Ramaphosa boasts about SA's 'world class' IPP project in Davos

Johannesburg – The partnership between government and the private sector has contributed to the success of South Africa’s Independent Power Producer (IPP) programme for renewable energy, said Deputy President Cyril Ramaphosa.

Ramaphosa was speaking on a panel discussion about bridging the energy gap in Africa by 2030 at the World Economic Forum (WEF) in Davos on Tuesday.

The deputy president is leading the South African delegation in Davos, themed “Responsive and Responsible Leadership”.

The news that Ramaphosa will be representing South Africa in Davos came unexpectedly on Friday afternoon when the Presidency announced President Jacob Zuma would no longer be attending. Other high profile ministers such as Finance Minister Pravin Gordhan, Minister of Trade and Industry Rob Davies and Minister of Economic Development Ebrahim Patel are part of the South African delegation. 

READ: Zuma to skip World Economic Forum in Davos

Ramaphosa said that in order to power the African continent, governments should look at getting the private sector to partner with them and eventually reach a point where the private sector generates power independently.

“In South Africa we have seen the effectiveness of involving the private sector to set up independent power projects,” said Ramaphosa. About R194bn worth of investments and 2500 MW of power generation were a result of giving the private sector an opportunity to generate power independently.

Speaking on South Africa’s “world class” IPP programme, Ramaphosa said it came about when government realised it could not do it alone.

“We needed to bring in new technology and those with better reach for technology were in the private sector.” He explained that the private sector can raise funding and use their networks to acquire technologies.

As a result a special unit was set up within the Department of Energy (DoE) which developed a policy to evaluate proposals to come. He commended the robustness of the regulations in place. 

“We had a huge number of proposals that came in because the private sector realised the government was serious about increasing energy supply in the country and that we wanted to move towards renewable energy and smart energy,” he said. “The private sector had a key role in sharpening government’s capability in this regard. We came out strong on renewable energy.”

Ramaphosa added that the private sector should present government with “winning and innovative” ideas. “If it is not accepted, bring another one and another until you win because that’s how governments work.”

The discussion was moderated by CNBC Africa journalist Bronwyn Nielsen (far right). Panellists were from left Nigerian billionaire and owner of Dangote Group Aliko Dangote, Rachel Kyte, chief executive of Sustainability For All, Akinwumi Adesina, president of the African Development Bank and Deputy President Cyril Ramaphosa. (Picture: CNBC AFRICA)

Recovering from the headwinds

During 2014 and 2015 South Africa faced significant headwinds concerning the generation and distribution of power. Ramaphosa listed the poor maintenance of old power stations as well as the delay in new power stations coming online as reasons for the blackouts.

But those days are a thing of the past, according to Ramaphosa. “Mines are operating, factories are operating, homes have electricity and we have excess power,” he said. 

He added that South Africa was moving to clean coal generation, more renewables and he briefly mentioned nuclear.

READ: Koko unpacks Eskom’s renewable costs, but experts disagree

Earlier this week, Fin24 reported that Eskom acting CEO Matshela Koko said that renewables would cost the South African consumer more, adding 4.9% to tariffs and would cost the South African economy R9bn a year. However experts disputed this.

Eskom previously said it would not sign on more IPPs as there was a surplus of capacity and the added agreements would negatively affect the utility financially. However the power utility is working with Treasury and the DoE to find a solution.

Koko was quoted by Fin24 as saying that he is prepared to sign all IPP bids that are at R0.62/kWh or below with immediate effect.

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