South Africa’s energy crisis has been declared a national disaster, President Cyril Ramaphosa announced in his State of the Nation address on Thursday. A state of emergency is effective immediately.
Ramaphosa will also appoint an electricity minister in the presidency, who will oversee all aspects of the country’s electricity crisis response. The minister, the president said, will work “day and night” to arrest the crisis.
To avoid confusion, Ramaphosa said, the public enterprises minister, now Pravin Gordhan, will remain as Eskom’s shareholder representative and will lead the restructuring of the electricity utility. This is despite a proposal from the ANC that the state-owned entity be moved out of Gordhan’s department and into the relevant policy department.
“The state of disaster,” said Ramaphosa, “will provide practical measures to be taken to support businesses in food production, storage and retail supply chains, including to launch generators, solar panels and uninterrupted power supply.”
If technically possible, the newly gazetted regulations will allow the government to relieve critical infrastructure and institutions such as hospitals and water treatment plants from the burden.
This will allow the government to accelerate energy projects and limit regulatory requirements while maintaining strict environmental protection, procurement principles and technical standards, the president said.
An auditor general will be brought in to ensure continuous monitoring of expenditure. This, Ramaphosa said, will protect against misuse of funds needed for this disaster.
“Extraordinary circumstances call for extraordinary measures,” Ramaphosa said.
“The energy crisis is an existential threat to our economy and our social fabric. We must spare no effort, and we must not delay in implementing these measures.
In a brief statement, Eskom said it would study the details in the government’s statement on the state of disaster “to understand the implications of the declaration”.
Ramaphosa’s address – delivered as the country undergoes another spell of the fourth stage – put the country’s energy crisis at the top of the administration’s agenda.
Other efforts to address the crisis include supporting Eskom with additional funding for diesel, which is needed to run gas turbines, as well as tax incentives for businesses and households that install solar panels. Details of the latter intervention will be announced by Finance Minister Enoch Godongwana in his budget speech later this month.
“Our immediate priority is to restore energy security,” Ramaphosa said on Thursday night.
“We are in a deep energy crisis, the seeds of which were planted many years ago. We cannot undo the mistakes made in the past – the capacity that has not been built, the damage done to power plants due to lack of maintenance and the effect of state capture on our institutions . What we can do is fix today’s problems. To keep the lights on for tomorrow and for generations to come.”
A 15-year energy crisis has threatened to devastate the country’s already fragile economy. Last month, the South African Reserve Bank predicted that the economy would grow by just 0.3% in 2023 as a result of the load shedding. At that level, the country’s unemployment will remain very high, as the country risks repeating July 2021.
“We know that, without a reliable supply of electricity, businesses cannot grow, assembly lines cannot run, crops cannot be irrigated and basic services are disrupted,” the president said in a speech.
“Limiting the burden means that households and supermarkets and shops cannot keep food fresh, water supplies are often interrupted, traffic lights do not work, roads are not lit at night. Without reliable electricity supply, efforts to grow an inclusive economy that creates jobs and reduces poverty will not succeed,” he said.
In addition to the solar panel tax incentives, Godongwana’s budget is expected to provide more details on the government’s plans to write off Eskom’s share of R400 billion in debt.
The debt takeover, announced in the treasury’s medium-term budget policy statement in October 2022, is expected to free up the electricity utility’s finances to invest in critical maintenance.
The national treasury, Ramaphosa said, is also working to adjust the reverse loan scheme to help small businesses invest in solar equipment and allow banks and development finance institutions to borrow directly from the scheme to facilitate the leasing of solar panels to them. customers.