Ramokgopa’s deviation from Necom plan ‘disconcerting’, says BLSA

Business Leadership SA found it disconcerting to see electricity minister, Kgosientsho Ramokgopa, deviate from the Necom plan to deal with the country’s electricity crisis in his presentation to Cabinet last week.

The National Energy Crisis Committee (Necom), set up under the presidency, brought together the best people and put together a plan with the best chance of resolving the crisis the fastest.

Business backed the plan and went as far as raising R100 million to pay for the technical skills needed for its implementation.

“Our greatest economic challenge is the electricity crisis. And we have a plan to deal with it. Without a plan we risk failing to achieve what we want simply because we are uncoordinated and have not properly understood how actions lead to the outcomes we desire,” Busi Mavuso, CEO of Business Leadership SA (BLSA), writes in her latest newsletter.

She identifies the country’s inability to stick to plans as one of the causes of implementation failures.

“When a plan is agreed, it aligns many stakeholders. When it is then deviated from, it inevitably creates misalignment and a loss of trust.

“We welcomed the new electricity minister and his promise to not be a creator of new policy, but an implementer of the existing Necom plan. But I did not feel that commitment was in place last week when his Cabinet proposal was made.”

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Major deviation from Necom plan

Mavuso writes it was, therefore, disconcerting to see a major deviation from that plan. Cabinet rejected it and instructed Ramokgopa to take it to Necom first for consideration.

“But why did the new minister contemplate the proposal, which envisaged a major new investment in coal and extending the life of coal-powered stations?

“Such plans must be considered carefully. They require huge amounts of investment, can only affect electricity availability several years ahead of us and may well face operating costs that are higher than the costs of alternative sources of new electricity.”

However, Mavuso points out that this is not to say that Eskom’s plants should not be part of the electricity solution.

“Indeed, the Necom plan envisages Eskom bringing several of its units back into operation and the introduction of Kusile unit 5. Eskom’s generation fleet must be managed effectively. We must get the most value from the coal power stations that we can.

“But we must do so considering the facts about what is possible and what it will cost. The right way to establish those facts is through a revised Integrated Resource Plan (IRP).

“The IRP is the single document that sets out a course for the future of electricity supply. It carefully assesses the different options and charts a course that delivers reliable energy at the least cost.”

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What we need is a new IRP

The IRP was published in 2019 and Mavuso says it is outdated. She thinks it should be a document that is revisited every year. The Necom plan envisages that, although its deadline of a new IRP last month has now been missed.

“Our plans must be driven by the evidence, rather than vested interests. That is the only way that all social partners can remain focused on delivery. Business’ commitment to the Necom plan is clear, most obviously in the resources we have put behind it.”

Mavuso says improvements in the operating efficiency of Eskom plants are important.

“Many of its plants suffered from significant maintenance deficits for many years. The new builds experienced problems from design issues to poor workmanship that meant they were never able to produce at their nameplate capacity.”

These issues affect the energy availability factor for both old and new plants in the Eskom fleet and Mavuso says we should improve this performance, but in some cases the necessary interventions will be more expensive than the alternatives.

“BLSA is strongly committed to supporting evidence-based solutions to the crisis. The Necom process has grappled with the issues and has the best possible solution for dealing with the crisis in the short term. A new IRP must set our path from there into the medium to longer term. We need everyone to rally behind those two plans for the sake of the country.”