Tag Archive | IPP

Parliament awaits to hear from Cabinet

Same Parliament, same Cabinet, different mood

..editorial……Parliament has now resumed with the same Cabinet, the same 400 MPs, the same ANC Allianceparliament 6 majority instructed whips and the same names in the party benches but the ambiance is very different.     This subtle fact, however, matters little in the immediate future.   Legislation before the National Assembly (NA) will still be subject to a simple numbers game when it comes to voting. Well, almost.

In the case of a Section 76 Bill, that is a Bill that needs not merely the concurrence of that portion of the 400 MPs that sit in the NCOP but subject to full debate by all nine provinces and a mandate returned in favour or not, there might be the beginnings of healthier opposition. Power at local level has been emboldened since Parliament last met.

So far, matters of consequence have been that the Department of Energy has presented its REIPPP plan with support from most other than Eskom with no Minister present and the Mineral Resources Portfolio Committee has re-endorsed a revised Minerals and Petroleum  Resources Development Amendment Bill for process by the NCOP using its ANC majority. Again no Minister was present. Eskom will be presenting on this and matters regarding coal any day.

Old tricks

jacob zumaHowever, presuming the picture in Parliament stays as it is until the 2019 national election with Jacob Gedleyihlekisa Zuma at the helm as President, it will be interesting to see what type and how much legislation is hammered through the NA by the ANC using the same old tactic of deploying party whips with threats of being moved down on the party list system for a total majority, timed last year in a rush just before a recess.

Notably, now in the case of three Bills sent for assent after being voted through, the three were not signed by President Zuma into law acting on legal advice.

With this trio now back with Parliament on the grounds of either suspected unconstitutionality and/or incorrect parliamentary procedure, the issue is now whether the coterie of Cabinet Ministers that surround the President, with Director Generals appointed by and who report to those Ministers, will take Parliament more seriously.

Not hearing

Good advice is not good advice when it comes in the form of a last minute warning not to put signature to any Bill thereby turning it into an Act of law. Plenty of such advice not do this in respect of a number of Bills was previously given during parliamentary portfolio committee debate, at parliamentary public hearings from affected institutions, business and industry and even earlier in public comment when the Bills were first published by gazette in draft form.

Similarly, the lesson seems not to be learnt in higher echelons that the independent regulatory entities are also not to be ignored – institutions from the Office of the Public Prosecutor to ICASA, from NERSA through to the board of the Central Energy Fund and from National Treasury to international courts, the UN and international bodies protecting human rights. Parliament is due to hear from ICASA any moment.

Most worrying, however, are the attempts to by-pass Treasury when presenting policy to Parliament. Ideological bullying can bankrupt a country in no time.

Such issues as Minister Aaron Motsoaledi’s National Health Insurance dream and Minister Joemat-Pettersson/President Jacob’s Zuma’s dream of six nuclear energy reactors – plans that the country should not possibly not countenance from a financial aspect – have neither been presented to Parliament in the proper national budget planning form or officially and financially endorsed.

Missing money details

Minister of Health, Aaron Motsoaledi, has gone as far as a White Paper to Parliament on the NHI and Minister Joemat-Pettersson has briefed Parliament on nuclear tendering. Treasury have said nothing about a financial plan in each case. Money is short, as evidenced by Treasury stepping in on the provisions for BEE preferential procurement. Somewhere there is a disconnect.

As for President Zuma’s continued pressure to bring traditional leaders into the equation with what amounts to two separate judicial systems and has even talked of the equivalent of four tiers of government – one therefore not even reporting to Parliament and certainly no idea of local government and nor subject to the PMFA  has its problems. President Zuma has used his ally, the Minister of Justice, to table the Traditional Courts Bill before Parliament. Opposition parties will walk out on that one, we are sure.

The Speaker of the House, Baleka Mbete, as part of the same coterie, has made a mild signal that the days of Cabinet maverick behaviour, even arrogance, towards Parliament and no respect for the separation of powers may be coming to an end. The SACP is clearly not happy. That is where the new ambiance felt in an unchanged Parliament may play an unofficial part and pressure may start building.

 
Previous articles on category subject
Parliament to open Aug 16 – ParlyReportSA
Parliament under siege – ParlyReportSA
Radical White Paper on NHI published – ParlyReportSA
Zuma’s nuclear energy call awaits Treasury – ParlyReportSA
Here it comes again…. the Traditional Courts Bill – ParlyReportSA

Posted in cabinet, earlier editorials, Electricity, Energy, Finance, economic, Fuel,oil,renewables, Health, Justice, constitutional, Trade & Industry0 Comments

Nuclear partner details awaited

DoE gives update on SA nuclear plan….

russian nuclearThe Department of Energy (DoE) says it is the sole procurer in any nuclear programme and that “vendor parades” had been conducted with eights countries, the results to be announced before the end of 2015. To give cost details, they said, would “undermine the bidding process”.

The situation regarding South Africa’s current intended nuclear energy programme was explained during a parliamentary meeting of the Portfolio Committee on Energy, DoE confirming that a stage had been reached where nuclear vendors had been approached and DoE staff were being trained in Russia and China.

Eskom not involved

Neither DoE, nor the Minister of Energy, Tina Joemat-Pettersson, who was also present would givetina-joematt cost estimates nor speak to the subject of financing other than the fact the minister admitted that the idea of Eskom being involved in the building programme in the style of Medupi and Kusile was a non-starter.

At the same time Minister Joemat-Pettersson announced that a new Bill, the Energy Regulator Amendment Bill, was to be tabled that would give Eskom the right to appeal against tariffs set by the National Energy Regulator (NERSA). This followed upon the news that Eskom would be given powers to procure, which must lead to the assumption, said opposition MPs later, that Eskom will recoup costs of financing through electricity tariffs.

The Minister said the renewable IPP programme involving the private sector had included multinationals and had been “hailed as a success” and the deal that would be struck with nuclear vendors would be on best price in terms of the end price for the consumer. Any bidding would be conducted in the “style of the IPP process”, which included support of the process of black procurement and skills training.

Contribution to grid still “theoretical”

modern nuclear 2Deputy Director, Nuclear, DoE, Zizamele Mbambo, explained to opposition members that whilst government had in principle decided to include nuclear energy in the energy mix for the future, DoE itself was still only at the stage of establishing all costs involved to the point of actual connection of a theorised figure of nearly 10GW to the national grid. To disclose costs at this stage would undermine the bidding process, he said.

The main purpose of the costing exercise still remained the final cost the consumer, he said, in terms of the NDP Plan 2030, a phased decision-making approach over a period of assessment having been endorsed by the Cabinet in 2012. The whole exercise of deciding what the costs would be was therefore relevant to how much coal sourced power would contribute to the baseload of the energy mix by 2030.

Deal or no deal

Zizamele Mbambo confirmed that in 2013, DoE had been designated as the sole procurer of the nuclearsmall nuclear reactor build programme and “vendor parades” had been conducted with Russia, China, France, China, USA, South Korea, Japan and Canada. The strategic partner to conduct the next stage, the New Build Programme itself, would be announced before the end of 2015, Mbambo said, by which time costs would have been established and treasury consulted.

At this stage no deal had been struck, he confirmed.

As distinct from the actual vendors per se, and any deals, Mbambo said that international agreements had been struck with interested counties on the exchange of nuclear knowledge, training and procurement generally.

DoE trainees already in China

chinese sa flags“Fifty trainees already employed in South Africa’s nuclear industry had already gone to China for ‘phase one’ training with openings for a further 250 to follow”, he said, noting that the Russian Federation had offered five masters degrees in nuclear technology.

The New Build nuclear programme was at present based on providing eventually 10GW of power to the grid but DoE confirmed that the indirect effect on the economy from “low cost, reliable baseload electricity is logically positive but difficult to assess”.

Zizamele Mbambo showed a graph of the possible integration of energy from coal, nuclear, hydro (imported), gas and renewables over a period, stating that nuclear was clean, reliable and would ensure security of supply with “dispatchable power.”

Opposition Members complained that the process seemed likely to make the price of electricity unaffordable to the poor and have a major impact on the cost of doing business in South Africa.

Nuclear vs. coal

Mbambo was at pains to explain that in the long term, the cost of nuclear energy was considerably lessgrids than coal and this was the reason that, for future generations, South Africa had to embark on a course that not only lead to cleaner but cheaper energy.

As a final issue, DDG Mbambo touched upon the question of approval by the International Atomic Energy Agency (IAEA) and explained that any relationship with this UN body was on the basis of a peer review.

This covered nineteen issues from nuclear safety management to radioactive waste disposal and was not an audit, he explained, South Africa already having been an experienced nation in nuclear matters from medical isotopes to nuclear weapons. It was pointed out to members that that IAEA merely carried out reviews and made input.

Up to speed or not

IAEAIt was during the response to the budget vote speech on the subject of the IAEA, that Opposition Shadow Energy Minister, Gordon Mackay said that the agency had found South Africa deficient in more than 40% of its assessment criteria.   In response, DDG Mbambo did not refer to the current state of the country’s nuclear readiness at any point but confirmed there was a great need for training and this was now the emphasis.

He said the relationship with the IAEA was in three phases covering purchasing, construction and operations and although it was thirty years since South Africa had a nuclear building programme at Koeberg, the current contribution to nuclear technology was recognised.    The programme now was to create a younger generation of nuclear experts, the main issue being to build technology capacity and train trainers in the state nuclear sector.

Reactor numbers

Mbambo concluded his presentation by stating that DoE was in discussion with treasury specifically on this issue of funding training, Minister Joemat-Pettersson adding that some six to eight reactors were planned  but a this was very early, the weight that “price” would carry in determining a strategic partner was not decided.

Other articles in this category or as background
Nuclear goes ahead: maybe “strategic partner” – ParlyReportSA
National nuclear control centre now in place – ParlyReportSA
Energy plan assumptions on nuclear build out in New Year – ParlyReport

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Eskom goes to the brink with energy

Editorial…..

What war room?….

black bulbFor those who have been associated with a war, they will know that a war room is a pretty busy place. However, one gets the impression that the South African war room, mandated to sort out Eskom and energy planning, has no red telephone and little understanding of working overtime in a time of crisis.

Spokesperson, Mac Maharaj or his  replacement, has certainly issued no statements headed with such a title, the President being busy visiting Egypt, Algeria and Angola with the deputy president calling in on the Kingdom of Lesotho.  President Mugabe has come and gone, more presidential visits are planned…… and the World Bank report on South Africa has been published.

Teetering on the edge

Meanwhile, the Eskom issue is still boiling over, the question of the fourth round of IPP tenders and more to come has been announced by the minister of energy but little evidence exists that a war room exists, let alone a high powered advisory council to advise the war room.  Parliament was, of course, on Easter recess which added to the uncanny political silence on urgent matters, particularly the energy issue, although the story at Medupi with a return to work and the appointment of a new CEO at Eskom seems  calming.

At last public servants are re-appearing from extended Easter holidays but the so-called war room gives the impression of having bunkered down. Hopefully the report in the coming weeks on Eskom, as South Africa tackles some of the other serious matters facing the country, will not only show with what went wrong but what the war room intends to do about it.

Perhaps a picture of the war room sitting and debating might actually help us believe there is one.

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Eskom crosses its fingers

Medupi:  Eskom on final run ….

eskomCollin Matjila, interim CEO of Eskom, told a joint parliamentary portfolio committee on energy and public enterprises that Eskom had learned a number of lessons in the building of coal-based power stations, probably the most important being the need for a suitably qualified and capacitated contractor oversight team to handle the complexity and extent of any project such as the construction of Medupi.

Although power from the new plant was to be introduced to the grid this Christmas Eve from Medupi, and incrementally more onwards, full power would only be happening at stable levels by winter 2015.

With both the boiler contractor and control and instrumentation contractor problems causing delays and a strike affecting between 40% -70% of the workforce, the 6-month delay had been recognised by both treasury and cabinet in financial re-calculations.

Minister notes….

Also addressing the committee, public enterprises minister, Lynne Brown, stressed that in her view “the corner had been turned at Medupi”.  She said that cabinet had approved a package to “support a strong and sustainable Eskom to ensure energy security”.   The inter-ministerial committee, which was comprised of finance, public enterprises and cooperative governance and traditional affairs, had now reviewed all options before them both on electricity and energy generally.

Eskom then stated that the second unit, Kusile would be added to the grid in a start-up process in the first half of 2015 and Ingula, the third and smaller hydro unit, in the second half of 2015.

No rest with summer

Matjila cautioned MPs that additional capacity would be needed during summer this year, despite any reduced seasonal demand.   This was because of the need to accommodate “planned” outages, which were set to take up 10% of full capacity being supplied.

By referring to full capacity, this was a theoretical maximum availability, Matjila said, subject to the reality of unplanned outages.  Eskom warned of a possible inability to meet demand throughout the remainder of the financial year, as distinct from seasonal timing, if it should be financially restrained in its use of it expensive-to-run standby open-cycle gas-turbines.

More price increases

Recovery of unbudgeted costs in this area for the year under review were part of the problem facing Eskom, Matjila said, and the recent announcement by the national electricity regulator, Nersa, of a rise of just short of 13% in electricity prices in April 2015 was no doubt motivated by this factor amongst others.

However, he said, Eskom may also have to deal with a higher maintenance in December, including half station shutdowns for three stations. He qualified this in a later Engineering News report which stated that 32 of Eskom’s 87 coal-fired generating units required “major surgery”, whilst four were in a “critical condition”.   November was also critical, he said, if all did not go as planned.

Despite continued questioning by parliamentarians on the state of progress at the second “New Build” power station, Kusile, no specific answers were provided by either Eskom or the minister other than the fact that Kusile had experienced “protected” and “unprotected” strikes in contractor workforces during the year.

Strikes

Matjila stressed that the workforce was back on site at both locations. “Additional resources had been mobilised to mitigate delays, he said, and additional shifts have been introduced 24 hours a day, 7 days a week, to accelerate progress on site.  Eskom was liaising with contractors to deal with any issues which had the potential of causing further delays, he said.

In his overall concluding remarks, Matjila said a five-point recovery plan had been introduced to improve the performance of the Eskom coal-fired fleet, with the utility having reaffirmed its objective of “returning to an 80-10-10 operating model, which implied 80% plant availability, 10% planned outages and 10% unplanned events across a period of a year.”

Outside inputs

On the situation with regard to the independent power producers (IPP) programme, Matjila said he was aware that the department of energy (DoE) had processed  over one thousand applications during the three IPP 3-stage bidding process and this had stretched DoE resources considerably.

He said it had been a complicated process to secure sustainable competitive prices in respect of the particular technologies involved. What had to be also factored in was the burden of hidden costs of storage and back-up which had to be borne by Eskom, not the IPPs.

Also the proximity and availability of energy supplies on the supply in providing the “appropriate infrastructure” was being dealt with and overcome.

It was important, Matjila said in conclusion, for Eskom to ensure that potential and online suppliers met grid code requirements and he was aware that some IPPs were struggling with this process.
Other articles in this category or as background
http://parlyreportsa.co.za/energy/medupi-key-short-term-energy-crisis/
http://parlyreportsa.co.za/cabinetpresidential/eskom-says-medupi-and-kusile-will-have-great-local-benefits/
http://parlyreportsa.co.za/energy/eskom-warns-on-costs-of-new-air-quality-rules/
http://parlyreportsa.co.za/energy/dpe-reports-on-eskom-and-it-utilities-to-parliament/

Posted in Electricity, Energy, Enviro,Water, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, Land,Agriculture, LinkedIn, Public utilities, Trade & Industry0 Comments

Medupi is key to short term energy crisis

Eskom bogged down with Medupi …

medupiActing director general of the department of energy (DoE), Tseliso Maqubela, told Parliament before it went into short recess that once Eskom’s new Medupi power station starts supplying the grid the country would have “turned the corner”.

“It is well known we are challenged on electricity”, he said, adding that the fresh view is being taken on the independent system marketer’s operators (ISMO) system which would contribute to recovery in the medium term through the addition of independent power producers (IPPs).

DG of energy policy, planning and clean energy, Ompi Aphane, in his presentation told parliamentarians that, as per the State of Nation Address (SONA), “vigorous attention is now being given to the establishment of the operator’s office to implement independent power supplies.

Financial  certainty, they say

On the subject of infrastructure build generally in the electricity sector, financial certainty was now being restored in the energy industry, Maqubela said, with the result that R120m in energy investment is now planned, “some of which has already come in and projects started.”

The overall plan was to divide power supply between Eskom and IPPs on a 70-30 basis through the national grid by 2020, decisions on refining and gas replacing diesel also being necessary in the short term in terms of a revised energy mix to meet future demand.

Other immediate focus areas for DoE were to increase access to electricity; increase “the momentum” of the installation of solar units; finalise the integrated energy plan; address maintenance and refurbishment programmes; “strengthen” the liquid fuels industry and facilitate decision taken on the nuclear programme.

Interface problems

A major issue being tackled was the in the area of household connections, according to the DoE presentation. Dr Wolsey Barnard, in charge of energy projects and programmes, explained that whilst Eskom was often bringing power to an area, the municipal backbone installations were either not ready or municipal skills were lacking.  DoE had recognised the problem and was busy trying to bridge this gap, he said, with skills training or by working on temporary permissions from municipalities with Eskom assistance.

However, Dr Barnard said it was encouraging that whereas the position ten years ago could have been described as hopeless, the situation was now specific and targeted to small areas, in most cases the most difficult remaining.

At the moment, 1,5m additional households will be connected by 2019 but as this is still insufficient to meet the target of universal electrification by 2025, additional funds are now being allocated by the state and plans made.

Barnard calls for co-operation

In order to achieve this, it was essential, Dr Barnard said, that the modalities regarding national, provincial and local government powers be revised on the ability for Eskom to assist in view of the lack of skills and the handling of appropriation funding.

He called for urgent attention to the fact that power installation funding by DoE to municipalities should be “ring fenced” and accounted for. This area had to be focused upon urgently, he noted.

He said that too many times Eskom had supplied power to an area only to be told by a municipality that there were no funds for distribution boxes or no skilled persons available to connect lines.  Dr Barnard said he was aware that the economic planning department were “in the picture” and legislation was planned despite the constitutional barriers but again he wanted to emphasise that this issue had to be resolved urgently.

EFF members asked if there were plans to specifically assist the unemployed with electricity connections and wanted a list of all power cuts to the different areas and the reasons for these.

Priorities from both sides

ANC member Ms Makwbele-Mashele asked the DG that with all the emphasis on “greening”, the high cost of gearing industry to meet new emissions and pollutants standards and the recently introduced air quality regulations, whether in his opinion these issues were hindering the country’ energy and industrial development.  The ANC also asked, as the fuel price seemed to be “out of our hands”, whether Sasol could increase production locally.

The DA wanted more detail on the exact steps at present underway to increase co-generation of energy to solve the immediate energy crisis.   This was in the light of the fact that the ISMO process had initially failed simply because DoE could not foresee the end state of independent power production, they said.    They also felt that a paper was needed to get clarity on how the integrated energy plan and the integrated resources plan locked into the NDP.

The DoE promised to respond to MPs questions in writing through the chair as the minister of energy had taken up most of the debating time available.

Other articles in this category or as background

  • http://parlyreportsa.co.za//bee/electricity-connections-target-far-short/
  • http://parlyreportsa.co.za//energy/electricity-tariffs-billiton-tells-its-side/
  • http://parlyreportsa.co.za//uncategorized/major-metros-open-up-on-electricity-tariffs/
  • http://parlyreportsa.co.za//energy/eskom-issues-alerts/

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Parliament gives birth to ISMO system

ISMO  to get Eskom’s transmission assets…

In practical terms, the transfer of electricity transmission assets (as distinct from the grid itself) from Eskom into the body of a new government utility known as the Independent System Market Operator (ISMO) has begun in theory.

This follows the agreement of the portfolio committee of energy to process the ISMO Bill in phases in the light of the fact that in practice whilst the exercise has only just commenced “on the ground”, nevertheless, a regulatory environment in which to transfer Eskom transmission assets in the course of time is needed.

Eskom at helm of exercise

The committee acknowledged such a transfer is in fact a lengthy and highly technical process, on the whole completely supervised and finally staffed by Eskom staff, they themselves being transferred to the new entity.

The state law advisors (SLA) present at a recent meeting of parliament’s energy portfolio committee agreed that such a “phased in” approach to the Bill was possible but with careful drafting of a time frame or “framework” to accompany the process.

SLA needs certainty on process of writing changes

This was providing each clause of the Bill before Parliament, said SLA, had the both the agreement and political sanction of the committee beforehand, enabling the SLA to re-write the Bill with certainty.

The purpose of moving in such direction was to provide an enabling environment to the initial phases of creating such a statutory body as an ISMO and at the same time providing clear intent and certainty in the marketplace that such a process was due to take place.

Some reservations were expressed in opposition circles that an operating environment would be particularly difficult for industry and commerce to go forward in with only a partially completed legal and regulatory environment present. Independent power producers (IPPs) were finding it difficukt to strategise without the playing field being defined. It was stated also that agreement on all aspects of the establishment of an independent transmission operator had not yet been agreed to by all parties.

However, the consensus was, with the agreement of SLA, that movement forward could be established in terms of a timing framework being written into or accompanying the Bill as far as the implementation of the portions of the Bill were concerned.

Meeting presidential requirement stated in SONA

Thus Parliament could meet the presidential requirement stated by President Zuma in the state of nation address (SONA) that the ISMO Bill be created as soon as possible and whilst it was appreciated that much of the creation of such a state utility as an entity could happen much of the detail such as the transfer of assets and the question of operational ability would be a much slower and detailed process.

Meetings have now taken place over the next few weeks re-drafting the Bill on this basis and a “B” draft version of the Bill produced clearly defining a portion for a timing framework and one for the usual definitions and establishment provisions.

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Biofuels development stays in limbo

Nobody building

sorghumIn a major presentation by the department  of energy (DOE) it became quite evident that governments biofuels strategy was still only a theory and whilst eight biofuels projects had licences either granted in principle or issued in practice, not one plant has yet gone into the building phase to meet government’s target of creating an estimated 25,000 jobs.

Ms Mokgadi Modise, chief director of clean energy at DOE, told the portfolio committee on energy up front that it was acknowledged by DOE that South Africa’s biofuels strategy could not get off the ground unless the state came up first with clear policy regulations and incentives to industry.

Big plans for 2013

Nevertheless, entrants to the industry that had indicated a firm commitment to the biofuels production had provided a cumulative figure to DOE that would exceed the 2013 target they had originally envisaged of some 400m litres, about 2% of the national fuels pool.

She said that whilst this was an encouraging start, there was little hope of any target date being met primarily because no support mechanisms from Treasury were yet put out; no regulations or pricing mechanisms had been established but only talked about and government was still undecided on blending options – the most suitable crops being mainly sorghum, soya, sugar and canola.

Blending issues

The minimum blending level of 5% biofuels into conventional diesel and petrol were set last year, in a gazette published accordingly, she said.

Currently, Modise said, DOE acknowledged that bio-ethanol falls outside the fuel tax net but bio-diesel, if supplied, would not, although manufacturers, would receive their 50% from the fuel levy in this case. Blending options were the six refineries in South Africa and at all the fuel depots, which amounted to 2 large depots for each of the seven oil companies.

Having heard their options, it was assumed by DOE that two of the companies would blend at their refineries and the balance of oil companies would blend at their depots. She gave no names.

On capital investment by the oil companies, she noted that R278m would have to be spent on refinery blending for this to be possible and a minimum of R460m on depot blending.

Looking outside SA

Parliamentarians noted that satisfactory diversification processes seemed to be going on in the liquid fuels industry and there were obviously attempts to create sustainable jobs but they asked what export markets were being created and how was the product going to be transported.

Modise said these issues had not yet been explored by DOE but she needed a joint meeting with the departments of science and technology, the department of agriculture including water department and treasury officials present before any such questions could be answered.

She said feasibility studies were being conducted with the refinery companies in order to establish whether or not they would “buy in” and that the department of science and technology were to supply their research findings by 31 March. A decision had to be taken by the same date on whether or not to exclude maize as a permitted feedstock.

Treasury answers needed

In answer to questions on financing, Modise said that IDC had put R1.5m aside for support but treasury needed play out its support programme on incentives and might make a statement before the national budget took place.

Parliamentarians said that if jobs were to be created in the right areas then Modise and DOE had to ensure that any such incentives must speak to the issue of distance from the market place if growth of agriculture in the “homelands” areas was to be encouraged. Modise said that was the kind of question that DAFF and treasury had to get together on.

On the one major biofuels plant that had been in the newspapers, namely the Craddock facility which had IDC backing, Modise said it still only had a conditional “granted” licence as not all requirements, mainly financial, had been met in order to issue a licence – only a temporary “granting” being considered. There was also a well-developed plan in Port Elizabeth but this was still on hold. A “granted” licence was a strong indication but an “issued” licence gave the right to operate.

Things too vague, says chair

In conclusion, chair Sisi Njikelana said there must be immediate follow up by Parliament on the whole issue of biofuels since DOE had to get beyond just local strategy and move towards the creation of an enabling environment. He had no sense, he said, on finality on manufacturing possibilities or issues, or even a road map on what was happening generally.

Modise responded by saying that DOE needed certain  “triggers” at the stage to happen; for example for the government needed to start talking to SADC for a start to see if the country really should be really working to just a 2% figure of the local market alone; treasury and particularly  agriculture had to provide clarity on policy; and technical issues under debate had to be finalised.

Feedstock,incentives,transport et al

Lance Greyling of the ID said the possibility of creating thousands of jobs in the biofuels industry had started in 2007 and there was still an air of frustration and expectation.   He told DOE that whilst it may seem possible to exceed the originally set target of 400m litres a year, the security of supply of feedstock was still a worrying issue, as was transport to manufacturing points and a proper tax incentives plan, including recovery cost factors to the liquid fuel companies.

Much more work had to be also with the department of rural development and land reform as well, he said, on the issue of getting small holders being able to get crops as well to their market in order to assist in rural development.  The implementation of the whole biofuels strategic plan was far too slow, he said.

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IPP 3 delayed until mid-August says DOE

More time needed before next IPP window……..

Announced by the department of energy (DOE) during December, potential IPP power producers now have until 19 August 2013 to submit their bids, thus meaning that the submission date for the third bidding window for independent power producers (IPP) has been postponed again.

As part of the renewable energy IPP procurement programme, which was introduced in August 2011, the submission date had originally been set for 7 May 2013 but DOE says that more time is needed to incorporate lessons learnt from the previous IPP windows.

In addition, DOE says it needs to update requests for proposals according to new matters coming to light

More power from renewables

By giving more time to bidders to consider updated request for proposals, this affords the IPP team, says DOE, more time to consider the preferred bidder process, DOE stating that the country’s overall energy needs programme will require an additional 3200 MW of renewable energy from the three phases or windows of IPP bidding.

IPP targets in technical terms for onshore wind, both types of solar energy, biomass, bio-gas, small hydro and generalise small energy projects are all included in the DOE statement.

Amendments to regulations regarding petroleum products wholesale licences and petroleum products manufacturing licences were also published by DOE in December late.

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Delays hinder start of SA’s renewable energy programme

News of yet another possible extension emerged regarding the R100bn Renewable Energy Independent Power Producer Programme (REIPPP) tender awards being staged by the department of energy (DoE) has emerged. The initial deadline to make the final tender award announcement was originally 19 June 2012.

Only days after energy minister Dipuo Peters had indicated that the deadline had been extended by DoE to the end of July, a further announcement has come from her office that the 28 renewable-energy project developers, identified in December as preferred bidders, have again been notified that “the timing of financial closure may be delayed beyond the end of July”

Originally, immediately following president Zuma’s state of the nation address, the economic cluster’s chairperson minister Sibusiso Ndebele said the tender programme on calls for renewable projects “has lived up to expectations” and that even more tenders were expected.

The initial 28 projects selected in December as preferred bidders under the REIPPP as part of the renewable energy independent power producer (IPP) programme would facilitate R50-billion-worth of international investment, with more to come from subsequent bidding rounds, it was said at the time.

The initial projects are collectively supposed to represent1 416 MW of wind, solar photovoltaic and concentrated solar power capacity.

Posted in Electricity, Energy, Finance, economic, Fuel,oil,renewables, Public utilities, Trade & Industry, Transport0 Comments

Hearings completed, debate starts on new ISMO Bill

With hearings over 4 days, the portfolio committee  of energy under Sisa Njikelana heard submissions on the Independent System and Market Operator (ISMO) Bill, legislation that brings to South Africa for the first time a regulatory system for the trading of electricity at a wholesale level and for integration of privately produced power into the national grid.

In addition, the department of energy has reported back to Parliament with its views on these submissions. This will be summated on this website shortly, after circulation of ParlyReport to private clients.

Department of Energy (DOE),  in their own submission during the hearings said that South Africa urgently needed new generation capacity but there had to be “rules of engagement and a level playing field” if the private sector was to be introduced. Consequently government had to ensure that the public still had the benefit of “minimalisation of inevitable tariff increases”.

The purpose of the ISMO Bill was to establish a centralised electricity buying department to separate such a process from Eskom who controlled 90% of the electricity output in SA, thus providing a form of independence from Eskom for independent power producers, DOE said in their introduction.

ISMO would be responsible for an “aggregated wholesale price”, leaving generation licences and allocation of megawatts supplied in terms of the integrated resources plan to be addressed under the Electricity Regulation Act.

In general, all submissions welcomed the introduction of such a Bill, the Energy Intensive User Group expressing concern in their comments as to who exactly was the ultimate owner of the national grid system and the fact that municipalities were included as distributors under ISMO jurisdiction.   The Bill was silent on ISMO rights, they noted, and how potential customers would be shared between Eskom and ISMO and is was important in their view that the Electricity Regulation Act be amended to reflect this since the new ISMO legislation would be rendered inoperable in many respects.

NERSA, the electricity regulator, had a number of critical comments to make, Richard Chauke of that organisation stating that “despatch”, or passing on of power generated is not provided for in the Bill as a licenced activity in terms of the Electricity Regulation Act (ERA), meaning that NERSA would have to commence trading activities on a temporary basis which was not a good plan.

Also, they stated, Eskom’s licence as an operator needed to be amended and separated to allow for independent power producers (IPPs).

NERSA responded to queries as to why the ERA had to be changed, stating in their reply that the ERA was the anchor legislation for the entire process and that matters should follow such a regime where major subjects such as this dealt should be dealt with in an over-arching industry act, particularly not the ISMO which was relevant to IPP supply.

NERSA again emphasised that as it was important in order to ensure equitable and fair despatch of IPP power; that considerable expertise within NERSA would have to be built up in NERSA in the coming months to ensure transparency and this might be achieved by hiring suitably qualified additional staff.

Posted in Electricity, Energy, Finance, economic, Fuel,oil,renewables, Mining, beneficiation, Public utilities, Trade & Industry0 Comments


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