Government is lobbying the private sector to make technical and project management skills available as it mobilises to implement President Cyril Ramaphosa's bold energy crisis plan. It's the biggest multi-department co-operation effort since Covid-19.
Rudi Dicks, joint head of Operation Vulindlela, an initiative of the presidency and National Treasury to accelerate the implementation of structural reforms, said the “private sector, through its various member bodies, has been extremely supportive of government’s energy security interventions and has offered support”.
“We are taking them up and engaging them on that offer of support. The support could be the use of their technical skills, engineering skills, project management and legal skills needed to support the implementation of the plan,” said Dicks.
Cas Coovadia, CEO of Business Unity South Africa (Busa), said even before the plan was unveiled, Busa indicated it would help wherever needed.
After the plan was announced, Busa wrote to the presidency and “emphasised that we stand ready to assist” and suggested they put together a small team of government and business people to unpack exactly what assistance was needed. It is also seeking clarity on the nature of the plan, its methods and immediate and longer-term priorities.
“Then we can approach whoever we need to approach. I don’t want to approach members or consultants who could ... be project managers until I have that in place,” said Coovadia.
He said as soon as government responded to Busa’s letter and “we are able to sit down and work through that plan”, the organisation would be able to say what it could provide.
On Friday, at the ANC national policy conference, Ramaphosa called on the private sector to respond to his plan with an intensified investment drive.
“As these reforms are implemented, as new opportunities arise, we call on the private sector to undertake its own investment drive — to match the commitment of government with a similar commitment to develop the productive capacity of our economy,” he said.
Dicks said since increasing the cap from 1Mw to 100Mw for self-generated power projects last year, “we have had over 80 projects alone in the pipeline that will bring more than 6,000MW, valued at over R70bn”.
He said the government, in discussions over the past week with the private sector, had also asked business bodies to speak to their members to help with issues “around transmission networks and servitudes”.
As the state looks to significantly increase generation capacity through a host of methods, it will need new transmission lines and servitudes — the right to use portions of land — over land that may be owned by farmers and other private owners as they build pylons to support generation capacity.
“Servitudes can be a problem as farmers may not be keen to give up land to build pylons, so we have asked business organisations to speak to their members who may be farmers and land owners so they can understand that solving the energy crisis is critical.”
Elements of the plan to increase grid capacity include scrapping the threshold for private power-generation projects that feed into the grid, doubling the size of Bid Window 6 of the state’s renewable energy independent power-producer procurement plan to 5,200MW and reducing local content components needed in this window from 100% to 50%.
Ramaphosa said this week the government aims to improve the performance of Eskom’s existing fleet of power stations and that the power utility’s plant maintenance budget will be increased.
Treasury is formulating a plan to transfer a portion of Eskom’s R390bn debt to its own balance sheet, a move that will make it easier for the power utility to access cheaper financing instead of relying on government bailouts.
Business Day reported on Friday that Duncan Pieterse, head of assets and liability management at Treasury, confirmed the plan. He said Treasury had conducted a financial modelling exercise to establish the quantum of debt relief required to put Eskom on the path to long-term financial sustainability.
Dicks, who helped Phindile Baleni, director-general in the presidency, draft the energy plan after input from a range of departments, said solving the electricity crisis had always been an Operation Vulindlela priority.
However, the “heightened crisis” of stage 6 load-shedding was a “tipping point”, forcing the state to conclude that something had to be done immediately to resolve the crisis “once and for all”.
It required a “multi-department approach” that “involved breaking all the silos and getting everyone into a room”, including National Treasury, the departments of mineral resources and energy; public enterprises; trade, industry and competition; and forestry, fisheries and the environment.
The challenge was “trying to cut across all the various interests of the different departments”, but all of them realised the “most important thing in our country” was dealing with the crisis.
“Everything else is secondary because if we don’t fundamentally deal with this primary issue, there are no jobs, there is no economic growth, there is no society that can function, there is no poverty alleviation.”
The state also consulted with business, labour, community organisations, political parties and energy experts in the past week, and “everyone realised the importance of an energy security plan”.
Those consulted included Busa, the Black Business Council, Business Leadership South Africa, labour unions and energy engineers and experts.
Dicks said while there may be differences regarding the way parts of the plan should be implemented, the “overwhelming response to the plan was positive”.
A major concern from those consulted was the state’s ability to implement the plan and meet time frames.
Dicks said it would be implemented in short- and long-term stages. Each had different time frames, from three to 18 months. Parts that could be immediately implemented included the removal of the cap on independent power projects, doubling Bid Window 6, reducing local content requirements and procuring power from the Southern Africa Power Pool, which included countries such as Zambia and Botswana.
He said if successfully implemented, the plan should see tens of billions of rand in new investment coming on stream, but it was too early to say exactly how much this could be.
Prof Miriam Altman, of the School of Economics at the University of Johannesburg, said the “biggest opportunity" from the president's announcement was a “greater openness to competitive generation” through the doubling of Bid Window Six, as well as getting rid of the caps on embedded generation.
This would attract more private-sector investment as these types of actions by the government are what the private sector has been “wanting to see happen”.
“I think what we are going to start to see is a lot more mining companies coming into play and then feeding into the grid,” she said.
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