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We'll redouble efforts to resolve the energy crisis, says finance minister Enoch Godongwana

13 May 2022 - 19:26
Finance minister Enoch Godongwana.
Finance minister Enoch Godongwana.
Image: Freddy Mavunda.

With ongoing challenges faced by power utility Eskom, stabilising the supply of electricity tops Operation Vulindlela’s five structural reform initiatives.

“Over the coming months we will redouble our efforts to resolve the energy crisis and ensure that the reforms facing implementation challenges access the support they need to progress,” said finance minister Enoch Godongwana on Friday.

Godongwana was speaking during a joint media briefing by the presidency and National Treasury to give an update on the progress made in the implementation of Operation Vulindlela in the first quarter of 2022.

Minister in the presidency Mondli Gungubele said President Cyril Ramaphosa announced the establishment of the operation in October 2020 as part of the economic reconstruction and recovery plan.

“We are focusing on reforms in five key areas including achieving an adequate and reliable supply in the electricity sector, to achieve reduced costs and increase quality of digital communication in the telecommunications sector, achieve a sustainable water supply that meets the demand in the water sector, create competitive and efficient freight transport and system in the transport sector and to establish a visa system that attracts investment and skills.”

Godongwana said the country has prioritised 26 structural reforms, eight reforms have been completed while another 11 are progressing well and a minority are facing delays in implementation.

“In digital communication, the successful allocation of higher demand spectrum not only raised R8bn for the fiscus, research estimates suggests that the industry will invest over R50bn.

“In transport, the successful implementation of third party access to the freight rail network can spurn an additional investment of R58bn. In electricity, where we are working with the private sector to unblock the remaining challenges to free up embedded generation, we can realise an investment of R54bn.”

While the progress should be celebrated, Godongwana said some might be frustrated with the slow pace of the implementation on the ground, “in the case of restoring Eskom’s energy available factor to 70% seem unattainable. We are mindful of these reforms and over the coming months we will redouble our efforts to resolve the energy crisis and ensure that the reforms facing implementation challenges access the support they need to progress.”

Giving a detailed progress report, chief director for microeconomic policy at the National Treasury Nomvuyo Guma said in the first quarter the country has seen the conclusion of the spectrum auction.

“There was concern that pending litigation from one of the players in the market would stymied the results. However we have seen the settlement between industry players and the regulator reaching finality to the auction outcome.”

In the energy sector the country has seen bid window six of the renewable energy programme open and preferred bidders have been announced from bid window five.

“We have had the publication of the draft Electricity Regulation Amendment Bill and this has been open for public comment.”

The aim, said Guma, is to ensure a more competitive market.

“This reform is occurring alongside the unbundling of Eskom which is proceeding according to schedule and the establishment of an independent transmission company that was achieved last year.”

The white paper on national rail policy, which provides clear policy direction on critical policy questions such as third party access and the devolution of passenger rail, was also approved by the cabinet.

“We have also revived several water quality monitoring systems, we have had the green drop report published recently for the first time since 2014. This allows for better monitoring of water and waste water treatment quality and accountability.”

Guma said the critical scarce skills list has been published for the first time since 2014 and this allows the government to reflect the current skills shortage in the economy, among other things.

This year, Guma said. one of things the government was looking forward to ticking off the list was the switching off of the analogue, which has been delayed to June 30.

“Completing this will allow spectrum an additional frequencies [the 700 and 800] to be used for mobile telecommunication. We are anticipating a further substantial boost for investment in the sector to stem from this.”

It is also anticipated that the finalisation of the amendments to the Electricity Regulation Act and electricity pricing policy will enable the emergence of a more modern and competitive electricity market that has a more consistent electricity supply and lower prices.

“Enabling third party access to the freight rail network will transform the network allowing private operators to utilise the network and with the passage of the Economic Regulation of Transport Bill, which we are also anticipating, will be done this year, will allow a transparent and non discriminating regulated access to these networks in the future.”

Implementing the recommendations of the work visa review, which is forthcoming, will enable firms to attract skilled personal and this will further promote investment and growth.

Guma said the government is also working on establishing the National Water Agency, which will be similar to the SA National Roads Agency [Sanral] and will improve the management of bulk water resources and allow private investment in water infrastructure.

On the lessons learnt thus far, head of protect management in the presidency Rudi Dicks said co-ordination across government was key.

It’s also important for the government to deal with the efficiency and capacity constraints.

“The lesson we learnt was that if you place more priorities, it dissipates the effectiveness is marginal, the ability to be able to co-ordinate, the ability to get the actual reform across the line becomes problematic.”

That is why the operation has scaled down its priorities to five because they will have a significant impact on the economy.

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