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Enhancing Private Sector Investment in the Energy Sector: Implementation Framework

Learn the key reasons for private sector participation in South Africa's energy sector and how to create a conducive regulatory and institutional environment. Find out about the progress, lessons learned, and the roadmap to implementation. Contact Karen Breytenbach, Senior Project Advisor, for more information.

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Enhancing Private Sector Investment in the Energy Sector: Implementation Framework

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  1. UNECA: Implementation Framework to enhance Private sector Investment and Participation in the Energy Sector Karen Breytenbach Addis Ababa, Ethiopia Date: 30 June 2011 to 1 July 2011 `

  2. Implementation Framework ………Enhance Private Sector Investment And Participation in the Energy Sector SA has learned the hard way …. REASON for participation

  3. Content • P/S investors & lenders need: • Certainty re Legal and Regulatory Framework – it has to work and hang together • Investment must be safe & secure environment • Has to be level playing field = fairness /Utility • Program must be sustainable – no Spain • Agreements will be honored • PREPARATION BY HOST Gov = well done • Regulatory Framework • Laws and Regulations • Institutional (competencies and functions)) • Policy environment • The Institutional Framework in South Africa • How is South Africa doing • Conclusion Strong Political Will & Champion to drive Due to Complex Issues

  4. Progress • WHY SHOULD YOU LISTEN AND BELIEVE ME • False starts ….. MANY • However • In process of the Procurement of a program od Renewable Energy • 3 800 MWs to be in the system by 2016 (ZAR 112 billion or USD 16 billion – Also 5 WINDOWS of opportunity) • 1 000 MWs of preferred bidders by Nov 2011 = COP 17 (Climate Change Conference in Durban) • WE HAVE A PIPELINE

  5. Regulatory Framework Legal/Regulatory Institutional Policy REVIEWED = ALIGNED AND PROVIDE ENABLING ENVIRONMENT

  6. South Africa’s Regulatory Framework for IPPs The South African Constitution provides: “When an organ of state … contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective.” • Public Finance Management Act • Regulation 16 • Municipal Finance Management Act • Municipal PPP Regulations IPP Procurement PPPs (Proper)

  7. South Africa’s Regulatory Framework for IPPs IPP Procurement

  8. INSTITUTIONAL FRAMEWORK Public and Private Institutions and Stakeholders Review Institutional Landscape – Who is doing WHAT - be critical, honest and diligent – ADJUST if necessary

  9. Institutional Framework for IPPs • Stakeholder Co-ordination: • Trade and Industry • Economic Dev • Water & Land Usage • Env Issues • Presidency • Associations • etc. Main Players: • Department of Energy (DoE) • Policy and Procurer of new gen capacity • Monitor Implementation - NB • IPP Unit with support from GIZ (experts) • NERSA – Economic Energy Regulator • Eskom – SA Utility - Buyer • National Treasury • PPP Unit – Complex deals and skills in Government • Technical assistance to the DoE with design and procurement • Government Support (Contingent liability - understand) ISMO

  10. How are we doing in South Africa?

  11. Progress and Lessons Learnt Wake-up Call Outages in 2008 Government became aware of the problems Cabinet called the Inter-Ministerial Committee on Energy Identify and Remove barriers and bring Private Sector MWs in Starting Point: Renewable Energy Program Difficult Part – No popularity contest Review regulatory environment Change the Institutional Structure Government – Procurer Utility – Buyer NERSA – Economic Regulator Political Support

  12. Progress • Request for Information by Government Team to understand – 24 GW (20GW of RE and 4GW of Co-Gen) • Realise we need Budget – MTEF and no alignment • Road show of “begging” – Danish, Spanish and German Support – Seed Capital • MoU with Development Bank of Southern Africa • Money available to appoint Transaction Advisors • Repay from Closure • Or Dept Budget if not Closing – Incentive to close • Project Development Fund from Closing Deals – • (No begging anymore) • TAs appointed (international Mott MacDonald and Linklaters and local – international best practice and learn) • RE Procurement Documents to market soon

  13. Progress • 3 800 MWs to be in the system by 2016 – ZAR 112 billion or USD 16 billion – Also 5 WINDOWS of opportunity • 1 000 MWs of preferred bidders by Nov 2011 = COP 17 (Climate Change Conference in Durban) • WHAT DO WE HAVE IN THE PIPELINE • After many false starts – NOW is the time for Sam’s tree i.e. our SUCCESS STORY for SA • RE program substantial in IRP 2010 (17GW+) • Co-Gen Program • Small Hydro (21 existing dams) • Gas project • Imports from neighbouring Countries • We have done our Planning (IRP 2010 and to be reviewed 2012) • Regulatory and Institutional Environment – enabling environment • Project Development Facility • IPP Unit (Treasury and DoE for information and monitoring) • SUCCESS HAS TO FOLLOW

  14. Contact Details THANK YOU Karen Breytenbach Senior Project Advisor PPP Unit National Treasury 240 Vermeulen Street Pretoria South Africa Tel: +27 12 315 5863 Fax: +27 12 315 5477 Karen.breytenbach@treasury.gov.za www.ppp.gov.za www.treasury.gov.za

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