In democracies, most governments are slow, neglectful and incompetent. But they aren’t always wilfully deceitful. Somehow the capacity of our government for political pretence and economic catastrophe seems bottomless. I thought President Cyril Ramaphosa signing the National Health Insurance Bill last week despite having no clue how to fund it took the cake.
Then I read Alex Parker’s astonishing column in this space on Monday. He described how the ANC took a bill designed to deregulate the energy sector, went through the motions of “consulting” stakeholders and only then snuck into the bill an utterly treacherous series of provisions, which would give the minister of energy (now ANC chair Gwede Mantashe) sweeping powers to override almost all its reformist provisions and to introduce entirely new forms of energy into the country pretty much at a whim and without consultation.
The draft Electricity Regulation Amendment Bill sitting now on the president’s desk (a dangerous place for dangerous law) is a scoundrel’s charter if ever there was one. And what beggars belief is that business has endorsed it, or hasn’t read it properly, or hasn’t been given, or asked for, professional advice.
The bill was supposed to embed Ramaphosa’s energy reforms, a reminder of his skills as an agent of change, the man who cleared the way for the private sector to generate all the electricity it could and in the process partly saved us from load-shedding. The bill establishes an independent transmissions company and should be the foundation of a radical new national energy market, in which the transmissions company buys the most competitive power on offer on the day from the state or private sources.
Instead, between the bill being introduced in parliament and emerging on the other side through the energy portfolio committee and the council of provinces the minister of energy has somehow been granted a whole swathe of new powers in it. He (or she) can “in the national interest” (undefined in the draft) introduce whole new sources of electricity. He no longer has to ensure that new capacity has to be acquired through fair and transparent tendering, no longer needs to gazette decisions for comment.
There’s much more and the amendments seem almost designed to kill the bill. Applicants for licences to produce electricity can keep commercial information entirely secret and new generation produced at the command of the minister need not even be offered to the new transmissions company. The new generation in the bill is driven by natural gas — Mantashe’s pet project.
Mantashe, sidelined from Eskom and power generation by Ramaphosa’s appointment last year of an electricity minister and his opening up of private sector generation, has set off on a journey to build almost from scratch, a new gas-fired energy infrastructure in SA almost in competition with Eskom or, possibly, Ramaphosa himself.
In essence, the two are political rivals. Mantashe is unelectable as ANC leader or state president but his clout in the ANC is hard to overstate. Ramaphosa would have to fire him to stop him and even then it might not work. Mantashe has support in business too — Sasol likes what it hears and those secret energy licence applications will be foreign and, probably, not Western.
So while we now have a supposedly market-driven energy policy reform bill awaiting signature, it is that in name only. In practice it sets Mantashe or a successor free to ignore reform and pursue an eye-wateringly expensive new industrial path for the country. I would be amazed if Ramaphosa signed it, but I thought the same about the NHI Bill.
This wouldn’t matter to the rest of the world were we not, as we prepare the ground for skulduggery in energy production, simultaneously pleading with it for money and time and patience to get our decarbonisation act together. Trade, industry & competition minister Ebrahim Patel is gearing up, along with other countries, to challenge the EU’s Carbon Border Adjustment Mechanism (CBAM) under which the EU, from 2026, will impose a carbon tax on imports, at the World Trade Organisation. He says it is unfair because it hasn’t been agreed yet at the WTO.
The Reserve Bank, according to a report in Business Day on Monday, fears the CBAM could cut the value of our exports by 10% by 2050 and kill 2.6-million jobs in the process.
Instead of rushing to meet the target, we are doing the exact opposite. We throw our hands up in despair about other parts of the world trying to decarbonise and we are way behind here and, as the bill on Ramaphosa’s desk tells us, some if not all parts of government are actively looking for ways to burn more fossil fuels. It’s Oliver Twist all over again as we pickpocket money from “partners” to meet our carbon targets and then give those targets the finger as we ask for more.
Perceptions matter. The EU is our biggest trading partner by value. A CBAM would do terrible things to our car industry, adding to the damage our poor industrial policies already do to it.
The rest of the world, particularly the West, is keen for SA to succeed. It is already generously funding decarbonisation here and Eskom’s success in raising the availability of its fleet buys us the space we need to press firmly ahead and not pause. If Eskom can keep the lights on with an energy availability factor of just more than 60%, we’re OK provided we double our green transition effort.
But the fact that we cling to fossil fuels (and legislate for more) despite everything tells its own story. Consumers and retailers in the West and other rich economies will soon deliberately be choosing to buy carbon-neutral products, from clothes to cars, and we will simply have locked ourselves out of those markets unless we move faster. This irritates some old energy hands, I know, but it’s just a fact.
No real preparation is being made yet for this new world racing towards us. All our manufacturing takes place at the far end of a trail of dirty energy we won’t ever be able to hide. One quick way, of course, to signal intent would be to erect a carbon tax of our own on imports. Join the virtuous circle and widen it, protect our own consumers and prepare our industries for a future just a few years out now.
• Bruce is a former editor of Business Day and the Financial Mail.
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