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PRESENTATION TO PORTFOLIO COMMITTEE ON ENERGY

PRESENTATION TO PORTFOLIO COMMITTEE ON ENERGY . Black Business Council 7 June 2012. Background . South African partner : 40 % Local content , job creation & BEE: 30 % Contribution towards local community At end of window 5 – R 120 bill worth of projects

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PRESENTATION TO PORTFOLIO COMMITTEE ON ENERGY

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  1. PRESENTATION TO PORTFOLIO COMMITTEE ON ENERGY Black Business Council 7 June 2012

  2. Background • South African partner : 40 % • Local content , job creation & BEE: 30 % • Contribution towards local community • At end of window 5 – R 120 bill worth of projects • At 3 725 MW , SA is currently one of the biggest procurers of RE technology .

  3. Observations – Ability of local black business to participate • No BBBEE Local Content procurement policy in place. • No real Government legislation driving RE development in South Africa (only Government policies such as IRP2010, IPAP,IPAP3,White paper on Renewable Energy, etc focus on the need for RE from a electricity demand position). • Note BBBEE is inclusive and includes all SA business

  4. BBC Recommendations • RE tenders should be awarded to the BEE / local partner . The BEE partner then sub -contracts work to multinational companies as is the current practice in the Mining Sector. • Awarding of licences to project developers should be subject to fulfilling BBBEE requirements (such as skills development, preferential procurement, etc.) not only local content . • RE project development companies should be BEE compliant and comply with Preferential Procurement Act . • Introduce ongoing assessment on BBBEE status to ensure ongoing BEE compliance ( Cl 16.3 of RFP only makes reference to ownership ) in order for IPP to retain its supply contract with Eskom. • Government should assist BEE companies with the acquisition of land as this is a key requirement of the RE bid process. This could be done in Special Economic Zones where EIA's have already been completed and Govt can use this to create dedicated RE Special Economic Zones. The allocation of land in such SEZ should be biased towards BEE companies. 6. Fast track the implementation of Green Economy Accord of COP17 conference.

  5. 2. Observations - Financial • Lack of access to capital for BEE project developers . • RE Bidding process is costly and lengthy • Associated costs of RE’s feasibility phase are high and therefore the BEE partner is at the mercy of multinational companies. • Economic impact will not match the World Cup as a significant amount of the technology will be imported.

  6. BBC Recommendations - financial • Funding institutions can assist by implementing preferential funding to BEE partners. • Consider reducing the application fees and bid bonds etc. • Bidding process needs to be simplified . E.g. RE tenders for the 5MW projects should have a shortened bidding period and preference be given to small black owned enterprises.

  7. 3. Observations – job creation • Continual reference to jobs created are mostly referring to unskilled jobs – e.g. cleaning of solar panels & security. • E.g. - One of the R 2 billion projects will only provide 12 permanent jobs .

  8. BBC recommendations – job creation • Govt must require a full breakdown of jobs to be created and the duration of such jobs from bidders. • Govt must focus on skills transfer at the highest level. There is a unique opportunity to create real quality green jobs not just low level semi-skilled jobs. • A ratio or target of skilled ,semi skilled and unskilled jobs must be set for bidders.

  9. 4. Observations - Technical • Limited understanding of the sector by BEE companies (REDD+, CDM projects and Carbon markets, etc) • Local content is mostly steel production, civil works & construction. • Limited manufacturing of the RE technology taking place in SA. Most technologies are imported (Germany, China, etc.) • Little to no RE technical skills available in SA especially amongst black South Africans. • No beneficiation to allow for downstream & upstream procurement opportunities for BEE companies.

  10. BBC recommendations - technical • Factories to be established will have capacity and skills to export products into Africa etc . It is therefore essential that these factories develop local black technical skills. The bid & DFIs need to play a developmental role to build and invest in upstream production opportunities that will create real capacity in SA and sustainable jobs after window 5 and a build RE industry • Skills transfer at the highest technical level must be a precondition of the tender .

  11. Micro solutions • Government should promote off-grid RE solutions for low income housing sector. • Government should set the example and also adopt off grid RE solutions on public buildings. • SA is currently only a procurer of technology. SA must become provider of technology especially with the demand for RE in Africa ( 500 mill without electricity). • Encourage and assist development of local invented and owned RE technology. RE is one of the biggest growth sectors of the future. • Introduce SMART grid solutions for RE. In so doing each micro installation on a roof becomes a mini wind farm or solar park.

  12. Thank you

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