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Minister Lynne Brown briefing to the portfolio committee on energy on cabinet approved Eskom package

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Minister Lynne Brown briefing to the portfolio committee on energy on cabinet approved Eskom package

Chairperson, as you may be aware, Cabinet approved a package to support a strong and sustainable Eskom to ensure that the energy security of the country is maintained, as well as supporting GDP growth. This package was based on recommendations from an Inter-Ministerial Committee (IMC) comprising of the Ministers of Finance, Energy, Cooperative Governance and Traditional Affairs and myself, which reviewed an extensive set of options available to ensure energy security. The package is a combination of tariff adjustment which the Regulator will consider through its regulatory process, cost containment by Eskom and an equity injection which the Minister of Finance will give more detail in his Medium-Term Budget Policy Statement in October. It is also clear that a discussion on the long-term structure of the energy industry and the role of Eskom is now more pronounced.

Further Chairperson, It is the IMC’s view that this package should also assist Eskom to continue and complete the construction of the new power plants.

In this regard chairperson, in 99 days from today, Eskom will synchronise the first of Medupi’s six units on 24 December. I was able to witness myself the progress that has been made in the construction of that power plant when I visited the site this past weekend. I must say that I was amazed at the work that has gone into the project and that South Africa is constructing what would be one of the largest power plants in the world.

Looking at the vast area the project covers and at structures as tall as the Carlton Centre in Johannesburg, it is clear that there is a giant in the making, whereas seven years ago there was nothing. That’s exciting.

It is exciting because Medupi and indeed Eskom’s bigger electricity capacity expansion programme will restore South Africa to a situation of secure electricity supply within the next few years. And it is exciting because these projects are bringing significant economic and socio-economic benefits to our country at a time when we need it dearly.

It is estimated that Medupi alone will grow South Africa’s gross domestic product by about 0.35% per year.

Job creation and skills development have occurred on an enormous scale in this area: close to 14 000 people are coming through the gates to work at the construction site every day. Jobs have also been created in the development of supporting infrastructure, including the large new Grootegeluk coal mine, as well as roads, housing and sewage works construction.

Medupi is expected to boost Lephalale’s economy by about 95% a year. Just looking at the period from April 2013 to date, local suppliers to the Lephalale area have benefited substantially, having won 12 out of 22 contracts and 100 out of 167 purchase orders.

And there has been a significant effort by Eskom and its contractors through the Medupi Legacy Programme to address the surrounding community’s immediate socio-economic needs including health, education, skills and enterprise opportunities and general infrastructure development.

I am aware that Medupi has had challenges and I’ve been told that there is a long way to go before the whole power station is completed. My Department will follow the progress keenly and I expect that Eskom would have learnt invaluable lessons in tackling future mega projects.

It will be some time before South Africa’s energy shortages are a thing of the past. Until then and even after that, we should all be aware of our shared responsibility in ensuring not only sustainable energy supply but also sustainable energy consumption

In conclusion, I would like to say Eskom has turned the corner with Medupi and I can confidently say that the countdown has officially started.

I thank you

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Page last modified:16/09/2014 13:40