Rampant Load Shedding Forces South Africa to Create Ministry of Electricity - A New Department Under The Presidency

As energy blues deepen in South Africa, Republican President Cyril Ramaphosa has been forced to create a new Department and appoint a Minister of Electricity. The man for the job is Kgosientsho Ramokgopa, a civil engineer and former Mayor of Tshwane.

Ramokgopa's appointment comes nearly 4 weeks after the President gave the State of the Nation Address (SONA) on 9th February 2023, where a National State of Disaster in electricity crisis was declared following historic load shedding that has rocked the country, hitting unprecedented highs in 2022, with threats of the situation worsening in 2023.

The load shedding problem in South Africa started manifesting in 2007, but little has been done to make significant investments in generation capacity since then and to improve the operational efficiency of Eskom, the national power utility.

This neglect resulted in load shedding, which reach historical highs in 2022.

To counter these problems, Ramaphosa announced at the SONA that he would create a new position of Minister of Electricity.

South Africa is experiencing one of the worst energy crises in the region, mainly due to increasing power demand amidst ageing coal plants which have not received adequate maintenance over the decades.

Investment in new power plants has been very slow, as politics, red tape, and inefficiencies at Eskom combine to create a catastrophe of unimaginable magnitude.

Consequently, the country has been experiencing daily blackouts averaging 4 hours per day, lasting as long as 6-10 hours in some instances. This is very high for a country whose economy, business, and households highly depend on 24/7 access to electricity to sustain their daily needs.

Despite having an installed capacity of 53.7GW as at 31 December 2021, percentage availability fell to 60% in October 2022?as Eskom's coal-fired power plants continued to break down. This resulted in power cuts to prevent the electricity grid from collapsing.

There are several reasons behind the crisis. Eskom, the national power utility has accumulated debt of up to R400bn. Other factors threatening the company's viability include rampant corruption, sabotage, and not forgetting increasing unpaid debt by municipalities.

In his exit interview with Annika Larsen on My Guest Tonight, former Eskom CEO Andre De Ruyter gave a glaring picture about the state of Eskom. He stated that there is evidence to suggest the Eskom is a feeding trough for South Africa's ruling party, the ANC. De Ruyter stated that senior politicians are involved in corrupt activities at Eskom.

Despite having the highest electricity access rates in the region, with the national access rate standing at 84.4% (88% urban; 75.3% rural), many South African's now live without electricity during peak times of the day.

The energy crisis poses existential threat to the economy and the social fabric of the country, as lack of electricity inhibits growth. These blackouts threaten economic activity in productive cities such as Gqeberha, the "Detroit" of South Africa, whose manufacturing, motor assembly, and export industries predominantly depend on electricity for their operations.

Visible disruption has also been seen in the agriculture and livestock sector, water supply, and food chains, resulting in job loses as companies scale down on labor during periods of heightened energy shortages. The result is an increase in unemployment, which is already too high.

Additionally, load shedding poses a threat to potential investment as more and more investors begin to see South Africa as an unreliable investment destination.

South Africa predominantly generates electricity from coal. But lately, there has been a shift to encourage IPP's to develop renewable energies, especially solar. While it remains small, the percentage of?South Africa's?electricity produced by renewable energy has increased rapidly.

At micro level, households have been given tax incentives to enable them buy solar panels. The declaration was made during the SONA, when the State of Disaster was declared.

The promotion of renewable energy arises from the need to increase overall generation capacity, and to implement a just energy transition in line with global resolutions made at COP26 to keep global temperate below 1.5 degrees and cut CO2 emissions by 50% by 2050.

It is amidst this crisis that Ramokgopa has been appointed as Minister of Electricity, a new portfolio under the Presidency.

His key role being “to deal more effectively and urgently with the challenges that confront us." Said Ramaphosa.

The Minister of Electricity will assume full responsibility for overseeing all aspects of the electricity crisis response, including the work of the National Energy Crisis Committee. He will primarily focus full-time on and work with the new Eskom Board and Management on ending load shedding and ensuring that the Energy Action Plan (developed in July 2022) is implemented without delay.?

The declaration of a State of Disaster provides a framework for taking actions targeted at resolving the energy crisis. These include a swifter procurement process that overrides some of the onerous and bureaucratic procurement rules that are characteristic of South Africa's public procurement system.

To deal with the threat of possible corruption following lighter procurement methods to be employed during the state of disaster, Ramaphosa has promised that the Auditor-General, Tsakani Maluleke will be brought in with her team to ensure that expenditure is monitored continuously. It is hoped that this proactive measure will prevent public funds from being abused while dealing with the disaster.?It will ensure that the state of disaster does not result in a blank cheque for looting of state resources as was the case during the Covid-19 pandemic.

Key areas of focus should include:

1. Bringing in new generation capacity as quickly as possible and
2. Improve the operational performance of Eskom.

It is evident that the electricity challenges being faced by South Africa are complex and cannot be resolved overnight. But it is hoped that the appointment of the Minister of Electricity, and the declaration of a State of Disaster to deal will the crisis will institute the much needed reforms and unity of purpose required by all stakeholders to put an end to load shedding once and for all.

In a way, it can be argued that the appointment of the Minister of Electricity is adding an extra layer of complexity in the governance structure of electricity which is already very onerous.

For Kgosientsho to succeed, there will be need for enhanced harmonization among the various Ministries that deal with energy i.e. Ministry of Minerals Resources and Energy, Ministry of Public Enterprises, Ministry of Finance, and the newly formed Ministry of Electricity.

Born 25th January 1975, Kgosientsho is a civil engineer and politician. Prior to his appointment as Minister of Electricity, he served as Head of Investments and Infrastructure Unit under the Presidency (2019 - 2022), and as Mayor of Tshwane (2010 - 2016).

Ramokgopa holds a Bachelors Degree in Civil Engineering and a Master Degree in Public Administration, and a PhD in Public Affairs.

The author is a Chartered Accountant (ACCA) and Renewable Energy/ Climate Finance Expert. He holds a Master of Philosophy in Development Finance from Stellenbosch Business School.