Cape Town - Keeping the lights on during load shedding by burning diesel will cost Eskom R30 billion, says Minister of Electricity Kgosientsho Ramokgopa.
“The question is not whether the fiscus can afford it but whether the South African economy can afford it,” he told the National Council of Provinces (NCOP) during his maiden question-and-answer session on Tuesday.
While purchasing the diesel would come at great cost to the fiscus, Ramokgopa warned that if there was no burning of diesel, there could be higher stages of load shedding.
“We run the open-cycle gas turbines so that the stages do not exceed Stage 6.
It is desirable to bring lower stages of load shedding,” he said.
There was R8bn dedicated to purchasing diesel, and out of the R254bn relief funds for Eskom R22bn would be directed to buy diesel.
“The SA Reserve Bank projected that just one stage of unmet demand translates to R300bn lost to the South African economy and a contraction of about 5% in gross domestic product.
“In 2022, 650 000 jobs were lost as a result of load shedding. At the current rate we are on course to lose 850 000 plus jobs.”
Ramokgopa said farmers required quality and uninterrupted supply of electricity and that the unmet demand increased operational costs, which translated to increases in food prices and the poor being worst affected.
Major retailers spend R500bn a year to buy diesel and that increases their operational costs.
“We have a choice of saving the billions to run open-cycle gas turbines and save the economy, or choose not to spend and allow the South African economy to collapse.
“Our principal occupation is about saving the South African economy, especially the poor that are disproportionately affected by load shedding.”
He also noted that the rich, affluent and the middle class could afford to buy solar, but SMMES, which employed 60% of active labour could not afford upfront capital costs and would collapse.
“Our primary intention is to protect the South African economy and hopefully over time our efforts will yield results and get load shedding out of the way.”
Asked about incentives for businesses that buy diesel, Ramokgopa said some of their efforts have been to engage energy intensive users, players in the economy, organised business and labour.
“We want to find a technical solution on how to protect the jobs. We are working to find alternative energy solutions to make it possible to have quality and uninterrupted supply outside energy generation by Eskom.”
He said the taxes on the cost of fuel did not anticipate the failure by the state to deliver electricity.
“The state must rethink. We are putting together a case and will make a presentation tomorrow in Cabinet,” he said.
Asked about the overlaps of responsibilities between him, Minister of Public Enterprises Pravin Gordhan and Mineral Resources and Energy Minister Gwede Mantashe, Ramokgopa said President Cyril Ramaphosa would determine the assignment of functions and responsibilities within the provision of the Constitution.
“I am more than confident that the president will assign as soon as possible as he applies his mind. We are hard at work co-ordinating our efforts.”
The minister reacted sharply when a DA delegate to the NCOP suggested that he was a “junior minister” when asking about where Eskom should be located between his ministry and Mantashe’s department.
Ramokgopa said there was nothing in the Constitution that attached hierarchy to ministers.
“My presence is not ornamental. I bring a significant amount of technical skills in addition to my political prowess.”
He also said he was not aware of a minister with a hold over Ramaphosa –as suggested by the DA MP.
“I am not the one to determine if this entity should report to me. The president will make a determination as he sees fit.”
He also dismissed a suggestion that he was involved in turf wars with Mantashe and Gordhan over functions and responsibilities to be assigned to him, saying the apparent turf was a construction by players in the public domain.
“Our primary focus is resolving load-shedding. It is an emergency situation. It is something that requires our collective attention,” Ramokgopa said.
South Africans are currently plunged into indefinite Stage 6 load shedding.