Power vacuum | Fin24
  • Covid-19 Money Hub

    The hub will help answer your business and money questions during the coronavirus crisis.

  • Coronavirus Funding

    Could a R100 billion social impact bond help fund SA's Covid-19 interventions?

  • Money Clinic

    I have invested R1m to be paid out monthly, I have not received any during Covid-19. What can I do?


Power vacuum

Oct 22 2017 06:00
Dewald van Rensburg

Outgoing energy minister Mmamoloko Kubayi’s last act as minister was to suddenly undo her controversial intervention in the war between Eskom and private renewable energy developers.

On Monday – the day before the latest Cabinet reshuffle – Kubayi unexpectedly “signed off” on 27 outstanding private renewable projects representing about R60 billion in capital expenditure, according to the SA Wind Energy Association (Sawea).

This came two weeks before a deadline that Kubayi had imposed on September 1 to “renegotiate” the tariffs for these projects down to 77c a kilowatt.

In return, Kubayi had promised the independent power producers that their long-delayed power purchase agreements (PPAs) with Eskom would get signed at the end of the month.

“It is curious that this is the second time this year that an energy minister, who has indicated a deadline for the conclusion of PPAs, is removed from the energy portfolio,” said Sawea CEO Brenda Martin.

In the Cabinet reshuffle in March, Kubayi had been brought in to replace Tina Joemat-Pettersson.

Kubayi’s intervention had been unlawful to begin with, according to a legal opinion procured by Sawea from law firm Webber Wentzel.

The move was made on behalf of Eskom, which has blocked the construction of 27 projects worth R60 billion, despite the developers having been appointed “preferred bidders” in the landmark renewable energy independent power producer procurement (REIPPP) programme back in 2015.

“We were informed by the department of energy on Monday that the minister had signed off on the PPA process, and provided the independent power producers’ office and the department with written instructions to proceed towards financial closure as planned. As far as we are aware, this process is now fully under way,” said Martin.

The renewable energy lobby apparently presented Kubayi with arguments that the lower tariff would only be possible if the independent power producers abandoned their local procurement commitments.

Kubayi’s spokesperson, Nomvula Khalo, told City Press that the handover between the ministers made it “difficult to make any informed commentary at this stage”.

“[New Energy] Minister David Mahlobo has to first receive a handover report from his predecessor and also briefings from the departmental management on matters relating to the programmes, including all these urgent issues you are asking about,” she said in an emailed response to questions.

Nuclear elephant in the room

The new energy minister has hit the ground running. He made his first appearance in his new role this week, speaking at a nuclear energy conference.

This added fuel to speculation that he was appointed in order to expedite a nuclear deal.

However, even the tiny recent victory for Eskom and proponents of new nuclear plants in South Africa will soon be challenged in court by environmental nongovernmental organisations (NGOs).

Last week, the department of environmental affairs granted authorisation to build a nuclear power plant near the existing Koeberg plant in Cape Town – 10 years after Eskom’s initial application.

This is, for now, the only place a nuclear power plant can be built in South Africa.

“We have briefed our lawyers to appeal the authorisation,” said Makoma Lekalakala, a senior project officer for Earthlife Africa, the environmental NGO that also successfully challenged key parts of the nuclear build programme in court earlier this year.

In his speech this week, Mahlobo cited South Africa’s outdated integrated resource plan (IRP) from 2010 and its call for 9 600 megawatts of new nuclear generation capacity.

The ministerial determination to build nuclear was set aside in Earthlife’s legal case.

Mahlobo’s invoking of the now-meaningless 9 600MW figure is worrying as its makes the entire process for deciding on major new energy investments seem like just a “tick-box exercise”, Lekalakala told City Press.

It should take two to three years to get a new nuclear build process going, she said. This means a new IRP, public consultation and Cabinet approval.

Then there needs to be a new ministerial determination, which can be challenged if it is not based on sound reasons.

It was hard to imagine what sound reasons there could be, considering South Africa’s large power surplus and the high cost of nuclear stations, said a lawyer familiar with the process.

“It will be hard to lawfully fast-track it, and if it is somehow forced through unlawfully, that can obviously also be challenged,” said the lawyer.

A new IRP is currently being finalised. The draft version, released late last year, was already criticised by electricity experts for artificially favouring nuclear.



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Company Snapshot

Voting Booth

How has Covid-19 impacted your financial position?

Previous results · Suggest a vote