Businesses put up R100 million to help end load shedding
A South African business group has secured commitments of R100 million to capitalise a fund in support of President Cyril Ramaphosa’s efforts to end rolling blackouts and reform the electricity sector.
The Resource Mobilisation Fund was established in response to the president’s request to private businesses to help capacitate the National Energy Crisis Committee, known as Necom, which is run out of his office.
Business for South Africa secured the pledges from local companies and international donors over a four-month period, Martin Kingston, its chairman, said in an online press conference Thursday.
South Africa is enduring its worst-ever load shedding, with state power utility Eskom subjecting the country to blackouts every day this year to protect the national grid from collapse as its old and poorly maintained coal-fired power plants struggle to meet demand.
The money raised will be used to procure capacity and expertise to help support the implementation of the country’s Energy Action Plan over a one- to two-year period.
The model seeks to address concerns about the potential mismanagement of funds under a fast-tracked procurement process that’s permissible under a national state of disaster that the government has declared to enable it to step up its response to the energy crisis.
“The Resource Mobilisation Fund exists only to receive and raise donations, procure capacity and skillsets, donate these to Necom and then report back appropriately,” and won’t engage in policy advocacy, said Kingston, who is also executive chairman of the local unit of Rothschild & Co.
Necom will seek project management, legal and energy modelling expertise through the fund, said Rudi Dicks, the head of the presidency’s project management office.
President Ramaphosa said that the fund would provide crucial expertise and resources to turbocharge the work of Necom and ensure that the best minds in the country are put to work to end load shedding.
“Support will be provided through an independent procurement process to source the required expertise in response to specific requests from Necom,” he said.
The new Minister in the Presidency for Electricity, Kgosientsho Ramokgopa, said the establishment of the RMF shows that action to end load shedding is being taken.
“The tremendous support that this initiative has already received from businesses and philanthropies alike is evidence that we can work together as Team South Africa to get our country back on track. We look forward to a strong partnership with the RMF as we move to ensure swift and full implementation of the President’s plan,” he said.
Ramokgopa said although the RMF comes as a boon for turning around the current energy crisis, the government has already been hard at work to bring more urgently needed megawatts onto the power grid.
Some of the work done includes:
- Eskom is implementing a detailed Generation Recovery Plan to improve its performance, focusing on six power stations that contribute the most to load shedding.
- The licensing threshold for embedded generation projects has been removed which has opened the way for private investment in electricity generation.
- A new determination for close to 15000 MW of new generation capacity from wind, solar, and battery storage has been published and project agreements for 2800 MW from bid windows 5 and 6 have been signed.
- A Request For Proposals for 513 MW of battery storage has been released, which will be followed shortly by the release of Bid Window 7.
- The Minister of Finance has announced significant debt relief for Eskom, totalling R254 billion, as well as a substantial fiscal support package, which includes tax incentives for businesses and households to invest in rooftop solar.
- Red tape has been cut, and the regulatory requirements for energy projects have been streamlined to reduce the time that it takes for new generation capacity to the grid.
The funding indicates that wheels are in motion to tackle the worsening energy crisis, albeit one month after a national state of disaster was declared to do so.
The first regulation changes under the state of disaster came into effect this week when the Department of Trade and Industry and Competition outlined exemptions to some of the country’s competition laws for energy suppliers.
Under the new regulations, businesses in the energy supply sector are being encouraged to collaborate and work closely together to reduce energy usage and build out new generating capavity.
The laws, however, do not condone price fixing and collusion.
With Bloomberg and SA News
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