Termination of State of Disaster for electricity, Eskom exemption withdrawal broadly welcomed

5th April 2023 By: Tasneem Bulbulia - Senior Contributing Editor Online

Termination of State of Disaster for electricity, Eskom exemption withdrawal broadly welcomed

The government has terminated, with immediate effect, the National State of Disaster for electricity declared by the Minister of Cooperative Governance and Traditional Affairs on February 9.

In a statement, the Department of Cooperative Government and Traditional Affairs (Cogta) said the State of Disaster was a necessary response to the impact of critical levels of loadshedding on the economy and vulnerable sectors such as health and small businesses.

Following the declaration of the State of Disaster in February, the government adopted wide-ranging regulations which set out the responsibilities of the different organs of the State to mitigate the impact of severe loadshedding, prevent the escalation of electricity supply constraints and avert a national emergency, the department averred.

It noted that these regulations and the underlying actions were put in place in support of the Energy Action Plan (EAP).

This was to support an effective and integrated response across all spheres of government, Cogta added.

Cogta also posited that the State of Disaster enabled government to enhance interventions by the National Energy Crisis Committee (Necom) in terms of the EAP.

“A significant enabler of the improvement in the supply of electricity has been the appointment by President Cyril Ramaphosa of Dr Kgosientsho Ramokgopa as Minister of Electricity.

“The Minister has, in recent weeks, undertaken oversight visits to power stations and consultations within government, including with Eskom, to identify and resolve electricity supply constraints,” Cogta highlights.

As a structure that integrates areas of responsibility and resources within government, the Necom provides support to the Minister in the identification and resolution of bottlenecks.

In view of these developments, Cooperative Governance and Traditional Affairs Minister Thembisile Nkadimeng has decided to terminate the State of Disaster.

Government would, through Necom, continue to engage, cooperate and coordinate its actions to reduce and eradicate loadshedding using existing legislation and contingency arrangements, Cogta said.

These included measures already taken to protect critical infrastructure, facilitate emergency energy generation and protect consumers in terms of relevant competition law.

A range of interventions and support measures introduced by departments as an accelerated response at the time the State of Disaster was declared would be sustained in terms of existing legislation, Cogta pointed out.

Speaking at a briefing in Pretoria on Wednesday, Ramokgopa stressed that the termination of the State of Disaster did not mean that there was no longer any provision for emergency procurement by Eskom, which had been given as a key reason for declaring the disaster in February.

He said such provision already existed under the Public Finance Management Act and would be drawn on should the need arise.

"The removal of the State of Disaster - is it going to undermine the agility, pace and responsiveness of procurement? The anwser is an emphatic, no."

The Minister also said that any interventions undertaken in line with the State of Disaster, such as the establishment of a one-stop shop at the Department of Trade, Industry and Competition for the processing of approvals for private generation projects, remained intact and would not be dissolved with the termination of the State of Disaster.

Ramokgopa also noted that the exemption provided to Kusile for the use of temporary stacks that by-passed the flue-gas desulphurisation system had been provided without reference to the State of Disaster and would, thus, be unaffected by the termination. 

"As a result of that exemption, we should be able to return those three [Kusile] units . . . and the last one should come online by December 24, just on Christmas eve.

"That's when we are going to get the full benefit of the 2 100 MW [which is currently unavailable and is adding two loadshedding stages]."

The news was welcomed by the Organisation Undoing Tax Abuse (Outa), which posited that the withdrawal was in response to Outa’s legal action challenging its rationality.

Outa was formally notified of the withdrawal in the State Attorney’s written response on April 5 as part of its legal action to review and overturn the decision to declare the State of Disaster. The State Attorney has offered to pay Outa’s wasted court costs in the case.

The State Attorney’s letter came while Outa was awaiting the State’s answering affidavits, which were overdue. The matter was due for a case management meeting with the judge on April 12, at which Outa said it had planned to ask for an expedited court date for the hearing.

Trade union Solidarity was also informed of the decision in a legal letter.

Solidarity was also requested to withdraw its court application to have this State of Disaster scrapped.

According to Solidarity, this letter was the direct result of the pressure it put on government, saying government stood no chance of a successful court outcome.

Solidarity argued that this also showed that government alone could not solve South Africa’s crises. 

“The solution lies in the devolution of power. The energy solution lies in small-scale generation on a large scale. It lies on millions of rooftops rather than in a few corridors of the Union Building,” it emphasised.  

Solidarity has called on government to step aside so that the private and community sectors can solve the power crisis.  

Meanwhile, Sakeliga also welcomed the announcement by Finance Minister Enoch Godongwana, that the exemption for utility Eskom from provisions under the Public Finance Management Act would be "withdrawn for now."

Nevertheless, Sakeliga had already started investigating the extent to which similar exemptions were being contemplated for other State entities, it noted.

Sakeliga's legal team is submitting Promotion of Access to Information Act applications to determine which State institutions have already received or will soon receive similar exemptions.

The now-withdrawn exemption would have allowed Eskom not to report irregular, wasteful and fruitless spending in their financial statements.

This decision was also welcomed as a “big win for civil society” by Outa.

City of Cape Town MMC for Energy Beverley van Reenen has also welcomed the withdrawal of the exemption, positing that it would have further weakened the confidence of global financial institutions and corruption watchdogs in the country’s ability to enforce accountability and compliance with strict financial management standards and legislation.

“Only transparent governance and a clean administration will attract investors and contribute positively to our creditworthiness. The rationale for this decision is therefore flawed and questionable. It is therefore not surprising that it has been hastily withdrawn.

"Notwithstanding loadshedding and Eskom's deepening financial challenges, the exemption would have also been an insult added to the injury of an almost 19% tariff hike that Eskom has implemented on struggling residents and businesses in South Africa,” she averred.

Van Reenen said the City of Cape Town remained “extremely concerned” about Eskom’s financial situation and its ability to end loadshedding and called on the national government to be more transparent about the financial issues facing the utility.

-Additional reporting by Terence Creamer.