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Forget strength… Give me power is SA’s new rallying cry

29 July 2022 Gareth Stokes

The recent mutterings by the department of mineral resources, since seconded by the country’s president, that Eskom 2.0 is a perfect counter to South Africa’s electricity woes should have sent the local citizenry into a Sri Lankan style frenzy. Alas, cowered as we were from week-upon-week of Stage IV and worse loadshedding, we hardly noticed.

Contradictions aplenty

As reported in DailyMaverick.co.za and elsewhere, minister Gwede Mantashe suggested that setting up a second state-owned electricity utility to compete with Eskom would serve to immediately up the ante insofar as electricity distribution and generation… President Cyril Ramaphosa, in his capacity as ANC president, then contradicted himself to the South African Communist Party (SACP), balancing the statement “we should not diminish the central role of the state in coordinating, in planning, in guiding [and] in enabling the development of the economy” with “in setting up state-owned enterprises (SOEs) through which [to] foster the employment of our people”. Bizarrely, reduced state influence means setting up more SOEs. 

Commenting during the same address, the president reportedly said: “Comrade Gwede Mantashe, in dealing with this problem of energy, has said ‘President, why don’t we set up … another state-owned entity so that we lessen our risk just as they are exposed in one entity,’ and I have said I agree with him because the state must continue to play a key role”. Mind you, the intersection of a private sector friendly African National Congress (ANC) government has never made sense in the context of its narrow alignment with the SACP and labour. On one front the ANC government is calling for the private sector to “lend a hand” at ailing SOEs, on the other, the various trade unions continue to declare an open ‘war’ on capital. But we digress. 

Forget tortoises, we are talking snail’s pace

Many South Africans remain confused by the apparent contradiction of government’s promise to tackle the electricity crisis and the snail’s pace progress being made in finalising independent power producer (IPP) contracts. Another recent development that beggars belief in the context of huge electricity production backlogs, is Eskom’s request to the National Electricity Regulation of South Africa (NERSA) to allow it to charge a fixed fee of almost ZAR1 000,00 per month to any citizens who dare to hook their houses up to the sun! Clearly, the country’s decades-long electricity crisis is set for a multi-year extension. 

Before this writer dives too far down the pessimism wormhole, he thought it worth exploring the president’s 25 July 2022 address on resolving the electricity crisis. The following paragraphs contain some key “he said” moments without immediately testing the veracity of same. Ramaphosa acknowledged the crisis, saying that “severe loadshedding has disrupted all of our lives and caused immense damage to our economy [and that] after more than a decade without a reliable electricity supply, South Africans are justifiably frustrated and angry”. No prizes for these observations, though we enjoyed the rather un-presidential comment that citizens were “fed up”. 

Bold, courageous and decisive action

The problem would be solved, said the president, by “bold, courageous and decisive action to close the electricity gap”. What, wondered this writer, will these actions include? It turns out that tangible actions were difficult to identify from the speech. Instead, we can list government’s actions (sic) or promises (also sic) under heading like appeals, chit-chat, and making lists. Alongside the appeals heading we include the tried-and-tested requests to all South Africans, businesses and consumers alike, to be part of the solution, and “contribute in whatever way they can to end energy scarcity”. Except, of course, if you intend installing solar at your home, or building a power facility exceeding 100MW of generating capacity! 

Under the chit-chat heading, you will be comforted to know that government (and / or the president) have held extensive discussions with the Eskom executive management, power station managers and former Eskom personnel [as well as] met with labour federations, Business Unity South Africa, the Black Business Council, community representatives, experts in the energy sector and political party leaders in the ongoing attempt to resolve the crisis. As for making lists, herewith the five-pointer the president shared as a ‘roadmap to power salvation’ midway through 2022. We leave it to you, dear reader, to decide whether you have heard these before: 

  1. We must improve the performance of Eskom’s existing fleet of power stations.
  2. We must accelerate the procurement of new generation capacity.
  3. We must massively increase private investment in generation capacity.
  4. The solution will hinge on enabling businesses and households to invest in rooftop solar.
  5. The solution will be designed to fundamentally transform the electricity sector and position it for future sustainability. 

Impossible to reconcile

All points well made; but how do you reconcile “the call for all South Africans to be part of the solution” with the aggressive move by Eskom to have electricity users pay a standing charge if they install solar, let along the decision by many local municipalities to foist all manner of regulatory red tape on solar installations at businesses and households? And how do you balance the demand that private firms invest in electricity generation with the proposal, or let us rather call it threat, of Eskom 2.0? In a recent media address, the Free Market Foundation (FMF) opined that “talk of establishing a second electricity utility owned and operated by the government to ‘compete with Eskom’ was of grave concern”. The writer agreed with their opening statement but was less sure about the FMF’s alternative approach to ending Eskom’s monopoly was entirely rational. 

The FMF argued that the power utility’s. monopoly could be ended by changing a single word in the Electricity Regulation Act (ERA). They explain: Section 8(1) of the ERA provides that no person may generate, distribute, transmit or trade in electricity without a licence; the FMF submits that ‘no’ be replaced with ‘any’. The ERA will then provide that “any person may generate, distribute, transmit or trade in electricity without a licence”. The media release was surely ‘tongue in cheek’, though it correctly identified Eskom, NERSA and various municipalities as part of the problem. “These institutions ought to be begging ordinary South Africans to generate power and transmit it into the national grid; and as part of this ground-up initiative, they should be offering to help South Africans set up these systems and feed excess electricity into the grid safely and efficiently,” said FMF Executive Committee member Martin van Staden. Hear, hear! 

The trouble with accelerated procurement…

Returning to the president’s ‘electricity crisis’ speech, this writer was confounded by his praise for already-completed generation projects. After all, the power produced by these facilities were part of the demand and supply ‘mix’ in June 2022, when the number of loadshedding days spiked so terribly. Nor does the apparent arbitrary raising of the “licensing threshold for new embedded generation projects from 1 MW to 100 MW” deserve praise: why not 1 000MW, or 10 000? Our greatest concern following the speech is with the promise to accelerate procurement for both gas and renewable electricity generating capacity, raising the distinct possibility that taxpayers will end up paying for that incredibly costly, and not particularly clean, Karpowerships deal. 

“The measures we are announcing this evening, together with the steps we have already taken, will hasten the end of loadshedding,” concluded the president. “They will put our country on a clear path towards reliable, affordable and sustainable energy supply; if we work together, if we hold each other to account, if we meet our deadlines and fulfil our commitments, we will end the energy crisis and create the conditions for growth and job creation”. There is nothing wrong with the president’s sentiment; but one can only hope the follow through does not let the country down.

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