Summary


In South Africa access to electricity increased from 35% of households in 1990 to 84% in 2011 (StatsSa 2012).The political context for this dramatic increase was the transition from the racially dominated apartheid government to a democratically elected government in 1994. These changes took place in three phases. From the late 1980s to 1994, there were initial scattered efforts and preparations. In the second phase from 1994 to 2000, new policies were drafted and institutional reforms were carried out in the electricity sector. Electrification levels increase from about 35% to 71%. In the third phase from 2000 to present, institutions return to function normally and policymaking and governance return to 'business as usual'. One major reason for the success of the electrification programme was that the national utility Eskom had access to capital, had well qualified staff, a good infrastructure supplying a very energy intensive economy. In addition the utility had a 55% reserve margin due to overbuilding in the 1980s. From 1991 to 2001 Eskom largely financed the programme from cross-subsidies of industrial users and bulk sales to local authorities. From 2001 onward the state funded the capital cost from the fiscus and from 2002 the Integrated National Electrification Programme (INEP) the programme was set up and from 2005 the planning, funding and coordination of the INEP was permanently established in the Department of Energy and Minerals (Department of Energy since 2009).

Connection charges for poor households are minimal and in many municipalities they can be paid in instalments. When the government realised that poor households could not afford to use electricity, Free Basic Electricity (FBE) was introduced in 2004

 

Contents
  1. Objective
  2. Target Group
  3. Output
  4. Key Features of the Case
  5. Sustainable Financing
  6. Supportive Policies and Institutional Environment
  7. Building Local Capacity and Skills
  8. Community Participation and Including Local Stakeholders
  9. Achieving Co-Benefits
  10. Affordability and Technical Issues
  11. Local Champions
  12. Monitoring and Evaluation
  13. Replicability and Scaling-up
  14. Contact
  15. References and Further Reading

 

Objective


To achieve universal access to electricity by 2012. The date later changed to 2019.

 

Target Group


All household, schools and clinics in South Africa

 


Output


• From 1994 to 2010 over 5.2 million households and more than 12 000 schools were connected to the grid

• Over 46 000 households, 3 000 schools and 345 clinics were supplied with non-grid electricity.

• From 2000, the fiscus makes available US$ 400 million annually for grid and off-grid electrification

• New policies such as the Energy White Paper in 1998 establishing the Integrated National electrification Programme (INEP) in 2000 a unit within the Department of Energy

• Restructured electricity sector

• Free Basic Electricity of 50 kWh per month for poor households

 

Key Features of the Case


• Prior to the democratic elections in 1994, policies and institutions of the apartheid regime were the barriers to widening access to the majority black population

• The transition to a democratic government opened the opportunity of institutional and policy reforms to start rapid and large-scale electrification

• He world-class national utility Eskom had access to capital and well qualified staff at all levels and good supply infrastructure and supplied a very energy intensive economy. The electricity sector therefore faced few of the common problems in developing countries such as lack of skills, supply infrastructure and access to capital

• The two initial phases were largely funded by Eskom and since 2000 by the fiscus through a national electrification fund

• The adoption of innovative technologies such as single-phase lines, ready boards and prepayment meters in houses reduced costs

• A lifeline tariff, the Free Basic Electricity tariff (FBE) was launched in 2004 and provided 50 kWh free electricity to the poor

 

Sustainable Financing


Eskom generates, transmits and in some areas distributes electricity. The major distributors are local authorities. From 1991 – 2001 Eskom largely financed the programme from cross-subsidy of industrial users and bulk sales to local authorities. In the initial stage it was assumed that operational and capital cost can be self-funding from consumption. But from the mid-1990s it became obvious that electrification was not self-funding. With relatively low tariff levels and high capital costs, households had to consume 350kWh per month to cover electrification costs but most newly connected households were poor and average consumption was only 100kWh per month. From the mid-1990s electrification was considered a socio-economic programme with partial subsidy of capital cost. From 1996 to 2000 Eskom paid local authorities a grant of R300 000 annually to support their electrification programmes. From 2000 the state funded the capital cost and the fiscus pays an annual subsidy of US$ 400 million for grid and off-grid electrification.

Poor households pay a minimal fee for a connection and they receive 50 kWh per month free of charge.

 

Supportive Policies and Institutional Environment


The national utility Eskom is responsible for generation and transmission and both Eskom and local authorities distribute electricity.

Electrification policy... like other policy processes leading up to the 1994 elections, moved out of the formal government context into a less formally structured negotiation process (Bekker, et al. 2008). Initially, the major actors were Eskom and a group of energy policy activists based in the Energy Development Research Centre (now ERC or Energy Research Centre) at the University of Cape Town. Trade unions, local authorities and the Department of Minerals and Energy Affairs (DMEA) played minor roles. The major liberation party the African National Congress (ANC) took up the idea as it fitted well into their policies and guiding principle. At the National Electrification Conference in 1992 the National Electrification Forum (NELF) was established. The Conference was held and organised at the Energy Research and Development Centre by the ANC at the University of Cape Town. It was a broad-based stakeholder body including Eskom, local authorities, and others. Nelf's main achievements was to combine technical and financial capabilities with political legitimacy and support, and it formed an arena where stakeholders could negotiate the shape of an electrification programme which would be both politically acceptable and practically implementable (Bekker, et al. 2008). The outcome was a proposal for restructuring the electricity industry and the establishment of a National Electricity Regulator. The Conference ended with an agreement between Eskom and the ANC to electrify 2.5 million houses from 1994 to 1999 putting Eskom in a central role in the electrification programme. The accelerated programme is included in the Reconstruction and Development Programme (RDP), the policy framework and election manifest for the African National Congress (ANC 1994).

Another major development was the publication of the White Paper on Energy Policy in 1998. It places emphasis on household access to adequate energy services for cooking, heating, lighting and communication (DME 1998).

From 2002 the Integrated National Electrification Programme (INEP) was set up and in 2005 the planning, funding and coordination of the INEP was permanently established in the Department of Minerals and Energy (since 2009 Department of Energy).

In 2004 Free Basic Electricity (see Affordability section below) was introduced and is administered together with other free basic services by the Department of Provincial and Local Government (DPLG).

 

Building Local Capacity and Skills


At the beginning of the programme there was capacity to implement the programme at Eskom but insufficient capacity at the DME, the Energy Regulator and at the local authorities. Eskom delegated some of its capacity to the new energy regulator and other institutions. Managerial and technical is still not sufficient to administer the programme efficiently. At a meeting of the Parliamentary Monitoring Group in 2012, a serious lack of both technical and managerial skills in municipalities still remained a barrier to timely and efficient implementation of the INEP at the local level (PMG 2012).

South Africa has well established universities and technical colleges and is continually training engineers, technicians and managers. Affirmative action policies ensure that the previously disadvantaged population gets preferential access to opportunities in employment and business. The policy is well monitored.

 

Community Participation and Including Local Stakeholders


The programme adopted a top down approach and there was no community participation. The local authorities and Eskom provided households with connections for a nominal fee.

Local authorities could be considered as local stakeholders and they were involved from the beginning as they were the major distributors in the municipalities.

 

Achieving Co-Benefits


The electrification programme had a wide ranging impact on the welfare of the South African population. Poor people who could not have afforded a connection and the extended use of electricity without the programme, were connected and felt more included and integrated into society.

It was the intention of the DME to create one new informal job for every ZAR100 000 of INEP capital expenditure (DME 2004). But this target was only partially achieved. The DME reported that in 2003 the electrification programme created 2390 temporary and 197 permanent jobs (DME 2003) and 5255 in 2006/2007.

Borchers and Hofmeyer (1997) and Rogerson (1997) found that electrification leads to the establishment of local businesses while Prasad and Dieden (2007) found that from 1997 to 2004 uptake of SMMEs increased in both electrified and unelectrified areas and that 40 to 53% of the SMME activities are attributable to electrification.

 

Affordability and Technical Issues


The greatest barrier to electricity access for poor households is generally the high connection fee. Under the South African Electrification programme the connection fee for poor households is nominal and affordable. In some municipalities such as Cape Town households can get connected without any upfront payment and the connection fee of about US$30 will be deducted in instalment at the rate of 14% of the payment whenever electricity purchases are made.

Initially poor households could not afford the monthly electricity bills. When government realised that poor households, newly connected to the grid, could not fully benefit from the large capital investments in the electrification programme, Free Basic Electricity (FBE) was introduced in 2004. Poor households get the first 50 kWh consumed each month free. The fiscus pays for the FBE.

Prepaid metering was introduced to reduce the cost of billing and meter reading. It was also helping customers not to exceed affordable consumption costs and plan their electricity expenditure.

 

Local Champions


The process of championing the cause is described under section seven Supportive Policies and Institutions

 

Monitoring and Evaluation


The electrification projects are monitored at different levels. At the project level there are budgetary allocations for monitoring but the INEP budget is often not sufficient to plan, implement and monitor projects effectively (PMG 2012).

Parliament monitors the programme through the Parliamentary Monitoring Group (PMG). The Department of Energy, Eskom and the South African Local Government Association (Salga) regularly brief the Energy Committee of the PMG on the status, progress and the challenges they face implementing the Integrated National Development Programme.

In 2012 the PMG reported that 3.4 million households were still without electricity. One of the reasons for this is that the number of households increase as the population grows and becomes more affluent. A key issue was to improve the management of individual projects which are affected by a serious lack of both technical and managerial skills at municipal level.

 

Replicability and Scaling-up


The South African experience is very context specific and its replication in other countries might be limited: The reasons are the nature of the political transition, the presence of a strong national utility with skilled staff and the high industrial load base which initially could absorb cross-subsidies.

Some general lessons can be learned (Bekker, et al. 2008); the institutional and planning arrangements developed by the South African programme; the development of cost-saving technical innovations and standards; the recognition of the social function of electrification and its funding from the fiscus rather than from cross-subsidies.

 

Contact


Gisela Prasad

Energy Research Centre

University of Cape Town

South Africa

Tel: +27 21 650 2419/3230

 

This email address is being protected from spambots. You need JavaScript enabled to view it.

www.erc.uct.ac.za

 

 

References and Further Reading


ANC. The Reconstruction and Development Programme: A Policy Framework. Johannesburg: African National Congress, 1994.

Bekker, B, A Eberhard, T Gaunt, and A Marquard. "South Africa's rapid electrification programme: Policy, institutional, planning, financing and technical innovations." Energy Policy vol. 36 Issue 8:3125-3137. 2008.

Borchers, M., Hofmeyer, I. Rural electrification supply options to support health, education and SMME Development. University of Cape Town: Energy Development Research Centre, 1997.

DME. Annual Report 02/03. Pretoria: Department of Minerals and Energy, 2003.

DME. Strategic Report 04/05-06/06. Pretoria: Department of Minerals and Energy, 2004.

DME. White Paper on the Energy Policy of the Rebublic of South Africa. Pretoria: Department of Minerals and Energy, 1998.

DOE. A survey of energy-related behaviour and perception in South Africa. The residential sector. Pretoria: Department of Energy, 2012.

Eberhard, A., Van Horen, C. Poverty and Power: Energy and the South African State. Cape Town: UCT Press, 1995.

Eskom. Eskom Factor Report 2011. Megawatt Park, Johannesburg: Eskom, 2011.

PMG. Integrated National Electrification Programme (INEP) Implementation: Department of Energy, Salga and Eskom Briefing. Parliament of South Africa, Cape Town: Parliamentary Monitoring Group, 2012.

Prasad, G., Dieden, S. "Does access to electricity enable the uptake of small and medium enterprises in South Africa?" Proceedings International Conference Domestic Use of Energy, 2007: 33-41.

Rogerson, C.M. Rural electrification and the SMME economy in South Africa. University of Cape Town: Energy Development Research Centre, 1997.

StatsSa. Census 2011 Census in Brief. Pretoria: Statistics South Africa, 2012.

Name:

South African Electrification Programme

Country:

South Africa

Location:

Print

Implementer:

Initially the national utility Eskom now the Department of Energy

Contact:

Gisela Prasad

Energy Research Centre

University of Cape Town

South Africa

Tel: +27 21 650 2419/3230

 

This email address is being protected from spambots. You need JavaScript enabled to view it.

www.erc.uct.ac.za

 

Technology:

Grid Electricity

Energy resource:

  • Other

Sub type:

    Sector:

    • Energy supply

    Service:

    • Electricity

    Grid:

    • National Grid
    • Off-Grid

    Targeted area:

    • Rural
    • Urban
    • Peri-urban

    Geographical scope:

    National

    Project status:

    Ongoing project

    Project start:

    1994

    End date:

    2019

    Implementing approach:

    Public

    Funding Type:

    • Grant

    Budget (Euro):

    >100,000