SA’s power fix needs grid access and capacity to converge, says Ramokgopa

Electricity minister Kgosientsho Ramokgopa told parliament that the Presidency, the National Treasury, and the department of public enterprises continue to work together to address Eskom’s challenges.

He was updating parliament’s portfolio committee on public enterprises on Wednesday regarding the national energy plan, at a time when he was also serving as acting finance minister while Enoch Godongwana was on leave.

He said the energy plan was making progress in addressing broader energy challenges as licence requirements have been eased to allow projects to produce energy. The project pipeline has been bolstered for generation capacity, he added.

“When we go to the next bid windows, we will try to match areas with grid access and capacity together with the development of new generation capacity. Otherwise, you are going to have a situation where the private sector will want to invest in areas with the best eradiation levels, while other areas have little investment,” he said.

Ramokgopa said not all energy projects will necessarily reach financial close, as the government still needed to see a pipeline demand for projects it issues bids to. He told the committee load-shedding remained a structural constraint to South Africa meeting its economic objectives.

“When the minister of finance delivered the medium-term budget policy statement, he made the point that there are two major structural constraints to the South African economy. Those are load-shedding and inefficiencies on the logistics side,” he said.

Ramokgopa said the South African Reserve Bank (SARB) indicated that primary sectors of the economy, such as agriculture, are disproportionately affected by load-shedding. He said his meetings with farmers indicated that about 25% of their revenue comes from production activities heavily reliant on a stable and quality electricity supply. “Load-shedding is an existential problem, both in economic and social terms and it requires an urgent intervention. And also, the SARB does make the point that the SA economy could be losing R1bn a day, depending on the severity of load-shedding.

“So, this is severe. The amount of jobs that have been lost as a result of load-shedding are projected to be upward of 800,000, just for the current year, if you are to go by the modelling done by some reputable institutions,” he said.

MPs asked the minister about his role in the turnaround of Eskom relative to the work of public enterprises minister Pravin Gordhan. He said the government has not finished the costing of the energy plan, but it has concluded the costing of unserviced energy.

“We are not industrialising Eskom. I think that is a complete misunderstanding of what we are doing. Because you are greening the fuel sources, you need to produce panels, solar PV, and batteries to store excess energy when you don’t have the benefit of solar and wind. You need to produce all of those,” he said.

He said development finance institutions like the Industrial Development Corporation were assisting the government with a programme to find industrialists to participate in the creation of new markets but the industrialisation of renewables does not align directly with Eskom.

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