Midterm budget: Little headway in lighting up homes

The electricity backlog in South Africa continues to loom large. Although providing power to far-flung homes remains a national imperative, the department of energy is struggling to deal with it and is lagging behind its mid-year targets.

According to the medium-term budget policy statement, the integrated national electrification programme, which is responsible for connecting households to the national grid, will continue to receive support and funding is being set aside to upgrade municipal electricity distribution.

The budget statement noted that, although 5.5-million households had been connected to the electricity grid since 1994, an estimated 3.4-million households were still without access to electricity.

The largest backlog, nearly 900 000 households, is in Gauteng, which is followed closely by KwaZulu-Natal, and then the Eastern Cape, which has more than 600 000 powerless households.

Out of an annual target to electrify 180 000 households, the department has achieved only about 11 000 about 6% of the annual estimate. But the department offered no explanation for the slow progress in its budget vote.

Additional substations
Not one out of six new bulk substations has been built yet, and not one out of 10 upgrades to additional substations has been carried out.

"The department planned to upgrade 10 and build six new substations during 2012-2013, which included projects not completed in the previous cycle," it said in its budget vote. "During the first six months of the year, no progress was achieved due to lead times in the equipment procurement processes. The process, which normally takes around 12 months, took longer than anticipated. The expected completion date for these projects has been scheduled for March 2013."

Only 31km out of 200km of existing medium-voltage power lines have been upgraded, but more than 100km out of 350km of new power lines have been constructed.

Only 32% of funds earmarked for black economic empowerment and small to medium enterprises has yet been spent.

But the department's one particular success is that it aimed to reduce electricity demand by 100MW, but it  achieved seven times that in the first half of the year alone.

Also, two new operational integrated centres, the target for the 2012-2013 financial year, are nearing completion.

The budget statement said that, to improve efficiency in the delivery of electricity connections, both on and off grid, the department of energy would develop an electrification master plan in collaboration with Eskom and other interested parties to reduce the cost per connection, support asset maintenance and enhance delivery mechanisms to achieve universal electrification.

It also noted that consolidated spending on transport, energy and communication was projected to rise from R83-billion in 2012-2013 to R105-billion in 2015-2016.

See the rest of the M&G's medium-term policy statement coverage:

Government debt to rise as tax revenues wobble
Pravin Gordhan has offered some optimism for SA's economic outlook, despite his mid-term budget signalling plans for a rise in government debt.

Midterm budget: Government failing to create jobs
The midterm budget policy statement has revealed that the government is failing at creating jobs, outside of the expanded public works programme.

Midterm budget: Money put aside to revamp mining sector
In response to developments in mining, the medium-term budget policy sets out imperatives to modernise the industry and amend labour relations.

Development cash linked to delivery
The government wants more bang for its buck when it comes to provincial and local government infrastructure roll-out.

Midterm budget: Strikes cost economy dearly
The treasury says unrest has had a negative impact on growth, adding tax revenue will be lower as wildcat strikes are estimated to have cost R10bn.

Fighting talk from Pravin Gordhan
Finance Minister Pravin Gordhan tightened his belt, chided the country's critics and delivered a no-nonsense medium-term budget policy statement.

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