The Democratic Alliance (DA) will write to the Minister of Energy and Mineral Resources, Gwede Mantashe, and the Minister of Public Enterprises, Pravin Gordhan, to ask that they act in the national interest and convene a National Energy Indaba that would draw up an Energy Social Contract for:
- accelerated emergency energy procurement from Independent Power Producers (IPPs);
- scoping feasible timelines for the unbundling of Eskom;
- fostering public/private partnerships for secure electricity supply; and
- providing actionable timelines for verifiable project throughput.
South Africa’s deepening energy crisis was laid bare on Monday by Eskom CEO, Andre de Ruyter, when he revealed that the country should expect another five years of loadshedding, due to a shortfall of some 4000 MW over this period. This was a stark reminder that unless urgent steps are taken to reverse the current trajectory, the prospect of a total grid collapse becomes an increasing reality.
The Energy Social Contract will be a binding plan of action entered into between the government, leaders from the energy sector and civil society. At the centre of its core offer should be a commitment from government to expedite the approval process for IPP projects that can be implemented at scale in short time frames, identification of such projects by industry experts and the development of an accountability framework to be administered by civil society.
The Indaba must put to bed once and for all government red tape which is standing in the way of unlocking additional generation capacity. The Risk Mitigation Emergency Power Procurement Programme, announced with much fanfare at the height of stage 6 loadshedding in December 2019 with the goal of bringing 2000MW of additional generation capacity online “within months” has not yet procured a single megawatt. The Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) has been marking time since 2015 – although generation procured then is now coming online, no new procurement has taken place in 6 years.
On the legislative front, Minister Mantashe should commit to using his ministerial powers to amend schedule 2 of the Electricity Regulation Act to open up the electricity generation sector. In addition, a firm undertaking is needed on when he will issue a Section 34 determination authorising the IPP Office to proceed with new power procurements.
Eskom’s current model of overreliance on state bailouts is unsustainable and has emerged as one of the largest threat to the country’s short to medium fiscal stability. The unbundling of the entity, while welcome, should be predicated on how the new structure can leverage on the growth of investment in renewables, gas and interim clean coal technology as applicable and permissible in terms of cost and gradated measures. It is no longer feasible for Eskom to continue using its monopoly to block change in the energy sector while pursuing an obsolete business model that no longer serves the needs of a modern economy.
South Africa needs a reset if it is to ride out the ongoing electricity crisis. A National Energy Indaba offers an opportunity to put outside our differences and work towards a re-imagined energy sector that will get our economy working again and creating jobs.
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