President Cyril Ramaphosa has penned his latest open letter to the public, outlining the issues that saw South Africa hit by load shedding this past week.
Ramaphosa said that the power outages disrupted the lives of millions of people in their homes, workplaces and businesses.
He added that the cost of load shedding is significant and contributes to investor unease at a time when we are trying to attract more domestic and foreign capital to South Africa and to improve our global rankings on ease of doing business.
“While technicians are working around the clock to fix problems at several power stations and restore the grid to stability, the government last week released the updated Integrated Resource Plan (IRP),” said Ramaphosa.
“It is our policy blueprint for the country’s industrial, commercial and household energy needs until 2030. It provides clarity and certainty on a crucial part of our development path.
“The plan focuses on affordable electricity, reduced emissions and water consumption and a diversity of generation sources.
“Significantly, given the events of the last week, the updated IRP takes into account the constraints facing Eskom, and deals with the desire by electricity users to have alternatives to meet their energy requirements.”
Ramaphosa said that the IRP supports a diversified energy mix that includes coal, natural gas, renewable energy, battery storage and nuclear power.
The IRP envisages a move towards steadily reducing emissions through greater uptake of renewables.
Alongside this, the government needs to implement a ‘just transition’ to ensure that communities and workers whose livelihoods depend on the fossil fuel industries are not left behind, Ramaphosa said.
“That is why we will be developing a clear framework for the process of decommissioning coal-fired power stations that have reached the end of their operational cycle,” he said.
“The global energy transition will present challenges for communities and workers in the areas where fossil fuel-powered energy generation takes place.
“However, it also presents opportunities for those affected to have access to technologies that are more cost-effective and better for human health. It also presents significant investment opportunities in cleaner energies.”
Ramaphosa cited the example of the recent natural gas find in the Outeniqua Basin off the Southern Cape Coast which gives great hope for future discoveries of coastal gas, including recoverable shale.
Opportunities also exist in the fields of biomass, biogas and cogeneration, he said.
Ramaphosa said that Eskom is also owed huge amounts of money by individual users and that a culture of non-payment exists in several parts of the country.
“Boycotting payment for services had a place in apartheid, South Africa. It was an effective tool to mobilise communities against an unjust system.
“But it has no place in present-day South Africa. If public utilities like Eskom are to survive, then all users need to pay for the services they receive.”
Households across South Africa owe Eskom around R40 billion in unpaid bills – but it’s Soweto, with its 1.3 million residents, which make up the biggest chunk of that.
Soweto owes Eskom approximately R18 billion, alone, with estimates that only 10% of its residents pay for power.
Non-payment in the city is endemic, with illegal connections a common feature.
Ramaphosa said that Eskom’s financial position remains untenable and its current operational model difficult.
To combat this, Ramaphosa said that government will soon be announcing the appointment of a permanent Eskom CEO who, together with a strengthened board, which will be tasked with turning the entity around.
“The restructuring of Eskom into three entities – generation, transmission and distribution – is critical if we are to respond effectively to the evolving technologies and developments in the global energy industry. Eskom needs improve its credit rating so that it can raise funding for both his operational and capital expenditure,” he said.
“The sheer scale of Eskom’s debt is daunting. Further bailouts are putting pressure on an already constrained fiscus.
“As government has made clear, the most recent support to Eskom comes with stringent conditions. The fruitless and wasteful expenditure must be stopped.”