Nersa ‘working on lifting restrictions’ for self-generation of power — Mantashe
Energy minister surprises delegates at Mining Indaba but warns against a ‘free-for-all’
“It’s like Invasion of the Body Snatchers,” one reporter remarked after mineral resources & energy minister Gwede Mantashe’s press briefing at the 26th Investing in African Mining Indaba on Monday.
Mantashe certainly looked and sounded the same, but the free-marketeering rhetoric from the former trade unionist was new.
Moments earlier, Mantashe had received emphatic applause when, in his opening speech, he announced that companies wanting to generate their own power would be allowed to.
It’s music to the ears of industry, which has been calling for the government to remove the regulatory hurdles which have prevented businesses from generating power for their own use as power prices rise and load-shedding continues.
Mantashe said the National Energy Regulator of SA (Nersa) was working on lifting restrictions and promised that those that want to generate even large amounts of their own power will be able to do so. But, as another reporter remarked, trying to get actual detail from the minister is like trying to nail water — never mind jelly — to a wall.
“Whether we need to register or licence depends on size,” Mantashe told reporters. For those wanting to sell power back to Eskom, he said a licence would definitely be needed.
“Many people are urging us for a free-for-all — it cannot be that,” he said. “The regulator ensures stability.”
In response to questions seeking further detail, the minister said the most important thing is to accelerate the process. “That is the issue. Whether licence or generation, the essence is to give people the right to self-generate.”
Delegates were also pleased that Mantashe invited investors to fund power generation outside of Eskom which will create a competitive electricity market.
“We need to take the initiative of generating electricity out of Eskom,” he said. “People must sell their energy to [Eskom] transmission and compete with prices.”
Asked what form the new entity might take, Mantashe said: “It may be a public entity, it may be a PPP [public-private partnership], it depends on the interest of the investors.”
Andrew Lane, Energy, Resources & Industrials Leader for Deloitte, says the green light on self-generation of power is what the industry was hoping for as it will make a big difference in operations.
Specialists in mining regulation at Webber Wentzel, Jonathan Veeran and Manus Booysen, say they are waiting on the details.
“In an environment of weak commodities prices and slow growth, mining companies may find it difficult to fund self-generation projects. It will not be easy for a mining company, unless it is large and long-term, to put up an economically sustainable energy generation facility,” they say.
Ambitions to create competition in the electricity industry are also positive, Veeran and Booysen say, “but these are long-term plans, while the problems facing Eskom are immediate. We are disappointed he said nothing about the immediate way forward and action being taken on Eskom”.