Transcript fbe/fbae - Electricity Governance Initiative – South Africa

FREE BASIC ELECTRICITY/FREE BASIC
ALTERNATIVE ENERGY
March 2012
4/13/2015
1
PRESENTATION OUTLINE
• Background
• Mandates
• Funding
• Implementation Challenges and Possible Interventions
• Status
• Conclusion
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BACKGROUND ON FBE/FBAE
 The government announced a statement of intent in respect of
the provision of free basic services in 2000 and the main areas of
focus were free basic water and free basic energy. Implementation
of free basic electricity programme started in 2003 with the
following intentions:
o
To provide basic energy to poor households to alleviate
poverty.
o
Minimise the health impact arising from the use of certain
fuel.
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BACKGROUND ON FBE/FBAE cont…
o Free
Basic Electricity (FBE) for the provision of both grid
and non-grid.
o Acknowledging
that not all poor households in South Africa
have access to grid or non-grid electricity,
o
provision of FBE sounds unfair to un-electrified households
o
lack of infrastructure for the provision of FBE necessitated Free Basic
Alternative Energy (FBAE) Guidelines for subsidising alternative energy
carriers.
o
Provision of FBAE is more expensive than FBE since most of the alternative
energies are unregulated.
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BACKGROUND ON FBE/FBAE
o Other programmes presently complementing FBE in the Energy
Sector as further measures introduced to address affordability
and protecting the poor:
o Implementation of Inclining Block Tariff (IBTs) even though other
Municipalities currently experiencing challenges with regards to the
implementation.
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BACKGROUND ON FBE/FBAE
o Facilitating
access to electricity through government subsidised
electrification;
o
Free connections provided to Eskom’s low consumption
residential customers; and
o Lower
price increases applied to low consumption domestic
customers. (15% vs general increase of up to 31.3%)
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MANDATE OF PROVINCES IN RESPECT OF FBE
 Section 104 (4) of the Constitution provides for provincial
legislation with regard to a matter that is reasonably necessary for,
or incidental to, the effective exercise of power concerning any
matter listed in schedule 4 of the constitution.
 Section 139 (1) of the Constitution provides for provincial
intervention when Municipalities does not fulfil its executive
obligation.
 MANDATE OF MUNICIPALITIES IN RESPECT OF FBE section 156 (1)
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ENERGY SOURCE GIVEN AS FBE/FBAE
 Provision of free 50kWh of grid electricity per month to all
households with concomitant blocked or stepped tariffs (IBT) for
electricity consumption beyond 50kWh to mitigate the cost
implication of the free basic electricity provided.
 The pilot study suggested that 35 to 60KWh/month was considered
adequate electrical energy to meet lighting , media access , limited
heating needs for a poor household. After consultation and taking
into account the funding aspects , 50KWh was deemed appropriate
FBE amount per month per household.
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ENERGY SOURCE GIVEN AS FBE/FBAE
 Provision of free non-grid electricity to all non-grid electrified
households (connected through the National Electrification
Programme).
 FBAE given to indigent households include:
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Petroleum Products to Unelectrified
Renewable Energy to Unelectrified
o Paraffin, LPG
o Candles and other lighting
fuels
o Fire wood
o Coal/Low smoke fuel
o Biogas
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CHALLENGES - IMPLEMENTATION
Disconnections
 Eskom and Municipalities are using the practice of disconnecting
households and businesses as a credit control measure.
 Defaulting indigents on the Poorest-of-the-Poor (POP) programme
lose their free basic electricity (FBE) monthly entitlement when
their electricity supply is disconnected due to a default in payment
of other services.
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CHALLENGES - IMPLEMENTATION
 Made worse by the fact that FBE does not accumulate if not used
within a particular month and cannot be claimed retrospectively.
Limited funds
 Free basic electricity accrues to a designated POP on a monthly
basis subject to funding availability from a municipality.
Inconsistency in Policy Application
 Between municipalities and Eskom.
 Amongst municipalities themselves.
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CHALLENGES - IMPLEMENTATION
Other challenges include the following
 Lack of indigent policies and registration, verification &
management of indigents.
 Cogta, DoE, SALGA, ESKOM and other utilities are assisting
Municipalities.
 Token collection, enhancement and provision of FBE/FBAE levels
of service in contravention of policy.
 Municipalities to assist beneficiaries on collection and advice on
enhancement.
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CHALLENGES - IMPLEMENTATION
Lack of communication.
- Continues improvements on communication by all stakeholders.
Lack of reporting, monitoring & evaluation system.
- Cogta committed to incorporate this responsibility in the current
restructuring of the Department.
- Coordination of FBS implementation at provincial & municipal
level.
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FUNDING ALOCATION: FBE/FBAE
 Apportionment of the Free Basic Electricity/Energy allocation in
line with the FBAE guidelines.
 The cost of providing Free Basic Electricity and Free Basic
Alternative Energy is included in the MTEF budget allocation of the
Department of Provincial and Local Government resulting in
Municipality revenue generation challenge.
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FUNDING ALOCATION: FBE/FBAE
 Where Service Authorities have been allocated with intergovernmental grants to provide for operating costs in respect of
basic services (other unconditional components of the Equitable
Share), such municipalities shall pass on the benefits of such
grants to targeted indigent households.
 Municipalities must further allocate funds from their budgets for
FBE/FBAE to supplement allocation to cover all the indigent
households.
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PROVINCE
Eastern
Cape
100
75
Free state
100
81
Gauteng
98
59
Kwa Zulu
Natal
86
57
Limpopo
100
81
Mpumalang
a
100
78
North West
98
72
98
72
100
89
Northern
Cape
Western
Cape
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%
%
Config Consu
uration mption
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2011 FREE BASIC ENERGY SNAPSHOT
PROVINCES
December '11
FBE
Total
Indigent
Households
(Census
2001)
Total
Indigent
Household
s(Munic
data)
Eskom
Municipality
nongrid
Total
%
Eastern Cape
939,776
717,759
141,340
218,684
10,096
370,120
39
KwaZulu-Natal
1,162,490
220,269
130,498
143,129
34,202
307,829
26
Gauteng
967,539
233,776
389,358
428,344
0
817,702
85
Mpumalanga
444,112
197,305
84,948
114,273
4,100
203,321
46
Limpopo
744,676
525,959
190,674
104,123
21,928
316,725
43
North West
440,733
143,210
73,949
22,467
126
96,542
22
Free State
425,049
229,435
106,923
373,968
920
481,811
113
Northern
Cape
118,194
95,736
43,587
47,186
300
91,073
77
Western Cape
290,213
204,821
182,508
441,718
301
624,527
215
Total
5,532,782
2,568,270
1,343,785
1,893,892
71,973
3,309,650
69
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Access to Electricity National Progress
Access
- 1996
Access
- 2010
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CONCLUSION
 Estimated national implementation of Free Basic Electricity/Free
Basic Alternative Energy (FBAE) is about 70% to all the qualifying
indigents.
 DoE will review the policy in the future to incorporate new policy
developments.
 Municipalities use their policies to identify the recipients of the
FBE.
 Lack of a monitoring mechanism on the ground makes it difficult
to establish accurate figures.
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CONCLUSION
 Cogta reported that they are undergoing structural changes to
incorporate resources to monitor FBS.
 Poverty alleviation is an important challenge for the country. The
links between poverty and energy are clear, and as such the policy
on free basic electricity is an important key to uplifting the poor.
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