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Budget 2016 - How it affects the energy sector

25 February 2016

The Budget Speech 2016 was presented on 24 February 2016. The Minister of Finance, Pravin Gordhan, made the following remarks regarding the energy sector:

  • Building on the success of the renewable energy initiatives, the Independent Power Producers Programme will be extended to include coal and gas power projects over the period ahead.
  • Minister Joemat-Pettersson is overseeing the renewable energy, coal and gas IPP programme as well as preparatory work for investment in nuclear power.
  • The government plans to inject ZAR865.4 billion into infrastructure projects such as housing, roads, rail, public transport, water and electricity, maintaining its public infrastructure investment commitments over the next three years. 
  • Investment in energy will be over ZAR180 billion over the next three years, of which the investment for this year will equal ZAR70 billion. 
  • State-owned power utility Eskom, with a three-year medium-term expenditure funding of ZAR155.3 billion, accounts for the bulk of the funding as it moves to bring on line the remaining units of the Medupi, Kusile and Ingula power stations over the next six years. 
  • About ZAR17.6 billion will be spent on the Integrated National Electrification Programme between 2016/17 and 2018/19 to provide 840 000 households with access to on-grid electricity, while spending on non-grid solar electrification programmes countrywide, with a target of 70 000 connections over the medium term, would increase from ZAR166.4-million in 2016/17 to ZAR201.6 million in 2018/19.  
  • The Clean Energy Programme will seeZAR1.2 billion spent on 131 146 solar water heating units, while ZAR603.9 million has been allocated over the medium term for subsidies for the installation of energy efficient public lighting and retrofitting energy efficient technology in municipal buildings to save municipalities about 500 GWh of energy a year. 
  • There are many opportunities for joint public and private investment and facilities management in the energy sector. 
  • There is a proposed increase in the general fuel levy of 30 cents per litre and the Road Accident Fund Levy of (which would result in further increases in the price of petroleum fuels).

A copy of the Budget Speech 2016 is available on www.treasury.gov.za.
Odendaal Infrastructure still Budget priority with R870bn allocation - available from www.engineeringnews.co.za

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