South Africa’s business community is calling on President Cyril Ramaphosa to take urgent action against the country’s crippling energy crisis, or risk further economic downturn, rating downgrades and a deeper decline in consumer and investor confidence.
In a statement issued on Thursday evening Business Unity South Africa (Busa) criticised government for its slow progress in solving the nation’s energy supply problem. Busa further called on the powers that be to place the same sense of focus and urgency that it directed towards the Covid-19 pandemic to solving Eskom’s energy generation woes.
The organisation’s calls come as the rest of the country waits to hear Ramaphosa’s grand plan to solve South Africa’s electricity crisis, which many South Africans have had to bear the cold brunt of over the last few weeks.
In his latest weekly column, Ramaphosa said: “Over the past two weeks, we have been working with the relevant ministers and senior officials on a range of additional measures to accelerate all efforts to increase our electricity supply … While the measures we have already taken will secure the supply of reliable and affordable electricity into the future, we have been looking at what additional measures we can take now to bring that goal closer.
“We will soon be completing the detailed work and consultations needed to finalise these further measures. We will then, in the coming days, be able to announce a comprehensive set of actions to achieve much faster progress in tackling load shedding.”
Says Busa CEO Cas Coovadia: “We hope that the president’s announcement will provide a clear path, with deadlines that demonstrate the urgency with which the proposed actions will be implemented.”
He adds: “Once it is announced, we would like to see a joint government and business working team configured and deployed to focus on delivering results against hard deadlines.”
Busa, along with energy experts, also furnished the president with a list of demands that they believe, if actioned urgently, will see significant new generation and transmission capacity added to an already strained national grid, within the next two years.
- Resolving embedded generation registration and licensing issues and accelerating the time it takes to get applications approved.
- Unblocking red tape constraining private sector investment in generation capacity.
- Removing caps on registering self-generation projects.
- The suspension of local content rules until the energy crisis has been averted.
- Increasing the regularity and size of IPP [independent power producer] rounds for renewable energy.
- Establishing an emergency feed-in tariff framework to enable Eskom to buy power from existing generators.
- Resolving bottlenecks in the transmission infrastructure to unlock additional generation capacity.
- Developing a unified and scalable wheeling framework.
- Developing a public-private transmission partnership framework to speed up build times.
- Urgently addressing sabotage at Eskom, and the theft of copper cables.
“The ultimate objective is to add 15GW of new capacity, mainly renewables, to the grid, as well as 4GW of battery capacity by the end of 2024, which will help supply catch up with the expected demand, and where there is currently a 6GW gap,” says Coovadia.
Although plans are in place to attend to the country’s energy shortfall – such as Eskom’s interventions related to generating renewable energy though IPPs, which are expected to bring in about 6.5GW over the next couple of years – Busa says this is not enough.
“Busa notes that the urgent implementation of the interventions identified will help close the remaining 9GW gap and will entail (including batteries) additional investment totalling approximately R170 billion,” it says.
“There is enormous upside to getting this right,” says B4SA steering committee chair Martin Kingston. “Not only for the economy, but also to unlock capital that is available for investment in the sector. The sooner the conditions for investment are in place, the sooner the country will be able to unlock the funding needed.”
Turning the tide
In a more positive tone Busa vice-president Adrian Gore says he remains hopeful that South Africa can still turn the tide on its energy crisis, but only if the necessary interventions are implemented.
“Many good people, including within Eskom and the broader energy sector, are working very hard to make a difference, so we need to acknowledge and celebrate the successes and the progress that has been made.
“We also must change the narrative of the country to one which sets out our undoubted potential.
“A few priority interventions, executed with urgency, will turn the flywheel which will, in turn, encourage investment and help us realise the inclusive economic growth needed,” say Gore.
Listen: NPC commissioner Joanne Yawitch says an energy state of emergency needs to be declared (read transcript)