President Cyril Ramaphosa delivers his state of the nation address at Cape Town City Hall on February 9, 2023.
- In his state of the nation address, President Cyril Ramaphosa said a national state of disaster had been declared in response to the electricity crisis.
- The president said that to deal with the crisis he would name an electricity minister.
- The Treasury is expected to announce tax incentives for solar power and make adjustments to the “catchback” loan scheme to allow companies to apply for solar financing.
- For more financial news, go to News24 Business Cover.
President Cyril Ramaphosa has announced a series of new measures to combat the country’s “existential” energy crisis, including the declaration of a state of disaster, a new electricity minister and loans and incentives for South Africans to go solar.
In his State of the Nation Address on Thursday night, the president said that to face the crisis “we need a single point of command and a single line of march.”
“Consequently, the National Center for Disaster Management has classified the energy crisis and its impact as a disaster. Therefore, we are declaring a national state of disaster to respond to the electrical crisis and its effects,” said the president.
South Africa had more than 200 days of load disconnection in 2022 and not a single day without cuts since the beginning of 2023.
Ramaphosa said the state of disaster, which began with immediate effect, would help with measures to “support businesses in food production, storage and the retail supply chain, including the deployment of generators, solar panels and power supply. uninterrupted”.
Critical infrastructure, such as hospitals and water treatment plants, would be exempt from load reduction.
The president said the Auditor General would “guard against any abuse of the funds needed to address this disaster.”
electricity minister
The president said that to deal with the crisis, he was appointing an electricity minister to the presidency to “take full responsibility for overseeing all aspects of the response to the electricity crisis.”
“The minister will be focused full-time and will work with Eskom’s board and management to end load shedding and ensure the energy action plan is implemented without delay.”
He later clarified that the minister would “day and night only be concentrating on this crisis that we are dealing with.”
However, the minister for public companies will remain the representative of Eskom’s shareholders.
Incentives and grants
Ramaphosa said that under its energy plan announced last year, the government “will proceed with the deployment of rooftop solar panels.”
“In his budget speech, the finance minister will outline how households will be helped and how businesses will be able to benefit from a tax break,” Ramaphosa said.
On Tuesday, SA Revenue Service Commissioner Edward Kieswetter said the tax authority had “already been engaged by colleagues at the Treasury to say we should look at additional measures to provide some relief and incentive for people to make an investment.” in its own being a little more self-sufficient”.
READ | It’s no to a wealth tax and yes to tax breaks for home solar – Kieswetter
The president also announced on Thursday that the Covid-19 “recovery” loan scheme the government announced last year, to help businesses recover from the pandemic, would now be used to help them raise funds for solar power. .
“The National Treasury is working on adjustments to the recovery 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 customers,” said the president.
EXPLAINER | What you need to know about the government’s new “catchback” loans for businesses
The Treasury previously hoped the scheme would also help companies recover from flooding in KwaZulu-Natal and the July 2021 riots in that province and Gauteng.
Although it is not yet clear what the adjustments to the scheme will be, currently only companies with a maximum turnover of R100 million per year qualify. Businesses can approach banks, SME finance providers or development finance institutions to borrow between R10,000 and R10 million.
Diesel
Ramaphosa also mentioned in his speech that “the government will support Eskom to secure additional financing, to continue buying diesel for the rest of the fiscal year.”
“This should reduce the severity of the head loss, as Eskom will be able to use its diesel-powered plants when the system is under pressure,” the president said.
In December, Eskom declared that it had run out of money to buy more diesel, having spent R12 billion, exceeding its annual budget by more than 100%.
READ | Eskom to borrow R4bn for diesel as Treasury doles out tough love
News24 reported in January that a standoff between Eskom and the National Treasury over diesel financing ended with a deal in which the government would support Eskom with loans from commercial banks, should it not be able to re-prioritize its own resources. .
Burning diesel in its open-cycle gas turbine power plants enables Eskom to reduce pressure drop in two stages for around six hours a day during peak hours.
