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PRESENTATION TO THE SELECT COMMITTEE ON APPROPRIATIONS

Public Hearing on Division of Revenue Bill 2010

5 March 2010

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PRESENTATION OUTLINE

Part 1INTEGRATED NATIONAL ELECTRIFICATION

PROGRAMME• Schedule 6• Schedule 7

Part 2

EEDSM• Schedule 6• Schedule 7

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Part 1

Integrated National Electrification Programme

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BACKGROUND

• The electrification programme was started by Eskom during the late 1980’s

• It was further refined by the National Electrification Forum (NELF) during the early 1990’s.

• Access to electricity for households in RSA was

approximately 30%.• During this period the electrification programme

was funded through the National Electricity Regulator (NER)

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BACKGROUND• After 1994 and through the government’s initiative

of RDP (Reconstruction and Development

Programme), electrification programme was

endorsed.• During 2001 the government took responsibility for

funding electrification programme.• The funds are made available through fiscal

allocation, Schedule 6 and 7 grant allocation• President’s State of Nation Address (universal

access in South Africa

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MANDATE OF INEP

• To manage the electrification planning, funding and

implementation process,with the aim of addressing

electrification backlog so as to reach universal

access.

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FOCUS AREAS

• Managing the electrification planning process• Managing the implementation of the electrification

programmes• Monitor both INEP programmes in line with the

Energy white paper, the Division of Revenue Act (DoRA, Public Finance Management Act (PFMA),ER Act, OHS Act etc.

• Conducting the technical audit on DOE funded project.

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Allocation Criteria for INEP

• Backlog.• Rural biasness.• Nodel Zone• Availability of formalized areas.• Bulk funding availability.• Past performance.• Integration with other programmes eg.

BNG

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Backlog

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Province Total Number of Households

Backlog Households not electrified (percentage)

% of National Backlog

Western Cape 1,333,886 191,366 14% 5.58%

Northern Cape

272,958 50,405 18% 1.47%

North West 914,070 196,605 22% 5.73%

Gauteng 3,127,991 740,569 24% 21.59%

Free State 823,972 201,919 25% 5.89%

Mpumalanga 879,082 231,485 26% 6.75%

Limpopo 1,250,716 329,440 26% 9.60%

Kwa-Zulu Natal

2,405,165 818,708 34% 23.87%

Eastern Cape 1,667,435 669,421 40% 19.52%

Total 12,675,275 3,429,918 25% 100%

% Backlog

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MTEF ALLOCATION INEP

Allocation split 62 % Eskom / 38% Municipalities

Details of allocation per municipality are available in the DoRB 2010

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VOTED FUNDS MTEF 2010/11

R’000

MTEF 20011/12

R’000

MTEF 20012/13

R’000

MUNICIPALITIES 1 020 104 1 096 612 1,151,443

ESKOM(NATIONAL) 1 719 810 1 737 842 1,882,087

NON - GRID 68 200 70 861 86 370

BASELINE ALLOCATION

2 808 114 2 905 315 3 119 900

ALLOCATION PER PROVINCE

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Province MUNICIPAL

R’000

ESKOM

R’000

TOTAL ALLOCATION PER PROVINCE

% OF NATIONAL ALLOCATION

Eastern Cape 285 258 551 486 836,744 30.2%

Free State 55 063 38 921 93,984 3.4%

Gauteng 142 200 107 616 249,816 9.0%

KwaZulu- Natal 223 776 409 294 633,070 22.8%

Limpopo 130 500 188 268 318,768 11.5%

Mpumalanga 57 300 117 657 174,957 6.3%

Northern Cape 21 555 47 265 68,820 2.5%

North West 40 800 192 883 233,683 8.4%

Western Cape 63 652 98 391 162,043 5.8%

BASELINE ALLOCATION

1 020 104 1 751 780 2,771,885

COMPLIANCE WITH DoRA 2010

Sec 10 – Duties of transferring national officer

• Sec 10 (1)(c) transfer funds in accordance with payment schedule determined in accordance with section 21;

• The Department does have a challenge of complying due to municipalities not requesting funds according to payment schedule

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COMPLIANCE WITH DoRA 2010

Sec 12 – Duties of receiving officer iro schedule 5,6 or 8 allocation

• The receiving officer of a schedule 5,6 or 8 allocation must ensure compliance with the requirements of the relevant framework.

• Municipalities do not comply with the requirements of the framework and sec12(2) and 12(7) as they don’t submit monthly, quarterly and annual evaluation reports. This makes it difficult for the Department to comply with the Act

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• Municipalities do not report on regular basis –monthly reports, quarterly and annual evaluation reports.

• Municipalities not requesting funds according to payment schedules

• Municipalities not implementing projects as agreed in the contracts

• Municipalities signs contract with the Department for connections and change projects without notification or reduce connections due to cost.

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CHALLENGES

Mitigating Strategies• Allow Eskom to assist where necessary• Revise the cost per connection subsidy annually

for municipalities• Support to municipalities in relation to planning,

capacity building development and monthly reporting

• Regional energy Officers and electrification managers to assist municipalities with planning and monitoring of projects

• Sec. 19 Conversion of schedule 6 and schedule 7 allocations to prevent under-spending

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Part 2

• EEDSM

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BACKGROUND• Over the past two years our country has experienced

electricity supply constraints.• the impact was so severe to both social and economic

sector• Production levels lowered while job security was threatened• Coordinated efforts between government and all

stakeholders made a huge difference in reducing the impact of the crises

• In 2008/9 financial year government provided fiscal allocations (schedule 6 and 7 ) to assist in reducing the impact of the situation by addressing energy efficiency and demand side management opportunities

• Bigger load centres benefitted from the allocations to

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MANDATE OF EEDSM

• To promote energy efficiency behaviour changes• To contribute towards reducing the demand for electricity to

12 per cent by 2015 as per the National Energy Efficiency Strategy 2005.

• To manage funding for the implementation of Energy Efficiency and Demand Side Management (EEDSM) programme in residential dwellings, and communities by providing capital subsidies to Eskom, Metros and secondary municipalities in order to mitigate the risk of load shedding and supply interruptions

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FOCUS AREAS

• Facilitate and manage the process of allocating EEDSM funding

• Manage and monitor the implementation of EEDSM and programmes in line with the National Energy Efficiency Strategy, the Division of Revenue Act (DoRA, Public Finance Management Act (PFMA),

• Conduct technical audit to EEDSM projects

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Allocation criteria for EEDSM

• National priorities in ensuring security of supply• Areas targeted with high electricity usage and 2010 FIFA

World Cup host cities getting preference • Technical and resource capabilities to implement EEDSM

projects• Support to already existing EEDSM programmes in

municipal and Eskom areas• EEDSM programme being implemented in line with

municipalities’ Integrated Development Plans (IDP)

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Objective of the programme

• Reduction of Megawatts from the network through the implementation of energy efficiency Projects i.e. Street lighting, traffic lighting, building energy efficiency lighting and the rollout of domestic lighting(CFL).

• These projects have a potential savings of 70MW

• The roll out of Solar Water Heating Programme in Tshwane, Naledi and Sol Plaatjie Municipalities.

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MTEF ALLOCATION EEDSM

VOTED FUNDS MTEF 2010/11

R’000

MTEF 20011/12

R’000

MTEF 20011/12

R’000

MUNICIPALITIES 175 000 220 000 280 000

ESKOM 75 000 108 900 118 800

BASELINE ALLOCATION

250 000 328 900 398 800

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ALLOCATION PER PROVINCE

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Province MUNICIPAL

R’000

ESKOM

R’000

TOTAL ALLOCATION PER PROVINCE

% OF NATIONAL ALLOCATION

Eastern Cape 29 000 29 000 8.8%

Free State 5 000 5 000 1.5%

Gauteng 73 000 73 000 22.2%

KwaZulu- Natal 33 000 33 000 10%

Limpopo 12 000 12 000 3.6%

Mpumalanga 8 000 8 000 2.4%

Northern Cape 0.0 54, 450 54, 450 16.5%

North West 4 000 54. 450 58,450 17.7%

Western Cape 56 000 56 000 17%

BASELINE ALLOCATION

220 000 108 900 328 900 100%

• Municipalities do not report on regular basis –monthly reports, quarterly and annual evaluation reports.

• Municipalities not requesting funds according to payment schedules

• Delay in the signing of contracts• Municipal managers not signing monthly progress reports as

required • Lack of capacity and competence to administer the

programme.

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CHALLENGES

Mitigating Strategies

• Allow Eskom to assist municipalities where necessary to implement EEDSM Programme

• Support to municipalities in relation to planning, capacity building development and monthly reporting

• Regional energy officers and electrification managers to assist municipalities with planning and monitoring of projects

• Sec. 19 Conversion of schedule 6 and schedule 7 allocations to prevent under-spending

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THANK YOU(TIME FOR QUESTIONS)

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