An inter-Ministerial committee on energy has been created to develop a 20-year integrated resource plan (IRP) for new generation capacity for power-stressed South Africa, President Jacob Zuma reported in his State of the Nation address to a joint sitting of both houses of Parliament in Cape Town on Thursday night.

The committee would also look at the participation of independent power producers (IPPs), and protecting the poor from rising electricity prices.

State power utility Eskom had submitted an application for tariff increases of 35% a year between 2010 and 2013, and the National Energy Regulator of South Africa would make a determination on this application on February 24, 2010.

“We will establish an independent system operator (ISO), separate from Eskom Holdings,” Zuma also promised.

Such a structure was seen as crucial to levelling the playing field for IPPs, which felt that the current model that set Eskom up as the "single buyer" of power generated by private producers to be a constraint to investment. The Department of Energy (DoE) had promised progress on the legal framework for such an ISO, which would probably need to be capitalised by government and backed by a State guarantee, by March.

However, Minister in the Presidency Collins Chabane, speaking on television after the address, promised the necessary regulatory framework for the introduction of IPPs would be in place only by year-end.

Nevertheless, African National Congress secretary-general Gwede Mantashe argued that the plan for an ISO was a major departure from past policy in the electricity supply sector and would be important to encouraging investment by IPPs, which were currently unhappy with a situation of having to contract with a competitor, in the form of Eskom.

But Zuma also stressed that Eskom would continue to build additional generation capacity and improve the maintenance of its power stations. The cash-strapped utility was currently pursuing a R400-billion investment programme.

Speaking on the occasion of the twentieth anniversary of the historic release from prison of Nelson Mandela, who later emerged as South Africa’s first-ever democratically elected President and an international statesman, Zuma stressed the importance of the State capital investment programmes to the rebuilding of a recession-afflicted economy.

However, the DoE had also promised greater consultation on the development of the so-called second IRP, following the release of a highly disappointing three-page first version in December, which was gazetted on December 31.

INFRASTRUCTURE & HOUSING
He said that government would spend R846-billion on public infrastructure over the next three years, with a particular emphasis on energy, transport and communications infrastructure.

“Municipalities must improve the provision of housing, water, sanitation, electricity, waste management and roads,” Zuma averred.

He also stressed that broadband, cell phone, landline and public phone rates would be reduced, while projects were being initiated to “increase broadband speed and ensure a high standard of Internet service, in line with international norms”.  

Also emphasised was a new initiative will be to accommodate those South Africans whose salaries were too high to get government subsidies, but who earn too little to qualify for a normal bank mortgage.

“We will set up a guarantee fund of R1-billion to incentivise the private banking and housing sector, to develop new products to meet this housing demand,” he said.

Well-located informal settlements would be upgraded, while proper service and land tenure would be extended to at least 500 000 households by 2014.

“We plan to set aside over 6 000 hectares of well-located public land for low income and affordable housing.