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We cannot rely on Eskom any longer: Mavuso

While there has been progress, it has been too slow: BLSA’s CEO.
Busi Mavuso is CEO of Business Leadership South Africa. Image: Supplied

The load shedding of last week was devastating. I have been told of companies forced to lay off staff because they simply couldn’t open their doors. Those with generators couldn’t get diesel to fill them fast enough. Those on batteries found them running dead.

Read: SA’s worst week of load shedding to hit economy hard

This was obviously also crisis for Eskom, with the loss of generation capacity directly linked to illegal labour action accompanied by sabotage and violence. Yet CEO André de Ruyter was front and centre to explain to the country and to business what was happening. He availed himself to address the BLSA Council to explain the situation on Wednesday and kept the country informed via the media. The openness was welcome.

There is only one way to ensure we do not face such occurrences again – we must diversify the sources of electricity in South Africa. We cannot rely on a single state utility any longer. We have known this for some time and had we acted more vigorously sooner, experiences like last week could have been avoided.

We have the right ingredients – the private sector can now build plants of up to 100MW without a licence. The renewable energy independent power producers programme can procure far larger power production. Within a matter of years we could substantially diversify the producers of electricity in South Africa.

Catch up on all our Eskom and load shedding coverage here.

We have made progress but it is too slow.

One very good intervention has been the decision of Eskom to make available the vast tracts of land it owns in Mpumalanga to independent power producers. Much of this land already has the regulatory approvals needed to produce electricity and is close to grid connection points. A fortnight ago, De Ruyter announced the first 18 successful bidders for leases on this land. They will each put up 100MW plants, adding 1.8GW in capacity. Only 11% of the 36 000 hectares available will be used by those first tenants so there is much more potential from this source.

There is also an acceleration in other private producers registering new plants with the National Electricity Regulator of SA. The regulator has so far approved 18 amid an “avalanche” of applications.

The last approvals were done in 19 days from receipt of the application. That is a positive sign that red tape has been removed from the process of private generation.

The signs are clear then that the future electricity market will be a diverse one. And in that scenario, industrial action at one producer does not necessarily result in load shedding. I suspect that those on strike foresee that future and the effort to extract higher wage concessions was driven by the knowledge that one day it will be impossible to hold the country to ransom.

There is still a way to go to a vibrant energy future.

Eskom must complete the unbundling of a separate system operator, one that will be able to buy electricity for the grid from the cheapest sources, only one of which will be Eskom. We need to put in place clear regulations and processes to facilitate wheeling through the grid – the process by which an electricity producer in one location can sell to customers in other locations through the grid. These additional steps will accelerate the rate at which private producers will enter the market.

Events of last week show how urgent it is that we act to bring about this future sooner. We need a single-minded focus on driving through the necessary reforms. Government and business need to be aligned to deliver on the vision. There have been successes – but we must not rest until we can confidently say that load shedding is thing of the past.

Busi Mavuso is CEO Business Leadership South Africa.

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My dear Busi —
You are attempting to put the blame at the door of Eskom.
You will be well advised that it is a problem not of their making.
The real causes ate an incompetent ANC government that willfully ignored several warning about the building of new plants.
An obstructive and spiteful Nersa not approving licenses.
An idiot of a Energy minister with coal connections to protect.
A minister called pravin – A pharmacist that is masquerading as Enterprise Minister and finally a President called Ramampoarra — for obvious reasons !!!

The Holstein breed is a specialized dairy cow that has the most efficient conversion of fodder to milk. Expecting the ANC to implement measures that will benefit the economy and create jobs is like trying to run a productive dairy with porcupines. It is a costly waste of time.

Trying to convert established socialist dogma and turn a communalist culture into a vibrant economy with full employment is a fool’s errand.

Not even “the terrible lessons of catastrophe”, as Bastiat put it, will bring the message across. The terrible lessons of catastrophe did teach the Chinese a lesson or two after Mao Zedong’s failed economic experiments though, but then again, they are an intelligent society that is able to learn from their own mistakes.

“When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns it’s back on progress and can be restored only by the terrible lessons of catastrophe.”

― Frédéric Bastiat, Economic Harmonies

I am having this discussion with myself here, and I am wondering how on earth any sophisticated banking system like ours is able to escape the damage that constant load shedding has on the ability of businesses and homeowners to service their debts?

It is inevitable for Luthuli House’s Eskom fiasco to eventually land in the lap of the governor of the Reserve Bank. When a shortage of electricity severely restricts the economic activity of a nation, solvency issues tend to go downhill very fast from there on. The tax base implodes, leading to a larger budget deficit and a worsening Debt/GDP ratio, and a shrinking GDP/Capita, followed by rising demand for social projects and increasing wage demands from government employees, which in turn, worsens the situation and puts pressure on the Reserve Bank to print the money Zimbabwe-style.

Please tell me that I have misdiagnosed the situation.

I would go a step further than saying “we” must diversify the national grid.

We must all be taking a serious look at self-provisioning as much as we can. It is easier for businesses with mainly daytime loads than for shift businesses and residential and it requires a big lump-sum upfront. it changes your place in the supply chain from being an abused milk cow to a fleet-footed free range animal.

“We cannot rely on Eskom any longer: Mavuso” …. Duh! That would be a lightbulb moment if there was a hope electricity to power it.

A billion Rand a day of lost income due to a handful of entitled “workers” and their self-serving trade unions? And will the new IPP companies have to go through the same labour/trade union dramas that have crippled the economy?

Yes, this is why my neighbour who works online for Amazon is leaving the country.

Sigh …

End of comments.

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