/ 12 April 2023

Minister of electricity’s controversial coal plans

Kgosientsho Ramokgopa
Electricity Minister Kgosientsho Ramokgopa

Only a month into the job as electricity minister and Kgosientsho Ramokgopa is already at odds with his counterparts over his plans for Eskom.

Allegations are rife that he will be handed some of Gwede Mantashe’s powers from the Department of Mineral Resources and Energy. From the public enterprises ministry, Pravin Gordhan is concerned about Ramokgopa’s utterances on keeping coal-fired power stations online and the implications for international donor funding. 

Ramokgopa was made electricity minister last month by President Cyril Ramaphosa to deal with load-shedding, which has brought businesses and the economy to their knees. He will work with the Eskom board to improve the utility’s energy availability factor (EAF).

Ramokgopa, who is yet to receive ministerial powers, is said to be in line to take over some of Mantashe’s duties. Cabinet sources told the Mail & Guardian Ramaphosa is planning to transfer the whole energy department to Ramokgopa, who has been operating without a job description since his appointment. Cabinet sources added that there is also discontent about Ramokgopa’s comments casting doubt on South Africa’s transition away from coal.

“This will have to be discussed in the next cabinet meeting because it is important that we present a unified voice, especially when dealing with international matters,” the cabinet source said.

Ramokgopa said the government needed to rethink the pace at which the country is to achieve a net-zero level of emissions so as not to harm the economy.

Extending the ageing, costly fleet of coal-fired power stations goes against the policy signed by Ramaphosa aimed at replacing them with cheaper renewable energy infrastructure. Ramokgopa plans to ask the cabinet to reconsider its position to decommission the plants and rather keep them operating.

On Thursday, Ramokgopa announced that he plans to extend the life of Eskom’s power stations that are reaching their end of lives by another 20 years, which will cost more than R400 billion. But this would be contingent on whether the cabinet gave him the go-ahead.

The fiscus had to invest in refurbishing the coal-fired power stations to improve their performance and he would advance this as his preferred option when he presented his plans to the cabinet before the end of April.

“Eskom has no money to invest in capital cost. When you accept that as a given, and say there is nothing you can do as a country, then accept that you are going to have higher levels of load-shedding, accept that the total cost to the economy continues to be exponential,” Ramokgopa said.

“Ageing power stations need investment to refurbish them to improve their performance and prolong their lifespans. This will require investment by the fiscus and/or the private sector. Renewables do not currently have enough baseload that will supply energy all day,” he said.

His announcement has put him at odds with Gordhan, who has noted that his comments could jeopardise the R130 billion investment by international donors that was factored into the cabinet-approved Just Energy Transition Investment Plan (JET-IP) that envisages an investment programme of R1.5 trillion over the next five years.

Responding to questions from EFF treasurer general Mpho Maotwe in parliament on Tuesday, Gordhan contradicted Ramokgopa’s statement by saying the plan to decommission Eskom’s old plants was still on track.

“The Eskom just energy transition strategy recognises the financial prudence of investing limited capital budgets towards establishing new generating capacity from renewables, rather than investing in aged coal plants to extend their lives or to make them environmentally compliant. Many coal plants are noncompliant with national minimum emission standards requirements,” Gordhan said.

Energy expert Mark Swilling told the Mail & Guardian if the cabinet agreed with Ramokgopa’s conclusions, this would send a signal that South Africa plans on being excluded from international markets that are introducing carbon border taxes aimed at preventing the import of goods from carbon-intensive economies. 

Swilling added that Ramokgopa’s preferred option means disregarding cabinet-approved policies. This has triggered consternation among local and international investors who take a long-term view based on the certainties provided by solid cabinet-approved policy frameworks. 

“Based only on a walkabout and unsupported by the detailed technical studies that exist, we must now believe that the machines can be fixed and made to last,” Swilling said.

He added that there was plenty of funding available for renewables, at a very low cost per kilowatt hour, but coal would cost the government more money while breaking the promise to limit the country’s carbon emissions.

“There is virtually no funding available for investing in coal, especially ageing, polluting, coal-fired power plants — and, if there is, it will be very costly.”

Any funding is also threatened by the corruption plaguing the utility which was exposed by former Eskom chief executive Andre de Ruyter, who said cabinet members were planning to loot the coffers of the utility using cartels in Mpumalanga.

The matter is yet to be discussed in parliament when De Ruyter returns to explain the corruption uncovered at the utility.

Mandisa Nyathi is a climate reporting fellow, funded by the Open Society Foundation for South Africa.