South Africa’s energy crisis has been declared a national disaster, President Cyril Ramaphosa announced Thursday in his state of the nation address. The state of disaster is effective immediately.
Ramaphosa will also appoint an electricity minister to the presidency, who will oversee all aspects of the response to the country’s electricity crisis. The minister, the president said, will work “day and night” to stop the crisis.
To avoid confusion, Ramaphosa said, the minister for public companies, currently Pravin Gordhan, will remain the representative of Eskom’s shareholders and will lead the restructuring of the power company. This is despite a proposal by the ANC that state entities be moved from Gordhan’s department to their relevant policy departments.
“The state of disaster,” Ramaphosa said, “will allow us to provide practical steps we need to take to support businesses in food production, storage, and the retail supply chain, including the deployment of generators, solar panels, and power supply. uninterrupted power. .”
When technically possible, the newly published regulations will allow the government to exempt critical infrastructure and institutions, such as hospitals and water treatment plants, from load reduction.
It will allow the government to speed up power projects and limit regulatory requirements while upholding rigorous environmental protections, procurement principles and technical standards, the president said.
The Auditor General will be hired to ensure continuous monitoring of expenditures. This, Ramaphosa said, will guard against any abuse of the funds needed to address 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 not allow delays in the implementation of these measures.”
In a brief statement, Eskom said it would study the details in the government gazette on the state of disaster “to understand the implications of the declaration.”
Ramaphosa’s speech, delivered as the country was undergoing another stage four load reduction period, 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 funds for diesel, needed to run its gas turbines, as well as tax incentives for businesses and households that install solar panels. Details of this latest 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 Thursday night.
“We are in the grip of a deep 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 lack of maintenance, and the effects of state capture on our institutions. What we can do is 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 Reserve Bank of South Africa forecast that the economy would grow by just 0.3% in 2023 as a result of the charge reduction 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 function, crops cannot be irrigated, and basic services are interrupted,” the president said in his speech.
“Load shedding means homes and our supermarkets and shops can’t keep food fresh, the water supply is often interrupted, traffic lights don’t work, streets aren’t 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,” she said.
In addition to the solar panel tax incentive, Godongwana’s budget is expected to provide more details on the government’s plan to relieve Eskom of part of its R400 billion debt.
The debt acquisition, which was announced in the Treasury’s October 2022 medium-term budget policy statement, is expected to free up the power company’s finances so it can invest in critical maintenance.
The national treasury, Ramaphosa said, is also working on adjustments to the recovery loan scheme to help small businesses invest in solar equipment and allow banks and development finance institutions to borrow directly from the scheme to facilitate leasing. of solar panels to its customers.
