Independent nonprofit public benefit organisation the Free Market Foundation (FMF) is calling on government to accelerate the process of detailing and Gazetting President Cyril Ramaphosa’s June announcement about raising the threshold for companies to produce their own electricity without a licence, to 100 MW.
During his June announcement, Ramaphosa said he would give Mineral Resources and Energy Minister Gwede Mantashe 60 days to Gazette the amendment.
The FMF, however, says there is no objective reason for this amendment to take such a long time, especially in the current low-growth environment.
The foundation notes that it has advocated for the amendment to Schedule 2 of the Electricity Regulation Act numerous times in the past and that government should be applauded for heeding its policy advice.
However, the organisation points out that it is more than a month since the announcement of the lifting of the threshold, and that if progress has been made in this regard, the public has not been informed accordingly.
Policy reform that is confined to speeches only, the FMF says, will not have any real-world benefit for South African businesses and consumers who are regularly subjected to load-shedding.
In terms of the reform process, the FMF says it should be as transparent and as closely monitored as possible.
In this regard, the foundation explains that part of Ramaphosa’s announcement was the indication that generation projects will need to obtain a grid connection permit to ensure they meet all the requirements for grid compliance.
However, the FMF states that it is concerned that the permit-obtaining process will be subject to the inefficiency and political interference that South Africans have become “all too familiar with”.
FMF deputy director Chris Hattingh says South Africa’s growth and job-creation potential has been inhibited by the government-enforced monopoly in electricity generation and distribution, through State power utility Eskom, for too long.
He adds that policy reform of the kind announced by Ramaphosa will not necessarily happen overnight; but that South Africans nonetheless need to see that real progress is being made in terms of actualising the reform.
“Meaningful business- and capital-investment, with all the concomitant job opportunities, will simply not happen in the current environment.”
The FMF also states that permitting industry and businesses to invest in their own substantial embedded generation capacity will alleviate pressure on Eskom, enabling it to implement urgent repairs to an aging generation fleet and ensure that those businesses and industry players can continue their operations without ongoing energy concerns.