In response EDI Holdings has wound down its operations and closed as of the 31 March 2011.  As such the Department of Energy will review the entire electricity value chain to develop a holistic approach towards energy security.

Eskom and 187 municipalities undertake the distribution of electricity to approximately 9 million customers, 31,000 people are employed in the EDI with an asset base of R261 million.  The operation of the distribution facilities vary between regions and municipalities.  Networks in many municipalities are believed to be in a poor state, with substantial investment required to maintain and rehabilitate assets.  There has been a chronic underinvestment in the upgrading and maintenance of distribution networks.  Much of this is attributed to a lack of asset management strategies, insufficient investment in planned and existing networks, ageing networks, inadequate maintenance and limited coordination of efforts to address national problem.  Limited fund and a lack of skills further exacerbate this issue.

A sound electricity infrastructure is required to support growth targets, create investor confidence and meet customer expectations.  It is estimated that the current requirement of electricity distribution in respect of maintenance, refurbishment, network strengthening and skills development is in the region of R27.5 billion.  The Department of Energy (DoE) has indicated in its Strategic Plan 2011/12 – 2015/16 that this is to be reduced to R15 billion by 2014.

The key programme initiated by EDI Holdings – ‘Approach to Distribution Asset Management’ (ADAM) is forms part of the response.  According to the DoE Strategic Plan 2011/12 – 2015/16 the first step in this process will be to develop an in depth assessment of the actual backlog along with detailed geographical maps at metro city and secondary metros.  Parallel to this process is the need to identify interventions required to rehabilitate infrastructure that is needed in the short term to ensure electricity service delivery.

This Infrastructure Dialogue takes a look at the current state of the Electricity Distribution, and the response required in light of EDI Holdings operations being wrapped up and what needs to be addressed as the EDI restructuring moves into a new phase.

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Governments from around the world met in December to discuss policy and the way forward in dealing with the effects of Climate Change (Conference of the Parties -15 of the United Nations Convention on Climate Change in Copenhagen).  Negotiations at the Summit closed without reaching a legally binding agreement.  South Africa had sought amendments to the Kyoto Protocol setting up a second commitment period, and a legally binding agreement under the convention to bring in the United States (US), secure finance for adaptation and mitigation for developing countries as well as their commitment to implement both mitigation and adaption programmes.  At the conclusion of the conference, a total of 28 nations including South Africa signed a political agreement, committing to the continuation of negotiations in 2010.

The South African Government has outlined its response to the climate change challenge . The intent is to balance mitigation and adaptation responses in designing a policy for the transition to a climate resilient and low carbon economy and society.

Six key themes that the national climate change response policy will address:

1. Greenhouse gas emission reductions and limits
2. Build on, strengthen and/or scale up current initiatives
3. Implementing the ‘business unusual’ call for action
4. Preparing for the future
5. Respond to vulnerability and the need for adaption
6. Alignment, coordination and cooperation

South African cities are in the process of determining and developing their own responses to the issues of Climate Change.

As part of the global local government climate roadmap process, a declaration at the African Local Government Summit  states that local government will be responsible for ‘national disaster management, the use of the development planning regime to guide the mitigation of greenhouse gas emissions, and adaptations to manage or minimise the impacts of climate change, including climate proofing of infrastructural development’.

Given that local governments approve and implement development frameworks across the country, this is a critical role and could provide the necessary stimulus for change. Spatial development, which prioritises energy efficiency, the development of activity routes, densification, the enforcement of urban edges, and the priority of public transport over private,  could contribute significantly to the reduction of greenhouse emissions. Local governments are therefore strategically positioned to be the front line in tackling climate change and are expected to respond to, and implement the objectives of the national climate change response policy.

The purpose of the Infrastructure Dialogue on Climate Change is to explore the challenges faced by Municipalities in determining and implementing strategies for adaption to and mitigation of the effects of Climate Change.
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1. Cabinet Memorandum July 2008
2. Tshwane July 2008 hosted jointly by South African Cities Network (SACN) and ICLEI (Local Governments for Sustainability

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As a result of these five functions, Municipalities play a key and central role in the delivery of infrastructure services.

The importance of this role is further emphasised by the fact that South Africa is  currently on a multibillion-rand development drive to remedy the skewed development of  infrastructure during the apartheid years, and to meet the demands of a growing economy and population. Further, the country is preparing to host the 2010 Fifa Football World Cup, for which the government is investing heavily in stadia, and on upgrading the energy, transport and telecoms infrastructure needed for this massive event.

However the 2007/2008 National Capacity Assessment Report  published by the Demarcation Board shows that most of the country’s municipalities (74%) are performing less than 50% of their functions. The reasons vary by municipality but are predominantly due to the lack of skilled experienced capacity. In the same report the Demarcation Board notes that an “exceedingly high” number of municipal manager positions were being filled with people with limited experience of both local government and the position itself. In 25% of municipalities, the post of Chief Financial Officer is vacant. Technical Service Managers positions were generally staffed, but the majority of managers had limited experience in the position – with only half of the managers having more than five years of local government experience.

Poor service delivery and the service delivery protests occurring increasingly around the country draw attention to the shortcomings of municipalities and their ability to deliver adequate services. There are numerous support programmes underway to assist municipalities to improve infrastructure and service delivery. However, the impact of these initiatives has been limited, primarily because of their short term nature and the lack of coordination between these programmes.

South Africa’s municipalities vary tremendously in their physical characteristics, demographics, investment needs, economic bases of their areas and their administrative and political capacity. Consequently, the nature of their intergovernmental relations with the Provincial and National spheres and the support they require must vary accordingly.  At the heart of the challenge of municipal infrastructure capacity, is the need to build the required capacity and at the same time meet the constitutional imperative for all municipalities to deliver services efficiently to all, in their area of jurisdiction.

This dialogue provides the platform to review progress, debate constraints and identify opportunities for constructively moving forward.

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The CSIR in a study undertaken on the ‘State of municipal infrastructure in South Africa and its operation and maintenance’ (2007) found that while some municipalities have exemplary practices in place in respect of infrastructure maintenance, gross shortfalls in management policies and practice exist in many municipalities. Between these two extremes, a wide range of capacity and competence can be found.

Several systemic issues contribute to infrastructure maintenance in South Africa. In many municipalities, budgets and staffing policies are severely inhibitive of sound infrastructure maintenance, thereby placing much infrastructure at risk. The great majority of municipalities are not making adequate provision for the long-term preventive maintenance, refurbishment and eventual replacement of their infrastructure.

In reaction to massive service backlogs and the increasing protests, government is investing heavily into infrastructure. Without adequate systematic asset operation, maintenance and prioritised rehabilitation this massive investment is jeopardised. Both the public and private sectors are seeking ways to radically enhance maintenance performance. This dialogue provides the platform to review progress, debate constraints and identify opportunities for constructively moving forward.

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The Municipal Infrastructure Investment Framework (MIIF) sets out a basis whereby Municipalities can plan, programme and budget for meeting the infrastructure service needs in their areas.

The framework assists Municipalities to:

• determine the extent of infrastructure to be provided,
• determine the capital expenditure required to provide this infrastructure,
• methods of financing the capital expenditure,
• determining the operational expenditure to operate and maintain the service delivery,
• methods of raising revenue to cover the operating expenditure, and
• monitoring and management systems.

The Framework was developed by the Department of Provincial and Local Government in partnership with the Development Bank of South Africa

The Framework has been through several iterations and has been both expanded and improved. The seminar provides a platform to be briefed on and interrogate the latest version of the MIIF and to be part of a dialogue for determining a constructive way forward for the application of the framework.

Have Your Say…Should you wish to participate in a discussion of this topic please click on the link below and indicate which sector you are from, namely Private, Public or Other.