The government’s intention to declare a National State of Disaster on the energy crisis is not likely going to spook investors and it may not result in the immediate end of load shedding.
This is the view of Momentum Investments economist Sanisha Packirisamy who weighed in on the raging debate about declaring a National State of Disaster on Eskom.
This comes after the weekend’s Cabinet Lekgotla, which met to evaluate the legal requirements that should be met by the government before taking such a decision in a bid to help end crippling power cuts.
Speaking to Business Report yesterday, Packirisamy said a state of disaster would likely speed up the timelines for any regulatory and legislative issues.
However, Packirisamy said by doing so, a number of stakeholders might not actually get the opportunity to effectively critique these decisions before they move to an implementation phase, leaving a ripe opportunity for corruption in procurement processes.
“Now I think, to the extent that we do get more electricity online over a quicker time period, it would then brighten the growth prospects for South Africa and the investment prospects for South Africa,” she said.
“We could potentially then see some alleviation of your short-term energy crisis and that’s positive for investment prospects and growth prospects and overall confidence.”
Packirisamy, however, warned that the government’s plan to put on stream about 8 822MW this year was an unrealistic ambition considering the generation challenges at Kusile and Medupi power stations, which could slash at least half of the envisaged electricity.
She said the generation units that had been taken offline at Kusile and Medupi were unlikely to come on stream this year, meaning that the country would still be short about 4 500MW.
“It is still unlikely that this amount of energy would come on stream, which means that we would still be short of electricity this year and we would still probably face load shedding this year,” Packirisam said.
“A state of disaster could enable something like, you know, more money being allocated to diesel. Because the open-cycle gas turbines are being run quite hard at the moment.
“The diesel gets used up quite quickly and we don’t have enough storage facilities and as a result that’s how we ran out of diesel.”
Packirisamy said Eskom was basically faced with engineering, technical, skills, financial and political challenges that were fanning the flames of the energy crisis even if a state of disaster was declared.
“The point is, I think even if we do have a state of disaster, I think it’s going to be limited in its impact to improve the investment outlook for South Africa because at the end of the day, it boils down to whether we have an energy supply that’s consistent and reliable.”
Meanwhile, trade union Solidarity joined a number of organisations that have warned President Cyril Ramaphosa of possible litigation if the government institutes a state of disaster due to the ongoing energy crisis.
Head of Solidarity Research Institute Connie Mulder said existing legislation already provided for the emergency procurement of electricity.
“Minister (Gwede) Mantashe has already used the existing legislation in July 2020 to announce an emergency power procurement programme for emergency purchases. By a simple regulation the minister can fully stipulate how much power can be procured over which period,” Mulder said.
“If the president is unhappy with the implementation of these instruments, then the appropriate route to be followed would rather be a letter of resignation from Minister Mantashe; not a declaration of a state of disaster.”
BUSINESS REPORT