Statement by Alan Winde, Minister of Economic Opportunities

Today (31 October 2016), Minister Winde addressed the World Energy Cities Partnership at the Westin. Minister Winde opened the session, “Developing an Energy Sector Hub”.

Please see Minister Winde’s address below:

I’m delighted to be speaking to you during an exciting time for the South African energy sector.

Over the last 5 years investments of over R17 billion have been made in renewable energy projects in the Western Cape – R2,5 billion last year alone – creating over 2000 jobs on these projects, and another 700 in component manufacturing.

South Africa is now the world’s fastest-growing green economy, and Africa’s largest renewables market.

During her address this morning Cape Town mayor, Patricia De Lille, spoke about the city as one of the world’s “emerging energy capitals”.

Mayor De Lille provided a snapshot of the latest energy developments, and reaffirmed the city’s commitment to renewable energy.

Indeed, what we are seeing in the Western Cape is a focus from both government and the private sector to invest in clean forms of energy.

The Western Cape Government has put in place the Project Khulisa growth strategy. Khulisa means “to grow” in isiXhosa. Through Project Khulisa, we have selected to focus on a set of high-potential sectors, namely tourism, agri-processing and oil and gas.

It is our goal to add up to a further 60 000 jobs to this sector, and increase its economic contribution to R3 billion.

Our objectives are closely aligned with the National Government’s Operation Phakisa, which is seeking to stimulate jobs and growth from the ocean economy.

Along with a specific set of sectors, we’ve also identified energy security as an important strategic enabler. We know that for an economy to thrive and attract investment, it must have stable, affordable power.

One of our flagship initiatives in driving growth in the oil and has sector is the Saldanha Bay Industrial Development Zone (IDZ) along the West Coast, which is being managed by the Saldanha Bay Industrial Development Zone Licencing Company.

Significant progress is being made at the IDZ. We’re seeing a good flow of vessels along our coast and in the pipeline is a major project to recertify vessels here.

The lease between the Saldanha Bay Industrial Development Zone Licencing Company and the Transnet Ports National Authority (TNPA) is in place, and we expect to start construction next year.

TNPA will also be asking for a formal proposal from an international consortium to develop the 500m terminal at Mosgas.

There’s been an overwhelmingly positive investor response. The Licencing Company already has Memorandums of Understanding in place with 32 companies, and of those, building plans have been submitted for three firms. They’re getting ready to start construction as soon as the necessary approvals have been obtained.

It’s clear there is a drive to provide long-term infrastructure support to the oil and gas sector, we’re also making sure that we equip residents with the skills they need to take advantage of the economic boost this sector is delivering.

In this regard, skills development and local enterprise development are top priorities.

To illustrate the kind of positive economic benefit this sector has on our economy, we can look to DCD Marine Cape Town and a contract they brought to our region in 2014.

The company won a R1 billion repair contract from Saipem, a leading international oil and gas firm.

DCD Marine hired 166 sub-contractors for that job and of that 75% of the contract value went into the South African value chain.

This is the economic power of this sector, and the real benefits to citizens.

It is further estimated that 1 500 people from 30 different occupations are needed to repair one rig. By the time the IDZ comes online, there will be demand for 18 000 jobs in Saldanha.

Through the Western Cape’s Apprenticeship Game Changer, we will focus on achieving sufficient, appropriately qualified technical and vocational skilled people to meet the needs of prioritised economic growth areas in the province over the next few years.

We have set a target of introducing 32 500 qualified apprentices into the labour market by 2019. This target includes apprentices who will qualify as artisans, semi-skilled workers who achieve partial qualifications, and top-up qualifications for existing artisans and semi-skilled workers.

In addition, to make it easier to source local experts in the sector, the Licencing Company and PetroSA, South Africa’s national oil company, have completed a comprehensive analysis mapping our oil and gas value chain.

Early indications are that direct and indirect spend in this sector contributes 35% to South Africa’s industrialisation.

This detailed study will be made available shortly.

While it’s clear we’re serious about growing this sector, we’re also aware of the challenges posed by the oil price.

The oil price is looking more stable, but certainly we have noted that the upstream sector cannot commit to any new investments. At the same time, downstream services are recording increased revenue.

I am sure you have also taken note of media reports about Chevron selling off many of their assets worldwide.

Here in the Western Cape, this presents a major opportunity for investors in this space, and we’re already seeing strong interest in Chevron’s storage facilities and pipeline.

Another issue in the media was the recent release of the Preliminary Information Memorandum (PIM) by the national Department of Energy (DoE), which states the programme for the fLiquefied Natural Gas to Power Independent Power Producer Programme.

The release of the PIM clearly shows government’s commitment gas to power. As Mayor De Lille mentioned during her address this morning, we were disappointed that Saldanha Bay was excluded as a LNG importation terminal for Phase 1 of the gas to power programme.

I have written to National Energy Minister Tina Joemat-Pettersson with a view to further engagement around this decision.

We’ve also requested from the Minister that investors be allowed to tender for any of the three ports in the Request for Qualification process. We also look forward to collaborating with the National Government to give effect to their 600MW determination for the Western Cape, and how we can work together on this and other West Coast opportunities.

Now along with the IDZ, the proposed Special Economic Zone in Atlantis will also deliver a major economic boost to our region. It is expected that the SEZ will create 1 200 jobs, and add R1 billion to our economy.

Earlier I mentioned how South Africa was the world’s fastest-growing green economy and this province is playing an important role in driving this rapid growth. Around 60% of the successful utility scale project developers and 70% of renewable energy manufacturing takes place in the Western Cape.

This forum offers a valuable platform to build mutually beneficial partnerships, and I am confident we will work together to strengthen our energy sectors.