Ramaphosa declares state of disaster over energy crisis

South African President Cyril Ramaphosa declared a state of disaster to enable the government to accelerate its response to an ongoing energy crisis, and announced plans to give tax breaks to businesses and households that generate their own solar power.

“Our country has for many months endured a debilitating electricity shortage that has caused immense damage to our economy and the lives of our people,” Ramaphosa said in his state-of-the-nation address in Cape Town on Thursday. “Extraordinary circumstances do call for extraordinary measures.”

Electricity shortages that have dogged the country since 2008 have reached unprecedented levels, with the country subjected to rolling blackouts every day so far this year. Ramaphosa has been pledging to turn monopoly state power utility Eskom Holdings SOC Ltd. around and bring new generation capacity on line ever since he took office in February 2018, but many projects have been delayed by red tape and government indecision.

The outages, known locally as loadshedding, threaten to erode support for the governing African National Congress to such an extent that it risks losing its grip on power in next year’s elections. While Gwede Mantashe, the energy minister, has said the problems can be fixed within six to 12 months, Eskom Chairman Mpho Makwana has warned blackouts will persist until at least 2025 because the utility needs to continue taking its old coal-fired plants off line for maintenance.

The central bank last month cut its economic growth forecast for 2023 to 0.3% from 1.1%, and sees the blackouts shaving two percentage points off output growth. Economists surveyed by Bloomberg predict there’s a 45% chance of the nation slipping into a recession this year.

“The state of disaster will enable us to provide practical measures that we need to take 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,” said Ramaphosa, who plans to appoint a minister in the presidency to focus solely on improving the electricity supply.

Details of the tax breaks will be announced by Finance Minister Enoch Godongwana is his Feb. 22 budget.

A 70-year-old former labor-union leader and one of the richest Black South Africans, Ramaphosa comfortably won a second term as ANC leader in December, meaning he’ll be the party’s presidential candidate in next year’s elections. His victory should give scope to appoint allies to key posts and ensure his administration acts more decisively.

The president said plans are afoot to restructure the government, but didn’t give details. Business Unity South Africa, the country’s biggest business group, wrote to Ramaphosa last week to urge him to use the opportunity to appoint a more competent executive, and to do more to institute economic reforms and crack down on corruption.

“Many investors simply don’t believe our plans,” Busa said in the letter. “To shift this view, they will need to see consistent” delivery, the organization said.

The start of Ramaphosa’s speech was delayed for about 45 minutes by interjections from the Economic Freedom Fighters, the second-largest opposition party, which says he has a case to answer in connection with a scandal related to the theft of cash from his game farm. They were eventually ejected from the Cape Town City Hall after trying to storm the stage and scuffling with security officers. The proceeding were held in the hall because parliament was gutted by a fire last year.

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