The ongoing energy crisis has overshadowed President Cyril Ramaphosa’s achievement after his target of raising R1.2 trillion in a five-year period was reached yesterday at the South African Investment Conference (SAIC) following an ambitious drive to kick-start the economy and create jobs.
Ramaphosa yesterday announced that the 5th SAIC had achieved the target of reaching R1.2 trillion worth of investments, which was set in 2018 after the previous four conferences attracted R1.14 trillion in investment pledges.
Ramaphosa has now set a new target to mobilise approximately R2 trillion in new investments over another five-year period, between now and 2028.
However, he acknowledged that the energy crisis, which remains unresolved, was a thorn in the government's plans to attract investment in the economy as businesses wanted a dependable and reliable supply of electricity.
“The lack of reliability in electricity supply weakens business and consumer confidence, taints international perceptions about our country and affects investment sentiment and decisions,” Ramaphosa said.
“Though load shedding will remain a challenge in the immediate future, its severity will begin to ease as some of the more targeted initiatives recently announced begin to take effect.”
This comes as Eskom yesterday said Stage 6 load shedding would remain in force until further notice as the system remained constrained.
This means that Eskom will cut electricity supply for at least 10 hours per day on a rotational basis in a bid to avoid a total grid collapse, but this affects productivity and business activity.
The struggling power utility said the extension of load shedding was caused by further breakdowns of generation units and a continued shortage of generation capacity due to delays in returning to service some generation units.
Breakdowns have increased to 18 617MW of generating capacity, while the generating capacity out of service for planned maintenance is 5 807MW.
Independent energy analyst Lungile Mashele agreed with reports that Eskom’s coal-fired power plants were not under-performing as a result of ageing, but because the utility was failing to perform reliability maintenance.
Mashele also noted the impact of these intensified power cuts on economic growth, saying the International Monetary Fund had revised South Africa's growth outlook to 0.1% for 2023 on the back of severe load shedding.
“There is policy incoherence at the government level. This is mainly caused by a rift between the actual government and the energy people who are in the Presidency," Mashele said.
“A question that is not asked frequently is who is in charge of energy planning.Once we understand that, we'll understand that everything flows from the Department of Mineral Resources and Energy.
“You can't attract investment when you don’t have electricity, energy security is the backbone of any well-functioning economy.”
Ramaphosa also indicated a measure of support for Electricity Minister Dr Kgosientsho Ramokgopa, whose recommendations after touring all Eskom power stations did not go down well with the proponents of renewable energy.
Ramokgopa recently doubled down on the need to extend the lifespan of Eskom’s 15 coal-fired power stations, with the taxpayers footing the bill.
This statement has angered proponents of renewable energy who pointed out that the Cabinet-approved Integrated Resource Plan (IRP) 2019 has clear target dates for closing coal power stations.
“We will soon be completing the review of the Integrated Resource Plan to lay the foundation for a fundamentally transformed energy landscape that transitions us along a low-carbon, climate-resilient developmental path,” Ramaphosa said.
“We will undertake this just transition at a pace our country can afford and in a manner that advances our developmental objectives and ensures energy security. In the long run, investment in green energy will be a huge boost to economic growth.”
Meanwhile, Ramokgopa outlined the five key pillars of the government's Energy Action Plan to investors at the SAIC yesterday, saying it was the long-term solution to resolving the power crisis.
“The first one is to fix Eskom and ensure that we increase the Energy Availability Factor, essentially making sure that we stick to philosophy maintenance, we address the issues of outage slips,” he said.
“The second feature of the plan is around accelerated investment by the private sector in new generation, so we know that Minister Gwede Mantashe has lifted the ceiling for embedded generation and that is why we are encouraging private sector players to come into the space, and the president thus makes a point that we’ve got a pipeline of about 10GW from various players.”
In a breakaway session, the Industrial Development Corporation’s chief operations officer, Joanne Bate, said although the Just Energy Transition was expected to bring challenges to businesses and society, it also presented major opportunities not only for bigger companies but also for small, micro and medium-sized enterprises and for localisation.
“We’re building potentially – if you look at (the government’s JET) investment plan and the green hydrogen commercialisation strategy – 5GW of power for electricity per annum, 5GW of power for hydrogen per annum,” Bate said.
“That presents an amazing opportunity for localisation. What does localisation give us the opportunity for? Additional tax revenues and additional jobs to be created.
“There’s a lot that needs to be done in energy efficiency and in own generation. So as the IDC, together with National Treasury and the banks, we are looking at schemes to accelerate own generation and the ability of small and medium-sized enterprises to become self-sufficient and greener because both are important.”
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