Mineral resources & energy minister Gwede Mantashe generated great excitement with his surprise declaration at the Mining Indaba that mining companies wanting to generate their own power just needed to register - no licence needed. Unfortunately, it wasn't quite true. And going into the state of the nation address (Sona), announcements like this raise questions about credibility and communications which President Cyril Ramaphosa might want to ponder.
Unless they plan to get entirely off the grid - which none of them do - mining companies still absolutely need a licence from the National Energy Regulator (Nersa) to generate more than 1MW of power. So does anyone else, and since most of the self-generation power projects that mines and other companies have on the drawing board are closer to 100MW than 1MW, that still means almost everyone.
However, a couple of things have changed in recent months. One is the government's new Integrated Resource Plan (IRP). Previously, any company wanting to pursue a new power project outside the framework of the IRP would have needed an exemption signed by the minister. That requirement is now gone, officials say, at least for the next couple of years, during which the IRP estimates there will be a 2,000MW-3,000MW capacity gap in SA's power system. So where before Nersa would have refused to entertain a project that didn't fall within the IRP, now it theoretically would consider an application for, say, a large solar photovoltaic plant that would help to supply a mine's own needs.
But the licensing process is usually long and cumbersome and the outcome unpredictable. So the other thing that has changed is that the government, Nersa and the industry have established a task team to fast-track the process. If it happens, it could make a difference to the national power system as well as the mines. Between the beginning and the end of the indaba, Minerals Council member companies lifted their estimate of how much self-generation they could bring onstream from 600MW to 1,600MW. To that can be added self-generation projects in other sectors.
Most of that is renewable energy, which generates only some of the time, so the energy produced is only about a third of the equivalent coal capacity. But it would still reduce the mines' demand by the equivalent of a large Eskom power station unit - and help the mines be more "green" and innovative, as investors increasingly want them to be. It's surely an important trade-off with the mines at a time when Eskom wants them to co-operate with a demand reduction programme that would help to reduce the load-shedding it plans to continue over the next 18 months or more. It's no quick fix for load-shedding, but it would help over the medium term. That is if the process is fast-tracked. Will it be? Or will Mantashe and the mines be having the same conversation at the next indaba?
We could ask the same of the debt restructuring plan for Eskom, which Cosatu and Ramaphosa are now punting but which has been promised since at least the last Sona. Now, there's supposedly agreement to use the Public Investment Corporation to lead a R250bn debt forgiveness scheme for Eskom. But it's not clear that trade unions other than Cosatu support this raid on the government pension fund money, and legal challenges to such a plan seem highly likely if it goes ahead. That could mean yet another credibility gap between Ramaphosa's Sona promises and reality. And we could cite others - from reforms to spectrum to skills visas, all happening at a snail's pace, if at all.
At this stage, no-one is expecting Ramaphosa to unveil a new vision for SA's economy, nor even a new set of reforms to boost growth. Markets just want to see tangible signs of action and clear timelines on a handful of the most urgent reforms that have already been promised. Realism, not rhetoric, will be key.
• Joffe is contributing editor
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