Government to fast-track energy procurement amid fears of load-shedding

Deputy President David Mabuza
Deputy President David Mabuza

The government will be fast-tracking the emergency procurement of additional energy generation amid growing fears that load-shedding could soon hit SA’s already battered economy.

The new build programme as well as the independent power producers programme will be crucial in improving SA’s economic prospects.

Earlier this week, the embattled power utility said that four of its major units had gone offline, suggesting that load-shedding may be inevitable.

This comes a few weeks after the debt-laden utility told independent producers of wind-generated power that it will declare force majeure on their power purchase contracts due to a lack of demand for electricity during the lockdown.

Force majeure — or “superior force” — is a doctrine in law in which unforeseeable circumstances prevent someone from fulfilling a contract through no fault of their own. It is most often used when a company is unable to meet its payment obligations.

Eskom has 20-year contracts with most independent power producers to pay for the energy they deliver.

Deputy President David Mabuza said during a parliamentary question and answer session on Thursday: “Rapid economic growth and recovery will depend mainly on our ability to ensure the security of energy supply to support industrialisation and development whilst equally ensuring that the livelihood of our people is not undermined through electricity interruptions.

Eskom is central to the country’s plans of reigniting the economy in the context of the prevailing negative impact of Covid-19

“Eskom is central to the country’s plans of reigniting the economy in the context of the prevailing negative impact of Covid-19.”

Mabuza said the government’s support for Eskom focuses on ensuring that the power utility strengthens its leadership, governance and accountability systems; addressing debt and liquidity challenges, including the payment of debts owed to Eskom by government entities and municipalities; the implementation of an effective plant maintenance programme to minimise energy supply disruptions; accelerating the completion of the new build programme, which will deliver additional energy capacity; and fast-tracking the emergency procurement of additional energy generation through the independent power producers’ programme.

Mabuza said the government remained confident about Eskom’s prospects.

“While the road ahead is still long, and challenges we face as a nation may be daunting, we are confident that Eskom is heading in the right direction,” he said.

“With the appointment of the new CEO and the executive team, the strategic direction of the organisation is clear. We can say without any fear of contradiction that there is visible progress in addressing key challenges to ensure that the organisation is transformed and put on a new governance and agile operating model.”

Economists have identified Eskom as the biggest single threat to the economy. This is mainly due to its staggering debt of nearly R500bn. The power utility could also cripple the economy through load-shedding and power outages.

Mabuza said, however, that the power utility is a different entity under a new leadership team led by CEO André de Ruyter. “The Eskom we are talking about is a different entity and it has taken measures to revive itself. Yes we agree power stations are old but they are doing the right job to keep lights on.”

The SA Photovoltaic Industry Association (Sapvia) welcomed the government update on plans to implement the Integrated Resource Plan (IRP).

“Implementation of the IRP is a valuable tool to kick-start our economic response to the pandemic, and can go a long way to giving our country the stability and certainty of a reliable power source,” said Sapvia COO Niveshen Govender.

“Our economy and our future simply cannot afford the uncertainty that comes with the spectre of possibly again going through load-shedding.”

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