The Department of Mineral Resources and Energy (DMRE) has been criticised for its plan to cut spending that was supposed to electrify 43 000 homes, most of them in impoverished rural areas. The cut will release R1,5-billion to be spent on Covid-19-related relief instead.
But the DMRE plans to leave untouched the South African Nuclear Energy Corporation’s (NECSA) R1-billion budget and the Council for Geoscience’s roughly R0,5-billion budget, including for mine exploration. These priorities have been criticised by civil society groups which say this “deepens inequity, further impoverishing the poor” while bailing out a state-owned nuclear company with an “appalling” financial record.
In a letter to the appropriations committee last week, Energy Governance South Africa (EGSA) said it supported non-profit group OUTA’s submission, saying, “To continue to reward NECSA for its financial mismanagement and irregular expenditure is to send a signal to those corrupt and malleable officials that they can continue with business as usual. Electrification is pro-poor service delivery of particular relevance during the Covid-19 pandemic, where vulnerable communities are feeling the brunt of the disease.”
EGSA describes itself as “a network of over 110 concerned individuals and organisations dedicated to promoting good governance in the energy sector”.
A recent study by authors including nobel winning economist Joseph Stiglitz, British economist Nicholas Stern underscores the importance of rural economic development for sustainable Covid-19 recovery in low- and middle-income countries.
EGSA says the way in which the budget changes affect those least able to bear it needs to be rectified.
When DMRE presented its proposal to parliament’s minerals and energy portfolio committee earlier this month, the department said: “The reduction will delay the implementation of planned bulk infrastructure projects, which are critical for laying the foundation for household connections, as well as reduce the targeted electricity connections. It is projected that the 2020/21 household connections target of 180 000, will decrease by 43 000 to 137 000 connections. The reduction will also have a significant negative impact on the Eastern Cape, Limpopo and Kwa-Zulu Natal as these provinces have the largest electricity backlogs.”
National Treasury had not provided any guarantee that reduced budgets would be reinstated later, according to DMRE.
The electrification programmes were significant line items in the department’s budget alongside budgets for NECSA and the Council for Geosciences. But the department said NECSA and the council “could not be touched. NECSA already had a cash deficit, so its budget could not be reduced any further.”
According to a summary of a subsequent minerals and energy committee meeting: “The Committee noted that this was too important of a project to decrease its budget and recommended that the Minister of Finance and the Minister of Mineral Resources and Energy should engage on this. It was noted the Programme was one of the largest service delivery areas of the Department for the electrification of the country.”
But in his budget vote speech this week, mining and energy minister Gwede Mantashe reaffirmed the cuts to rural household electrification and the combined R1,5-billion allocated to NECSA and the Council for Geosciences. He said the electrification cuts would be “on projects that are amongst others not ready for delivery and can be moved to later years”.
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