South Africa’s blackouts render it seeking private sector assistance In a bid to reduce the country’s reliance on the state-owned power provider, Eskom, amidst extended blackouts, the President of South Africa, Cyril Ramaphosa has announced a plan to enlist the private sector to support generation capacity of the grid.
Recent load-shedding announcements by Eskom have become cumbersome on the country’s economy as the power-cuts last up to 12 hours, highest historically and persisting for more than a decade according to a report by Financial Times. Lack of investments in new
plants, and a monopoly on production by the state-owned Eskom has held back improvements in power generation and deepened reliance on ageing coal plants.
“The ailing state utility has been left with as little as 26,000 megawatts (MW) of capacity to meet national demand that peaks at 32,000MW in winter — forcing it to cut off up to 6,000MW from the grid at a time,” the report stated. Previously, power generators needed some requirements to hold a license for projects larger than 100MW, but Ramaphosa’s new plan would erase those needs. Mines and other businesses would be able to install their own generating capacity regardless of size. The state will also double the procurement of
renewable energy in 2022 to more than 5000MW.
However, there are worries in certain quarters that the plan may not materialize or take very long. An independent economist, Thabi Leoka was quoted by FT: “The measures are a good plan, especially the removal of the licensing threshold. However, it may take a few years
before independent producers can meaningfully contribute to the grid. Building the capacity will take some time, but it’s better than not doing anything as most companies are struggling.”
The president blamed vested interests in the status quo as causing deliberate sabotage to Eskom’s infrastructure, calling them “well-organised criminal syndicates destroying the utility and damaging our economy.” Some of the nefarious activities include rampant theft
of spare power-plant parts.” Ramaphosa also faces in-party challenges as ANC heartlands cover coal mining regions that supply Eskom. Some factions in the party prefer state direction of those resources than independent renewables.
“There is a history of obstructing renewables because you want to protect the gravy train around incumbent resources,” Grové Steyn, managing director of Meridian Economics told FT. “The problem is not red tape. It is political resistance,” he affirmed. Industry lobby group Business Leadership SA hailed Ramaphosa’s plan as a positive step but this was clearly not enough as many companies are hedging their bets. MTN, for instance, was reported to be adding a fleet of 2,000 generators to keep towers running.
Leoka lamented that as the country awaits new power investments, running diesel generators and hiring security to guard them were deadweight costs for businesses in an already stagnant economy. “This is money that could have gone elsewhere, into investment or employment,” he decried.
