What do you do if you have one job — a complex, fraught job — and the fate of the national economy depends on it? You dive deep into the problem and immerse yourself in it, and hope you succeed despite the odds. You also get back up when you don’t, which is more often than not.
This is how electricity minister Kgosientsho Ramokgopa has spent the past nine months. Though, from the outside, it may look as if he’s not been too successful.
South Africa has, after all, spent much of the past year in the dark. Independent energy economist Lungile Mashele calculates the country has experienced about 332 days of load-shedding — and at higher stages than before.
By another calculation, over the 153 days of winter (April 1-August 31), the country endured outages every day, with 55 days spent at a maximum of stage 3; 42 days at stage 4; and 39 days at stage 6. In other words, during winter the economy experienced stage 6 levels of load-shedding in one day out of every five.
This despite the utility chugging through diesel at a rate of knots.
Of course, this can hardly be pinned on one man — but as the minister directly responsible for load-shedding, Ramokgopa has to be feeling the pinch.
A mandate for change
Ramokgopa’s appointment by President Cyril Ramaphosa nine months ago came as a surprise to both the ANC national executive committee and the cabinet. But Ramaphosa had a strategy: Ramokgopa was to implement his energy action plan (EAP) and end load-shedding, a task on a par with taking a rocket ship to the moon — from Waterkloof.
It has been a deep dive of getting to the core of the complexities behind the energy challenge and what is required to resolve it — all of which has been an eye-opening experience
— Kgosientsho Ramokgopa
Ramokgopa came across as cocky at first, but it quickly dawned on him that the task was Herculean. So he declared early on that while scheduled blackouts wouldn’t be easy to end, he could reduce their intensity. Hollow words, given the return to stage 6 load-shedding in November.
For Ramokgopa, it’s been something of a shock. “It has been a deep dive of getting to the core of the complexities behind the energy challenge and what is required to resolve it — all of which has been an eye-opening experience, which clearly sets out and crystallises the historic challenge we are dealing with. The situation we find ourselves in is incredibly complex and is a result of decisions made over the last 20-odd years,” he tells the FM.
He goes on to explain how his mandate is to reduce the severity of load-shedding and ensure energy security in the longer term.
“In the last nine months I’ve been immersed with this core task, which has also been a heartening experience, seeing the level of support and dedication from Eskom employees in finding solutions and being passionate about the work they do despite the cynicism and criticism from the public.”
He argues that there’s a core of competent, highly motivated people at Eskom who are acutely aware of the impact of load-shedding on the economy. One of these is Eskom’s new CEO Dan Morokane, who returns after leaving during the height of state capture. And the recent appointment of former Sasol executive Bheki Khumalo as head of generation is a game changer, say analysts.
They’ll have a hard task turning things around, if the utility’s interim results for the six months ended September are anything to go by. Plant availability continued to deteriorate over the reporting period, resulting in more frequent and higher stages of load-shedding than the previous year; the energy availability factor (EAF) fell to 55.3%, lower than its target of 60%; renewable and independent power producer programmes delivered less than their targets, contributing to the generation shortfall; and primary energy costs increased 10.1%, from R77.3bn in September last year to R85.1bn.
Ramokgopa is relatively sanguine. He tells the FM it is crucial to note that the load-shedding over those six months came on the back of 2,400MW out of service at the Kusile power station as well as a long-planned project at Koeberg.
It must be understood that the generation plants are still unreliable and unpredictable and it is unrealistic to expect to solve a problem many years in the making in a short time
— Kgosientsho Ramokgopa
“Our main priority was to support the team so as to bring these units/capacity back into the grid as soon as possible. We can confirm that all units at Kusile were brought back to service earlier than the targeted date, with unit 3 brought back end-September — two months earlier, and unit 1 one-and-a-half months earlier,” he says.
“In October the country got a reprieve of nine continuous days without load-shedding. Furthermore, the synchronisation of Kusile unit 5 being around the corner, we believe that the additional 800MW will further alleviate the pressure on the power system and impact on the economy.”
Crucially, he adds, maintenance has been increased during this period of reprieve. He expects that the EAF will drop further, but as units return to service, it will rise to 70% — and the fleet will be generally more reliable.
Still, there remain challenges — and Ramokgopa urges patience.
“It must be understood that the generation plants are still unreliable and unpredictable and it is unrealistic to expect to solve a problem many years in the making in a short time,” he says.
“We are confident that with the impetus of the equity support from the National Treasury, the drive to put more megawatts on the grid, the delayed shutdown of the older coal stations and [the] generation [division’s] turnaround plan, the increase in maintenance in summer will reduce the frequency and level of load-shedding in the year to come and be all but eliminated once we achieve an EAF of 70%.”
A bite out of the economy
Still, as much as consumers have become inured to rolling power outages, and many industries have proved increasingly resilient, the impact of prolonged load-shedding on the economy has been devastating.
One of the most detailed studies into the economic impact was undertaken by Stellenbosch consultancy Nova Economics for Eskom in late 2020.
Its 104-page econometric analysis estimated that load-shedding cost the economy R34.5bn between 2007 and 2020. In other words, had all the load-shedding experienced over those 12 years taken place in a single quarter in 2019, it would have resulted in a 5% contraction of real quarter-on-quarter GDP growth.
Eskom’s response? It could have been worse. In a September presentation, the utility patted itself on the back, saying: ‘Despite not having the Kusile units and [our] winter prediction of stage 8, we kept the load-shedding stages at a maximum of stage 6’
To put this into perspective, it means that the impact of load-shedding has been roughly equivalent to that of the 2008/2009 global financial crisis. And this, say the researchers, is a conservative estimate, as it excludes the longer-term dampening effect on business and investor confidence.
Moreover, the pace of load-shedding has increased in intensity every year since 2020, when the study was done.
Investec investment strategist Ayan Ghosh estimated earlier this year that load-shedding cost the economy R300bn in 2022, subtracting 5% from GDP in that year alone.
Ghosh noted, for example, that Shoprite was spending R100m on diesel every month during stage 6 load-shedding. His analysis suggested at the time that retail profits could decline about 10% if patterns of load-shedding persisted.
Of course, things only got worse, with 2023 having been South Africa’s record year for load-shedding by far both in terms of the number of days and the GWh of energy shed.
Eskom’s response? It could have been worse. In a September presentation, the utility patted itself on the back, saying: “Despite not having the Kusile units and [our] winter prediction of stage 8, we kept the load-shedding stages at a maximum of stage 6.”
For the summer months (September 1 — end-March 2024), Eskom aims not to exceed stage 4 and to hold the number of load-shedding days down to 116 out of 213. So, the lights will be off just over half the time.
Earlier this year, the Reserve Bank estimated that load-shedding would likely cut two percentage points off GDP growth this year. At the time, the Bank was forecasting real GDP growth of just 0.3% for 2023. So, without persistent outages, the Bank believed the economy was capable of 2.3% growth.
It recently revised its 2023 growth forecast up to 0.8%, mainly because the impact of load-shedding has been less severe than anticipated. This is not because there has been less load-shedding, but rather because the economy has shown remarkable resilience in coping with the impact even as it has intensified.
In large part, this is due to an avalanche of private sector investment as the state has relaxed regulations allowing companies to generate their own power.
Too harsh?
Perhaps South Africa has been a bit unfair on Ramokgopa. As Emily Tyler, climate lead at Meridian Economics, tells the FM, there was no way he could have stopped load-shedding altogether — or even made a significant dent.
“He simply did not have the jurisdiction,” she says.
In part, the problem was that he found himself stuck between the ministers in charge of energy policy (Gwede Mantashe) and Eskom (Pravin Gordhan), two hard-headed politicians with vastly different ideas on the country’s energy policy direction.
There was already confusion between Mantashe’s stance and Gordhan’s — adding another minister to the mix simply deepened that confusion, Tyler says. The politicking, she adds, has been “unhelpful”.
But Ramokgopa says he has faced little resistance when it comes to visiting power stations and engaging the Eskom board and management.
“I did that with the full support and understanding of [Gordhan’s department of public enterprises] DPE. The issue of powers is a necessary one administratively. But insofar as understanding the nature of the problem and what needs to be done to resolve it — there was no problem there,” he says.
It’s an assertion at odds with reports in the Sunday Times of a strained relationship between Gordhan and Ramokgopa, and intervention by the ANC national working committee to give the electricity minister access to powers to interact directly with Eskom management. The decision culminated in Ramaphosa committing to add to Ramokgopa’s powers.
As Ramokgopa tells it, his powers remain the prerogative of the president.
“The president will decide upon his own assessment when given more reports whether I require more powers, but as far as I’m concerned we are going to continue working as we have been working with all concerned stakeholders, which includes my cabinet colleagues and DPE and [the department of mineral resources & energy] to ensure that we pull the country out of load-shedding.
“The EAP is multidimensional, it requires the co-operation of multiple stakeholders, so it’s going to take a collaborative effort, rather than a one-man show to get us out of the challenge that we are facing.”
Insiders say the biggest problem is that Ramokgopa doesn’t have the power to procure energy, for which he has to rely on his cabinet colleagues.
That donation was made without proper consultation with the Chinese and it ended up being something of a technology dump ... We are literally sitting with generators that can power my home
— Lungile Mashele
Mashele believes that not only are his powers too circumscribed, the regulatory regime around energy procurement is also limiting. She cites an example of how the minister’s procurement of energy from Mozambique, announced to much fanfare in October, fell flat.
Another glaring failure was the announcement of generators donated from China, initially lauded as a solution to powering hospitals and schools. Ramaphosa instead received small generators with extremely modest output.
“That donation was made without proper consultation with the Chinese and it ended up being something of a technology dump ... We are literally sitting with generators that can power my home,” Mashele says.
Getting financial close on renewable projects is also taking longer and longer — though that is out of Ramokgopa’s scope and ability to fix.
Meanwhile, the National Union of Mineworkers — the largest union at Eskom — seems to be cautiously optimistic about the minister. Its energy sector co-ordinator Khangela Baloyi tells the FM things look pretty bleak at Eskom, but the minister has been trying his best under difficult circumstances. While the union was sceptical about Ramokgopa’s appointment, it now believes he provides a necessary conduit between the power utility and the cabinet, he says.
“He is seeing what is happening on the ground and he takes that back to the cabinet. No other minister is doing that and that has been a game changer,” Baloyi says.
Mashele concurs: “He is that conduit required, he is certainly more than what Mantashe initially described: a project manager.” Still, she says it will take more intense and rigorous work, done more speedily, to really make a dent on load-shedding or end it.
Bright lights?
There are green shoots, however — and not just increased maintenance and a steadily improving fleet. For a start, there’s that influx of private sector investment.
Since 2018, the National Energy Regulator of South Africa (Nersa) has registered 1,185 new electricity generation facilities with a combined capacity of about 5,800MW. Of these, about 15% were registered in the first half of this year alone, with a total capacity of just under 3,000MW.
At the same time, there has been an exponential rise in smaller rooftop solar installations (only projects over 1MW need to be registered with Nersa). The government put the installed capacity of solar panels (excluding its IPP programmes) at 4,841MW at the end of August 2023, more than double the figure recorded a year earlier.
We think that stage 1-3 load-shedding from the second half of 2024 will have a minimal economic impact as the private sector quickly adjusts to its new reality
— Jeff Schultz
This trend has been evident in the fact that after falling for seven years, the country’s fixed investment ratio climbed back to 15% of GDP this year from a low of 13% in mid-2021, with renewables investment leading the pack.
Thanks mainly to the investment the private sector is pouring into new generating capacity, as well as the joint reform efforts of business and the government, Business Leadership South Africa CEO Busi Mavuso believes that 2023 will be remembered as the year South Africa “broke the back” of the electricity crisis.
BNP Paribas agrees. It expects South Africa to experience less severe and more infrequent load-shedding from mid-2024 as existing supply comes back online and demand for Eskom supply falls in favour of wind and solar.
“A lack of meaningful new baseload capacity means that it will be difficult for the country to rid itself of load-shedding completely,” says BNP Paribas chief economist Jeff Schultz. “However, we think that stage 1-3 load-shedding from the second half of 2024 will have a minimal economic impact as the private sector quickly adjusts to its new reality.”
Perhaps if Ramokgopa is able to get that right, he’ll be able to say he got his one job done.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.