The Dark Reality Of South Africa’s Energy Crisis

During his state of the union address, South African president Cyril Ramaphosa has declared a state of disaster to address the longstanding energy crisis that has plagued the nation since 2007. State-owned power company Eskom has conducted “load-shedding,” scheduled blackout periods, every day in 2023 to prevent nationwide power collapse due to a lack of supply and surplus of demand on the energy grid. What was once proposed as a temporary solution has now become standard practice for the continent’s most industrialized nation. Now, with power outages reaching up to 15 hours a day in some areas, President Ramaphosa is expediting government plans to improve the power grid and ensure that hospitals, water treatment plants, and other essential services have priority access to power. The president also informed the public that he would be appointing a minister of electricity, whose sole duty would be to handle the energy crisis.

Critics fear the appointment may further the bureaucratic bloating that has slowed government progress down in the past. But although increased government oversight is not favored by all, the outages are wreaking havoc on businesses, livelihoods, and both foreign and domestic investment. South Africa already faces a real unemployment rate nearing 50%, annual inflation close to 7.5%, and external debt of $130bn U.S.D., and Eskom itself has over $22.5 billion in debt, requiring a government bailout to prevent default. Al Jazeera reports that Gwede Mantashe, the minister of mineral resources and energy, told mining industry participants that the power cuts cost the economy 1 billion rands ($56 million U.S.D.) per day, and the World Bank estimates that the nation’s economy lost 24 billion dollars in 2022 due to power cuts.

Families, corporations, tourists, and even stoplights are currently operating in the dark for much of the day. Intervention is obviously needed.

“I’m only making a third of my income compared to before the load-shedding times, and I have clients who are becoming frustrated with me,” Nadine Iqani, a small business owner and beautician in Cape Town, told Al Jazeera. “It’s just a nightmare … I have to work long hours, including weekends, just to accommodate my clients.”

Today’s energy crisis was not unpredictable. A lack of investment in Africa’s energy grid post-apartheid paved the way for unreliable energy, and moreover, corruption at Eskom has mismanaged hundreds of millions in government funds meant to improve the power grid. One scandal noted in the New York Times involved funneling money from sizeable state contracts to portfolio companies owned by the Guptas, three Indian-born brothers closely linked to the family of then-president Jacob Zuma. Often remembered as one of the most egregious cases of “state capture,” the turmoil lead to the premature end of Zuma’s tenure as president.

Global management consulting firm Mckinsey & Company was also embroiled in the Gupta scandal. In late 2015, McKinsey agreed to a 700-million-dollar deal with Eskom without properly vetting the company, but in early 2016, Mckinsey discovered Eskom’s tie to a shell corporation called Trillian Management Consulting. Close to 40 million dollars of government funding went to Trillian, backed by Salim Essa, a Gupta associate who previously received $100 million in a state locomotive deal. Despite having uncovered this information, McKinsey kept quiet. According to the New York Times, South Africa’s National Prosecuting Authority issued a harshly critical report regarding the Eskom case in 2017. McKinsey, the report said, had been instrumental “in creating a veil of legitimacy to what was otherwise a nonexistent, unlawful arrangement.” That arrangement permitted a firm controlled by a Gupta associate to gain profit.

While there have been many proposals to unbundle the Eskom energy conglomerate, plans made at the 2021 COP26 in Glasgow to separate the entity into three parts – generation, transmission, and distribution – have yet to come to fruition. “This unbundling, as it is called, has been mooted now essentially for the better part of 30 years and we haven’t yet got down to actually making it work,” André de Ruyter, who resigned as CEO in December, told Eyewitness News.

Ultimately, a long-term solution is needed to get South African energy back on track. The government must increase its ability to service energy demand by restoring the broke, shut for maintenance, or under-construction power stations that make up half the country’s estimated 46,000 MW capacity, but transitioning to alternative energy sources at the corporate and household level would also allow South Africa to reap bountiful rewards and reduce its reliance on coal. Almost 80% of South Africa’s energy currently comes from coal, making the nation the 11th largest carbon emitter in the world. However, the country receives over 2,500 hours of sunlight and averages around 220 W/m2 in solar radiation annually, making it a prime location for solar energy development if it can attract investment. While wind and hydropower are also viable, the sustainability and scale of solar energy gives it the potential to vastly reduce both requisite water use and carbon emissions. With more energy on the grid and a shorter blackout duration, the economy can function around periodic dark hours.


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