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Disturbingly misguided

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Disturbingly misguided

22nd May 2020

By: Terence Creamer
Creamer Media Editor

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Being able to participate, virtually, in several of the parliamentary committee meetings that have taken place during May has been a combination of interesting, frustrating and downright scary. Without fail, these meetings yielded one or two real gems of information, amid the irritation of failed Zoom or Microsoft Teams connections and protracted debates over procedure.

Recent meetings of the Portfolio Committee on Mineral Resources and Energy have been particularly fascinating and disturbing. During these meetings, the short- and medium-term plans and strategies of the Department of Mineral Resources and Energy (DMRE), and several of the entities falling under it, have been showcased and discussed.

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Now, the immediate annual performance plans are likely to be materially overhauled after Finance Minister Tito Mboweni delivers the Special Adjustment Budget on June 24. Nevertheless, the strategic goals and objectives of the DMRE and its entities could well remain largely intact. And that’s precisely where the problem lies.

The priorities outlined by the DMRE for energy are entirely out of sync with the real priorities of the sector. It boggles the mind that, when the Integrated Resource Plan 2019 (IRP 2019) has at last brought a semblance of policy certainty, the DMRE is choosing to fixate on a tiny component of the document (new nuclear) that has no prospect of improving electricity security in the short term and is unlikely to play a role even in the longer term.

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Preparing a roadmap for small modular reactors is probably the least urgent aspect of the IRP 2019, particularly when serious intervention is needed to clear the way for the development of solutions that are the quickest to build, easiest to fund and the cheapest producers of new electricity to boot – solar and wind. It is widely accepted that nuclear was initially excluded from the plan entirely and was only wedged into the IRP 2019 at the eleventh hour to appease some politically powerful unions.

As if the priority being given to nuclear was not bad enough, the cherry on the cake came in the form of a presentation by the Central Energy Fund (CEF), in which it canvassed its latest restructuring and turnaround proposals with lawmakers.

In an audacious move for an institution whose underlying businesses, especially PetroSA, have failed so dismally, a large part of the plan is premised on grabbing additional resources from an increasingly fragile fiscus, together with large chunks of the energy market itself.

Not only is the CEF seeking 25% of the fuel levy and a portion of the revenue raised through carbon taxes, but it also wants to be designated as the developer of South Africa’s liquefied natural gas infrastructure, the custodian of a new crude refinery and the State’s holder of key energy infrastructure assets.

The DMRE’s strategic plan and the CEF restructuring proposal need to be strongly scrutinised and critiqued by lawmakers and society as a whole, as they are disturbingly misguided. Perhaps, the post-Covid-19 Budget will help bring them both back down to Earth.

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