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Photo of Terence Creamer

20th May 2022

By: Terence Creamer
Creamer Media Editor

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There is no question that Operation Vulindlela has done a good job in identifying the main obstacles to important structural reforms in key growth- and job-creating sectors such as electricity, transport, water, tourism, and digital infrastructure.

There is also no doubt that the initiative, established in October 2020 by the Presidency and the National Treasury, has made some important progress in tackling those obstacles.

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That said, some of the claims regarding the overall status of these reforms, as outlined in the recently published Operation Vulindlela Progress Update report for the first quarter, are questionable.

Take electricity, for instance.

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The report assigns a ‘blue’ status, representing a reform that has been ‘completed’, to the regulatory amendment that raised the licensing threshold for embedded generation projects from 1 MW to 100 MW.

Now this is a vital reform, as allowing large consumers to invest in, or buy electricity from, a distributed generator is regarded as the quickest, cheapest and most fiscally sound way to begin closing a gaping 6 000 MW supply shortfall.

Crucially, the reform allows for such power stations to wheel electricity through existing Eskom and municipal networks and enables nonrelated customers to buy a portion of the electricity generated.

However, simply gazetting such a reform does not mean it is complete.

As with any new initiative, the implementation devil is in the detail and the detail, in this instance, is not yet fully supportive of ensuring that more electricity is urgently injected into South Africa’s load-shedding-prone grid.

Part of the problem lies with grid capacity and the capacity of Eskom’s Grid Access Unit to process applications for connection. Part of the problem also lies with South Africa’s cumbersome environmental and land-use authorisation processes.

However, the main problem seems to be a registration system overseen by the National Energy Regulator of South Africa that appears both overly bureaucratic and onerous. Some have described the stipulation that power purchase agreements be submitted to secure registration as akin to the Companies and Intellectual Property Commission demanding to know the identities of a firm’s customers before agreeing to register it.

Together, these impediments are holding up 58 projects, representing 4 500 MW and collective investments worth R65-billion.

Now, President Cyril Ramaphosa assured mining investors last week that government is working to further cut red tape for the registration of projects, as well as to accelerate environmental approvals and strengthen the capacity of Eskom and municipalities to link such projects to the grid.

The President also promised that South Africa’s energy landscape is being fundamentally transformed to introduce greater competition, more diverse energy sources and greater energy security.

These are indeed important statements, which gel with what the Presidency’s project management office told Engineering News & Mining Weekly in a recent interview.

However, the red tape has not yet been cut. And until it is, it is simply premature for Operation Vulindlela to mark down the 100 MW reform as ‘completed’.

 

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