The National Solar Water Heater (NSWH) programme of the Department of Minerals and Energy (DMRE) that is meant to install 5 million units in households by 2030 hit a snag on the first 82 000 units.
This as R324 million in fruitless and wasted expenditure was accrued from extensive storage costs. while many units have been stolen or vandalised in municipal and government facilities.
Updating Parliament’s Portfolio Committee on Energy and Electricity, the director-general at the DMRE, Jacob Mbele, and chief director for programmes and projects management office, Elizabeth Marabwa, said the department was currently reviewing the responses of officials implicated in a KPMG investigation into the fruitless and wasteful expenditure, which accumulated after 2022 when the department claims to have controlled the high storage costs.
They said the DMRE was also engaged in legal battle with some of the contracted manufacturers to recover more than 13 000 units in dispute for either storage costs or poor quality.
The storage costs have been accrued from the units being kept with the manufacturers for more than six years, while the department went through the initiating processes resulting in over R100m annual expenditure, which the DMRE said it had capped in 2022 by moving the units.
Mbele in 2022 said some of the SWH systems - originally priced at R16 500 for manufacture, storage and installation - stored in various facilities had been vandalised and components, especially copper pipes stolen while storage costs, which had been running at more than R100m a year, had been capped through using government and municipal storage facilities.
Mbele said yesterday the KPMG report had been finalised and in the main points to the contravention of the Public Finance Management Act (PFMA) by officials in the department and that the disciplinary process was expected to be concluded by December this year.
“The forensic report does not consider the reasons, it just looks at whether the officials followed process and if they contravened the PFMA or not, it does not look necessarily at issues,” Mbele said.
He said significant progress has been made to deal with the problems of storage costs of the solar water heaters, with 80% having been installed in various municipalities.
“We had hoped to have finalised by the end of this month but there are a number of issues, delays in one municipality because the contractor could not execute as planned,” Mbele said.
“The importance and the need for the solar heater programme as a government remains and because the original objectives and issues that draw the need for the programme still remain.”
Meanwhile, Marabwa said the rollout process was nearing completion. Out of the 82 000, close to 74 000 were collected, 13 500 units were under litigation with suppliers, close to 59 000 were installed, 11 481 were yet to be installed and 3 687 were counted as damages.
She said 15 contractors had been appointed to install the last phase expected to be completed in December this year.
“We had issues during the pre-installation period. We also had a number of issues involved during the manufacturing period. We were not able to collect the systems in time, and as a result, companies kept the solar water geysers in their facilities for a period of six years and that resulted in high storage costs being charged,” she said.
“We incurred cost of R324.8m on average, but once we started connecting the geysers in 2018, we started to reduce the cost and finally eliminated it in this financial year.”
She said the project had to continue because of spin-offs including the 70% local content input that aided job creation, the jobs and training to previously unemployed, reduction of the cost of electricity for poor households and also the cushioning of consumption from the grid.
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