Simply put, without the Electricity Regulation Amendment Bill on the statute books, much of the proposed energy sector reform can’t happen. And this means no end to the persistent power cuts that leave South Africans without electricity for up to 12 hours a day, and which have squashed economic growth prospects alongside public confidence.
It’s understood that the Amendment Bill, which must bring the 2006 law up to date, remains with state law advisers, ostensibly to knock into shape a piece of legislation that’s been poorly drafted, and also to ensure proper certification.
Questions arise as to what exactly Cabinet approved at its meeting on 29 March (Statement on the Cabinet Meeting of 29 March 2023 | Government Communication and Information System (GCIS)).
Missteps in administrative basics — granted, experienced legislative drafters are scarce — combined with governing ANC politicking and ideological posturing, once again scupper domestic structural reform priorities.
Such governance hara-kiri is underscored in the political noise and hype for shortcuts like reversing the agreed timetable on decommissioning ageing coal power plants that Electricity Minister Kgosientsho Ramokgopa flighted in a televised briefing on 6 April.
“The preoccupation can’t be about the Eskom balance sheet — it must be about the cost to the economy…” Ramokgopa said repeatedly, even as he acknowledged that money was the domain of National Treasury.
Later, he added: “You can’t be looking for additional megawatts when you are planning to take out megawatts. You are plunging the country into the dark… How do you decommission in the middle of a crisis?”
Energy backtrack?
His commentary seems out of step with the agreed July 2022 National Energy Action Plan and its five policy priorities: fixing electricity availability; accelerating private investment in generation and the procurement of renewables and battery storage; facilitating household and business rooftop solar, and “fundamentally transform the electricity sector to achieve long-term energy security”.
The Electricity Regulation Amendment Bill falls into the National Energy Action Plan and the domestic structural reform priorities under Operation Vulindlela, the joint Presidency and National Treasury initiative, including visa regimen, transport logistics and water systems.
Cabinet on Wednesday was considering Ramokgopa’s proposals on extending the life of ageing coal power stations through public-private partnerships to lessen the impact on the fiscus, according to News24.
Government Communication and Information System (GCIS) confirmed that Ramokgopa had briefed Cabinet, and that “a further assessment of the electricity situation” would be made when the National Energy Crisis Committee meets again.
Electricity minister Kgosientsho Ramokgopa visits Hendrina Power Station on 30 March 2023. (Photo: GCIS)
This comes as Eskom’s operational review by a consortium of five German companies remains underway, with the report and recommendations expected mid-2023. This review is part of the R254-billion bailout Eskom received in the 2023 Budget on several conditions, including a ban on borrowing money for infrastructure.
Read more in Daily Maverick: These five German energy companies are reviewing Eskom’s operations, Scopa finally told
Getting National Treasury’s buy-in for public-private coal power station life extensions is highly unlikely, as is credible private sector preparedness to bid for such initiatives when, globally, the push is for clean energy.
The European Union carbon border tax, which imposes fees for dirty energy used to produce goods, is being phased in from 1 October 2023.
Meanwhile, South Africa is stalled on taking up the $8.5-billion low-interest loans and grants for the Just Energy Transition, or ensuring workers and communities left vulnerable by decommissioned power stations are protected, retrained and reskilled.
The damage caused by flip-flopping on agreed-upon policies for energy sustainability and domestic structural reform priorities would be tremendous. For now, vested interests and ideological muddles contribute to the uphill battle of resolving South Africa’s devastating energy shortages.
This emerged in the raising to 100MW the licensing threshold for embedded power, an Operation Vulindlela measure that President Cyril Ramaphosa finally announced in June 2021 after months of stalling by the Department of Mineral Resources and Energy that wanted to limit the licensing threshold lift to 10MW as business called for 50MW
Read more in Daily Maverick: Increase to 100MW embedded generation threshold will give ‘oomph’ to South African economy, says Ramaphosa
Since then, licensing caps have been removed, a contributor to government announcements that the private sector would contribute 9,000MW from late 2023. The issues are transmission and wheeling, or how independent electricity producers send excess power into the grid.
Eskom’s wheeling framework is bureaucratic spaghetti. Without the Electricity Regulation Amendment Bill, a national standard is possible.
Not helping is the stall on Eskom’s unbundling included in the October 2019 roadmap, after both the 2019 Budget and State of the Nation Address announced this. The year 2021 had been set for when transmission, generation and distribution entities would be formalised. To date, only a transmission company has been established — in structure and law — but is not functioning.
Read more in Daily Maverick: Eskom Roadmap: Floated ideas with flexible milestones, for an uncertain future
A wheel loader transports coal from a pile at the Mafube open-cast coal mine in Mpumalanga. South Africa relies on coal to generate more than 80% of its electricity. (Photo: Waldo Swiegers / Bloomberg via Getty Images)
“In line with the roadmap, the corporatisation of the transmission function was completed in December 2021. A legally binding merger agreement was entered into between Eskom and its wholly-owned subsidiary, the National Transmission Company South Africa SOC Limited (NTCSA),” said Ramaphosa in a written parliamentary reply to DA leader John Steenhuisen.
“Reasons for the delays in unbundling transmission relate to external dependencies such as obtaining lenders’ consent, acquiring electricity licences, and designation of the transmission entity as a buyer.”
Outdated legislation
While a board must also still be appointed over a year later, many of the delays are caused by the lack of updated legislation. Yet it’s taken 14 months for the Electricity Regulation Amendment Bill to reach Cabinet.
The draft Bill was issued by the Department of Mineral Resources and Energy for a 30-day public comment period on 10 February 2022.
See the Bill here: Republic Of South Africa Electricity Regulation Amendment Bill
The process of collating the public comments, and possibly including them in an updated version of the draft Bill, alongside other possible consultations with other economic cluster ministers and officials, took until January 2023.
Then, in an apparent switch, a different draft was submitted by Mineral Resources and Energy to the Cabinet committee process where ministers and officials can interrogate, often quite harshly, what’s before them before it reaches Cabinet for a decision. The “new” version was withdrawn and replaced with the previously conferred one.
And that’s the version Cabinet approved on 29 March — although it has yet to come to Parliament some three weeks later.
The Department of Mineral Resources and Energy did not indicate a date by which the Electricity Regulation Amendment Bill would be tabled in Parliament, as requested on Wednesday. Daily Maverick was referred to the media desk that morning after following up on Tuesday’s request for input to ministerial spokesperson Nathi Shabangu, who was finally reached on a private Gmail account. The departmental parliamentary liaison official, who had been copied in on these emails, did not respond.
Time running out
What happens next on the Electricity Regulation Amendment Bill, and how fast, depends on the department and the state law advisors.
But the clock is ticking. From mid-June, legislators go on a 10-week recess until late August. While parliamentary lawmaking could be rushed, or expedited, as the jargon goes, it’s unlikely this draft law will pass in both Houses of Parliament ahead of the 2024 elections, which, at the latest, must happen in early August 2024.
Given the pressure of positive messaging on the campaign trail, speeding up the legislative processes may be tempting. But given the politicking and ideological quagmire that electricity provision has become, it holds the danger of litigation over legislative shortfalls.
And until this Electricity Regulation Amendment Bill is finalised, rolling blackouts will remain a harsh reality. DM
