BRIEFING TO THE PORTFOLIO COMMITTEE ON ENERGY INTEGRATED NATIONAL ELECTRIFICATION PROGRAMME 26 AUGUST 2014

Transcription

1 BRIEFING TO THE PORTFOLIO COMMITTEE ON ENERGY INTEGRATED NATIONAL ELECTRIFICATION PROGRAMME 26 AUGUST

2 ELECTRICITY INDUSTRY OVERVIEW Generation Transmission Distribution 93% Eskom IPP s new players in the sector Governance: Electricity Regulation Act; New Capacity Generation Regulation Regulated by Nersa 100% Eskom A handful of Municipalities Governance: ERA, Grid codes Regulated by Nersa Eskom still a significant Player (about 45% of customer base) Municipalities Governance: Nersa; Municipal Legislation and thus Complex 2

3 OVERVIEW OF THE INEP PROGRAMME The Department of Energy (DoE) has been mandated to ensure and secure sustainable provision of energy for socio-economic development. Integrated National Electrification Programme (INEP) is the Department s programme responsible for achieving universal access to electrification in the country by The INEP is responsible for planning, project management and funding the bulk infrastructure (e.g. MV lines and substations), grid and non-grid new connections for households that cannot afford to pay on their own to receive access to electricity. 3

4 OVERVIEW OF THE INEP PROGRAMME Access to electrification has increased from 36% in 1994 to 88% in Over million households were connected to the grid between 1994 and March Since the inception of Non-Grid Programme achieved more than installations mainly in EC, KZN and Limpopo. 4

5 Fiscal Donor Funding FUNDING MODEL Grid Electrification Non Grid Electrification Eskom - Connections - Infrastructure Municipalities - Connections - Infrastructure Concessionaires Municipalities - Limited projects 5

6 BACKLOG PER PROVINCE Households without electricity: ~3.3 million (Informal 1.2 mil and formal 2.1 mil) 75 % in Eskom supply area and 25% in municipalities supply area. 6

7 SUCCESS AND CHALLENGES ENCOUNTERED 7

8 CONNECTIONS BETWEEN 1994 AND 2014 Just above million households were connected to the grid between 1994 and June In the period from 2002 to 2013/ households were supplied with non-grid technology (Solar panels Renewable Energy) Eastern Cape Kwa-Zulu Natal Limpopo Northern Cape Non-grid electrification programme will in future not only be implemented in concessionary areas, but in other areas of the country, through the Master Plan Strategy. Province Electrified Houses: Municipalities & Eskom Eastern Cape Free State Gauteng Kwa-Zulu Natal Limpopo Mpumalanga Northern Cape North west Western Cape Total

9 PROVINCE MUNIC PROGRAMME PERFORMANCE APRIL 2013 MARCH 2014 ALLOCATION MUNIC R 000 ALLOCATIO N ADAM R 000 TRANSFERRED R 000 EXPENDITUR E R 000 PLANNED CONNECTION S CONNECTIO NS ACHIEVED YTD ACTUAL CONNECTION S INCLUDING ROLLOVERS EC FS GP KZN LIM MP NW NC WC TOTAL

10 ESKOM PROGRAMME 2013/14 PERFORMANCE APRIL MARCH 2014 PROVINCE ALLOCATION R 000 TRANSFERE D R 000 EC EXPENDITURE R PLANNED CONNECTIO NS CONNECTION S ACHIEVED ESKOM OWN FUNDING YTD Actual Connectio ns INCLUDIN G ROLLOVE RS FS GP KZN LIM MP NW NC WC TOTAL

11 INEP PERFORMANCE (13/14) Entity MTEF Allocations We have 25 PPP s events conducted against the 20 PPP s target in the financial year 13/14. Planned connection 2013/14 Target connection was for grid connection and for non-grid according to the APP, INEP manage to achieve connections. Connections INEP (including roll-overs) Connections Own funding Total Connections Eskom (bn) 2,141, , , Municipalities (bn) 1,314, Non-grid (mil) 91, Total 3,546, ,

12 ROLES OF ESKOM/MUNICIPALITIES AND CURRENT PROGRAMME 12

13 ROLES OF ESKOM AND CHALLENGES 75 % of the backlog is in the Eskom supply area and 25% in municipalities supply area, due to the fact that Eskom has more rural supply areas. Eskom will maintain and operate the assets created by municipalities in its area of supply. Eskom needs to strengthen the network capacity especially on Eskom area of supply in order to eradicate the backlog. Eskom needs to execute a programme of R2,9 billion and achieve more than new households connection in the 2014/15 financial year. Eskom long process of energizing municipal electrification projects and additional 5% admin fee. Difficulties to audit Eskom large utility, internal process which is very time consuming to get through - regional vs HQ approvals 13

14 ROLES OF MUNICIPALITY A backlog of 25% is in municipalities supply area, mainly around the local towns. The municipalities need to shorten and expedite their procurement processes in order to fast track the roll out of electrification programme 9-12 months before connection infrastructure projects started after funds been transferred to municipalities. Municipalities need to address the issue of ageing infrastructure through their revenue collection in order to eradicate the electrification backlog. Municipalities will execute a programme of R1,1 billion and achieve more than new households connection in the 2014/15 financial year. Municipalities are allowed to pledge their two outer years allocations by utilizing financial institutions or a person to accelerate the electrification programme. 14

15 CHALLENGES WITHIN MUNIC PROGRAMME Data quality for planning including influx of informal settlement during electrification implementation. Receive 5.5 times more applications per year than what is been allocated ( allocations vs 3,3 mil backlogs!!) Slow implementation of funded electrification projects Late signing of the contract and submission of annexure, delays the process of transfer. Changing the project names without informing the Department of Energy. Cash Flow which is not in line with the payment schedule Unreported funds for the previous years. Duplication of reports. Lack of technical and project management capacity within Local Municipalities. 15

16 CURRENT INEP MTEF ALLOCATIONS PROGRAMMES 2014/ / /17 MUNIC PROGRAMME ESKOM PROGRAMME NON - GRID BASELINE ALLOCATION

17 ALLOCATIONS FOR 2014/15 PROVINCE TOTAL ALLOCATION MUNIC ALLOCATION (R 000) ESKOM ALLOCATIONS (R 000) Eastern Cape R R R Free State R R R Gauteng R R R KwaZulu Natal R R R Limpopo R R R Mpumalanga R R R Northern Cape R R R North West R R R Western Cape R R R Total R R R

18 PLANNED CONNECTION FOR 2014/15 PROVINCE MUNIC CONN ESKOM CONN Eastern Cape Free State Gauteng KwaZulu Natal Limpopo Mpumalanga Northern Cape North West Western Cape TOTAL

19 SERIOUS INFRASTRUCTURE BACKLOGS PROVINCE MUNICIPALITIES Kwazulu-Natal Eastern Cape Limpopo North West Northern Cape Mpumalanga Western Cape Gauteng Ubuhlebezwe, Umshwati, Umzimkhulu, Nongoma, Umhlabuyalingana, Nqutu, Ndwedwe LM, Danhauser LM, Ulundi LM, Mtubatuba LM, Jozini, emadlangeni LM, Mooi Mpofana LM, Vulamehlo LM Bufalo City LM, Nelson Madela Bay, Chris Hani District, Alfred Nzo District, KSD LM, Inkwanca LM, Engcobo LM, Polokwane LM, Thulamela, Ba-Phalaborwa LM, Greater Giyani Madibeng LM, Mafikeng LM, Moses Kotwane LM, Rusternburg LM Sol Plaatjie LM Mbombela LM, Thembisile Hani LM Beaufort West LM Westoneria LM, Merafong LM, Randfontein LM 19

20 FBE AND FBAE AS IT APPLIES TO INEP 20

21 CHALLENGES OF FBE ON INEP FBE are managed and allocated by CoGTA Some of the municipalities do not have indigent register for years or if there is one, it is not updated, creating a problem of identifying beneficiaries for FBE. Illegal connected household are not qualifying for FBE Backyard and side year dwellers connected illegaly to the main house meter resulted that no FBE are reaching poor households. Sustainability of the non-grid project depends on FBE, monthly payments are required for operations and maintenance (That s the reason why other small non-grid service providers were liquidated). The poor households are not benefiting from the FBE because the municipalities are not paying the service providers the FBE fees mainly on non-grid programme. 21

22 NON-GRID ELECTRIFICATION 22

23 NON-GRID ELECTRIFICATION ROLL OUT Non-Grid Electrification is the electrification that does not depend on Eskom/grid networks, it is considered in areas that are far from the grid with unfavourable topography. The Department chose SHS as the energy of choice for the non-grid electrification programme. The programme was necessitated by the fact that some areas are virtually difficult to electrify through grid immediately. Currently the programme is running in three provinces KZN, Limpopo and EC. In addition nine service providers have been appointed to expedite the roll out of the non grid programme To date over households have been connected with non-grid electricity. 23

24 Pilot technologies wrt non-grid The Department will be conducting a non-grid electrification pilot in the informal settlements of the Nelson Mandela Metro Municipality. The intention is to provide total non-grid solutions in a form of lighting in the houses, as well as security lights in a form of solar street lights. The pilot will assist us in formulating policy in the future. This will reduce theft of electricity. A fuel cell generation pilot project has been launched in Moqhaka Municipality in Free State sponsored by Anglo Platinum. The fuel cell technology has never been tested for rural electrification and is a ground breaking project for the country. More R&D about this source of energy and whether it can be considered in the future for electrification purposes is required. 34 households connected in that rural farm and it is one of its kind. 24

25 OPPORTUNITY ON NON-GRID Job creation from Fuel Cell implementation (installation, maintenance, re-fuelling) Industrial capacity building in a high tech manufacturing industry. Job creation in knowledge-based industries along the entire Fuel Cell value. Unlocking new export markets in the rapidly growing clean tech sector. 25

26 DOE OVERSIGHT PROGRAMME ON INEP 26

27 DOE OVERSIGHT ON INEP Project Managers and Project Coordinators in the regions visits the projects before funds can be allocated in order to verify the existence of the project. During implementation phase, projects are monitored and evaluated, and this need to be strengthened as mentioned in the Minister s budget vote speech. After the completions of the projects, Technical Audits are conducted in order to inspect the quality, technical standards and safety compliance. Not all the projects are constantly monitored and audited due to insufficient financial and human capacity. Projects allocated over R5 million are prioritised for technical audits. 27

28 INEP PLANS FOR THE NEXT 5 YEARS 28

29 5 YEAR PLAN 29

30 CHALLENGES MUNICIPALITIES AND ESKOM Slow delivery of electrification projects by Municipalities and certain Eskom regions. Lack of skills within Municipalities technical and project management. Majority of Municipalities are not performing as required - internal procurement processes takes too long, even up to 7 months to appoint the consultants and just as long to complete the appointment of the contractors. NON-GRID PROGRAMME Slow roll-out of non-grid connections due to negative political perceptions and practical short comings. Current non-grid systems not addressing basic electricity needs of customers does not address heating and cooking needs. Non-grid service providers struggle financially to survive due to small customer base and rural location. FUNDING AND COST OF CONNECTIONS More and more connections done in rural areas connections costs increase sharply and subsidy level have to be increased accordingly. Annual budgetary process force projects to be planned and designed on an annual basis and not on a multi-year (project completion) basis. 30

31 LESSONS LEARNED Municipalities do not have sufficient capacity (technical, financial, etc) for project planning and implementation Reliability on Consultants Universal access to electricity cannot be reached with Grid electrification only Insufficient Bulk infrastructure for electrification INEP mandate not to supply grid infrastructure, was expected to be the responsibility of the licenced distributor. Job creation possibilities

32 WAY-FORWARD Implementation of the Electrification Master Plan INEP to be more operationally involved in projects undertaken by municipalities to ensure they deliver on the set targets. Creation of Project Steering Committees in the provinces with the assistance of MISA in order to assist the non performing municipalities The Department should on an annual basis revise the cost per connection subsidy to keep up with price increases of electrification materials Municipalities should fast track Council Resolutions and procurement processes in order to accelerate the implementation of electrification projects within their municipalities. Provide each municipalities with pre-engineering fund in year prior to the implementation year to ensure quicker delivery. 32

33 Matatiele Electrification Task Team 33

34 MATATIELE ELECTRIFICATION TASK TEAM The establishment of Task Team on electrifications consist of (DoE, Cogta, Salga, MISA, DPE, Eskom and Municipality). The committee is chaired by the DoE. The Committee focuses on the following:- The capacity building of the municipality must be prioritised for the smooth rollout of electrification programme. Backlog information against progress to date on the electrification of Matatiele Local Municipality. Consideration of alternative energy source and the rollout of the FBE and FBAE within the municipality. (DoE has already appointed three service providers for non-grid rollout) Matatiele Local Municipality should fast track Council Resolutions and procurement processes in order to accelerate the implementation of electrification projects within their municipalities. 34

35 MATATIELE LM TASK TEAM FEEDBACK Makhoba The Electricity Backlog is currently sitting at 55% within Matatiele Municipality Makhoba compliments Ward 5 & 9 within Matatiele Municipality Approximately 1829 connections not electrified at Makhoba Feed to Makhoba achieved from Cedarville Substation Extension of feeder bay and build 30km of Hare backbone Estimated costs R48 mil Eskom to endorse Network Planning Strategies. Mzongwana Mzongwana compliments Ward 5,7 within Matatiele Municipality Approximately 2902 connections not electrified at Mzongwana Goxe,Lufefe and Mngeni villages can be accommodated when the existing SWER network is upgraded to 3 phase Hare Approximately 30km at a cost of R15mil The remaining villages within Mzongwana can be accommodated when a new feeder is built from Cedarville Substation to Mzongwana using Hare Conductor Approximate Cost R14mil Estimated costs to electrify Mzongwana is R68mil. 35

36 MATATIELE LM TASK TEAM FEEDBACK Wards 13, 23 & 24 Ward 13 yields 2226 non-electrified customers estimated cost to cover connections R46mil (system strengthening required) Ward 23 yields 1196 non-electrified customers estimated cost to cover connections R21mil. Ward 24 yields 1519 non-electrified customers estimated cost to cover connections R29,8mil. 36

37 THANK YOU 37