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Joemat-Pettersson will have to win over sceptics as she takes on big energy challenge

6th June 2014

By: Terence Creamer

Creamer Media Editor

  

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There is little doubt that Tina Joemat-Pettersson will have to work hard to gain the confidence and respect of the domestic energy sector, which greeted her appointment with a mixture of surprise and concern.

President Jacob Zuma moved Joemat-Pettersson from Agriculture, Forestry and Fisheries, where she had a relatively controversial tenure, having been found by the Public Protector to have behaved improperly in the management of a R800-million State fishery-vessels tender – a finding she is contesting.

She replaces Dikobe Ben Martins, who himself only took up the position from Dipuo Peters following a Cabinet reshuffle in July last year.

In a departure from the organisation’s typical diplomacy, Business Unity South Africa (Busa) did not hide its disappointment, with acting CEO Cas Coovadia arguing that the portfolio “should have been given to a person experienced in this field and able to bring critical stake- holders together to address the serious energy sustainability issues”.

In an interview with Engineering News, Coovadia made reference to the Minister’s “turbulent” performance at Agriculture, Forestry and Fisheries and cautioned that any similar instability at Energy could have serious implications for South Africa’s competitiveness and growth prospects.

He stressed, though, that Busa was ready and willing to work with Joemat-Pettersson. But he urged her to “bring into this Ministry a style that is different to that which she applied in her previous role”.

An energy specialist, who spoke on condition of anonymity, was more critical, saying the appoint- ment showed Zuma’s lack of appreciation for the current critical state of South Africa’s electricity supply industry.

On March 6, South Africa descended into its first load-shedding episode since 2008 and there was ongoing concern about the financial sustainability of Eskom, the slow pace of delivery on new generation projects and the legal and regulatory obstacles to the introduction of independent power producers (IPPs).

“To put the Energy Ministry and, therefore, the energy sector in this country through yet another change is far from ideal . . . it’s more important than this,” he added.

Democratic Alliance shadow Energy Minister Lance Greyling was even more scathing in his assessment of the appointment, describing Joemat-Pettersson’s pervious Ministerial performance as “dismal”.

Besides the tender irregularities, Greyling pointed to what he described as a bungling in the allocation of fishing rights, which led him to question whether she should be entrusted “with keeping South Africa’s lights on”.

However, in an interview with Die Burger, Joemat-Pettersson said she had done her best having taken over a Ministry that had been in decline. She conceded that she would have liked to have achieved more, but said she left with her “head held high”.

South African Chamber of Com-merce and Industry CEO Neren Rau agreed that the Minister’s record was uneven, but said energy pre- sented a new and different challenge and that it was not inconceivable that Joemat-Pettersson would rise to it.

Rau said her first test would be in ensuring that South African survived winter in the absence of load shedding, adding that success in this area could lay the foundation for dealing with other outstanding issues such as the passing of the Independent System and Market Operator Bill, which stalled amid serious Parliamentary headwinds.

University of Cape Town Gradu-ate School of Business’ Professor Anton Eberhard agreed that Joemat-Pettersson’s first priority would be to restore electricity supply security. “The Department of Energy (DoE), the Department of Public Enterprises, Eskom and the electricity regulator need to agree that all available non-Eskom generation supply should be contracted. Procurement of new baseload IPPs should proceed immediately. Eskom’s demand-side management programme should be expanded and the regulator needs to provide a top-up in its multiyear price determination for these programmes,” Eberhard said.

He added that the Gas Utilisation Master Plan should also be com- pleted as a matter of urgency and that priority gas projects, such as liquefied natural gas import infrastructure and linked power plants, should be contracted.

South African National Energy Association (Sanea) MD Brian Day said he hoped the Minister would foster a new era of collaboration between business and government on the issues of energy in general, but more specifically in dealing with the prevailing electricity crisis.

Day told Engineering News that greater alignment between role- players in the energy sector was now a pressing priority and that Sanea was committed to a more intensi- fied and effective engagement with government and other energy associations to achieve such alignment in the interest of “South Africa Incorporated”.

Energy Intensive User Group chairperson Kevin Morgan concurred, adding that he hoped that it would be able to build on the strong working relationship that it had developed with the DoE and the country’s previous Energy Ministers.

Morgan, who is also GM for energy at BHP Billiton, said the sustainability of the electricity supply industry was a key priority for the new Minister. Such sustainability would have to be built on a framework of competitive and affordable prices for domestic, commercial and industrial consumers, while also dealing with the generation and distribution backlogs.

Coovadia added that greater policy coherence would also be required, particularly on the role that Eskom and IPPs should play in the country’s electricity mix. To achieve this, Joemat-Pettersson would need to work closely with the other economic Ministers, especially new Public Enterprises Minister Lynne Brown.

Brown succeeds Malusi Gigaba, who will take over as Home Affairs Minister, at a time when Eskom is facing serious financial problems, which could result in further tariff increases and possibly even the need for a further financial injection from the State.

There was also general agreement that the momentum that had been built around the hitherto successful roll-out of renewable energy in South Africa should be sustained, while also moving ahead with procurement processes for convention IPPs.

There was also much eagerness for greater certainty on the role that both nuclear and shale energy could play in the country’s future energy mix and for improved visibility on the country’s cleaner-fuel timelines, as well as the introduction of biofuels.

Eberhard said shale gas and coalbed methane exploration should be fast-tracked, the renewable-energy IPP programme should continue with predictable yearly procurement windows, while nuclear energy procurement should be delayed until there was evidence that costs were competitive with other generation options.

In addition, there was a clamour for the Minister and Cabinet to sign off on both the Inte-grated Energy Plan and the updated Integrated Resource Plan, which would outline the generation invest- ment roadmap for electricity until 2030.

Rau said that, while the Minister might be technically inexperienced in the area of energy, she might well carry the political influence that the portfolio demands.

Edited by Creamer Media Reporter

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