President Cyril Ramaphosa. (GCIS)
South Africa’s energy crisis has been declared a national disaster, President Cyril Ramaphosa announced in his State of the Nation address on Thursday. The state of disaster is effective immediately.
Ramaphosa will also appoint a minister of electricity in the presidency, who will oversee all aspects of the country’s electricity crisis response. The minister, the president said, will work “day and night” to arrest the crisis.
In order to avoid confusion, Ramaphosa said, the minister of public enterprises, currently Pravin Gordhan, will remain Eskom’s shareholder representative and will steer the power utility’s restructuring. This is despite a proposal by the ANC that state-owned entities be moved out of Gordhan’s department and into their relevant policy departments.
“The state of disaster,” Ramaphosa said, “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, the freshly gazetted regulations will enable the government to exempt critical infrastructure and institutions such as hospitals and water treatment plants from load-shedding.
It will enable the government to accelerate energy projects and limit regulatory requirements while maintaining rigorous environmental protections, procurement principles and technical standards, the president said.
The auditor general will be brought in to ensure continuous monitoring of expenditure. This, Ramaphosa said, will guard against any abuses of the funds needed to attend to this disaster.
“Extraordinary circumstances call for extraordinary measures,” Ramaphosa said.
“The energy crisis is an existential threat to our economy and social fabric. We must spare no effort, and we must allow no delay in implementing these measures.”
In a brief statement, Eskom said it would study the detail in the government gazette on the state of disaster “to understand the implications of the declaration”.
Ramaphosa’s address — which was delivered as the country endured yet another spell of stage four load-shedding — put the country’s energy crisis at the top of his administration’s agenda.
Other efforts to address the crisis include supporting Eskom with additional funding for diesel, needed to run its gas-fired turbines, as well as tax incentives for businesses and households that install solar panels. Details of the latter intervention will be announced by Finance Minister Enoch Godongwana in his budget speech later this month.
“Our most immediate priority is to restore energy security,” Ramaphosa said on Thursday night.
“We are in the grip of a profound energy crisis, the seeds of which were planted many years ago. We cannot undo the mistakes that were made in the past — the capacity that was not built, the damage that was done to our power plants due to a lack of maintenance and the effects of state capture on our institutions. What we can do is to fix the problem today. To keep the lights on tomorrow and for generations to come.”
The 15-year energy crisis has threatened to break the back of the country’s already fragile economy. Last month, the South African Reserve Bank forecast that the economy would grow a mere 0.3% in 2023 as a result of load-shedding’s onslaught. At that rate, the country’s unemployment will remain stubbornly high, as the country risks a repeat of July 2021.
“We know that, without a reliable supply of electricity businesses cannot grow, assembly lines cannot run, crops cannot be irrigated and basic services are interrupted,” the president noted in his address.
“Load-shedding means that households and our supermarkets and shops are unable to keep food fresh, water supply is often disrupted, traffic lights do not work, streets are not lit at night. Without a reliable supply of electricity, our efforts to grow an inclusive economy that creates jobs and reduces poverty will not succeed,” he said.
In addition to the solar panel tax incentive, Godongwana’s budget is expected to give more detail about the government’s plan to relieve Eskom of a portion of its R400 billion debt.
The debt takeover, which was announced in the treasury’s medium-term budget policy statement in October 2022, is expected to free up the power utility’s finances so that it can invest in critical maintenance.
The national treasury, Ramaphosa said, is also working on adjustments to the bounce-back loan scheme to help small businesses invest in solar equipment and to allow banks and development finance institutions to borrow directly from the scheme to facilitate the leasing of solar panels to their customers.