Themba Maseko: Apologies for calling you so early on a Friday morning. I know in Cape Town....

Journalist: It is very early for a Friday.

Themba Maseko: I know in Cape Town you guys normally wake up after nine. So apologies for being here, okay, thank you, welcome. And the reason we are doing it a bit early today is because of the Fifa World Cup Preliminary Draw in Durban. I have to go there, catching a flight at eleven o'clock to deal with your colleagues, about 3 000 of them who have gathered there. Thanks for understanding. Already we can start. All ready? Okay.

Cabinet held its meeting, ordinary meeting, in Cape Town yesterday morning, 21 November 2007. Cabinet decided that the Ministries of Minerals and Energy, Water Affairs and Forestry, Public Enterprises and of Trade and Industry must collaborate to develop a comprehensive Electricity Master Plan for the country. This decision followed the presentation of a draft electricity master plan, which showed inter-alia the rise in demand for energy caused by the high rate of growth, and South Africa's continued reliance on coal as an energy source, which is standing at around 88%. The global norm is around 45% reliance on coal. The pillars of the comprehensive Electricity Master Plan will include increasing capacity, and improving the reliability of electricity infrastructure; providing reasonably priced electricity; ensuring security of supply as set out in the security supply standards; diversifying energy sources and meeting renewable energy targets. The investment in maintenance and rehabilitation of infrastructure, and the quality of supply of electricity will be better regulated in future.

This plan will enable the state to make the correct investment decisions to meet South Africa's extensive energy requirements owing to the strengthening and growth of the economy. Some of the strategic considerations will include the skills development and management; the need for investment in research and technology; and meeting demands that are a result of the rise in fixed capital formation by both the public and private sectors, including economic activities associated with the 2010 Fifa World Cup. In the meantime Eskom's investment strategy, to increase the generation capacity and local government's maintenance of existing infrastructure will continue and will form part of the comprehensive Electricity Master Plan. The final plan will be finalised and approved by the end of the year.

The meeting was also briefed on the progress in the development of the Bio-fuels Industrial Strategy and resolved that the strategy be approved by the end of the year when all the final details have been finalised.

Cabinet also approved that South Africa ratify the African Energy Convention, which regulates and sets standards on energy policy matters in the continent.

The Interim Textile and Clothing Development Program was extended for a further two years until 31 March 2009. The Ministers of Trade and Industry and Finance were directed to consult further on measures that need to be put in place to strengthen the administration and monitor the implementation of the program to curb abuse of the system.

The meeting also endorsed the Historic Schools Restoration Project, which seeks to restore the rich heritage of schools that were established for Africans in the late 19th century and 20th century. These schools remain the principle bearers of modern education among Africans and became the incubators for African intelligentsia. This project will form part of the Bicentennial Celebrations of Ntsikana, who promoted the visions that Africans should learn to read and write. This vision led to the establishment of the schools, such as Ohlange High and Adams College in KwaZulu-Natal, Healdtown and St Mathews, the latter two being schools in the Eastern Cape.

The project will be piloted in the above-mentioned schools and will form part of the national movement to revive the culture of teaching and learning in our schools, and is expected to expand as more historic schools are added to the list. The pilot project in the four schools will be implemented at a cost of R11,2 million over three years, and will be funded jointly by the Departments of Arts and Culture and Education. Anglican Archbishop Njongonkulu Ndungane has been appointed as the Project Champion.

The meeting noted that the preparations for the hosting of the 2010 Fifa preliminary draw, which is the key milestone event prior to the 2010 Fifa World Cup, were proceeding according to plan, and that this event will demonstrate our ability to host successful international events. This occasion is the first major Fifa event on African soil, and will give the world a taste of the outstanding World Cup that Africans will deliver in 2010. The event will be addressed by President Thabo Mbeki and a host of other dignitaries.

The Sixteen Days of Activism for No Violence Against Women and Children will be launched on Sunday, 25 November 2007. Notable events on that day will include men's marches in all provinces with the national event taking place in Bloemfontein. Cabinet calls on all men to participate in the marches to show their support for the campaign against women and child abuse. This year's campaign coincides with other international events that will take place during December, including the International AIDS Day on 1 December, and the International Day of Disabled Persons on 2 December 2007.

The Africa agenda will receive further momentum when the Commonwealth heads of government meeting holds its session in Kampala, Uganda, from 23 to 25 November 2007, under the theme "Transforming Commonwealth Societies to achieve political, economic and human development." South Africa will be providing security and logistical support to the Ugandan authorities during the duration of this meeting.

The meeting also noted that South Africa successfully hosted the Diaspora Conference which took place in Johannesburg over the past weekend. This conference recognised that the Diaspora discourse cannot just be about an emotional and spiritual journey, but must also focus on concrete, actionable, measurable results in political, social and economic spheres. It also identified the need to pay attention to areas such as tourism, culture, communication and development of sustainable partnerships. The conference resolved that the Diaspora must become the 6th region of the African Union in order to facilitate the establishment of the necessary institutions to make the concept operational.

Cabinet decided that the South African Customs Union should be strengthened as an anchor to regional economic integration in the South African Development Community. The meeting agreed to adopt a developmental cantered approach, which seeks to harmonise policy within government and in the region. Work will be done to enhance the sectoral co-operation within South African Development Community (SADC), as part of the strategy towards regional integration within the context of the broader African integration agenda.

Progress regarding the... South Africa's bid to host the square kilometre array radio telescope was noted. Government is indeed confident that the well prepared bid could see the SKA being awarded to South Africa. The final decision is now expected only in 2011 after some of the bidding countries requested a postponement.

The report on the meeting between President Mbeki and CEOs and heads of state entities was noted. The meeting concurred with the need for greater co-ordination and alignment between government and the various state entities, and among the entities themselves. This initiative will help to identify and address overlapping mandates, the role of state entities in development programs, and will ensure that the state system can contribute meaningfully to the achievement of a better life for all South Africans.

The continued deployment of South African National Defence Force members in different parts of the continent, in countries such as Uganda and Sudan, was noted. Furthermore the meeting approved that the Departments of Defence, and Arts and Culture, should formulate social programs aimed at motivating deployed forces, especially during the festive season.

The guidelines on the design, implementation and maintenance of organisational structures in the public service were approved. This guide provides a common framework for the public service, and will serve as a practical tool to support practitioners in designing, implementing and maintaining organisational structures.

Cabinet approved that the Department of Agriculture and Land Affairs of South Africa hosts the 16th Commonwealth Agricultural Bureau's international review conference which will take place in June 2008. The meeting also noted that South Africa's successful hosting of the Group of 20 Ministers of Finance and central bank governors in Kleinmond in the Western Cape took place last week. This meeting marked the culmination of the work done during South Africa's tenure as the chair of the group. Cabinet noted that the G20 meeting discussed four major themes. These were the global economy, fiscal elements of growth and development, commodity cycles, and Bretton Woods reform. Climate change was also discussed.

With regard to appointments, Cabinet rejected the reports which suggested that President Mbeki had blocked the appointment of Mr Ruben September as CEO of Telkom. These reports are nothing but an embarrassing fabrication that only serves to mislead the public and present the President in a very bad light. Once again we call upon members of the media to refrain from publishing unsubstantiated stories as this will discredit the media houses that allow themselves to be used by anonymous and so-called unnamed sources. The following appointments were approved and the following bills were approved. End of statement.

Thank you very much. We will take a few questions.

Question: A couple of questions. First of all, strengthening Southern African Customs Union (SACU)! How do you intend to strengthen SACU? What is going to be done to strengthen it? Secondly, when did the meeting between President Mbeki and Chief Executives, heads of state entities take place? That will do.

Themba Maseko: Okay. Strengthening SACU, as you know, government is committed to the notion of economic integration in the region. Some of the measures that will be taken will be to ensure that we adopt policies as governments within the SADC regions, to ensure that there is proper alignment at a policy level that makes sure that the interests of all the member countries are served. It will also include the need for structures that are currently in place to be strengthened to make sure that in fact there is some kind of structure that can manage the activities of SACU and that payment of customs as agreed by all the countries are complied with by all the participating countries.

The meeting between the President and CEOs and heads of state entities, that meeting took place about a month or so ago, and as we say the idea was to try and make sure that there is better alignment between what government is doing and what the state entities are doing. Because there were indications that in some cases there will be differences or misunderstanding of government policy by some of the state entities, and to make sure that all of them as they do their work, they do so in support and in co-ordination with government. We will come back to your third question.

Journalist: Thanks. My question is on the very first bit, on electricity supply. For some time now government has said that the reason why we have all these outages is because the economy grows so phenomenally. Surely however this economic growth was planned for and expected, given government's macro-economic policy. Would government therefore agree that perhaps it did not plan very well for electricity supply? Because I mean we cannot just say oh you know it is a bad thing, but it is actually a good thing.

Themba Maseko: Deon, we have a few follow-ups, yes?

Journalist: Just to follow-up on Jan-Jan's question. One of the government successes that are often trumpeted is the fact that they have expanded electricity supply to now... what is it now... over 80% of households from a previous point of 50%, I think. Surely that must also be a factor in the increased demand for electricity. Can the government in fact distinguish between the demands on the electricity supply that have come from those successes, and the demand that is coming from the economy as such? Thank you.

Themba Maseko: Yes, okay.

Journalist: Thanks. It just goes to the meeting with the CEOs of the SOEs as well, whether Eskom's proposed, you know, 18% tariff hike was an issue there, given that government on the one hand is very keen to keep inflation within the band, and whether ... whether this was in fact a draft master plan that was presented to Cabinet, or whether it was more of a kind of... you know, this is where we are at and these are the risks and dangers going forward kind of presentation? And who made that presentation? Thanks.

Themba Maseko: Okay. Let us take that question.

Journalist: Your first major paragraph on electricity says that Cabinet decided that these ministries must collaborate. The decision followed the presentation of a draft Electricity Master Plan. Does that mean that the Cabinet criticised the master plan because it lacked collaboration between these departments? Is there an implied criticism there of the draft master plan?

Themba Maseko: Okay Jan-Jan. The master plan is something that is long overdue. All of us would know that our economy has performed extremely well over the past few years. A lot of what is happening in our economy was indeed, yes, planned and anticipated. But the pace of the growth has actually exceeded our capacity to meet the power or energy demands of the country. So you could say that in fact this master plan is long overdue, and I will concede to that. But I think what is important is to focus on the fact that we now know where we are at this stage as far as our energy requirements are, and we are putting a plan in place to make sure that in fact we deal with the challenges that we are facing in the economy. So you could look at it as a negative, to say it was poor planning. But what we are suggesting here is that we have identified this as one of the major challenges that could constitute a major risk to economic growth, and we are putting a plan in place to make sure that we deal with the challenges that are posed by this plan.

Deon, yes, the presentation included a discussion on the current state of affairs as far as energy supply is concerned. And the presentation does look at the current use by the different sectors in the economy, the growth of the residential sector, largely due to, yes, a commitment by government to make sure that each and every household has access to energy. But also a lot of the initiatives in the private sector as more and more people were rising through the various living standards measures (LSMs), affording new houses. You have seen a lot of private developments taking place in many parts of the country. So yes, there is a push on the residential side for greater energy, but the economic growth is also putting a major burden on our generating capacity. We have got major investments already in the country...the Coegas and many other infrastructure initiatives that are already putting strains on our capacity. But the plan is to make sure that we begin to come up with a long term master plan that takes into account the demands that are placed on the power by industry itself, but also by the residences. And what is very clear in the report is that, yes, there is indeed a possibility out there to begin to save on the energy, especially at a residential level. Because it is very clear that in fact the use of energy especially in the residential sector is taking place between the hours of six and ten, and mainly used for cooking and heating of water. And we think that in fact it is possible with better strategies that need to be put in place, it is better... it is possible to manage our electricity better, to make sure that we kind of manage the use of energy as we increase our capacity to generate more power. But the figures, yes, are presented, which indicates what percentage is used by residential... the residential sector and what by the private sector. And if I have time I can actually check the figures for you and give them to you.

Gaye. Your question about whether the tariff rise was discussed at the meeting between the President and the CEOs and heads of state institutions. Pardon? No, no... that issue never arose. The meeting did not discuss specific problems and difficulties and challenges experienced by the individual state owned... state entities. So the issue of tariffs was not discussed. But neither was it discussed at the meeting yesterday. The draft plan... let me say that the task team that was working on the draft electricity master plan was actually hoping that this would be the final stage of the draft master plan. So there is a plan but Cabinet was of the view that in fact there needed to be greater co-ordination and collaboration with the other ministries to make sure that when the plan is approved soon there would have been input from all the key players in the sector. For instance, you know, Mineral and Energy is a driving department, but you have got to make sure that state entities and state enterprises are also on board and they have got their investment plans to support this plan.

And that is why Cabinet said, yes, it is a good plan, it was not rejected, Michael, but it was basically saying a good plan but let us get more input from these departments. Because some ministers were saying it was important to consider a number of other areas first before we finalised the plan. So I think I have answered your question, Michael. It was not criticising it, it was saying good plan but do further work in collaboration...

Journalist: Sorry. Just a quick follow-up. Is this... is this statement actually saying that those departments have not been collaborating in the past?

Themba Maseko: No, no.

Journalist: Because that is moderately astonishing.

Themba Maseko: As I just said, this master plan was a product of a departmental task team, which prepared a presentation. This is primarily officials working on the report. It then comes to Cabinet. Cabinet looks at it and Cabinet says, yes, good plan. But the ministers now must look at it to make sure that in fact it is inline with the policy objective of government, and that all other key aspects of the plan are taken into account. But the plan is a product of an interdepartmental task team of officials which worked on it. Yes, Sir, I will take that question.

Journalist: You mention a comprehensive master plan but there is no mention of climate change here. Why is that? Why has it been omitted? And why is the Department of Environmental Affairs not included in that group of ministries that are dealing with the problem, given that 80%... 80, 90% of South Africa's energy comes from coal-fired power stations which are pumping up millions of tons of greenhouse gases?

Themba Maseko: Look, I do not think there is a... this report did not deal with the issue of climate change specifically, because we have produced lots of documents on that, and the Department of Environmental Affairs and Tourism is actually leading government's processes in that regard. This plan is focusing primarily, specifically on electricity management, and the need for us to make sure that we meet energy requirements. So there would not have been an extensive focus on climate change specifically with regard to this plan. But government does have, yes, a strategy to deal with all the challenges that are associated with climate change. For instance, this plan also does not deal with issues of the nuclear energy strategy that is in play. We did brief you guys about what we are planning to do as far as that is concerned. So there is a comprehensive strategy dealing with all of these issues, but this plan is just focusing on meeting the electricity or energy needs at this particular point in time, but again if you need a comprehensive briefing about what the other plans and strategies are dealing with other aspects I am sure we can give that to you at a later stage.

This is the comprehensive master plan focusing specifically on the electricity part. But as we have briefed you before, there is a broader plan that deals with challenges of energy requirements in the country, and we have briefed you on these issues previously. So, we can do another presentation later on to show you how the different pieces link up together. You have a follow-up question, Sir?

Journalist: Just following up, are you not trying to have your cake and eat it? We have got one part of government focusing on developing energy... the supply of energy, and another part of government pushing for recognition of climate change. How are you going to bring those two together?

Themba Maseko: Well, as I am saying, that there is a government task team dealing with all the challenges with regard to climate change. Now this master plan is just one component which is dealing with the electricity master plan. So how this deals with the other components of the strategy is something that we can brief you on at a later stage. But this one is just saying as far as meeting and dealing with the power outages that we are experiencing in the country, this is what we are putting on the table to deal with that problem but it does not mean that in fact it is de-linked with all the other initiatives that are taking place in government. I think we will take that question.

Journalist: Thank you, Themba. It is sounding more and more like a mini-master plan, but anyway. Just two questions if I may. The security of supply standards...what are they and where can one get hold of them? And then the last sentence, the investment in maintenance and rehabilitation of infrastructure and the quality of supply of electricity will be regulated in future, can you explain that please?

Themba Maseko: Okay. I think let us start with your latter question by giving you an example, Deon. We have a situation where at local government level as an example you have many of the municipalities using electricity income as a source of revenue. Now when that revenue comes in very little is invested back into maintaining and upgrading electricity supply. So you have infrastructure getting old, and not being maintained for literally decades. Now what this regulation means is that in fact standards will be set, to say what percentage of the municipality's revenue must be put back and reinvested into making sure that we build and strengthen and maintain our electricity infrastructure. So that is what this basically means. Now already there are standards set. Part of the difficulty is that at this stage a lot of these decisions are being taken at local government level, with very little input from provincial or even national government. Now through the implementation of the regional electricity distribution agencies we think that it is possible for greater regulation of this sector to be put in place. Security of supply, it is a standard that is been set and approved by government, and the key department there is the Department of Minerals and Energy, so I would ask you to get contact with them and they can give more details on that. Okay. You had your question earlier.

Journalist: Just to follow up on that and also a question about biofuels. Does this mean that we are headed for a clash with municipalities like Cape Town regarding the Regional Electricity Distributors (REDs)? And secondly... the Red One in that case. And secondly, your statement on bio-fuels, given the context of a world crisis over using food productive land for biofuels, what was said particularly to Cabinet about this problem in South Africa?

Themba Maseko: Does this mean we are heading for a clash with municipalities, particularly Cape Town, with regard to the Reds? Not necessarily, I do not think so. The issue of making sure that we have a comprehensive strategy to meet energy requirements for the country is something that is of national interest. And government will make sure that as and when we move with this strategy all the key spheres of government are part of the process, to make sure that we meet the needs. Because I am sure that the people of Cape Town are at this stage probably sick and tired of the power outages they had in the past few months, and they would be willing to participate in any efforts that are aimed at making sure that we ensure security of supply of electricity. So I do not anticipate that there will be major clashes as far as that is concerned. But I am aware that there are indeed discussions as far as the establishment of Reds is concerned, and you are aware that in fact Cape Town has officially pulled out of that. But there will be discussions to sort that one out later on. The bio-fuels strategy was discussed at Cabinet. The view was that we needed to do further work on this matter, to make sure that issues such as what... you are raising the issue of food security and making sure that as you move along in developing the bio-fuels strategy you do not have... that does not have a negative impact on food security in terms of leading to higher prices, food prices and... the fact that South Africa has limited water resources was one of the issues that were looked at, and when the final strategy is presented I am sure we will have answers to a lot of those major policy issues.

Journalist: Thanks Themba. Just a last question from me on the electricity supply thing. I mean, it is essentially about managing the really tight supply and the growing demand going forward, but there was a briefing by Eskom and it was made clear there that the big problem is the fact that municipalities have not been doing the necessary maintenance and refurbishment of their power supply systems, and that as a result whatever you do about increasing the supply of energy if you cannot actually supply to the local consumer because those power systems are in a state of collapse. It is just not going to help. So clearly a large focus then, is that correct, that a large focus of this would be on that level?

Themba Maseko: When we talk about some kind of regulation of this issue, those are some of the issues that will be put on board to make sure that we deal with this complex issue. Because as I was saying earlier on, one of the major challenges we are facing as a country is that a lot of the municipalities have used electricity as a major source of revenue, so income generated from the sale of electricity to private consumers, houses and the private sector has basically been taken and used for other services at local government. So the need for regulation basically says, yes, you can generate as much income as you choose from the sale of electricity, but you will be required to invest a certain percentage of that revenue to upgrade and maintain your infrastructure. So those are some of the issues that will be dealt with when we are talking about better regulation of the sector.

Journalist: Themba, what are these abuses that you are... that you have been experiencing in the interim textile and clothing development program, and how will that be dealt with now?

Themba Maseko: Can I refer you to the Department of Trade and Industry (Dti) on that one? It is a question of detail. What came before Cabinet at the meeting was simply to say this is the challenge, this is what we need to address, and we need to extend the timeframe for this interim measure. Because it was indeed an interim measure so some of the sectors have not been fully complying with the interim measure that is currently in place. But as far as the details are concerned I will make sure that somebody from DTI can answer your question.

Journalist: Themba, did government express any concern or discuss the possibility of football by candlelight in 2010?

Themba Maseko: Okay. Another question!

Gaye Davis: And whether there was any noting or any concern expressed, or perhaps a dim view taken, of the fact that the costs are likely to overrun, in fact we cannot even say by how much they are likely to overrun. And whether the Finance Minister's prepared to sort of recant on his determination not to give any extra money for 2010?

Themba Maseko: Football by candlelight, that is a new sport you are inventing, Wyndham. But I am confident that in fact... or government is confident that the 2010 Fifa World Cup will not be affected by any power outages. Part of the arrangement with Fifa is that a lot of the stadia will also have generators that will serve either as the primary source of energy or as a backup. So measures are indeed put in place for that, and it is a procedure that is used by Fifa in all its World Cup tournaments. I am told that in fact in Germany, the primary source of energy for the '06 World Cup was actually the use of generators in the various stadia. But Eskom has also given an assurance that in fact all... everything will be done to make sure that in fact power outages do not affect the tournament in any way whatsoever.

The issue of cost overruns was not specifically discussed at Cabinet because there is already an existing Cabinet decision that in fact everything will be done to make sure that the World Cup is indeed a success, and that all the infrastructure requirements are met. The main focus of our work as government at this stage is to ensure that there is proper management of the budgets by the various hosting cities, to make sure that we do not have the costs overruns exceeding what may be considered acceptable levels at this stage. The Minister of Finance is on record as saying that in fact we cannot allow a situation where each and every six months host cities come back and say we need an extra 100 million rands or hundreds of millions of rands to fund the stadia. So the focus is on making sure that support is given to municipalities to better manage the costs. Okay. Final question and then we conclude.

Journalist: Was there a decision taken on bio-fuels. How was it discussed between maize, grain and sugar as a source?

Themba Maseko: Michael, it is one of the issues that are included in the strategy document. That document does identify the major policy choices. No, Cabinet has not yet taken a final view on which route to go, but it is very clear that in fact some tough choices are going to have to be made about which specific products will be used for bio-fuels. But the document does go into details about some of the policy choices, and the implications of each and every choice. Government is going to have to decide on which route. It is expected... I think I say here by the end of the year, but it is expected fairly soon, fairly soon. Okay, thank you very much, I think this brings us to the end.

Thank you.