Monday, November 16, 2009

SA’s electricity crisis response structure in crisis of its own

The public–private structure set up during the peak of South Africa’s load-shedding crisis of 2008, known as the National Electricity Response Team (Nert), is facing a crisis of its own.

It has emerged that key officials from the newly formed Department of Energy (DoE) have not been attending meetings, while the project office set up in December to coordinate the various response programmes is facing serious cash flow constraints, having not been paid since March.

The Nert structure, which is split into governance and operational elements, was assembled hastily last year to develop strategies to deal with the immediate crisis, as well as to help manage the power system during what is to be a protracted period of tight reserve margins.

It comprises officials from various gov- ernment departments, supposedly led by the DoE, representatives from power utility Eskom and a host of private-sector organisations and individuals. It also has a direct link to Cabinet through the Nert steering committee.

Nert’s operational elements, meanwhile, are overseen by a consortium of consultants (Gobodo Systems Consulting, EON Con- sulting and Aurecon), which was appointed in late 2008 following a tender process overseen by EDI Holdings. However, it is also understood that the newly restructured DoE, created by President Jacob Zuma after South Africa’s national elections in late April, has not yet formerly mandated an official to take up responsi- bilities at Nert.

For this reason, Nert chairperson Nelisiwe Magubane, who was previously a deputy director-general in the Department of Minerals and Energy, and who is currently acting director-general in the new depart- ment, is reportedly no longer attending meetings.

However, DoE spokesperson Bheki Khumalo tells Engineering News that Magubane handed over responsibilities to Ompi Aphane, who is the acting deputy director-general responsible for electricity, more than “a month ago” and believes that stakeholders have been informed of the change. Nert project management unit (PMU) head Shaun Nel, who is also a director at accounting and consulting group Gobodo, confirmed in an interview with Engineering News that the structure is facing some constraints.

However, he also insists that work is continuing, despite the fact that the PMU itself has been forced to scale back, with some R16-million in fees outstanding. The consortium of consultants was awarded a two-year contract worth some R40-million by EDI Holdings, in December 2008.

But the money from government to EDI stopped flowing in March. Nel says that the issue of nonpayment, as well as a seeming lack of leadership for Nert, would be raised at the upcoming meeting of the Nert Stakeholder Advisory Council, which is scheduled for December 8. He acknowledges that all the companies involved are taking strain, but have decided to proceed with work for “reputational reasons”, as well as because they are convinced that major interventions are still required to prevent a return to the blackouts that afflicted the economy last year.

Other observers, who requested that their names be withheld, are far more critical, saying that the DoE is showing little or no leadership, while business is too afraid to raise the issue in public.

One commentator warns that South Africa’s weekly power demand is fast returning to the prerecessionary levels, during which the load-shedding took place – a reality that has been confirmed by Eskom. Worryingly, there has been little, if any, development between the first quarter of 2008 and today to suggest that South Africa can avoid another bout of blackouts.

However, Nel notes that some good progress has been made in finalising the power con- servation programme, which will involve the implementation of incentives and disincentives to help reduce power demand. He adds that the work group on system operations and independent power producers (IPPs) has also made strides in iden- tifying the key blockages to the finalisation of power purchase agreements between the IPP and either Eskom’s single buyer’s offices or an independent system operator (ISO).

The work group, which favours the crea- tion of an ISO, would be canvassing its proposal at the December 8 meeting, which Nel believes could give the stalled IPP process some impetus. In fact, the work group believes some 3 500 MW of private power could be brought on stream over the next 36 months if government can move in to mitigate Eskom’s concerns about the lack of cash flow guarantees, and if either Eskom or the ISO can be provided with guarantees to cover currency risks.

However, Nel acknowledges that the current situation regarding Nert and its work groups is not sustainable as it is reliant almost entirely on the goodwill of certain private individuals and companies, with limited support or leadership from government. Khumalo, meanwhile, said that he could not comment on confidential contractual matters between the DoE and the consultants.

Written by Terence Creamer

5 Opinion(s):

WHITEADDER said...

The Bafanas of electricity...

Anonymous said...

The kaffirs are going back to the day of their ancestors, when the only source of heat or light was the campfire.

Anonymous said...

The world is closely observing and taking note of the illegal actions of the evil ANC. We are spreading the word far and wide from the USA and soon, we will deal with the sorry ANC bastards. Being a top flight mercenary organization with extensive experience and connections, our group is taking action to remedy the situation. Off to HELL with the ANC and ALL the totally worthless kaffirs! Today, the ANC are the pigeons, very soon, they will be the statues!

Exzanian said...

Ons roep die Baas

FishEagle said...

@Exzanian, LOL