South Africa’s Cabinet did not deliberate on the Integrated Resource Plan (IRP) at its most recent fortnightly meeting, potentially threatening Energy Minister Jeff Radebe’s self-imposed mid-August deadline for finalising the long-awaited update to the electricity generation plan.
Communications Minister Nomvula Mokonyane confirmed on Thursday that Cabinet had not discussed the IRP during its July 4 meeting. She also noted that Cabinet would only resume its normal meeting cycle in August, owing to the upcoming mid-year Cabinet Lekgotla.
Cabinet did deliberate, however, on the “negative impact” of recent fuel price increases on consumers and Radebe had been mandated to communicate government’s plans for addressing the country’s vulnerability to cyclical price shocks at a briefing scheduled for the coming week.
Radebe again reiterated his aspiration to have the IRP finalised by mid-August at a gathering with business leaders in Johannesburg on June 29, which followed on from a meeting of the energy ministers from the Brics bloc of Brazil, Russia, India, China and South Africa on June 28.
He told those present that a “Cabinet-approved” IRP would be released “soon” for public comment ahead of final promulgation in August.
However, public comment periods are typically never shorter than 30 days and sufficient time is usually left for departments to consider the comments and to make adjustments to the policy ahead of final Cabinet approval.
Mokonyane indicated that the focus of the lekgotla would be “primarily on the economy, on youth development, on education, on nation building and social cohesion”. Therefore, she anticipated that the IRP would be brought before Cabinet in August, but she could not confirm whether that would definitely be the case.
Business Unity South Africa (Busa) energy and environment policy manager Jarredine Morris said the delays in releasing the IRP for public comment were disappointing, as the process had been a long time in the making. “However, Busa wants to highlight the need to ensure that the IRP is subjected to a well-considered and rigorous process, which may account for and explain the delay,” she added.
“Once published, Busa intends to comment on the plan and ensure that the organisation’s inputs are factored when government finalises the energy blueprint. Business had expected that the IRP would be released by now to enable sufficient time for public review and comments, as well as the consideration thereof. Energy is one of the key areas in which policy certainty is an imperative for business to enable future planning and investment,” Morris told Engineering News Online.
Allen & Overy partner Jason van der Poel said the importance of the updated IRP to investor confidence could not be overstated. "Investors are looking for policy certainty. It goes back to the lessons learned through the hiatus in the independent power producer programmes in the last two years: investors need policy certainty and a clear procurement trajectory in order to invest in projects, as well as in the manufacture of inputs and in the provision of services that go into these projects."
Van der Poel noted that the delays resulted in around 14 manufacturing companies closing down and withdrawing from South Africa, or placing their investments and training programmes on hold.
The IRP update has been strongly linked with delivering the policy certainty required to facilitate investment in the electricity sector, owing to the fact that the current version, known as IRP 2010, includes out-dated assumptions.
Radebe has set an objective of the energy sector as a whole delivering 25% of the $100-billion in investment set as a target by President Cyril Ramaphosa for the coming five years. Besides electricity investments, Radebe has also flagged the potential for new gas and liquid fuels infrastructure, including a possible new greenfields oil refinery.
Ramaphosa has announced that he intends convening an Investment Conference before the end of 2018 and in its latest statement, Cabinet described the recent World Economic Forum roundtable on investment as a significant step towards that event.