Mineral resources & energy minister Gwede Mantashe. Picture: PUXLEY MAKGATHO
Mineral resources & energy minister Gwede Mantashe. Picture: PUXLEY MAKGATHO

Mineral resources  & energy minister Gwede Mantashe this week gave the Mining Indaba in Cape Town two big shocks.

They were not electrical but were about electricity and, more particularly, its generation in the light of the crisis at power utility Eskom. And while Mantashe’s twin suggestions will not generate any power in the short term, they are sure to generate a lot of heat and debate.

First, he announced that large companies, particularly the mining houses, would be allowed to generate power for their own use. At present private companies and private individuals have been able to produce only minimal amounts. Anything more would require registration and the like.

Mantashe thinks that there is space to create a second Eskom using private money and place it on the ground next door to the existing bankrupt state entity.

Mantashe said all that would be required in the future would be for companies to register to generate their own power. But he did not mention how long it would take for this new order to be regularised in the Government Gazette or how, or if, excess power could be sold to the state for addition to the national grid.

It has been speculated for some time that Mantashe, a former leader of the National Union of Mineworkers, is opposed to independent power producers using solar and wind to generate power because it could threaten coal mining jobs where the mines are supplying Eskom’s fossil fuel guzzling infrastructure.

The minister, who has the sole authority to procure more generation capacity and to cut through the red tape preventing businesses from generating their own energy, had previously refused to be rushed into a decision, saying he would not be pushed around by “lobbyists” for renewable energy.

The jury is out on whether the change of heart will be followed through with tangible action. It does not even begin to mention the jobs that would be lost at Eskom itself if a really serious effort was made to reintroduce efficiency and cut back on its astronomical wage bill.

The utility is already in the midst of a so-called death spiral, where its exorbitant price increases and irregular supply are driving away paying consumers, leaving it with a bigger proportion of non-paying “customers”. Will this plan alleviate that or make it worse?

It’s also not clear if mining houses will be able to use renewable energy and sell the excess or whether by “own use” Mantashe means precisely that.

On the creation of a second power generation company  parallel to Eskom, no mention is made on whether this would be a private entity, only that private investment would be sought to finance it. Mantashe said this would be a security measure “as Eskom is grappling with all the crises and problems, we must have a fail-safe option of delivering energy”.

Given the tenacity with which the ANC has clung to control over state-owned entities and companies, it is highly unlikely that what is being imagined is a private company in competition with Eskom — simply unthinkable. Far, far better, as with SAA, to throw billions of taxpayer rand at the problem rather than relinquish one iota of state control.

Mantashe thinks that there is space to create a second Eskom using private money and place it on the ground next door to the existing bankrupt state entity. A sort of second Megawatt Park. What makes it sensible for there to be a second power generator alongside a failed Eskom as a sort of hopeful insurance policy?

If you cannot run the existing entity, with its staggering built-in monopoly, and take the really tough decisions that are needed to return it to viability, what chance is there that a second generation entity could be run efficiently or attract the necessary private sector funding?

The messages from Mantashe are confusing. Yes, there is a desperate need to stabilise the national grid, as day after day of load-shedding bear testimony. But the creation of another state-controlled generation company is not the answer. Freeing up the system, and human imagination, definitely are.