Six steps National Government could immediately pursue to tackle SA’s energy crisis

12 December 2019

Today, alongside the Western Cape Premier, and the Acting Mayors of Cape Town and Tshwane, I engaged a wide range of small business owners and entrepreneurs here in the Cape Town CBD who have been adversely affected by continuous rolling blackouts imposed on them by the beleaguered Eskom.

From café’s and coffee shops, to tech start-ups and tourism hubs, those who have taken the risk of starting a small business are being hit the hardest by what can only be described as a material failure of governance by the ANC National Government. Rolling blackouts are not merely a simple inconvenience, they are an assault on the livelihoods of business owners and their employees. When the power goes out our entire economy switches off – putting us on the back foot in an extremely competitive international economy.

Most small businesses operate on tight profit margins and often have no spare capital to cushion them against unforeseen losses. For them, power cuts mean an inability to pay staff, suppliers, rent and other operational costs. Many small businesses and entrepreneurs operate on the brink of closure, and on the brink of threatening the livelihoods and incomes of dozens of employees.

This is why decisive action is urgently required to begin reforming our country’s energy sector. The authority and mandate to do so lies with National Government and their dithering, dodging and indecision cannot continue a day longer.

In this light, I welcome President Ramaphosa’s decision to return home from his trip to Egypt in order to address this unfolding crisis after sustained pressure from the DA. Now that he’s back he must urgently address Parliament on the matter, and the Speaker of the National Assembly, Thandi Modise, has a duty to ensure this happens. Now is not the time for MPs to be sipping cocktails on the beach – they ought to be doing their jobs in finding solutions to SA’s energy crisis.

The call for Parliament to reconvene is further justified by the President’s underwhelming media briefing yesterday, in which he once again failed to provide the necessary leadership in chartering a clear way forward. A once again “surprised and shocked” Ramaphosa stated that:

There was so-called “sabotage” which led to the loss of 2000 megawatts (MW) of power and that the South African Police Service (SAPS) and the State Security Agency (SSA) will investigate this;

There will be no rolling blackouts between 17 December 2019 and 13 January 2020; and

Eskom’s management team is currently working on an “emergency recovery plan”.

While this may provide some limited reprieve in the short term, it fails to address the root causes of insecure energy supply. We cannot be putting band-aids on bullet wounds. Since 2014, President Ramaphosa has been in charge of turning around Eskom’s fortunes and yet he still has no grasp of the magnitude of the crisis, and the reform that is urgently required.

That is why today we set out six steps National Government could immediately pursue in order to reform our energy sector and tackle head-on the systemic issues that continue to undermine our economy and the livelihoods of millions of South Africans.

Eskom must be immediately be split into two entities, one for generation and the other supply. Unlike the ANC’s proposal, these entities must be operated independently of each other. Allowing IPPs to generate and supply power to the grid will secure supply and bring down the cost of electricity through competition in the energy market. This must include renewable energy sources including wind, solar and hydro-electric power. The DA’s “Cheaper Electricity Bill” achieves exactly this and is currently before Parliament. it needs to be urgently passed;

Energy Minister Gwede Mantashe should at once sign permissions for Independent Power Producers to provide additional power to the grid via qualifying municipalities, in terms of Section 34 of the Electricity Regulation Act. He has the power to do so with the strike of a pen. If Mantashe will not do so, President Ramaphosa must instruct him to do so, or relieve him of his duties;

Eskom should be permitted to procure coal from any and all sources, and not be contractually bound to the current restricted supplier list;

Eskom must be sold diesel by PetroSA at a tax-free cost price;

All electricity consumers must be placed onto smartmetres to collect electricity revenue on time; and

Eskom employees must be declared an “essential service” in the economy and barred from going on strike.

In order to mitigate against the consequences of rolling blackouts, the DA-led Western Cape, City of Cape Town, and City of Tshwane governments are in the process of formulating and implementing disaster management plans. Essential services such as bulk water supply, sanitation services and clinics must be adequately managed, and all risks mitigated against.

Despite burdensome restrictions by National Government, DA-led governments are innovating in the following ways:

The Western Cape has introduced the Energy Security Game Changer which continues to diversify and conserve energy supply. This includes solar PV, electric vehicles, efficient water heaters, wheeling/energy trading and the roll out of IPP’s;

The Western Cape has also legalised the household production of solar energy for over 22 municipalities. In 18 of those, households can sell excess electricity back to the grid;

Six studies have been conducted exploring the potential of natural gas to supply power and create jobs in the Western Cape. The province continues to pursue its proposal for energy cooperation as it pertains to liquefied natural gas (LNG). Investment in LNG infrastructure alone could amount to over R20 billion, potentially creating almost 70 000 jobs.

IPP projects in the Western Cape have generated over 3 200 jobs per year, despite National Government’s onerous restrictions.

The City of Cape Town is currently seeking a legal remedy in court challenging the Minister of Energy and the National Energy Regulator of South Africa (NERSA) to allow municipalities to purchase energy directly from IPPs. The City of Tshwane is also pursuing this, having written to the Minister of Energy as far back as March of this year requesting the same remedy;

The City of Cape Town has invested extensively in technologies to assist with the switching process during rolling blackouts. In addition, the Steenbras Dam generation capacity has been used to mitigate against the stage of rolling blackouts in Cape Town.

South Africa is fast running out of time to reform our energy sector, and in turn ensure a stable and affordable supply of uninterrupted energy that will attract investment, spur on economic growth and create much needed new jobs. Now is the time for action!

Issued by John Steenhuisen, Democratic Alliance Leader, 12 December 2019