Government is doing away with its own red tape to rapidly add energy to the grid

Experts say the situation would be improved if Eskom relied more on ­independent power producers. (PHOTO: Gallo Images/ALAMY)

Experts say the situation would be improved if Eskom relied more on ­independent power producers. (PHOTO: Gallo Images/ALAMY)

 

Government’s plan to add capacity to the grid includes a lot of deviation from the regulations that cause delays and some private sector involvement. Something that could have been done a long time ago instead of reacting to the falling apart of the system.As President Cyril Ramaphosa mentioned in his speech last week, the focus would be on:

• Fixing problems within Eskom and adding extra energy to the grid as soon as possible;

• Enable and accelerate private sector participation in generation capacity;

• Accelerate procurement of renewables, gas and battery storage;

• Allow businesses and households to invest in rooftop solar panels and sell to the grid;

• And fundamentally transform the sector for the long term.

To add meat to last week’s bones of a speech, Minister in the Presidency Mondli Gungubele led several Cabinet ministers to outline some details of government’s plans.

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Eskom’s six power stations will receive critical maintenance over the medium term. These power stations include Camden, Kusile, Majuba, Thuthuka, Duva and Matla.

But for the immediate- to short-term electricity supply, Public Enterprises Minister Pravin Gordhan said this includes getting parts and contracts ready to go and having original parts where possible. Gordhan said to add capacity immediately to the grid, his department would get consent from the department of mineral resources and energy to buy surplus power from independent power producers (IPPs)

He said:

IPPs are currently not using all the power they produce, so they have a surplus. Eskom requires consent to buy surplus power that is available in current IPPs. Up to 1000MW is potentially available in the next three months and that will be connected to the grid as well.

“There was potential for another 600MW that could be made available following a similar requirement and where triple exemptions would be required from section 34, from the triple PFA and the PFMA [Public Finance Management Act]. Those are processes my colleagues are working on.”

Gordhan said negotiations have been under way over the 10 days or so with our neighbouring countries on the southern African energy pool that could avail between 100 and 200MW for a month. He said this would depend on the contracts and an agreement on prices. 150MW of gas from Mozambique might be available in three months.

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“In the immediate term, its maintenance, buying excess capacity that is in the country from IPPs and the potential for gas to come online as well. In terms of the Eskom power lines, the intention from Eskom is not to skip environmental impact assessments … There are mechanisms of fast tracking these and one of the key elements of the new way of doing business in government so to speak is to remove as much red tape as possible and a lot of intensive work has gone into this area over the last two or three weeks.”

Fraud at Eskom ongoing

Gordhan said while progress has been made to deal with criminality at Eskom, a lot of fraud was still going on.

From poor quality coal that’s been supplied to the power utility to non-delivery of oil or the overcharging for parts that are required by Eskom.

Police Minister Bheki Cele said the police have been working in collaboration with general managers at Eskom.

He said:

Between four and six people have been arrested at one power station. We are hopeful that the whole chain of the justice system will begin to take these matters seriously. In the last financial year, there were 210 cases opened and 191 of those people were found guilty. Some of them are doing between 10 and 15 years.

Trade, Industry and Competition Minister Ibrahim Patel said the localisation requirement for PV solar panels to be acquired locally would be reduced for bid window five.

Deviations and red tape cutting

“There are two elements to this flexibility. The first is there is a 100% requirement for localisation of PV panels or modules this would be reduced very drastically to 35% … Secondly, within this 35% that I have spoken of that would be produced locally, if there are any delays or challenges with supply, there is also an exemption facility that will be put in place … This is a wide deviation that’s been put in place because it’s helpful to the economy and has been structured to enable local production of some of the demands for local producers.”

He said for future bid windows, the localisation targets will be increased to allow scaling up of local production to create jobs and strengthen supply chain security.

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Finance Minister Enoch Godongwane said to expedite things, the PFMA would be deviated from. He said Eskom was yet to come forward on how much it would need to carry out critical maintenance for the key power stations that will be prioritised. These power stations are Kusile, Camden, Thuthuka, Matla, Duva and Majuba.

A figure of about R2 billion had been spoken of but it was agreed that it might be too early to speculate. He said Eskom had spent R8 billion on its generation division.

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Godongwane added it was accepted that to avert the risk Eskom posed to the sovereign debt, the sovereign would have to intervene.

“We’ll be going to the Cabinet lekgotla in the first week of September with a proposal to deal with that issue. What has not been settled is the quantum of that how much will be taken by the sovereign. At the moment, both treasury and Eskom officials are developing scenarios which we’ll table before Cabinet. The final quantum and the conditions precedent and conditions post the transactions will also be dealt with on October 26 in the mid-term policy budget statement,” he said.