Key Ramaphosa ally hinders efforts to tackle power supply crisis

Criticism is increasingly being directed at Gwede Mantashe.
Mineral Resources and Energy Minister Gwede Mantashe. Image: Moneyweb

South Africa has been hit by rolling power cuts less than a month after President Cyril Ramaphosa gave renewed assurances that energy constraints were being addressed, making his pledges ring hollow and highlighting his administration’s inability to tackle the crisis.

While Eskom, the state utility that provides about 95% of the nation’s electricity and is overseen by Public Enterprises Pravin Gordhan, has borne the brunt of the blame for the outages, criticism is increasingly being directed at another target: Mineral Resources and Energy Minister Gwede Mantashe, who is also chairman of the ruling party.

The 64-year-old former miner and labour union leader is one of Ramaphosa’s most important political allies, yet his reticence to fast-track renewable power projects could prolong the electricity shortages, which have caused the economy to stagnate and sapped investor confidence.

Increased use of solar and wind energy would reduce South Africa’s reliance on coal, which is currently used to generate the bulk of electricity utilised in the continent’s most industrialised economy. That prospect bodes ill for about 87 000 coal miners, many of them members of the National Union of Mineworkers — which Mantashe led from 1998 to 2006.

“He is a calculating man. The reason he is where he is is because he comes with the unions,” said Ralph Mathekga, an analyst and author of books on South African politics. “He manages to restrain Ramaphosa in the interest of his old traditional allies.”

Furthermore, private producers dominate the production of green energy and an enhanced role for them would mean a diminished one for Eskom and increase pressure on the utility to trim its bloated workforce of more 46 000 people — a prospect vigorously opposed by the unions.

Mantashe “does not believe in privatisation,” Mathekga said. “He is a trade unionist at heart.”

The gravity of the situation has been demonstrated by several days of outages at a time when many power-hungry factories are closed for the holiday season. Most will restart this week, adding strain to the grid.

Private generation

One of the quickest ways to boost electricity output would be to allow private business to generate as much as 10 megawatts without a license, up from a current limit of 1 megawatt. While former Energy Minister Jeff Radebe initiated the process of raising the threshold last year, Mantashe has failed to follow through since assuming the energy portfolio in May.

“Nothing is being done” to enable additional power generation, said Dave Long, general secretary of the South African Independent Power Producers Association. “They are just dragging their feet.”

Sibanye Gold, the country’s biggest precious metals producer, has failed to get approval for a 150 megawatt solar plant, and many other firms have experienced similar problems, its chief executive officer Neal Froneman said last month.

The government could also tap private producers to supply more renewable power to the grid. South Africa had one of the world’s most successful green energy purchase programs, but stopped seeking bids for new projects in 2016 as former President Jacob Zuma pushed a nuclear power deal with Russia that’s since been abandoned.

Stalled procurement

The last power off-take agreements were signed with 27 independent producers in 2018. Mantashe last month said discussions were underway to establish which of those projects could still be brought on stream this year and that additional investment rounds won’t start until that process is concluded.

“We need to place procurement rounds out there like yesterday,” said Wido Schnabel, chairman of the South African Photovoltaic Industry Association, who estimates that sizeable solar projects can be up and running in a year. “Every day that we delay buying new capacity is a day lost and a day that’s going to cost us dearly.”

Mantashe didn’t respond to questions about why he hasn’t moved to ease the small-scale generation requirements or call for more bids for renewable projects.

The minister was galvanised into action last month when Eskom instituted its deepest power cuts yet, reducing supply by 6 000 megawatts, and published a request for information for short-term power supply options of as much as 3 000 megawatts within a year. That process is unlikely to deliver the desired results, according to Long.

“The request for information is worthless” because there’s no way you can procure that much capacity quickly, he said.

Ramaphosa, himself a former union leader, is likely to be loath to act against Mantashe because his control over the ruling African National Congress remains tenuous and he needs to keep his labour allies on side.

“If you replace him, the unions will overrun Ramaphosa,” said Mathekga. “If you retain Mantashe you say you are happy with this moderated approach,” and that the unions’ interests are paramount, he said.

© 2020 Bloomberg L.P.

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South African’s always moan about government intervention at SOE’s. However, when times are tough, the same moaners insists that government must intervene. Eskom CEO must now be given the space to make independent decisions. If he feels SA needs power cuts, lets respect his decisions and not run to government. Only way forward.

Tweedledee and Tweedle…

Between this fellow and Zuma they stalled 65 REP projects. I am involved in a windfarm so have inside info.

o’Gwede is one of those ‘talk left’ political people who has fallen in love with the finer things in life.

He only wants to be retained as he wants to be perpetually blessed with money.

Why is this guy still in government taking down the economy?? ???????????????????????????????????????????????????????????????????

The unions have much political influence and little political accountability – they need to split from the ANC and form their own party – instead of keeping the country at ransom.

In a growing economy the excess workers at the SOE’s can be easily absorbed – but first the economy needs to be kickstarted again.

Indeed I fully agree with your first paragraph, the trade unions in SA are too influential. In many media like the SABC or even eNCA the trade unions are often hauled in as experts on everything.
I think what you say in the 2nd part has to be reversed, we can only really kickstart the economy, when Gov let’s go.
About all SOEs should be liquidated, closed down or sold. And the rest of the massive Gov machinery, bureaucracy should be seriously rationalized and reorganised. Bloated staff to be relaeased, and inflated Gov wages seriuosly adjusted. This all combined with enormous relaxations of labour laws, to really unshackle the private sector. Then new jobs will be created, although not immediately royally rewarded.
On Twitter there is now some obscure poopooganda entity called the SAEF, the SA energy forum, that released a document requesting that Eskom should be taken away from Minister PG, but would solely rest with the MRE department, Mantashe. The SAEF does not have a website, and acc to Prof Hartmut Winkler it is linked to Rosatom, TransformSA’, ‘Coal Transporters Forum’, Guptabots, etc.
twitter.com/chrisyelland/status/1214617160171098112/photo/1

SHOW GWEDE THE MONEY (IN FAMILY MEMBER’S ACCOUNT) AND YOU CAN GET WHAT YOU WANT.

It is becoming increasingly clear that the narrow base of pro active, concerned and positive economy-integrated South African citizens have been separated from the supposed tenants of good government for quite some time.

Urgent formal settlement of this divorce from the corrupted core of the political apple, and generation of the new momentum is needed.

Enabling private energy creation on a grand scale, should be fast-tracked.

At the current rate, ultimately even the houses of parliament will need a new service provider soon.

Grab them by the gwedies!

As usual, the biggest obstacle to this country’s progress (barely) is the ANC and their union partners, the giant millstone around our necks!

It’s time the damage Gwede Mantashe is doing to South Africa is made public. At least a third of Eskom’s employees need to be fired, which obviously sticks in Mantashe’s craw. But these people (where willing) could then be retrained to do solar PV installations, which South Africa is crying out for. Am so sick of Communists (who are historically-proven failures) and Socialists (no way 3 million taxpayers can support 57 million people) trying to run the show. But Mantashe is dragging his feet on renewables just for the sake of a few thousand union workers. A seriously disgusting stance.

Dragging their feet or dragging their knuckles?

GM needs to retire and start doing adverts for throat lozenges – he’d make a fortune.

End of comments.

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