15 February 2002
KEY DELIVERABLES PROMISED
The year 2001 was a very productive year for the Department of Minerals and Energy (DME). Each Directorate can boast of a successful implementation of their programmes on target and within budgets.
1. The Integrated National Electrification Programme (INEP)
This programme remains the flagship of the DME. Our electrification programme continues to surpass our targets.
Challenges
The breakdown for electrification backlog per province as at 31 December 2001, was also as follows:
Province Backlog
Gauteng 684 001
North West 261 434
Free State 215 810
Mpumalanga 206 487
Western Cape 199 191
Northern Cape 69 896
Eastern Cape 610 623
KwaZulu-Natal 980 692
Northern province 423 878
Total 3, 652 012
In the calendar year 2001, the South African Electricity Distribution Industry spent R909 million on the national electrification programme.
The total number of connections for 2001 were 336 858, of which 141 707 were installed in rural areas, and 195 191 in urban areas. The connections were spread in all 9 provinces.
The electrification Programme has been delivering above target. In 2001/2002, there were336,858 connections from 300,000 targets. Real costs per connection are also coming down at a rate of about two and a half percent per annum. It is now levelling out and we expect it to move slightly up as we proceed to the more remote and sparsely populated areas which contain the backlog.
During 2002, a further 300 000 households, 700 schools, and 100 clinics will be electrified. This will be done at a cost of R950 million during 2002/2003 financial year. With more emphasis placed on integration with other infrastructure and service providers, this pace will continue, and even improve until universal access is reached which is targeted for 2010 at the latest.
'From National Electrification Programme to Integrated National Electrification Programme'
In future KPI for the NEP will not only be based on the number of connections, but also on measurable impact on;
Hence the change from NEP to INEP.
The remaining 30% minus un-energised areas will be driven through a combination of grid, non-grid, mini grids and renewables. DME is already providing solar powered multi-media centres in solar powered schools, and making tele-medicine possible in isolated areas.
2. MINI GRID HYBRID SYSTEMS
During 2001 most of the attention was focused on developing a project implementation plan of a mini grid for the Hluleka Nature Reserve. The main role players are National Electricity Regulator, CSIR, Shell, DME and the Eastern Cape provincial government. An integrated approach resulted in the design consisting of an energy system, a water purification system and a telecommunication system. An energy system will make use of renewable energy solar water heaters and liquid petroleum gas. This combination of energy sources will result in an increase in energy efficiency, and the technology has been proven.
Additionally, two villages adjacent to Hluleka Nature Reserve have been identified as sites for pilot hybrid mini-grid systems. An emphasis has been placed on the linking of these mini grids to new economic activities in collaboration with the Agricultural Research Council (ARC), high value crops have been planted in a number of demonstration plants. This activity has been done in cooperation with entrepreneurial farmers. The plan is to determine the mini grid systems with a view to exporting the value added crops out of the region, hence generating income.
Our plans for 2002 are as follows:
After starting with the identified sites next to Hluleka Nature reserve, additional sites for hybrid mini grid systems would be attended to in the Eastern Cape, KZN and Northern Province. This would be done in consultation with relevant stakeholders such as communities, Local, Provincial Governments, National, and National departments as well as other infrastructure development agents. An integrated framework for a national strategy to roll out hybrid mini grids would be developed as part of the analysis of the pilot study.
3. Renewable Energy
The launch of the Renewable Energy White Paper
4. LIQUID FUELS AND GAS
DEVELOPMENT OF THE GAS INDUSTRY AND INFRASTRUCTURE IN SOUTH AFRICA
Our White Paper on Energy commits our government and the country to a process that will ensure security of supply through diversity of energy sources. Gas in the South African energy industry comes in the context of attempting to diversify our sources of energy.
The South African gas industry will expand significantly due to the following:
Already an agreement between the government of South Africa and that of Mozambique has been signed. This agreement will facilitate natural gas trade between the two countries. Included in this agreement is the South African government's right to participate in the South Africa -Mozambique gas pipeline via iGas (which is a company under the CEF group of companies).
The introduction of Mozambican gas will further improve the competitiveness of energy-intensive industries that operate in the eastern part of South Africa. I expect that the availability of gas as an energy source for cooking, heating and fuelling small and medium enterprises will also make a huge difference to the lives of our people and I have tasked the Central Energy Fund and iGas to make this an important focus of their energy development activities in the future. I am pleased to learn that an exciting pilot project, in conjunction with the World Bank, is currently underway.
I have also challenged Sasol to ensure that, while working within commercial considerations, their process of awarding contracts around the construction of the pipeline should provide employment and skilling opportunities to many local communities along the pipeline route.
Possible markets of this gas are heavy industries, and there is also a potential for the domestic market.
The development of additional gas infrastructure between Mozambique and RSA is on course through Sasol.
The second phase of the development of our gas infrastructure should commence by 2008 on the West/Eastern Coast. It is envisaged that gas derived from Namibia (Kudu gas fields) and within our own shores (iBhubesi Forest Oil/Mvhelaphanda gas fields) will supply the Western Cape and Eastern Cape regions. Our newly formed South African Petroleum and Gas Company, a merger of Mossgas and Soekor (PetroSA), has received a mandate from government to amongst other things; play a leading role in the development of the Western Cape gas infrastructure.
The creation of the Petroleum Agency of South Africa, in line with the policy programme outlined in the White Paper, and the good work that PASA have been carrying out, has led to considerable interest by international gas exploration companies in South Africa's west and south eastern seas. Drilling operations are increasing and there appear to be good prospects of increasing proven reserves of gas and also of finding new and larger gas fields.
It is envisaged that these new finds together with known reserves of gas including Shell's Kudu field in Namibia and Forest Oil/Mvelaphanda's iBhubesi field on the west coast could supply the Western Cape and Eastern Cape regions with gas.
Regarding the Kudu gas field in Namibia, we have signed a letter of intent with Shell International Gas. On the other hand, we will also sign a draft letter of intent with Forest Oil/Mvelaphanda Consortium for possible cooperation based on their iBhubesi gas find in South African waters.
The third phase in our development of the South African gas infrastructure will result in the connection of both the Eastern and Western coasts. When we speak of the Western region gas infrastructure I refered to our newly formed State Petroleum Company as a possible client.
PETROSA
Government announced in 1997 that it intends to bring together all its commercial energy interests in an integrated oil company. In 1998 the White Paper on Energy Policy recorded the first steps in this direction, by announcing the reorganisation of the CEF group of companies and the separation of the commercial elements from the regulatory, strategic and developmental functions and interests. In November 1999 we announced the merger of Soekor/Mossgas and tasked the Boards of these companies to plan and execute the merger. Following a business case, Cabinet accepted a business plan in 2001.
Mr Mpumelelo Tshume was appointed Chief Executive Officer of the merged company in November 2001. Good progress has since been made towards the implementation of the business plans and organisational structures of the merged company. Consultation with employee representatives as required by law has commenced and the organisation's structures are currently involved in such consultations. The new name of the company was registered formally on 22 January 2002.
The Executive Team of PetroSA has also been appointed. It will be announced to staff and the public at both the Mossel Bay and Parow locations on 22 February 2002, when Cabinet has confirmed the names. All these developments are key for Coega, extending the life of Mossgas and stimulating the Western and Eastern Cape economies.
Thank you