South Africa: Ramaphosa declares ‘state of disaster’ promising to fix power meltdown

By Patrick Smith, Ray Mwareya, in Cape Town

Posted on Friday, 10 February 2023 15:11
South African President Cyril Ramaphosa delivers his 2023 state of the nation address in Cape Town, South Africa, February 9, 2023. REUTERS/Esa Alexander/Pool

Declaring South Africa in a “state of disaster”, President Cyril Ramaphosa delivered the State of the Nation address Thursday evening after 45 minutes of disruption by opposition party Economic Freedom Fighters. He said he was appointing a minister of electricity to be based in the presidency to tackle the country’s energy crisis.

“Our country has for many months endured a debilitating electricity shortage that has caused immense damage to our economy and the lives of our people,” said Ramaphosa.

His speech was disrupted by Economic Freedom Fighters (EFF) MPs who were forcibly removed after they tried to storm the podium.

Declining to comment directly on the disruption, Ramaphosa justified the emergency measures: “Extraordinary circumstances do call for extraordinary measures.”

Support for farmers

Under the state of disaster regime, the government would be able to offer more support to farmers and food processors as well as distribution and logistics companies, argued Ramaphosa.

“Where technically possible, it will enable us to exempt critical infrastructure such as hospitals and water-treatment plants from load shedding,” he said.

“And it will enable us to accelerate energy projects and limit regulatory requirements while maintaining rigorous environmental protections, procurement principles and technical standards,” he added.

But the plan has already triggered wide-ranging opposition from an alliance of trade unions that met before Ramaphosa’s address. Centre-right opposition Democratic Alliance (DA) has launched a lawsuit to challenge the State of Disaster declaration.

DA leader John Steenhuisen said in a statement on 9 February that the use of such extraordinary powers during the pandemic had been abused by corrupt officials, giving the ruling African National Congress “unfettered power to loot without any parliamentary oversight.”

The minister of electricity will be working in the president’s office. That’s being seen as evidence that the collapse of Eskom, the national power utility, has rattled Ramaphosa and could threaten his political future.

Existential crisis

South Africa now has “difficulties by the tonne”, said Ramaphosa, admitting that power cuts that can last 10 hours a day are derailing South Africa’s economic recovery from the pandemic and the very existence of the nation.

Last week, South Africa’s Reserve Bank forecasted GDP growth in 2023 at 0.3% down from 1.1%. It reckons that the current level of power cuts could take about 2% GDP growth in a year.

This week, top domestic retailers like Shoprite and Picknpay warned that they are spending about half their profits to run emergency diesel generators.

Ramaphosa left plenty of questions open about how the state of disaster regime would operate. The minister of electricity, who is yet to be named, is to coordinate policy on the energy crisis in liaison with the president.

Ramaphosa is taking more personal responsibility as electricity shortages paralyse Africa’s most industrialised economy.

But the public enterprises ministry, currently run by Ramaphosa ally Pravin Gordhan, will remain the shareholder representative of Eskom and steer its restructuring.

This will “ensure the establishment of the transmission company, oversee the implementation of the energy transition programme and the establishment of the State Owned Enterprise (SOE) holding company,” said Ramaphosa.

That company will be created as a centralised body to oversee reforms and restructuring at all the parastatals.

Eskom control

But this doesn’t resolve the position and powers of energy and mines minister Gwede Mantashe, dubbed a ‘coal fundamentalist’ by his critics. With strong backing from the ANC, Mantashe was meant to bring control of Eskom into his newly expanded portfolio.

Mantashe has been seen until now as one of the most powerful people in the ANC and the government, having twice helped Ramaphosa win the party’s presidency.

At the Mining Indaba in Cape Town this week, Mantashe said the power cut crisis would largely be resolved by the end of this year. That runs counter to Eskom Chairman Mpho Makwana who predicts another two years of power cuts as the company’s maintenance team rehabilitates tens of ageing coal-fired power stations as the government gradually expands power generation from renewable sources.

More state funds are earmarked for Eskom to continue buying emergency diesel and Eskom will be allowed to source emergency power within six months, promised Ramaphosa.

He also pledged to enforce a crackdown on theft and sabotage of Eskom infrastructure.

The president said at least R3bn ($277m) of investments in renewable energy projects are already in full swing, adding that he wanted the mounting of solar panels on rooftops to be accelerated everywhere, from schools to state buildings to private homes.

The government plans to give tax breaks to businesses and households that generate their own solar power, according to the budget plans of Finance Minister Enoch Godongwana due to be announced on 22 February.

A rail of disaster

Transport and logistics, specifically the railways, are the other deepening crises undermining the national economy. Criminality and years of underinvestment have chronically undermined cargo and passenger services.

“Those with money should come in to help,” Ramaphosa said. This comes as Transnet, the cargo rail utility, has insisted that the only way forward is to open its operator slots on the lucrative Johannesburg-to-Durban corridor to private investors.

The decline of South Africa’s rail network, once the continent’s best, has been closely monitored by the South Africa Association of Freight Forwarders.  The group told The Africa Report via email that the volume of cargo carried on state-owned Transnet’s rail wagons has fallen by 80% since 2010.

Taking a break from reciting recipes for tackling crises, Ramaphosa talked up his government’s record:

  • At least 1,000 Black South African industrialists have been created;
  • In 2022 R367bn ($21bn) of investments were pledged to the nation;
  • A historic R14bn ($787mn) broadband auction has sailed through without a glitch;
  • By January 2023, R232bn ($17bn) worth of construction projects were thriving across the country.
  • The government is geared to mobilise R2trn in new investments by 2028.
  • A new water supply and distribution project with Lesotho is due to take off this year to ameliorate the country’s worsening water shortages.

Giant welfare state

South Africa’s provision of state welfare to its poorest has widened, said Ramaphosa. Some 250,000 small-scale farmers are receiving subsidies to remain on the land; one million title deeds for houses are to be handed out; and 7.8 million South Africans are receiving ‘distress’ monthly cash grants.

“Around 60% of (the state’s) budget is spent on what’s known as the social wage,” said Ramaphosa as he revealed that 25 million out of 59 million South Africans depend on some sort of state welfare to make ends meet.

Running out of ideas?

Outside the governing ANC, support for Ramaphosa’s plans is thin on the ground. “It’s a damp squib,” independent economist Carter Mavhiza tells The Africa Report.

“Apart from the energy state of disaster, it’s a below-par speech with zero specifics. At the least, he should have announced when a new, desperately-needed Eskom chief executive will be appointed.”

Like his predecessor Jacob Zuma, Ramaphosa has reached a stage of his presidency where he is running out of solutions, says veteran political analyst Kudakwashe Magezi, who followed the address live from the capital Pretoria.

“Twenty-five million South Africans on state welfare – that’s unsustainable- especially knowing lots of high-income taxpayers in South Africa are emigrating and there’s talk of a tax revolt brewing.”

Electric play

Planning a new so-called minister of electricity to be centralised in the presidency won’t do much difference and will add to the mess of bureaucracy, Mavhiza added.

“It’s simply shuffling deck chairs as the Titanic –  Eskom –  takes on water. Creating a new minister is just political play because control of Eskom is being fiercely contested by the energy minister and the state corporations minister”.

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