The debacle surrounding South Africa’s bid to secure emergency power supplies has highlighted a dysfunctional energy policy that’s subjecting Africa’s most-industrialized nation to intermittent blackouts.
Since March, the energy department has identified companies it wants to provide almost 2,000 megawatts of electricity to the grid by August next year.
But a losing bidder has alleged that the selection process was corrupt and sought to reverse it in court, environmental activists have raised objections and lawyers are at odds over whether ship-based power plants can be moored in the nation’s ports.
Delays to the projects, which now appear to be almost inevitable, will extend debilitating energy shortages that president Cyril Ramaphosa said are a “massive risk” for the economy, and further damage South Africa’s reputation as a feasible place to do business.
In addition to Turkey’s Karpowership, which is in line to supply 1,220 megawatts of power, some of the world’s leading energy companies – TotalEnergies, Electricite de France, Scatec ASA and ACWA Power – are involved in the bids.
“What does this do to other potential bidders? The answer is it alienates them,” said Martin Kingston, vice president of the country’s biggest business group, Business Unity South Africa. “They need to believe there’s a transparent process.”
South Africa has been dogged by electricity outages – known locally as load shedding – since 2005, with the near-monopoly state power utility Eskom unable to meet demand from its old and poorly maintained plants.
Its plans to build new capacity have been riven by corruption, cost overruns and government vacillation over what form of energy to use and the role private producers should play.
Ramaphosa took a major step toward alleviating the crisis last week, announcing that companies will be allowed to build their own power plants with up to 100 megawatts of generating capacity without requiring a license.
While the decision was taken in the face of opposition from Gwede Mantashe, his energy minister, and will effectively break Eskom’s monopoly, it won’t provide immediate relief.
The emergency power projects and own-use generation needs “to come through in order to arrest load shedding within the next year or two,” said Jevon Martin, head of energy and decarbonization at Sibanye-Stillwater, the country’s biggest precious-metals miner and a major power consumer.
“Eskom is not going to turn around their generation performance overnight.”
A High Court case filed by losing bidder DNG Energy in April that’s likely to be heard next month poses the biggest threat to the short-term projects.
DNG’s executive director Aldworth Mbalati has alleged that he was approached by a relative and a business associate of Mantashe’s and a meeting was brokered with government officials who asked for a bribe.
DNG is seeking to either be given Karpowership’s contract, or alternatively have all the winners interdicted from completing their deals with the government.
Mantashe, energy department officials and Karpowership have denied wrongdoing and the other winners have said DNG threatens South Africa’s energy security.
“An interim interdict would cause catastrophic knock-on consequences for South Africa’s ability to increase its generation capacity,” Oya Energy, a winning bidder, said in its court documents.
“This will translate into even further strain on an already strained national grid.”