EDITORIAL: Let the private sector in
It is clear this government is out of its depth when it comes to running a modern economy
It is possible some good may come from this week’s damaging bout of load-shedding. Friday’s cabinet meeting will be the decider of that.
President Cyril Ramaphosa has said that several responses to the energy shortage will be taken there for decision. He has implied that freeing up the private sector to generate its own energy will be one of them. He has also said that the procurement of new rounds of energy could be one of them.
These are the two single most important things that the government can do at this point. If there is some progress on these then it will be the first progress ever on energy security made by the Ramaphosa administration. The Integrated Resource Plan (IRP), which is the long-term energy plan for the country, identified “the immediate risk of huge power shortages” that could last for four years. The risk was due to deteriorating performance of Eskom’s plant, which over the past five years has declined significantly. It is clear that this trend is not about to be arrested.
The infuriating thing is that back in 2015, when Ramaphosa headed the Eskom war room, he spoke of the potential of self-generation to close the energy gap. He did nothing about it then and the potential of farmers, mines and businesses to generate their own energy has remained pent up, blocked by regulatory red tape. With renewable energy technology now so accessible to anyone with a bit of capital and in a country where the sun shines so intensively and the wind blows, this neglect is unforgivable. The SA Photovoltaic Association of SA estimates the 2,000MW — which is energy equal to two stages of load-shedding — can be added to the grid over 12 months.
The second quickest way to add more capacity to the grid is through the construction of new wind and solar PV generation. Once commissioned and financed, these projects can be up and running within two years. The government has held back on a new round of procurement because of political opposition by interests in the energy sector: trade unions, coal truckers, the nuclear lobby and others. In doing so Ramaphosa and his cabinet, particularly mineral resources & energy minister Gwede Mantashe, have allowed a small group of vested interests to put the energy security of the country at risk. This is another unforgivable neglect.
When the IRP was published in October, department of energy officials (and presumably Mantashe heard this because he was present) expressed concern on the power supply gap. They said they would be issuing a call for proposals on how to fill this gap. Two months later they are no further along with this task. As the options are few and far between in any case — Ramaphosa seems attracted to the idea of a powership — this initiative is not likely to amount to much. Energy supplied by powerships is enormously expensive and SA’s rough seas and lack of infrastructure to make use of one make this a romantic idea.
Then of course there is Eskom itself. The company has a board without a single engineering skill, and managers and employees do not have the skills required to run the plant. There is absolutely no incentive for efficiency within the organisation, which has procured probably the most expensive coal in history, which it can’t keep dry. Soon it will be headed by a lawyer with an MBA who no doubt will join the chorus to complain about the regulator’s unfair tariff structure.
It is more than abundantly clear that this government is out of its depth when it comes to running a modern economy. Ramaphosa is constantly surprised and shocked, Pravin Gordhan believes the solution is to interfere more rather than less and Mantashe is more concerned about the SA Communist Party conference that was running this week than he is about the people of SA and its economy.
It is time for Ramaphosa to wake up and let the private sector in.