Electricity: Western Cape is acting like a spoiler, says Gwede Mantashe

Mineral resources and energy minister Gwede Mantashe has hit out at Western Cape premier Alan Winde, threatening to resist the DA's intention to source additional energy supplies to offset Eskom load-shedding.

Mantashe, also the ANC's chairperson, was interviewed by Chris Yelland, managing director at EE Business Intelligence, who asked him about municipal electricity generation, the Eskom "war room", emergency procurements, integrated resource plans (IRPs) and restructuring of the utility.

Earlier this month, Winde announced a four-point plan for the province which included helping municipalities procure energy from independent power producers; increase “small-scale embedded generation” such as solar panels in private homes, businesses and other entities; and increase imports of liquefied natural gas.

Four months ago, Winde called on Mantashe to consider a proposal that municipalities be authorised to procure power, ranging from 1MW to 10MW, from independent producers.

“This would be at no cost to the fiscus and would increase the energy resilience of municipalities and South Africa as a whole,” Winde said.

Cape Town previously went to court to be allowed to procure its own renewable energy without the permission of the national energy minister.

Here is an excerpt of the interview between Mantashe and Yelland:

Question: On municipal generation being part of the solution, the president and you, as minister of minerals and energy, have recently provided strong signals that municipalities will again be allowed to become part of the solution as generators of electricity in South Africa, as well as being enabled to procure energy from IPPs outside the Eskom single- buyer model. Would not the clearest signal of government and your department’s intentions in this regard be to withdraw your stated intention to oppose the Cape Town’s court application to be allowed to generate electricity and procure energy from IPPs? Why are the minister and the regulator (Nersa) still opposing this, instead of enabling it?

Minister: The City of Cape Town must talk to us instead of going to court. When you go to court, you are creating a precedent that can be applied across the board, instead of finding a solution to the particular problem. It is the City of Cape Town that must withdraw the case, come to the table with the signal we have sent, and talk to us to find a solution. But if they go to court, we will have to oppose the case and explain that we are ahead of what is being heard in court. We must educate one another, and the Western Cape government, that oppositionist positioning does not help in solving issues.

I met the premier of the Western Cape at the recent government legotla, and said to him that the best way is for us to work together, but if you want to spoil everything, you will be resisted at every turn, because you behave like a spoiler, and you regard the ANC government as your enemy.

We are not going to surrender the power of the national government because there is mischief driving the issue.

Cape Town, Johannesburg, Bloemfontein and other municipalities used to have their own power stations. So, when we refine the rules and regulations, it’s is not from an empty space. There is precedent. We must tighten it. The solutions will not be developed by the court. The solutions will be developed around the table. At best the court will say, go and develop all the rules and regulations. The City of Cape Town can go to court, but it’s an academic exercise.

On the 'war room'

Question: We have seen a number of hastily announced, reactive, and some would say panic initiatives in response to the electricity crisis at Eskom, such as the president’s task team, the technical task team, the Nedlac task team, the so-called war room, and the request for information (RFI) for emergency procurements, instead of proactive, carefully considered, robust, resilient institutionally formed policy initiatives. How will the ministry responsible for energy and electricity policy bring together these initiatives into something that is properly co-ordinated and directed towards resilient and sustainable energy and electricity policy?

Minister: My background is in mining, where one of the first lessons is that one must never panic because panic kills. I don’t understand when you refer to panic initiatives. They are initiatives to deal with the crisis that faces the country. Take for example the RFI. It is normal practice after you gazette an IRP to issue an RFI to test the market. We received 481 responses from this, and we are looking at them, sifting through them, and looking at what is possible, and what can give us energy in the next 12, 18, 24 months, and so forth. It’s not a panic issue, but normal to ask for information.

The others you mention are initiatives intended, if I can speak for the president, to get a hands-on feel for what is happening. I happen to be on the war room team, and we had our first meeting last week. I found it quite helpful because in the war room you have a situation where political leaders interact with technical teams, including the Eskom team, where they can explain issues that are being done, step-by-step. The work is task-orientated rather than panicking.

I have never run a business, but what I know is that where you have a duty to supply a service, you have a responsibility to actually look into that service. Customers will interact with the team from time to time. The terms of reference allow me to interact with stakeholders depending on the issues. But the war room itself is a government initiative to ensure we do give proper service to the people. I would suggest you organise a series of interviews on this matter, and talk to the deputy president, okay?

On emergency procurements

Question: A particular initiative to the emerging electricity supply gap that cannot be met by normal procurement in terms of the (IRP) for electricity has been the RFI to identify any immediate and short-term emergency options and solutions to fill this gap. Following the RFI, what viable solutions have been identified that can deliver projects that can make a difference in the short term, what are the next steps in the procurement process, and what are the risks?

Minister: The RFI is not for emergency procurements. It is to test the market for the implementation of the IRP. It is much broader than simply emergency procurement.

As I said, we received 481 proposals, and this helps us begin to interact with various players. It’s a learning process, but I sometimes feel a sense of urgency is not as clear as it should be in the department. We are working on ensuring the department moves with the necessary speed. Officials in the department are used to working according to rules, where it takes three months to do this, or six months to do that. The situation we are in requires a change of approach.

That’s why we are engaging with Nersa and everybody to say: guys, let’s accelerate processes, because if we don’t we are going to be plunged into darkness.

My own view is that the RFI has helped us identify a number of possibilities. To me, one of the most urgent is the offer to convert diesel-driven open-cycle gas turbines (OCGTs) to gas. In itself, this will go a long way to significantly reduce costs and address the unreliability of diesel supply to provide a more reliable connected capacity. Together with the installation of modular gas engines, this will go far in terms of ensuring security of supply.

On the issue of renewables, let me state that we are going to open Window 5 because Nersa has now received the Section 34 ministerial determinations for concurrence.

But we must remove the myth that by opening Window 5 there will be no load-shedding in the next few years. And while we have a capacity allocation of 14,400MW from wind and 6,000MW from solar PV in the IRP, the actual electricity derived from this is much lower, until we have the gas-to-power and the battery industry established and can address the base-load issue.

In the meantime, in my view, the biggest game changer is going to be gas. If we can begin to break this mode of politicising energy – which is necessary for economic growth and development – we will make a lot of progress.

-Yelland is a specialist consultant, adviser, analyst and writer on energy, electricity and ICT infrastructure