Address by the Deputy President, Phumzile Mlambo-Ngcuka, at
the Launch of the National Energy Regulator of South Africa, Sandton Convention
Centre, Sandton, 22 November 2005. Honourable Minister of Minerals and Energy,
Lindiwe Hendricks, Honourable Ministers and Deputy Ministers, Premier
of Gauteng, Mbazima Shilowa, Chairperson of the Parliamentary Portfolio Committee
on Minerals and Energy, Nathi Mthethwa, Members of the Parliamentary Portfolio
Committee on Minerals and Energy, Councillors, Chairperson of National
Energy Regulator, Collin Matjila, NER Board Members and NERSA Regulator
Members, Your Excellencies, Members of the Diplomatic Corps, Members of
the South African Utility Regulators Association (SAURA), Members of the African
Forum for Utility Regulators (AFUR), Members of the Regional Energy Regulation
Association (RERA), Staff of the NERSA Secretariat, Distinguished guests, Ladies
and gentlemen: It is very gratifying indeed to be afforded the opportunity
to address you on the occasion of the launch of the National Energy Regulator
of South Africa. On behalf of the Government and people of South Africa, I congratulate
all the new board members as well as members of the secretariat. I would also
like to extend a very warm welcome to all our distinguished guests, some of whom
have travelled from across our continent, in a move which symbolises the interconnectivity
that is being achieved through the provision of electric power.. Few among
us would be aware that South Africa was one of the first countries in the world
to use electricity commercially. Yet this is true. The diamond mining in Kimberly
led to electricity streetlights being switched for the first time in 1882, only
three years after Thomas Edison started supplying electricity in New York. This
was before London had electric street lights. However, as we know, these were
very different times and, because of racism and privilege, for decades this resource
was to be enjoyed by a minority of South Africans. A mark of the non-racial
democratic statehood which we achieved in 1994 was to banish such crude notions
which had done so much, over such a long time, to damage race relations. We are
now able to reap the benefits of freedom. In 1995 the National Electricity
Regulator was established to replace the old Electricity Control Board, to ensure
equal and universal access to electricity. I would like to take this opportunity
to congratulate the National Electricity Regulator (NER) for the ten years of
successful regulation of the electricity industry in South Africa. I would particularly
like to thank the past and present NER Chairpersons, Board Members and Chief Executive
Officers for their contributions in the electricity industry. A strong regulatory
system allows for the certainty which encourages international investment, confidence
in the long-term reliability of supply required by industries in the energy business,
and lays down a transparent system which can be benchmarked against any similar
system in the world. Clearly, the arena of energy in which the national
energy regulator operates is one of the key drivers of a vibrant and competitive
economy as demonstrated by the diversification of the South African energy scene. Today,
our fundamental reliance on coal co-exists with important new developments in
natural gas and a strong commitment towards including cleaner energy technologies
from clean coal, through natural gas to eventually having a portion of our energy
generated by renewable resources. The regulation of the energy system is
vital to the country and even plays an important role in South Africa's relationships
with all our neighbours, from the natural gas pipeline to South Africa to the
interconnected electricity transmission grids. Undoubtedly, effective and
efficient regulation is pivotal to South Africa's economic growth. Indeed, as
of 2005, the energy sector has contributed 15 percent of the GDP [CHECK PLEASE].
Accordingly, the establishment of a single energy regulator is critical to the
promotion of investment, diversification of sources of fuel, and the need for
central coordination of the energy industry. In this regard, the infrastructure
development of energy, like other utilities such as telecommunications, transport,
and water and sanitation, is central to sustainable development and to the prospect
of achieving prosperity for our country. These utilities contribute towards creating
an environment that promotes investment across sectors and ensuring that we are
the better able to address poverty and underdevelopment. They form our armoury
for progress. In examining the energy industry in South Africa, energy infrastructure
needs particular attention if it is to contribute effectively to the growth of
the economy; and it is well-known that we are seeking enhanced growth. The
veins of the energy supply system are the pipelines which connect the nodes of
supply and market. In the area of gas this is a developing infrastructural necessity,
led by a government company working closely with major energy companies. The
liquid pipelines will develop out of the need to supply liquid fuels from the
refining resources at the coast to the markets inland. In this instance, another
government company, Petronet, is actively operating the present system and considering
upgrades and new liquid pipelines. Much work in liquid and gas pipelines
will take place in the future. We are confident that public-private partnerships
(the basis on which our new democracy is built) in these projects will spur development
of industries at the important industrial hubs. In these developments, the petroleum
pipeline and gas regulators will play an important role. The inherent worth
of the electricity industry and its contribution to the development of the country
cannot be overemphasised. As we know, surplus generation capacity is quickly diminishing
and provision needs to be made for growth. A significant contribution to these
capacity requirements will for the first time be met by private sector generators.
There is no doubt that generation and transmission must respond to the
growing demand. While we have unprecedented levels of electrification in South
Africa, we are still faced with the challenge of ensuring sufficient access to
rural communities. These challenges present fantastic opportunities for the electricity
industry to spearhead economic growth and help bring a better life to all our
people. Ladies and gentlemen: It is very important for NERSA to do
more to integrate energy resource planning in a manner that is beneficial to all
of us. This planning must be done in a manner that takes into account all energy
carriers and not only electricity. The vision of a restructured electricity
distribution industry, in which all electricity consumers with the same requirements
receive a uniform quality of service at a uniform price, has started to become
a reality. One of the challenges in this sector is to ensure that the electricity
infrastructure is recapitalised and managed by skilled technical resources. Regulatory
oversight of the total value chain of electricity is essential to ensure that
end use consumers benefit from low and efficient electricity prices that are sustainable.
We are all aware that investors, both in electricity infrastructure and
in the economy, want assurance of price predictability and stability. Over
the past three years, the developments in natural gas have been small in their
total impact, but significant in South Africa's move to provide an environmentally
cleaner fuel resource. The numbers show this movement. The connection of
Mozambique and South Africa through the natural gas pipeline increases our economies'
use of gas. The vision of importing natural gas in the form of liquefied gas from
the world markets, once competitively priced, will add to the country's energy
diversification and to the move to cleaner fuels. All these aspects of gas require
good and transparent regulations from our energy regulator. The Mozambique-South
Africa gas pipeline project, which cost $1,2b, demonstrates what African countries
partnering for the development of their people can achieve. It is a useful example
for others to emulate within the context of the New Partnership for Africa's Development,
or Nepad. There is confidence that more gas will be discovered and we anticipate
that, together with other African countries, we will use this resource to accelerate
development. We are all very pleased to learn that more natural gas has
been found recently in Mozambique. We look forward to expanding our joint natural
gas venture for our mutual benefit. Piped-gas currently makes up a small
but growing percentage of South Africa's energy mix. Piped-gas from coal was previously
supplied to industries in Kwa-Zulu/Natal, Mpumalanga, Gauteng and the Free State.
We are also looking forward to the development of new gas fields in South
Africa. For this to happen, more exploration along our coast needs to occur and
the Petroleum Agency of South Africa (PASA) is playing a key role in encouraging
gas and oil companies to prospect along our coast. The National Energy Regulator
is thus tasked with ensuring the orderly development of the piped-gas industry
and with facilitating investment. We must not forget the ongoing South African
offshore gas developments which have been in progress for many years now and have
received a boost in the deep water exploration. PASA is presently working
on this outer continental shelf extension project. The potential oil and gas in
this region will have a profound effect on our future. Our energy regulator will
certainly be faced with new, exciting and paradigm-changing challenges. NERSA
will also be required to regulate the petroleum pipelines industry. This industry
has not previously been subject to economic regulation but will now be under to
a transparent regulatory process. Transnet, through its subsidiary, Petronet,
is the main player in the petroleum pipelines industry. It has approximately three
thousand kilometres of pipelines and a new multi-product pipeline is under consideration. NERSA
will face the challenges of promoting the sustainable and orderly development
of the petroleum pipelines industry, promoting competition and promoting equitable
access. New players will now be able to import petroleum products and have them
transported to the main markets. One of the pre-requisites for the socio-economic
growth of our continent is the development of basic infrastructure. We cannot
overemphasise the role regulation has to play in promoting the right framework
for infrastructure development and integration. This is the reason why,
in adopting the framework document of Nepad, we recognised the need for the establishment
of organisations such as the African Forum for Utility Regulators (AFUR). The
implementation of a harmonised regulatory framework will fast-track and facilitate
the implementation of integrative infrastructure projects in pursuit of the socio-economic
development of Africa. The National Electricity Regulator (NER) must be
praised as one of the institutions in South Africa to have quickly aligned itself
to the Nepad initiative and played a pivotal role in the launching of AFUR. We
are certain that the National Energy Regulator (NERSA) will continue to play a
leading role in the development of AFUR as regulatory harmonisation and development
on the continent remains critical to the success of Nepad. It is further
expected that NERSA will contribute to the advancement of regulatory practices
applicable to the African continent, including regulatory capacity building and
skills development, and to complement the principles set out in the AFUR Framework
on Utility Regulation in Africa. In closing, permit me to wish the National
Energy Regulator success in its endeavours. I am confident that working with other
partners on our continent we will contribute to the goals and initiatives of the
African Union towards making Africa both developed and prosperous. We will provide
a better life for all. Congratulations to all those involved in the launch
of NERSA. We await, with great expectations, NERSA's contribution to the objectives
of this better life for all.
Thank you. |