GIULIETTA TALEVI: When Gwede called me to complain ...
Mantashe’s conclusion that the market is satisfied with a power-generation cap of just 10MW seems at odds with the reality of companies desperate to produce their own electricity
I got a call from Gwede Mantashe this morning. You could say it was unexpected.
The mineral resources & energy minister was irked that I’d laid the blame for the current round of power cuts at his feet quoting RMB chief economist Ettienne le Roux, who’d argued that if Mantashe’s department had upped the generation cap for power producers we wouldn’t be experiencing this chronic, economy-shattering degree of load shedding.
And Mantashe was especially irked that I hadn’t rung him up to talk it through.
His argument is that “hindsight is a perfect science” and that 18 months ago people weren’t talking about a 50MW cap as they do today. And he’s also adamant that it can’t be a free-for-all where every company and his dog start producing power. Fair enough.
But as this Engineering News article argues, the minister “has again swatted aside calls for a 50MW licence-exemption threshold for distributed-generation plants, describing such calls, which have been made by organised business and even endorsed by Eskom, as ‘academic’ in light of a departmental survey showing that mines, factories and farms were satisfied with an increase in the cap to only 10MW.”
Delivering his budget speech in parliament, Mantashe, the article goes on to say, veered from his prepared remarks, and said there had been “a lot of noise” about the 50MW threshold, but “our research and survey, where we had about 10,000 people responding, [shows] overwhelming support for the 10MW”.
Mantashe added that “the market is not ready for this 50MW, but is very much prepared to adjust to the 10MW”.
Ten thousand people? Who are these alleged people? It’s a pertinent question, as since Mantashe’s “conclusion” seems rather at odds with the reality of companies desperate to generate their own electricity.
Especially now. As it is, you’d be hard pressed to find something that can unite a country as divided as SA as the collective loathing of the clusterfunk that is Eskom.
But then, 13 years of blackouts — which is something we still obediently call “load-shedding” — can do that to you.
Consider that in 2008, the year when Eskom first ran out of juice, it charged 19.8c a kWh of electricity. This year it charges 134c.
That is an immense, wallet-sapping increase of 576%. In other words, electricity prices have risen six-fold in just over a decade (whereas, almost certainly, your salary hasn’t).
But the real teeth-clenching tragedy is that, thanks to a free-for-all of orgiastic plunder and mismanagement, the power utility is less able now to deliver a stable electricity supply, despite those price increases and even though it took on more than R400bn in debt to build two monstrously unstable power stations, Medupi and Kusile.
To be clear, a stable power supply is absolutely critical if SA is to get back on a meaningful growth trajectory.
And yet last night Eskom escalated its load-shedding schedule to stage 4. Why? Because more than 15,000MW of power was unavailable to the grid, as a third of its generation units broke down. That is a deeply scary deterioration in performance.
It has happened despite the fact that every year for more than a decade we’ve written that it didn’t have to be this way. Now, however, the frustration feels that much more acute: you’re only going to give a free pass to world-class mismanagement and ineptitude for so long.
Not being part of the government, we are clearly not privy to the plans for power generation that pass the minister’s desk. But the evidence shows that the speed at which decisions are being made is simply nowhere close to what it should be.
Mr Mantashe, how about a press conference for all of us, where we can get to grips with your ministry’s plans? Our economy depends on this.
Talevi is the FM's Money & Investing editor.
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