BUSISIWE MAVUSO: Fund to mobilise resources a crucial step towards resolving power crisis
POSTED ON: March 14, 2023 IN by Admin
The launch of the Resource Mobilisation Fund (RMF) last week was momentous for South Africa, signifying the beginning of an unprecedented partnership between business and government to tackle the electricity crisis. BLSA believes the RMF and its support of the National Energy Crisis Committee (NECOM) is a critical next step in the role business can play.
One of the difficulties South Africa has faced is the multiplication of efforts when trying to overcome challenges. This dispersion of resources is one of the factors that has stood in the way of achieving success in the many initiatives already pursued to solve the electricity crisis.
The RMF does away with this by channelling significant private sector efforts towards helping government resolve one of South Africa’s key challenges – achieving reliable access to electricity and long-term energy security. It brings together government, coordinated by the NECOM, and the resources of the private sector, channelled through the Fund, to mobilise the capacity necessary to realise President Ramaphosa’s Energy Action Plan.
Business is fully supportive of NECOM. It is gratifying to see the new Minister of Electricity hit the ground running, calling for meetings with business to begin bilateral discussions, at which he talked about engagement, process and urgency.
While NECOM may have taken time to establish, it is now fully operational and ready to spearhead the actioning of the most pressing initiatives, with the additional resource support of the RMF. This renewed impetus provides us with the best chance of addressing the electricity challenge and BLSA is committed to doing all it can to contribute because if this doesn’t work, then we are not sure what else will.
Last week S&P Global’s decision to downgrade South Africa’s rating outlook again drove home how much hinges on resolving the electricity crisis. The primary reason for the downgrade was the detrimental impact loadshedding was having on the economy. The agency warned that, unless this is resolved, South Africa risks another rating downgrade. The disappointing growth statistics also highlighted the very high likelihood of South Africa entering a technical recession in the first quarter of this year because of the electricity crisis. Unless we turn this around, the country could face a protracted recession that it can ill afford.
NECOM is our best chance of forestalling these outcomes. It has been tasked with overseeing five critical short-term interventions aimed at reducing the severity and frequency of load shedding, then ending load shedding altogether, and achieving energy security by adding as much new generation capacity to the grid as possible, as quickly as possible.
Much still needs to be done to realise the goals laid out on NECOM’s roadmap to end load shedding. Fortunately, the establishment of the RMF allows us to take comfort that NECOM will be sufficiently capacitated to expedite the President’s Energy Action Plan.
RMF has been deliberately established as an autonomous entity with an independent board. It will administer the funds raised from donors, oversee the requests for resources and ensure these are sourced and financed. Skilled resources will be donated for a year to two years, and, crucially, the RMF will be responsible for paying the service providers, not government, so that RMF will have control of the disbursement of donations.
A targeted R100m has been raised based on donations from SA corporates and local and international donors, based on RMF’s understanding of Presidency capacity requests. We are comfortable that the Fund has the necessary checks and balances to ensure these donations will be used as intended and that the RMF will operate at the highest levels of ethics, integrity, and transparency.
We hope to see the creation of the RMF become the turning point in our efforts to address the electricity crisis that has plagued us for years. The formation of the Fund also represents a significant step up in the private sector’s role from initially advocating for the much-needed policy and structural reforms in South Africa and then mobilising self-generated energy in the private sector to alleviate the strain on Eskom’s power grid.
Increasing South Africa’s electricity supply availability and reliability is one of BLSA’s top four objectives. The others are reducing crime and corruption, creating a conducive framework to measurably improve the operational efficacy of the transport and logistics sectors and, finally, increasing government’s capacity to improve the resilience of the water infrastructure.
Ultimately government has the legal responsibility to address the electricity problem, but history has shown it cannot do so alone and without the support of business. At last, we have a partnership that now has the means to rally the critical skills needed to make it happen, drawing on the private sector and targeted non-government financial resources to do so.
Have your say.
Share your opinion