Minerals Council CEO Roger Baxter said the council hoped to see Finance Minister Tito Mboweni allocate resources towards the promotion of energy efficiency and demand management when he tabled the Budget on Wednesday. Photo: Supplied
Minerals Council CEO Roger Baxter said the council hoped to see Finance Minister Tito Mboweni allocate resources towards the promotion of energy efficiency and demand management when he tabled the Budget on Wednesday. Photo: Supplied

Minerals Council in plea to address South Africa's energy constraints

By Dineo Faku Time of article published Feb 24, 2020

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JOHANNESBURG – Measures to address South Africa’s energy constraints should top the agenda of the 2020 National Budget in order to address the fiscal crisis as it opposed Eskom’s application for an additional R27.3 billion in revenue, the Minerals Council South Africa said on Friday.

Council chief executive Roger Baxter said the council hoped to see Finance Minister Tito Mboweni allocate resources towards the promotion of energy efficiency and demand management when he tabled the Budget on Wednesday. 

“This could include incentives for the installation of energy-efficient equipment and possible support or incentives for investment in renewable energy generation,” he said.

Baxter said the resources would go a long way in supporting energy efficiency, given that load shedding would be a permanent feature for the next few years and that 11 gigawatt of old generation coal plants would be closed in the next decade.

The council also called for the urgent implementation of the National Treasury’s strategy on the economy, citing that the economy was functioning below its current capacity, and this would lead to further job losses.

“Confidence will be greatly enhanced when real action is taken and is seen to be taken on resolving key constraints in infrastructure industries, maintaining a prudent fiscal and monetary policy stance and improving the competitiveness of the country to foster higher investment,” said Baxter. 

Mboweni unveiled the strategy last August. It aims to grow the economy by between 2 and 3 percent over the next 10 years and create 1 million jobs.

Earlier on Friday, the council said it had opposed Eskom’s electricity tariff saying that the power producer’s revenue shortfalls and cost overruns were due to mismanagement on the organisation’s part. 

The council’s chief economist, Henk Langenhoven, said the council had appeared before the National Energy Regulator of South Africa (Nersa) to give verbal evidence in support of the organisation’s written submission opposing Eskom’s regulatory clearing account (RCA) application for an additional R27.3bn in revenue.

“The Minerals Council’s economic modelling suggests that the granting of Eskom’s application will result in more than 8 200 job losses at marginal mining operations.

“There would doubtless be equivalent impacts elsewhere in the economy. All of this could have been prevented had Eskom been run efficiently,” Langenhoven said.

Langenhoven also said the council’s opposition to Eskom’s RCA application was that the impact on Eskom would be the opposite of what was intended. 

“Even if Nersa decides that consumers, including mining companies, can justifiably be asked to pay for the shortcomings in Eskom’s management decisions, demand will be reduced and with it, Eskom’s income,” he said.

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