2. Integrated National Electrification Programme (INEP): Overall Performance (End of January 2012) Dr Wolsey Barnard

3. 2 Outline 1.INEP performance 2.Allocations for 2012/13 3.Island formations in KZN 4.Flagship interventions 5.Challenges 6.Way forward

4. 3 INEP : MTEF Allocations VOTED FUNDS MTEF 2010/11 R’000 MTEF 2011/ 12 R’000 MTEF 2012/ 13 R’000 MTEF 2013/ 14 R’000 MUNICIPALITIES 1 020 105 1 096 6121,151,443 1,314,772 ESKOM 1 719 810 1 737 8421,882,087 1,982,596 NON - GRID68 20070 86186,400 91,152 BASELINE ALLOCATION 2 808 1152 905 3153,119,930 3,388,520

5. 4 INEP three year grid performance trail VOTED FUNDS (Connections) INDICATOR MTEF 2011/12 R’000 MTEF 2010/11 R’000 MTEF 2009/10 R’000 ESKOM Annual connections % 85% 100% Connections - Jan 12 59 820 136 597 149 901 MUNICIPALITIES Annual connections % 45% 75% 98% Connections - Jan 12 26 863 54 872 70 567 CONNECTIONS TO DATE Jan 201286 683191 469 220 468 PROJECTED CONNECTIONS By completion date 218 000 (April 2014) 219 500 (April 2013) 230 500 (April 2012)

6. 5 TOTAL ALLOCATION R’000 Planned Connections Total Expenditure to date R’000 Connections Achieved to Date 127 86110 00085 8607 492 Non grid – Solar home systems 2011/12 Financial year

7. 6 Various Municipal and Eskom infrastructure projects are funded, related to the building new substations, upgrading of existing substations and inter- connecting High Voltage (HV) lines: 1.Eskom 42 projects under construction, mostly in KZN and EC Different stages of completion – next 6 months 2.Municipalities 45 projects under construction Different stages of completion– next 12 months. Infrastructure Projects

8. 7 Allocations for 2012/13 ProvinceBacklog Eskom allocations (R’ 000) Munic allocation (R’ 000) Eastern Cape621 081488 339279 400 Free State196 52939 12179 300 Gauteng846 669104 882188 000 KwaZulu Natal827 720510 291234 000 Limpopo296 878235 027125 300 Mpumalanga221 185111 28274 943 Northern Cape48 81036 10759 900 North West159 338246 98949 300 Western Cape202 885110 04861 300 Total3 421 0941 882 0871 151 443

9. 8 Island formations in KZN Islands already addressed5,673Completed Planned for 2011/ 20123,382Funds from re-gazetting process and Eskom internal funds To be done (2013/14)7,001Funds obtained from Eskom savings in 2011/12 year Current Island Backlogs10 383 (16,056) Planned Delivery of Island YearConnectionCapex 2011/123,382R50,730,000 2012/134,500R67,500,000 2013/142,501R37,515,000 Total10383R155,745,000

10. 9 Flagship Interventions Special flagship interventions are undertaken, such as: 1.Engcobo 2.uMsinga 3.Maluti-a-Phofung 4.Masibambisane Rural Development Initiative 5.King Sabata Dalindyebo (KSD)

11. 10 Challenges Municipalities do not report on regular basis – monthly reports, quarterly and annual evaluation reports. New Councillors and officials have not signed contracts in time this year due to new councils and new agendas, hence the majority of municipal are about 4 - 6 months behind with the start of 2011/12 financial year projects. Majority of Municipalities are not performing as required in the contract. Internal procurement processes takes to long, even up to 7 months to appoint the consultants and just as long to complete the appointment of the contractors. INEP had to implemented emergency measures to ensure that connections targets are been reached by end of financial year. – During re-gazetting funds were withdrawn from those municipality that had started late with the identification and appointment of consultants. Municipalities use electrification funds to do upgrading of existing networks. INEP Operational budget not sufficient to plan, implement and monitor projects effectively – current operational budget is less that 0.2 % of fund: – Can not conduct effective planning – Limited monitoring

12. 11 Challenges (cont..) Limited funds, received 4.2 times more applications from municipalities than what is available for the 2012/13 financial year. For the last 6 years INEP received about 50% of the funding as projected in 2003/4. Municipalities signs contract with the Department for connections and change projects without notification or reduce connections due to cost. Eskom and municipalities performance are decreasing due to twice above inflation rate increases of electrification costs. Shortcomings in EDI is starting to have a very negative effect on the delivery of new connections. INEP resources are stretched, since more and more operational involved in municipal projects. In addition, to the challenges mentioned above, there was a decrease in real terms of the electrification allocations from National Treasury over the last five years, and as a result the number of connections are decreasing, while the natural growth rate are between 100 000 to 150 000 houses per annum above the number electrified each year. Hence universal access can never been reached under the current conditions.

13. 12 Way forward Need to address EDI challenges as a mater of urgency – having negative effect on electrification delivery. INEP capacity in terms of human resources will have to be strengthened, especially in Planning, KZN and EC regions and to render assistance to struggling municipalities. Approval to be give by NT to allow for multi year planning and budget to be implemented. It is of no use to make service delivery the key delivery of Government, but National Treasury keep on decreasing INEP operation budget (to plan and manage the fund), while the annual allocations budget for connections increase with inflation, while the connection cost are increasing annually by 15% for the last three years.

14. 13 Way forward (..2) Tighter control over performance of municipalities – Provincial Energy Forums, withdrawal of funds if not utilized immediately; Have progressed well with negotiations with DBSA to combine INEP and ‘soft’ loans for electrification projects; Selected non-grid roll-out projects to rest of country – INEP assistance to Municipalities. National planning function to be strengthened within INEP All 2009/10 and older unused funds have been re-called by NT. Agreement with Special Investigation Unit regarding funds be misused – Closer co-operation between INEP, Provincial Governments, NT, CoGTA and MIG allocations. National Electrification Indaba – 15/16 March 2012 in Durban.

15. 14 Thank you