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30 January 2008

Madam Speaker of the National Assembly
Chairperson of the National Council of Provinces
Deputy Speaker of the National Assembly and Deputy Chairperson of the National Council of Provinces (NCOP)
President of the Republic
Deputy President of the Republic
Honourable leaders of our political parties and Honourable Members of Parliament
Ministers and Deputy Ministers
Distinguished guests

Introduction

Let me start by congratulating the former Chairperson of the Portfolio Committee, Mr Nathi Mthethwa, for his new position as the Chief Whip of the majority party in Parliament. We appreciate his leadership and guidance during his tenure as our Chairperson. I also welcome Mr Nqaba Ngcobo as the new Chairperson of the Portfolio Committee on Minerals and Energy.

Over the past two weeks, we have seen unprecedented levels of electricity supply disruptions in South Africa. The questions on the minds of most people is how long this problem is likely to persist and whether enough is being done to resolve it. In some quarters, the sentiment relates mainly to the need to identify the culprits and to castigate them. At the onset, I must take the opportunity to apologize to all South Africans for the hardship and inconvenience caused by this unfortunate turn of events. I want to reiterate the apologies by our President and Deputy President, in expressing sincere regret.

We would like to thank all South Africans for the overwhelming response to our calls to save electricity. Let me also acknowledge the leadership that the ANC has provided in dealing with this national emergency we are facing.

Madam Speaker, Chairperson of the NCOP, the main contributing factors to the challenge facing us today are:

* the unprecedented and unanticipated rate at which we are economically growing as a country
* to a certain extent, the expansion of electricity services to previously unserved areas in the context of ensuring a better life to all South Africans.

When we took over the country in 1994, growth had stagnated, with over 3000 MW excess capacity of plant in mothballed state after they had been decommissioned. Our emphasis as the ANC in line with our vision was to use the excess supply for growth but also to turn excess into access for those who needed this basic service.

A legitimate question that always arises is "why did we not foresee this problem?"

The major task of the ANC when it took power in 1994, was to revitilise the economy and extend services to the majority of our people.

As the Department of Minerals and Energy, responsible for the security of supply of energy, we anticipated this current situation.

When we experienced electricity demand growth of 3,34% and 7,1% in 2002 and 2003 respectively, projections were revised and it was confirmed that new power generation would be required in 2007 and that this would be peaking plant, and we did the following:

In September 2003, my department informed Cabinet that South Africa was running out of excess capacity faster than expected and that additional capacity would be required in 2007. The lead-time for such projects is approximately 3 years and therefore a decision was required as soon as possible.

Cabinet approval was subsequently acquired for proposals that were geared towards ensuring that South Africa had adequate electricity supply going forward. The key decisions made by Cabinet included that:
* Eskom should be instructed to ensure security of supply up to 2007, including the building of new power stations if necessary in the short term.
* 70% of new capacity required beyond 2008 would be commissioned by Eskom. For the remaining 30% of required capacity beyond 2008, a process to bring Independent Power Producers (IPP) into the system would be started in 2005.
* Eskom be instructed to aggressively pursue demand side management strategies, with clearly defined targets.

In April 2004 Cabinet took a decision to procure new peaking plant as the first IPP in South Africa involving Eskom as the sole buyer of the power. Cabinet had also approved that in line with its obligation to supply, Eskom should be instructed to enter into a Power Purchase Agreement or other appropriate agreements with the IPPs and should there be no acceptable bids in the IPP process, Eskom should be asked to build the required capacity.

Honourable Members, there may have been a delay, but there was definitely an attempt to look into the matter.

Other global factors that must be considered are:
* A high demand of energy globally
* The growth of the economies of India and China have had an impact.
* Other incidents in other parts of the world also affected us as there is a great demand for material to develop energy infrastructure and the lead times for such material is much longer than normal.
* The collapse of energy markets in Ontario.
* The North Eastern United States and Europe power blackouts.
* Brazil, and China.

We had to strengthen the White Paper and the Integrated National Energy and this we did by developing a National Energy Master Plan which Cabinet approved last year.

Another important policy tool we put in place, also last year, is the Energy Efficiency Strategy that has since enabled the Department of Minerals and Energy (DME) to establish the Energy Efficiency Agency that still needs to be beefed up in order to roll out the Energy Efficiency Campaign.

Honourable members, we are all aware that we have a national emergency which calls upon each and everyone of us to contribute towards the management of this situation. We are calling for a partnership between the people of South Africa and government. We have had a series of meetings with stakeholders, discussing approaches to dealing with this problem. We have since put together a National Electricity Emergency Programme which speaks to the supply and demand side management of the situation.

In our view, the demand side management can be a quick win because it entails using energy efficiently and this can be done now. One element of the National Electricity Emergency Programme entails the following –

* Power rationing where we are calling for a 10% reduction in consumption. We have started implementing this after a meeting we had with stakeholders. We are also calling for those who were not at the meeting to heed the call and this will contribute to bringing back the 4 000 MW that we need to save.

* Banning the manufacturing and use of incandescent lights. It has been established that of the 10 million electrified houses in South Africa, on an estimate of eight incandescent lights per household, it is projected that 800 MW could be saved by replacing with compact fluorescent light.

* We will be promoting that South Africans who can afford to install solar heaters be encouraged to do so. We are aware of the cost that ranges between 7 000 to 20 000 and we are looking at subsidising these by 20%. The programme is targeting households, group houses (like army bases, hostels), commercial and industrial applications.

* We are looking at smart metering which requires the use of wireless technologies so that Eskom or the municipalities are able to manage the customer load.

* Fuel switching to other sources like LP Gas will ameliorate the strain experienced by the electricity networks during peak times. This could result in saving 500 MW.

* Traffic lights and public lighting will be converted to solar power with the battery back-up.

* The hospitality industry is called upon to retrofit and be energy efficient. We also call upon them to convert water heating to solar power.

We will embark on the education/public awareness programme with emphasis on partnership with the education department through the school.

We will also look at regulations which will be enforced from Wednesday last week.

Tariff increase: South Africans must be prepared for an adjustment in the tariff regime to reflect the actual cost of providing electricity.

Another very important programme that is picking up is the one on renewable energy. We have been piloting the project and are now upscaling. We are also dealing with the related hindrances to the programme.

In conclusion, I would like to present to you the 10-point Energy Saving Plan which contains practical things that we can do. (READ THROUGH THE PLAN)

The following are areas that will be exempted: water services, health service and public transport.

I would like once again to thank the South Africans for helping us thus far. We thank them for their patience and support. We acknowledge that some of these tips are being practised, but we would like all of us to continue with even more consciousness.

We are confident that we have the ability to turn the situation around. We reassure the South African community and the world at large that the 2010 FIFA World Cup is not under threat.

I thank you.

Issued by: Department of Minerals and Energy
30 January 2008