Reform needed in SA's power distribution infrastructure

Tuesday, March 1, 2011

Sandton - South Africa's electricity distribution infrastructure is in need of a major shake-up if the country is to meet its economic growth targets, says Deputy Minister of Energy Barbara Thompson.

"The electricity distribution infrastructure requires urgent reform to support the South African growth targets," Thompson told a two-day Energy Indaba in Sandton.

According to statistics, South Africa faces a backlog of infrastructure worth R2.5 billion a year. "As we speak, our backlog figure is more than R30 billion," Thompson explained.

With the closure of EDI Holdings at the end of this month, the Energy Department is set to take over the electricity distribution industry restructuring process. Together with National Treasury, the department will identify a proper funding mechanism to address challenges encountered in distribution.

The department was also in the process of finalising the Integrated Resource Plan (IRP2) for electricity, which was released last year for public comment. The plan seeks to address South Africa's energy mix and supply in the next two decades. 

The department said the plan was presented to the Inter Ministerial Committee last week. The IRP2 will again be presented to Cabinet on 9 March, after which it is expected to be promulgated on 1 April 2011.

According to the IRP2010, the country requires 5 2248 MW of new capacity in order to meet the projected demand and provide adequate reserves.

Meanwhile, Eskom's Kannan Lakmeeharan said the utility was ready to connect with Independent Power Producers (IPPs), adding that the country's energy requirements are expected to continue growing.

Additionally, the department expressed concern at rising oil prices, which have gone over the $100 a barrel mark, as a result of political unrest in the Middle East and on the African continent). This has placed a serious financial strain on the South African economy, which is still slowly recovering from the recent financial meltdown.

"There's an urgent need to review the country's strategic fuel stock to ensure that government, together with the oil industry, maintain reserves that will face future oil challenges," said Thompson.

A Policy Brief, released by the Human Science Research Council last week, revealed that excessive dependence on imported oil from high-risk regions makes South Africa vulnerable to both economic and national security problems. 

The brief suggested a different approach by South Africa was needed to ensure energy security. - BuaNews