Mineral resources & energy minister Gwede Mantashe upped the ante on the controversial question of self-generation last week when he told MPs in his budget vote speech that his department had done a survey of 10,000 people and ascertained that he was indeed correct to place a 10MW cap on unlicensed energy projects.
This will make it humiliating for him when he is forced to walk it back, which is looking increasingly likely as opposition from business, labour, the presidency and some quarters of the ANC mounts against him, insisting that the cap must be far higher.
It is common cause that the quickest way to add megawatts to the grid is through self-generation, where companies build their own generation plants. As the law now stands, schedule 2 of the Electricity Regulation Act requires anyone with a project bigger than 1MW to first obtain a licence from the National Energy Regulator of SA (Nersa). Mantashe has gazetted a proposed amendment that will raise this threshold to 10MW. This amendment is open for public comment.
Business, the Minerals Council SA and independent energy analysts all say the threshold should be raised to 50MW. Licensing is cumbersome and takes years. A higher threshold would attract the big investors — such as mines — and more effectively relieve electricity constraints.
Despite being appealed to by Operation Vulindlela, the unit in the presidency and Treasury set up to unblock regulatory constraints, and by members of the ANC’s economic transformation committee, Mantashe and his department have stuck to 10MW, insisting “there will be chaos” should big self-generation projects be allowed without licensing, as the government would lose a clear line of sight on the grid.
This is not true, as self-generators would still register with Nersa and must, if they remain connected to the national grid, comply with all of Eskom’s technical requirements. But so far Mantashe has held all the cards and stood firm.
Even when President Cyril Ramaphosa said in his state of the nation speech that 5,000MW could be gained from self-generation — strongly suggesting, though not specifically promising, a 50MW cap — Mantashe claimed on several public platforms that Ramaphosa had announced a threshold of 10MW, which he most certainly had not.
It is this duplicity and stubbornness that have caused such a large reaction to his claim last week that a “survey” of 10,000 had been done. This survey, he said, “showed overwhelming support for our move. The majority in the market say they are not ready for the 50MW. The issue of debating between 10MW and 50MW is an academic debate. The reality is the market is not ready for this 50MW.”
Departmental officials, when asked for more details, later said there had not actually been a survey but insisted that more than 10,000 public comments had been made on the amendment and that in these the public support for 10MW had been overwhelming.
For 10,000 people to comment on a technical amendment is unusual. Business Day columnist Peter Bruce queried this with Mantashe and was told these were the voices of the poor that were being heard. “The poor are not stupid,” he told Bruce in a phone call (“Skewed orbits: Planet Patel and Planet Mantashe”, May 19).
Another explanation for the 10,000 comments has been suggested by energy commentator Chris Yelland. A mysterious online petition by pop-up lobby group Dear SA circulated recently asking the question: “Do you support the proposed amendment to the licensing exemption notice?” Automated e-mail replies — yes or no — were sent directly to Mantashe’s department. The petition is still live and claims to have 15,000 respondents. However, Mantashe’s spokesperson, Nathi Shabangu, is adamant that the petition is not the origin of the 10,000 comments claim.
As an aside, Dear SA has since collapsed, say news reports, as the founders squabble over money they received from a donor, which seems to have gone missing.
Back to last week: while Mantashe was willfully misleading parliament on the “survey”, opposition to his stubbornness was mounting behind the scenes. Two days after his budget vote speech, deputy finance minister David Masondo, who is politically responsible for Operation Vulindlela, gently implied in a speech that the threshold level is not yet settled and the unit is still “resolving” the issue.
Cosatu general secretary Bheki Ntshalintshali, interviewed on SAfm the next day, was less gentle. Speaking about ways to reboot the economy, he singled out the energy constraint, saying it would be good if Mantashe could “listen sometimes” to what the industry has been telling him.
Public comments on the amendment close on June 4, and the industry has provided substantial input in favour of a higher threshold. How Mantashe weighs this against the 10,000 yes votes he apparently received is going to be watched more keenly than ever.
• Paton is editor at large.
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