Take a leaf from my streetwise ministers, Ramaphosa tells municipal officials

President Cyril Ramaphosa has called for municipal officials to take a leaf from his “streetwise” ministers amid the country's energy transition and deliver top quality services.

Ramaphosa was the keynote speaker at the Municipal Just Energy Transition Conference in Johannesburg on Monday.

He took a hard line against municipalities, warning that mediocrity was no longer an option.  

“Municipalities will need to adopt best practice when it comes to the design and implementation of programmes and projects. By best practice I mean we must do the best of the best. The days of mediocrity, the days of doing things just because we have to do them and end up with sub-optimum results are over. They must be over for us as a nation.

“Our people expect the best we can do for them because they are the best themselves inherently, so therefore it is important as we traverse this path that we must do the best. Relying on best practice is what we should have a clearer focus on. I've appointed streetwise ministers. Their eyes are wide open. Let's take a leaf from their book and do the very best,” he said. 

The president wants municipalities to be central to the country's efforts to decarbonise the energy sector, but said this cannot be a stranglehold on electricity users.

He emphasised South Africa's commitment to low-carbon, climate resilient development which is central to achieving inclusive growth, saying the reliance on fossil fuels to industrialise poses a significant risk.

Should South Africa fail to drive energy transition it could pose a threat to the economy, society and environment as many of the country's main trading partners are taking measures to achieve net zero within certain time frames, Ramaphosa said.

With municipalities owning and operate about half of South Africa’s electricity distribution grid, facilitating universal access to electricity, local government will be integral to the transition, he said. 

Government records indicate 165 municipalities are electricity service providers.

“Through the integrated national electrification programme grant, municipalities are responsible for addressing the electrification backlog. Municipalities therefore need to be in the driving seat when it comes to providing clean, affordable energy to communities, businesses and industry.

“One of the aims of the conference is to unlock the institutional arrangements required to drive the decarbonisation effort. The just energy transition implementation plan approved by cabinet last year includes a dedicated municipal portfolio roadmap,” he said.

The road map includes the provision of affordable clean electricity.

With the Electricity Regulation Amendment Act signed into law, municipalities are able to purchase power directly from independent power producers and establish their own power-producing entities.

The act also paves the way for a competitive electricity market, Ramaphosa said.

“The reforms contained in the law must help to speed up decarbonisation. More than that, they must result in a better deal for households and businesses. The national climate change effort must not come at a higher cost for electricity users.

“South African households, like many around the world, are battling with the rising cost of living, including the cost of energy. We must ensure energy transition does not contribute to energy poverty. It must not deepen inequality.”

Ramaphosa said the free basic electricity subsidy for indigent households is one of the most important policies implemented by government to tackle poverty since the advent of democracy.

He expressed frustration with municipalities that had not used the indigent subsidy. 

He said it will be important to sustain and expand the support during the just energy transition and ensure many poor households benefit from the subsidy.

“We will need to deal with challenging issues such as electricity pricing structures and the staggering levels of municipal debt owed to Eskom.”

Municipal debt to Eskom is estimated at R78bn. In July, minister of electricity and energy Kgosientsho Ramokgopa warned that municipal debt owed to Eskom would increase to R3.1-trillion by 2050, leading to the power utility’s collapse if not resolved.

“Collectively, municipalities are owing Eskom R78bn and a lot of this is irrecoverable. There’s no possibility under the sun we are going to collect that R78bon. It’s important that we resolve this picture.

“The picture presents problems for Eskom. Eskom needs the money to be able to reinvest back into its own infrastructure. Municipalities have to pay the money. However, on an objective ground, they simply don’t have the means to pay,” Ramokgopa said at the briefing held in Pretoria.

He said the trajectory of debt owed to Eskom poses a threat to the existence of the power utility in the future.

“To give you the magnitude of the problem, if we don’t resolve the problem, our projection is that at the current rate, by 2050, Eskom will be owed R3.1-trillion. Eskom will collapse. Generation capacity is going to be compromised. It’s important we resolve this question.”

Ramaphosa's statements come as parliament is expected to debate Eskom's proposed 36% electricity tariff increase submitted to the National Energy Regulator of South Africa. 

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