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Similar to Morgan Sithole presentation 18-22 May 2009, CTICC, Cape Town
Similar to Morgan Sithole presentation 18-22 May 2009, CTICC, Cape Town (20)
Morgan Sithole presentation 18-22 May 2009, CTICC, Cape Town
- 1. Morgan Sithole, Chief Advisor, ESKOM, South Africa 18 - 22 May 2009 CTICC, Cape Town, SOUTH AFRICA Smart power choices for Africa
- 2. 18 – 22 May 2009, CTICC, Cape Town, SOUTH AFRICA • >USD 750 billion invested between 1990-2001 3% went to Africa and Middle East • GDP growth in Sub Sahara between 2006-2007 average 6% for oil producing countries • GDP growth in 2008 showed significant slow down by ~2% • GDP growth for 2009 is expected to slow down further by ~1.6% due to decline in trade Flow of Investments and GDP
- 3. Current state of power infrastructure • In most African countries - in a state of neglect, decay, disrepair and collapse over many years of neglect and lack of maintenance • Power utilities lack capital funds and revenues for upkeep of infrastructure • Theft of electric cables on the increase substantial revenues diverted to address the issue • Vandalisation of assets on the increase • Illegal connections have increased
- 4. 18 – 22 May 2009, CTICC, Cape Town, SOUTH AFRICA • World Bank estimates investment costs to meet power demand amount to US$180billion -29 African countries • This support is for increase in power generation and maintaining the existing infrastructure and refurbishments • Current expenditure (excluding SA) is less than US$2 billion per annum- it will take 90 years to catch up Investment Required
- 5. 18 – 22 May 2009, CTICC, Cape Town, SOUTH AFRICA • Selection of leadership Must be based on meritocracy best ability to lead and manage • Retention of staff through development Critical for improvement and performance • Holistic assessment of reward systems Apart from salaries can improve retention • Training Intensify at all levels, explore exchange programs and secondments Management of Power Utilities
- 6. 18 – 22 May 2009, CTICC, Cape Town, SOUTH AFRICA • Is a symptom of underlying economic performance • Poses the highest risk • In SAPP debtors days have increased • Other Power Pools data not available but the trend is similar • Pre-paid meters have improved collection temporarily • Increase in None technical losses • Collection must be vigorous and robust devoid of political sanction Collection of Revenues
- 7. Regulation and tariffs • In Southern Africa most countries have power regulators • Tariffs are promulgated - insufficient to create economic sustainability most below break-even margins • Avoid political electricity tariffs • Majority of utilities are subsidised by the government • Provide welfare tariffs for poor communities • Cross-subsidisation of sectors inevitable • Sub-economic tariff frighten investments
- 8. 18 – 22 May 2009, CTICC, Cape Town, SOUTH AFRICA • Complete lack of congruency in policies • Provision of electricity is cornerstone to eradication of poverty • Elevate the ESI to the highest pinnacle of economic development • Make independent bi-annual technical audits of plants, systems and fuel reserves and supply logistics • Act upon those findings for sustainable improvement and performance • Provide capital funding and credit guarantees Policy Issues
- 9. 18 – 22 May 2009, CTICC, Cape Town, SOUTH AFRICA • Must be inculcated • US$16 Billion intended for power projects disappeared no projects on the ground • Value honesty, integrity and fair play in the award and execution of contracts • Instill a sense ownership and pride Culture of Accountability
- 10. Conclusion • Regulatory processes that are transparent encourage investment • Increased investment of capital by the governments in the sector is imperative • Private Sector Participation will help alleviate funding from governments • Wholesale of privatisation not the cure