South African Energy Policy FES Briefing Paper 11| August 2007 Page 3 competitive but most domestic coal production is via long-term non-transparent contracts. A central tenet in the South African Energy Poli­cy White Paper of 1998 is that: “ Government will encourage competition within energy mar­kets. ” Since publication of SAWPEn South Africa has put a lot of effort into activities around at­tempting to establish competition in the bulk electricity market, re-structuring the electricity distribution industry and de-regulating the Petro­leum/liquid fuels sector. There have been prob­lems which are ongoing, and given the long his­tory of monopoly in the electricity sector and the tight, secret regulation of the petroleum 2 sector it can be expected that the market liberalization and de-regulation processes will face significant challenges and obstacles. Transparent, equitable, stable and effective legal and regulatory frameworks Transparent, equitable, stable and effective legal and regulatory frameworks are a central tenet of the SAWPEn. A raft of legislation has been pro­mulgated to implement the SAWPEn and South Africa is now in the first phase of implementing crucial aspects of the legislation involved in es­tablishing the institutional capacity necessary for independent regulation. Independent energy sector regulation is in an embryonic stage. The National Electricity Regula­tor(NERSA) was established in November 2006. South Africa is in the throes of implementing an entirely new regulatory regime. Prior to establis­hing NERSA, practically all regulatory experience and capacity in the energy sector had been in electricity regulation. Now, the new regulatory regime is based on fundamentally different prin­ciples and procedures and new capacity is being built to implement it. Enhanced dialogue on relevant stakeholders' perspectives Following a long history of policy often being made in relative secrecy, the approach followed in developing the SAWPEn recognized and put into practice effective and transparent engage­ment of all stakeholders. In addition, the SAW­PEn explicitly recognizes the need for the South African energy sector to be operated and deve­loped within co-operative and integrated regio­2 During the apartheid years’ United Nations crude oil sanctions legislation made it a criminal offence to communicate basic information about this in­dustry. nal and international systems. Indeed, the SAW­PEn was developed with the participation of key players in the international arena, and during and after development of this key policy docu­ment there have been significant and successful ongoing efforts to build, contribute to, and work within a number of international bodies and in­stitutions, with South Africa often playing a key role. Locally, too, ongoing policy development and implementation have sought to further extend stakeholder involvement. Relevant examples in­clude the processes around compilation of Na­tional Integrated Resource Plans 3 ; production of the first ever national Integrated Energy Plan 4 ; the National Climate Change Response Strategy 5 and the National Energy Efficiency Strategy 6 . The processes around production of these plans and strategies have been comprehensively inclusive in terms of engaging stakeholders. Another example is the recent joint activities between the National Energy Efficiency Agency and key sta­keholders 7 . In addition to these pro-active processes involved with implementation of policy, when implemen­tation runs into problems, government has en­gaged stakeholders, openly where appropriate, in assessing the problems and seeking solutions, for example the Report of the Moerane Investi­gating Team to the South African Minister of Minerals and Energy on the December 2005 Fuel Shortages 8 and the Fuel Supply Strategic Task Team. Diversification of energy supply and demand, energy sources, geographical and sectoral markets, transportation routes and means of transport SAWPEn explicitly supports diversification of energy supply sources in one of its 5 fundamen­3 NIRP-1-3, Integrated Energy Plan for the Republic of South Africa Department of Minerals and Energy. 19 March 2003. 4 Integrated Energy Plan for the Republic of South Africa Department of Minerals and Energy. 19 March 2003. 5 A National Climate Change Response Strategy for South Africa. South African Department Of Envi­ronmental Affairs And Tourism. September 2004. 6 Energy Efficiency Strategy of the Republic of South Africa South African Department of Minerals and Energy. March 2005. 7 Note that this is a small selection of a multitude of stakeholder processes. 8 Report of the Moerane Investigating Team to the South African Minister of Minerals and Energy on the December 2005 Fuel Shortages. July 2006.