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How radical will Zuma really be?

In his state of the nation address on Thursday night, President Jacob Zuma said government would embark on ‘radical socioeconomic transformation’ to bring fundamental change to the racial patterns of ownership, management and control of the local economy.

As part of this transformation, Zuma said the department of economic development would seek to amend the Competition Act.

READ: SONA: Mixed views on impact and implementation

In addition, a draft Property Practitioners Bill as well as a Mining Company of SA Bill will be published for public comment this year.

And, in another key development, Zuma said Eskom would sign the outstanding power purchase agreement for renewable energy projects which had been procured, putting an end to delays on the part of Eskom.

Eskom and renewables

1. Zuma’s assertion that “Eskom will sign the outstanding power purchase agreements for renewable energy in line with the procured rounds” was interpreted by the renewables industry as signalling executive intervention in the impasse that had halted 37 renewable projects worth R58 billion in total.

The projects were chosen as preferred bidders in the Renewable Energy Independent Power Producer Procurement Programme, but from July 2016 Eskom refused to sign their power purchase agreements.

“One can only gather that Eskom has been waiting for instruction from a higher level of government and that this has now happened,” said Brenda Martin, chairperson of the SA Renewable Energy Council.

This week, Eskom started contacting the project developers to extend their so-called budget quotes, which set project fees and cost “hundreds of millions” to prepare, said Martin.

The majority of the quotes had expired by late last year, she added.

Eskom had now assured the developers that the quotes were still valid.

Eskom spokesperson Khulu Phasiwe confirmed that the budget quotes were being extended, but denied that the power utility’s position had shifted.

The renewable projects would still be contracted “at a pace and scale we can afford”, he said, adding: “We will have to idle coal capacity as we add renewables.”

Eskom’s acting CEO, Matshela Koko, said he did not want to contract new renewable power until it was needed – in about 2021 – to save costs.

The bidding happened when there was a shortage of power. Now there is a surplus, thanks to falling demand and units at the new coal stations of Kusile and Medupi having been completed.

Draft property practitioners bill

2. Zuma made the point in his state of the nation address that less than 5% of the property sector was owned or managed by black people, particularly Africans.

READ MORE: SONA: Zuma's vision for a stronger state-controlled economy

“A draft Property Practitioners’ Bill will be published by the department of human settlements for public comment,” he added.

Ndivhuwo Mabaya, spokesperson for Department of Human Settlements Minister Lindiwe Sisulu, said the draft bill had been completed and would go to Cabinet for approval before being released for public comment, which was likely to happen before June.

He added that a key section of the bill was dedicated to the transformation of the property sector.

The bill would also prioritise black business and black property agents when it came to government property deals, Mabaya said.

Once enacted, this bill would replace the Estate Agency Affairs Act.

The new bill would govern estate agents, conveyancers and developers of property, Mabaya said.

The bill aimed to convert the Estate Agency Affairs Board into the Property Practitioners’ Regulatory Authority (PPRA) and improve the governance of estate agents – who would be known as property practitioners – by the PPRA, said Mabaya.

The new bill would also regulate home inspectors, who would be called Property Assessment Practitioners. It would regulate these practitioners’ activities as well as training standards, he added.

The new bill would remove all jurisdiction of consumer protection relating to property transactions from the Consumer Protection Act and bring it under the PPRA, said Mabaya.

Amendment of Competition Act

3. A new amendment to the Competition Act mentioned by Zuma will be finalised for Cabinet’s consideration by October this year, said Minister of Economic Development Ebrahim Patel.

The high concentration of many markets in South Africa – such as retail and banking – was singled out by the World Bank for retarding economic expansion last year, noted Patel.

“The work of the Competition Commission across a wide range of sectors has convinced it, the regulator and the policymaker that the law is inadequate to address instances of market dominance by a small number of firms,” said Patel, hinting that the amendment might introduce a potentially radical change to the way in which harm caused by uncompetitive behaviour is judged in competition law.

Local experts have long complained that South Africa’s Competition Act makes it almost impossible for anyone besides large companies to make a case against dominant companies.

This is because the act requires a demonstration of “anti-competitive effects”, which is impossible to prove in cases where a small business has no chance of entering a sector.

According to Patel, the act does not “adequately address public concerns about market structure, particularly high levels of concentration in the economy”.

Another concern which the amendment may address is the law’s inefficacy when it comes to tackling abuse of dominance through excessive pricing and other practices. There have been more than 30 cases of abuse of dominance since the Competition Act came into being in 1999.

Last year, a controversial amendment to the act criminalised cartel behaviour, making individuals and not just the companies they run liable. This has paved the way for fines and even jail time for cartel members.

Mining Company of SA Bill

4. Zuma said “direct state involvement in mining” was still on the cards.

“The Mining Company of SA Bill will be presented to Cabinet and Parliament during the year,” he added.

Martin Madlala, spokesperson for the department of mineral resources, was unable to comment on the contents of new bill being mooted.

Currently, government’s main mining vehicle is the African Exploration Mining and Finance Corporation, a subsidiary of the Central Energy Fund.

However, there are plans to move the company to the department of mineral resources.

In January 2016, Minister of Mineral Resources Mosebenzi Zwane issued the African Exploration Mining and Finance Corporation Bill, which provided for the establishment of the mining company as a new, state-owned, stand-alone company.

The bill proposed that the state mining company acquire and develop mining interests.

At the time, the DA referred to the bill as “another potentially damaging piece of legislation”.

“If passed, it will further diminish the reputation of South Africa as a place to put money into mining. That means less investment and fewer jobs,” the DA said.

“The bill is replete with problems. It will see the company becoming the personal kingdom of Minister Zwane, with the minister having a say in almost every major decision in the company and almost complete control of its board,” the DA added.

“Further, the minister will now, more than ever, be playing both referee and player in the mining industry,” concluded the party.

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