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President’s energy plan fails to address the cancer at the heart of the crisis

By Mr Jacques Moolman, President of the Cape Chamber of Commerce & Industry.

While the Chamber welcomes long overdue steps to deregulate energy generation, we feel the President should do more to protect the country from the chronically underperforming state-owned power utility, which has run up a debt of R400-billion.

The country’s energy landscape will always remain vulnerable so long as there remains an income-swallowing black hole at the centre of the sector, and the new energy plan was light on detail regarding how that hole is to be plugged.  The Chamber has always maintained that government should create an enabling environment for the private sector to do what it does best – in this case cost-effective energy production.  South Africa’s energy future lies in a vibrant competitive marketplace that can harness global expertise and take advantage of exciting innovation in the green energy space. We do not see the point in trying to resuscitate or restructure Eskom in light of its systemic failure over the years, particularly in the context of countrywide load shedding which has caused such enormous damage to the economy.  Given the moves to introduce more private sector players into the energy space, why not consider allowing the private sector to partner with government to make Eskom profitable?

In this regard two recent Eskom revelations bear repeating:

  • Deputy President David Mabuza told parliament it will take a further five years – and several billion Rands – to rectify design defects at its Medupi and Kusile coal power stations
  • These two power stations have suffered outages as well

We note that it has taken many years for government to implement obvious reforms that should have been completed long ago, such as increasing its power station maintenance budget, cutting red tape to allow for more efficient procurement, removing the 100 MW licensing threshold for embedded generation, and doubling the Bid Window 6 for Independent Power Producers from 2 600MW to 5 200MW.  The question now is how long government will take to action these promises.

It is also noteworthy that the President’s energy plan coincided with news that the City of Cape Town is taking proactive steps to reduce the City’s reliance on Eskom, by amending its ‘feed-in’ tariff system.  While the President paid lip service to the idea of private generation, to date there has been little detail on how municipalities could be empowered to generate their own supply. We commend Cape Town for taking the lead in this area, with other municipalities sure to follow suit.

We sincerely hope there are more concrete plans in place to ensure Eskom does not short circuit a much-needed economic recovery.

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