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Busa calls for new ‘SA first’ response to power crisis

Busa calls for new ‘SA first’ response to power crisis

Photo by Duane Daws

13th March 2014

By: Terence Creamer

Creamer Media Editor

  

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Business Unity South Africa (Busa) announced on Thursday that it intended mobilising a “strategic national response” to the problems associated with South Africa’s electricity shortages, which came into sharp focus again on March 6, when Eskom resorted to 14 hours of load shedding to stabilise the network.

Acting CEO Cas Coovadia said that it would assemble a small, senior team of business leaders to engage with Eskom and government “at the right level, on the right issues”.

The discussion, which Busa anticipates would begin within three weeks, should put “national interest first” and move beyond the immediate crisis.

Speaking after a meeting with Eskom leadership in Johannesburg, Coovadia indicated that the response plan should seek the deal decisively with the “hard issues”, including whether tariffs were appropriately set to ensure Eskom’s sustainability and whether there where other ways to fund the utility.

The structural issues surrounding the role of municipalities in the electricity supply industry, as well as whether the appropriate legislative and regulatory environment is in place to “keep the lights on” should also be on the agenda.

“In these more strategic, high-level discussions we would want to talk about Eskom’s sustainability – whether that comes from the fiscus to a certain extent, whether that comes from increased tariffs and what the increases should be,” Coovadia outlined, adding that the tone of the discussion also had to move from recrimination to cooperation.

Special policy adviser Professor Raymond Parsons indicated that Busa’s analysis of the current problems highlighted that critical decisions had either not been taken, owing to the difficulty of the choices, or there had been a failure to implement the decisions that had already been made.

“We hope that, through this more collaborative approach, we can build confidence in addressing some of these tough issues that now have to be addressed in order to get from where we are to where we want to be in two or three years time.”

Outgoing Eskom CEO Brian Dames concurred that key decision had been made and that solutions had been identified to address the shortfall that was always anticipated ahead of the introduction of new baseload capacity from Medupi and Kusile.

These interventions had been outlined in the 2010 Medium-Term Risk Mitigation (MTRM) plan, which was only partially implemented, owing to funding and regulatory obstacles.

Dames said the supply and demand relief measures had been identified and were well known, but that key decisions were now needed to liberate the financial resources required for implementation.

Eskom was continuing with some independent power producer and demand-side interventions “at risk”, having failed to secure the resources for the programmes from the National Energy Regulator of South Africa when the regulator determined that the utility could increase tariffs by 8% a year between 2013 and 2018 – Eskom had sought five yearly increases of 16%.

But a longer-term solution was required, and Dames confirmed that Public Enterprises Minister Malusi Gigaba had committed to canvassing the idea within government and to bringing “all the components together” so that the necessary funding could be secured.

“That process has now started in order to finalise the decisions on this,” Dames, who departs the utility at the end of March, indicated. “But it needs to happen quickly.”

The solutions, Dames added, lay either within existing Eskom programmes or within the MTRM plan, asserting that there had not been “any new rocket science” since those remedies were identified.

“There is no one silver bullet – but it is possible for this country to have a sustainable energy system within this constrained environment. We have to, as leadership, work together to solve that.”

Edited by Creamer Media Reporter

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