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It’s only about four years too late (or maybe 14? Or even 24?) but President Cyril Ramaphosa has finally announced something resembling a lucid plan to deal with SA’s power crisis.
Forget that it has taken until 2022 to present an action plan for a problem flagged by energy experts in 1998; at least we now have something.
And there is much to chew on in Ramaphosa’s proposal.
First, the decision to jettison the licensing cap on private sector renewable energy projects is the clearest admission yet that the state cannot fix Eskom on its own. That, and the intent to slash red tape to allow the state to buy private sector power, are the most fundamental reforms of SA’s energy sector in 20 years, says the Minerals Council SA.
Yet it’s understandable that pundits are reserving their judgment.
Take Futuregrowth Asset Management, probably the first fund manager to publicly raise its concerns over mismanagement at state-owned entities, under the Jacob Zuma regime in 2016.
Futuregrowth wasn’t exactly thanked for its efforts to warn the state. The asset manager was roundly lashed by touchy government ministers when it questioned the viability of buying Eskom bonds, long before the true scale of looting at the power utility was laid bare.
“SA is desperately in need of reliable energy provision and the recent address from the president is welcomed,” Futuregrowth director Jason Lightfoot tells the FM. “However, we remain cautious around the implementation of the proposed changes. Execution hasn’t always been a strong characteristic of the current regime.”
That’s a very gentle assessment. But Futuregrowth is not alone in questioning the chasm that exists between what the government says it wants to do, and what it actually does.
It is critically important that internal politics around energy policy, particularly within the ... department of mineral resources & energy, do not derail this process
The Energy Intensive Users Group SA, representing the country’s biggest power consumers, is also leery of yet another grandiose state scheme. “The real crux of the matter will be the implementation, which will require swift action by all role-players in recognition of the enormity of the energy crisis,” it says.
Swift and decisive action, after all, is precisely what has been lacking since Ramaphosa became president in 2018, not to mention since he was made the head of Eskom’s “war room” in 2015.
This lethargy is only accentuated by indifference from public servants, who are largely insulated from the hardships faced by most South Africans. And this is no more obvious than in the department of Ramaphosa’s ally, mineral resources & energy minister Gwede Mantashe.
Says Lightfoot: “It is critically important that internal politics around energy policy, particularly within the realms of the department of mineral resources & energy, do not derail this process.”
This isn’t an academic concern, given the sentiment from business that Mantashe has often thrown obstacles in the way of any energy project that dilutes the state’s control over spending.
Ramaphosa ought to take heed. Futuregrowth, like other asset managers, could marshal billions in pension and investor money into viable infrastructure projects to boost the power sector. But it’s squarely up to Ramaphosa and his cabinet to make sure this energy plan doesn’t end up on the well-worn altar of grand plans never implemented.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.