NATASHA MARRIAN: The plan to fix Eskom
Besides the implementation of short-term interventions, parties accept that 2,500 MW of electricity needs to be generated by business speedily and that the government has to buy this energy using its emergency procurement powers
The government has agreed to urgently remove barriers to the self-generation of power to remedy the shortfall in supply, according to a deal reached at the National Economic Development & Labour Council (Nedlac).
This step is a central pillar of the plan to limit the damage of load-shedding — which is expected to continue for months, even though units at Medupi and Kusile are due to come on line in the next 24 months and add 2,400MW to the grid.
The final draft of the agreement, seen by the FM, spells out how SA plans to find new sources of power.
The Nedlac partners — the government, business and labour — are negotiating an economic recovery plan, as SA’s economic picture, already bleak before Covid19 hit our shores, has worsened owing to the lengthy pandemic lockdown and persistent power supply issues.
Finance minister Tito Mboweni, in an opinion piece in the Sunday Times last week, wrote that the pandemic has left government finances “dangerously overstretched”. Mboweni said the economy is likely to contract by more than the 7% initially forecast by the National Treasury.
The agreement says the Nedlac partners will “address obstacles to the efficient implementation of the Integrated Resource Plan”.
“Government must enable self-generation by finalising all necessary legislation and regulation expeditiously and [remove] any barriers to implementation, including those in respect of … self-generation/own use.”
The deal is that while business agrees to speed up the creation of 2,500 MW of self-generation capacity in the next 18 months, the government agrees to buy that 2,500 MW using its emergency procurement powers.
The short-term interventions to fix Eskom listed in the agreement include buying extra energy, managing tariffs, addressing illegal connections, recovering debt owed to the utility, tackling corruption and reviewing Eskom’s operating model.
The country’s municipalities alone owe Eskom R26bn, which illustrates why municipal collection systems have to be overhauled.
Significantly, the agreement says prepaid electricity meters should be rolled out for “all consumers across the country”.
This provides the first insight into what is contained in Nedlac’s economic recovery plan, which President Cyril Ramaphosa said on Wednesday will be tabled before the cabinet for approval.
The plan itself is unlikely to contain any major surprises. Rather, the focus is on implementing the existing ideas which, for various reasons, have stalled.
Prescribed assets on ice
The dismal economy has already placed a number of contentious ANC policy positions on the back burner.
On Tuesday, ANC treasurer-general Paul Mashatile told Bloomberg’s S’thembile Cele that the party’s plans to nationalise the SA Reserve Bank and push ahead with prescribed assets have been placed on ice.
Mashatile’s comments triggered a predictably fierce reaction from Julius Malema’s Economic Freedom Fighters (EFF).
The EFF is seeking to exploit divisions in the ANC’s parliamentary caucus on the contentious matter of the nationalisation of the Bank: it has proposed a private member’s bill on the issue, hoping to win the support of the ANC’s radical economic transformation (RET) faction, aligned to secretary-general Ace Magashule, to push it through.
But parliament’s legal advisers have apparently warned that the EFF’s bill may be unconstitutional — and the ANC caucus is set to reject it.
In that story, Mashatile said SA just doesn’t have the money right now to buy out the Bank’s minority shareholders.
And, regarding prescribed assets, Mashatile said changing the rules to force pension funds to invest in state infrastructure projects is “not viable”.
“It just creates challenges between the government and the investors because when you do prescribe assets, you are basically saying to fund managers: ‘You shall invest in this project.’ You need to give them flexibility to choose. I think it is better not to prescribe, but to create an environment for the pension fund to invest,” he said.
Mashatile’s comments will rile the ANC’s RET faction, which has used the nationalisation of the Bank as a wedge issue in the battle against President Cyril Ramaphosa. This faction wanted to use the now postponed National General Council meeting to recall Ramaphosa, arguing that he’d failed to implement resolutions reached at the ANC’s 2017 Nasrec meeting.
But the faction has weakened considerably in recent months.
Still, it would be premature to conclude that the fight over the Bank is over, as many inside the ANC still support the minority shareholders who are pushing for a large payout for their shares in the institution.
For all the background to how this fight has developed, read this story by Cele, written a few months ago in the Sunday Times.
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