There were no contradictions in statements by the Treasury and Energy Minister David Mahlobo on the country’s nuclear procurement deal, according to Finance Minister Malusi Gigaba.
Speaking at a business breakfast in uMhlanga yesterday, a week after tabling his mid-term budget, he said: “At times when people speak, you don’t get the detail. There is no contradiction in our messages."
It was difficult to elaborate in a sound bite, he said.
Although he did not mention the nuclear deal in his mid-term budget speech, Gigaba has said nuclear energy needed to remain part of the country’s energy mix and would be implemented on a scale that was affordable.
While he was being interviewed after the mini-budget, Mahlobo said the plans for nuclear procurement would go ahead.
“As part of our integrated resources plan, nuclear remains part of the energy mix. Right now we have 5700 megawatts of excess electricity. When Medupi is at full capacity, it will be generating 4800 megawatts,” he said.
Gigaba said that despite the energy surplus, there would come a time when the economy was “growing robustly again”, the country would have exhausted its coal-fired power generation and renewable energy, and it would need to look for other energy generation options.
“At all times, the litmus test must be if the economy can afford it,” he said.
The country faced a budget shortfall of R50billion, Gigaba noted, and there were calls to address issues such as free higher education.
“We can’t say in the light of all of this we are going to add budget pressures of hundreds of billions of rand. The budget will not cope.”
Gigaba said current thinking had to be about the top priorities for spending.
“That which can be delayed until later years, not later months, let’s delay. At the moment I think we can cope with the electricity we have.
"We have to respond to these other budget pressures and will come back at a later stage and start looking at it,” he said.
Eskom remained a major concern, he said, and the cabinet shared concerns about other state-owned enterprises.
“We need to intervene quickly to ensure we have credible boards made up of people who understand the economy, the energy sector and finance so they can stabilise this institution and bring it back to stability and credibility.”
Gigaba also said the tariff increase being sought by Eskom was too high.
“I think the tariff application they are asking for is far higher than they should get. I think Eskom must incentivise South Africans by improving its governance, by employing properly qualified executives.”
“To ask South Africans to pay more tariffs when the economy is subdued and the medium-term outlook is as subdued as it is, and to have the type of leadership challenges Eskom is experiencing, I think this would serve as a perverse incentive.