For the State of the Nation Address delivered by President Ramaphosa in 2021, BEPA notes broad progress in some of the areas the President addressed and committed to, especially on the renewable energy front, but regrettably in most other areas there has been scant progress during the year under review and for a protracted period preceding that.

It points to dwindling political will to fundamentally transform the structure of the economy and the structural impediments to growth which are intimately intertwined.

BEPAs expectations for the SONA of 2022, to be delivered by the President on 10 February 2022 to a joint sitting of both houses of parliament; incorporate the need for accelerated energy reforms and more meaningful transformation of the energy sector and its value chain.

It is likely that the President will laud the $8,5 billion financial commitments from the developed world to support South Africa’s Just Transition to a low carbon and climate resilient economy. The risk that accompanies this funding is the potential of developed nations using it as a “revolving door” to deploy their own capacity to South African energy projects and exercising disproportionate decision-making in the supply chain of the energy sector and repatriating locally generated value abroad for their won benefit. To arrest this, the President may want to sound a caution to these financiers: that there is sufficient local capacity and expertise to develop South Africa’s own energy resources or where it is lacking, the resources will be developed in partnership with black entrepreneurs and professionals. This is the only manner in which the transition can be just.

BEPA encourages the President to consider the pace and scale of this transition and mitigating any negative effects on coal mining communities. Efforts should be spelt out about how value chains alternative to coal mining will be created at grassroots level in the affected communities.

Green hydrogen is likely to feature in the President’s speech. It is the next big-ticket investment attraction that South Africa has to offer. With planning for green hydrogen moving along apace, the President may want to mention how communities in the target areas of Boegoebaai in the Northern Cape and others will be prepared to absorb the benefits of this catalytic initiative and how a genuinely South African green hydrogen value chain will be developed. As it stands, foreign interests are heightened in South Africa as a result of this beckoning opportunity. They anticipate a feeding frenzy. On the other hand, this may represent a bonanza for energy sector transformation, if done appropriately from the outset.

With the release of the first and second reports of the Judicial Commission of Enquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector Including Organs of State in January 2022, it has become clear that brazen corruption has not only diverted public resources from the poor but has also stunted the country’s transformation project. The President and the prosecutorial bodies are called upon to act swiftly to implement the recommendations of the commission. For BEPA it is particularly disconcerting that state capture has permeated the energy utility which can hardly afford the instability inflicted by state capture in state owned enterprises and the accompanying loss of revenue. This directly impacted upon the cost of electricity today, as witnessed in the requested price determination by Eskom, which is under NERSA’s consideration.

Glibly considered by the commission, the governance and service delivery erosion at municipal level should be of equal import as high-level state capture. Local electricity distribution infrastructure is rapidly crumbling as a result of low or no maintenance and sheer neglect. Capacity to deal with this has all but disappeared. Solutions need to be urgently found and the growing pool of black engineering expertise needs to be tapped into and appropriately deployed.

Prepared by Ricardo Hansby Executive Director of Senze Consulting and Mtiya Dynamics on behalf of BEPA