OPINION | The light side of load shedding | Fin24
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OPINION | The light side of load shedding

Feb 29 2020 10:35
Adam Craker

With one of the toughest budgets in our country’s history behind us, it seems mad to believe that light at the end of the tunnel could be anything other than an oncoming train, but as an eternal optimist,  I beg to differ.

On the surface we have every reason to feel defeated and despondent about the state of the economy and the apparent lack of consequence for the deplorable behaviour of certain elected officials both recently, and in the recent past. 

Over the last year, economic growth has all but ground to a halt as the spectre of load shedding became a daily reality for all South Africans and cast a long shadow over already difficult economic conditions.

The result is that South Africa’s growth forecasts for 2020 have repeatedly been revised downwards and all signs suggest that the market has already priced in a credit rating downgrade to junk status by Moody’s next month. Yet in spite of this, there are signs that the trajectory of our economy could be starting to change.

The electricity crisis is perhaps the most real physical manifestation of the malaise that has plagued the ANC for the past decade. After years of neglect, mismanagement, and barefaced corruption the chickens have finally come home to roost.

Yet as much as the crisis has undermined President Ramaphosa’s best attempts to restore confidence in the economy, it has also acted as a catalyst for change. 

Over the past several years, the looming Eskom crisis – and how to solve it – laid bare deep ideological schisms between his most important ministries, namely the Treasury, the Department of Public Enterprises, the Department of Minerals and the former Department of Energy.

This deadlock between these ministries has to some extent in recent months been relieved by intense pressure brought about by the immediacy of the crisis. Most importantly, it has allowed for some of the most honest politics we have seen in years. This is what gives me hope.

For starters, there is now a clear alignment between President Ramaphosa, the newly appointed Eskom CEO Andre De Ruyter and COO Jan Oberholzer with respect to how Eskom’s immediate supply issues need to be addressed. The decision by De Ruyter to announce at his first media briefing as CEO that the country could expect load shedding for another 18 months would have been very politically unpopular, but it was a necessary truth that had previously been avoided.

This unpleasant reality was then backed up by Ramaphosa in his State Of The Nation address when he said that load-shedding was unavoidable but must be undertaken in a manner that was predictable and minimised disruption and cost to firms and households.

The fact that Eskom has since stuck to its guns and implemented load shedding when needed has given more credence to their plans and restored some faith and credibility to the ailing state-owned entity and the political powers that preside over it. It doesn’t really matter whether they call it a "maintenance philosophy" or just "maintenance", the fact that the biggest bulls in the Eskom boardroom are finally being allowed to pull in the same direction – without political interference – is hugely positive.

Another sign that there is more honesty about the electricity crisis in the political space was the recent proposal put forward by labour federation Cosatu. Cosatu proposed that a special purpose vehicle be created to take over 50% of Eskom’s R400bn debt.

While the proposed plan is not necessarily feasible, it indicates a definite shift in the underlying political landscape. The fact that Cosatu was able or willing to take such a political risk in championing this proposal has made it clear that they consider the electricity crisis to be a serious existential risk that requires urgent action. This is a significant shift. A year ago, when the lights were still on Cosatu, was reluctant to enter into any debate around potential restructuring at Eskom. 

Similarly, the electricity crisis has given birth to other ideas. Minister of Minerals and Energy Gwede Mantashe made two key announcements at the recent Mining Indaba: one, that mining companies would be allowed to generate their own power; and two, that discussions would be moving ahead with investors about starting a power utility outside of Eskom.

Again, practical details remain thin on the ground and feasibility has yet to be established, but it is clear that there is a willingness to explore previously taboo solutions to the energy crisis. The same applies to the announcement by President Ramaphosa in his State Of The Nation address that municipalities in good standing can procure their own power from independent power producers. 

What all of this shows is that for the first time in a long time, there is finally a space for previously politically unpalatable truths to be made public. By openly admitting that there is an electricity crisis and actively engaging in proposing resolutions, South Africa has a much better chance of finding workable solutions than if these issues are ignored. What comes next is going to be a paradigm shift with no clutch, but it needs to happen. 

In the words of Clem Sunter at the SONA.co.za breakfast, "We are at a pivotal moment in our history… may we all fix it together." 

Adam Craker is CEO of IQbusiness. Views expressed are his own.



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