The privatisation of South African Airways (SAA) and the increase of the embedded generation licensing exemption threshold to 100 MW are the kind of dramatic interventions needed to get the economy going, says Business Leadership South Africa (BLSA).
CEO Busi Mavuso believes these events have signalled government’s willingness to break away from orthodoxy and hold up its side of the bargain in the economic recovery plan to get South Africa growing again.
Particularly, the embedded generation decision means companies now have a realistic prospect of ending the chronic electricity insecurity they have faced as a result of load-shedding, Mavuso states.
President Cyril Ramaphosa last week announced the increase in the threshold for companies wanting to produce their own electricity without first obtaining a licence from the National Energy Regulator of South Africa, to 100 MW.
The move is expected to be especially useful for intensive energy users such as mining and industrial enterprises.
Mavuso says companies’ self-generation will open up direct investment into new plants, as well as other investment in new mines and factories because companies will have more reliable energy.
Meanwhile, she mentions that SAA had been one of the clearest casualties of State capture and that the only way out for it was for a controlling stake in the airline to be sold.
Mavuso explains that the airline policy vision set out in the Civil Aviation Policy White Paper that was gazetted in 2017 envisions a competitive airline industry in which all participants are treated equally and where economic decisions should be resolved by the market.
“Even before SAA’s latest troubles the airline had received billions in public subsidies, which violates the key principles of the policy. It was not tenable to continue this way,” she states.
Mavuso urges government not to meddle in SAA’s affairs, but rather see its 49% stake as an opportunity to participate in the upside.
She refers to the example of telecoms company Telkom, which also became a profitable operator in its own right once government relinquished its control.
She challenges government to maintain this momentum, to gazette the embedded generation decision and set up an efficient registration process for new embedded generators, as well as finalise the SAA deal as soon as possible.
Mavuso refers to further structural reforms that need to follow, including auctioning of spectrum and digital migration of televisation signals, boosting infrastructure investment and providing water security.