The allegations in the media regarding the high-level Russian delegation who met with President Jacob Zuma shortly before the second cabinet reshuffle in seven months, which saw David Mahlobo appointed as Energy Minister, ostensibly to push through the nuclear deal in favour of the Russians, are startling, to say the least.
The previous Minister of Energy, Mmamoloko Kubayi, committed on record to abide by the Western Cape High Court’s ruling in April of this year, which declared that all Requests for Information (RFI) and potential RFP pursuant to the outdated Integrated Resource Plan (IRP) and Section 34 Ministerial Determinations are set aside with immediate effect. Mr Mahlobo is reminded that he too is bound by the court judgment and any deviation will be illegal.
In order for the nuclear deal to be approved, five key pieces of legislation/regulations will need to be updated and amended, which will require Parliament’s participation. These are:
- The Integrated Resource Plan;
- The Electricity pricing path;
- The procurement regulations;
- The framework agreements; and
- Changes to the energy act – to allow for a different funding/ownership model.
In addition, the court ruling made clear the need for a substantial public participation process.
The fact is that we cannot afford nor do we need the nuclear deal. In any event, it is doubtful that we need nuclear in the energy mix bearing in mind that by the time reactors come online, green energy will be able to fill the gap sufficiently.
The DA will be keeping a very close eye out for any such amendments and will also push for the entire process to be open and competitive. Should the details of any progress on pushing through this costly and unnecessary nuclear build not be open to the public, the deal will be tainted and the DA will not hesitate to go to court to interdict it.
As the third Communications Minister in 7 months, Mmamoloko Kubayi now faces the monumental task of bringing much-needed stability to the various entities of her department, almost all of which face serious governance and financial crises.
With the experience and knowledge gained as the former Chairperson of Parliament’s Telecommunications and Postal Services portfolio committee, Kubayi will have no choice but to hit the ground running.
First on her agenda will be working hand in hand with the newly appointed SABC board to address issues raised by staff last week, in order to prevent imminent strike action and keep the public broadcaster on air.
Other key issues Minister Kubayi will have to urgently address, include:
- Full disclosure to Parliament and the public of the application submitted to National Treasury for a R3 billion bail-out for the SABC;
- Appointment of the SABC’s top executives according to the prescripts of the Broadcasting Act and the SABC Charter;
- Scrapping the SABC’s problematic Memorandum of Incorporation (MOI);
- Recommending to the President the immediate suspension of Media Diversity and Development Agency (MDDA) Chairperson, Phelisa Nkomo, who has been implicated in serious financial mismanagement at the entity;
- Appointing permanent top management at the MDDA, Films and Publications Board (FPB), and the Government Communications and Information Systems (GCIS); and
- Investigating the suspension, withdrawing of charges and full payouts to the former CEOs of the FPB and ICASA.
Minister Kubayi has the opportunity to demonstrate to prove South Africa wrong that all she is an enforcer of President Jacob Zuma by tackling without fear or favour the issues facing her department and its entities.
We trust that she will be a responsive, communicative, hard-working, fearless Minister, or we will have no choice but to push for it to be goodbye, Kubayi.
The DA is deeply disturbed by the long delays in signing the Independent Power Producers (IPPs) contracts.
Especially concerning is the announcement today by the Minister of Energy, Mmamoloko Kubayi, that the DOE will be renegotiating the tariffs for these renewable contracts.
This delay and renegotiation is most likely a smokescreen initiated by the Department of Energy and Minister Kubayi in a bid to buy time to ensure the implementation of nuclear energy. This is made abundantly clear by the freeze of all new renewable projects from October, until such time as they have thoroughly scrutinised and aligned it to the IRP and IEP.
The DA will encourage the affected stakeholders to go to court if necessary to ensure that their IPP contracts and prices are upheld. The IPP renewable energy programme is an established and internationally recognized economic model which should be defended.
The delays are costing people their jobs and could result in further closures of renewable energy companies. On top of this, the renegotiation process also sends the wrong signals to the energy industry and appears to be an attempt to stifle growth in the renewable energy sector in favour of nuclear power.
We will ensure the government pursues the most viable approach to maintain the supply of power to the country. Given our renewable resources, and job creation opportunities, South Africa should be prioritising renewable energy and not costly nuclear power.
The decision by the Energy Minister, Mmamoloko Kubayi, to suspend the entire Central Energy Fund (CEF) board, including the acting CEO and CFO, is highly confusing and may be nothing more than a smoke screen.
It is confusing in the sense that the current CEF board became aware of the sale only in May 2016 and the CEF Chairperson and the two other board members, Mosimaneotsile Besnaar and Mr Neville Mompati, were only appointed in December 2016, well after the issues of the sale which occurred in December 2015.
Removing a new chairperson who is actively trying to clean up the fund and PetroSA is also highly suspicious. The firing of these board members is highly irregular and seems politically motivated – it has nothing to do with the board’s performance.
What the Minister has done is a significant U-turn from two months ago and her opinion is based on an audit report she presented to the Portfolio Committee on Energy that said the CEF board was not complicit in the secret sale of 10.3 million barrels of the country’s strategic oil reserves at alarmingly low prices. Minister Kubayi has admitted that this was not ‘a rotation of stock’ as former Energy Minister, Tina Joemat-Pettersson, had claimed.
The Department of Energy has now appointed a law firm to investigate all contracts at the Strategic Fuel Fund after a whistle blower indicated in a letter that 300 000 barrels of oil were loaned out to a private entity without proper procurement processes.
The DA will therefore urgently write to the Minister to request that she table the findings of these investigations, in Parliament.
Should the investigation reveal any corrupt activities, those people must face the full might of the law. We can no longer afford for our state institutions to be bled dry while the perpetrators of looting get off scot-free.
The DA will write to the new Minister of Energy, Mmamoloko Kubayi, to call on her to urgently set a new deadline for the signing of the Power Purchase Agreements (PPAs) for the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) and to stick to the new deadline.
This comes after the deadline for Eskom to sign the remaining 37 renewable Independent Power Producers (IPPs) contracts, from the fourth bid window, lapsed today.
This finalisation has been delayed for months after former Eskom CEO, Brian Molefe, expressed concern about making this commitment due to costs to the utility and its power surplus amid weak demand.
These concerns have been addressed by Treasury, the National Energy Regulator of South Africa and the Department of Energy.
Former Minister of Energy, Tina Joemat-Pettersson, stated that the impasse had been broken in February this year and stated that Eskom would sign off on the IPPs today, 11 April 2017.
Now there are further delays as Minister Kubayi has claimed that she would like to discuss the IPPs with the Minister of Public Enterprises, Lynne Brown, and other interested parties.
We believe that the delay is a further blow to investor confidence which the country can ill afford in light of the recent cabinet reshuffle and sovereign downgrades.
It is also convenient timing given the push for nuclear with the request for proposals being issued in mid-June.
With 13 000 jobs and R58 billion worth of investment waiting for signature, urgency is required in this consultative process by Minister Kubayi.
Having resulted in inward investment of R200 billion over the past six years, the DA is worried that the delay will negatively affect the IPPs and the successful bidders for the 2015 procured projects.
Renewable energy is a vital part of our future energy mix and should not be side-lined by potential patronage-linked motives around nuclear.
This is a test of the new minister’s commitment to renewable energy and whether the renewables programme has a future beyond the already allocated bid windows.
The DA will write to the new Minister of Energy, Ms Mmamoloko Kubayi, to request an urgent meeting to discuss and clarify her position regarding critical energy issues in South Africa.
The new Minister, seemingly with little or no energy experience, will now preside over significant changes to South Africa’s energy policy framework that will have long-term consequences and could provide the basis for an accelerated nuclear new build programme.
Specifically, the DA will seek clarity on the following:
The Nuclear Deal:
Minister Kubayi will play a direct role in the finalisation of the current draft Integrated Resource Plan 2016 (IRP 2016), which currently places a hold on new nuclear capacity until the mid-2030s. Whispers in the Department seem to suggest Kubayi will either make radical amendments to the current plan or simply not take the updated plan to Cabinet for approval – giving Eskom the necessary space to continue with the already underway procurement process. A failure to pass the IRP 2016, will also severely limit the ability of Parliament and civil society to question the nuclear deal.
The Renewable Energy Independent Power Producer Programme (REIPPP):
The appointment of Minister Kubayi also throws into question the future of the highly successful REIPPP, which has resulted in inward investment of R200 billion since 2011.
In July last year, the renewables programme ground to a screeching halt. There is now significant doubt as to whether the signing of the remaining 37 power purchase agreements will go ahead by 11 April 2017 as planned and whether the renewables programme has a future beyond the already allocated bid-windows. Eskom has expressed a preference that National Treasury directly cover the costs for the renewables programme – a move designed to free up Eskom’s balance sheet in order to pursue the nuclear new build programme. Such a move would be disastrous for South Africa’s sovereign credit rating, significantly undermining any attempts to regain an investment grade rating.
Amendments to South Africa’s Energy Regulatory Framework:
The Department has also been working on various troubling amendments to South Africa’s Energy Regulatory Framework as currently contained in the National Energy Regulation Act (2004) (NERA). These include the establishment of an appeal board which would have wide ranging powers. Alarmingly, membership to this board will be determined solely at Minister Kubayi’s discretion, and while the criteria for appointment will be similar to those for appointment to the NERSA board, it is deeply concerning that the bar on political party membership for regulators will not apply.
This amendment will effectively ensure the politicisation of the appeal board, making it subservient to political interference, undermining the independence currently enjoyed by NERSA. The creation of an appeal board will therefore open the door to unlimited challenges to NERSA’s rulings which may be judged on political criteria, rather than those of efficiency or equity.
This will greatly undermine NERSA’s ability to stand up to Eskom’s ludicrous tariff increase requests, as any decision taken by NERSA could be overturned by a politicised appeal board made of members of the ruling party.
There is now every expectation that Minister Kubayi will try ram this amendment through parliament in order to provide Eskom with greater revenue in order to prop up its balance sheet and support the proposed nuclear new build programme.
The DA will continue to push Minister Kubayi to clarify her position regarding energy in South Africa.