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Ministry of Minerals, Energy and Water Resources (MMEWR)
MINISTERIAL STATEMENT TO PARLIAMENT
17/03/14
MINISTERIAL STATEMENT TO PARLIAMENT POWER SUPPLY SITUATION AND A RESPONSE TO THE LEADER OF OPPOSITION 12 MARCH 2014

MINISTERIAL STATEMENT TO PARLIAMENT

POWER SUPPLY SITUATION AND A RESPONSE TO THE LEADER OF OPPOSITION 12 MARCH 2014

17 MARCH 2014

I am grateful to you, Mr. Speaker, for giving me an opportunity to give an update on the power supply situation and make a few remarks on the 12 March 2014 Statement by the Leader of Opposition.

2.    Load shedding experienced by our country from the week beginning Monday 3rd March 2014 is deeply regretted.  As we all know it is necessary to save essential services using limited electricity supply available to us during times when demand exceeds supply

3.    Mr. Speaker, without continued support of the Government of the Republic of South Africa, the extent and duration of the load shedding would have had far reaching consequences on our economy.  I, therefore, once again, thank the South African Government for their consistent support to our country.

4.    Mr. Speaker, I thank everybody for their understanding in enduring the hardships of load shedding.

5.    A lot has been written and said, as exemplified by 12th March 2014 hurriedly prepared statement by the Leader Of Opposition (LOO).  A lot more will continue to be said and written, both in good and bad faith.  We shall continue to be doused in a plethora of speeches and articles meant to inform and misinform. 

This is the beauty of our Democracy.

6.    I, therefore, feel obliged as the portfolio Minister to clear the misconceptions created by the statement by the leader of the opposition and inform the nation of the status of our power supply situation.

7.    Mr. Speaker, provisions in the National Development Plans NDP 8, 9 and 10, show how the energy planning process has evolved over time.  I refer the Honourable Members to the National Development Plan Extracts in APPENDIX 1.

8.    Mr. Speaker, the first paragraph of the LOO’s Statement on Power Outages, which he also refers to as “disruptions” have been a subject of three Ministerial Statements, in February 2008, February 2013 and August 2013 and have also been a subject of numerous talk shows. 

9.    Mr. Speaker, in the second paragraph the LOO talks about the “Ruling Party’s” lack of vision.  As advised earlier, the vision of this country on the provision of power is very clear; NDP 8 dealt with provision of affordable power not losing sight of the need to build financial reserves that were to be used as leverage when negotiating power supply agreements; NDP 9 focused on the need for self-sufficiency and with NDP 10 focused on the creation of assets to make the country self-sufficient.     

As for the closure of the Selebi Phikwe Power Station, a proper appraisal was done on the state of the assets and a decision was taken to close down the Power station.

10.   Mr. Speaker, I wish now to refer to the contents of the third paragraph of the LOO’s statement.  Mr. Speaker, from the National Developments Plans, the Policy direction was clear and the issue of achieving self-sufficiency or having the necessary leverage to ensure that the country had the necessary wherewithal to construct a power plant was equally well defined.   What failed the country was the project execution of the 600MW Morupule B Power Station.  This is something I conceded in my two Ministerial Statements to this August House.  The development of Orapa 90MW, renting of 70MW at Matshelagabedi and the development of the Morupule B Power plant with the delivery of the first section being January 15 2012 all took into account the reducing level of imports.  In any case, the Agreement was extended to 2015, based on (100 + 200)MW level of imports.

11.   Mr. Speaker, National Development Plans are very clear on future provision of power in the country, the LOO’s statement on the strategy of the provision of power being short sighted, which it is not, should be seen in the context of achieving political mileage out of a very trying and unfortunate situation.

12.   Mr. Speaker, let me now address some of the points raised in paragraph 4 of the LOO’s Statement. Over and above what I said on 12 March, 2014, regarding the change of Ministers responsible for energy in the neighbouring country, in the 14th February, 2008 Parliamentary Statement by the then Minister of Minerals, Energy and Water Resources he said and I quote

“Implement a pilot project to operate Bulawayo Power Station using coal and, if the project is successful, will receive a 50% share of the station’s output, estimated at 60MW.”

We cannot impose our will on a Sovereign State.  Despite our proposal that part of the P500million GoB credit line that was put in place at the time was to be made available the project was unable to get off the ground.

13.   Mr. Speaker, as for the 3x60MW at P425million, the terms that were being offered by the IPP were found to be commercially unattractive and negotiations could not proceed.     

14.   The full text of Paragraph 43 of the Committee of Supply of 2010 which the Leader of Opposition quoted an extract from reads “To further enhance availability and security of supply in the medium to long term in a sustainable manner, “LOO” a 250 MW gas (coal bed methane – CBM) fired power station is to be developed by an Independent Power Producer (IPP) called Karoo Sustainable Energy (KSE) who was awarded a tender in July 2008 to undertake this investment. ”LOO”  This project will take advantage of the 90 MW Emergency Power Facility I mentioned earlier on as this facility is designed to use liquid fuel (diesel) or gas (CBM).  The 90 MW Emergency Power Facility will be switched from diesel to CBM once the quantities of the CBM have been established.  Other Investors show considerable interest in CBM and Coal to liquid development.” You will note that the extract by the LOO is out of context.

15.   Mr. Speaker, quoting what was said leaving out the context creates serious distortions.  What the LOO tried to achieve through the distortions is to appeal to people’s hearts, which are a source of emotions, as opposed to appealing to the intellect of the body politic.  This is, of course, an easy way out but not the best as through distortion of facts one could be perceived to be entering the realm of intellectual dishonesty.

16.   GoB proceeded and did develop the 90MW plant at Orapa as a dual fuel plant at a total cost of about P1billion.  I do not blame the Leader of Opposition as he prepared the statement hurriedly, in the process managing to extract one liners that were intended to enable him gain maximum political mileage.

      

17.   As for the remarks made about our Vice President, captured in APPENDIX 2, which remarks the LOO presumably felt we were so naïve as not to realize how sarcastic they were, all I can say is that they were most unfortunate and came both as a surprise and shock.  The Vice President’s intellect and humility are well known.  He has led a distinguished career and his reputation precedes him.  He has earned his respect and he deserves respect.

18.   The Bankable Feasibility Study, funded by AfDB and IBRD, for the Concentrating Solar Thermal Power Plant was completed last year (2013).  The estimated cost of a 100MW Concentrating Solar Thermal Plant is USD600million, about P5.4billion.  In comparison to the 600 MW coal fired plant at cost of P8 billion (approximately P1.33 billion for 100 MW)

19.   Mr. Speaker, the need to follow-up on the five points the Leader of the Opposition is asking to pursue does not arise, as the Ministry is already working on issues raised. 

20.   Morupule B Plant Status

Mr. Speaker, allow me to give a brief on the status of Morupule B Plant.

UNIT 1:

Unit is currently running and will be taken out of service, for boiler modifications, once the three other Units are brought back into service and at an appropriate time.

UNIT 2:

This is the only Unit of the four Units which has not yet been taken over by BPC.  The boiler has been modified as per the recommendations of the designers and is expected to be brought in service by the end of April.

 

UNIT 3:

Boiler modifications have been completed is expected to be brought into service by the end of March 2014.

UNIT 4:

The Unit was shut down on 6th March 2014 on account of boiler tube leaks.  The boiler will be modified and the timelines of its being brought back to service are still being evaluated.

 

21.   Mr. Speaker, impression has been created that this house, the Business community and the nation at large has not been kept informed on the power situation and Morupule B Project in particular.  I wish to categorically state that the reverse is true, this August House, the Business community and the public have been kept informed.  For example there have been no less than 9 radio talk shows, two Ministerial Statements, excluding this one, one Question Time on 28th of February 2014, as well as one site visit by the Honourable Members of Parliament.  Some details are of when information was shared are contained in APPENDIX 3.

 

 

 

 

22.   LOOKING TO THE FUTURE

In November 2013, the Government, through BPC, brought in the Boiler designers, from Germany, to investigate Unit 2 and 3 boiler failures.  They advised that the manufacturing of the boilers was not as per original designs.  Modifications to boilers 2 and 3 are completed and the units are to be brought into service before the end of April 2014, barring the unforeseen.

 

On 4th March 2014, I met the new president of CNEEC, the main contractor.  I am pleased to advise he made a firm commitment to address our concerns.  At site there has a marked improvement in terms of responsiveness and cooperation with other stakeholders by CNEEC.

 

Mr. Speaker, My Ministry is also reviewing various options, in terms of procuring power, from neighbouring countries to ensure we have belts and braces for the firming up of the country’s electricity supplies.

 

Mr. Speaker, Government’s commitment to ensuring that we achieve Project closure to the development of the power plant is total, with failure being no option.

 

In my February 2013 statement to this August House I said and I quote “A time will come, as it must come, to review what might have been done better”.  At this juncture our energy and focus should be on resolving the current power crisis rather than engaging in meaningless witch hunt informed by political expediency.

 

23.   Mr. Speaker, I thank you.

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