Business Unity SA calls for improved energy policy as cabinet meets on Eskom

The government must urgently implement a “least-cost, least-regret option” that identifies the optimal energy sources required to power the economy and sustain and create jobs, says Business Unity South Africa (Busa).

In a statement on Wednesday, timed to coincide with the expected tabling of the Integrated Resource Plan (IRP) at cabinet, Busa president Sipho Pityana said, “the finalisation of a least-cost IRP is the necessary first step towards the stabilisation of the energy sector”.

The IRP has been subject to a substantive Nedlac process, and any further delay will prejudice urgent procurement and investment decisions that are necessary to ensure electricity supply security and the avoidance of further load-shedding, said Busa.

The statement came as Eskom announced the return of nationwide, rotational power cuts.

Pityana said as the first quarter GDP results show, load-shedding significantly damages economic growth. “The gazetting of the IRP needs to be followed by an immediate ministerial determination for the procurement of new generation capacity.”

The restructuring of Eskom needs to be considered in the context of a gazetted IRP, he added.

Busa has consistently argued that the current model of a vertically integrated, state-owned monopoly electricity utility is increasingly out of step with global trends, posing a major risk to SA’s fiscal sustainability. “A review of Eskom’s capital model, operating structure and tariff regime is therefore of the utmost urgency to ensure that demand can be stimulated, energy output optimised and costs minimised.”

Actions that should be taken by government, says Busa, include:

• The appointment of an Eskom CEO with proven leadership capability, assessed independently of political considerations, as well as reinforcing the board and management with competent and capable executives.
• The Eskom sustainability task team should be mandated to explore the feasibility of lower-cost, climate-linked finance for Eskom.
• Putting in place a cost-reflective tariff regime that enables business to flourish;
• Encouraging private sector participation where it can be competitive and maximise its contribution to Eskom and the sector;
• Lifting licence exemptions for small-scale distributed generation up to 10MW per project. “This intervention, which can be comparatively rapidly implemented, will ensure security of supply for critical sectors of the economy and ease pressure on Eskom’s supply."

Pityana said, “We believe that the stabilisation of Eskom in a restructured industry is a long-term proposition where business can be of significant assistance as a partner.

“Busa, on behalf of the broader business community, remains committed to engaging with government and other stakeholders with a view to developing a secure, stable and cost-effective energy supply for our country.”