The Free Market Foundation (FMF) is calling on government to speed up the process of detailing and gazetting President Ramaphosa’s June announcement regarding the lifting of the threshold for companies to produce their own electricity without a licence, up to 100 MW.
The FMF has advocated for this policy reform numerous times in the past, and said government should be applauded for heeding our policy advice. However, it is more than a month since the announcement and, if progress has been made, the public has not been informed accordingly.
The organisation says the reform process must be as transparent and as closely monitored as possible. Part of the President’s announcement was the indication that generation projects will need to obtain a grid connection permit to ensure that they meet all the requirements for grid compliance.
The FMF is concerned that the permit-obtaining process will be subject to the inefficiency and political-interference that South Africans have become all too familiar with.
“South Africa’s growth and job-creation potential has been inhibited by the government-enforced monopoly in electricity generation and distribution – Eskom – for too long,” comments FMF deputy-director Chris Hattingh.
He adds: “Policy reform of the kind announced by President Ramaphosa will not necessarily happen overnight; but South Africans need to see that real progress is being made in terms of actualising the reform. Meaningful business- and capital-investment, with all the concomitant job opportunities, will simply not happen in the current environment.”
In the decade up to 2019, South Africa’s GDP growth averaged 1,4%; at present unemployment hovers above 42% (using the expanded definition). As many businesses, communities, and consumers try to recover and rebuild from more than a week of violence and looting – and more than a year of livelihood-killing lockdowns – South Africa needs cheap, reliable energy, the FMF believes.
The only way to reach that point, is to allow competition in the energy space, it adds, and this 100 MW reform can be the first significant step on that road.