean energy and electricity,  outlined DOE’s role where the role and contribution of energy to local manufacturing was concerned, factors involving the “green economy” and energy efficiency and the demand side management of electricity generation, all of which he said played critical roles in South Africa’s energy future.

He said the restructuring of the EDI and infrastructure rehabilitation still formed a major part of his department’s activities, as did the re-pricing of electricity generally. This was an ongoing situation which South Africa was grappling with.

There was part progress on the South Africa energy renewable programme at this stage and he gave parliamentarians an outline of the photovoltaic, wind, small hydro and solar energy bidding process, as it now stood.

Aphane spent considerable time on energy efficiency and the eventual re-distribution of energy assets, including the final DOE plan to map distribution infrastructure in distress in South Africa, starting with metros, in order to introduce a funding mechanism that takes municipalities out of cycle of underinvestment and service delivery lapses.

In conclusion, he re-affirmed DOE’s determination to instigate the renewable energy programme; the solar park issue; to process the ISMO legislation needed to introduce and licence independent energy producers; and the need to “revamp regulatory framework for new generation capacity”.

Dr Wosley Barnard, DDG of DOE programmes and projects, outlined the household electrification programme in South Africa, showed parliamentarians a graph of achieved household connections made through solar and non-grid connections totalling 50,000 households in all.

Since 1994, 5.4m households had been connected to the grid by both provincial and Eskom electrification programmes.

Dr Barnard said that households without electricity now stood at 3.4m in informal settlements and approximately11.2 in formal areas.  75 % of these future connections lay in the Eskom supply area and 25% where municipalities were responsible.

He concluded that the problems being faced were the slow delivery of electrification projects by municipalities and certain Eskom regions and a distinct and worrying lack off skills within municipality staffing structures. Eskom complained of hitting “red tape” in certain of its regions and also had internal project management distractions.

The major issue remained, however, that consulting engineers and contractors were not geographically spread according to backlogs in household connections in the country and the municipalities themselves lacked the finance to have any bargaining power.

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