I will show you later. Initially, it was the Regional Electricity Distributors, Reds, policy, which was meant to solve the crisis in municipal distribution. This was abandoned when it was considered unconstitutional, and since then we have seen nothing new from the government to address this burning issue. The backlog in the maintenance of municipal electricity grids has since grown to close on R50 billion, and many municipalities are starting to experience localised blackouts as a result.
Instead of smart grids, we have broken grids, and the situation is only getting worse. Quite simply, we need to rethink the entire institutional structure at municipal level and find noble ways of funding local government differently. The DA therefore welcomes Minister Gordhan opening the broader debate on this in his Budget Vote, but we would also argue that the Division of Revenue Act, Dora, funds must incentivise achieving certain national objectives like energy efficiency and the uptake of renewable energy and solar water heaters. Instead, the Approach to Distribution Asset Management, Adam, programme of the Department of Energy, while responding to an emergency need in municipalities, is simply rewarding the practices of municipalities that have led to an underinvestment in their electricity grids.
Then there was the infamous Independent System and Market Operator, Ismo, Bill, which was supposed to remove the operations of the grid out of Eskom and create a more level playing field for Independent Power Producers. It was first announced in the President's state of the nation address in 2010, debated and passed by the full energy committee in 2013, only to have ministerial interference, preventing it from being debated in the House. At the time, I was called a pathological liar for simply pointing out what many ANC members said, and, in fact, what the Chief Whip confirmed to me at the time, which was that powerful ministerial interests did not want this Bill to be passed. I am sure I will be called many more things while I continue to speak truth to power. That is precisely what we all have to do, if we truly want to address this energy crisis.
Minister, you need to build a shared consensus around a so-called end-state vision for our electricity sector, something that Minister Brown called for in her budget debate. The DA has a clear vision of what that end state should be, but it will require taking on vested monopoly interests. For the sake of the EFF, I am talking about state monopoly interests and not what you derogatively refer to as white monopoly interests.
Monopoly power must certainly be challenged in our economy, but the biggest and most inefficient monopoly is in our energy sector. Eskom currently accounts for 95% of electricity generation; it owns and operates the country's entire transmission grid and is responsible for about 42% of electricity distribution.
The painful fact is that Eskom's monopoly stranglehold of this sector is holding our whole economy to ransom, and it has become a model of perverse economics. On the one hand, it is encouraging its customers not to consume its product and even paying businesses huge amounts of money not to do so. On the other hand, it is selling large amounts of its product at below the cost of producing it to other customers. In addition, it is paying one of its suppliers vast sums of money for inputs that it cannot even use.
It has also racked up R250 billion in debt with very little to show for it, and now thinks that the answer to its woes is to force the National Energy Regulator of South Africa, Nersa, to hike its electricity prices in order to pay for its enormous inefficiencies. Clearly, this is a huge hole that has been dug for South Africa, and it requires a fresh new approach to solve this crisis. So let me now outline what that approach should be.
In fact, we can see small glimmers of it in the one huge success of this department, namely the Renewable Energy Independent Power Producer Procurement programme. This programme has seen over R150 billion of private investment flowing into the energy sector and the average price of generated electricity falling dramatically over the three bid windows, with each one being massively oversubscribed. In fact, the average price of wind- generated electricity has now fallen to 74c per kilowatt hour, significantly cheaper than what it will finally cost from Medupi, whenever it finally comes on line. It has also only taken two years to construct these plants, and some of them are now already adding electrons to the grid and helping to alleviate our energy crisis.
The success of this programme shows that we have to increase the allocated amounts to it, and we should have been using the South African Renewables Initiative, Sari, that was signed at COP 17 to utilise grant funding from developed countries, to institute a far more ambitious renewable programme. However, we let that fall by the wayside.
Hon Minister, you should also convince your colleague in Land Affairs to change the tenure system in the communal areas so that communities in areas like the Eastern Cape could also benefit from investments into large-scale renewable projects.
The fact is though that this programme is still too small to threaten Eskom's monopoly control and that is probably why it has been allowed to proceed. We now need to see major Independent Power Producer, IPP, procurement programmes for base-load energy, especially in the gas sector, along with the long-awaited cogeneration programme that has come close to the 2 500 megawatts it wanted to supply to the grid for many years. A new grid operator must also facilitate wheeling through the grid so that IPPs can contract directly with companies, thereby removing the risk from the state.
Instead, what we see unfolding in the background is more of the ANC's outdated state monopoly thinking in the form of the proposed nuclear build programme. This programme could cost the country upwards of R1 trillion and will push up electricity prices to completely unaffordable levels, which in turn will drive down economic growth and with it electricity demand. We could have the absurd situation that after spending vast sums of money on this programme for over ten years of building these nuclear plants, there would no longer be customers willing to buy the energy from them. This is the arms deal and e-toll debacle rolled into one and then magnified by ten.
Almost everyone I speak to, from the business sector to civil society, has huge concerns about this programme, which is, in fact, explicitly outlined in government documents like the Integrated Resource Plan, IRP, update and the NDP. It seems the only person truly in favour of this programme is the President himself. Given the huge potential for corruption in this programme, I suppose it is not difficult to understand why. However, the DA will not stand by idly and let the ANC dig this country into an even bigger hole than it has already done in the energy sector. It is time to stop digging, and to embrace a radically different energy future for South Africa.
The DA wholeheartedly agrees with the latest IRP update that states we need a flexible energy policy that gives priority to smaller generation technologies with shorter lead times. This fits with our open-opportunity vision for South Africa. Open up the grid, and give every South African the opportunity to contribute to finding the solutions to our energy crisis.
Instead of big state-controlled build programmes, the DA will radically overhaul the institutional architecture of our energy sector and unleash the dynamism of our households and companies in responding to this crisis. We will make it easier for households and companies to feed power back into the grid, like Cape Town is in the process of doing. We will also change all of our diesel-powered generators over to gas, and ensure that there is a favourable environment for investments to flow into putting in place the needed infrastructure to take advantage of the major gas finds in the Southern African region.
The DA will also replace the Mineral and Petroleum Resources Development Act, MPRDA, with legislation that actually makes it attractive to invest in the oil and gas sector. Instead of the broken municipal grids that we have now, the DA will invest in new smart grids that can help us prepare for the uptake of future energy technologies.
Ultimately, the DA will replace our current wholly outdated institutional and infrastructural energy framework with one that is able to take advantage of the major global advances that are being made in the energy field.
The time for dancing around this issue is over as we run the risk of being stuck in an energy paradigm that will render our country uncompetitive. If you are prepared to stop the ANC's time warp dance, and spend the next five years pushing forward significant energy sector reforms that can get us to a more competitive, dynamic and diverse end state for the sector, then the DA will play its part in helping to overhaul our creaking energy system. I thank you. [Applause.]