A South African energy expert has warned that the full powers signed over to the Minister of Electricity in the Presidency, Dr Kgosientso Ramokgopa, will come at a high price for the end users of electrical energy.
The warning comes as President Cyril Ramaphosa just concluded the signing of a proclamation that transfers “certain powers and functions” to Ramokgopa in line with the Electricity Regulation Act. In the past few months, Ramokgopa had become a laughing stock because he was appointed a minister to end load shedding but had no executive powers to implement some of his plans.
Instead, he always had to ask Minister of Mineral Resources and Energy Gwede Mantashe and Minister of Public Enterprises Pravin Gordhan for permission before making serious decisions on how power stations should be managed nationwide. Ramaphosa’s spokesperson Vincent Magwenya has said Ramokgopa was appointed in “response to the electricity crisis as a national priority.”
“On 7 March 2023, the President appointed several Ministers and Deputy Ministers, including Dr Kgosientsho Ramokgopa as Minister of Electricity. “After due consideration, President Ramaphosa has transferred to the Minister of Electricity all powers and functions contained in Section 34(1) of the Electricity Regulation Act, which were previously entrusted to the Minister of Mineral Resources and Energy,” said Magwenya.
According to the presidency, Section 34 of the Act deals with new generation capacity in various ways, but in consultation with the National Energy Regulator of South Africa.
Ramokgopa’s ministerial powers include the following:
• Determine that new generation capacity is needed to ensure the continued uninterrupted supply of electricity;
• Determine the types of energy sources from which electricity must be generated, and the percentages of electricity that must be generated from such sources;
• Determine that electricity thus produced may only be sold to the persons or in the manner set out in such notice;
• Determine that electricity thus produced must be purchased by the persons set out in such notice;
• Require that new generation capacity must be established through a tendering procedure which is fair, equitable, transparent, competitive and cost-effective and also provides for private sector participation.
“This proclamation will provide the Minister of Electricity with the powers necessary to direct the procurement of new generation capacity and ensure security of supply.
“The Minister will work full-time with the Eskom board and management to end load-shedding and ensure that the Energy Action Plan announced by the President is implemented without delay,” said Magwenya.
However, energy expert Tshepo Kgadima believes this is the one road that leads to the privatisation of electricity generation, with Eskom (government) targeted as the primary customer.
“The practical meaning and effect of proclamation is that economically catastrophic and financially ruinous rolling blackouts are here to stay, unfortunately.
“It is also apparent that the Presidency has not duly considered that Section 34 of the Electricity Regulation Act violates Section 217 of the Constitution, procurement provisions in the Public Finance Management Act and Energy Regulator Act,” said Kgadima.
The expert said the aim of Section 34 was to open up electricity generation tenders, which will not be suitable for the consumer, he insisted.
“The section’s purpose is for the liberalisation of the electricity market and thus create competition and usher new players in the electricity market in South Africa. However, as matters stand, Section 34 has been misapplied in that its implementation arbitrarily and unlawfully imposes financially onerous conditions on Eskom as the buyer of first instance.
“Eskom will be buying electricity purportedly produced by privateer, so-called independent power producers, regardless of cost which is currently 6.25 times to 10 times higher than the actual cost of electricity generation by Eskom itself,” Kgadima said.
“Consequently, Eskom has had to pass on the Section 34 related costs on to electricity consumers in the form of unsustainably high and unaffordable electricity tariffs which have in turn caused devastating harm to the economy.”