Disappointing dip in energy

Glow slow: The upgrading of medium voltage power lines is behind schedule. (Madelene Cronjé, M&G)

Glow slow: The upgrading of medium voltage power lines is behind schedule. (Madelene Cronjé, M&G)

The report back on energy was not as encouraging as some would have liked, with expenditure 9.9% down on the same period last year and the energy savings realised from efficiency and demand side management not likely to meet targets.

Despite an upbeat medium-term budget policy statement on energy, the more detailed analysis accompanying it revealed a less encouraging picture.

According to the budget statement, "New electricity generating capacity [is expected] to come on line next year and a new coal-fired power plant is planned … which will contribute to adequate electricity supply over the longer term."

But the figures relating to delivery suggest that many of the energy programmes are running behind schedule for various reasons.

There have been some successes, like the renewable energy independent power producer programme, now in its third round of contract awards, the publication of draft regulations for shale-gas exploration this month, with a view to exploration applications beginning in 2014, as well as plans to ensure that proposals to procure the next coal-fired power station and for the cogeneration of electricity are issued by mid-2014.

On the negative side, only 12.4% of the 220km of existing medium voltage power lines are expected to be upgraded by mid-year, which is significantly behind the annual target.

Expecting to reach target
But the department of energy said that most of the construction projects are scheduled to take place in the second half of the municipal financial year, which began in July 2013.

The department said it expects to reach its target for upgrading medium voltage power lines by the end of 2013-2014.

The department also said that, as of September 30, projects to build and upgrade substations were still in progress. None was at the complete stage, at which the substation can supply electricity to the network.

On the positive side, the substations are expected to be brought on line in the second half of the year and the projects are on track for completion by the end of 2013-2014.

According to the policy statement, expenditure in the first six months of 2013-2014 was R2.838-billion, or 43.6% of the adjusted appropriation of R6.503-billion for the year.

In comparison, mid-year expenditure in 2012-2013 was R3.151-billion, or 46.8% of the 2012-2013 adjusted appropriation.

Expenditure decreases
Compared to the first six months of 2012-2013, expenditure during the same period in 2013-2014 decreased by R313.045-million, or 9.9%.

This was attributed to several delays. Agreements for the solar water heater supply programme were not finalised and there were problems with the process of providing energy to those not on the grid.

Also there were delays in establishing the National Radioactive Waste Disposal Institute and appointing its board members.

Only 26 461 of 129 679 solar water heaters were installed, because of a failure between Eskom and the department of energy to finalise funding and solar water heater supply agreements.

"The agreements have now been finalised to enforce the subsidisation of products with a high local content.

"The implementation is scheduled to begin in the second half of 2013-2014," according to the policy statement.

However, it warned that targets for the year might not be met and a portion of the allocated funds have been declared unspent.

Additional funding has been set aside for the Nuclear Energy Corporation of South Africa for additional funding for research and development, and to refurbish existing research facilities.

The publication of blending regulations for biofuels with pricing arrangements are expected to be finalised by mid-2014 and the amended Mineral and Petroleum Resources Development Act, which is currently before Parliament, should eliminate ambiguity, ­streamline administration, clarify governance concerns and encourage beneficiation, according to the government.

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