by Dr Andrew Dickson, CBI-electric: low voltage
With over 2162 hours – equivalent to 90 days – of load shedding by the third week of October 2022, this year has experienced the most intensive load shedding in the country’s history (almost double the 1153 load shedding hours that took place in 2021 — the previous record). Another 18 months of regular load shedding is also on the cards for the country, but there will be no end in sight unless sufficient generating capacity is added to the grid to meet demand.
This will undoubtedly be a key focus of the Medium-Term Budget Speech which is being presented by Finance Minister Enoch Godongwana on Wednesday, 26 October 2022.
When he last stood before parliament, the Minister announced that Eskom would be provided with a further R88 billion until 2025/26 to pay off its debt, but it now seems that Treasury is finalising a plan to take over a portion of this. A provisional amount of R21 million was also earmarked for the power utility’s restructuring. Recently, Eskom’s new board was announced which, on the surface, appears to be a good change but the proof will be in how they guide Eskom through the short term.
Additionally, the February Budget Speech saw Minister Godongwana say that action had been taken to reform the electricity sector which included the lifting of the registration threshold of embedded generation to 100 MW, amendments to the Electricity Regulation Act of 2006, and new generation projects, although he didn’t provide specifics. In the middle of the year, when the country was plunged into Stage 6 load shedding, the president expedited a number of these including the removal of the licensing threshold in its entirety, the reduction of red tape hampering energy projects and doubling the amount of new generation capacity in Bid Window 6 for wind and solar power.
More decisive actions like these are needed now more than ever, so my wish list for this Medium-Term Budget Speech is as follows:
Increasing grid capacity
Red tape must be streamlined to allow for the procurement of power from independent producers. This includes ensuring that sufficient funds are available to secure and maintain these contracts. It is also imperative that the grid is stabilised by putting effective maintenance and quality control programs in place to protect the base load.
The country should be leveraging the Cahora Bassa hydroelectric power station and directing spend towards its modernisation as well as to the development of the 1500 MW Mpandha Nkuwa hydropower project some 60 km downstream. Getting this online would be infinitely faster than building another coal-fired power station.
That said, the Kusile and Medupi power stations need to be fixed to ensure consistent operational performance. Each station could contribute significant base generation. Being the newest, they should be in the position to provide sustainable power in the long term. This would allow for more focus on renewables and the introduction of decentralised power onto the network. Moreover, this should be faster and more sustainable than spending copious amounts of money on de-mothballing older plants.
Improving infrastructure
A greater emphasis on infrastructure spend is essential, not only for the country’s power plants, but its municipalities too. Focus must be given to ensuring sustainability of the local distribution networks that have been hammered due to the excessive switching as a result of load shedding. City Power in Johannesburg, for instance, is reportedly losing R3,6 million every day on average due to load shedding. This includes the cost of fixing damaged infrastructure and increasing teams to carry out the repairs.
As business hubs are also affected, this impacts economic activity, with the BankservAfrica Economic Transactions Index revealing that the economy has entered a fourth consecutive month of decline. It’s no surprise then that the International Monetary Fund has downgraded its outlook for the country’s economic growth for 2022 to 2,1% from 2,3%.
Increase accountability
Earlier this year, it was discovered that state-owned enterprises (SOEs) spent close to R300 million over the past three years on paying suspended employees. This is a massive sum of money that could have been put to better use. There needs to be more accountability around what is being done with state funds. SOEs must have clear guidelines showing how the money will be spent and put processes in place to account for every cent. At the same time, it is the ministers to whom these entities report that are responsible for what the SOE does and spends, so if there is any mismanagement, the MPs must be answerable.
It has been reported that the country loses over R800 million per day to corruption. With this in mind, more funds should be going towards making the National Prosecuting Authority and judiciary more effective so that law and order can return to South Africa.
A “no” to Eskom 2.0
Mineral Resources and Energy Minister Gwede Mantashe has proposed setting up a new power utility, dubbed Eskom 2.0, which would entail converting three coal-fired plants into gas-burning generators to ease the nation’s energy crisis. What this amounts to, is putting a band-aid over a problem.
However, the Minister’s plans to build a new 2500 MW nuclear plant at Thyspunt in the Eastern Cape, does have merit but this would likely only come online after a minimum of eight years. This would also require stable water infrastructure which is another issue that may result in the project being a dead starter. All this of course might be too little too late.
The objective of this Medium-Term Budget Speech must be keeping the lights on, so how money is deployed must be both actionable and decisive. We need to turn the power crisis around now. Doing so will mean that business interruptions are minimised, South Africans can earn an income, tax can be generated for reinvestment and the country’s economy can stand a chance of starting its recovery.
About CBI-electric: low voltage
Established in 1949, CBI-electric: low voltage is a manufacturer and supplier of quality low voltage electrical distribution, protection, and control equipment. Previously known as Circuit Breaker Industries or CBI, the company specialises in the design, development, and manufacturing of circuit breakers, residential current devices, surge protection, wiring accessories, and metering products.
Head quartered in Johannesburg, South Africa, the company is a subsidiary of renowned JSE listed industrial group Reunert, with international operations across Africa, Asia, Australia, Europe, and USA.
CBI-electric: low voltage can be found in almost every home and has firmly become a market leader over the last 72 years while supplying products to authorities, utilities, manufacturers, commercial property developers, industrial, mining, telecommunications, and general power distribution applications.
In 2021, the brand launched its smart IoT (internet-of-things) home automation range, called the Astute Range.
Contact CBI-electric, Phone: 011 928-2000, cbi@cbi-electric.com , https://www.cbi-lowvoltage.co.za/
