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    ENERGY SECURITY - Fund to mobilise resources crucial for resolving power crisis

    March 13, 2023 - Business Day



      Fund to mobilise resources crucial for resolving power crisis

      Last week’s launch of the Resource Mobilisation Fund (RMF) was momentous for SA, signifying the beginning of an unprecedented partnership between business and government to tackle the electricity crisis. Business Leadership SA (BLSA) believes the fund 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 SA 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 private sector efforts towards helping the government resolve one of SA’s key challenges: achieving reliable access to electricity and long-term energy security. It brings together the government, co-ordinated by Necom, and the resources of the private sector, channelled through the fund, to mobilise the capacity necessary to realise President Cyril Ramaphosa’s Energy Action Plan.

      Business is fully supportive of Necom. It is gratifying to see the new electricity minister 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 ready to spearhead 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. If this doesn’t work, we are not sure what else will.

      S& P Global’s decision to downgrade SA’s rating outlook again drove home how much hinges on resolving the electricity crisis. The primary reason for the downgrade was the detrimental impact load-shedding is having on the economy. The agency warned that unless this is resolved, SA risks another downgrade. The disappointing growth statistics also highlighted the high likelihood of SA entering a technical recession in the first quarter because of the electricity crisis. Unless we turn this around, the country could face a protracted recession 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 it and achieving energy security by adding as much new generation capacity to the grid as quickly as possible.

      Much still needs to be done to realise the goals contained in Necom’s road map. Fortunately, the establishment of the RMF allows us to take comfort that Necom will be sufficiently capacitated to expedite the Energy Action Plan.

      The RMF has been 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 or two and, crucially, the RMF will be responsible for paying the service providers, not the 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 the 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 the creation of the RMF becomes the turning point in our efforts to address the electricity crisis. The formation of the fund also represents a step up in the private sector’s role from initially advocating for the policy and structural reforms in SA, and then mobilising self-generated energy in the private sector to alleviate the strain on Eskom’s power grid.

      Increasing SA’s electricity supply 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 increasing the government’s capacity to improve the resilience of water infrastructure.

      Ultimately the government has the legal responsibility to address the electricity problem, but history has shown it cannot do so without the support of business. At last we have a partnership that has the means to rally the critical skills needed to make it happen, drawing on the private sector and targeted non-government financial resources.

      Mavuso (@BusiMavuso2) is BLSA CEO.


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