Worst economic crisis in recent history, Ramaphosa says as he tackles SA’s energy problems

Johannesburg – South African president Cyril Ramaphosa has said that the country finds itself in the worst economic crisis in recent history.

“As a country, however, our challenges predate the pandemic. We have experienced low economic growth and high levels of unemployment for many years, due to the structural constraints that hold our economy back,” Ramaphosa said as he addressed the nation while delivering his plan for economic recovery for the country on Thursday.

“In the GDP figures released by Statistics South Africa this week, in the encouraging signs of a revival in many sectors of our economy, and in rising business confidence, we are seeing the green shoots that emerge after a devastating fire,” Ramaphosa added.

Loadshedding and energy shortfall 

“There is no doubt that the prospect of a continued energy shortfall and further load shedding presents a massive risk to our economy,” Ramaphosa said.

“We also know that in responding to any crisis, we must remain agile and willing to adapt our interventions to match the circumstances that we face. The interventions that we planned yesterday may not be sufficient to meet our needs today. For this reason, we are today announcing a significant new step in further reforming our electricity sector towards achieving a stable and secure supply of energy.”

Ramaphosa said that the government will be amending Schedule 2 of the Electricity Regulation Act.

“This intervention reflects our determination to take the necessary action to achieve energy security and reduce the impact of load shedding on businesses and households across the country. It is evidence of our intention to tackle this economic crisis head-on, by implementing major economic reforms that will transform our economy,” the president further stated.

The amended regulations will exempt generation projects up to 100 MW in size from the NERSA licensing requirement, whether or not they are connected to the grid.

This will remove a significant obstacle to investment in embedded generation projects.

Generators will also be allowed to wheel electricity through the transmission grid, subject to wheeling charges and connection agreements with Eskom or the relevant municipality.

Ramaphosa said, “This will ensure that we are able to bring online as much new capacity as possible without compromising the integrity or stability of our energy system.”

Generation projects will still need to obtain a grid connection permit to ensure that they meet all of the requirements for grid compliance.

Municipalities will have discretion to approve grid connection applications in their networks, based on an assessment of the impact on their grid.

“They will also have to undertake an Environmental Impact Assessment and all other requirements of existing legislation,” Ramaphosa said.

Reduce the burden on Eskom 
“This, in turn, will increase the available supply of energy and reduce the burden on Eskom, allowing Eskom to proceed with its intensive maintenance programme and reduce its reliance on expensive gas and diesel turbines,” Ramaphosa said.
Economic Recovery 
“We are faced with the significant challenge of achieving a swift and lasting economic recovery, following many years of economic decline,” Ramaphosa said.

“This government has the task of building a new economy in the wake of a global pandemic, and of placing our country on a strong footing for the next decade and beyond.”

Ramaphosa concluded his address by saying, “I would like to thank the Minister and his team for working tirelessly to secure our energy supply & to forge a modern, forward-looking and sustainable energy system for our country. I wish to also thank the team working tirelessly on Operation Vulindlela. We are a country that is blessed with tremendous resources and resourcefulness. We have a bright future ahead of us. Today’s announcement takes us one significant step further towards that future.”

Watch Ramaphosa’s full address below: 

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