In July, still plunged in cold and darkness, so much happened and did not happen.
It all started with a statement from the ANC’s national executive committee urging government to speed up energy sector reforms “before we are left in the dark, permanently.” On 11 July in his weekly newsletter, President Cyril Ramaphosa confirmed that, in the coming days, he would announce a comprehensive set of actions to achieve a much faster progress in tackling load shedding. “What the past two weeks have demonstrated,” he said, “is that we need to do more and do so with the utmost urgency.” We were pleasantly surprised when the President announced some wide ranging reforms to do just this in his address to the nation last night, but more about that later.
July saw stage 6 load shedding for only the second time in our history, triggered by the loss of more than 18 000MW of generation capacity due to unit breakdowns and the unprotected strike by Eskom workers. Eskom speedily came to an inflation-beating pay deal with protesting workers, which was as speedily criticised by S&P Global as setting a dangerous precedent for on-going public-sector wage negotiations. Eskom spokesperson, Sikonathi Mantshantsha, however confirmed that top-level employees at Eskom have not had salary increases or a bonus for years.
As we highlighted last month, electricity has consistently been under-priced for over a decade so we wait, very nervously, for NERSA’s upcoming decision whether or not to grant Eskom’s application for another tariff increase of 32,66%. Eskom has also applied to court for a review of NERSA‘s 2022/23 tariff increase of 9,6% as opposed to the requested 20,5%. In addition, rumours abound of a new tariff structure that would, if approved by NERSA, significantly increase the unit cost for those consuming less than 900KW per month, while imposing a R938 per month surcharge for solar uses. Eskom has defended the proposed changes to the tariff structure to account for the cost-reflective nature of the services provided, such as energy charges, network costs (for using Eskom’s infrastructure) and services charges (for the cost of administration).
Despite general outcry internationally around preferential treatment (culminating in the UK with Prime Minister Boris Johnson’s resignation) not all South Africans seems to be suffering Stage 6 equally . . . there are rumblings that those living in the “Bryntirion State VIP enclave” are exempt from loadshedding. This vast compound east of the Pretoria CBD includes Mahlamba Ndlopfu, the chief official residence of the President, the Vice President’s official residence, and a number of Cabinet Minister homes. It is apparently not on any loadshedding schedule, while public hospitals and morgues are not exempt and by law are required to run generators. The rest of us, if we’re lucky, are stuck in loadshedding-induced traffic, sporadically losing our WIFI and cell phone reception, and switching off generators we can’t afford to run thanks to the exponential rise in diesel prices. If the rumours have merit, it is puzzling why such preferential treatment does not translate into a more productive and energised government?
Despite the palpable despair of a people plunged into this special breed of Stage 6 gloom, the office of the Presidency endorsed, as “a great idea,” Minister Gwede Mantashe’s plan, known as “Eskom 2.0”, to create another state-owned utility to compete with Eskom. What with grid capacity constraints being one of the drags on the REIPPP Programme which government has been struggling to resuscitate since Bid Window 4, the instances of state capture and corruption in SOC’s brought to light by the Zondo Commission, Kusile still not online but a source of endless kickbacks, a run-away R20 billion Koeberg refurbishment for July 2024, arrests in relation to kickbacks on Eskom deals, Eskom debt estimated at several hundreds of billions of Rands, and concerns about a looming sovereign debt crisis, it is hard to fathom why and how National Treasury and the South African taxpayer could fund another state-owned competitor to Eskom. Or how this would help to achieve a just energy transition. As Thabi Leoka so logically puts it, a “transition is a move from one condition to another. … Renewable energy is not coming onto the grid quick enough, and Eskom is collapsing. Can there be a transition from which there is no base to transition from?”
Unsurprisingly perhaps the idea has been widely criticised, including in colourful terms by DA shadow Minister of Public Enterprises, Ghaleb Cachalia. Also throwing shade, Mondli Gungubele, chairperson of the National Planning Commission, called for the total annihilation of all red tape, it being, in his view, the main reason for the delay in new, renewable projects, for which he says Mantashe is largely to blame.
Undeterred, Mantashe found time to profile Andre De Ruyter in an interview with the Mail & Guardian. “Eskom needs a fixer”, he said, “a person who focuses on what is broken, and [who will] try to fix what is broken, and once he or she fixes it, moves on. Then you can have an alpha”. We appreciate the Minister’s sensitive use of pronouns and look forward to coherent fixer-based government policy. Indeed, according to the President’s weekly newsletter, the Presidential emergency plan also includes urgently bringing back skilled employees who have left Eskom to fill serious staff shortages at all levels, in particular in management, operations, maintenance and engineering services. No alphas need apply at this stage.
And just when we had abandoned all hope, Minister Barbara Creecy threw the people a lifeline by announcing initiatives to streamline the environmental assessment process for renewable energy projects. These include exceptions from EIAs / BARs for certain listed or specified activities, and a fast-track registration process which could reduce the timeframes from 300 days in many instances to 60 days from inception of the project. Addressing the opening of the 13th Petersburg Climate Dialogue in Berlin, the Minister also took on developed nations for reverting to coal amid a global energy crisis. Cometh the hour, cometh the fixer!
The press had also started to ask whether the Presidential emergency interventions could not perhaps “unleash the forces of the private sector into the electricity supply market” as a means of fixing the problem. Indeed, given the current crisis, one may be forgiven for having asked why government policy continued to limit registered privately held power plants to 100MW and for government to remain virtually the sole offtaker restricting supply through section 34 determinations in the REIPPP Programme and generally. Talking about fixers – did you hear the President last night…there may be hope after all! We’ll send you a special edition Energy Blast detailing his proposed amendments shortly.