Power Grid

28 Mar 2022

Competitive Market for Electricity Generation Part of SA Reconstruction and Recovery Plan

28 Mar 2022  by   
As South Africa continues along the path of reconstruction and recovery, President Cyril Ramaphosa has called on investors, entrepreneurs and business people to be a part of the infrastructure journey including electricity generation.

President Ramaphosa said that investors need to know that their investments are secure, that the operating environment is stable, and that they are supported by policy certainty and regulatory safeguards.

The President was speaking at the fourth South African Investment Conference (SAIC) on Thursday at the Sandton Convention Centre, in Johannesburg.

The President initiated the SAIC annual event in 2018 in an effort to secure domestic and inbound investment of R1.2-trillion in investments over five years.

“You need to know that the measures we are taking to tackle crime and damage to infrastructure are having an effect. Your investments are making a difference in local economies and in people’s lives.

“We, therefore, invite you to be part of South Africa’s growth story. We invite you to be part of a young, dynamic, resilient nation positioning itself at the forefront of progress and change,” he said.

The President said that this fourth SAIC could not be taking place at a better time, just as the country is casting off the long shadow of the  COVID-19 pandemic and embarking on a concerted and determined recovery.

Despite the impact of the pandemic, by the time of the third South Africa Investment Conference that was held in 2020, R774 billion in investment commitments had been raised which is two-thirds of the way to reaching the R1.2 trillion target.

“I am here to say that as the government of the Republic of South Africa we are making progress along the difficult but necessary path of reform we embarked on three years ago; that we are starting to see the results,” said Ramaphosa.

Transforming the electricity generation sector

On Eskom’s rolling blackouts, President Ramaphosa said that no economy can operate without a reliable supply of electricity. He said that this resulted in the country having undertaken the most extensive transformation of the energy sector in nearly a century.

In December last year, Eskom met its deadline of establishing a separate transmission entity and is set to complete the process of unbundling into separate entities for generation, transmission and distribution by the end of this year.

“We are moving ahead to facilitate a competitive market for electricity generation, and the establishment of an independent state-owned transmission company. We have a deficit of some 4,000MW of energy supply,” said Ramaphosa.

He announced that government is working with the private sector to fast-track investment to unlock a potential 4,000 MW of embedded generation.

“We have increased the licensing threshold for embedded generation projects from 1MW to 100MW. Last year, we launched bid window 6 of our Renewable Energy Independent Power Producer Procurement Programme.”

The President said that this is going to add new generation capacity to the grid over the next two years, mainly through wind and solar power.

“And so, even as the country continues to experience intermittent load shedding, we are moving with pace and determination to bring new generation capacity online in the shortest possible time.

“We are doing so while undertaking the far-reaching reforms that will secure a reliable, affordable and sustainable supply of electricity well into the future.”

Infrastructure reforms on the cards

While the country undertakes a range of measures to improve operational performance, President Ramaphosa said that government is also implementing structural reforms to increase investment, introduce new technologies and skills, and improve efficiency in the rail and port infrastructure.

He emphasised that for South Africa’s economy to realise its potential as a supplier of products to markets across the world, it needs roads, railways and ports that work.

“The establishment of the Transnet National Ports Authority as a separate entity may not, at first glance, seem particularly transformational, but it is a long-overdue structural reform that will have a profound effect on investment in ports infrastructure,” he said.

The President said that Transnet will soon start the process of providing third-party access to the freight rail network, a development that will encourage more efficient use of some of the country’s most valuable infrastructure assets.

He reiterated government’s commitment to establishing a special unit in the Presidency to deal with bureaucratic red tape and to improve the operating environment for businesses and to reduce the cost of doing business.


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