3 years ago
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ARTICLE AD BOX
Energy minister Gwede Mantashe has spent the last five years since his appointment advocating against the full participation of private companies in the energy sector.
The minister blamed the private sector for being the root cause of load-shedding, contradicting historical evidence and statements from former president Thabo Mbeki.
South Africa’s official opposition, the Democratic Alliance (DA), says Mantashe shouldn’t be pointing fingers as he’s been a key player in failing to generate private interest in the energy sector.
“The reality is that no amount of blame-shifting will hide the undeniable fact that Mantashe has, since his appointment, failed to move the needle on the procurement of independent power generation and the incentivisation of private investment in the sector,” stated DA mineral resources and energy spokesperson Kevin Mileham.
“Together with his ANC comrades, he has fostered policy and regulatory uncertainty, and has not moved fast enough to remove red tape impeding the active participation of independent power producers.”
In November 2022, Mantashe went so far as to suggest the establishment of Eskom 2.0 — another state-owned power utility to compete with Eskom — rather than push for more private sector involvement.
During a South African Communist Party Conference, President Cyril Ramaphosa alluded to Mantashe’s suggestion, describing it as “not a bad idea”.
“For much of its history, this model that we have pursued has worked, but we are today witnessing the great risks associated with placing sole responsibility for electricity generation in one company,” said Ramaphosa.
“That is why when comrade Gwede [Mantashe] flighted the idea of ‘why not a second one which can be owned by the government?’, I said that’s not a bad idea.”
However, several energy experts lashed out at the idea, with some describing it as “Total Insanity”.
Mantashe has also actively opposed certain aspects of private power production, including increasing the embedded generation from independent power producers (IPPs) to 100MW.
The minister described the call as “academic” and argued that the private power market was only ready for a threshold of 10MW.
However, the rest of President Cyril Ramaphosa’s cabinet effectively outvoted him on the matter, and the minister was forced to increase the threshold.
It was later lifted entirely as part of South Africa’s plan to end load-shedding, announced by Ramaphosa during his address to the nation on Monday, 25 July 2022.
Ramaphosa said government’s decision to raise the licencing threshold to 100MW — the very aspect Mantashe had opposed — had unlocked a pipeline of more than 80 confirmed private sector projects with a combined capacity of over 6,000MW.
As a result of the enthusiasm with which the private sector received the invitation to produce power, the president said government would remove the threshold.
Mileham highlighted several other times Mantashe either actively fought against private sector participation or failed to remove red tape standing in the way of investment.
He failed — or refused — to remove the red tape for IPP investment. The South African Independent Power Producers Association has argued that 5,000MW to 10,000MW of generation capacity could be built within two years if IPPs could get a waiver on power purchase agreements.
However, Mantashe’s department insists that IPPs sign PPAs before construction can begin, which can take months or even years to get right.
The minister has also failed to update the Integrated Resource Plan (IRP). Mantashe committed to concluding a review of the IRP by March 2023.
However, he missed the deadline. Without an updated IRP, the country continues to rely on outdated assumptions that don’t reflect what must be done to address the electricity crisis.
Mileham also said the small projects programme has stalled. It was established in 2013 to help local independent power producers run power projects up to 5MW in size.
“Five years after incurring costs to keep the 20 projects — which range across wind, solar, and biomass technologies — on standby for government go-ahead, no power purchase agreements have been signed, and no projects have proceeded into construction,” stated Mileham.
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