Ramaphosa liberalises South Africa’s energy sector

President Cyril Ramaphosa scrapped licence rules for private power generators in a sweeping overhaul of the energy industry to end electricity outages that are hobbling the economy.

Private producers will be allowed to build power plants with unlimited capacity without requiring a licence, compared with a previous cap of 100MW, Ramaphosa said in a televised broadcast on Monday night. He also announced that the government will double the amount of renewable energy it procures under the so-called sixth bid window process to 5.2GW.

“Bold, courageous and decisive action” is needed to resolve the problem that’s caused “immense damage” to economic growth, Ramaphosa said. His comments come hours after the presidency said in a presentation to opposition parties that the floodgates need to be open for private investment in new generation capacity.

Other steps announced include:

• Boosting the recruitment of skilled workers at Eskom and addressing sabotage and theft at the company;
• Allowing Eskom to buy excess power from private producers;
• Climate financing negotiated at talks last year will be used to repurpose power plants and bolster the grid;
• Importing surplus power from neighbouring countries in the region; and
• Announcing a plan to deal with Eskom’s debt by October.

Ramaphosa has been under pressure to end rationing of power that’s plagued the economy for more than a decade, as Eskom’s nearly century-old monopoly has descended into an indebted, underperforming drag on the economy. The new measures are likely to inspire an unprecedented number of private projects.

In the most recent bout of power cuts, breakdowns at Eskom coal-fired plants and labour strife prompted the utility to cut 6GW of supply — enough to light up four million South African homes. That led to the worst blackouts in the nation since 2019.  — Paul Burkhardt and Antony Sguazzin, (c) 2022 Bloomberg LP

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