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Don’t keep us in the dark about Eskom

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 Brian Molefe
Brian Molefe

Government needs to provide clear direction following Eskom’s halted power contracts, writes Sisa Njikelana

If we focus only on Eskom’s recent public announcement about no longer signing purchase contracts with independent power producers (IPPs) – until investigations on their renewable programme’s implications for the national supplier are concluded – we miss a key issue that may spark off unnecessary tension.

Any interruption of, or delay in, the changing power market will have a broader effect on the country’s much-needed economic recovery, not just on IPPs.

Last month, Eskom said it would suspend the signing of any new contracts with IPPs until it had consulted the department of energy – because it was concerned about being forced to buy energy from IPPs at prices it did not negotiate and that these prices would constrain its revenue stream.

Since Eskom is not in a position to make public pronouncements that have profound implications on policy issues, it is unfortunate that the utility did so without first consulting the department of energy.

Notwithstanding this, Eskom’s concerns had been expected (given Eskom CEO Brian Molefe’s complaint earlier this year about the relatively high cost that renewable energy generated).

This calls for a sober response from all key players.

A few queries I have received thus far have shown nervousness about Eskom’s intention, with little understanding accorded to the utility’s stated concerns.

Plans and investment in this industry are lengthy, involved and expensive processes. Any signal of interruption triggers unease.

This must serve as a wake-up call to IPPs to work coherently in future.

While the SA Independent Power Producers’ Association has requested a meeting with the department of energy, this idea has been met with a less than enthusiastic response from various associations.

Finance Minister Pravin Gordhan and Minister of Energy Tina Joemat-Pettersson have downplayed Eskom’s July 21 announcement.

Gordhan has been quoted as saying it was not up to Molefe to decide on state policy, while Joemat-Pettersson has said:

“We have started down an irreversible path with the success of our IPP and renewable energy programme. We expect this sector to continue to grow in the years ahead.”

But despite assurances by the energy minister about her department’s commitment not only to renewables but to alternative energy technologies and systems, mixed signals from government remain of concern.

I refer to government’s persistent silence about the review of the Integrated Resource Plan, a long-term energy plan for the economy that projects demand and analysis costs of competing technologies.

Supposed to have been revised every two years, the last update was conducted in 2010.

Eskom’s public pronouncement indicates a deeper malaise whose resolution is slow and unclear.

This is where I strongly maintain that government should be more assertive in providing direction and ensuring a timeous review of policy tools such as the resource plan.

A balanced response is essential. Any confrontational response risks harming the prospects of effective and sustained remedial action.

And confidence-building during such trying times is paramount.

I therefore appeal to the relevant leadership to take us into its confidence and go beyond public pronouncements to engage the independent power production industry directly, in our capacity as contributors.

While government has the authority to decide on how to address the matter, including key players can only enhance its remedial efforts.

Continuing to sensationalise the situation does more harm than good.

Yes, Eskom should have abided by its intention to consult with the energy department prior to signing any further contracts – and releasing a public statement.

Although we cannot wish away the potential damage the announcement may have caused, let me caution against an unnecessary alarmist reaction.

Lest we forget, government has brandished the renewable programme as a success.

This serves to enhance our future involvement in supplying power, although Joemat-Pettersson has not confined it to the renewable energy sector but has mentioned a “diverse energy mix” that includes “a variety of generation sources, such as coal, nuclear, renewables and gas”.

Despite such assurances from the key policymakers, it bears repeating that Eskom’s announcement – issued in the midst of uncertainty as to how the IPP programme will continue rolling out – may remain unsettling until all stakeholders are brought in and involved.

My concern is that an impression has been given that the situation has been addressed – public statements have been made – yet there are still burning embers beneath the ashes.

Njikelana is chairman of the SA Independent Power Producers’ Association. He writes in his personal capacity.

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