South Africa’s electricity distribution network maintenance backlog stood at about R27-billion and there was also a need to invest in power stations, and this necessitated power tariff increases, Energy Minister Dipuo Peters said last week.
“We would like to indicate unequivocally that tariffs are going to rise steadily as we build more generation and distribution capacity of our power networks. It is, therefore, critically important that we weigh the advantages of investing in infrastructure, while, at the same time, increasing tariffs. The consequences of not having the infrastructure are too grave to even imagine,” she said when she officially opened the African Utility Week, in Durban.
She reiterated that government was doing everything in its power to ensure that the poor were cushioned against higher-than-normal electricity tariffs and that industrial consumers continued to cross-subsidise domestic customers.
Eighty per cent of Africa’s 800-million population have no access to electricity, which is a key requirement for economic development. Peters said that electricity utilities across the continent were faced with the challenge of having to focus on the issue of revenue generation to remain viable and sustainable.
“Gatherings such as the Indaba could begin to correct the anomalies,” she said. “We have to work together to seek opportunities and drive investments in the energy sector of our economy.
“We are all grappling with serious challenges of the shortage of infrastructure in so far as the entire value chain of generation, transmission and distribution is concerned.
“Through the Southern African Power Pool, we have identified regional bankable projects which require financial institutions to have confidence in the true potential that this sector brings to the economy of our continent and our sub-Saharan region.”
Peters said the first thing that needed atten- tion was the issue of universal access and, in line with this, government had set itself the target of providing electricity to all formal households by 2012.
The three most energy deprived provinces, which account for 25% of all households without electricity, are rural KwaZulu-Natal, the Eastern Cape and Limpopo.
“Our total installed capacity is just above 40 000 MW and we have to compete with huge economies like China, which is bringing on stream about 40 000 MW of electricity generating capacity each year as part of its drive to ensure that its supply meets the demand,” she said.
“They are doing this to make sure that their economic growth continues to hover around double-digit figures.”
She said government was gravitating to generating 10 000 MW hours of electricity from renewable sources by 2014.
“The country needs to start moving towards renewable energy, particularly in rural areas where the potential for small-scale renewable investment projects is huge,” she said.
“This has to happen while governments are simultaneously ensuring that the masses of our people continue to receive these services at prices they can afford. Our utilities, in particular, are facing formidable challenges as they quite correctly implement credit control measures and proper metering systems in order to maximize their revenue collection potential.”
She said it was important to maintain a proper balance between the demands of free basic electricity and charging high users the exact prices for which they provided them with electricity.
She added that government could not solve the energy problem alone and that it remained committed to ensuring adequate participation by the private sector.
Public Enterprises Minister Barbara Hogan said the massive R486-billion bill for energy provision could not be met by government alone or by consumers.
“We have to look to private-sector investment and independent power producers must come into play,” she said.