Martins’ Inbox

26th July 2013 By: Terence Creamer - Creamer Media Editor

Martins’ Inbox

There is little clarity as to why President Jacob Zuma decided to switch the portfolios of Ministers Dipuo Peters, from energy to transport, and Ben Martins, from transport to energy. More certain, though is that both will have their work cut out for them in their new roles, with Peters having inherited the e-toll poison chalice and Martins the tight electricity system and rising tariffs.

Martins is now also presiding over an area of government and the economy that has the potential to either simulate or undermine future growth and development. Indeed, his inbox is full to overflowing, with major decisions required that will shape the economy and the energy economy, more specifically, for years to come.

His entry follows Cabinet’s approval of the draft Integrated Energy Planning Report for release for public consumption and comment. This document forms part of a process to formulate an Integrated Energy Plan (IEP) for the country, covering liquid fuels and electricity.

He also enters amid ongoing anxiety over the supply/demand balance in the electricity milieu, as well as uncertainty over the appropriateness of the Integrated Resource Plan (IRP2010) for electricity, which covers the period from 2010 to 2030.

The IEP is critical for defining the route South Africa will adopt for securing affordable supply across all energy carriers and networks. But there is tremendous urgency to update the IRP2010, as the current iteration was developed using assumptions – particularly economic and power growth assumptions – that are now sorely out of date.

It has been indicated previously that the IRP will be updated in parallel to the IEP processes and that the revision should be made in the current fiscal year.

Given that the term of the current administration ends in the first half of 2014, it is vital that Martins using the time remaining to both consult on and, hopefully, complete the IEP and the IRP update.

Certainty is needed from all participants, including Eskom. But private companies that are showing a willingness to invest their money, time, technology and skill in building new electricity capacity need it even more.

Investors require visibility of the allocations across the various power generation platforms, from nuclear and coal, to gas, hydro and renewables.

Such certainty will go a long way to ensuring that electricity does not become a binding constraint on the country’s future growth – as, no doubt, would have been the case had it not been for the global economic crisis, which has been devastating, but has enabled Eskom to keep the lights burning.