Click to edit Master subtitle style 2/23/12 A PROGRAMME FOR THE ACCELERATION OF THE DELIVERY OF ELECTRICITY SERVICES TO HOUSEHOLDS IN THE VHEMBE DISTRICT

Click to edit Master subtitle style

2/23/12

A PROGRAMME FOR THE ACCELERATION OF THE DELIVERY OF ELECTRICITY SERVICES TO HOUSEHOLDS IN THE VHEMBE DISTRICT MUNICIPALITY

Operation TSHEDZA

Presentation to the Joint Meeting: Portfolio Committee on Energy, Parliament, Cape Town, 21 February 2012

VHEMBE DISTRICT MUNICIPALITY

Executive Mayor: Cllr F. DzhombereMunicipal Manager: Mr M. Makumule

2/23/12

AN OVERVIEW

1. EXECUTIVE SUMMARY2. OBJECTIVES OF THE PROGRAMME3. BACKGROUND INFORMATION4. CHALLENGES FACED BY THE

MUNICIPALITIES 5. GUIDING POLICIES AND GOVERNMENT

DIRECTIVES6. OUR APPROACH7. OUR PROGRAMME FUNDING PLAN8. PROGRAMME STAKEHOLDERS9. RISK ANALYSIS AND MANAGEMENT10.DEMONSTRATION OF BENEFITS11.CONCLUSIONS

22


2/23/12

1. EXECUTIVE SUMMARY

This proposal aims to practically address the unlocking of electricity services delivery to the households in the Vhembe District Municipality:

Initial delivery of services to more than 20 700 households before the end of June 2013 using INEP Grant’s Schedule 6 & 7 funding allocation in the 2012/13 and the 2013/14 Fiscal years;

Strongly position the District Municipality to achieve Universal Access to all households by 2014/15; and

Create more than 250 000 person-days of employment and training opportunities over the period ending June 2013.

33


2/23/12

1. EXECUTIVE SUMMARY

Should the Jobs Fund application (submitted to the DBSA on 31 July 2011) be successful, this Programme will take forward other Government’s objectives as follows:

A. Promote the Energy Efficiency Campaign through the use of Split –Meter Prepaid system as a strategy to reduce incidences of Meter tampering and thus discouraging cases of illegal connections;

A. Reducing the electrification lifecycle costs through the use of Circuit Breakers instead of fuses for the benefit of the customers and Eskom;

A. The identification of areas that will need Public Lighting installations and the pursuance of creating a sense of Public Safety and the reduction of crime incidences;

D. Implement the Reforestation Programme to plant new trees in the project areas to replace trees cut (for firewood);

D. The opportunity for Municipalities to apply for electricity distribution licences for their areas in pursuance of ensuring growth, development and sustainablity , and

D. To create additional sustainable employment and training opportunities.

44


2/23/12

2. OBJECTIVES

The objectives of this Electrification Programme are as follows:

Accelerate the delivery of electricity services delivery to households in the Vhembe District Municipality;

Position the Municipalities in the Vhembe District Municipality to achieve Universal Access to electricity by the 2014/15 Fiscal year;

Contribute to the attainment of the United Nations’ Millennium Development Goals through accelerating access to modern energy services; and

Unlock or stimulate the achievement of other opportunities for the benefit of the Communities in the Vhembe District Municipalities.

55


2/23/12

3. BACKGROUND INFORMATION

3.1 GEOGRAPHICAL LAYOUT

3.2 DESCRIPTION OF THE PROGRAMME

3.3 ELECTRIFICATION BACKLOG

66


2/23/12

3.1 GEOGRAPHICAL LAYOUT77


2/23/12

3.2 PROgramme description88

This programme aims to deliver electricity services to more than 20 700 households in the Vhembe District Municipality, before end of June 2013 using INEP Grant funding allocation in the 2012/13 and the 2013/14 Fiscal years.


2/23/12

3.3 ELECTRIFICATION BACKLOG9

9

Municipality Estimated Total Households in 2010

Estimated BACKLOG in 2010

Musina 13,564 5,348

Mutale 19,443 6,997

Thulamela 142,696 42,927

Makhado 123,180 34,533

TOTAL 298,883 89,805


2/23/12



2/23/12



2/23/12

4. Challenges faced1212A. Approximately 90 000 households in the Vhembe District

Municipality are without access to Electricity Services. This backlog is currently being reduced at a rate of less than 9 000 households per year. At this rate, Universal Electricity Access will be achieved beyond the 2020 year;

A. The high electrification backlog is impacting negatively on the education of learners;

A. The attainment of the UN’s Millennium Development Goals in the Vhembe District Municipality;

A. The continued use of firewood is contributing to extensive soil erosion and desertification of the land;


2/23/12

4. Challenges faced1313E. The Vhembe District Municipalities do not have

electricity distribution licenses in their areas, with only two former “white towns” having licenses, namely, Louis Trichardt and Musina towns;

E. Currently, on completion of Projects by the Municipalities, the infrastructure is handed-over to Eskom for operation, maintenance and revenue collection; and

E. The Government is calling for the expediting of spending on capital projects that are funded by conditional grants as per the Division of Revenue Bill, gazetted on 24 January 2011, No. 33959.


2/23/12

4. CHALLENGES FACED1414


2/23/12

5. POLICIES AND DIRECTIVES

5.1 POLICY FRAMEWORKS APPLICABLE

5.2 DIRECTIVES FROM GOVERNMENT

1515


2/23/12

5.1 POLICY FRAMEWORKS

Adopted Municipal IDPs regarding the Electrification Backlogs in the Municipality

Department of Energy - Integrated National Electrification Programme (INEP)’s Policy Framework

2011 Division of Revenue Bill No. 33959, 24 January 2011

MFMA Circular 51 as issued by the National Treasury Department, February 2010

MFMA Supply Chain Management Regulations – Appointment of Service Providers

1616


2/23/12


1717A.“.. I want to repeat here today that this

government believes that people living in the rural areas also have a right to basic necessities and amenities such as electricity, water, …”, Address by President Jacob Zuma during the electricity switch-on ceremony at Mushiyane, Greater Giyane Municipality, MPUMALANGA, 30 August 2009


2/23/12


1818B. “.. A guarantee of R15.2 billion has been

approved for the Development Bank of Southern Africa, enabling it to extend capital to poorer municipalities for infrastructure projects. ..”, Budget Speech 2010 by the Minister of Finance Pravin Gordhan, 17 February 2010


2/23/12


1919C. “.. The quest for universal access to electricity

continues. The electrification programme not only provides a modern energy option for our people, but it also has positive socio-economic impact on the lives of ordinary South Africans. We have seen improvements in the education, health, and social circumstances of communities that have been electrified through the grid and off-grid technologies. ..”, 2011 Budget Vote Speech by the Deputy Minister of Energy, Ms Barbara Thompson, MP, National Assembly, Parliament, Cape Town, 26 May 2011


2/23/12


2020D. “.. The Secretary General of the United Nations

has declared 2012 “The year of access to energy services”, and accordingly, the quest for universal access to electricity continues. ..”, 2011 National Council of Provinces (NCOP) Budget Vote speech by the Minister of Energy, Ms Dipuo Peters, Old Assembly Chamber, Parliament, Cape Town, 7 Jun 2011


2/23/12

6. OUR INTEGRATED APPROACH2121

Electricity Services delivery APPROACH IN THE VHEMBE DISTRICT MUNICIPALITY

Employment Creation Strategy Rural Development CampaignRisk Management Strategy INEP POLICY FRAMEWORK Stakeholder Management Sustainability of InfrastructureCost-Effectiveness Strategy Energy Efficiency Programme Finance Strategy Neighbourhood Development Strategy


2/23/12

7. OUR FUNDING PLAN

7.1 ROAD MAP TO SECURING INEP GRANT FUNDING

7.2 JOBS FUND APPLICATION

7.3 OUR BUSINESS MODEL

2222


2/23/12

7.1 ROAD MAP TO INEP GRANT ALLOCATION

2323


2/23/12

7.2 OUR JOBS FUND APPLICATION

JOBS FUND

ENERGY EFFICIENCYELECTRIFICATION LIFE-CYCLE COSTS REDUCTION

REFORESTATION PROGRAMMEACCELERATION COSTS

PUBLIC LIGHTING INSTALLATIONSELECTRICITY DISTRIBUTION LICENSES2424


2/23/12

7.3 OUR BUSINESS MODEL2525Department

of Energy

VHEMBE district MUNICIPALITY

Bridging Finance Funder

(DBSA)

SERVICE PROVIDERS

INEP Conditional Grant

Design Criteria agreementPlanning Technical

InformationTesting and Commissioning

Handing-Over Documentation

Bridging Finance Agreement

Department of Public Works

National TreasurySchedule 8

EPWP Incentive GrantMTEF

commitmentPledging of Grants

Approval (MFMA Circular 51)

Service Level AgreementESKOM

DISTRIBUTION

Asset Ownership & Operation/Maintenance

Agreement

Jobs Fund

Application


2/23/12

8. Project stakeholders

# STAKEHOLDER COMMENTS

1 PROJECT STEERING COMMITTEES OF THE VILLAGE

EXECUTION PLAN, LABOUR UTILISATION, PAYMENT TERMS, SAFETY PLAN

2 THULAMELA, MAKHADO, MUTALE AND MUSINA MUNICIPALITIES

GENERAL INFORMATION, FINANCE REQUIREMENTS, EXECUTION PLAN, PROGRESS REPORTS, PAYMENT MILESTONES, HAND-OVER DOCUMENTATION

3 VHEMBE DISTRICT MUNICIPALITY

4 DEVELOPMENT BANK OF SA

5 ESKOM DISTRIBUTION

6 DEPARTMENT OF ENERGY

7 DEPARTMENT OF NATIONAL TREASURY

8 DEPARTMENT OF LABOUR

9 DEPARTMENT OF NATIONAL PUBLIC WORKS

10 MPHAPHULI CONSULTING

2626


2/23/12

9. RISK ANALYSIS AND MANAGEMENT2727

# Identified Risks Causes Possible Impact Planned Risk Response

1 Injuries to workers and Community Members

Not wearing safety clothing Delays in the execution of the works due to investigations process

Safety induction of the workers & procurement of the required safety clothing

2 Injuries to domestic animals and people

Holes dug for the poles and stays

Injury claims and delays in the execution of the works

Avoid digging excessive holes & protect the dug holes; Ensure that the poles are delivered to site before digging.

3 Unrest/Protests by the workers Delayed payment of wages Delays in the project Have agreed payment dates with the stakeholders

4 Vandalisation of the project Delayed energisation of the completed Project

Financial loss Communicate effectively with the Stakeholders

5 Delayed completion of the projects Incomplete houses Waiting for the completion of the houses

Provide a cutoff date agreed with the communities

6 Delayed energisation of the projects Eskom delays Vandalisation of the completed works

Communicate effectively with the Stakeholders

7 Sustainability of completed Project Poor quality of the works DELAYS in the take-over of the completed Projects

Have the Designs approved by Eskom; Implement the Project in accordance to the agreed Standards and Specifications

8 Delayed execution of the Project Insufficient funding allocation Service delivery protests National Treasury Department to provide security for the bridging finance as per MFMA Circular 51

10 Implementation Capacity of electrification projects

Most Municipalities do not have electricity distribution licenses

Lack of capacity to drive electricity services delivery

Programme execution approach is based on disbursement of funds against milestones achieved successfully and thus encouraging performance and easier monitoring of progress.


2/23/12

10. DEMONSTRATION OF BENEFITS

TYPE OF BENEFIT BENEFIT DESCRIPTION

• DIRECT

• Loan CostsInterest repayment and fees associated with the Bridging Finance (interest estimated @ 8.075%). Discounted because of the security/pledging approval by the National Treasury Department.

• Project Related

• Savings in Escalation Cost

Using BER Indices (2010. Property and Construction Handbook, Davis Langdon), the savings in project cost escalation can be estimated .

• Economies of Scale

As more projects will be implemented simultaneously, there will be savings in the Preliminary and General (P&G) Costs on projects, as contractors may be working on more than one project site. P&G costs usually account for 10-15% of total project costs.

Also, the procurement of materials can be centralised thus ensuring cost-effective procurement and risk management.

• INDIRECT Local Economic Development, Rural Development, Capacity building, UN’s Millennium Development Goals, Training Opportunities for FET students

2828


2/23/12

11. CONCLUSIONS

In addition to the BENEFITS derived from the acceleration of the delivery of electricity services to the households in the Vhembe District Municipality, this Electrification Programme supports and takes forward other Government’s key priorities in the following ways:

A. Encouraging partnership with other Government Departments, Municipalities, Parastatals and the private sector to achieve shared objectives; and

B. Supporting the Government’s job creation agenda through the creation of employment and training opportunities in the Electrification Programme.

2929


Documents

Click to edit Master subtitle style 2/23/12 A PROGRAMME FOR THE ACCELERATION OF THE DELIVERY OF ELECTRICITY SERVICES TO HOUSEHOLDS IN THE VHEMBE DISTRICT