NOTES: Ramphosa responds to Parliament on Eskom and SA's power supply

NOTES: Ramphosa responds to Parliament on Eskom and SA's power supply

The Leader of the Democratic Alliance (DA) asked President Cyril Ramaphosa in Parliament on Thursday about Eskom and South Africa's power supply.

DA leader John Steenhuisen asked:

With reference to his recent assertion that the ongoing electricity blackouts, which are being implemented more frequently and at more severe stages by Eskom, do not constitute a looming crisis, and in light of the challenges that these rolling blackouts present to learners studying for examinations and vulnerable businesses trying to remain operational after almost two years of economic lockdowns due to the COVID-19 pandemic, what are the relevant details of

(a) the Government’s urgent plans to reform Eskom and the Republic’s energy market to address the electricity crisis and

(b) any further emergency measures the Government will undertake to augment the Republic’s electricity supply in order to shield the economy and citizens from the Government’s failure to generate sufficient electricity?

President Ramaphosa's reply

Honourable Members,

The recent load shedding – which has disrupted daily life for millions of South Africans and caused great damage to our economy – is a stark reminder of the severe and intractable challenges in our electricity system.

Load shedding is always the last resort where demand for electricity is greater than what can be produced. It is necessary to prevent the collapse of the power grid and a complete blackout.

At its core, load-shedding is the inevitable consequence of the age of many of Eskom’s power plants and its inability over many years – due to debt, lack of capacity and state capture – to service its power plants.

Eskom has to undertake the fundamental maintenance that is necessary to improve the reliability of our electricity supply.

As it continues with maintenance, load shedding will remain a possibility for the immediate future.

But we are not simply waiting for the inevitable. We are working hard to fix this problem.

As Eskom has been implementing a generation recovery plan to improve the availability of generating capacity and minimise the risk of load shedding, we have been undertaking measures to fundamentally change the trajectory of energy generation in our country.

As part of Eskom’s Roadmap, Eskom is currently being restructured into three subsidiaries for transmission, generation and distribution.

The legal separation of the transmission entity is planned for 31 December 2021 and legal separation of generation and distribution is scheduled for December 2022.

The Electricity Regulation Act and Electricity Pricing Policy is being amended to reflect the new structure of the electricity industry.

The restructuring of Eskom will transform the sector, and will enable greater competition and investment in new generation capacity.

Some of our municipalities are already getting ready to take advantage of what flows from this transformation and have declared the clear intention to generate power for their residents.

This will also remove the risk of relying on one entity that has the sole monopoly on power generation.

This reform will have a significant positive impact on economic growth, and will improve the reliability and efficiency of our electricity supply.

Over the last year, we have put in place several additional measures to address energy constraints.

· We have amended Schedule 2 of the Electricity Regulation Act to exempt embedded generation projects up to 100MW from having to apply for a license. This will allow for more private sector investment in electricity generation capacity without any public funding and will reduce the risk of load shedding.

· Eight preferred bidders have been appointed for the 2,000 MW Risk Mitigation IPP Procurement Programme. These are for projects that can deliver electricity into the grid within 3 to 12 months from approval.

· We have revitalised the Renewable Energy Independent Power Producer Procurement Programme, with 25 preferred bidders announced in the fifth round of the programme. Together, they are expected to produce around 2,600 MW of wind and solar photovoltaic electricity.

· From the renewable energy Bid Window 4 projects, 1,600 MW had been connected to the grid as at the end of June 2021 and over 400 MW is to be connected by the end of the year.

While we can anticipate that substantial new generation capacity will come onto the grid in the near future, there are still many challenges that we need to address to secure a stable and reliable supply of energy.

These include the management of Eskom’s debt, overcoming the skills deficit within the company, steadily improving municipal revenue collection, further improving Eskom’s maintenance capabilities, addressing procurement challenges and rooting out all forms of corruption and criminality.

There are no easy solutions to load shedding.

However, we have developed a roadmap towards a revitalised Eskom within a transformed energy industry.

We are making significant progress in implementing the roadmap, and are determined to persevere – regardless of the difficulties and obstacles – until we have achieved energy security in this country.

I thank you.