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1. PRESENTATION TO THE SELECT COMMITTEE ON APPROPRIATIONS Public Hearing on Division of Revenue Bill 2010 5 March 2010 22.

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Presentation on theme: "1. PRESENTATION TO THE SELECT COMMITTEE ON APPROPRIATIONS Public Hearing on Division of Revenue Bill 2010 5 March 2010 22."— Presentation transcript:

1 1

2 PRESENTATION TO THE SELECT COMMITTEE ON APPROPRIATIONS Public Hearing on Division of Revenue Bill 2010 5 March 2010 22

3 PRESENTATION OUTLINE Part 1 INTEGRATED NATIONAL ELECTRIFICATION PROGRAMME Schedule 6 Schedule 7 Part 2 EEDSM Schedule 6 Schedule 7 3

4 Part 1 Integrated National Electrification Programme 4

5 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) 5

6 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 6

7 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. 7

8 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. 8

9 Allocation Criteria for INEP Backlog. Rural biasness. Nodel Zone Availability of formalized areas. Bulk funding availability. Past performance. Integration with other programmes eg. BNG 9

10 Backlog 10 Province Total Number of Households Backlog Households not electrified (percentage) % of National Backlog Western Cape1,333,886191,36614%5.58% Northern Cape 272,95850,40518%1.47% North West914,070196,60522%5.73% Gauteng3,127,991740,56924%21.59% Free State823,972201,91925%5.89% Mpumalanga879,082231,48526%6.75% Limpopo1,250,716329,44026%9.60% Kwa-Zulu Natal 2,405,165818,70834%23.87% Eastern Cape1,667,435669,42140%19.52% Total12,675,2753,429,91825%100%

11 % Backlog 11

12 MTEF ALLOCATION INEP Allocation split 62 % Eskom / 38% Municipalities Details of allocation per municipality are available in the DoRB 2010 12 VOTED FUNDSMTEF 2010/11 R’000 MTEF 20011/12 R’000 MTEF 20012/13 R’000 MUNICIPALITIES1 020 1041 096 6121,151,443 ESKOM(NATIONAL)1 719 8101 737 8421,882,087 NON - GRID68 20070 86186 370 BASELINE ALLOCATION 2 808 1142 905 3153 119 900

13 ALLOCATION PER PROVINCE 13 Province MUNICIPAL R’000 ESKOM R’000 TOTAL ALLOCATION PER PROVINCE % OF NATIONAL ALLOCATION Eastern Cape285 258551 486 836,744 30.2% Free State55 06338 921 93,984 3.4% Gauteng142 200107 616 249,816 9.0% KwaZulu- Natal223 776409 294 633,070 22.8% Limpopo130 500188 268 318,768 11.5% Mpumalanga57 300117 657 174,957 6.3% Northern Cape21 55547 265 68,820 2.5% North West40 800192 883 233,683 8.4% Western Cape63 65298 391 162,043 5.8% BASELINE ALLOCATION 1 020 1041 751 780 2,771,885

14 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 14

15 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 15

16 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. 16 CHALLENGES

17 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 17

18 Part 2 EEDSM 18

19 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 19

20 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 20

21 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 21

22 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) 22

23 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. 23

24 MTEF ALLOCATION EEDSM VOTED FUNDSMTEF 2010/11 R’000 MTEF 20011/12 R’000 MTEF 20011/12 R’000 MUNICIPALITIES175 000220 000280 000 ESKOM75 000108 900118 800 BASELINE ALLOCATION 250 000328 900398 800 24

25 ALLOCATION PER PROVINCE 25 Province MUNICIPAL R’000 ESKOM R’000 TOTAL ALLOCATION PER PROVINCE % OF NATIONAL ALLOCATION Eastern Cape 29 000 8.8% Free State 5 000 1.5% Gauteng 73 000 22.2% KwaZulu- Natal 33 000 10% Limpopo 12 000 3.6% Mpumalanga 8 000 2.4% Northern Cape 0.054, 450 16.5% North West 4 00054. 450 58,45017.7% Western Cape 56 000 17% BASELINE ALLOCATION 220 000108 900 328 900100%

26 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. 26 CHALLENGES

27 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 27

28 THANK YOU (TIME FOR QUESTIONS) 28

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