19 May 2017

South Africa: Renewables Remain Part of SA's Energy Mix

Photo: Dana Smillie/World Bank
Toward renewable energy: Not enough progress yet.

Cape Town — Energy Minister Mmamoloko Kubayi says renewable energy is still part of government's energy mix.

The Minister said this when she tabled her maiden Budget Vote Speech in Old Assembly Chamber on Friday.

She said as part of government's energy mix, renewables remain one of the key areas for the country to achieve its mandate of energy security.

"We need to acknowledge that there was uncertainty around the Independent Power Producer (IPP) programme. We will need to evaluate whether or not the programme is assisting us to achieve our objective as initially outlined.

"We need to reflect what are the lessons learned so far and what needs to be improved. We will look at the final report from the two teams of the Department of Public Enterprises and Department of Energy and will act accordingly," she said.

The Minister said renewables are one of the most critical tools for government to achieve radical economic transformation.

This, she said, will be done by ensuring that instead of discussing shareholding by black business, efforts are made to ensure that ownership patterns are changed.

"We need to look at how best to assist SMMEs [small, medium and micro enterprises], which are interested in participating in this programme. We will need to ensure that conducive conditions are created to see them grow and not condemned to debt. We will engage National Treasury to ensure that the guarantees we sign are for securing and supporting the participation of SMMEs," she said.

She said government sees the IPP programme's future as being critical to the country's developmental goals.

More energy towards transforming the petroleum sector

The Minister said, meanwhile, that the audit on the transformation in the petroleum retail sector that was announced last year is in full swing.

She said there have been challenges in terms of the submission of accurate information by some industry players.

"Initial indications, however, confirm the appallingly low participation of black women in petroleum retail. When the final report is published, it will show that women account for less than 10% in the retail sector by volume and number of service stations. I cannot allow this to continue. I would want to see this figure double to at least a realistic 20% by 2020.

"We intend hosting an Economic Transformation Lekgotla, with a specific focus on women during August of this year," she said.

Minister envisions refinery investment

The Minister said South Africa is ready for a new refinery investment. She said by the time any new refinery is completed, the country will be importing in excess of a third of its fuel requirements.

"This high dependence on import of finished product by a major economy like ours, located at the southern-most tip of the continent, is not in the interest of energy security and does not advance local industrialization.

"I will in the third quarter of this financial year be approaching Cabinet for a firm decision in this regard.

"A public-private partnership (PPP) approach is preferred, with the strong participation of a crude oil producing partner.

"We need to ensure that there is opportunity for Black business to participate in this new refinery as part of our transformation drive. The refinery must be majority South African owned," Minister Kubayi said.

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