Posted: 2008-02-25 23:58 Power crisis  Presenter: David Williams Guest(s): Buyelwa Sonjica - Click here to listen to the interview Summit TV speaks to Minerals and Energy Minister Buyelwa Sonjica about the electricity crisis and the possibility there may be problems on the way DAVID WILLIAMS: Welcome to Face to Face. I’m talking to Minister of Minerals and Energy Buyelwa Sonjica about energy and mining. Minister, these are the two portfolios you have - looking at the load shedding we had that terrible time at the end of January and early February, but everything has been okay for a couple of weeks - being South Africans we now think everything is okay but it’s not… BUYELWA SONJICA: It’s not. We are very tight at the margins of demand and supply of electricity. Generally on energy - even on fuel - we are at tight margins. So indeed it’s not yet over - we will find stability and normality with this situation only in 2013 so we have to be prudent in the manner in which we use energy. That’s why we are embarking on energy efficiency in a vigorous way. DAVID WILLIAMS: You’ve got a lot to worry about - there's the electricity itself, then there’s coal that falls under your portfolio to some extent, and then there's diesel. One worries people haven’t expected diesel demand to be what it is because of generators… BUYELWA SONJICA: Quite correct. There is what we call the open turbine generation of capacity - in that case we use a lot of diesel. Also, the demand for generators has led us to have more demand for fuel and diesel - as a result that’s tapping supply, and we will indeed experience problems in the near future if we are not careful. So that’s an area we need to manage very carefully, and we are indeed monitoring it very closely. DAVID WILLIAMS: Looking at how we got here - and obviously you don’t want to point fingers at the culprits for too long - but it remains puzzling that the prediction was made in a government White Paper 10 years ago that power would run out by 2007. What’s puzzling there is it wasn’t Eskom - it was government’s own White Paper that said we needed to build more power stations… BUYELWA SONJICA: Indeed. We have conceded that some mistakes were made in terms of putting in enough investment at the appropriate time. We have invested in infrastructure development, but we are a bit late in terms of what has been happening in South Africa. The real problem is that we never anticipated the rate of growth of our GDP that we are enjoying today… DAVID WILLIAMS: Except 10 years ago you did say that power would run out even on the predictions from 1998… BUYELWA SONJICA: That’s correct, but projections remain projections. When the projections become reality - it’s only then that you realise that you were actually right. There was some delay in putting more money into it, and indeed we are now suffering the consequences of that. DAVID WILLIAMS: It could be an anomaly that Eskom - you’d think they would report to you as it’s energy, but they report to Public Enterprises - so to some extent you are blamed for another Ministry’s faults. Has that been an issue? On the one hand you’re accountable - on the other hand you’re not… BUYELWA SONJICA: Maybe. I need to talk about the mandate of the Department of Minerals and Energy. I know that’s been confusing a lot of people. I’m responsible for security of supply of energy in the country - what that means is in terms of the policy I’m responsible for developing I need to create an enabling environment for all the service providers to be able to deliver the electricity or fuel we need. Eskom is a state-owned enterprise, and given that electricity distribution and generation is partly a monopoly - it’s a national monopoly which means electricity generation is more a function that’s handled by government. DAVID WILLIAMS: But isn’t that a problem for you? You’ve got the mandate and yet you don’t control Eskom? BUYELWA SONJICA: In their operations they implement policy - so I come in as a regulator, I monitor them indirectly. It is a slightly complex situation because in terms of daily activities they report to the Minister of Public Enterprises. DAVID WILLIAMS: Do you think that could have been part of the problem? Two departments responsible neither focusing on the job… BUYELWA SONJICA: I wouldn’t say so because we collaborate a lot. We work very closely. As a result we have established a inter-ministerial committee that brings myself, the Minister of Public Enterprises, the Minister of Science and Technology and the Minister of Trade and Industry together to deal with all issues related to infrastructure, and energy infrastructure in particular. So I wouldn’t say that is a serious problem indeed. DAVID WILLIAMS: You mentioned the regulator - one of the issues is the National Electricity Regulator who approves the price increases. Consensus is there should have been more price increases earlier - now we’ve got to catch up. What influence are you bringing to bear there? BUYELWA SONJICA: It’s difficult. I’m the appeal authority, and the regulator to a certain extent enjoys some independence. It’s only when there’s a serious problem between the two parties that I can intervene as an appeal authority. We need to appreciate as South Africans that electricity in South Africa has been very cheap - because of the large reserves of coal we have we’ve been able to generate electricity very cheaply. Indeed those days are over. We are beginning to learn that electricity is not an infinite commodity - rather it’s a finite commodity. DAVID WILLIAMS: Looking at the cuts the mining industry has taken it hard - the effects have been pretty huge, certainly at that time of the cuts. Now Gold Fields is talking about laying off 7,000 workers. The National Union of Mineworkers says they shouldn’t have to take the burden of this through layoffs. Is there any way that government can alleviate that? BUYELWA SONJICA: We are going to call an urgent meeting. Gold Fields has already announced that it will be retrenching 6,900 workers. We are very concerned about that. It’s going to impact on our people in a negative way - we will have a lot of people unemployed, and we are going back to higher levels of poverty. All of those consequences would be negative for South Africa and the economy, so as government we are quite concerned. We will be engaging … DAVID WILLIAMS: What are you offering Gold Fields? BUYELWA SONJICA: It can’t be Gold Fields only. It would be the industry as a whole. I think it would be fair if we engage with the industry and look at the impact of this electricity situation on their production and investments. DAVID WILLIAMS: Is it possible that you would give tax concessions, or some other concessions? BUYELWA SONJICA: We will find a way. I don’t want to pre-empt the outcome of the meeting that we’re going to have - but we will be looking at strategic ways of dealing with the matter. DAVID WILLIAMS: In retrospect would it have been easier if you planned differently - not to penalise the mining industry so much? It seemed they took the brunt of these cuts. Possibly with better planning and more consultation they might not have had it so bad... BUYELWA SONJICA: Maybe you are right in that, but I must say that other industry sectors have also been affected. Agriculture for an example has said they’ve been adversely affected, and if agriculture is affected then that would have an impact on food security - so there may be a looming crisis on that side as well. It’s just that the mining sector has been very vocal - it’s something that’s been in front of our eyes. All the other sectors have been affected. I must say that we need to do more to ensure there is security of supply. But even with the industries I think we still can be able to get maximum benefits by consuming less electricity. I think all of us including industry have been wasteful in the manner in which we have been using electricity. So the message applies to individuals and industry, and I must say that some industries are beginning to say they don’t foresee problems in terms of their production, in terms of their investments. Even as they are doing whatever they are doing within this allocation of 90% of electricity they still think they can get maximum benefit. www.summit.co.za Transcripts: onsub1@avusa.co.za ds/met Comments Related to this transcript: Comment on this transcript... Name : Email : Comments :