Ramaphosa Dusts Off Covid-Era Playbook as Energy Crisis Mounts

Paul Burkhardt
·2 min read
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(Bloomberg) -- South African President Cyril Ramaphosa’s declaration of a state of disaster over the nation’s energy crisis resorts to a measure last invoked to respond to the coronavirus pandemic and resulted in a massive squandering of public funds.

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The decree will help the government bypass bureaucratic hurdles so it can accelerate new projects and equipment repairs, Ramaphosa said in his state-of-the-nation address on Thursday. It will also enable the government to exempt hospitals and water-treatment plants from outages, and enable it to assist food producers and retailers affected by the blackouts, he said.

At the same time, “rigorous environmental protections, procurement principles and technical standards” will be maintained, the president said.

Africa’s most-industrialized nation has endured daily power cuts since the start of the year due to breakdowns at state-owned utility Eskom Holdings SOC Ltd.’s plants, stunting economic growth and disrupting services for hours at a time. The rationing is taking a toll on food production and water supply, but without it excessive demand could result in a complete and extended shutdown of the grid.

Read: Why Blackouts Are Still Crippling South Africa: QuickTake

The state of disaster will help “prevent the escalation of the severe electricity supply constraint to a total blackout,” the government said in a notice published in the Government Gazette.

A similar decree was last imposed in March 2020 in response to the pandemic to enable the government to fast-track spending and cut red tape. An official investigation later found that 2,803 contracts worth 14.3 billion rand ($800 million) the government issued to suppliers were improperly awarded, and there are fears of a recurrence, with labor union Solidarity challenging the decree’s legality in court.

“We are not convinced that declaring a state of disaster will help address the crisis,” Business Unity South Africa, the country’s biggest business group, said in a statement. “It must be seen as a low point in the life of our society that mismanagement and lack of governance has created circumstances in which a state of disaster has to be declared.”

Mike Brown, the chief executive officer of lender Nedbank Group Ltd., bemoaned the poor execution of South Africa’s existing plans to improve the electricity supply.

“The state of disaster may provide some additional impetus for implementation and delivery, but needs to be well-managed and monitored to prevent wasteful expenditure,” he said.

--With assistance from Adelaide Changole.

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