President Cyril Ramaphosa announced that he would be appointing a new Minister of Electricity in The Presidency coordinate the response to the electricity crisis, which has now officially been declared a “national disaster” with immediate effect.
In his seventh State of the Nation Address on February 9, which was initially disrupted by the Economic Freedom Fighters, the President acknowledged that the country was “in the grips of a profound energy crisis”, which was not only stymying the economic recovery from Covid but also threatening social stability and food security.
“We are therefore declaring a national state of disaster to respond to the electricity crisis and its effects,” Ramaphosa said, announcing that a Gazette classifying the severe electricity supply constraint a national disaster had been published by the Department of Co-operative Governance prior to his speech.
“To deal more effectively and urgently with the challenges that confront us, I will appoint a Minister of Electricity in The Presidency to assume full responsibility for overseeing all aspects of the electricity crisis response.”
The Minister would focus full-time on ending loadshedding and ensuring that the Energy Action Plan announced in July last year “was implemented without delay”.
“To deal more effectively and urgently with the challenges that confront us, I will appoint a Minister of Electricity in the Presidency to assume full responsibility for overseeing all aspects of the electricity crisis response, including the work of the National Energy Crisis Committee.”
Responding indirectly to criticism that declaring the electricity crisis as a national disaster could facilitate procurement corruption similar to that which was experienced during the Covid lockdowns, Ramaphosa said the Auditor-General would be brought in to ensure “continuous monitoring of expenditure in order to guard against any abuses of funds needed to attend to this disaster”.
Outlining the rationale for the state of disaster, the President said it would enable government to implement practical measures needed to support businesses in the food production, storage and retail supply chain, including for the roll-out of generators, solar panels and uninterrupted power supply.
“Where technically possible, it will enable us to exempt critical infrastructure such as hospitals and water treatment plants from load shedding.
“And it will enable us to accelerate energy projects and limit regulatory requirements while maintaining rigorous environmental protections, procurement principles and technical standards.”
In response, Eskom said it would study the detail in the Government Gazette to understand the implications of the declaration before it would provide any further comment. It also did not comment on the plan to appoint a Minister of Electricity.
Ramaphosa also used his address to indicate that shareholder responsibility for Eskom would remain with the Public Enterprises Minister and would not be shifted to the Mineral Resources and Energy Minister, despite indications that the African National Congress had decided to move State-owned enterprises (SOEs) to their line departments in a National Executive Committee resolution that had yet to been formally published.
“So as to remove any confusion, the Minister of Public Enterprises will remain the shareholder representative of Eskom and steer the restructuring of Eskom, ensure the establishment of the transmission company, oversee the implementation of the just energy transition programme, and oversee the establishment of the SOE Holding Company.”
The restructuring of Eskom was also reaffirmed in the speech, with the President announcing that the National Transmission Company South Africa (NTCSA) would soon be operational with an independent board.
The separation of the NTCSA from Eskom generation and distribution is seen as key to leveling the playing field for private and municipal generators and to ensuring that there is adequate investment in the grid, which is currently a key constraint to investment, particulalrly in the Cape provinces.
No new plans were announced to tackle loadshedding with Ramaphosa holding to the National Energy Plan he unveiled in July last year.
However, he announced that Finance Minister Enoch Godongwana would use his Budget to outline how households would be assisted in buying solar systems and how businesses could benefit from a tax incentive.
“National Treasury is working on adjustments to the bounce-back loan scheme to help small businesses invest in solar equipment, and to allow banks and development finance institutions to borrow directly from the scheme to facilitate the leasing of solar panels to their customers.”
Also emphasised were recent moves to ensure that Eskom had sufficient money available to buy diesel for the next two months of its financial year so as to reduce the intensity of loadshedding, as well as confirmation that Eskom had been mandated to procure emergency power “that can be deployed within six months to close the immediate gap”.
There are concerns that this programme will facilitate the long-term entry of powerships, but details of the procurement have not yet been released by the State-owned utility.