South Africa: State of Disaster Declared and ‘Electricity Minister’ to be Appointed to Respond to Energy Crisis

  • In the state of the nation address last night, which featured the annual ‘tossing out’ of the EFF party members before the address began, South Africa’s president, Cyril Ramaphosa, announced a state of disaster to deal with the country’s energy crisis.
  • The country’s state owned power utility, Eskom, is plagued by major incidences of theft, questionable equipment failure and acts of sabotage which, along with a legacy of poor planning, maintenance and corruption, has spiralled the country into a major energy crisis where daily blackouts are is costing the economy a massive R950 million a day.

Main energy sector take-aways

“We are in the grip of a profound energy crisis, the seeds of which were planted many years ago. We cannot undo the mistakes that were made in the past, the capacity that was not built, the damage that was done to our power plants due to a lack of maintenance, or the effects of state capture on our institutions,” said Ramaphosa.

Ramaphosa said that South Africa’s National Disaster Management Centre has classified the energy crisis and its impact as a disaster. The Minister of Cooperative Governance and Traditional Affairs has just gazetted the declaration of the State of Disaster, which will begin with immediate effect.

“The state of disaster will enable us to provide practical measures that we need to take to support businesses in the food production, storage and retail supply chain, including for the rollout of generators, solar panels and uninterrupted power supply,” said Ramaphosa.

“Where technically possible, it will enable us to exempt critical infrastructure such as hospitals and water treatment plants from load shedding and  it will enable us to accelerate energy projects and limit regulatory requirements while maintaining rigorous environmental protections, procurement principles and technical standards,” added Ramaphosa.

Ramaphosa also announced that the Minister of Finance will outline how households will be assisted and how businesses will be able to benefit from a tax incentive. National Treasury is working on adjustments to the bounce-back loan scheme to help small businesses invest in solar equipment, and to allow banks and development finance institutions to borrow directly from the scheme to facilitate the leasing of solar panels to their customers.

New Minister of Electricity to be appointed

“To deal more effectively and urgently with the challenges that confront us, I will appoint a Minister of Electricity in the Presidency to assume full responsibility for overseeing all aspects of the electricity crisis response, including the work of the National Energy Crisis Committee. The Minister will focus full-time and work with the Eskom board and management on ending load shedding and ensuring that the Energy Action Plan is implemented without delay,” said Ramaphosa.

He explained that the Minister of Public Enterprises will remain the shareholder representative of Eskom and steer the restructuring of Eskom, ensure the establishment of the transmission company, oversee the implementation of the just energy transition programme, and oversee the establishment of the SOE Holding Company.

“We are focusing our attention on the energy crisis right now and will address the restructuring of government in due course,” said Ramaphosa.

Eskom bailout and diesel funding

Ramaphosa confirmed that National Treasury is finalising a solution to Eskom’s R400 billion debt burden which will enable the utility to make necessary investments in maintenance and transmission.

Government will support Eskom to secure additional funding to purchase diesel for the rest of the financial year. “This should reduce the severity of load shedding as Eskom will be able to use its diesel-run plants when the system is under strain,” said Ramaphosa.

Link to Ramaphosa’s full SONA speech HERE

Author: Bryan Groenendaal

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