Agricultural sector’s answer to power supply

18 February 2020

Agri SA welcomes the attention President Cyril Ramaphosa gave to the Eskom crisis in his state of the nation address. It was heartening to see that Agri SA’s prior discussions with Minister Pravin Gordhan concerning the energy crises and agriculture’s role in addressing power shortages had been incorporated into the President’s address.

Agriculture can provide the network with energy within 12 months after approval of project registrations to help alleviate the pressure on Eskom, which the President referred to as a priority. Agri SA has already developed a product in collaboration with top financial institutions that offer off-balance sheet finance for installing solar systems. Agri SA believes it is important that the agricultural industry forms part of the solution to sustainable energy supply within the renewable energy framework, without forfeiting the security needed for agricultural development for energy generation purposes. In this way, both types of development can take place while available capital is used optimally.

Agri SA will study the President’s announcements closely and exert pressure on the Department of Energy (DoE), Eskom and NERSA to develop the policy and products as soon as possible to give effect to the President’s objectives. It is also important to expedite the process from application to NERSA registration for units under 1 MW, and not only for those above 1 MW as referred to in the state of the nation address. It is in fact in this respect that Agri SA acknowledges the agricultural industry’s role in energy generation and intends to negotiate acceptable time frames for the sector.

Agri SA’s Centre of Excellence: Economics & Trade will serve as the engine room to give effect to these objectives, which will include inclusive participation by commodity as well as corporate members. It also equips Agri SA to participate effectively in policy development and the development of products by Eskom and will put pressure on the DoE, Eskom and NERSA to ensure prompt practical implementation of the plans highlighted in the state of the nation address.

Agri SA and its affiliates are currently actively involved in NERSA’s public hearings regarding Eskom’s RCA application to recover R27,323 billion of the 2018/19 financial year income deficit. Tariff increases alone are not the answer to Eskom’s problems. Agri SA will, in its presentations and arguments, clearly articulate agriculture’s vulnerability concerning above-inflation input costs and incorporate the principles as highlighted the state of the nation address.

Issued by Nicol Jansen, Chair: Agri SA’s Centre of Excellence – Economics & Trade, 18 February 2020