Electricity minister Kgosientsho Ramokgopa has conceded that constant rolling blackouts make SA a hard sell ahead of the last leg of President Cyril Ramaphosa’s R1.2-trillion investment drive.
Since 2018, R1.14-trillion has been pledged by domestic and international investors through successive instalments of the SA Investment Conference. The last round will be held in Johannesburg in April.
However, SA’s energy crisis — which has got progressively worse since 2008 when it was first implemented by Eskom, often leaving households, businesses and industry without power for up to 10 hours a day — makes investment in SA a “very difficult case to make”, Ramokgopa said.
“We have to illustrate that we are making an effort to [rectify the situation]. It’s one thing to say that we are working on it, but people want to see the results,” he told Business Day. “Whether our case is compelling enough is a different conversation, but I think it is important for us.”
The staggering economic impact of the electricity crisis was recently illustrated by the GDP figures for the fourth quarter of 2022, which showed that major sectors contracted due to rolling power outages. GDP declined 1.3% in the fourth quarter after an upwardly revised 1.8% rise in the previous quarter, signalling that economic activity is unlikely to improve soon as power cuts and fiscal consolidation weigh on the economy.
Business Day previously reported that the value of large investment projects in SA’s economy fell to R248.5bn in 2022 from R392.7bn the year before, reflecting the effect the energy crisis has on investor confidence.
To allay investor concerns over the electricity crisis the government last year unveiled a five-point action plan, which includes improving existing supply system stability and increasing generation capacity by accelerating the onboarding of renewable energy.
“There is [a] correlation between underinvestment in electricity generation and investment ... As a basic minimum we are trying to protect what is already in the ground — that is protect the investments that are already there as we build the additional capacity to make it possible for additional investments going into the future,” Ramokgopa said.
Chronic breakdowns
The electricity minister, who was previously head of infrastructure before being appointed to Ramaphosa’s cabinet in March, this week began a tour of Eskom’s coal-fired power stations, which are prone to chronic breakdowns resulting in the utility implementing intermittent power cuts at short notice.
The weeklong tour, which began on Monday with visits to the Kriel and Duvha power stations, forms part of the drive to improve the functioning of the power utility’s existing assets. On Tuesday Ramokgopa assessed the condition of the Kusile and Kendal power plants. This will be followed by Tutuka and Camden on Wednesday, Lethabo on Thursday and Koeberg on Friday.
At Kriel, Ramokgopa told Eskom workers that as part of the solution to end load-shedding the utility would have to stick to its commitment to reducing the intensity and frequency of blackouts. This would be achieved by improving the use of coal, gas and nuclear, which carry the baseload of the country’s energy needs, while accelerating the onboarding of renewable energy.
SA can’t “wish away” the need for baseload power, he said, because it is the oxygen of the economy. “Baseload is the solution to our problems while we accelerate the onboarding of renewable energy,” Ramokgopa said.
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