Business fraternity divided over need for state of disaster, electricity minister

South Africa’s business fraternity seems divided over whether a state of disaster is really the best way to to tackle the electricity crisis, and if a new minister is the right approach to getting rid of load shedding.

President Cyril Ramaphosa announced in his State of the Nation Address on Thursday that a state of disaster would be in effect immediately.

In addition, the new minister of electricity will assume full responsibility for overseeing all aspects of the electricity crisis response, including the work of the National Energy Crisis Committee, and focus full-time and work with the Eskom board and management on ending load shedding and ensuring that the Energy Action Plan is implemented without delay. 

SA’s State of disaster

Wayne Duvenage, OUTA CEO, says his organisation does not believe declaring a state of disaster is appropriate, as this is not the mechanism to provide South Africa with energy security.

“It appears this decision is intended to give the impression that action is being taken, when the reality is that government’s plan is weak.”

OUTA’s response to state of disaster

OUTA is considering possible action.

“We do not believe that a state of disaster will cure government’s inability to address the crisis. It will not make previously inept officials and ministers suddenly competent and willing to do their jobs.”

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Duvenage says the explanation in the gazetted notice declaring the state of disaster raises further concern rather than providing reassurance, as it says it is “to ensure that measures are put in place to enable the national executive to effectively deal with the effects of this disaster and prevent the escalation of the severe electricity supply constraint to a total blackout”.

He does not think raising the possibility of a total blackout sounds like a government in control and also finds it curious that Eskom seemed a little taken aback by this announcement, which suggests that Eskom’s board and executive management were not consulted.

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BLSA’s state of disaster concerns

Business Leadership South Africa (BLSA) is also concerned about the state of disaster in the context of the over-reach and undermining of citizens’ rights that occurred during the Covid 19 state of disaster, as well as the massive corruption linked to Covid-related tenders.

Another concern is that many of the above measures could be implemented effectively without a state of disaster.

“It is important, therefore, for government to limit the use of the extra powers it has granted itself purely to address the load shedding crisis on a least-regret basis.

State of disaster costs?

However, BLSA says, if it is used responsibly and effectively, the state of the disaster, along with the new electricity minister driving the energy reforms, offer hope of faster implementation of the measures needed to end load shedding in the short term and secure our energy supply over the longer term through increased generation capacity.

Frank Blackmore, lead economist at KPMG says the state of disaster will of course allow government to take immediate action, but at what cost?

“We saw that, given the amounts of money that are going to be flowing around energy crisis, the potential here is for a very high cost to be paid.”

He also asks if it is ethically correct to institute a state of disaster for something caused by the very people who are now empowered through that state of disaster.

ALSO READ: Eskom mum on new electricity minister to resolve load shedding

Minister of Electricity

Blackmore is interested in who will actually run the show and if anything will happen.

“We are yet to see. A new minister of electricity will be appointed to oversee these energy initiatives. This could be a good thing, but as we saw with economic growth, if we divide the responsibility up too finely, nothing gets done.”

Two departments already

He also points out that there are already two departments of public enterprises, under which Eskom falls, as well as the Department of Mineral Resources and Energy.

Duvenage says adding a new minister of electricity to oversee the electricity crisis just adds weight to an already bloated and lacklustre Cabinet.

“We are not convinced this is a solution. Will we now have three ministers, each playing different roles in the electricity landscape: a minister of public enterprises, a minister of mineral resources and energy, and a minister of electricity?”

Issue of accountability

He also wants answers to questions such as who will be accountable and for what?

“Setting up new ministries or positions does not fix problems in ineffective departments. We note this is another key position centralised in the presidency, but this is not a sign of a healthy democracy but rather of the president’s mistrust of Cabinet and perhaps an attempt to circumvent the obstructive minister Gwede Mantashe.”

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BLSA thinks president Cyril Ramaphosa made a bold move in announcing that he will appoint a minister of electricity in the presidency to oversee the implementation of the energy action plan.

“It is of course concerning that the energy sector will now be governed by the presidency, as well as two other ministries, the departments of public enterprises and minerals and energy. Public enterprise will continue to be responsible for Eskom and steer its restructuring. Delineating clear responsibilities will be important, particularly between the ministers of energy and electricity.”

Concerns raised

However, BLSA said it is encouraged by this move to install the new electricity minister in the presidency because he needed someone to be centrally located to work day and night on resolving load shedding.

Indeed, concerns have often been raised about minerals and energy’s commitment to the extremely important goal of transitioning to a low-carbon economy.

“We hope the new minister will be able to accelerate the processes needed to address both the short-term imperative of addressing load shedding and the longer-term need to increase the country’s electricity generation capacity at a faster pace.”