Briefing to the Select Committee on Economic Development Date: Tuesday, 08 October 2013,

1. Municipal Infrastructure Support Agent____________________________________________________Contribution of the Municipal Infrastructure Support Agent (MISA) towards the Achievement the Universal Access to Electricity and Sustainable Supply Briefing to the Select Committee on Economic Development Date: Tuesday, 08 October 2013, Venue: E249, 2nd Floor, National Assembly Wing, Parliament, Cape Town

2. CONTENTS • INTRODUCTION • OVERVIEW OF MISA • KEY MISA PROGRAMMES • MISA’S ROLE IN THE ENERGY SECTOR • KEY CHALLENGES • CONCLUSION AND WAY FORWARD MISA Briefing to Select Committee on ED

3. INTRODUCTION • This presentation outlines how MISA’s support programmes contribute towards the achievement of the universal access to electricity and ensuring sustainable supply. • MISA is a dedicated government component established under the Ministry of CoGTA with the mandate to provide technical capacity support and assist municipalities to build their internal capacity for improved delivery and management of infrastructure and service provision. • MISA’s programmes focus on supporting mainly low and medium capacity municipalities that continue to struggle with the development and maintenance of infrastructure and service provision. • Support to identified municipalities focusses mainly on the water and sanitation, energy, waste management , as well as roads and stormwater • Implementation of MISA’s programmes is guided by government’s key policy imperatives such as the National Development Plan (NDP), New Growth Path, Strategic Integrated Projects (SIPs), as well as the broader legislative framework on energy supply. • The focus of MISA’s programme on Energy is intended to address electricity backlogs, maintenance and refurbishment of existing infrastructure and development internal technical through skills development. MISA Briefing to Select Committee on ED

4. OVERVIEW OF MISAInstitutional Form • MISA was established by Presidential Proclamation 29 of 2012, which was gazetted on the 11th May 2012, in terms of section 7(5) (c) of the Public Service Act. • The establishment of MISA was one of the key thrusts of the Local Government Turnaround Strategy (LGTAS) aimed at creating a dedicated vehicle to support and build technical capacity in local government for the improvement of municipal infrastructure provisioning, refurbishment and maintenance; • Anticipating the establishment of MISA, government took a decision to unbundle SiyenzaManje with the infrastructure component transferred to CoGTA and financial management component transferred to National Treasury, with effect from 01 April 2011. • MISA is operationally ring-fenced from the Department of Cooperative Governance, but linked to it for policy implementation purposes. • The head of MISA is the Accounting Officer in terms of the Public Finance Management Act, No.1 of 1999, as amended. • MISA has been allocated its own operational budget of R820m over the MTEF period, with R262m allocated for 2013/14 FY. MISA Briefing to Select Committee on ED

5. OVERVIEW OF MISACore Mandate MISA has a two-pronged mandate can be summarised as follows: • To render technical advice and support in order to optimise municipal infrastructure provisioning and management. • To coordinate the development and implementation of programmes designed to strengthen the capacity of municipalities for planning, development, operations and maintenance of their municipal infrastructure. It is not within MISA’s mandate to provide grants to municipalities for either infrastructure projects implementation or the costs of maintaining and refurbishing such infrastructure. Its mandate is to give technical assistance to enable municipalities to perform these functions effectively. MISA Briefing to Select Committee on ED

6. KEY PROGRAMMESOverview of Key Support Programme • Municipal Technical Support Programme – to ensure that MISA provides technical support to those municipalities that require assistance with technical aspects of infrastructure planning, implementation, operation and/or maintenance. Support provided is based on a needs assessment and agreement with municipalities. This buy-in from municipalities is essential for ownership and sustainability of support initiatives. • Sectoral Support, Coordinationand Grants ensures that resources from different departments and institutions are properly coordinated to address sectoralpriorities towards eradication of service backlogs in water and sanitation, energy, solid waste management and roads and storm water. This programme also supports municipalities to ensure effective utilization of grants, especially the Municipal Infrastructure Grant. • Capacity DevelopmentProgrammeensures that technical capacity is developed in local government for planning, delivering, operating and maintaining municipal infrastructure. Capacity development is implemented through various programmes, including apprenticeships, young professionals, experiential learning and rotating key municipal officials to the private sector and academia for exposure. Bursaries are made available for studies in built environment, especially engineering, to build a pipeline of future technical officials for municipalities. The programme also provides mentorship opportunities for technical officials in municipalities to meet the requirements for professional registration. Working in partnership with other public institutions, private sector companies, tertiary institutions and professional bodies forms an important part of MISA’s capacity development strategy. MISA Briefing to Select Committee on ED

7. CURRENT SUPPORT ON ENERGYMISA’s Overall Focus on Energy MISA’s support programme on energy is focussed on the following: • The Implementation of Integrated National Electrification Programme (INEP). • Approach to Distribution Assets Management (ADAM) Programme. • Business-Adopt-A-Municipality (BAAM) Support Programme in Collaboration with Eskom. • Capacity building support to municipalities for accelerated delivery and proper maintenance of electricity distribution infrastructure. • Presidential Infrastructure Coordinating Commission (PICC) Programme. MISA Briefing to Select Committee on ED

8. CURRENT SUPPORT ON ENERGY Roll-out of INEP and Green Energy • Backlogs on electrification are currently at 3.5 million households and growing at a rate of 7% per annum. It is projected that at the current rate of connecting households, it would take another 17 years to achieve universal access, without factoring in future growth requirements. • MISA is a member of the National Electricity Advisory Committee (NEAC) that oversees the roll out and monitoring of the Integrated National Electrification Programme (INEP) with budget allocation for financial year of R1,6 billion. • Through MISA’s technical support programme technical experts (electrical engineers) are supporting 7 (seven) municipalities (Randfontein, Empfuleni, Phumelela, Lesedi, Baphalaborwa, Ngwathe) to enable improvement of their performance on electricity provision. • In addition 27 Municipalities are receiving support in relation to targeted areas within the electricity distribution value chain through professional service providers (PSPs) contracted by MISA. MISA Briefing to Select Committee on ED

9. CURRENT SUPPORT ON ENERGY List of Municipalities Receiving Support through PSPs MISA Briefing to Select Committee on ED

10. CURRENT SUPPORT ON ENERGYApproach to Distribution Asset Management (ADAM) • In 2012 DoE, adopted a strategy called the Approach to Distribution Asset Management (ADAM). • This multi phased program in addressing electricity distribution challenges, was aimed at addressing the backlog in maintenance, refurbishment and upgrading of the Electricity Distribution networks. • The initial work undertaken in implementing ADAM focused on addressing the capital and skills shortage that exists in the electricity distribution industry which was driven by the Electricity Distribution Industry (EDI) Holdings. • National Treasury has also made additional funds available towards increasing the number of households connection to 200 000 by 2013/14,270 000 by 2014/15 and 350 000 by 2015/16. • MISA serves in the Mini- ADAM Steering Committee that is overseeing the piloting of ADAM in 12 municipalities with the support of grants to be transferred to these municipalities through DOE. MISA Briefing to Select Committee on ED

11. CURRENT SUPPORT ON ENERGYMunicipalities Selected for Mini-ADAM MISA Briefing to Select Committee on ED

12. CURRENT SUPPORT ON ENERGYBusiness Adopt a Municipality Programme • Business-adopt-a-Municipality (BaaM) programme entails a partnership with Eskom to support struggling municipalities on electricity issues; 27 municipalities have been identified for support during the first Phase of the programme. • The provision of support to the selected municipalities is preceded by an assessment to establish the exact needs of these municipalities. • Although the assessment will determine the final areas of support per municipality, the following areas have been identified as common challenges facing a number of municipalities: • Maintenance and rehabilitation of existing infrastructure; • Increased investment in new and existing infrastructure • Need to address high non-technical electricity losses; • Revenue management and tariff setting • Technical skills development MISA Briefing to Select Committee on ED

13. CURRENT SUPPORT ON ENERGYBAAM Priority Municipalities MISA Briefing to Select Committee on ED

14. CURRENT SUPPORT ON ENERGYMenu of Support under BAAM Programme Total menu of support agreed with Eskom : Demand Side Management Investment, Networks & Master Planning Maintenance and Operations Leadership and Management Training and Development Business and Financial Management Support Pricing and Tariff Structure Contact Centre Access and/or Setup Energy Losses Management Technical Standards Credit and Revenue Management Technical Skills Development Improving Efficiency in Procurement MISA Briefing to Select Committee on ED

15. CURRENT SUPPORT ON ENERGYMunicipal Capacity Building: Electricity Supply MISA’s initiative aimed at strengthening the capacity of municipalities to perform the electricity distribution function entails the following: • Placement of electrical apprentices for operation and maintenance of distribution infrastructure. • Training of officials in municipalities’ electricity/ technical departments focusing on the electricity distribution and solar/renewable energy supply. • Supporting municipal officials and unemployed graduates qualified in the electricity field to register with relevant professional bodies. • Supporting and facilitating the trade testing for both municipal officials and unemployed graduates. • Granting of bursary to students in electrical engineering and related fields. • Currently a total of 234 Electrical Apprentices are placed in 25 municipalities under 6 Provinces (EC, KZN, LM, MP, NC and NW), for experiential learning. • In addition 29 candidates are undergoing experiential learning in municipalities across all nine provinces towards qualifying as Artisans in the electricity sector. MISA Briefing to Select Committee on ED

16. CURRENT SUPPORT ON ENERGYMunicipal Capacity Building: Electricity Supply Cont… MISA Briefing to Select Committee on ED

17. CURRENT SUPPORT ON ENERGYPICC Initiative • MISA is leading the process of exploring the option of central procurement of equipment for electricity distribution by municipalities. • This project is in line with the decision of PICC Manco that recommended that municipalities follow a central procurement approach, using Eskom’s procurement system, when purchasing equipment for electricity infrastructure. • This approach is intended to apply to the purchase of equipment for both electrification infrastructure and maintenance if existing infrastructure assets. • It is further proposed that a provision be included in the conditions for Integrated National Electrification Programme (INEP) to give effect to the PICC decision. • The rationale for pursuing this model is to enable government to reap cost savings accruing from economies of scale and accelerate the electrification programme. • The initial work towards the development of a mechanisms for implementing this approach has just commenced. MISA Briefing to Select Committee on ED

18. CURRENT SUPPORT ON ENERGYPICC Initiative Continue… • Municipalities are experiencing challenges in relation to the implementation of Strategic Integrated Support Projects (SIPs). • To address this challenge, MISA is in the process of creating institutional capacity for supporting municipalities in the implementation of the Strategic Integrated Projects (SIPs). • The aim is to provide technical support to municipalities on the implementation of key elements of SIPs that deal with infrastructure for service delivery, especially those touching on the local government functions such as SIPs 8 and 10, among others. • SIP 8 (Green Energy in Support of the South African Economy) – supporting sustainable green energy initiatives through a diverse ranges of clean energy options. • SIP (Electricity Transmission and Distribution for All) - expand the transmission and distribution network to address historical inbalances, provide access to electricity for all and support economic development. MISA Briefing to Select Committee on ED

19. KEY CHALLENGES • Most municipalities are also faced with massive and growing backlogs in relation to households access to energy, as well as maintenance and refurbishment of their distribution assets. • These municipalities lack requisite institutional capacity and funding required to address these two challenges. • Municipalities continue to allocate insufficient budgets to deal with maintenance and refurbishment of their distribution assets. • There is generally poor uptake of alternative/green energy opportunities by municipalities. • MISA and DOE need to forge stronger working relationship to leverage from each other’s capacity and knowledge base, as well as promoting coordinated supporting to municipalities. MISA Briefing to Select Committee on ED

20. CONCLUSION AND WAY FORWARD • There is a great need for MISA refine its programme for supporting the provision if energy by municipalities to optimise its impact. • As an initial step towards beefing up the capacity for supporting municipalities on energy supply function, MISA will be appointing and assign nine (9) Senior Electrical Engineers – one professional for each province. • Priority will continue to be given to the improving collaboration with the Department of Energy. • With the guidance and support from DOE MISA will play an active role in supporting municipalities to exploit opportunities in alternative/green energy. • An area that also warrant more attention is the building of internal capacity in individual municipalities for better operations and maintenance of electricity infrastructure. MISA Briefing to Select Committee on ED