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Open Letter to Minister Mantashe

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You’re all talk and no action on energy security

Dear Minister Mantashe,

As we enter the second day of stage 4 loadshedding, Eskom has just announced that we can expect loadshedding until 2022.

But we have heard this story before. We heard them say that loadshedding would be resolved in weeks in 2007. We heard it again from then Deputy President Cyril Ramaphosa in September 2015: “In another 18 months to two years, you will forget the challenges that we had with relation to power and energy and Eskom ever happened.”

At the State of the Nation Address earlier this year, after the country had been subjected to stage 6 loadshedding in December 2019, we were promised an emergency power procurement programme, which would source electricity from independent power producers (IPPs). We were promised that the red tape that was holding back self-generation by industry would be removed. We were promised that Bid Window 5 of the Renewable Energy Independent Power Producers Procurement programme would be initiated, to allow new entrants into the generation market.

So the question is: what have you, as the Minister of Mineral Resources and Energy done to make this a reality? The answer is precious little.

In March, you issued an amended draft of Schedule 2 of the Electricity Regulation Act, which would (once promulgated) ease the licencing requirements for self-generation below 1MW (even though everyone expected this limit to be raised to 10MW). That draft has never been formally adopted and is not yet law.

In May, you issued draft amendments for the regulation of new generation capacity. This would permit municipalities that were able to demonstrate that they are on a sound financial footing, to establish or procure electricity generation directly from independent power producers. Again, there has been no movement since then.

On 21 August 2020 – more than 8 months after it was first mooted by the President – you issued a request for proposals to procure 2000MW of electricity to “fill the current short term supply gap”. Although the RFP indicated it was technology agnostic, it requires that the power procured be “dispatchable” and “able to operate between 05h00 and 21h30”. Then there is the anticipated timeframe: IPPs must connect to the grid by June 2022. So no real emergency, then? And finally, the document states that “The RFP is designed to support Broad Based Black Economic Empowerment initiatives including ownership and localisation.” While the intent of BBBEE is laudable, it has been problematic in its implementation and the benefits have not trickled down to those who require empowerment the most. All this requirement in the RFP does is delay and disincentives those IPPs (especially foreign investors) who might have wanted to assist our struggling power sector.

Bid Window 5 of the Renewable Energy IPP Procurement Programme is dead in the water. Despite the Integrated Resource Plan (IRP), which was (finally!) approved late last year, requiring 2600MW of renewable energy (wind and solar) to come online in 2022, nothing has been done to make this happen. Minister, apart from the time that your department needs to evaluate the proposals, establishment, installation and testing does not occur overnight. It takes time. Having gone through 4 prior bid windows, we should know how this works by now. We should have a regular, annual bid process, to allow investors to plan accordingly and to ensure a consistent stream of IPPs coming onto the grid over the short and medium term – as envisaged by the IRP.

As we sit here in the dark again, Minister, we have to ask: where is the sense of urgency? Eskom’s problems are nothing new. We have known about our electricity supply shortfall since at least 1998, when the White Paper on Energy warned that Eskom’s reserves would run out in 2007 if government did not make significant investments into generation and infrastructure. That worked out well, didn’t it?

It is clear, Minister, that you are out of your depth. You are (like much of the rest of the ANC government) “all talk and no action”. And the actions you have taken, as outlined above, are too little, too late. Even when concrete and actionable proposals are put on the table, you dismiss them or contest them. Why, for example, would you persist with a court action against the City of Cape Town seeking to procure own generation, only to issue (draft) regulations that permit exactly that?

Now is not the time to play politics, Minister. If our economy is to have any hope of recovery, the national government needs to get out of the way and let the private sector, provinces and municipalities get on with the job of keeping the lights on and industry working.

Regards

Kevin Mileham MP
DA Shadow Minister of Mineral Resources and Energy

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