Transcript Document

DEVELOPMENTAL
LOCAL GOVERNMENT
AND ELECTRICITY
DISTRIBUTION
INDUSTRY
RESTRUCTURING
MUHLOTI RUSSELL BALOYI
______________________
18 OCTOBER 2006
MIDRAND
Outline
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Purpose
Global perspective
African context
South African context
EDIR and DLG
Current reality and financials
Key issues on the current debate
Developmental Local Government
Energy Planning
NMA Resolution
Purpose
• Locate Electricity in the context of Developmental Local
Government
• Relationship between service delivery in general and
electricity function
• Perspective on the EDIR
TAKE AWAY
Electricity plays a critical role in addressing the
developmental needs of our communities
Millennium Development Goals
• The MDG’s represent an advancement in the way
in which the developmental Agenda is set with
clear objectives, targets and deadlines which
allows for monitoring and evaluation at any point in
time
• Universal access to energy services by 2014 =
necessitate full adoption and implementation of
decentralization policies, strategies, etc
• The MDG’s should be used as the basis for our
local policies and strategies
African Context
• Not recognized as a distinct sphere of
governance
• Limited powers and functions
• Lack of Accountability
• Limited resources
• Institutional capacity
• Legislative framework
• The sectoral model of decentralization used by line
ministries delay the empowerment of local government
and improved service delivery
SA Context
All spheres of government are distinct
spheres of governance and plays a
pivotal role in economic growth and
development in all areas of South Africa.
Local Government is recognised by the
constitution and other legislations, and
located at the heart of service delivery
to facilitate development.
SA Context cont…
Section 73(1) of the Local Government: Municipal Systems
Act 2 of 2000 provides that a municipality must give effect
to the provision of the constitution and –
– Give priority to the basic needs of the local community;
– Promote the development of the local community; and
– Ensure that all members of the local community have
access to at least the minimum level of basic municipal
services.
Not just ELECTRICITY
SA context cont…
• The overall government approach to service delivery
shows that planning and authority on the delivery of
basic services is devolving to the implementation level,
which is developmental local government .
• This approach is clear from the restructuring of the health
sector, water, housing, etc, that have seen local
government assuming more responsibilities.
ELECTRICITY MUST FOLLOW
Reality
• The Electricity Distribution Industry is a
highly Contested Environment, and the
varying EDI desired End State and
vision amongst key industry players
creates a major challenge to the
process. Revenue base and input for
development in LG
Reality
• Municipalities are variable in their capacity to
discharge their constitutional mandate, and it must
be noted that the level of governance, resources,
capacity and systems differ from municipality to
municipality. It should therefore be acknowledged
that the impact of the REDS to municipalities will
differ between categories of municipalities.
LG Revenue Streams
(Budget Analysis)
Incme per Category -2004/2005
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Gr oup 1
Gr oup 2
Gr oup 3
Dis tr ict
Wate r
14%
12%
9%
6%
Ele ctr icity
34%
34%
22%
28%
Pr ope r ty Rate
18%
18%
11%
21%
5%
5%
6%
Sanitation
Re gional Le vie s
Re fus e Re m oval
Gr ants
Exte r nal Inte r e s t
2%
5%
6%
13%
11%
35%
2%
Othe r
10%
12%
7%
13%
1%
2%
46%
7%
3%
26%
7%
3%
1%
0%
Inte r nal Inte r e s t
M e tr o's
2%
12%
The current debate
• National vs. individual interest
• Possible compromise of Blue Print objective
• ERAB:Dual Regulation vs. single regulator and
definitions
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Open the non negotiable, e.g. PE or ME
Implications for cat B municipalities
Benefit and role to none distributing munics
Service provider and or service authority
ESI
Investors
Generation
Transmission
Distribution
Customers
Developmental LG
ESI in the Context of Service delivery
Operations
Balancing competing needs
Communities
ED & general
service delivery
Local Energy Strategy
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A comprehensive PLAN for the
municipality (covers municipal
functions AND all city/town/ village
activities)
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Based on integrated energy
planning – DEMAND led and crosssectoral
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Promotes sustainable energy
approaches & practices at the local
level within a clear vision of future
city development
A planning tool/
mechanism based on
partnerships between
different levels of govt,
utilities, NGOs, business
etc.
Local energy cont…
Local energy cont…
NMA RESOLUTIONS
1).SALGA recognises
the immense responsibilities
that are progressively devolving to local
government and call for attention to the task of
building local government capacity in line with
project consolidate, as opposed to disempowering
municipalities in electricity distribution.
NMA cont…
2).No
municipality has shown interest to be
incorporated into Eskom, and should this
happen, it will be unconstitutional
3).SALGA request the Department of Minerals and
Energy to fast track the enabling legislations that
are in line with the constitution to guide the
process as a matter of urgency
NMA cont..
4). SALGA recommend that Eskom distribution assets to be
transferred to the REDs should include key customers as per
the original six wall to wall REDs model and EDIR blue print
5). SALGA recommend that the end state of the restructured
electricity distribution industry should establish the REDs as the
only distributor to all customers, domestic, industrial, key
customers, etc.
6).SALGA supports the transactional approach to REDs creation
in the interest of the country and discourage quick fix National
RED, that will lead to problems in the long term
NMA cont..
7). SALGA support the Six REDs Model as the End State to supply Electricity to
all customers in the country
8). SALGA furthermore recommend that we Uphold, respect and recognize the
following key principles that were agreed upon to guide the Electricity
Industry Restructuring process;
– Restructuring must be conducted in accordance with the Constitution,
taking into account that the responsibility of electricity reticulation is a
municipal function;
– The Financial state of municipalities currently performing the electricity
function must not be adversely affected;
– Any RED end-state model must meet the restructuring objectives set out
in the EDI Blueprint that was approved by Cabinet earlier.
SALGA RECOMMEND THE SIX WALL
TO WALL REDS
Thank You!