Finance minister Enoch Godongwana told a reporter this week: “We prefer to freeze in the dark than burn coal.”
This was his way of siding with mineral resources & energy minister Gwede Mantashe in his pursuit of more fossil-fuel energy as part of the solution to our electricity shortage.
Anyone who read the ANC’s economic policy documents while Godongwana ran the party’s economics unit will understand he is never short of poor ideas, but even by his standards his remarks to and on the sidelines of a SA Chamber of Commerce & Industry (Sacci) conference were especially destructive. SA needed, he said, more reliable sources of electricity like gas and nuclear. They were in the 2019 Integrated Resource Plan anyway.
He warned that while government has agreed to take on some of Eskom’s R400bn debt, it would have to meet certain preconditions. “When I’m saying I’m going to take the debt, I’m going to have conditions precedent, which will make sure that Eskom makes certain undertakings before I take the debt,” News24 quoted him saying. One condition would be that Eskom would have to bring these “old and reliable” technologies into its energy mix.
So our finance minister will relieve Eskom of half its debt, but require it to build an entirely new gas infrastructure and at least one large nuclear power plan for which we can presume Eskom will incur more debt for technologies almost as old as the rinderpest. Smart fellow this.
Will Godongwana be joining President Cyril Ramaphosa, Eskom CEO Andre de Ruyter and Ramaphosa’s hand-picked climate finance chief, former Reserve Bank deputy governor Daniel Mminele, at the big gathering of world leaders next week at Sharm el-Sheik in Egypt?
Welcome to COP27, the annual conference of the parties to the UN Convention on Climate Change — the effort to keep global warming below 1.5°C if possible, and certainly below 2°C by the end of this century, which is borderline catastrophic. COP17 was held in Durban in 2011. If only the city had listened at the time.
Ramaphosa arrives with a 163-page document titled “SA’s Just Energy Transition Investment Plan (JET IP) for the initial period 2023-2027”. It needs to present this to the UK, US, German, French and EU administrations to unlock $8.5bn of financing pledged by them, the International Partners Group (IPG), at COP26 in 2021, to help Eskom stop burning fossil fuels.
The draft document I have seen may not yet have reached the finance minister. “The political declaration (at Glasgow) resolved to establish a partnership comprised of SA and international partners, to enable ... the accelerated decarbonisation of SA’s electricity system; SA’s efforts to lead a just transition that protects vulnerable workers and communities ... affected by the move away from coal; SA’s efforts to successfully and sustainably manage Eskom’s debt, define the role of the private sector, and create an enabling environment through policy reform in the electricity sector...”
Nowhere does it mention “old and reliable” technologies like nuclear and gas. If the lenders in the IPG were to have heard the finance minister speak at the Sacci meeting would they still give him the money?
And what will they make of trade, industry & competition minister Ebrahim Patel’s sudden passion for electric vehicles (EVs). He has managed to elbow his way into the $8.5bn with a raft of EV proposals he wasn’t even remotely considering when he produced an automotive industry master plan in 2019. Will the IPG lend Patel the money? He has special powers to make money disappear.
“The rate at which alternative engine technologies displace the [internal combustion engine], and what specific material composites come to dominate ‘body in white’ and structural components over the period is unclear,” he declared in his master plan. What is not at all unclear is that he has been caught napping. SA is now in a desperate race to catch up with EVs.
So does the IPG pay for that? How do these plans help communities that live off coal today? EV production will probably employ fewer people than today’s combustion technology. The IPG will be told there’s a plan to build 50,000, e-bikes or e-motorbikes in the Western Cape for export. As an example of the thirst for this localised product the SA document notes that Kenya imports 291,553 bikes and cycles a year. Absolute pie in the sky.
I feel genuinely sorry for citizens relying on this government to get them through our energy transition. As our JET IP notes, the transition “is highly dependent on the scale and nature of financial support it can secure from the international community to complement domestic resources” and so getting this $8.5bn really, really matters, even if it is just a start.
And while dodderers like Mantashe and Godongwana may be embarrassing, they are merely representative of a party with little clue what to do next. Financial help needs to be ring-fenced fiercely. It needs to avoid SA’s corrupting tender procedures.
If it is of any help, I’d say to the IPG that the South Africans they can trust at Sharm el-Sheik are Daniel Mminele, Reserve Bank governor Lesetja Kganyago and Andre de Ruyter. And if De Ruyter is fired as CEO I’d advise them not to lend Eskom a cent.
• Bruce is a former editor of Business Day and the Financial Mail.
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