Integrated National Electrification Programme (INEP):

Overall Performance (End of January 2012)

Dr Wolsey Barnard

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Outline

1. INEP performance

2. Allocations for 2012/13

3. Island formations in KZN

4. Flagship interventions

5. Challenges

6. Way forward

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INEP : MTEF Allocations

VOTED FUNDSMTEF 2010/11

R’000

MTEF 2011/ 12

R’000

MTEF 2012/ 13

R’000

MTEF 2013/ 14

R’000

MUNICIPALITIES 1 020 105 1 096 612 1,151,443 1,314,772

ESKOM 1 719 810 1 737 842 1,882,087 1,982,596

NON - GRID 68 200 70 861 86,400 91,152

BASELINE ALLOCATION

2 808 115 2 905 315 3,119,930 3,388,520

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INEP three year grid performance trail

VOTED FUNDS

(Connections)INDICATOR

MTEF 2011/12

R’000

MTEF 2010/11

R’000

MTEF 2009/10

R’000

ESKOMAnnual connections % 85% 100% 100%

Connections - Jan 12 59 820 136 597 149 901

MUNICIPALITIESAnnual connections % 45% 75% 98%

Connections - Jan 12 26 863 54 872 70 567

CONNECTIONS

TO DATEJan 2012 86 683 191 469 220 468

PROJECTED

CONNECTIONSBy completion date

218 000

(April 2014)

219 500

(April 2013)

230 500

(April 2012)

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TOTAL ALLOCATION

R’000

Planned Connections

Total Expenditure to

dateR’000

Connections Achieved to

Date

127 861 10 000 85 860 7 492

Non grid – Solar home systems

2011/12 Financial year

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Various Municipal and Eskom infrastructure projects are funded, related to the building new substations, upgrading of existing substations and inter- connecting High Voltage (HV) lines:1.Eskom

• 42 projects under construction, mostly in KZN and EC• Different stages of completion – next 6 months

2.Municipalities • 45 projects under construction • Different stages of completion– next 12 months.

Infrastructure Projects

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Allocations for 2012/13

Province BacklogEskom allocations

(R’ 000)Munic allocation

(R’ 000)

Eastern Cape 621 081 488 339 279 400

Free State 196 529 39 121 79 300

Gauteng 846 669 104 882 188 000

KwaZulu Natal 827 720 510 291 234 000

Limpopo 296 878 235 027 125 300

Mpumalanga 221 185 111 282 74 943

Northern Cape 48 810 36 107 59 900

North West 159 338 246 989 49 300

Western Cape 202 885 110 048 61 300

Total 3 421 094 1 882 087 1 151 443

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Island formations in KZNIslands already addressed 5,673 Completed

Planned for 2011/ 2012 3,382 Funds from re-gazetting process and Eskom internal

funds

To be done (2013/14) 7,001 Funds obtained from Eskom savings in 2011/12 year

Current Island Backlogs 10 383(16,056)

Planned Delivery of Island

Year Connection Capex

2011/12 3,382 R50,730,000

2012/13 4,500 R67,500,000

2013/14 2,501 R37,515,000

Total 10383 R155,745,000

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Flagship Interventions

Special flagship interventions are undertaken, such as:

1. Engcobo

2. uMsinga

3. Maluti-a-Phofung

4. Masibambisane Rural Development Initiative

5. King Sabata Dalindyebo (KSD)

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Challenges• Municipalities do not report on regular basis – monthly reports, quarterly and

annual evaluation reports.• New Councillors and officials have not signed contracts in time this year due to

new councils and new agendas, hence the majority of municipal are about 4 - 6 months behind with the start of 2011/12 financial year projects.

• Majority of Municipalities are not performing as required in the contract. Internal procurement processes takes to long, even up to 7 months to appoint the consultants and just as long to complete the appointment of the contractors.

• INEP had to implemented emergency measures to ensure that connections targets are been reached by end of financial year.– During re-gazetting funds were withdrawn from those municipality that had

started late with the identification and appointment of consultants.• Municipalities use electrification funds to do upgrading of existing networks.• INEP Operational budget not sufficient to plan, implement and monitor projects

effectively – current operational budget is less that 0.2 % of fund:– Can not conduct effective planning– Limited monitoring

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Challenges (cont..)• Limited funds, received 4.2 times more applications from municipalities than

what is available for the 2012/13 financial year. For the last 6 years INEP received about 50% of the funding as projected in 2003/4.

• Municipalities signs contract with the Department for connections and change projects without notification or reduce connections due to cost.

• Eskom and municipalities performance are decreasing due to twice above inflation rate increases of electrification costs.

• Shortcomings in EDI is starting to have a very negative effect on the delivery of new connections.

• INEP resources are stretched, since more and more operational involved in municipal projects.

• In addition, to the challenges mentioned above, there was a decrease in real terms of the electrification allocations from National Treasury over the last five years, and as a result the number of connections are decreasing, while the natural growth rate are between 100 000 to 150 000 houses per annum above the number electrified each year. Hence universal access can never been reached under the current conditions.

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Way forward• Need to address EDI challenges as a mater of urgency – having

negative effect on electrification delivery. • INEP capacity in terms of human resources will have to be

strengthened, especially in Planning, KZN and EC regions and to render assistance to struggling municipalities.

• Approval to be give by NT to allow for multi year planning and budget to be implemented.

• It is of no use to make service delivery the key delivery of Government, but National Treasury keep on decreasing INEP operation budget (to plan and manage the fund), while the annual allocations budget for connections increase with inflation, while the connection cost are increasing annually by 15% for the last three years.

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Way forward (..2)

• Tighter control over performance of municipalities – Provincial Energy Forums, withdrawal of funds if not utilized immediately;

• Have progressed well with negotiations with DBSA to combine INEP and ‘soft’ loans for electrification projects;

• Selected non-grid roll-out projects to rest of country – INEP assistance to Municipalities.

• National planning function to be strengthened within INEP• All 2009/10 and older unused funds have been re-called by NT.• Agreement with Special Investigation Unit regarding funds be

misused – Closer co-operation between INEP, Provincial Governments, NT, CoGTA and MIG allocations.

• National Electrification Indaba – 15/16 March 2012 in Durban.

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Thank you