President Cyril Ramaphosa has assured investors that his administration was at the forefront of turning coal-fired power stations around in order to reestablish a conducive environment for investment in the country.Although the president acknowledged the economic challenges South Africans have faced over the past five years, he has indicated that there are signs that the country’s economy is on a recovery path.
Ramaphosa was addressing investors at the 5th South Africa Investment Conference in Johannesburg on Thursday. The conference brought together local and international investors, cabinet ministers, government officials and other role players to discuss investment opportunities in South Africa.
“The energy sector remains our foremost priority. The lack of reliability in electricity supply weakens business and consumer confidence, taints international perceptions about our country and affects investment sentiment and decisions.
“Our immediate focus is on improving the performance of our existing coal fired power stations as they continue to provide the baseload of our energy. Demand-side management initiatives will receive elevated attention, including through consumer behaviour, rooftop solar and facilitating embedded generation,” he said.The government has come under fire from some quarters, including union Numsa and the EFF, who accused him of putting the country’s energy security at risk by prematurely abandoning coal in favour of renewable energy. Some went as far to accuse Ramaphosa and former Eskom CEO Andre de Ruyter of prematurely decommissioning coal fired power stations to pave the way for Independent Power Producers.
Ramaphosa told the conference that the country’s clean energy drive has not been abandoned. Instead his government was implementing wide-ranging reforms in the electricity sector. This is to enable private investment in electricity generation and accelerate the procurement of new generation capacity from solar, wind, gas and battery storage.
“One of these reforms regarding the removal of the licensing threshold for embedded generation, has facilitated considerable private investment in the electricity sector. “This reform, together with measures to streamline regulatory processes, has enabled a surge of new projects, with the pipeline of committed projects now representing over 10,000 MW of new capacity.
“Several municipalities are making use of regulatory changes to procure power independently. We have introduced tax incentives for households and businesses to invest in rooftop solar,” he said. He said necessary investment in the transmission network and the maintenance of Eskom’s generation fleet relied on the utility’s debt transfer package and efforts to unbundle the State-owned company.
“We expect the National Transmission Company to be fully operational shortly. Through our renewable energy programme, we have signed agreements for approximately 2 800 MW from bid windows 5 and 6, with several large projects already in construction and others on track to reach financial close.
“We recently released a request for proposals for over 500 MW of battery storage, and will soon open further bid windows for wind and solar, battery storage and gas power,” he said.”As we work to close the electricity supply shortfall and end load shedding in the short term, we are laying the foundation for a fundamental reform of the energy sector in the longer term.”
The president added that the conference has continued to evolve and grow over the past five years.”In 2018, we set a bold and ambitious target to raise R1.2 trillion in investment over a five-year period. This year’s conference is an opportunity to reflect on progress we have made to achieve that goal.
“Given the state of the economy in 2018, and given that we were emerging from a decade of state capture, many thought it was an unattainable target. We moved with speed, appointing the first of our Special Envoys to engage with domestic and foreign investors on investment opportunities in South Africa,” he said. Ramaphosa said R300 billion was raised in pledges from the first conference held.
“The value of investment pledges has continued to grow. Since April 2018, we have had to contend with a devastating global pandemic, damaging social unrest, several natural disasters and a cost-of-living crisis worsened by the ongoing conflict in Ukraine. “In addition, we are now confronted with the consequences of years of under-investment, mismanagement and corruption in our electricity, rail and logistics sectors. Given all that has taken place in the intervening years, it is understandable that investor confidence has been sorely tested,” said Ramaphosa.
“Doubters have had reason to be sceptical. We are on a long journey to rebuild our country and recover the ground we have lost. Our recovery is a mission that will take time to accomplish.” The president also told the conference that they had achieved the R1.2 trillion investment target set by his government.