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DAM-L Sub-Saharan energy conference speech/LS (fwd)
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Date: Tue, 20 Feb 2001 11:05:07 -0800
To: irn-safrica@netvista.net
From: Lori Pottinger <lori@irn.org>
Subject: Sub-Saharan energy conference speech/LS
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Date: 20/02/2001
Source: Ministry of Minerals and Energy
Title: Mlambo-Ngcuka (South Africa): Opening of sub-Saharan energy conference
----------------------------
SPEECH BY MINISTER OF MINERALS AND ENERGY, MS PHUMZILE MLAMBO-NGCUKA, AT THE
OPENING OF THE 3rd SUB-SAHARAN CONFERENCE, Midrand, 20 February 2001
Salutations,
I consider it an honour for me to be given an opportunity to speak here
today at the 2001 Sub-Saharan Conference, at the beginning of the "African
Millennium". This conference offers opportunities for us as role-players in
the energy sector in Africa to share ideas and promote investments in order
to strengthen the sector in the region.
My purpose here today is to open this momentous occasion with a brief
background on the current energy related activities in South Africa.
THE SOUTH AFRICAN ENERGY SCENE
* SA rich in energy resources
* Energy sector contributes 15% of GDP and employs about 250 thousand
people.
* South Africa is a world leader in converting coal to liquid fuels.
* However, we have has negligible indigenous oil and the economy is skewed
towards mining and processing industries with a high energy intensity
* Renewables, such as solar are inexhaustible but very expensive to convert
into useful forms at present.
* Coal remains dominant in SA and accounts for 70% of total primary supply.
* Crude oil is next at about 16%, followed by biomass and then small amounts
of gas, hydro-power, nuclear and renewables.
Most of the primary energy is transformed before it is finally used, notably
by converting coal, hydro and nuclear to electricity and by converting crude
oil, coal and gas to diesel, petrol and other liquid fuels.
The biggest energy consumers in SA are industry and transport.
ELECTRIFICATION
* By the end of 2000, 70% of households had access to electricity.
* In the year 2000 alone the following connections were made:
- Eskom connected 255023 customers (69 840 urban; 185 183 rural (including 5
222 farm worker houses))
- Municipalities connected 120 000 customers (96 000 urban, 24 000 rural))
- Shell/Eskom JVC provided 6 000 non-grid customers with Solar Home Systems
* Towards end of 2000 DME spent R31 million connecting villages in the
Eastern Cape
* To achieve universal access to basic domestic electricity by 2010 - an
electrification rate of at least 330 000 domestic, 1 700 rural schools and
100 rural health clinics per annum needs to be sustained
* The annual budget of R1.2 billion from the fiscus needs to be maintained
REGIONAL CO-OPERATION
* SA acknowledges the importance of regional and sub-regional co-operation
in the African continent.
* As part of the SADC achievements, the Southern African Power Pool (SAPP)
is one important milestone in regional energy co-operation and integration.
* Similar efforts should be encouraged in other areas.
* SA is negotiating construction of gas pipeline from gas fields in Pande
and Temane, in Mozambique.
* Similar discussions are going on in West Coast in an effort to bring
natural gas via a pipeline from Namibia to the Western Cape.
* Government is in process of establishing national gas development company-
iGas - to engage SASOL on construction of gas pipeline.
ELECTRICITY SUPPLY INDUSTRY (ESI) REFORMS (LIBERALISATION)
The DME's mandate is to optimise the operation of the Electricity Supply
Industry so as to maximise its potential to provide adequate, reliable and
low cost electricity to the people and industries of South Africa.
* Need for changes in generation, transmission and distribution of
electricity.
* White Paper on Energy Policy states that Government realises that
competitive models and private sector participation hold the promise of
benefits for electricity consumers.
* Government has begun investigations into future market structures for the
Southern African Electricity Supply Industry (ESI).
* Introduction of Independent Power Producers (IPPs) will be facilitated in
the South African electricity market.
The restructuring in this sector will be guided by the following objectives:
* Improvement of social equity by specifically addressing the energy
requirements of the poor
* Enhancement of the efficiency and competitiveness of the South African
economy by providing low-cost and high quality inputs to industrial, mining
and other sectors; and
* Achievement of environmental sustainability in the short and long term
usage of our natural resources.
* The final restructuring model for Eskom (South African utility) has yet to
be decided upon
* The reform of the electricity supply industry is driven primarily by the
need to introduce competition in this sector.
* Internationally the dominant trend is unbundling, re-regulation and the
introduction of competition.
* Primary objectives are for Eskom restructuring are:
- Maximising financial and economic returns to the state
- Increasing economic efficiency in investment decisions and operations
- Promoting economic empowerment
GENERATION
* Competition in generation should be introduced systematically, in a phased
manner, so as not to prejudice the existing strengths of the electricity
supply industry.
* 1st phase of restructuring of generation, is the separation of Eskom's
power stations into a number of independent competing generation companies
directly owned by the state.
* As the system evolves, companies in the generation sector should not be
allowed to gain control of the transmission and distribution part of the
industry as this could lead to abuse of market power.
DISTRIBUTION
* Government has committed itself to the restructuring of the distribution
sector
* Significant progress has been made in this regard
* The process will amalgamate Eskom distribution division with the local
authority distributors into a number of regional electricity distribution
companies or REDs:
* The aim of this initiative is to:
- Ensure that agreed-to-electrification targets are met,
- Provide low-cost electricity,
- Facilitate better price equality,
- Improve the financial health of the industry,
- Improve the quality of service and supply,
- Foster proper co-ordination of operations and investment capital, and
- Attract and retain competent employees.
* In the interim, Eskom's Distribution Division will form part of a holding
company for the entire distribution industry, EDI Holdings
* Eventually REDs will become independent of EDI Holdings.
TRANSMISSION
* Our view is that transmission of energy should remain, at least partially
in the hands of the state
* This could take the form of a separate independent transmission company.
* The introduction of a strategic equity partner into the transmission
company in the future.
* This assessment will have to be made against the background of the role of
the transmission network in providing the infrastructure within which
competition takes place.
* We will ensure that during the restructuring process, the electrification
programme presently being funded by Eskom will be able to continue.
END
Contact: Kanyo Gqulu on 083 29 333 77/(012) 317 9537
Issued by: Ministry of Minerals and Energy, 20 February 2001
--
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
Lori Pottinger, Director, Southern Africa Program,
and Editor, World Rivers Review
International Rivers Network
1847 Berkeley Way, Berkeley, California 94703, USA
Tel. (510) 848 1155 Fax (510) 848 1008
http://www.irn.org
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