Foreword to the Department of Energy’s annual report for 2017/2018

February 28th, 2019, Published in Articles: Energize

The National Development Plan is our nation’s overarching plan that seeks to fulfil the aspirations of the majority of South Africans, and black people in particular. It underpins our developmental endeavours and informs the policies and strategies spearheaded by government. It is the blueprint and programme to build on our achievements, and to decisively confront our challenges, especially the triple threat of poverty, unemployment and inequality. I would like to address each of these as they relate to energy.

Click here to download the full report

Since January 2017, the Organisation of the Petroleum Exporting Countries (OPEC) has withdrawn almost 2% of the world’s oil production from the international market with the intention of reducing global crude oil inventories, resulting in higher crude oil and refined petroleum product prices. This Annual Report is an opportunity to remind all South Africans that the reality for non-oil producing countries like ours is that we have to accept the price of crude oil as determined by international markets.

Accordingly, the Department of Energy (DoE/Department) wishes to call upon all sectors to be circumspect prior to increasing the prices of goods and services as a result of the prevailing high fuel prices, so as to moderate the cyclical nature of these prices. In particular, the government calls upon retailers and food processors to take into consideration the negative impact that their product price increases may have on the most vulnerable. Consumers of liquid fuels are advised to use all possible options available to them to contain costs.

Among these options is the decision to change our driving habits as motorists, ensure correct tyre pressure, balancing and wheel alignment; plan and combine trips to avoid unnecessary travel time and petrol, and drive below the speed limit. All these actions help to save fuel and contain costs.

As the responsible minister, I undertake to intensify engagements with my counterparts in oil producing countries with a view to obtaining favourable terms for crude oil allocations for South Africa. Similarly, the ministers in the economic cluster have resolved to engage various stakeholders, as a matter of urgency, including those in the transport sector, civil society organisations and social partners in the National Economic Development and Labour Council (NEDLAC), with a view to finding a common approach to this challenge in the best interests of South Africa.

Unemployment

Through the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) the DoE has shown that sustainable clean electricity at an affordable price can be provided to our communities and the people living around these projects. The programme is delivering real economic growth through direct investment; creation of direct and indirect jobs; and by stimulating the green economy. Through this procurement, 58 000 new jobs will be created for South African citizens, mostly for the youth. The majority of these jobs will be created during the construction period and entail the utilisation of labour in the vicinity of the projects. Furthermore, jobs will be available across the entire value chain with an additional 1500 jobs in the manufacturing sector alone.

Inequality

As noted in the Medium-Term Strategic Framework (MTSF), high levels of inequality contribute to demands for rapid wage increases, pressures on household incomes due to the rising cost of living, dependence on the wages of those in employment and a rising sense of frustration in communities. Specific measures to support growth include building enough energy generation capacity to power the economy. For example, the continued and equitable expansion of information and communication technology depends on electricity. The real divide over the next decade will be between those who have access to reliable electricity to power these devices and those who do not.

This is why we consider our Integrated National Electrification Programme (INEP) to be our flagship programme. In 2017/18 the Department facilitated the connection of 275 830 households to the grid via the funding and oversight of our main implementing partners Eskom and the municipalities. In addition, 16 875 solar home systems were installed. These achievements bear testimony to the fact that the DoE is on course to meet the MTSF target of 1 355 000 households for both grid and non-grid connections by 2019.

Most of the remaining households requiring electrification are concentrated in remote areas that are far from the grid and other infrastructure. The installation of additional bulk infrastructure is needed to connect these areas. The REIPPPP has also been tasked to help reduce inequality. In Bid Windows 3.5 and 4, South Africans own the majority share of 57,8% (R11,90-billion) in the project companies, of which an average of 64,2% (R7,64-billion) is held by black shareholders.

From January to December 2017 South Africa imported 92% of the total crude oil (approximately 113-million barrels per day) through the major oil companies operating in the country. The remaining 8% was sourced by independent wholesalers and other crude oil distributors. In addition, three new electricity bulk substations were built; four additional substations were upgraded; 161,49 km of new MV power lines were constructed; and 31,5 km of existing MV power lines were upgraded.

In pursuit of energy co-operation, the DoE hosted 31 multilateral engagements in the energy sector in Africa and globally and undertook 35 bilateral inter-governmental engagements. Promulgation of the revised Integrated Energy Plan (IEP), Integrated Resource Plan (IRP) Liquid Fuels and Gas Master Plans Considerable work has been done on the finalisation of the above policy documents, however, due to public interest in holding further consultation on the IRP and IEP, these policy documents could not be finalised as envisaged.

Public consultation will be carried out in the next financial year. When considering responses to this consultation, the DoE will give greater weight to responses that are based on argument and evidence, rather than simple expressions of support or opposition. The DoE will also, in the next financial year, prioritise the finalisation of all pending legislative issues to create much needed policy certainty, transformation and promotion of sustained economic development.

Energy efficiency and demand side management (EEDSM) programme

The Department has intensified efforts to close the regulatory gaps on energy efficiency measures, especially in finalising the Regulations on the amendment of the Provision of Mandatory Data as well as submitting the Post 2015 National Energy Efficiency Strategy (NEES) to Cabinet for consideration before the end of this financial year. We will continue to encourage municipalities to participate actively in the Energy Efficiency and Demand Side Management Programme, through which energy consumption will be reduced in municipal infrastructure.

Skills development

The ANC manifesto identified access to reliable energy supply in all its forms as a priority for this administration. If we are to achieve the energy vision, as contained in the NDP, skills development in the energy sector is of critical importance. Given planned energy infrastructure investments, the country will require substantial investment in technical skills such as engineers, technicians, artisans and project managers. This demand for technical skills is a global demand. Critical skills development in South Africa must be the business of all stakeholders, not government alone. The Department contributed to these objectives by employing 43 young people in the Internship and Learnership Programme for the year to help up-skill youth. The Department also offered 21 new bursaries to current employees with effect from the beginning of the 2018 academic year. This brings the total number of employees studying part-time at various institutions to 52. Through its Internship Programme, the Department provides recently qualified and unemployed graduates with work experience to help them obtain gainful employment. During the period under review, the Department appointed a total of 22 interns and 16 students for the Learnership Programme.

Community upliftment

The DoE has done considerable work in promoting women economic empowerment in the energy sector. In the year under review, the Department focused on gender equality in the energy sector through, among other things, the sharing of information on business opportunities in the energy sector, addressing issues of capacity building, access to funding, and developing a solid implementation framework for the energy sector to promote and support women as entrepreneurs, investors, experts, business owners, small medium and micro businesses and major stakeholders.

The Department also initiated a number of youth and women empowerment programmes as a way of promoting the gender equality agenda. A number of workshops were held to share information on opportunities in the energy sector and guide the development of an Energy Policy on Women Empowerment and Gender Equality (WEGE), Draft Energy Sector WEGE Strategy (commonly known as Gender Strategy).

The Gender Policy was approved in 2016 and sets out the broad framework which enables the Department to actively develop and implement strategies, plans and instruments that will create a conducive environment to empower women in the energy space. A Women’s Dialogue was hosted, in partnership with the Minister of Energy and the Mayor of eThekwini Municipality on 11 August 2017 in Durban and launched the Women in Energy Excellence Awards. This provided women with opportunity to discuss business opportunities in the energy sector and how to access them; the challenges they are facing as women; and how the Department, together with women can reinforce and support each other in transforming the sector and moving forward.

The Women in Energy Excellence Awards aims to honour individuals and organisations that have made a substantial contribution in the energy sector. Various other initiatives, committed to advancing and empowering women in the workplace and the sector, were held.

Integrated energy centres

An Integrated Energy Centre (IeC) is a one-stop energy centre aimed at enhancing accessibility and affordability of energy to rural areas; job creation; poverty alleviation and stimulating the rural economy. The IeC Programme is an initiative of the Department in response to the White Paper on Energy Policy, which advocates for increased affordable energy services to disadvantaged communities; stimulation of economic development by creating an investor-friendly climate; and securing energy supply by encouraging diversity of energy supplies and energy carriers. In the year under review, the Department has strengthened its cross-sector partnership to discuss challenges hindering leCs from becoming sustainable businesses and jointly come up with solutions to the existing problems.

Youth development

The Department has ensured that its Youth Development initiatives are aligned with the priorities of the NDP Vision 2030 and the National Youth Policy 2020 as well as the energy sector mandate.

In this regard, the Department has:

  • Produced a Draft Youth Policy in December 2017, which is still undergoing public consultation.
  • Hosted the Learners’ Focus Week Programme which is aimed at empowering South Africa’s Learners, particularly from poor and disadvantaged backgrounds, with optimal scientific, mathematical, technology, engineering and life skills to access and succeed in STEM-based careers.
  • Launched the solar-powered computer laboratory at Phagamang Secondary School in Blouberg on 2 March 2018.
  • Co-ordinated the National Youth in Energy Dialogue on 23 June 2017, aimed at creating a platform for young people in energy businesses to discuss opportunities and challenges in the energy sector and come up with solutions and interventions to deal with them.

In addition to awareness workshops on career opportunities within the sector to young people, the Department will continue to strengthen youth-specific programmes and expenditure and roll out programmes as a solution to narrow the socio-economic divide for those from previously disadvantaged backgrounds.

Conclusion

Having taken stock of this past year, it is also important to look forward. South Africa has committed itself to a low-carbon energy transition, as outlined in Chapter 5 of the National Development Plan (NDP). This will entail choosing the most appropriate transition fuels mix in the medium to long term to meet both South Africa’s energy security needs, as well as the triple threat of poverty, unemployment, and inequality.

Acknowledgement

This is the foreword to the full report, click here to download the full report

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