Ramaphosa jeered as he declares national state of disaster

The dominant theme of this year’s State of the Nation Address (Sona) was the electricity crisis, and what is being done to solve it. Amid boos from the chamber, President Cyril Ramaphosa announced a National State of Disaster had been gazetted on 9 February, and begins with immediate effect, to address the electricity crisis and prevent a possible total blackout.

Watch/read: 2023 Sona – National state of disaster declared on electricity crisis

As with Covid, the disaster management of the electricity crisis falls to Minister of Cooperative Governance and Traditional Affairs Nkosazana Dlamini-Zuma.

“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 rollout 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,” said Ramaphosa.

Other key steps being taken to address this are changes in regulation to allow private sector participation in power generation, tax incentives for rooftop solar panels, and fixing the broken Eskom power plants.

To occasional jeers, Ramaphosa outlined plans first announced in July 2022 to address Eskom’s 4 000 to 6 000 MW shortfall, that resulted in load shedding becoming a daily affair. These plans included:

• To fix Eskom’s coal-fired power stations and improve availability of existing supply
• Accelerate investment in generation capacity
• Accelerate procurement of new capacity renewables, gas and battery storage
• Unleash businesses and households to invest in rooftop solar
• Transform the electricity sector to achieve long-term electricity security.

Ramaphosa detailed steps taken to improve the performance of Eskom’s power stations, including appointing a new board with the focus on fixing the six power stations that contribute the most to load shedding. This includes bringing back on line three downed generation units at Kusile, and deploying skills to under-performing power stations.

National Treasury is finalising a solution to address Eskom’s R400 billion debt, which will allow it to make the necessary investments in maintenance and transmission. Government will assist Eskom to purchase additional diesel to fire up its auxiliary generators and so minimise load shedding severity in 2023, added Ramaphosa.

A programme also been launched to buy extra power from private generators and neighbouring countries.

Steps are being considered to mitigate the impact of load shedding on food prices, through no details were given.

SA Police Services (Saps) has set up a team to deal with corruption and theft at power stations, and 43 arrests have already been made.

The Electricity Regulation Amendment Bill will be introduced in 2023 to foster a competitive electricity market, while the finance minister’s Budget speech later this month will provide details on proposed tax incentives for rooftop solar panels.

National Treasury is working on adjustments to its Bounce-back Loan Scheme first introduced in 2022 which will allow businesses to invest in solar energy systems, with banks and finance institutions being incentivised to facilitate the financing and roll-out of solar.

There are now more than 100 private developer power projects that will contribute over 9 000 MW to the country’s energy needs over time, with 2 800 MW of new capacity becoming available in the near future. Eskom will purchase emergency power that can be deployed in six months, said Ramaphosa.

One of the grid bottlenecks is lack of transmission capacity. To this end, new transmission lines and substations are being invested in, particularly in the Eastern-, Northern- and Western Cape.

To assist in the management of the crisis, the Auditor General will be brought in to monitor expenditure and guard against abuse of funds.

A Ministry of Electricity in the presidency will be appointed to oversee all aspects of the crisis response, including the work of the National Energy Crisis Committee. The Ministry of Public Enterprises will continue to operate as the shareholder representative for government.

“All of these measures will result in a massive increase in power to the grid over the next 12 to 18 months and beyond,” said Ramaphosa.

Renewables

While addressing the electricity crisis, SA will continue to pursue its Just Energy transition targets to reduce carbon outputs. To this end, R1.5 trillion will be invested over the next five years “in new frontiers such as renewable energy, green hydrogen and electric vehicles.”

Green projects already underway include Sasol’s green hydrogen project at Boegoebaai in Northern Cape, the Prieska Power Reserve in the Free State which will start producing green hydrogen and ammonia by 2025, the Hydrogen Valley project in Limpopo and Kwazulu-Natal, while the Northern Cape has already attracted more than R100 billion into renewable projects.

Removing rail bottlenecks

In 2022, government adopted the National Rail Policy to modernise and reform of the rail sector, and allow third-party access to the rail network. “We are working across government to develop a Transnet Roadmap that will translate our policy commitments into reality, including the restructuring of Transnet Freight Rail to create a separate Infrastructure Manager for the rail network by October 2023,” said Ramaphosa.

“Transnet and private sector companies will conclude partnerships at the Durban and Ngqura container terminals, to enable new investment in our ports and improve their efficiency.”

The Port Elizabeth Automotive Terminal has more than doubled its capacity, resulting in a substantial increase in vehicle exports.

Thirteen new passenger rail lines have been reopened, and large-scale investment in water supply – including Phase Two of the Lesotho Highlands Water Project – will ensure reliable supply to Gauteng, Free State, Mpumalanga, North West and Northern Cape.

R2 trillion investment target

SA achieved R367 billion in investment commitments in 2022 at the 4^th South Africa Investment Conference, but this year intends to set a new, higher target of R2 trillion by 2028 (the previous target was R1.5 trillion).

Plans are in place to put together a R10 billion fund to support small business growth, while the Small Enterprise Finance Agency intends to provide R1.4 billion to 90 000 entrepreneurs.

Further funds will be made available for skills training in fields such as IT and artisanal trades, with a view to creating tens of thousands of new jobs.

Addressing the poor

There are more than 25 million South Africans receiving some form of income support from government, in addition to the two million households receiving free basic water, free basic electricity and free solid waste removal. Some 60% of the government’s budget is spent on welfare, and social grants will be increased to cushion the effect of rising costs of living.

One plan to unlock wealth for the poor is to provide title deeds to one million homes currently backlogged, creating collateral – and hence financing possibility – to the most needy.

A state bank, long discussed, is now in the advanced planning stages, with the Postbank Amendment Bill currently before the National Assembly, as a way to provide “a viable and affordable alternative to the commercial banks,” said Ramaphosa.

As an aside, it took President Cyril Ramaphosa more than 30 minutes to launch into his Sona, as EFF members heckled him over the burglary at his Phala Phala game farm in Limpopo, and attempted to raise points of order.

The Parliamentary Speaker tried in vain to bring order, but eventually ordered security services to eject the EFF members from the chamber, allowing Ramaphosa to start his speech.