Ramaphosa mulls new electricity ministry in South Africa’s ‘national state of disaster’

By Tonderayi Mukeredzi | 6 minute read

South Africa’s political and electricity supply industry (ESI) crisis has entered a new phase, after embattled President Cyril Ramaphosa was compelled to declare a National State of Disaster, as pressure intensifies on ruling African National Congress (ANC) bureaucrats to end the long-enduring energy catastrophe, which has shaved percentage points off growth. To tackle this predicament Ramaphosa is planning to appoint a new electricity minister, who would operate from an office in The Presidency.

South Africa must hold general elections in 2024 to elect a new National Assembly, as well as the nine provincial legislatures (elected by a system of proportional representation with closed lists, which also selects their premiers), who are represented in parliament’s 90-member National Council of Provinces?Rolling power outages and glaring governance shortfalls – including still widespread reports of corruption – at failing national utility Eskom and associated companies in coal and other industries are hot national issues with deep political implications that could end the ANC’s ruling majority, if not its hold on government (AE 476/7, 469/10, 469/26).

Announcing his initiatives on 9 February, during his seventh State of the Nation Address (Sona) at Cape Town City Hall – where he was constantly heckled by the opposition – Ramaphosa said the state of disaster would allow his energy action plan to be practically implemented without any great regulatory inertia.

The new minister is envisaged to superintend all aspects of the electricity crisis response, working with the National Energy Crisis Committee and Eskom to end load shedding.

In an intriguing political situation, the Department of Public Enterprises (DPE) will continue as Eskom’s ‘shareholder representative’. DPE is mandated to restructure Eskom, including the establishment of the National Transmission Company of South Africa, implementation of the Just Energy Transition (Jet) programme the creation of a SOE [state-owned enterprises] Holding Company, which will represent a second state-owned electricity company.

Public enterprises minister Pravin Gordhan – who has an established reputation as one of the ANC’s most distinguished mainstream economists – has survived in-fighting once more to preside over Eskom. Meanwhile, undoubtedly influential mineral resources and energy minister Gwede Mantashe seems to have failed in moves to steer Eskom’s fate to an even greater extent.

Critics say politicians like Mantashe (who is also ANC chair and a South African Communist Party politburo member) have undermined reforming executives like outgoing Eskom chief executive André de Ruyter, who survived a 12 December attempt to kill him with cyanide-laced coffee. Ramaphosa depends on Mantashe to deliver support among critical ANC factions.

Some analysts believed the president would accede to Mantashe’s demands to move responsibility for Eskom to his Department of Mineral Resources and Energy (DMRE) from Gordhan’s DPE. Behind-the-scenes modalities seem unclear, but such is the extent of the crisis that Ramaphosa – now formally installed as the ANC’s candidate in 2024 – seems to have reached a limit of humouring his powerful minister.

Ramaphosa announced an emergency action plan last July, which included measures to fix Eskom’s coal-fired power stations and improve the availability of existing supply (AE 466/11). It promised to enable and accelerate private investment in generation capacity and to increase procurement of new capacity from renewable energy (RE), gas and battery storage. This, the July 2022 plan promised, would “transform” the ESI to achieve long-term energy security.

“We gather here at a time of crisis. Our country has, for many months, endured a debilitating electricity shortage that has caused immense damage to our economy,” Ramaphosa said on 9 February. In this agenda for the year ahead, “our most immediate task is to dramatically reduce the severity of load shedding in the coming months and ultimately end load shedding altogether. Under these conditions, we cannot proceed as we usually would.”

The costs are undoubtedly high: Mantashe told the Mining Indaba in Cape Town on 6 February persistent power cuts had cost the economy at least ZAR1bn ($56m)/d in 2022.

Ramaphosa claimed significant progress was being made to end load shedding, as measured by the steps taken to improve the performance of Eskom’s power stations and to procure new capacity. Several independent power producers (IPPs) that have participated in the RE programme were expected to start construction soon to deliver a total 2.8GW of new capacity (AE 472/14).

So much more to do

At a more mundane level, the government promised to help Eskom find additional funding to purchase diesel for the rest of 2023, while the utility is frantically working to build a temporary solution to bring back Units I, II and III at the highly strategic – and costly – Kusile coal-fired power station following the collapse of a chimney stack last year (see Protracted fix for Eskom’s Kusile coal power plant).

The government further says that a solution is being finalised for the state to “assume” a significant portion of Eskom’s ZAR400b debt burden, in a move to allow the utility to make necessary investments in maintenance and transmission (AE 472/12).

The government is positive these measures will lead to a substantial addition of power to the grid over the next year and beyond.

South African Wind Energy Association (Sawea) chief executive Niveshen Govender was optimistic the changes announced in Ramaphosa’s Sona would expedite the energy action plan’s implementation – particularly regulatory and procurement processes that would otherwise be time-consuming and bureaucratic.

Govender hoped the new minister would work well with DMRE and DPE to remove hurdles to the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPP), and the renewable energy independent power producer procurement programme (REIPPP)’s fifth bid window (BW). It was also necessary to ensure that grid capacity available for “ready wind projects” that were left out from REIPPP BW6 (AE 475/15).

An international consultant said there were signs of movement on the thermal-focused risk mitigation IPP programme, potentially even reviving Karpower’s controversial contracts.

But other analysts countered that, while some progress had been made in implementing the July energy plan, not nearly enough work has been done.

“It is now more than six months later and reviewing work to date on the plan there is a level of disappointment on the extent to which it has created specific actions and deliverables that have been executed and delivered upon,” energy analyst Chris Yelland told African Energy on 11 February: “It has been quite long on talk and further discussions and quite short on actual implementation.”

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